The Supreme Court of India held that Where two assessees, namely, 'GSFC' and 'GACL' received acid through common pipeline from Reliance Industries and said acid came first to premises of 'GSFC', where handling facilities were installed, and from there it was shared between 'GSFC' and 'GACL' in ratio of 60:40 respectively and further by an agreement handling facilities expenditure was shared equally by both parties, payment of handling expenditure which was made by 'GACL' to 'GSFC' was share of 'GACL' and it could not be treated as common service provided by 'GFSC' to 'GACL' in order to levy service tax upon 'GSFC'.

The Indian Railways will soon switch from cash to accrual-based accounting. The national transporter has engaged ICAI, the apex body of chartered accountants, to handhold, guide and prepare a Management Information System (MIS) for the same. The reforms will focus on right costing and right pricing and would enable provision of improved services, stronger financial health and a healthy operating ratio. The move will help in determination of true cost of services and online availability of costing data, which will lead to enhanced transparency.

The Institute of Chartered Accountants of India (ICAI) has asked the government to put in place a more transparent process in selecting auditors in banks. The chartered accountants' institute had also suggested that the Banks Board Bureau should frame norms for appointing the central statutory auditors.

The standing committee felt "justifiable relief" was necessary for private companies and subsidiaries of foreign companies as only 1.6 per cent of total number of unlisted companies are required to rotate their auditors as per the criteria prescribed under the Companies Act 2013. ICAI Recommendation as per the committee will now be crucial.

Firms and establishments that have not registered their employees under the Employees Provident Scheme (EPS) 1952, on or after April 1, 2009 and are required or entitled to become members before January 1, 2017, will be given amnesty and will have to pay a token fine of only Re 1 after filing a declaration, the Employees Provident Fund Organisation (EPFO) has said. 

Service charge on a food bill is not compulsory and a customer can pay only if satisfied with the experience.

Registrar of Companies has to give at least a month's time to the parties concerned before striking off the name from the register of companies, according to norms issued by the government.The provisions related to power of registrar to remove name of a company from register of companies have been notified

Under the Pradhan Mantri Awaas Yojana (Gramin) or PMAY, the Centre will directly transfer about Rs 1.30 lakh and Rs 1.50 lakh in accounts of the beneficiaries staying in plain areas and hilly areas respectively. This is in addition to 6.5% interest subsidy upto Rs. 6 lacs loan for 15 years to Economic Weaker Section (EWS) - income upto Rs. 3 lacs p.a. and Low Income Group (LIG) - income upto Rs. 6 lacs p.a.

The Reserve Bank of India allowed banks to issue Prepaid Payment Instruments (PPIs) to unlisted firms and public bodies. Only listed companies could avail this facility earlier. Banks can offer the PPI facility to only those organisation that have an account with them and after obtaining an undertaking that they are not availing of the facility from any other bank.

India's drug regulator has eased licencing norms for vaccine and recombinant-DNA manufacturers in a move expected to promote research and development of new drugs in the country. According to CDSCO's latest decision, State Licencing Authorities will issue 'Form 29' licences to vaccine and r-DNA makers within three working days of them submitting their application

A notification on RBI's website said, "Accordingly, banks are hereby advised that they may use the facility of providing above 'additional working capital limit' (approved by their boards as above) to their MSE borrowers, to overcome the difficulties arising out of such cash flow mismatches also." The notification states that this would be a onetime measure that will remain in force up to March 31, 2017. Thereafter, lending must be normalised in the subsequent working capital assessment cycle.

The new investment pattern mandates investments between 45% and 50% in government securities, 35% and 45% in debt instruments and 5% and 15% investment in equities. Provident funds also have to invest up to 5% of their corpus in short-term debt instruments.

Insurance Regulatory and Development Authority of India (IRDAI) has granted certificates of registration to foreign re-insurers for opening their branches in India. Officials in the industry estimate that, foreign reinsurers might bring in capital of Rs. 2,000 -Rs. 3,000 crore in India.

Global player such as Munich Re, Swiss Re, SCOR Re, Hannover Re and RGA Life Reinsurance Company of Canada have received certificates of registration from the insurance regulator. As of now, the state-owned GIC Re is the only reinsurer which is fully operational within the country.

(1) Putting in place the disclosure norms for real estate investment trusts (REITs), Sebi on Monday said the offer document will contain financial information, related-party transactions and past performances.

(2) SEBI last month notified revised and easier regulations for raising capital through this instrument. SEBI had notified the REIT regulations in 2014

Simplifying the process, pension fund regulator PFRDA has dispensed with the requirement of submission of physical application form for NPS account opening if done through Aadhaar verification and e-Signature.

The National Stock Exchange (NSE) will introduce new interest rate futures (IRF) contracts from December 30 on six-year government bonds maturing in 2022.

Markets regulator SEBI said registered FPIs planning to set up operations in International Financial Services Centres (IFSCs) will be allowed to do so without any additional documentation. Foreign Portfolio Investors (FPIs), who presently operate in Indian securities market and propose to operate in IFSC also, will be required to ensure clear segregation of funds and securities.

THE ITAT Kolkata Bench held that where principal business of assessee was trading in shares, in view of amendment brought by Finance Act 2014 with retrospective effect from 1-4-1988, Explanation to section 73 was not applicable to its case and, thus, it was eligible to claim set off of loss incurred in share transactions against short-term capital gain.

Jalan Cement Works Ltd. v. CIT, Kolkata-1. [2016] 76 taxmann.com 230

THE ITAT Mumbai Bench held that where assessee made payment towards internet charges to concerns providing broadband facilities, internet services provided by broadband service provider could not be construed as technical service so as to require assessee to deduct tax at source under section 194J. 

