o Audit o Direct Taxes o Indirect Taxes

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o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME Sincerity Professionalism & Commitment is our Motto MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES Chartered Accountants MONTHLY NEWSLETTER EDITORIAL TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT S P C M & ASSOCIATES C. A. Suhas P. Bora 1211 B, Shukrawar Peth, Subhash Nagar Lane No. 4, Pune 411 002, Ph. : (020) 24479119 T elefax (020) 24486663 C. A. Pradip M. Katariya 207, Nav Maharashtra House, 43, Shaniwar Peth, Pune 400 030 Telefax : (020) 24478059/69 Email : abhay. bora@spcm. co. in DISCLAIMER : Every effort has been made to ensure accuracy in the information. The publishers do not hold themselves responsible for errors that may have arisen. Please take professional advice for further implementation. All rights reserved. STRICTLY FOR PRIVATE CIRCULATION BY INVITATION

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants Editorial - CA Suhas P. Bora Dear All Happy morning. The month of August was very hectic for us professionals. This of course was due to the deadline on filling of return of income for all the tax payers except whose books of accounts are required to be audited U/sec, 44 AB of the Income Tax act 1961 and companies. The month also became significant as on one Monday the share market witnessed an unprecedented plunge. This of course happened due to the volatility in the currency in the yuan in China. This month also saw the Lok Sabha as well as Rajya Sabha coming to a standstill due to political issues. This has impacted on important legislations, especially the Goods and Services Tax. This entire scenario is further compounded lack of rains in large parts of the country, flaring up of the reservation issue in Gujarat as disturbed border with Pakistan. This clearly indicates that in the last 68 years the country continues to grapple with more or less one set of problems or the other. There are two types of people in the world - leaders and followers. Yes, everyone would want to lead but there would be only a few who can do so effectively, not all can become leaders. Earlier it was believed that a leader is always born and cannot be trained and that the leadership qualities are inherited. However such concepts have considerably changed in the recent past. A leader who may have reached great heights and can motivate people to achieve big goals may have been a follower himself at one point of time. Such people become leaders by planning, thinking, and implementing the basis traits like courage, self-control, keen sense of justice, understanding, empathy, mastery of details, willingness to assume responsibility and building team with cooperation. These are the traits that separate a leader from a follower.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy S P C M & ASSOCIATES Chartered Accountants SEPTEMBER 2015 HOME MONTHLY NEWSLETTER EDITORIAL 6 th MONTHLY DUE DATES 7 th Sept 2015 INCOME TAX 15 th Sept 2015 21 st Sept 2015 PROVIDENT FUND LOCAL BODY TAX ESIC 21 st Sept 2015 MVAT/CST 30 th Sept 2015 E-Payment of Monthly Tax for August 2015 30 th Sept 2015 PROFESSION TAX LUXURY TAX 30 th INCOME TAX Due date for filing of Income Tax return for AY 201516 for asseesse whose accounts are required to be audited. SPCM ACTIVITIES Due dates Sept 2015 INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES 20 th Sept 2015 ACT SERVICE TAX MONTHLY DUE DATES REGISTER FOR SEPT 2015 Particulars E- Payment of Service tax by Companies for August 2015 TDS/TCS Payment for the month of August 2015 Provident Fund Payment for the month of August 2015 Payment of Local Body Tax for August 2015 Employee State Insurance Corporation Payment for the month of August 2015 E-Payment of Monthly Tax & WCT TDS for August 2015 E-filling of Monthly Returns for August 2015 E-Payment of Monthly Tax for August 2015 NOTE: - If Due date is on Sunday or Public Holidays, the next working day is to be considered as due date.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants SPCM ACTIVITIES STUDY CIRCLE MEETINGS CONDUCTED EDITORIAL DATE MONTHLY DUE DATES 08/08/2015 Service Tax issues-real estate, composition schemes Students Group-I Karan Bora Suraj Somani 22/08/2015 Service Tax – General Students Group-III Akshay Mukkawar Samruddhi Khedkar SPCM ACTIVITIES TOPICS GROUPS INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT 29/08/2015 Schedule II & Amendments of Companies Act, 2013 PRESENTERS CHAIR PERSON CA Yogita Mutha CA Chetan Parakh CA Manoj Jain FORTHCOMING STUDY CIRCLE MEETINGS DATE TOPICS ANALYSIS OF NON TAXABLE SERVICE S 25/09/2015 Taxation of Charitable Trusts CA Manoj Jain CA Suhas Bora INVESTMENT BY RESIDENTS OUTSIDE INDIA Partners & Qualified Assistants 12/09/2015 Tax Audit-overview Group-I 1. Aishwarya Brahmecha 2. Aditya Sanghavi Adv Abhay Bora/ Deepali Shah 19/09/2015 Deductions Group-II Natasha Tatiwar 26/09/2015 Tax Audit Report Group-III Sudarshan Attal TRANSFER AND TRANSMISSION OF SHARES GROUPS PRESENTERS CHAIR PERSON CA Gaurav Oswal CA Rohan Nahar

