Quvisor’s weekly refresher on Legal updates in India: June 5, 2021

GST:

GST on slump sale: An intricacy to look upon 
Setting up a business undertaking has been a tough row to hoe as it involves multiple compliances and formalities to be undertaken with regard toincorporation and taxation. However, sometimes despite ample efforts, business undertakings may not meet its growth expectations.

Govt. releases operational guidelines for the Production Linked Incentive (PLI) Scheme for Pharmaceuticals
The Government has notified the scheme on 3rd March, 2021 to enhance India’s manufacturing capabilities by increasing investment and production in the sector and contributing to product diversification to high value goods in the pharmaceutical sector. Now, the operational guidelines for the Production Linked Incentive (PLI) Scheme for Pharmaceuticals has been issued which provides whole criteria and procedure in detail.

GSTINs which are suspended are now allowed for generation of e-waybill
The GSTINs which are suspended on the GST Common Portal can continue generating e-way bills on the e-way bill portal. Similarly, the recipient and transporter GSTINs which are suspended are also allowed for generation of e-waybill.

No IGST on import of Covid-19 relief materials for donating to Govt. or authorised relief agency: Notification
The Government has notified that IGST would not be levied on imported goods which are meant for free distribution for COVID relief by the Central Government, State Government, or a relief agency as recommended by the nodal authority.

Income tax:

Redemption of credit card reward point is a taxable income: US Court
In an interesting ruling, the United States Tax Court held that the redemption of credit card reward points, which are earned from buying ‘cash equivalents’, shall be liable to tax. The Court held that reward received in connection with the purchase of gift card constitutes rebate. However, buying money order and reloading cash into debit cards is nothing other than cash transfers.

No disallowance if interest amount was actually paid and not converted into loan or borrowing: ITAT
INCOME TAX : Where interest amount had actually been paid by assessee through overdraft/cash credit account and same had not been converted into loan or borrowing (or) loan or advance, disallowance of interest under section 43B(d)/(e) read with Explanation 3D could not have been made

Analysis of Family Settlement aka Family Arrangement
Family Settlement or Family Arrangement, as it is also called, is a device by which disputes between family members as to their respective property rights are settled.

CBDT notifies rule for computation of FMV of Capital Assets for section 50B
The Finance Act, 2021 has amended Section 50B(2) to provide that the FMV of capital assets (being an undertaking or division transferred by way of slump sale) as on the date of transfer shall be calculated in the prescribed manner. Such FMV shall be deemed to be full value of the consideration received or accruing as a result of transfer of such capital asset. Now the board has notified Rule 11UAE for computation of FMV.

Set off and carry forward of Losses – Certain Issues
Income Tax is leviable on income and income would obviously mean net income or real income. Total income as defined u/s. 5 of the Act implies aggregation of income from one or more sources after deducting therefrom looses from one or morc sources, subjcct of course to the specific provisions of law.

Corporate Laws:

Govt. issues draft Code on Social Security (Employee’s Compensation) (Central) Rules, 2021
The ministry of Labour and Employment has issued draft Code on Social Security (Employee’s Compensation) (Central) Rules, 2021 wherein provision related to Form, manner and fee for application for claim or settlement, Rules to give effect to arrangements with other countries for the transfer of money paid as compensation and so on have been discussed in detail.

SEBI signs MoU with CSSF, Luxembourg for mutualco-operation and technical assistance
The Securities and Exchange Board of India (SEBI) and the Luxembourg Commission de Surveillance du Secteur Financier (CSSF) have entered into a bilateral Memorandum of Understanding (MoU) for mutual co-operation and technical assistance. The objective of this MoU is to strengthen cross border co-operation in the area of securities regulation.

Economic Potential Of Over-The- Top (OTT) Platforms-Analysing the Issues In The Indian Context
Over the Top (OTT) Platforms also known as Online Curated Content Platforms (OCCP) refers to any media service which provides streaming of video and audio content like, movies, T.V. shows and music via an application or through a website over the internet. it differs from traditional ways such as distribution through networks like cable and DTH.

Preparing For A New Data Protection Regime: A Guide For Companies
India explicitly recognised right to privacy as a fundamental right in the year 2017. However, effective implementation of the right has remained a far-fetched reality considering that there was no law definitively determining the scope of the right or modes of its implementation.

Insolvency & Bankruptcy Code:

NCLT orders admission of petition u/s 7 on failure of corporate debtor to repay loan granted by financial creditor
IBC : Where financial creditor had granted loan to corporate debtor in various forms and corporate debtor had failed to repay same, since loan amount obtained from financial creditor was reflected in balance sheet of corporate debtor, debt and default stood established and, therefore, petition for initiation of CIRP against corporate debtor was to be admitted

Inter-se Ranking of Creditors – Not Equal, But Equitable
Insolvency laws, globally, have propagated the principle of equitable distribution as the very essence of liquidation/ bankruptcy processes; and while, “equitable distribution” is often colloquially read as “equal distribution” the two terms hold significantly different connotations, more so in liquidation processes – an ‘equitable distribution’ simply means applying similar principles of distribution for similarly placed creditors.

Leasehold property transferred to subsidiary prior to initiation of CIRP couldn’t be included in resolution plan
IBC : Where leasehold property of corporate debtor had been transferred to its subsidiary prior to initiation of CIRP of corporate debtor, said leasehold property could not be included in resolution plan of corporate debtor by RP

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