The Co-operative department circular

FYI- The Co-operative department has issued a circular which has been uploaded on the website of www.mahasahakar.maharashtra.gov.in. As per this notification, all the existing empanelled  auditors will have to update their profile by 6.7.2014.  The  complete message is as under:

Important Information
(1) Online Enrolment is only for Auditors Empanelled with Commissionerate of Cooperation and  Registrar of Cooperative Societies only.
(2) Commissionerate of Cooperation and Registrar of Cooperative Societies has not invited any new  applications from Auditors for empanelment through this activity. Any fresh application would be rejected by the District Officials of Commissionerate of Cooperation and Registrar of Cooperative Societies.
(3)  Username and Password provided to Auditors via SMS will not work any more on MahaSahakar site.
(4) Previous Audit Tracking System is discontinued by Department as new enhanced application is hosted on MahaSahakar.

(5) Enrolment drive would be available till 6th July,2014 11;59 pm. No further extension would be  provided by Department.
(6) All auditors Data entered before 2nd July,2014 would be flushed from the system
(7) All empanelled auditors need to enroll online before 6th July,2014 11;59 pm.

Major changes in Income Tax Returns

Major changes in Income Tax Returns this year are as under:

1. All taxpayers filing E-Returns will have to compulsorily update correct mobile number and E- Mail ID's. Otherwise there will be login issues before uploading of return on income tax Depts Website.

2. Now onwards Income Tax Refund will be issued directly in the bank account of the taxpayer through ECS only, cheques are discontinued. Therefore at most care should be taken while mentioning Bank Account Number and IFSC Code in the income tax returns.

3. From this year while claiming TDS in Income Tax return facility has been given to carry forward the TDS of previous year and brought forward TDS to next year. Due to this reconciliation of TDS claimed on Income and total available TDS as per Form 26 can be made. Tax payers which follow cash system of accounting will be benefited, like Doctors, Advocates, CAs and other professionals.

4. As per newly inserted Section 87A if annual income of the taxpayer is up to Rs. 5,00,000/- then Tax relief of maximum of Rs. 2,000/- is given. For claiming this relief separate space has been inserted in the return.

5. As per newly inserted Section 80EE if taxpayer has purchased house up to Rs. 40 Lakh and taken housing loan of Rs. 25 Lakh then taxpayer can claim deduction of interest up to Rs. 1 Lakh. For claiming this deduction separate space has been inserted in the return.

6. If income of the taxpayer is more than Rs. 1 crore then surcharge of 10% is applicable. For this separate space has been inserted in the return.

7. All salaries taxpayers will now have to give now separate details of LTA (Leave Travel Allowance) and HRA (House Rent Allowance) and other allowances separately. This will help Govt. to track proper claim of such deductions, recent HRA and LTA fallacious claimed by some MPs and Govt. taxpayers may have forced for such changes.

8. From this year the details of short and long term capital gain will have to be given in three parts viz.

a) sale of plot / flat

b) sale of STT paid shares and mutual funds

c) sale of other assets.

Further in case of sale of land or building Stamp Duty Value will have to be mentioned. Further if taxpayer is availing exemption under capital gains then value of newly purchased asset, date of acquisition of the asset and if invested in capital gain account then its details will have to be mentioned.

9. Corporate or LLP assessee will have to mention Corporate Identification Number or LLP Identification Number. Further Director or Designated Partner Identification Number will have to be mentioned. This will help in cross check of information with other legal departments by income tax dept or visa a versa.

10. If assessee carrying on business is taking deduction of bad debts of more than Rs. 1 Lakh of single person, then his PAN will have to be mentioned.

11. As per newly inserted section 43 CA if, taxpayer have sold other than capital assets below stamp duty value (eg. builders / developers) then the difference between the two will be considered as deemed income of the assessee and tax will have to be paid on it. For this separate space has been inserted in the return.

12. If there is more than one owner of the house then, while mentioning details in the schedule of Income from House Property the percentage of co ownership will have to be given.

13. From this year e-filing of wealth tax return is compulsory and in this return the details of all wealth whether taxable or not, will have to be given in depth.

Multipurpose Empanelment Form (MEF)

Multipurpose Empanelment Form (MEF) for the year 2014-15 has been hosted on www.meficai.org.
Last date for online submission of MEF/ Bank Audit form is 4th August, 2014.

