Monthly Archives: June 2014

Statutory Compliance Chart – July 2014

DATE COMPLIANCE REQUIRED FORM NO. / CHALLAN NO.
JULY 2014
5 EXCISE: PAYMENT OF EXCISE DUTY FOR JUNE 2014 GAR 7
EXCISE: PAYMENT OF EXCISE DUTY FOR QUARTER ENDING JUNE 2014 BY SSIs
SERVICE TAX: PAYMENT OF SERVICE TAX FOR JUNE 2014 BY CORPORATES
SERVICE TAX: PAYMENT OF SERVICE TAX FOR THE QUARTER ENDING JUNE 2014 BY NONCORPORATES
6 EXCISE: E-PAYMENT OF EXCISE DUTY FOR JUNE 2014 GAR 7
EXCISE: E-PAYMENT OF EXCISE DUTY FOR QUARTER ENDING JUNE 2014 BY SSIs
NOTE: E-PAYMENT IS MANDATORY IF ED PAID>=10 LAKH IN FY 2013-14
SERVICE TAX: E-PAYMENT OF SERVICE TAX FOR JUNE 2014 BY CORPORATES
SERVICE TAX: E-PAYMENT OF SERVICE TAX FOR QUARTER ENDING JUNE 2014 BY NON-CORPORATES
NOTE: E-PAYMENT IS MANDATORY IF ST PAID>=1 LAKH IN FY 2013-14
7 INCOME TAX: DEPOSIT OF TDS/TCS COLLECTED DURING JUNE 2014 281
10 EXCISE: MONTHLY RETURNS FOR PRODUCTION AND REMOVAL OF GOODS AND CENVAT CREDIT FOR JUNE 2014 ER 1
EXCISE: MONTHLY RETURNS OF EXCISABLE GOODS MANUFACTURED & RECEIPT OF INPUTS & CAPITAL GOODS BY UNITS IN EOU, STP, HTP FOR JUNE 2014 ER 2
EXCISE: MONTHLY RETURNS OF INFORMATIONS RELATING TO PRINCIPAL INPUTS FOR JUNE 2014 BY MANUFACTURER OF SPECIFIED GOODS WHO PAID DUTY>=RS. 1 CRORE DURING FY 2013-14 BY PLA/CENVAT/BOTH ER 6
12 CST/TN VAT: MONTHLY RETURNS AND PAYMENT OF CST AND VAT COLLECTED DURING JUNE 2014 FOR ASSESSEES WHOSE YEARLY SALES TURNOVER > RS. 200 CRORES IN THE FY 2013-14 IF THE MODE OF PAYMENT OF VAT AND CST IS BY CASH/CHEQUE/DD FORM 1 / FORM I
14 CST/TN VAT: MONTHLY RETURNS AND PAYMENT OF CST AND VAT COLLECTED DURING JUNE 2014 FOR ASSESSEES WHOSE YEARLY SALES TURNOVER > RS. 200 CRORES IN THE FY 2013-14 IF THE MODE OF PAYMENT OF VAT AND CST IS BY ELECTRONIC MODE FORM 1 / FORM I
15 EXCISE: QUARTERLY RETURNS OF ASSESSEES PAYING 1% OR 2% EXCISE AND NOT MANUFACTURING ANY OTHER GOODS FOR QUARTER ENDING JUNE 2014 ER 8
EPF: PAYMENT OF EPF CONTRIBUTION FOR JUNE 2014
EPF: CONSOLIDATED STATEMENTS OF DUES AND REMITTANCES UNDER EPF AND EDLI FOR JUNE 2014 12A
EPF: MONTHLY RETURNS OF EMPLOYEES WHO JOINED/LEFT THE ORGANISATION IN JUNE 2014 5/10
EXCISE: QUARTERLY RETURN OF CENVAT BY FIRST STAGE AND SECOND STAGE DEALERS FOR QUARTER ENDING JUNE 2014 ER 3
INCOME TAX: QUARTERLY STATEMENT OF TDS IF THE DEDUCTOR IS A PERSON OTHER THAN OFFICE OF GOVERNMENT FOR QUARTER ENDING JUNE 2014 24Q/26Q
INCOME TAX: STATEMENT OF TDS FROM INTEREST, DIVIDEND OR ANY OTHER SUM PAYABLE TO NON-RESIDENT FOR QUARTER ENDING JUNE 2014 27Q
INCOME TAX: QUARTERLY STATEMENT OF TCS FOR QUARTER ENDING JUNE 2014 27EQ
21 CST/TN VAT: MONTHLY RETURNS AND PAYMENT OF CST AND VAT COLLECTED DURING JUNE 2014 FOR ASSESSEES WHOSE YEARLY SALES TURNOVER < Rs. 200 CRORES IN THE FY 2013-14 IF THE MODE OF PAYMENT OF VAT AND CST IS BY CASH/CHEQUE/DD FORM 1 / FORM I
EXCISE: QUARTERLY RETURN OF PRODUCTION, REMOVAL AND CENVAT BY SPECIFIED MANUFACTURERS OF YARNS AND READY MADE GARMENTS FOR QUARTER ENDING JUNE 2014 ER 3
ESI: DEPOSIT OF ESI CONTRIBUTIONS AND COLLECTIONS FOR JUNE 2014
22 CST/TN VAT: MONTHLY RETURNS AND PAYMENT OF CST AND VAT COLLECTED DURING JUNE 2014 FOR ASSESSEES WHOSE YEARLY SALES TURNOVER < Rs. 200 CRORES IN THE FY 2013-14 IF THE MODE OF PAYMENT OF VAT AND CST IS BY ELECTRONIC MODE FORM 1 / FORM I
30 INCOME TAX: ISSUE OF TDS CERTIFICATE FOR TDS MADE DURING THE QUARTER ENDED JUNE 2014 EXCEPT ON SALARIES 16A
31 INCOME TAX: QUARTERLY RETURN OF NON-DEDUCTION OF TAX AT SOURCE U/S 206A BY BANKING COMPANY FOR QUARTER ENDING JUNE 2014 26QAA
INCOME TAX: QUARTERLY STATEMENT OF TDS IF THE DEDUCTOR IS AN OFFICE OF GOVERNMENT FOR QUARTER ENDING JUNE 2014 24Q/26Q/27Q
INCOME TAX: LAST DATE FOR RETURN OF INCOME/WEALTH FOR THE PY. 2013-14 FOR NON CORPORATE ASSESSEES WHOSE ACCOUNTS ARE NOT SUBJECT TO AUDIT UNDER THE INCOME TAX ACT ITR 1/2/3/4/5/7/8-BA