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants Income tax Updates - CA Suhas Bora, CA Mehul Jain A. Notification and Circulars 1. Section 48 – Capital Gain Index for Financial year 2015 -16 In exercise of the powers conferred by clause (v) of Explanation to section 48 of the Income -tax Act, 1961, the Central Government made further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, published in the Gazette of India, Extraordinary, vide number S. O. 709(E), dated the 20 th August, 1998. Accordingly the Cost Inflatio Index for F. Y. 2015 -16 is 10817 (Notification no. 60/2015 dated 24. 07. 2015) 2. Section 143 r. w. s. 154 regarding issue of manual refunds by AO. The CBDT has repeatedly instructed that in all cases orders must be passed on the system. This is also stressed in the Central Action Plan for each year. However, the CBDT has noticed the instances where assissing officer have issued manual refunds even in cases which have been processed on AST. CBDT therefore decided that no manual refund should be issued in a case which has been processed on AST. For monitoring by supervisory officers, the data of refunds issued manually and entered by the AOs in the screen will be matched with the data of such refunds encashed as per OLTAS database regularly to identify cases that have not been entered by AOs through MIS feature to be will be launched shortly. This process would continue till a separate functionality is developed in ITBA. (AST Instruction No. 136 (F. No. DGIT (S)/DIT (S)-3/ast/manualreunds/85 -2015 -16 dated 10. 07. 2015)

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants Income tax Updates - CA Suhas Bora, CA Mehul Jain B. Recent Reported Decisions - High Court and ITAT Paramount Education Charitable Trust vs. CIT (2015) 120 DTR(Chd)(Trib)461 Charitable Trust – Registration under section 12 A of the Income-tax Act, 1961 – Denial of registration for the reason that the trust not registered under Haryana Registration & regulation of Societies Registration Act, 2012 – not justified U. P. State Bridge Corporation Ltd vs. Dy. CIT–(2015)121 DTR(Luck)(Trib)266 Business expenditure – section 37(1) of the Income-tax Act, 1961 – Expenditure on shuttering, centering, scaffolding, etc. – Expenditure incurred in accordance with the guidelines of the office circular issued by the concerned department – Allowable as business expenditure. (A. Ys. : 200607, 2007 -08, 2009 -10 & 2010 -11) C. Unreported Decisions CIT vs. Ovira Logistics (P) Ltd (Bombay High Court) S. 43 B: Service-tax billed to customer but not collected from him cannot be disallowed u/s 43 B on ground of non-payment to treasury Section 43 B does not contemplate liability to pay the service tax before actual receipt of the funds in the account of the assesee. Liability to pay service tax into the treasury will arise only upon the assessee receiving the funds and not otherwise. Vipula J. Choksi v. WTO, WTA No. 29 -31/M/2014 dt. 20/05/2015 AYs 2008 -09 to 2010 - 11 (ITAT Mumbai) S. 18(1)(c) of Wealth Tax Act – Penalty–Inaccurate particulars of wealth/ concealment.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants Income tax Updates - CA Suhas Bora, CA Mehul Jain The assessee did not file wealth tax returns but paid the wealth tax due. After receipt of wealth tax, the WTO issued notices for reassessment, in response to which assessee filed the wealth tax returns, though belatedly, which were accepted by the WTO. However the WTO levied penalty u/s. 18(1)(c) of the Wealth tax Act. The ITAT observed that return for AY 2008 -09 was to be filed till 31/7/2008 which was not done. However, the assessee paid the wealth tax on 22/6/2012 after which the WTO issued the notice u/s 17 of the Act. The assessee filed the return immediately thereafter which was accepted. Held, since the assessee paid the tax before issuance of notice, he cannot be said to have caused loss to revenue. Furthermore, since the return was accepted by the WTO, there cannot be said to be concealment/ furnishing inaccurate particulars of wealth. Hence, penalty was deleted. Badruddin Hirani v. ACIT, ITA No. 4188/M/2012 dt. 02/07/15, AY 2003 -04, (Mum) Section 147 – Reopening beyond four years – Failure on part of assessee to disclose material facts. Reasons were recorded by AO stating that search was carried out at the premises of Mahasagar Securities Pvt. Ltd and its group companies wherein it was discovered that Mr. M had floated 34 companies which carried no genuine business and were all engaged in the activities of issuing bogus bills and that “it is seen from the statement recorded during the course of the above referred search and seizure operations that the assessee has entered into five transactions of Rs. 4, 67, 590/ -. “

