Service Tax due but not actually Collected from Customers eligible for Income Tax Deduction: Bombay HC [Read Judgment]
Read more at: http://www.taxscan.in/service-tax-due-collected-customers-eligible-income-tax-deduction-bombay-hc/28913/
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Dear CAs, don't sign any Project Report or Estimates or Provisional Figures,
Now Calcutta High Court comes hammer & tongs at CAs
In the latest judgement in Binod Kumar Agarwala vs. CIT, the Hon’ble Calcutta High Court has signaled a zero-tolerance policy towards the alleged nefarious practice of CAs.
The High Court slammed the CAs for certifying bogus loans and misleading lenders, which in turn has led to the colossal NPAs.
“The matter is typical of how business is conducted in this country and why loans obtained from banks remain unpaid,” the High Court observed.
The assessee committed fraud on the bank and obtained credit facilities by misrepresenting its financial position.
To aid him in the criminal act, a firm of chartered accountants named
‘Roy Ghosh and Associates’ issued a certified balance sheet containing
bogus figures.
The CA firm boldly issued a disclaimer stating that the figures “have no relation with the actual figures”.
“We are giving the information and explanations herewith purely
based on estimate basis and have no relation with the actual figures and
to avail the bank loan.”, it was stated.
The High Court seethed with anger at the blatant temerity of the Chartered Accountant in certifying the bogus balance sheet.
“The substance of the appellant’s submission is that to suit a
person’s purposes before one authority or the other, different pictures
as to the financial position of such person or any entity under the
control of such person may be presented.
This is a question larger than any legal issue under the Income Tax Act and is a matter of public policy.
It is inconceivable that a person may approach a bank by
inflating the value of his assets and a few months down the line he can
deflate the value of the assets, so to say, while queuing up to pay tax.”
It is scarcely expected of a banker to question the veracity of
any accounts certified by a firm of chartered accountants or to look
into the fine print and comprehend therefrom that utterly bogus figures
had been furnished only for the purpose of availing of the credit
facilities from the bank”, it was observed.
The High Court came down heavily on the practice of painting a rosy
picture as to the financial position of the applicant seeking credit
facilities while at the same time slipping in another balance-sheet and
P&L A/c in the income-tax records indicating a less robust financial
position of the constituent.
It described Roy Ghosh and Associates as a “willing accomplice” to this criminal and fraudulent practice.
It also held that the accounts cannot be “tailor-made to suit a
particular purpose or window-dressed to make it attractive for bankers
to rely thereupon and all the gloss and sheen removed thereafter when it
was the time to pay tax.”
ITAT hauled up for not reporting the CA to the ICAI
The ITAT passed strictures and observed that a Chartered
Accountant
is governed by certain discipline and he has to conduct audit in
accordance with the provisions and rules of the Chartered Accountants Act.
It also noted that Schedule II and Part 1 holds a chartered
accountant guilty of professional misconduct if he permits his name or
name of his firm to be used in connection with the audit based on estimate.
However, the High Court hinted that the ITAT should have gone further and been vigilant towards the abetment by the CA in the “commission of a colossal act of misrepresentation”.
“Indeed the Appellate Tribunal may only be faulted for not
reporting Roy Ghosh and Associates to the Institute of Chartered
Accountants for having apparently abetted in the commission of a
colossal act of misrepresentation which the appellant assessee undertook
before his bankers for the purpose of obtaining credit facilities by
indicating a financial position that was not warranted by the books of
the assessee”, it held.
ICAI directed to examine the issue
Ultimately, the Hon’ble High Court directed that a copy of the order
be sent to the ICAI for appropriate steps, if thought fit, to be taken
against Roy Ghosh and Associates in accordance with law and upon due
notice to such firm of CAs.
Whether the ICAI has taken any steps pursuant to the directions of the High Court is not known as of date.
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1. AADHAAR: The Supreme Court upheld the constitutional validity of the government’s Aadhaar scheme as pro-poor and inclusionary. Linking Aadhaar with PAN is mandatory and so filing of ITRs and for transfer of subsidies benefits or services provided by the Govts. The Aadhaar won’t be mandatory for opening bank accounts, getting a phone connection or school admissions.