Updates in Direct Taxes – June 2014 Series

Shree Guru Kripa’s Institute of Management

“GyaanSmriti” – DIRECT TAX LAW UPDATES (Selected) –June 2014 Series

Updates in Direct Tax Law

1.           [2014] 45 taxmann.com 445 (Delhi)

CTCI Overseas Corporation Ltd. v. Director of Income-tax-I, International Taxation

Issue: Whether the consortium agreement between CTCI and CINDA constitute an AOP for the purpose of the Income Tax Act, 1961 to be assessed as an separate entity.

Decision: Advance Ruling was set aside by the High Court with a direction that constitution of AOP in this case was to be examined on basis of principles laid down by the Delhi High Court recently in the case of Linde AG, Linde Engineering Division v. Dy. DIT and the same was set aside and the matter is remitted to the said authority.

Reasoning: It is obvious that unless the facts lead to a conclusion that there is sufficient joint participation for a common enterprise, it would not be appropriate to treat two or more persons as an Association of Persons for the purposes of assessing them as a separate taxable entity.

 2.           [2014] 45 taxmann.com 400 (Delhi)

Council For The Indian School, Certificate Examinations v. Director General of Income-tax

Issue#1:- Whether generating surplus by a charitable society or educational institution itself removes the exemption u/s 10(23)(vi) of the Income Tax Act, 1961.

Decision:- Increase in the fees for generating surplus would not by itself exclude the petitioner from the ambit of section 10(23C)(vi) of the Act.

Reasoning:- Generation of profit or surplus by an organization cannot be construed to mean that the purpose of the organization is generation of profit/surplus, as long as the surpluses generated are accumulated /utilized only for educational purposes. The same would not disable the institution from claiming exemption under section 10(23C)(vi) of the Act.

Issue#2:- Whether inefficient utilization of funds by a educational institution or a charitable society would mean that funds are not utilized for the specific object.

Decision:- Merely, because the funds of the petitioner may not have been utilized in the best possible manner cannot lead to a conclusion that they have not been applied to the object for which the petitioner has been established.

Reasoning:- It is not essential that all decisions made by the management of a society yield optimum results. A management of a society which is either negligent or has not performed its functions diligently with the requisite skill may be guilty of mismanaging the affairs of the society.

But it would be quite another thing to state that the funds have not been deployed wholly and exclusively for its objects.

 3.           INSTRUCTION NO.11/2014 [F.NO.279/MISC,/M-115/2013-ITJ], DATED 16-5-2014

The Commissioner of Income Tax (CIT) may, either of his own motion or on an application made by the assessee, revise an order passed by an authority subordinate to him. The CIT may, before revising such, order, make enquiry or cause such enquiry to be made and subject to the provisions of the Act, pass such order which is not prejudicial to the assessee.

 4.           NOTIFICATION NO. 26/2014 [F.NO.142/15/2013-TPL]/SO 1297(E), DATED 16-5-2014

Form 49A – Application for allotment of Permanent Account Number   -  In the case of Indian citizens/Indian companies/entities incorporated in India/unincorporated entities formed in India.

Form 49AA – Application for allotment of Permanent Account Number – Individuals not being a citizen of India/entities incorporated outside India/unincorporated entities formed outside India.

An Article on Section 197

 “CERTIFICATE FOR DEDUCTION OF TAX AT LOWER RATE

(Section 197 – Income tax act, 1961)

- By Harrish Mahesh

    I.        What is it about?! ( Ref :  Section 197 )

  • In case of any payments for which TDS is to be deducted u/s 192 – 195, the assessee(the Payee) shall make an application and satisfy the Assessing Officer that his/her/their total income justifies the deduction of income-tax at any lower rates or no deduction of income-tax, as the case may be.
  • The AO shall give a certificate once he is satisfied with the information obtained and the person responsible for paying the income shall, until such certificate is cancelled by the AO, deduct income-tax at the rates specified in such certificate or deduct no tax, as the case may be.