Tax Audit limit for a Financial Year

The Council of the Institute at its 331st meeting held in February, 2014 decided to increase the specified number of tax audits from 45 to 60 and an Announcement dated 11.2.2014 in this regard was hosted on the website of the Institute. The Council subsequently at its 333rd meeting held in May, 2014 decided that the specified limit of 60 would relate to an assessment year as against the existing stipulation of a financial year.
In view of the aforesaid decisions of the Council, the existing Para 6 of Chapter VI of the Council Guidelines No. 1-CA(7)/02/2008 dated 8th August, 2008 as contained in Appendix No. (34) to the Chartered Accountants Act, 1949 stands modified as under:-
1. In para 6.1 (a) and (b), the figure “45” pertaining to specified number of tax audit assignment has been substituted by the figure “60”.
2. In para 6.0 and 6.1, the words “in a financial year” have been substituted by the words “relating to an assessment year”.
3. In para 6.1.6, the words “in each financial year” have been substituted by the words “relating to each assessment year”.
As already announced the revised limit of 60 tax audits would be applicable w.e.f. 1st April, 2014. The above announcement is published for information of the members at large.

(T. Karthikeyan)

MCA extend last date for filing DPT4 without additional fee upto August 30,2014

MCA extend last date for filing DPT4 without additional fee upto August 30,2014

CBDT releases E-filing Utility of ITR-5 for AY 2014-15

After Long Wait CBDT has Finally Released ITR 5 which is applicable for Income Tax Return (ITR) of firms, AOPs, BOIs and LLPs for Assessment year 2014-15. CBDT has Released Java Utility of ITR-5 and we expect Excel Utility also to be released soon.

The Recent Clarifications issued by MCA on 25th June 2014

The Recent Clarifications issued by MCA on 25th June 2014 and Notification is reproduced below for your ready reference:

1. General Circular no. 24/2014 :

In continuation of the General circular No. 20/2013 dated 2711212073, it is clarified that the shares held by a company in another company in a 'fiduciary capacity' shall not be counted for the purpose of determining the relationship of 'associate company' under section 2(6) of the Companies Act, 2013.

2. General Circular no. 23/2014 :

it is clarified that there is no bar in the new Act for a company incorporated outside India to incorporate a subsidiary either as a public company or a private company. An existing company, being a subsidiary of a company incorporated outside India, registered under the Companies Act, 1956, either as private company or a public company by virtue of section 4(7) of that Act, will continue as a private company or public company as the case may be, without any change in the incorporation status of such company.

3. General Circular no. 22/2014 : 

It is, clarilied that Form MGT-7 shall not apply to annual returns in respect of companies whose financial year ended on or before 1st April, 2014 and for annual returns pertaining to earlier years. These companies may file their returns in the relevant Form applicable under the Companies Act, 1956. 

It is clarified that until the requisite fee is specified by companies, inspections could be allowed wlthout lely of fee.

4. Notification : Companies (Management and Administration) Amendment Rules, 2014. 

In the Companies (Management and Administration) Rules, 2014, in rule 20,

(i) in sub-rule (1), the following shall be inserted, namely:-"Provided that the Company may provide the facillty referred to in this sub rule on or before 1st Day of January 2015.

(ii) in sub-rule (3), for the words "which opts to provide", the words "which

provides" shall be substituted.

Govt extends excise duty sops for capital goods & auto sector for six more months

  Govt extends excise duty sops for capital goods & auto sector for six more months

[TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

 

Notification No. 06/2014-Central Excise

 

New Delhi, the 25th June, 2014

            G.S.R.     (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 12/2012-Central Excise, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 163(E), dated the 17th March, 2012, namely:-

            In the said notification, in the opening paragraph, in the second proviso, for the figures, letters and words “30th day of June, 2014”, the figures, letters and words “31st day of December 2014” shall be substituted.

