Latest Blogs from SBS and Company LLP

    The Ministry of Corporate Affairs (MCA) has put an announcement that the new lease accounting standard, Ind AS 116 will get implemented from 1st April 2019. The new Standard, globally implemented in several countries from 1st Jan 2019, is called IFRS 16. The Standard eliminates the 6-decade old distinction between financial and operating leases, from lessee accounting perspective, thereby putting all leases on the balance sheet. Ind AS 116 introduces a single lease accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.

    Assessment of whether an arrangement is, or contains, a lease, will be one of the biggest practical issues when applying the new standard. Under the new standard, a lease is a contract, or part of a contract, that conveys the right to use an asset (underlying asset) for a period of time in exchange for consideration. To be a lease, a contract must convey the right to control the use of an identified asset, which could be physically distinct portion of an asset such a floor of a building. A contract conveys the right to control the use of an identified asset if, throughout the period of use, the customer has the right to obtain substantially all of the economic benefit from the use of the identified asset and direct the use of identified asset.

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    Chapter XXII of the Income Tax Act, 1961 (‘Act’) provides for offences and initiation of prosecution for non-compliance of the provisions of the Act. Section 279 of the Act provides for initiation of prosecution for the offence specified there in. This section requires previous sanction of Principal Commissioner or Commissioner or Commissioner (Appeals) or appropriate authority[1]

    Section 279(2) provides that any offence under this chapter may either before or after institution of proceedings be compounded by Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General. (authority competent to compound an offence).

    Explanation to Section 279(3) provides for power of Central Board of Direct Tax (CBDT) to issue orders, instructions or directions under the Act shall include and shall be deemed include the power to issue instructions or directions obtain previous approval of CBDT to other income-tax authorities for the proper composition of offences under this section.

    CBDT issued guidelines[2] on 14th June 19 in suppression of earlier guidelines pertaining to compounding of offences including the guidelines of CBDT dated 23rd December 14. The new guidelines shall be effective from 17th June 19. All the applications received for compounding after the said date shall comply with new guidelines.

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    The recent decision[1] of Supreme Court which has upheld the decision of Telangana & Andhra Pradesh High Court in the matter of PV Ramana Reddy & Others v. Union of India & Others[2], wherein the High Court has held that arrest under goods & services tax laws (GST laws) is not dependent on the assessment, gives power to the authorities to tackle more efficiently with the economic frauds. In other world, the said judgment also gives power to authorities to intimidate genuine taxpayers and subject them to arrest. Hence, either appropriate changes to the legislation are to be done or instructions shall be laid by Central Board of Indirect Taxes & Customs (CBIC) when it comes for implementing the arrest provisions to see that genuine taxpayers are not harassed or subjected to intimidation and personal liberties are safeguarded.

    In this article, we shall deal with certain issues pertaining to arrest and related by examining various judgments of different High Courts.

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    Key Topics:

    INCOME TAX

    • ACCELERATED ASSESSMENT

    FEMA

    • DEPOSITS ACCOUNTS OF PERSONS RESIDENT OF INDIA

    In this edition, we bring you to quite a few interesting articles.

    The recent decision of Supreme Court in the matter of Calcutta Club Limited dealing with principle of mutuality qua the indirect taxes has a greater impact on taxation under GST regime. Hence, we thought of analysing the said judgment and tried to apply the essence to GST regime to understand the way forward for clubs.

    The next article is on the recent changes to tax rates for domestic companies. The said article captures the comparisons among different rates along with specific conditions.

    The article on ‘IBC vs RERA- IBC Wins’ is another blessing from the Supreme Court on the IB Code. The Supreme Court stating that remedies under IBC and RERA will be simultaneously available for a house owner makes the position of house owner more secure and stable.

    The article on ‘Ancestral Property vs Self-Acquired Property’ is also a daunting issue in the Hindu Law, which was quite a bit addressed by Supreme Court in the recent decision. I hope that you will have good time reading this edition and please do share your feedback. I will also urge clients to mail us topics or issues on which you want us to deliberate in our future editions, so that we can contribute to the same.

    I am also glad to announce that we have launched our mobile app ‘SBS Connect’ on the eve of completion of 10 years. Now, Wiki and other resources can be accessed through ‘SBS Connect’. Please use ‘SBS Connect’ to stay connected with us.

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