  II.        Why would an assessee want this Certificate?!

  • Simple, its all because of the cumbersome and dawdling process of getting an “Income Tax Refund”
  • Let’s take an easy example.
Particulars Rs.
Professional Receipts 10 Crores
TDS Deducted(assuming u/s 194J) 1   Crore
Expenditure 9.1  Crores
Profits & Gains of Profession 90 Lakhs
Tax Payable ( Assume 30.9%) 27.81 Lakhs
Less: Tax Deducted at Source 1 Crore
Refund 72.19 Lakhs
  • The assessee will have to file the return claiming the above refund and wait a long time to get the money.
  • Instead of doing so, the assesee can be proactive and obtain a certificate from the assessing officer and provide it to his clients/customers who will then deduct TDS as directed by the Assessing Officer in the certificate.
  • Now, let’s assume the AO directs as per the certificate for deduction of TDS @ 2% instead of 10% u/s 194J
Particulars Rs.
Business Receipts 10 Crores
TDS Deducted(assuming u/s 194J) 20 Lakhs
Expenditure 9.1 Crores
Profits & Gains of Business/Profession 90 Lakhs
Tax Payable ( Assume 30.9%) 27.81 Lakhs
Less: Tax Deducted at Source 20 Lakhs
Payable 7.81 Lakhs
  • In the First case the assessee has his working capital blocked in a refund.
  • The TDS of Rs.1 Crore would be deducted on or before the end of the Financial Year (31st March)
  • The due date of return filing is 30th September.
  • Assuming the assessee files the return in the month of September, he will have to wait for a minimum of 6 months due to the huge amount.
  • In the Second Case, The assessee has the benefit of not having to wait for his money and has a net benefit of having Rs. 64.38 Lakhs in hand instead of having to wait for the same.

Thus, his working capital is not blocked and the corresponding interest cost is also sav

III.        What is the procedure to obtain this certificate?!

  • Submit Form 13 – giving all details to satisfy the AO
  • Affidavit by the applicant duly notarized
  • Power of attorney in case the process is delegated by the applicant to Consultants(CAs etc)
  • Other documents as the case may be
  • All the above documents supported by a covering letter shall be submitted to the department
  • The inspector shall record all the details and proceed to the ITO for his approval, who shall satisfy himself that all the details have been duly provided.
  • The inspector will then get the final approval from the Additional Director and issue the certificate
  • The process usually takes a minimum of 2 days to a maximum of 1 month.

IV.        Other documents as the case may be?! What are the different cases which demand this certificate?!

  • Let’s take 2 situations.
  • Situation 1 :
    • Assessee is a non resident who owns a House Property in India and has no other source of income/income less than the taxable limit
    • The property is sold and the assessee proposes to invest the proceeds in a Capital Gain Deposit Scheme or under any other scheme which gives exemption benefit under sections 54,54B,54D,54EC etc.
    • Thus, the assessee has to get the certificate to avoid the entire amount of TDS being refunded.
  • Documents required to be submitted in this case:

i)             Purchase Deed of the Property

ii)            The Construction Agreement

iii)           Draft Sale Deed

iv)           Copy of the Passport of the Non Resident

v)            In case of Deposit in CG Deposit scheme – the particulars of the account to which it is to be deposited

vi)           In case of purchase of another residential property – The Draft Purchase Deed

  •  Situation 2:
  • Assessee is an Indian Company suffering huge losses for the past 5 years and claiming huge refunds every year due to TDS Deductions
  • The documents to be submitted:

i)     Audited Financial Statements for the past 3 years

ii)    Tax Audit Reports if any for the past 3 years

iii)     Estimated Financials for the current year

iv)     TDS Certificates from the Deductors

v)      Form 26AS

vi)     Details of Assessment under any section pending against the assessee

  • In case it is a newly formed entity, then the Financials /Audit Reports for the available period shall be submitted

   V.        Case Laws

  • Sri Santhalakshmi Mills (P.) Ltd. v. Income-tax Officer

In the above case the assessee obtained the certificate and did not deduct TDS for the Previous Financial Year also.

Held, the certificate cannot be operated retrospectively.

  • Indus Towers Ltd. v. Assistant Commissioner of Income-tax (TDS)

As per the above case, Form 13 can be filed even before the commencement of the Financial Year as Tax Deduction has to be made right from the commencement of the Financial Year

  • Serco BPO (P.) Ltd. v. Assistant Commissioner of Income-tax, TDS Circle, Gurgaon

In the above case, AO rejected application for Certificate for Violation of TDS Provisions and pendency of proceedings under sections 271 and 276

Held, none of these grounds formed part of reasons for rejecting an application under section 197, read with rule 28AA, therefore, order rejecting said application was illegal.

Rule 28AA:

The AO shall satisfy himself that existing and estimated tax liability of a person justifies the deduction of tax at lower rate or no deduction of tax, as the case may be after taking into consideration the following:

(i)       Tax payable on estimated income of the previous year

(ii)      Tax payable on the assessed or returned income, as the case may be, of the last three previous years;

(iii)     Existing liability under the Income-tax Act, 1961 and Wealth-tax Act, 1957;

(iv)     Advance tax payment for the assessment year relevant to the previous year

(v)      Tax deducted at source for the assessment year relevant to the previous year

(vi)      Tax collected at source for the assessment year relevant to the previous year

  • Rajendra Kumar v. Deputy Commissioner of Income-tax , Circle 3(1), Hubli

Assessee did not deduct tax on payment of interest under section 194A based on the Form 13 applications submitted by the payees.