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants Income tax Updates - CA Suhas Bora, CA Mehul Jain On appeal to the ITAT, the ITAT held that since the notice u/s 148 was issued after four years where original assessment was done u/s 143(3), proviso to sec. 147 was applicable. The ITAT held that AO should not only mention the failure of the assesseeto disclose material facts fully and truly and that his income had escaped taxation but alsohe has also to demonstrate as to how the failure on part of the assessee led to escapement/underassessment of the income for a particular AY. Since the recorded reasons did not contain this information, the reopening was held to be void. 4. M/s. Amzel Limited v. ACIT, ITA No. 5070/M/2011 dated 22/04/2015 AY 200607 (ITAT Mumbai) Section 271(1)(c) – Penalty on application of sec. 50 C- The deeming fiction created under the statute should be restricted to the purpose for which it has been created and cannot be expanded in all kinds of situations: During the relevant year, the assessee sold three immovable properties, which were forming block of assets. While computing short term capital gain u/s. 50, assessee did not take into consideration provisions of sec. 50 C. During assessment proceedings, the assessee filed revised computation stating that as per provisions of Section 50 C the short term capital gain would be increased by Rs. 7, 76, 579/-. The assessment was completed by enhancing the capital gain as per sec 50 C, which was accepted by the assessee. The AO levied penalty on the addition made which was confirmed by the CIT (A). On appeal to ITAT it was held that, the short term capital gain was shown u/s. 50, wherein the actual sale consideration was adopted for computing the gain and tax liability. The provisions of section 50 C create a deeming fiction, whereby the value of the consideration received on the sale transaction of an asset is to be adopted as per the valuation of stamp duty.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES S P C M & ASSOCIATES Chartered Accountants SALES UPDATES – Adv. Abhay Bora MONTHLY NEWSLETTER SALES TAX UPDATES A) RECENT AMENDMENTS 1. Trade Circular No 12 T of 2015 Dt. 14/08/2015 The Commissioner of Sales Tax, Maharashtra State, Mumbai has issued Trade Circular No 12 T of 2015 Dt. 14/08/2015 regarding the Computerized Desk Audits (CDA) for the period 2012 -13. The Sales Tax Department of Government of Maharashtra has now generated CDA reports for the period 2012 -13 after analyzing electronic data pertaining to e-returns, audit reports in Form 704 and annexures uploaded by the dealers. The CDA findings are available to dealers through their login on www. mahavat. gov. in. with compliance facility available electronically if the dealer agrees with the CDA findings. In such a case, the department will separately communicate the closure of the CDA cases in Form 605 in which full compliance is received and the due taxes and interest have been paid. The CDA findings have been generated on the basis of 11 parameters mentioned in the circular alongwith the annexure giving patywise details of the transaction. The compliances of the CDA have to be done till 19/08/2015. The department have also displayed the list of assessees selected for comprehensive assessment for the year 2012 -13 on www. mahavat, gov. in. Assessees in these cases will be required to attend before the assessing authority for complete verification of their books of accounts. 2. Trade Circular No 13 T of 2015 Dt. 14/08/2015 The Commissioner of Sales Tax, Maharashtra State, Mumbai has issued Trade Circular No 13 T of 2015 Dt. 14/08/2015 providing instructions to the departmental authorities on processing of registration applications submitted alongwith the scanned documents as per the new registration procedure for MVAT, CST and PT.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES MONTHLY NEWSLETTER SALES UPDATES – Adv. Abhay Bora B. GIST OF IMPORTANT DDQ’S 1. SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT INVESTMENT BY RESIDENTS OUTSIDE INDIA Chartered Accountants The Commissioner has provided guidelines to the officers on verification of the applications, visit to the place of business of suspicious dealers, non-acceptance of applications, granting of TIN e. t. c INCOME TAX UPDATES ANALYSIS OF NON TAXABLE SERVICE S S P C M & ASSOCIATES 2. TRANSFER AND TRANSMISSION OF SHARES dt. 29. 07. 2015 a) The product “DILICIA DAIRY FREE WHIP TOPPING” : b) Is not covered by the description against the Central Excise Tarriff Headings 15179090, 1516 and 1518 as notified for the purpose of schedule entry C-54 c) Is not an edible oil or vegetable oil or vanaspati d) Falls in the residuary schedule entry E-1 for want of specific entry and hence liable to tax @ 12. 5% The request for prospective grant of effect is rejected. M/s KVR & Co No. DDQ 11 -2014/Adm. 6/15/B-3 dt. 28. 07. 2015 The Question was in relation with interpretation of a provision which has the effect of concessional rate of tax. When the provision bars an eating house to be eligible to a concessional rate of tax, to allow the benefits of the same bu means of prospective effect even when circumstances do not warrant fot the same, in incorrect. In view of the circumstances of the case, the request for grant of prospective effect is rejected.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME MONTHLY NEWSLETTER SPCM ACTIVITIES 4. M/s Abrasive Technology No. DDQ/11 -2013/Adm-6/33 -34/B-2 dt. 14. 