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TMI Tax Updates - e-Newsletter
August 18, 2014
Case Laws in this Newsletter:
Articles
By: Madhukar N Hiregange
Summary: The article discusses the changes in tax audit requirements for the Assessment Year 2014-15, particularly focusing on indirect taxes. It highlights increased responsibilities for auditors due to additional disclosures and reporting requirements. The article outlines the impact of these changes on various indirect taxes, including VAT, CST, Service Tax, Central Excise Duty, and others. It emphasizes the need for auditors to understand indirect tax laws to provide value to clients and ensure compliance. The article also details potential errors and disputes in major taxes and provides a comparative analysis of changes in tax audit forms to enhance transparency and compliance.
By: DR.MARIAPPAN GOVINDARAJAN
Summary: The Companies Act, 2013, outlines the declaration and payment of dividends under Sections 123 to 127. Dividends can be declared from current or past profits, provided they account for depreciation. Rule 3 allows dividends from free reserves under certain conditions if profits are inadequate. Interim dividends may be declared by the Board, but companies failing to comply with deposit-related sections cannot declare dividends. Unpaid dividends must be transferred to a designated account, with interest penalties for non-compliance. After seven years, unclaimed dividends go to the Investor Education and Protection Fund. Failure to distribute dividends can lead to fines and imprisonment for directors.
Highlights / Catch Notes
Income Tax
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Bus Hiring Not Leased: Correct Tax Deduction u/s 194C Confirmed for Kilometer Basis Contracts.
Case-Laws - HC : TDS on hiring of Buses on kilometer running basis - the contract of transport was not akin to the taking of any 'plant' or 'machinery' on lease or any other similar arrangement - the assessee had correctly deducted tax at source u/s 194C - HC
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Bonus Shares' Acquisition Date is Issuance Date: High Court Clarifies Tax Benefits u/s 54E for Capital Gains.
Case-Laws - HC : Benefit of section 54E - LTCG / STCG – bonus shares issued by a company are acquired by a shareholder when they are issued, and they must be taken to be held by the shareholder from the date of their issue, and not from the date when the original shares - HC
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Royalties Classified as Revenue Expenditure, Not Capital, Due to Their Nature as License Fees for Manufacturing and Sales.
Case-Laws - HC : Royalty payment - revenue expenditure or capital expenditure - payment is purely revenue in nature, as they provide for payment of license fee for manufacture and sale of the products which are manufactured - HC
Customs
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Commissioner Denies Conversion of Shipping Bill from DEEC to Draw-Back Scheme, DEEC Benefits Still Available.
Case-Laws - AT : Denial of conversion of shipping bill from DEEC Scheme to draw-back scheme - benefit under DEEC Scheme was not denied to the appellant - Commissioner has rightly denied the conversion of shipping bill from DEEC Scheme to draw-back Scheme - AT
Corporate Law
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Determining Proper Notice u/s 138 of Negotiable Instruments Act Should Occur During Evidence Stage, Not Preemptively.
Case-Laws - SC : Proof of service of notice under Section 138 of the Negotiable Instruments Act, 1881 - service of notice is a matter of evidence and proof and it would be premature at the stage of issuance of process to move the High Court for quashing of the proceeding under Section 482 of the Cr.P.C - SC
Service Tax
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Reversal of Credit Balance Qualifies Respondents for Small Service Exemption under Notification No. 6/2005-S.T.
Case-Laws - AT : Small service exemption - admittedly the respondents have taken credit on telephone service but have not utilized the credit available for payment of service tax on telephone service and they have reversed the credit balance so they are entitled to claim for the benefit of exemption Notification No. 6/2005-S.T - AT
Central Excise
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Revenue Must Prove Capital Goods Cleared in Original State for Modvat Credit Reversal in Cenvat Case.
Case-Laws - AT : Cenvat Credit - Clearance of capital goods as such - It has to be kept in mind that it is the Revenue who is making the allegations and as such, the onus to show that the goods were cleared as such thus requiring reversal of modvat credit, is on the Revenue - AT
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Duty Demands on Lifts and Elevators Excluding Installation Charges Are Unlawful; Manufacturing and Service Are Separate.
Case-Laws - AT : Valuation - demands of duty made by including the erection, commissioning and installation charges in the assessable value of the lift/elevators cannot be sustained in law as manufacture and rendering of services are distinct and different activities - AT
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