Held, Application in Form 13 cannot be taken as the valid document to authorize a payer to deduct TDS at a lower rate. Only a certificate by the AO shall be taken as the authorization.

For Form 13 – Click Here

Updates in Corporate and Allied Law – June 2014

Shree Guru Kripa’s Institute of Management

“GyaanSmriti” – CORPORATE LAW UPDATES –June2014 Series

Updates in Corporate and Allied Law

S. No.

Act

Particulars

Link

1

Companies Act, 1956

Resolution approving scheme of amalgamation should not be passed by shareholders only by way of voting through postal ballots or through electronic means in complete substitution of an actual meeting of shareholders. Wadala Commodities Ltd., In re

2

Companies Act, 2013

Where petitioner was not qualified under any of clauses of section 237(b) to seek opinion of CLB for investigation into affairs of company, petition seeking investigation was to be dismissed.

R.P. Khosla v. Connaught Plaza Restaurant (P.) Ltd.

3

Companies Act, 2013

Responsibilities of the Practicing Professionals w.r.t. signing of the E-forms. General Circular No. 10/2014 [F.NO. MCA21/28/2014-E-GOV], Dated 7-5-2014

4

Companies Act, 2013

Extension of validity period for the reserved names upto 31st May 2014 for the names expiring between 1st April 2014 to 28th April 2014.

 

General Circular No. 11/2014 [MCA21/72/2014-E-GOV.CELL], Dated 12-5-2014

5

Companies Act, 2013

PAN of foreign nationals for incorporation is mandatory only if required under the Income Tax Act, 1961. General Circular No.12/2014[F.NO.1/12/2013 CL-V], Dated 22-5-2014

 

6

Companies Act, 2013

Extension of 15 days in the validity period for all the reserved names as on 31st March, 2014.

 

General Circular No.13/2014 s[F.NO.MCA21/28/2014-E.GOV.], Dated 23-5-2014

7

Companies Act, 2013

Delegation of authority by CG to Regional Directors w.r.t specified sections. Notification No. SO 1352(E)[F.NO.1/6/2014-CL-V], Dated 21-5-2014

8

Companies Act, 2013

Delegation of authority by CG to Regional Directors w.r.t specified sections. Notification No. SO 1353(E)[F.NO.1/6/2014-CL.V], Dated 21-5-2014

9

Companies Act, 2013

Delegation of powers by CG to RD, JD, DD or AD posted in the office of Regional Director at Noida w.r.t allotment of DIN u/s 153 & 154. Notification No. SO 1354(E)[F.NO.1/6/2014-CL.V], Dated 21-5-2014

10

Companies Act, 2013

Corrigendum to Notification No. SO 1177(E), DATED 29-4-2014 Notification No. SO 1406(E) [F.NO.2/6/2014-CL-V], Dated 27-5-2014

11

FEMA, 1999

Investee company to file form FC-TRS for NR and NRI investors. A.P. (DIR SERIES 2013-14) Circular No. 127, Dated 2-5-2014

12

FEMA, 1999

Delegation of Power to AD Category – I bank for re-shedulement or ECB. 13.       A.P. (DIR SERIES 2013-14) CIRCULAR NO. 128, DATED 9-5-2014

13

FEMA, 1999

Eligible Indian Companies not allowed to raise ECB from overseas branches of Indian Banks for repayment of rupee loans raised from domestic banking system. A.P. (DIR SERIES 2013-14) CIRCULAR NO. 129, DATED 9-5-2014

14

 FEMA, 1999

Po has been delegated to AD banks to approve the specified cases under the automatic route w.r.t ECB’s from Foreign Equity Holders. A.P. (DIR SERIES 2013-14) CIRCULAR NO. 130, DATED 16-5-2014

15

FEMA, 1999

LLP has been notified as an “Indian Party”. A.P. (DIR SERIES 2013-14) CIRCULAR NO. 131, DATED 19-5-2014

16

FEMA, 1999

Long term export advance for a tenor of 10years has been allowed to be permitted by AD-Category I banks. A.P. (DIR SERIES 2013-14) CIRCULAR NO. 132, DATED 21-5-2014

17

FEMA, 1999

Revised guidelines have been issued for import of gold. A.P. (DIR SERIES 2013-14) CIRCULAR NO. 133, DATED 21-5-2014

18

FEMA, 1999

Rupee value of the Special Currency Basket has been fixed at Rs.80.603699 from 21.05.2014. A.P. (DIR SERIES 2013-14) CIRCULAR NO. 134, DATED 26-5-2014

19

FEMA, 1999

Importers to book forward contracts,  up to 50 per cent of the eligible limit. (Earlier 25%) A.P. (DIR SERIES 2013-14) CIRCULAR NO. 135, DATED 27-5-2014

20

FEMA, 1999

Inoperative foreign currency deposits shall be crystalised. A.P. (DIR SERIES 2013-14) CIRCULAR NO. 136, DATED 28-5-2014

21

FEMA, 1999

Fem (Transfer Or Issue Of Security By A Person Resident Outside India) (Sixth Amendment) Regulations, 2014 – Amendment In Regulation 12 NOTIFICATION [NO.FEMA.305/2014-RB]/GSR 370(E), DATED 22-5-2014

22

FEMA, 1999

Fem (Transfer Or Issue Of Security By A Person Resident Outside India) (Fifth Amendment) Regulations, 2014 – Amendment In Schedule 5 NOTIFICATION [NO.FEMA/304/2014-RB]/GSR 371(E), DATED 22-5-2014

1.            [2014] 45 taxmann.com 245 (Bombay)

Wadala Commodities Ltd., In re

Issue:-Whether any meeting is required for shareholder to cast his vote on basis of information that has been send to him by post or e-mail.