08. 2015 SALES TAX UPDATES Diamond/CBN Grinding Wheels and Diamond Dresser sold are not covered by the schedule entry C-53 A OF THE MVAT Act 2002 and the impugned product falls under residuary schedule entry E-1 and therefore liable to tax @ 12. 5% TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES SALES UPDATES – Adv. Abhay Bora Fumigation Machine/Air Sterilizer 6224 (Fogking Machine) sold has not been notified under the notification for the purposes of the schedule entry C-107(8) OF THE MVAT Act 2002 and the impugned product falls under residuary schedule entry and therefore liable to tax @ 12. 5% MONTHLY DUE DATES ANALYSIS OF NON TAXABLE SERVICE S Chartered Accountants 3. M/s Anant Engineering Products No. DDQ-11/2014/Adm-6/17/B-1 dt. 10. 08. 2015 EDITORIAL INCOME TAX UPDATES S P C M & ASSOCIATES 5. M/s Dhujans Engineering Corporation No. DDQ-11 -2010/Adm-3/32/B-3 dt. 14. 08. 2015 Coil Nails are covered by the word fasteners as appearing in the schedule entry C-107(10) OF THE MVAT Act 2002 and therefore would be liable to tax @ 4% upto 31. 03. 2010 and 5% from 01. 04. 2010 onwards.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants Lease & Hire Purchase – Adv. Abhay Bora, CA Gourav Oswal Taxation of Lease, Hire Purchase and Installment Sales After merger of the Maharashtra Lease Tax Act, 1985 into the MVAT Act, tax is payable under the MVAT Act on lease transactions on and after 1 -4 -2005. Similarly, hire purchase as well as installment sales covered under the Bombay Sales Tax Act, 1959 are also taxable under the MVAT Act. The provisions applicable to transactions of ‘sales’ apply equally to lease, hire purchase and installment sales. a. ‘Sale price’ [Sec. 2(25)]: The sale price for the purpose of levy of tax is the total agreementvalue and also includes customs duty and excise duty, as also any deposit, whether refundable or not, received by the lessor or hire-purchase company, from the hirer/lessee. Under Rule 57(4), in the case of hire purchase or installment sales, the amount of interest contained in the sale price can be deducted, if the agreement is reduced in writing and the amount of interest is specified therein. INVESTMENT BY RESIDENTS OUTSIDE INDIA b. Determination of Taxable Turnover [Sec. 2(33)]: In the case of hire purchase, lease and installment sales, the turnover of sales is the installments or rentals due and receivable during the period. TRANSFER AND TRANSMISSION OF SHARES c. Rate of Tax: Tax on the taxable turnover of rentals or installments is payable at the rate applicable to the goods as specified in the Schedules. d. Input Tax Credit: i. The lessor/hire purchase/installment sale company is entitled to claim input tax credit of taxes paid on purchases for leasing/hire purchase/installment sale.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants Lease & Hire Purchase – Adv. Abhay Bora, CA Gourav Oswal ii. The lessor/hire purchase/installment sale company is permitted to issue ‘Tax Invoice’ to enable the lessee/hirer/customer to claim input tax credit, if allowable as per Rules. iii. The MVAT Act does not provide for carry forward of set-off which has remained unutilised/unadjusted on 31 -3 -2005, under rule 8 B of the Maharashtra Lease Tax Rules, 1986. This unutilised set- off will have to be claimed as refund under Second Proviso to Rule 8 B(3) of the Maharashtra Lease Tax Rules, 1986. e. Ongoing hire purchase/lease/installment sales transactions : [Sec. 96(1)(f)] — Saving Clause (f) of sub-section (1) of section 96 provides that the liability for payment of tax in respect of ongoing lease, hire purchase and installment sales, on the rentals or installments due and receivable after the appointed day, that is, 1 -4 -2005, will be restricted to the liability under the earlier Maharashtra Lease Tax Act, 1985 or the Bombay Sales Tax Act, 1959. ANALYSIS OF NON TAXABLE SERVICE S Important Trade Circulars INVESTMENT BY RESIDENTS OUTSIDE INDIA 1. Clarification regarding stay towards tax on lease of copyrights of cinematographic films (32 T of 2004, dated 16 -10 -2004) 2. Administrative Relief to Mandap Decorators (9 T of 2005 dated 16 -3 -2005) 3. Administrative Relief in respect of lease of ‘Copyright’ of cinematographic films including video films under the Lease Tax Act, 1985 (18 -T of 2005 dated 30 -8 2005 & 33 -T of 2006 dated 31 -10 -2006) 4. Sale/Lease of ‘Copyright’ of Cine Films – Certain clarifications (30 T of 2007 & 32 T of 2007 dated 3 -4 -2007) TRANSFER AND TRANSMISSION OF SHARES