2. GST: 30 SEP 2018 is the last date for filing GSTR-6 for Jul'17 to Aug'18.
3. GST: Taxmen arrest three Businessmen in Bengaluru for issuing fake GST invoices to claim input tax credit.
4. GST: Supply of solar inverter, controller, battery and panels would covered under “Solar Power Generating System” as a whole in terms of Serial No.234 of Schedule-I of the NN.01/2017-CT(Rate) - applicable rate of GST on such supply will be 5% IGST (2.5% CGST + 2.5% SGST) – AAR, Uttarakhand in Eapro Global Ltd. (2018 (9) TMI 1526).
5. IT: Claim of expenditure - Damages paid by the assessee to Microsoft Corporation USA for unauthorized use of software / operating system - the payment of such damages is allowable business expenditure u/s. 37(1) – MD India Healthcare Services (TPA) Pvt. Ltd., Vs ACIT (2018 (9) TMI 1548 - ITAT Pune).
6. IT: The loss caused by embezzlement by the employee was incidental to the employment and entrustment of duty and should be allowed in computing the business income of the year under consideration -DCIT Vs. National Engineering Industries Ltd. (2018 (9) TMI 1545 - ITAT Kolkata).
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# ICAI Election 2018 : Nominations for 32 Central Council (CC) Seats and 64 Regional Council (RC) Seats have been completed y’day (26.09.18). The Region wise list of probable candidates is expected soon.
# ICAI has launched A unique and exclusive Job Portal for CAs https://cajobs.icai.org where no. of companies and vacancies increasing every day. Members can find a best job on this portal that matches their interest.
# GST: MoF issues a circular clarifying applicability of GST on Residential programs or camps meant for advancement of religion, spirituality or yoga by religious and charitable trusts – C.N.66/2018, dt.26.09.2018.
# GST: Marg Sudharan Shulk charged and collected by applicant for the maintenance of forest road, from non-govt, pvt and commercial vehicles engaged in mining work in lieu of use of forest road - Levy of GST confirmed – AAR, UK in DFO, Dehradun (2018 (9) TMI 1647).
# GST: Post GST regime, the pending refund claim of CENVAT credit under Central Excise, if sanctioned, will necessarily have to be paid in cash – Toshiba Machine (Chennai) Pvt. Ltd. Vs CCE (2018 (9) TMI 1576 - CESTAT Chennai).
# IT: Credit of TDS deducted from salary - Revenue directed to give the credit even if employer failed to deposit TDS amount with the Govt. – Devarsh Pravinbhai Patel Vs ACIT (2018 (9) TMI 1635 - Gujarat HC).
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Due Dates to claim Transitional Credit is Procedural in Nature, Input Credits can’t be denied on Procedural Grounds: Madras HC [Read Judgment]
Read more at: http://www.taxscan.in/due-dates-claim-transitional-credit-procedural-nature-input-credits-procedural-grounds-madras-hc/28964/
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NCLT (Guwahati Bench) : In IDBI Bank Limited vs. Kitply Industries Ltd.
Where the financial creditor instead of proposing name of Insolvency Resolution Professional (IRP) for appointment by Adjudicating Authority travels beyond its assigned territory appointing IRP, such minor lapses have to be ignored if the person concerned otherwise fulfils the requirements which law requires.
Read full case law at : https://dasgovernance.com/2018/09/28/nclt-guwahati-bench-in-idbi-bank-limited-vs-kitply-industries-ltd/
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Calculation of Turnover for Tax Audit u/s 44 AB of Income Tax Act, 1961:
(i)For Assessee in share trading business to give them clear understanding whether they are liable to get their accounts audited for tax audit u/s 44AB of the Income Tax Audit. So, let's check what law dictates about it.
Tax Audit Applicability under section 44AB:
(i)An individual who is engaged in business and the annual turnover of his/her business is Rs 1 crore and above.
(ii) Determination of turnover u/s 44AB of income tax act,1961, in case of trading of shares either on speculation or non speculation basis
(iii) “As per Section 43(5) of the Income Tax Act, 1961, INTRA-DAY TRADING shall be considered as SPECULATIVE BUSINESS TRANSACTIONS and the income therefrom would be either speculation gains or speculation losses. Income from speculation gains is taxed at the normal rates.”
(iv) However, Income from trading F&O (both intraday and overnight) on all the exchanges is considered as NON-SPECULATIVE BUSINESS TRANSACTIONS as it has been specifically defined this way.
(v) Income from shorter term equity delivery based trades (held for between 1 day to 1 year) are also best to be considered as non-speculative business income if frequency of such trades executed by you is high or if investing/trading in the markets is your main source of income.