Income-tax Officer, TDS-1 (2), Mumbai v. Chinubhai Kalidas & Bros. [2016] 76 taxmann.com 289

The Supreme Court of India held that Where Tribunal held that assessee was entitled to deduction under section 80-IA without setting off losses/unabsorbed depreciation pertaining to windmill, which were set off in earlier year, initial assessment year in section 80-IA(5) would only mean year of claim of deduction under section 80-IA, and assessee had option to choose first/ initial assessment year of claim for deduction under section 80-IA and High Court upheld order of Tribunal, SLP was to be dismissed. 

Commissioner of Income-tax v. Best Corporation Ltd.

[2016] 76 taxmann.com 295

The offer to settle the disputes was to end on December 31, but it has now been extended till January 31, said the Central Board of Direct Taxes (CBDT). The Direct Tax Dispute Resolution Scheme seeks not just to settle disputes in retrospective taxes, but end nearly 2.6 lakh pending cases where Rs. 5.16 lakh crore are locked in.

The scheme provides for waiving interest and penalties if the principal amount involved in retrospective tax cases is paid. For disputes other than the retrospective tax cases, taxpayers, whose appeal is pending as on February 29, 2016 before the CIT (Appeals), can settle cases by paying the disputed tax and interest up to the date of assessment. For a disputed tax amount of up to Rs 10 lakh, the penalty will be forgone. In cases where the disputed tax amount is above Rs 10 lakh, a penalty of 25 per cent will be levied. For penalty appeals, the scheme allows the assessee to pay only 25 per cent of the penalty.
The Scheme also covers cases whose even penalty appeal is pending before CIT on 29th February 2016. Even main case can get settled pending at ITAT or High Court/Supreme Court in such cases by paying tax and interest upto date of all pending cases to withdraw assessment order.

Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016, has started on December 17 and will remain open until March 31 next year. Those who declare cash deposits under this will be levied a charge of 50%, which breaks down into 30% tax, 33% surcharge and 10% penalty. In addition to this, 25% of the amount declared will go into the non interest-bearing Pradhan Mantri Garib Kalyan Deposit Scheme, 2016, for four years.

The amendment, which is in line with the revised pacts with Mauritius and Cyprus, would allow

India to levy capital gains tax on investments coming from Singapore from April 1, 2017.

'Grandfather' clause

It provides for source based taxation of capital gains arising on transfer of shares in a company. All investments before this will be grandfathered for a period of two years that is till March 31, 2019.During the two-year transition period between 2017 to 2019, capital gains tax will be imposed at 50 per cent of the prevailing domestic rate on shares, subject to the Limitation of Benefits (LOB) article.

Withholding tax on interest payment

Withholding tax applicable on interest payments made (on the fixed income business side) to Mauritius entities stand at a beneficial rate of 7.5 per cent, much lower than the existing 15 per cent level for Singapore and Cyprus.

In a boost to the home textile segment, the government has extended a five per cent duty drawback benefit to the made-ups (including towels, bedsheets, curtains, decorative cotton products, etc) sector.

The package includes similar measures given to apparel. Such as additional 10 per cent subsidy under the Technology Upgradation Fund Scheme, additional contribution under the Pradhan Mantri Rozgar Protsahan Yojana and Rebate of State Levies.

Garments manufacturers do not need to follow the labelling and packaging norms applicable for

packaged commodities such as consumables. 

1. Agriculture & Animal Husbandry (100%) - Automatic Route

a) Floriculture, Horticulture and Cultivation of Vegetables & Mushrooms under controlled conditions;

b) Development and production of seeds and planting material;

c) Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture, Apiculture; and

d) Services related to agro and allied sectors.

Note: Other than the above, foreign investment is not allowed in any other agricultural sector/activity

2. Manufacturing (100%) - Automatic Route

A manufacturer is permitted to sell its products manufactured in India through wholesale and/ or retail, including through e-commerce without Government approval. Notwithstanding the foreign investment policy provisions on trading sector, 100% foreign investment under Government approval route is allowed for trading, including through e-commerce, in respect of food products manufactured and/or produced in India.

3. Defence (100%) - Automatic route upto 49%, Government route beyond 49%

Defence Industry subject to Industrial license under the Industries (Development & Regulation) Act, 1951; and Manufacturing of small arms and ammunition under the Arms Act, 1959

4. Broadcasting Carriage Services (100%) - Automatic Route

5. Cable Network (100%) - Automatic

Infusion of fresh foreign investment, beyond 49% in a company not seeking license/ permission from sectoral Ministry, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require Government approval 

6. Airports (100%) - Automatic

(a) Greenfield projects

(b) Existing projects

7. Single Brand Retail trading (SBRT) (100%)

Automatic route upto 49%, Government route beyond 49% 

Conditions

a. Products to be sold should be of a 'Single Brand' only.

b. Products should be sold under the same brand internationally

c. 'Single Brand' product retail trading would cover only products which are branded during manufacturing.

d. In respect of proposals involving foreign investment beyond 51%, sourcing of 30% of the value of goods purchased, will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors.

e. A single brand retail trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce.

8. Pharmaceuticals

Greenfield (100%) - Automatic

Brownfield (100%) - Automatic upto 74%, Government route beyond 74%

Conditions

a. The production level of National List of Essential Medicines (NLEM) drugs and/or consumables and their supply to the domestic market at the time of induction of foreign investment, being maintained over the next five years at an absolute quantitative level.

b. Research and Development (R&D) expenses being maintained in value terms for 5 years at an absolute quantitative level at the time of induction of foreign investment.

Note :Foreign investment up to 100% under the automatic route is permitted for manufacturing of medical devices 

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