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME Amendments EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER 5. S P C M & ASSOCIATES Chartered Accountants Lease & Hire Purchase – Adv. Abhay Bora, CA Gourav Oswal 11 -9 - 2006) 6 Maharashtra Value Added Tax (Fourth Amendment) Rules, 2006 (30 T of 2006 dated 10 -102006) Composition Sheme 1. Section 42(4) of the MVAT Act, inserted from 20. 6. 2006 provides for payment of tax by way of composition on lease of Mandap @ 1. 5% of the turnover of Sales in respect of period starting on or after 1 -4 -2005. 2. For this purpose the term “Mandap” includes Mandap, Pandal, Shamiana or the decoration of such Mandap, Pandal or Shamiana, Furniture Fixtures, Lights and Light fittings, Floor coverings, Utensils and other articles ordinarily used alongwith a Mandap, Pandal or Shamiana. 3. Under rule 54(5) no set-off is available to the Mandap Keeper who has opted to pay tax by way of composition on purchases made from 20. 6. 2006 of mandap, tarpaulin, pandal, shamiana, decoration of such mandap, pandal or shamiana and furniture, fixtures, lights and light fittings, floor coverings, utensils and other articles ordinarily used along with a mandap, pandal or shamiana. 4. No application is required to be made for payment of tax by way of composition u/s. 42(4).

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME MONTHLY NEWSLETTER EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES Introduction: S P C M & ASSOCIATES Chartered Accountants ANALYSIS OF NON-TAXABLE SERVICES - CA Chetan Parakh ANALYSIS OF NON-TAXABLE SERVICES (MAJOR SERVICES ONLY) Negative list regime was commenced w. e. f 1 st July, 2012. From that time all the services, excluding those specified in negative list will be subject to service tax. The services which are covered by Negative list are not taxable and out of the service tax net. In addition to items included in negative list, there are certain exemptions by way of Notification, which are also out of the service tax net and not liable for service tax subject to fulfillment of certain conditions as applicable. Major Services covered under Negative List of Services : - 1) Services relating to agriculture The services relating to agriculture that are specified in the negative list are as below: a) Agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing; b) Supply of farm labour; c) Processes carried out at the agricultural farm including tending, pruning, cutting, harvesting, drying cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but makes it only marketable for the primary market; d) Renting of agro machinery or vacant land with or without a structure incidental to its use; e) Loading, unloading, packing, storage and warehousing of agricultural produce;

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants ANALYSIS OF NON-TAXABLE SERVICES - CA Chetan Parakh f) Agricultural extension services; g) Services provided by any Agricultural Produce Marketing Committee or Board or services provided by commission agent for sale or purchase of agricultural produce; h) Testing activities in relation to agriculture and agricultural produce Further the activities like breeding of fish (pisciculture), rearing of silk worms (sericulture), cultivation of ornamental flowers (floriculture) and horticulture, forestry is also included in the definition of agriculture. The plantation crops like coffee, tea are also covered in agricultural produce. 2) Trading of Goods Merely trading in goods is not a service and thus not liable for service tax. Transfer of title of goods is one of the essential conditions for a transaction to come under the ambit of trading of goods. However, the services supporting or ancillary to the trading of goods would not come under the above item of Negative List. e. g. Commission agent supporting trading activity etc. 3) Processes amounting to Manufacture or Production of Goods This entry covers manufacturing activity carried out on contract or job work basis provided duties of excise are leviable on such processes under the Central Excise Act, 1944 or any of the State Acts. 4) Selling of Space for Advertisements in Print Media Sale of space for advertisement in print media is only covered bu Negative List. All other types of advertisement are now taxable.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants ANALYSIS OF NON-TAXABLE SERVICES - CA Chetan Parakh 5) Access to a Road or a Bridge on Payment of Toll Charges The negative list entry covers access to a road or a bridge on payment of toll charges. The access to National highways or state highways, which are also roads, is hence covered in this entry. 6) Specified services relating to Education The following services relating to education are specified in the negative list – a) Pre-school education and education up to higher secondary school or equivalent b) Education as a part of a prescribed curriculum for obtaining a qualification recognized by any law for the time being in force; c) Education as a part of an approved vocational education courses have been specified in section 65 B of the Act. These arei) a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961 (52 of 1961) ii) a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Employment and Training, Ministry of Labour and Employment, Government of India; iii) a course run by an institute affiliated to the National Skill Development Corporation set up by the Government of India. iv) Vocational courses offered by institutes affiliated to the State Council of Vocational training. 