Decision:-Prima facie, resolution approving scheme of amalgamation should not be passed by shareholders only by way of voting through postal ballots or through electronic means in complete substitution of an actual meeting of shareholders.

Reasoning:-That would erode shareholders’ right to know, their right to be informed, and their right to take an informed decisions and, thus, it would restrict a shareholder to a level where all that he can do is only to say aye or nay but not to seek any clarifications, express any doubts or reservations, or raise any questions.

2.            [2014] 45 taxmann.com 259 (Delhi)

R.P. Khoslav.Connaught Plaza Restaurant (P.)Ltd.

Issue:-Appellant had filed company petition before CLB invoking suomotu jurisdiction of CLB under section 237(b) to investigate into affairs of respondent-company and McDonald.

Decision:-Where petitioner was not qualified under any of clauses of section 237(b) to seek opinion of CLB for investigation into affairs of company, petition seeking investigation was to be dismissed.

Reasoning:-Decision of CLB was a judicial or quasi judicial act and same was appealable under section 10F. However, CLB was right in law in holding that appellant had no locus standi under section 237(b).

3.            GENERAL CIRCULAR NO. 10/2014 [F.NO. MCA21/28/2014-E-GOV], DATED 7-5-2014

CERTIFICATION OF E-FORMS/NON E-FORMS UNDER THE COMPANIES ACT, 2013 BY THE PRACTICING PROFESSIONALS

The Ministry has allowed registered Members of the professionals bodies (the ICAI, ICSI and the ICOAI) to authenticate correctness and integrity of documents being filed by them with the MCA in electronic mode.

The responsibilities regarding the above are as follows:

  1. The Regional Director or the Registrar, shall conduct a quick inquiry against the professionals who certified the form at instance of misleading information.
  2. The Regional Director shall forward a consolidated report to the Joint Secretary E-Governance Division on or before 7th of every month in the prescribed profoma.
  3. E-Gov cell will thereafter refer such cases to the concerned Institute for conducting disciplinary proceedings against the errant member as well as debar the concerned professional from filing any document on the MCA portal in future.
  4.     GENERAL CIRCULAR NO. 11/2014 [MCA21/72/2014-E-GOV.CELL], DATED 12-5-2014

SECTION 7 OF THE COMPANIES ACT, 2013 – INCORPORATION OF COMPANY – ONE TIME OPPORTUNITY FOR EXTENSION OF PERIOD OF RESERVATION OF NAME

The validity of reservation of all such names with due date of expiry between 1st April, 2014 to 28th April, 2014 is hereby extended upto 31st May, 2014 due to non-availability of service on the MCA21 portal because of the deployment requirements for new E-forms.

5.            GENERAL CIRCULAR NO.12/2014[F.NO.1/12/2013 CL-V], DATED 22-5-2014

SECTION 7 OF THE COMPANIES ACT, 2013 – INCORPORATION OF COMPANY – CLARIFI CATION ON APPLICABILITY OF PAN REQUIREMENT FOR FOREIGN NATIONALS

PAN details are mandatory only for those foreign nationals who are required to possess “PAN” in terms of provisions of the Income Tax Act, 1961 on the date of application for incorporation.Where the intending Director who is a Foreign National is not required to compulsorily possess PAN, it will be sufficient for such a person to furnish his/her passport number.

6.            GENERAL CIRCULAR NO.13/2014 [F.NO.MCA21/28/2014-E.GOV.], DATED 23-5-2014

SECTION 7 OF THE COMPANIES ACT, 2013 – INCORPORATION OF COMPANY – EXTENSION OF VALIDITY PERIOD FOR NAMES RESERVED AS ON 31-3-2014

In continuation of the General Circular No. 11/2014 dated 12.05.2014, approval of the Competent Authority is hereby conveyed to extend continuity of all reserved names as on 31st March, 2014 for another fifteen days period from the date of issue of this circular.

7.            NOTIFICATION NO. SO 1352(E)[F.NO.1/6/2014-CL-V], DATED 21-5-2014

DELEGATION OF POWERS & FUNCTIONS OF SPECIFIED SECTIONS TO REGIONAL DIRECTORS AT MUMBAI, KOLKATA, CHENNAI, NOIDA, AHMEDABAD, HYDERABAD AND SHILLONG UNDER SECTION 458 OF THE COMPANIES ACT, 2013

The Central Government delegates to the Regional Directors of above places, the power and functions vested in it under the following sections of the said Actnamely :

(i)   clause (i) of sub-section (4) of section 8 (for alteration of MOA in case of conversion into another kind of company);

(ii)  Sub-section (6) of section 8; (order for amalgamation of Charitable Companies)

(iii) sub-sections (4) and (5) of section 13;(for alteration of MOA for change in Reg. Office from one state to another)

(iv) section 16;(for rectification of name of the Company)

(v)  section 87;(for rectification in the registrar of Charges)

(vi) sub-section (3) of section 111;(for non-circulation of resolution to members)

(vii)  sub-section (1) of section 140; (approval for removal of Auditor) and

(viii) proviso (i) to sub-section (1) of section 399.(for inspection of documents kept by the registrar)

