Daily Tax & Corporate Law Digest
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Today’s newsletter analytically summarizes today’s top Tax & Corporate Law stories reported at?taxmann.com, in a unique section-wise format.
INCOME TAX
SECTION 32 OF THE INCOME-TAX ACT, 1961 - DEPRECIATION - ALLOWANCE/RATE OF
Owner: Where assessee-company acquired a plant for a certain period from a company SIL and as per the agreement, SIL had a right to purchase the plant after the expiry of the stipulated period of time, since SIL had neither claimed any title or possession over plant nor claimed depreciation in respect thereof and it had also not exercised its option to purchase the plant, ownership of assessee in respect of plant could not be disputed for purpose of section 32 and, therefore, the assessee would be entitled to avail benefit of section 32 - Commissioner of Income-tax v. SBI Home Financer Ltd. - [2022] 145 taxmann.com 94 (SC)
SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDIT
Money decree: Where in a suit simplicity for recovery of money lent and advanced by the plaintiff to the defendant it was pleaded by the defendant that transaction between parties was not a real transaction but ostensible one in the guise of accommodation entry, Trial Court was justified in directing Central Board of Direct Taxes to make an investigation over transactions between parties and submit the report for further course of action - KLG Tradefin (P.) Ltd. v. Ashoka Hawai and Shoes (P.) Ltd. - [2022] 145 taxmann.com 93 (Calcutta)
SECTION 155BAA OF THE INCOME TAX ACT, 1961 - INCOME OF CERTAIN DOMESTIC COMPANIES, TAX ON
Assessee co. cannot avail lower tax rate u/s 115BAA for AY 2020-21 as Form No.10-IC was not filed even by the extended deadline of 31-3-2021 - Bholanath Precision Engineering (P.) Ltd. v. Commissioner of Income-tax (Appeals) - [2022] 145 taxmann.com 180 (Mumbai - Trib.)
GOODS AND SERVICES TAX LAWS
SECTION 74 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DEMANDS AND RECOVERY - TAX OR INPUT TAX CREDIT INVOLVING FRAUD OR MISSTATEMENT OR SUPPRESSION
High Court quashes summary of show cause notice, summary of order and consequential orders as same had been issued/passed without issuance of show cause of notice and without offering hearing and concerned authority was to be directed to pass fresh orders after following principles of natural justice - Prity Dokania v. State of Jharkhand - [2022] 145 taxmann.com 163 (Jharkhand)
SECTION 129 OF THE CENTRAL GOODS AND SERVICE TAX ACT, 2017 - DETENTION, SEIZURE AND RELEASE OF GOODS AND CONVEYANCES IN TRANSIT
High Court provided interim relief by ordering the release of confiscated goods and vehicle on payment of the amount of tax and penalty and also ordered the petitioner to furnish a bond for the fine amount and tagged matter with similar matters pending before it - Virani Tradelink v. State of Gujarat - [2022] 145 taxmann.com 166 (Gujarat)
E-Way Bill being expired during transit due to breaking down of the vehicle, demand and penalty was not imposable in the absence of any intention to evade tax - Ajay Shaw v. Assistant Commissioner of State Tax - [2022] 145 taxmann.com 162 (Calcutta)
COMPANY AND SEBI LAWS
CIRCULAR NO. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/161, DATED 25-11-2022
SEBI reduces timelines for the transfer of dividend and redemption proceeds to unit holders by AMCs
Editorial Note: SEBI has reduced the timeline for dividends payout to 7 working days from the current 15 days. Also, the transfer of redemption or repurchase proceeds to the unit holders shall be made within 3 working days from the date of redemption or repurchase. It was clarified that Interest for the period of delay in transfer of redemption or repurchase or dividend shall be payable to unitholders at the rate of 15% per annum along with the proceeds of redemption or repurchase or dividend.
CIRCULAR NO. SEBI/HO/MIRSD/DOP/P/CIR/2022/162, DATED 25-11-2022
SEBI extends timelines for implementation of circular on ‘Execution of DDPI for transfer of securities towards deliveries’
Editorial Note: SEBI has extended the timeline for implementing the Circular on “Execution of ‘Demat Debit and Pledge Instruction’ (DDPI) for transfer of securities towards deliveries/ settlement obligations and pledging / re-pledging of securities – Clarification”. The circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2022/137 dated 06.10.2022, shall come into effect on or before 20.01.2023. T. Also, the circular SEBI/HO/MIRSD/DoP/P/CIR/2022/119 dated 19.10.2022 shall come into effect from 27.01.2023.
CIRCULAR NO. SEBI/HO/MIRSD/TPD-1/P/CIR/2022/160, DATED 25-11-2022
SEBI lays down a framework to address the ‘technical glitches’ in Stock Brokers’ Electronic Trading Systems
Editorial Note: The SEBI has issued a new framework to address instances of technical glitches being faced by stock brokers in India. The measures include new reporting requirements, capacity planning, Software testing and change management, Monitoring mechanism, Business continuity planning and Disaster Recovery Site. The framework will be applicable effective from April 1, 2023.
INSOLVENCY AND BANKRUPTCY CODE
SECTION 5(6) OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - DISPUTE
Where the operational creditor procured goods from a suspicious source and supplied the same to the corporate debtor and further raised invoices including GST whereas the corporate debtor conspicuous of its input tax credit likely to get rejected on purchase made from the appellant asked the operational creditor for a bank guarantee, which was refused, there was a pre-existing dispute between parties and, therefore, the application filed by the operational creditor under section 9 against the corporate debtor was rightly rejected - Subhash Chandra Goyal Sole Proprietor of Goyal Enterprises v. K B Ispat (P.) Ltd. - [2022] 145 taxmann.com 79 (NCLAT- New Delhi)
Where a clear contract existed between the corporate debtor and the operational creditor for the supply of SBTs on behalf of A Ltd., the contention of the corporate debtor that there was a pre-existing dispute as the operational creditor should have pursued A Ltd. for payment could not be accepted and NCLT had rightly admitted CIRP application against the corporate debtor on its failure to make payment - P. Sikkandar v. Jiangsu Yinhe Electronics Corporation Ltd. - [2022] 145 taxmann.com 80 (NCLAT - Chennai)
SECTION 5(21) OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - OPERATIONAL DEBT
Where an independent MoU was entered between the corporate debtor and A Ltd. to supply SBTs purchased by the corporate debtor from the operational creditor, the operational creditor was not a direct party to said MoU and, therefore, it was the responsibility of the corporate debtor to make payment of the operational debt due to the operational creditor - P. Sikkandar v. Jiangsu Yinhe Electronics Corporation Ltd. - [2022] 145 taxmann.com 80 (NCLAT - Chennai)
ACCOUNTS AND AUDIT
Merely due to consolidation, adjustments should not be made to the method of depreciation in the CFS
Editorial Note: Different methods of depreciation can be followed by the parent and the subsidiary in their separate financial statements provided those methods reflect the expected pattern of consumption of the future economic benefits embodied in the asset, and the same would be considered to be compliant with the accounting standards.
OPINIONS
Consequences of using the designation as CEO by a director without being appointed as CEO - a case study - Prof R Balakrishnan, FCS - FCWA - [2022] 145 taxmann.com 179 (Article)
Mutual Fund units now under the net of insider trading regulations - Vinita Nair, FCS, Senior Partner, Vinod Kothari & Company - [2022] 145 taxmann.com 178 (Article)
That’s it from us for today! Stay Tuned for more updates from?Taxmann.com
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