7) Services by way of Renting of residential dwelling for use as residence ‘Renting’ has been defined in section 65 B as “allowing, permitting or granting access, entry, occupation, usage or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants ANALYSIS OF NON-TAXABLE SERVICES - CA Chetan Parakh letting, leasing, licensing or other similar arrangements in respect of immovable property‘. A residential dwelling is a Non-Taxable service only when it is used for the purpose of residence and not for any commercial activity. 8) Financial Sector The services of loans, advances or deposits represented by way of interest or discount. Any charges or amounts collected over and above the interest or discount amounts would represent taxable consideration. Some examples: i) Fixed deposits or saving deposits or any other such deposits in a bank for which return is received by way of interest. ii) Providing a loan or over draft facility for a credit limit facility in consideration for payment of interest. The Invoice discounting is covered only to the extent consideration it is represented by way of discount. Any charges or amounts collected over and above the interest or discount amounts would represent taxable consideration. Services provided by banks or authorized dealers of foreign exchange by way of sale of foreign exchange to general public are not covered in Negative List. 9) Service relating to Transportation of Passengers The following services relating to transportation of passengers, with or without accompanied belongings, have been specified in the negative list. Services by: i) A state carriage; ii) Railways in a class other than (i) first class; or (ii) an AC coach; iii) Metro, monorail;

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants FEMA, 1999 CA Yogita Shailesh Muttha FEMA, 1999 Investment by Resident outside India – Part 3 Broadly there are two routes through which residents can invest abroad v. i. z. the Automatic Approval Route and the RBI Approval Route. In the news letter for the month of August we studied in detail the investment approach under the Liberalized Remittance Scheme (LRS). In this news letter we will go through the General Permission and the Automatic Approval Route. I. B) General Permission General permission has been granted to persons resident in India for purchase / acquisition of securities in the following manner: a) out of the funds held in RFC (Resident Foreign Currency) Account b) as bonus shares on existing holding of foreign currency shares; and c) when not permanently resident in India, out of their foreign currency resources outside India General Permission is also available to sell the shares so purchased or acquired. I. C) Automatic Approval Route Under the Automatic Route, an Indian Party does not require any prior approval from the Reserve Bank for making overseas direct investments in a Joint Venture / Wholly Owned Subsidiary (JV / WOS) abroad. The Indian Party should approach an Authorized Dealer Category – I bank for affecting the remittances towards such investments. Any Indian Party make investments in a Joint Venture / Wholly Owned Subsidiary (JV / WOS) abroad under the Automatic Route. “Indian Party” includes any of the following:

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants FEMA, 1999 CA Yogita Shailesh Muttha A company incorporated in India A body created under an Act of Parliament A partnership firm registered under the Indian Partnership Act, 1932 A limited liability partnership incorporated under the Limited Liability Partnership Act, 2008 It should be noted that individuals are not allowed to invest under the Automatic Route. What are the criteria for direct investment under the Automatic Route? i. The Indian Party can invest up to 400% of its net worth (as per the last audited Balance Sheet) in JV / WOS for any bonafide activity permitted as per the law of the host country. The ceiling of 400% of net worth will not be applicable where the investment is made out of balances held in the EEFC (Exchange Earner’s Foreign Currency) account of the Indian party or out of funds raised through ADRs/GDRs (American Depository Receipts / Global Depository Receipts). In case the financial commitment in any financial year is above USD 1 billion, prior approval of Reserve Bank will be required; ii. The Indian Party is not on the Reserve Bank’s exporters' caution list / list of defaulters to the banking system published/ circulated by the Credit Information Bureau of India Ltd. (CIBIL) / RBI or any other credit information company as approved by the Reserve Bank or under investigation by the Directorate of Enforcement or any investigative agency or regulatory authority; and iii. The Indian Party routes all the transactions relating to the investment in a JV/WOS through only one branch of an authorized dealer (bank) to be designated by the Indian Party.