8.            NOTIFICATION NO. SO 1353(E)[F.NO.1/6/2014-CL.V], DATED 21-5-2014

DELEGATION OF POWERS & FUNCTIONS OF SPECIFIED SECTIONS TO REGISTRAR OF COMPANIES UNDER SECTION 458 OF THE COMPANIES ACT, 2013

The Central Government delegates to the Regional Directors of above places, the power and functions vested in it under the following sections of the said Actnamely :

(I)   sub-section (2) of section 4; (opinion on desirability of the name of the company)

(II)  sub-section (1) of section 8;(satisfaction of the objectives for formation of the Companies with the Charitable Objects)

(III) clause (i) of sub-section (4) of section 8, except for alteration of memorandum in case of conversion into another kind of company;

(IV)sub-section (5) of section 8 (revoke of license granted to Charitable Companies ); and

(V)  sub-section (2) of section 13 (for change in name of the company).

9.            NOTIFICATION NO. SO 1354 (E)[F.NO.1/6/2014-CL.V], DATED 21-5-2014

DELEGATION OF POWERS & FUNCTIONS OF SPECIFIED SECTIONS TO REGIONAL/JOINT/DEPUTY OR ASSISTANT DIRECTORS POSTED IN OFFICE OF REGIONAL DIRECTOR AT NOIDA UNDER SECTION 458 OF THE COMPANIES ACT, 2013

The Central Government delegates tothe Regional Director, Joint Director, Deputy Director or Assistant Director posted in the office of Regional Director at Noida, the powers and functions of the Central Government in respect of allotment of Director Identification Number under sections 153 and 154 of the said Act.

10.         NOTIFICATION NO. SO 1406(E) [F.NO.2/6/2014-CL-V], DATED 27-5-2014

COMPANIES (REMOVAL OF DIFFICULTIES) SECOND ORDER, 2014 – CORRIGENDUM TO NOTIFICATION NO. SO 1177(E), DATED 29-4-2014

In the notification of the Government of India in the Ministry of Corporate Affairs S.O. 1177(E), dated the 29th April, 2014 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) dated 30th April, 2014, in line six, for “(1) This order may be called the Companies (Removal of Difficulties) Second Order, 2014″ read “(1) This order may be called the Companies (Removal of Difficulties) Order, 2014″.

11.         A.P. (DIR SERIES 2013-14) CIRCULAR NO. 127, DATED 2-5-2014

FOREIGN DIRECT INVESTMENT (FDI) IN INDIA – REPORTING MECHANISM FOR TRANSFER OF EQUITY SHARES/FULLY AND MANDATORILY CONVERTIBLE PREFERENCE SHARES/FULLY AND MANDATORILY CONVERTIBLE DEBENTURES

(i)   If NR investor including an NRI acquires shares on the stock exchanges in terms of Circular No. 38 dated September 6, 2013, the investee company would have to file form FC-TRS with the AD Category-I bank.

(ii)  The AD Category-I bank may approach Regional Office concerned of Reserve Bank of India, Foreign Exchange Department to regularize the delay in submission of form FC-TRS, beyond the prescribed period of 60 days and in all other cases, form FC-TRS shall continue to be scrutinized at AD bank level as per extant practice.

12.         A.P. (DIR SERIES 2013-14) CIRCULAR NO. 128, DATED 9-5-2014

EXTERNAL COMMERCIAL BORROWINGS (ECB) POLICY: RE-SCHEDULEMENT OF ECB -SIMPLIFICATION OF PROCEDURE

The power has been deligated to the designated AD Category – I bank to allow re-schedulement of ECB due to changes in draw-down schedule and/or repayment subject to the given conditions.

13.         A.P. (DIR SERIES 2013-14) CIRCULAR NO. 129, DATED 9-5-2014

EXTERNAL COMMERCIAL BORROWINGS (ECB) POLICY – REFINANCE/REPAYMENT OF RUPEE LOANS RAISED FROM DOMESTIC BANKING SYSTEM

 

Eligible Indian companies will not be permitted to raise ECB from overseas branches/subsidiaries of Indian banks for the purpose of refinance/repayment of the Rupee loans raised from the domestic banking system in respect of the specified items.

14.         A.P. (DIR SERIES 2013-14) CIRCULAR NO. 130, DATED 16-5-2014

EXTERNAL COMMERCIAL BORROWINGS (ECB) FROM FOREIGN EQUITY HOLDER – SIMPLIFICATION OF PROCEDURE

 

The powers has been delegated to AD banks to approve the following cases under the automatic route w.r.t ECB’s from Foreign Equity Holders:

(i)   Proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals &software sectors from indirect equity holders &group companies.ECB for general corporate purpose (which includes working capital financing) is, however, permitted only from direct equity holder.

(ii)  Proposals for raising ECB for companies in miscellaneous services (includes Co. engaged in training activities, R & D, etc.) from direct/indirect equity holders and group companies.

(iii) Proposals involving change of lender when the ECB is from FEH – direct/indirect equity holders and group company.

15.         A.P. (DIR SERIES 2013-14) CIRCULAR NO. 131, DATED 19-5-2014

OVERSEAS DIRECT INVESTMENTS – LIMITED LIABILITY PARTNERSHIP (LLP) AS INDIAN PARTY

It has been decided to notify a Limited Liability Partnership (LLP), registered under the LLP Act, 2008 (6 of 2009), as an “Indian Party” under clause (k) of Regulation 2 of the Notification ibid. Accordingly, an LLP, may henceforth undertake financial commitment to / on behalf of a JV / WOS abroad in terms of the extant FEMA provisions under Regulation 6 (and regulation 7, if applicable) of the Notification ibid.