Turnover or gross receipts in respect of transactions in shares,securities and derivatives may be determined in the following manner:
(i)As per Para 5 of “Guidance Note on Tax Audit under Section 44AB of the Income Tax Act,1961″ issued by The Institute of Chartered Accountants of India (ICAI):
(a) For Speculative Transactions:
“The Turnover is net of all positive and negative income from various transaction and not total of all Sales transaction.So if your Net Income > 1 Crores rs., you are liable to tax audit.”
(b) Derivatives, Futures And Options (Non- Speculative Transactions)
“The turnover in such types of transactions is to be determined as follows:
(i) The total of favourable and unfavourable differences shall be taken as turnover.(i.e suppose in 1st transaction you have incurred loss of Rs 65 Lacs and after that you entered in profit transaction in which you have earned Rs 36 lacs, Then as per this guidance note you are liable to tax audit because total of of Profit and Loss a/c exceed Rs 1 Crore)
(ii) Premium received on sale of options is also to be included in turnover.(Call or Put Premium paid/received)
(iii) In respect of any reverse trades entered, the difference thereon, should also form part of the turnover.”
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Profiteering Charges against Restaurant can’t be made for Increase in Base Price to Compensate Denial of ITC post Rate Reduction: NAA [Read Order]
Read more at: http://www.taxscan.in/profiteering-charges-restaurant-increase-base-price-compensate-denial-itc-post-rate-reduction-naa/28987/
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30th GST Council Meeting: Key Decisions
Read more at: http://www.taxscan.in/30th-gst-council-meeting-key-decisions/28994/
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Highlights of the Aadhar judgement given by Honorable Supreme Court of India:
1. Aadhaar mandatory for filing of IT returns and allotment of Permanent Account Number;
2. Not mandatory to link Aadhaar to bank accounts;
3. Telecom service providers can't seek linking of Aadhaar;
4. Nothing in Aadhaar Act that violates right to privacy of individual
5. SC upholds passing of Aadhaar Bill as Money Bill by Lok Sabha;
6. No child can be denied benefits of any schemes on not being able to bring their Aadhaar number;
7. Government not to give Aadhaar to illegal immigrants
8. CBSE, NEET, UGC cannot make Aadhaar mandatory, also not compulsory for school admissions;
9. Aadhaar authentication data cannot be stored for more than six months;
10. SC Constitution Bench strikes down the National security exception under the Aadhaar Act
11. Section 57 of Aadhaar Act permitting private entities to avail Aadhaar data struck down
12. Robust data protection regime has to be brought in place as early as possible, says Justice Sikri in majority verdict
13. There is sufficient defence mechanism for authentication in Aadhaar scheme: Justice Sikri
14. The concept of human dignity has been enlarged in the judgement, says Justice Sikri
15. SC declares Aadhaar scheme as constitutionally valid
16. There is no possibility of obtaining a duplicate Aadhaar card: Justice Sikri
17. It is better to be unique than being best; Aadhaar means Unique: SC
18. SC says there has been minimal demographic and biometric data collected by UIDAI for Aadhaar enrolment
19. Attack on Aadhaar by petitioners is based on violation of rights, will lead to a surveillance State
20. Justice A K Sikri pronounces judgement on Aadhaar for himself, Chief Justice of India Dipak Misra and Justice A M Khanwilkar
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No sec. 43B disallowance on unpaid service tax if amount on which service tax was payable not received*
[2018] 97 taxmann.com 525 (Bombay)
HIGH COURT OF BOMBAY
Principal Commissioner of Income Tax-II, Mumbai
v.
Tops Security Ltd.
Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deduction to be allowed only on actual payment (Service tax) - Assessment year 2006-07 - Assessee provided detection and security services to its clients - Assessee did not receive any amount from its clients, on which services tax was payable - Assessee claimed unpaid services tax as its liability - Assessing Officer was of a view that by virtue of section 43B, service tax could be allowed only when paid, thus, amount was not liable for deduction - Whether section 43B does not contemplate liability to pay services tax before actual receipt of funds in account of assessee - Held, Yes - Whether since services were rendered, liability to pay service tax in respect of consideration would arise only upon assessee receiving funds and not otherwise, thus, liability claimed by assessee could not be disallowed under section 43B - Held, Yes [Para 10] [In favour of assessee]
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5% GST applicable to Food, Soft Drinks and Snacks supplied in Snack Bar and Food Court: AAR [Read Order]
Read more at: http://www.taxscan.in/5-gst-applicable-food-soft-drinks-snacks-supplied-snack-bar-food-court-aar/28971/
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GST Audit can’t be done by an Internal Auditor: ICAI
Read more at: http://www.taxscan.in/internal-auditor-entity-gst-audit-icai/29005/
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Shareholders reject re-appointment of Apollo Tyres MD
Minority shareholders of Apollo Tyres have rejected the re-appointment of Neeraj Kanwar as managing director in a major defeat of the promoter at the hands of shareholders. Kanwar is also the vice-chairman of Apollo which is the country’s second-largest tyre maker. Apollo Tyres’ board of directors will discuss the resolution in the next meeting and determine the course of action to be taken with respect to it. The company would like to reiterate that it is the vision and resolve of the company, and its senior leadership, to deliver value to all its stakeholders including employees, shareholders, customers, partners and other relevant communities, it said in a statement. Some Indian institutional investors including mutual funds are believed to have voted against Kanwar on the issue of high compensation. The voting result is more a reflection of the compensation drawn by Kanwar than his ability to manage the company, said the source cited above. Kanwar took home an annual compensation of ₹42.8 crore in 2017, a 43% hike over his take-home of ₹30 crore in 2016. Apollo’s annual standalone net profit in 2017 was ₹622.4 crore, a decline of 23% over last year. Annual consolidated net profit also declined by 34% at ₹724 crore. This is the first instance where the shareholders have questioned the controlling shareholders on their right to manage their own company, said Amit Tandon, a proxy advisory firm. This is also a signal that promoters should be more thoughtful in the resolutions they propose and have an open channel of communication with investors to understand their thinking, Tandon said. Minority shareholders, including local and foreign institutional ones, have been using every opportunity to vote against resolutions that they consider to be unfair or against the interests of the firm, scuppering management and promoter plans. The most high-profile case was that of HDFC where chairman Deepak Parekh was almost voted out in July when foreign proxy firms advised clients to vote against him.
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Internal Auditor can not be a GST Auditor - ICAI
Announcement Sub. : Internal Auditor not to undertake Goods and Service Tax (GST) Audit simultaneously
We have received enquiries from the members at large and other stakeholders as to whether an internal auditor of an entity can also undertake GST Audit of the same entity as required under the Central Goods and Service Act, 2017.
The Council of the Institute, while considering the issue at its 378th Meeting held on 26th and 27th September, 2018, noted its earlier
decision taken at its 281st Meeting held from 3rd to 5th October, 2008, that internal auditor of an assesee, whether working with the organization or independently practising Chartered Accountant being an individual chartered accountant or a firm of chartered accountants, cannot be appointed as his Tax auditor (under the Income Tax Act, 1961).
Upon consideration, the Council has decided that based on the conflict in roles as statutory and internal auditor simultaneously, the bar on internal auditor of an entity to accept tax audit (under Income Tax Act, 1961) will also be applicable to GST Audit (under the Central Goods and Service Act, 2017).
Accordingly, it is clarified that an Internal Auditor of an entity cannot undertake GST Audit of the same entity.
28.9.2018
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No GST on services of religious and charitable trusts by way of residential programmes or camps*
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Internal Auditor can not be a GST Auditor - ICAI
Announcement Sub. : Internal Auditor not to undertake Goods and Service Tax (GST) Audit simultaneously
We have received enquiries from the members at large and other stakeholders as to whether an internal auditor of an entity can also undertake GST Audit of the same entity as required under the Central Goods and Service Act, 2017.
The Council of the Institute, while considering the issue at its 378th Meeting held on 26th and 27th September, 2018, noted its earlier decision taken at its 281st Meeting held from 3rd to 5th October, 2008, that internal auditor of an assesee, whether working with the organization or independently practising Chartered Accountant being an individual chartered accountant or a firm of chartered accountants, cannot be appointed as his Tax auditor (under the Income Tax Act, 1961).
Upon consideration, the Council has decided that based on the conflict in roles as statutory and internal auditor simultaneously, the bar on internal auditor of an entity to accept tax audit (under Income Tax Act, 1961) will also be applicable to GST Audit (under the Central Goods and Service Act, 2017).
Accordingly, it is clarified that an Internal Auditor of an entity cannot undertake GST Audit of the same entity.
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NCLT (Delhi Bench) : In Seatel Electronics (India) (P.) Ltd.
Where the applicant has not come with clean hands and has suppressed facts, cannot be a ground to reject the application if it is otherwise complete in all aspects.
Read full case law at : https://dasgovernance.com/2018/09/29/nclt-delhi-bench-in-seatel-electronics-india-p-ltd/