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants FEMA, 1999 CA Yogita Shailesh Muttha What is the quantum of the total financial commitment of the Indian party? The total financial commitment of the Indian party, in all the Joint Ventures / Wholly Owned Subsidiaries put together, shall not exceed 400% of the net worth of the Indian party as on the date of the last audited balance sheet. Financial commitment means the amount of direct investments outside India by an Indian Party – i. by way of contribution to equity shares of the JV / WOS abroad ii. as loans to its the JV / WOS abroad iii. 100% of the amount of corporate guarantee issued on behalf of its overseas JV/WOS and iv. 50% of the amount of performance guarantee issued on behalf of its overseas JV/WOS. v. bank guarantee / standby letter of credit issued by a resident bank on behalf of an overseas JV / WOS of the Indian party, which is backed by a counter guarantee / collateral by the Indian party vi. Creation of charge (pledge / mortgage / hypothecation) on the movable / immovable property or other financial assets of the Indian party / its group companies The Indian party / entity may extend loan / guarantee only to an overseas JV/ WOS in which it has equity participation. Proposals from the Indian party for undertaking financial commitment without equity contribution in JV / WOS may be considered by the Reserve Bank under the approval route. Can Indian entities offer any form of guarantee? Indian entities may offer any form of guarantee - corporate or personal (including the personal guarantee by resident individual promoters of the Indian Party)/ primary or collateral / guarantee by the promoter company / guarantee by group company, sister concern or associate company in India provided that:

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants FEMA, 1999 CA Yogita Shailesh Muttha a. All financial commitments including all forms of guarantees are within the overall ceiling prescribed for overseas investment by the Indian party i. e. within 400 per cent of the net worth as on the date of the last audited balance sheet of the Indian party. b. No guarantee should be 'open ended' i. e. the amount and period of the guarantee should be specified upfront. In the case of performance guarantee, time specified for the completion of the contract shall be the validity period of the related performance guarantee. c. In cases where invocation of the performance guarantees breach the ceiling for the financial exposure of 400 per cent of the net worth of the Indian Party, the Indian Party shall seek the prior approval of the Reserve Bank before remitting funds from India, on account of such invocation. Specific approval of Reserve Bank will be required for creating charge on immovable / moveable property and other financial assets (except pledge of shares of overseas JV/WOS) of the Indian parent / group companies in favour of a non- resident entity within the overall limit fixed (presently 400%) for financial commitment subject to submission of a ‘No Objection’ by the Indian Party and their Group companies from their Indian lenders. We will study acquisition of foreign company under Automatic Approval Route and investment under RBI Approval Route in the next edition of news letter.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants TRANSFER AND TRANSMISSION OF SHARES – CA Manoj Jain, CS Aditi Deo TRANSFER AND TRANSMISSION OF SHARES Shares are the properties of the shareholder therefore it is very important to look after the compliances regarding share transfer as it’s a transfer of property followings are the compliances which need to be complied for making transfer of shares of the company. Following are three basic sources of compliances for share transfer as well as transmission Section 56 of the companies Act 2013 1. Rule 11 of Companies ( Share capital & Debentures) Rules 2014 2. Provisions contained in the AOA( Articles of Association) of the company. TRANSFER OF SHARES Following is the procedure of transfer of shares in case of Private Limited Company The shares of the private limited companies are not freely transferable and depended upon the decisions of board of directors and the existing shareholders the shares to be transferred are first offered to the existing shareholder and if no one is ready to take the same it can be transferred to the outsider all with the consent of existing members it can be transferred to outsider 1. Transferor shall make the application the company for transfer of his shares to the specified person called transferee along with transfer deed in the Format of SH-4 2. An instrument of transfer of shares i. e. Form SH. 4 with the date of its execution specified thereon shall be delivered to the company within sixty (60) days from the date of such execution by or on behalf of the transferor and by or on behalf of the transferee. 3. The transfer deed should bear stamps according to the Indian Stamp Act and Stamp Duty Notification in force in the State concerned.