16.         A.P. (DIR SERIES 2013-14) CIRCULAR NO. 132, DATED 21-5-2014

EXPORT OF GOODS – LONG TERM EXPORT ADVANCES

It has been decided to permit AD Category- I banks to allow exporters having a minimum of three years’ satisfactory track record to receive long term export advance up to a maximum tenor of 10 years to be utilized for execution of long term supply contracts for export of goods subject to the given conditions.

Guidelines issued for Authorized Dealer banks who are required to issue bank guarantee (BG) / Stand by Letter of Credit (SBLC) for export performance.

17.         A.P. (DIR SERIES 2013-14) CIRCULAR NO. 133, DATED 21-5-2014

IMPORT OF GOLD BY NOMINATED BANKS/AGENCIES/ENTITIES

It has been decided to modify the guidelines for import of Gold by the nominated banks/agencies/entities. These revised guidelines which will come into force with immediate effect.

It has been decided to permit the nominated banks, to give Gold Metal Loans (GML) to domestic jewellery manufacturers out of the eligible domestic import quota of 80% to the extent of GML outstanding in their books as on March 31, 2013.

Star Trading Houses/Premier Trading Houses (STH/PTH) which are registered as nominated agencies by the Director General of Foreign Trade (DGFT) may now import gold under 20:80 scheme subject to the given conditions.

18.         A.P. (DIR SERIES 2013-14) CIRCULAR NO. 134, DATED 26-5-2014

DEFERRED PAYMENT PROTOCOLS DATED 30-4-1981 AND 23-12-1985 BETWEEN GOVERNMENT OF INDIA AND ERSTWHILE USSR

The Rupee value of the Special Currency Basket has been fixed at Rs.80.603699 with effect from May 21, 2014.

19.         A.P. (DIR SERIES 2013-14) CIRCULAR NO. 135, DATED 27-5-2014

RISK MANAGEMENT AND INTER BANK DEALINGS

 

It has been decided to allow importers to book forward contracts, under the past performance route, up to 50 per cent of the eligible limit. Importers who have already booked contracts up to previous limit of 25 per cent in the current financial year, shall be eligible for difference arising out of the enhanced limits.

20.         A.P. (DIR SERIES 2013-14) CIRCULAR NO. 136, DATED 28-5-2014

CRYSTALLIZATION OF INOPERATIVE FOREIGN CURRENCY DEPOSITS

Authorised Dealer banks shall crystallise, that is, convert the credit balances in any inoperative foreign currency denominated deposit into Indian Rupee, in the manner prescribed.

21.         NOTIFICATION [NO.FEMA.305/2014-RB]/GSR 370(E), DATED 22-5-2014

FEM (TRANSFER OR ISSUE OF SECURITY BY A PERSON RESIDENT OUTSIDE INDIA) (SIXTH AMENDMENT) REGULATIONS, 2014 – AMENDMENT IN REGULATION 12

In regulation 12, after sub-regulation (iv), the following shall be inserted, namely:

Any person being a NR investor of a company registered in India and listed on a RSE in India (resident investee company), may pledge the shares of that company, in favour of a NBFC in India, to secure the credit facilities being extended to that resident investee company for bona fide business purposes, subject to the AD bank satisfying itself of the compliance of the conditions stipulated by the Reserve Bank, from time to time, in this regard.”

22.         NOTIFICATION [NO.FEMA/304/2014-RB]/GSR 371(E), DATED 22-5-2014

FEM (TRANSFER OR ISSUE OF SECURITY BY A PERSON RESIDENT OUTSIDE INDIA) (FIFTH AMENDMENT) REGULATIONS, 2014 – AMENDMENT IN SCHEDULE 5

 

In the Foreign Exchange Management (Transfer or issue of security by a person resident outside India)

Regulations, 2000 (Notification No.FEMA.20/2000-RB, dated May 3, 2000), in Schedule 5,

In paragraph 1, after the existing clause (k), paragraph 1A, in clause (v), after sub-clause (h), paragraph 1B, in clause (iii), after sub-clause (j) and before the existing proviso, in paragraph 1C, in clause (1), after sub-clause (k), in paragraph 2 clause (1A), after sub-clause (iv), clause (2)  the following shall be inserted, namely:—

“listed non-convertible/redeemable preference shares or debentures issued in terms of regulation 7(2) of these Regulations.”

Indirect Tax Updates – June 2014

Shree Guru Kripa’s Institute of Management

“GyaanSmriti” – INDIRECT TAX LAW UPDATES –June 2014 Series

Updates in Indirect Tax Law

 1.           Union of India and ORS Vs. Mahindra and Mahindra Ltd.)

 Valuation – Depot as a place of removal

Facts of the Case: The revenue demanded Excise duty on the basis of the higher price, at which the tractors were sold by the assessee from their depots whether on wholesale basis or retail under the law as it stood at that point of time.