 

 

[F.No. 354/85/2014-TRU]

(Akshay Joshi)

Under Secretary to the Government of India

e Wealth Tax Return Mandatory

WEALTH-TAX (FIRST AMENDMENT) RULES, 2014 - SUBSTITUTION OF RULE 3 AND INSERTION OF FORM BB

NOTIFICATION NO.32/2014 [F.NO.143/1/2014-TPL]/SO 1576(E), DATED 23-6-2014

In exercise of the powers conferred by clause (ba) and clause (bb) of sub-section (2) of section 46 read with section 14A and section 14B of the Wealth-tax Act, 1957 (27 of 1957), the Central Board of Direct Taxes hereby makes the following rules further to amend the Wealth-tax Rules, 1957, namely:—

1. (1) These rules may be called the Wealth-tax (First Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Wealth-tax Rules, 1957 (hereinafter referred to as the "said rules"),—

(i) for rule 3, the following rule shall be substituted, namely:—

"3. FORM OF RETURN OF NET WEALTH.—(1) The return of net wealth referred to in section 14 shall—

(a)		in respect of assessment year 2013-14 and earlier assessment years in the case of individuals, Hindu undivided families and companies, be in Form BA and shall be verified in the manner specified therein.
(b)		in respect of the assessment year 2014-15 and any other subsequent assessment year in the case of individuals, Hindu undivided families and companies be in Form BB and shall be verified in the manner specified therein.

(2) Subject to the provisions of sub-rule (3), for the assessment year 2014-15 and any other subsequent assessment year, the return of net wealth referred to in sub-rule (1) shall be furnished electronically under digital signature.

(3) In case of individual or Hindu undivided family to whom the provisions of section 44AB of the Income-tax Act, 1961 (43 of 1961) are not applicable, the return of net wealth referred to in sub-rule (1) may be furnished for assessment year 2014-15 in a paper form.

(4) The return of net wealth required to be furnished in Form BB shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax and interest paid, or any document or copy of any account or form of report of valuation by registered valuer required to be attached with the return of net wealth under any provisions of the Act.

(5) The Director General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the returns in the manners specified in sub-rule (2)."

3. In the said rules, in Appendix, after Form BA, the following Form shall be inserted; namely :—

FORM BB RETURN OF NET WET WEALTH [See rule 3(1)(b) of Wealth-tax Rules, 1957]

Chapter XII, section 185 Shall not apply to Private companies

Proposed notification includes: Relaxation given for deposits from shareholders. Provisions Shall not apply to private companies having 50 or less number of members if they accept monies from their members not exceeding twenty five per cent of aggregate of the paid up capital and free reserves or one hundred per cent of the paid up capital whichever is lower.

Private limited companies limit of 20 audits not 2 apply

Chapter XII, section 185 Shall not apply to Private companies - (a) which have borrowings from banks or financial institutions or any bodies corporate not more than twice of their paid up share capital or Rs. 50 crore, whichever is lower;  and   (b) in whose share capital no other body corporate has invested any money”.

SECTION 143(3)(i) OF THE COMPANIES ACT 2013 AND THE RELATED RULES 20-06-2014

APPLICABILITY OF THE PROVISIONS OF SECTION 143(3)(i) OF THE COMPANIES ACT 2013 AND THE RELATED RULES
20-06-2014

Section 143(3)(i) of the Companies Act 2013 requires the auditors of the companies to report as whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.
The Council of the Institute of Chartered Accountants of India, at its adjourned 333rd meeting held on 18th June 2014, considered the issue of applicability of the provisions of sections 143(3)(i) of the Companies Act 2013 and the related Rules to the audits of the periods beginning on or before 31st March 2014.
The Council noted that the sections 143(3)(i) had come into force in respect of financial years beginning on or after 1st April 2014.  The Council was of the view that the provisions of sections 143(3)(i) of the Companies Act 2013 applied to the auditors appointed under the Companies Act 2013 to audit the financial statements for the year beginning on or after 1st April 2014.  As a corollary, the requirements of these sections and related Rules would not apply to audits of financial statements of the periods beginning on or before 31st March 2014, even if the audits therefor were actually carried out and auditor’s report thereon issued on or after 1st April 2014.   These would continue to be done as per the requirements of the Companies Act 1956.
The Council also decided that as a corollary, the provisions of section 143(3)(i) of the Companies Act 2013 would apply to the audits of the financial year beginning on or after 1st April 2014.