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants TRANSFER AND TRANSMISSION OF SHARES – CA Manoj Jain, CS Aditi Deo The present rate of transfer of shares is 25 Paise for every one hundred rupees of the value of shares or part thereof. Do not forget to cancel the stamps affixed at the time or before signing of the transfer deed. 5. Attach the relevant share certificate or allotment letter with the share transfer deed and deliver the same to the company. The share transfer deed should be deposited with the company within sixty (60) days from the date of such execution by or on behalf of the transferor and by or on behalf of the transferee. Following is the procedure of transfer of shares in case of Public Limited Company The shares of the Public Limited companies are freely transferrable therefore the transferor directly transfer the shares by executing transfer deed in the Format SH-4 by paying the appropriate stamp duty stated above. Along with share certificates within 60 days from the date of such execution by or on behalf of the transferor and by or on behalf of the transferee. After receipt of share transfer deed, board shall consider the same. If the documentation for transfer of share is in order, board shall register the transfer by passing a resolution. Listed Company Shares of the listed company are listed on the recognized stock exchange and are freely transferable and are in D-MAT format which can be easily transfer by the holder of D-MAT account the record of the transfer is kept by the registrar and Transfer agent for the company.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME 2015 EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants TRANSFER AND TRANSMISSION OF SHARES – CA Manoj Jain, CS Aditi Deo TRANSMISSION OF SHARES Meaning of transmission: Transmission of shares means transfer of title by operation of law. Who should initiate the Procedure ? 1. Joint holder if the shares were held by two or more person other are the successors and the shares will get transferred in the name of other joint holders 2. If the shares are held singly then the name of the person mentioned in “will” can apply for the transmission 3. If there is no will the legal representative of the shareholders are entitled for the same What is the Procedure? 1. The person entitled (legal representative) required to make an application to the board of directors of the company 2. No need of to execute share transfer deed 3. Following documents along with the application stated above will be sufficient for transmission procedure a) Certified copy of death Certificate b) Succession Certificate c) Will / Probate d) Specimen Signature of successor 4. The company review and verify the documents submitted with transmission request. In case all the documents are in order, company shall approve the transmission request and register the shares in the name of the survivor or legal heir as the case may be. 5. Since the transmission is by operation of law, payment of consideration or payment of stamp duty would not be required on instruments for transmission.

o Audit o Direct Taxes o Indirect Taxes o Company Law o Management Consultancy SEPTEMBER 2015 HOME EDITORIAL MONTHLY DUE DATES SPCM ACTIVITIES INCOME TAX UPDATES SALES TAX UPDATES TAXATION OF LEASE, HIRE PURCHASE AND INSTALMENT SALES UNDER MVAT ACT ANALYSIS OF NON TAXABLE SERVICE S INVESTMENT BY RESIDENTS OUTSIDE INDIA TRANSFER AND TRANSMISSION OF SHARES MONTHLY NEWSLETTER S P C M & ASSOCIATES Chartered Accountants TRANSFER AND TRANSMISSION OF SHARES – CA Manoj Jain, CS Aditi Deo 6. Every company, unless prohibited by any provision of law or of any order of any Court, Tribunal or other authority, shall, within One month deliver, the certificates of all shares transmitted after the application for the registration of the transmission of any such shares received. 7. Time Limit for Refusal of registration of Transmission: Provisions related to Refusal of registration and appeal against refusal is given in Section 58 of the Companies Act, 2013. Power of refusal to register transmission of shares is to be exercised by the company within thirty (30) days from the date on which the intimation of transmission is delivered to the company. 8. Time Limit for appeal against refusal to register Transmission by Private Company: As per section 58(3), the person who gave intimation of the transmission by operation of law, may appeal to the Tribunal against the refusal within a period of thirty (30) days from the date of receipt of the notice from the Company or in case no notice has been sent by the company, within a period of sixty (60) days from the date on which the intimation of transmission was delivered to the company. 9. Time Limit for appeal against refusal to register Transmission by Public Company: As per section 58(4), the person who gave intimation of the transmission by operation of law may, within a period of sixty (60) days of such refusal or where no intimation has been received from the company, within ninety (90) days of the delivery of the intimation of transmission, appeal to the Tribunal against such refusal. 10. Penalty for Non-compliance: Where any default is made in complying with the provisions related to transmission of shares, the company shall be punishable with fine which shall not be less than Rs. 25, 000/- but which may extend to Rs. 5, 000/- and every officer of the company who is in default shall be punishable with fine which shall not be less than Rs. 10, 000/- but which may extend to Rs. 1, 000/-.