Decision: The said question was answered in negative in favour of the assessee and the High Court set aside the show-cause notices. In the present case the assessee failed to bring the ascertainable price of the tractor, cost of transportation to depot, etc. to the notice of the High Court. The assessee simply challenged the show-cause notices on the ground that the amended Section 4 is not applicable. The High Court without looking into the relevant fact, only on the ground that sub-clause (iii) to Section 4(b) was subsequently added by amendment including ‘depot’, ‘premises of consignment agent’ or ‘any other place’ or ‘premises’ from where the excisable goods were to be sold after their clearance from the factory, declared the notices illegal and set aside the same. Even the matter was not remanded back to competent authority allowing the assessee to bring to its notice “normal price”, in course of wholesale trade, place of removal of tractors, transportation charges, etc.

 2.           Union of India and ORS vs M/s Hindustan Zinc Ltd

Inputs used in manufacture of dutiable and exempted final products

Rule 6 of the CCR: Inputs used in manufacture of dutiable and exempted final products – Payment of 8%/separate accounts not applicable for by-products: Sulphuric acid produced during manufacture of zinc is a by¬¬-product. Clearance of sulphuric acid without payment of duty for manufacture of fertilizers. There is no requirement of 8% or separate accounts. Sulphuric acid is indeed a byproduct. It is not as though some quantity of zinc ore concentrate has gone into the production of sulphuric acid, applicability of Rule 57 CC can be attracted. The entire quantity of zinc has indeed been used in the production of zinc and no part can be traced in the sulphuric acid. It is for this reason, the respondents maintained the inventory of zinc concentrate for the production of zinc and there was no necessity and indeed it is impossible, to maintain separate records for zinc concentrate used in the production of sulphuric acid. The mischief of recovery of 8% under Rule 57 CC on exempted sulphuric acid is not attracted.”

 

M 14 FR Guideline Answers finalised

Shree Guru Kripa’s Institute Of Management                       K Shriram,FCA

A Bird’s Eye View on May 2014 – Financial Reporting

 

  1. Level of Difficulty – Moderate
  2. Question Paper Pattern

(a)   Questions from AS constituted                                          – 32 Marks

(b)   Questions From Consolidation, Amalgamation, Valuation     – 48 Marks [16 marks x 3 questions each]

(c)   Questions From Other Areas                                             – 40 Marks

  1. Chapter wise analysis

Q No

Chapter

Marks

Remarks

1(a)

AS 15

5

New area tested in exams

1(b)

AS 22

5

Basic question testing the accounting for Tax Credits. New Area.

1(c )

AS 10

5

Moderate Difficulty. Testing in-depth, the principles in AS 10

1(d)

AS 20

5

Past Exam Question repeated again (with change in values)

2

Goodwill Valuation

16

Past Exam Question repeated again (with change in values, minimal new adjustments) – moderate level difficulty

3

Consolidation of Financial Statements

16

Elementary Question testing the Basics in AS 21

4(a)

Accounting for Share Based Payments

8

Past Exam Question repeated again (with change in values)

4(b)

Accounting for NBFC

4

Theory oriented application question

4(c )

Market Value Added

4

Question of Standard Model (with one extra adjustment)

5

Accounting for Amalgamation

16

Past Exam Question repeated again (without change in any numbers)

6(a)

Human Resource Accounting

8

New area tested in this exams

6(b)

Economic Value Added

8

Past Exam Question repeated again (change in values)

7(a)

Guidance Notes on Revised Sch VI

4

New area tested this time.

7(b)

Accounting for Mutual Fund

4

Theory oriented application question.

7(c )

AS 22

4

Theory Question

7(d)

AS 19

4

Past Exam Question repeated again (change in values)

7(e )

AS 9 & GN on Revised Sch VI

4

New Area– Testing the conceptual clarity of Students

4.Ambiguity / Mistakes in the Question Paper

Question

Ambiguity

Marks

1(b)

It is given in the question that the Company is yet to finalise the accounts for the year 2012-13. Further the question states that the Assessment Order for the year is received. The Question requires the student to pass adjustment entries for the same.Ambiguity

(a)   Before finalizing the accounts, it is impractical to receive the Assessment Order.

(b)   Further the question says that the rectification is filed by the Assessee for the same. The question is silent on what aspect the rectification is filed. Is it “acceptance of error” by the Assessee or “intimation of error” to the Assessing Officer. Depending on the assumption, the Student’s answer will change.

5

4(a)

Accounting for Stock Appreciation Rights – It is given that the Intrinsic Value of Share on date of closing (15th May 2014) was Rs 30 per share. It should read as “Intrinsic value of SAR” rather than ”Intrinsic value of Share”. The final answer will change depending on Student’s interpretation of the words.

8

4(b)

NBFC Provisioning: The question wants to calculate the Provision required to be created (i.e., Provision = General Provision + Additional Provision). For calculating General provision, adequate information is not available. Based on given information, only additional provision can be calculated. Further considering the marks for which the question is asked, calculating General Provision would be laborious. The question should be reworded as “Calculate the amount of additional provision to be made”.

4

6(a)

Human Resource Accounting – It is given in the question as “Equity shares in respect of which calls are in arrear at Rs 25 per share – Rs 1,00,000”. Considering the consistency of the question and answer, it should read as “Equity shares in respect of which calls are in arrear at Rs 25 per share – 1,00,000 shares”.

8

5.Highly tested areas – not visited by the Examiner this time – AS 11, 16, 20, 28, 30, 31, 32

 

Above information is purely the opinion of the Author and does not binds anyone. The appropriateness of the above is a subject matter of understanding and interpretation.

kannan.shriram@gmail.com