This Announcement has been issued by the President, ICAI under the authority of the Council of the Institute of Chartered Accountants of India.

Mobile mandatory by ITD

From today ITD made mandatory updation of mobile no and email id of all assessees to make website more secure. All assessees to update their credentials this will be used for recreation of passwords in case it is misplaced or forgotten. Information from CPC call centre password regeneration request will be sent on registered new email id

Annual Return-FLA

Date: Jun 18, 2014 Annual Return on Foreign Liabilities and Assets Reporting by Indian Companies – Revised format RBI/2013-14/646 A .P.(DIR Series) Circular No. 145 June 18, 2014 To All Category - I Authorised Dealer Banks Madam / Sir, Annual Return on Foreign Liabilities and Assets Reporting by Indian Companies – Revised format Attention of the Authorised Dealer Category – I banks is invited to A.P. (DIR Series) Circular No.133 dated June 20, 2012 which stipulated that all Indian companies which have received FDI and/or made FDI abroad in the previous year(s) including the current year, should file the annual return on Foreign Liabilities and Assets (FLA) in the soft form to the Reserve Bank by July 15 every year. 2. In order to collect information on Indian companies' Outward Foreign Affiliated Trade Statistics (FATS) as per the multi-agency global 'Manual on Statistics of International Trade in Services', the FLA return has been modified marginally and is made available on the RBI website (www.rbi.org.in → Forms category → FEMA Forms) along with the related FAQs (www.rbi.org.in → FAQs category → Foreign Exchange). 3. Reserve Bank has since amended the subject Regulations accordingly through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Eighth Amendment) Regulations, 2014 which have been notified vide Notification No. FEMA.307/2014-RB dated May 26, 2014, vide G.S.R. No. 400(E) dated June 12, 2014. 4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (J. K. Pandey) General Manager - Officer-in-Charge  Top

© Reserve Bank of India. All Rights Reserved.

TARC Report

 First Report Of The Tax Administration Reform Commission

It may be recalled that the Tax Administration Reform Commission, headed by Dr. Parthasarathi Shome, was set up in August 2013 to suggest core reforms to the tax administration set-up in the Country. The TARC has now issued a report dated 30.05.2014 called the "First Report of the Tax Administration Reform Commission (TARC)". The said report makes several critical and far-reaching suggestions which are intended to radically change the working of the Income-tax and other Revenue departments.

One of the important recommendations is that the department should treat the taxpayer as a "customer" and have "customer focus" in its attitude, which is totally lacking at present. One of the important "fault lines" identified by the TARC is that there is extreme "risk aversion" amongst the officials with the result that it leads to infructuous tax demands and the filing of frivolous appeals. The TARC has also come down strongly on the rude and arbitrary behaviour of officers and their total lack of accountability. It has noted with regret that taxpayers are totally helplessness against such an attitude and this leads to non-compliance of tax laws.

It may be noted that several recent judgements such as Sairang Developers (Bom High Court), Bharti Airtel (ITAT Delhi) &Growel Energy (ITAT Mumbai) bear out the reality of what the TARC has stated.

Applicability of PAN Requirement for Foreign National

Applicability of PAN Requirement for Foreign National

Ministry has issued a circular dated 10th June, 2014 clarifying that foreign nationals, who are subscribers/promoters of a company are not required to furnish their PAN details, in case they are not allotted a PAN. They may provide a declaration instead in the prescribed proforma.

The corresponding notifications and circulars are available on the Ministry’s website at www.mca.gov.in.

Ministry of Corporate Affairs
13-June-2014 13:00 IST

Sale of Malba (Scrap) on demolition of structure thereon is a Capital Gain

Sale of Malba (Scrap) on demolition of structure thereon is a Capital Gain and not income from other sources, held by High court of P. & H. in the case of CIT, Jalandhar V. Ribu Saggi. The 'a' sold land and malba after demolition of structure. AO treated sale of malba as income from other sources. It was held by HC that there was extinguishment of right of the assessee, in superstructure leading to transfer of the super structure, within the meaning of Sec. 2(47). Capital gain was to be computed by deducting indexed cost of structure from sale value of malba. In the same case capital gain on sale of land was computed by under estimating Fair market value of land as on 1.4.1981 at Rs. 21000/- per Marla only, by AO, Tribunal directed to take FMV at Rs. 125000/- per Marla, after considering valuation by DVO and valuation got done by 'a'. HC held that valuation of land is question of fact based on material on record and there arise no question of law. Hence upheld the order of Tribunal to value FMV as on 1.4.81 at Rs. 125000/- per Marla. [2014] 45
taxmann.com 371
CA. Vinay Mittal, Ghaziabad

Sec 7 clarification about foreign national

SECTION 7 OF THE COMPANIES ACT, 2013 - INCORPORATION OF COMPANY - APPLICABILITY OF PAN REQUIREMENT FOR FOREIGN NATIONALS
GENERAL CIRCULAR NO.16/2014[F.NO.01/12/2013 CL-V], 2014- 06 -10
In continuation of the General Circular No. 12/2014 dated 22.05.2014 regarding the above subject, it is clarified that the provisions of the said Circular are applicable to a Foreign National who is a subscriber/promoter at the time of incorporation of the Company.
2. In case the said subscriber/promoter, does not possess Permanent Account Number (PAN), he/she shall furnish a declaration in the prescribed proforma, as an attachment to the Incorporation Form (INC-7).
3. Further, it is clarified that, in case of a Resident Director of the proposed company he/she shall be required to submit PAN details at the time of incorporation.
4. This issue with the approval of the Competent Authority.
Undertaking
I. . . . . . . . . . . . . (name) . . . . . . . . . . . . ., son of . . . . . . . . . . . . . (father's name) . . . . . . . . . . . ., citizen of . . . . . . . . . . . . . (nationality) R/o (Address) . . . . . . . . . . . . . having passport No. . . . . . . . . . . . . . (passport Number) . . . . . . . . . . . . . hereby declare as under:
(i)   That I am not required to obtain Income Tax Permanent Account Number (PAN) under the provisions of Income Tax Act, 1961;
(ii)   That in view of the above I have not been issued any PAN; and
(iii)   That I undertake to furnish to the Registrar of Companies (mention jurisdiction) details of my PAN as soon as a Permanent Account Number is allotted to me.
Date:  
Place: (Signature)
Name of the Person
■■

Update in ITR form

FYI - Please find updates in the ITR form of Financial year 2013-14 (AY 14-15) as under:

1. There are no refund by Cheque and only e-refund will be allowed

2. Claim of TDS/TCS credit of earlier years - Hence if we don't have sufficient income we can carry forward the credit benefit.

3. CIN/LLPIN in ITR has to be filled by Company/LLP

4. Buy back of shares must be reported in the ITR by CHC

5. PAN of Debtors has to be provided if the assessee is claimed Bad debts

6. In Capital gain Computation

- Details U/s. 50 C is required to be reported
- Sale of securities by FII's

7. Gains U/s. 43CA under PGBP

8. Special income tax Return has to be shown separately

9. Payment details to Non-residents required to be reported in ITR

10. Changes in ITR5/7

- ITR 5 includes Private discretionary trust
- In ITR 7 following details has to be reported:

a. Registration No. & Registration Authority
b. Accumulation of Income details
c. Voluntary contribution like whether from foreign or anonymous

11. Additional details U/s. 36/37

12. Transactions with Cyprus has to be reported if any.

Changes in tax returns

Now in the Income tax return form it will be necessary to show Property's

guideline value and transaction value separately U/s 50C

Now builders and colonizers will also have to show amount of difference in
property sold by them at less than guideline value U/s 43CA

Earlier State Govt. Undertakings used to save tax by making payment of
royalty, fees, charges, licence fee to its own State Government, now U/s
40(a) (iib) they are not allowed any deduction of such expenses, thereofre

in the ITR FORMS such payments will have to be sepaprately shown for
disallowance.
Now credit of unused TDS can be carried forward and brought forward if
the corresponding income is not taxable in the current year.

Now charitable and religious trust will have to give break up of corpus and
non corpus donation from local and foreign nations.
In case of bad debts exceeding 1 Lakh PAN No. will have to be given.

Payments to Non Residents will have to be shown separately by way of Royalty, Commission, Interest, Fees etc. So that it will be checked that Withholding tax U/s 195 has been deducted or not ?

Cost Inflation Index is 1024 for this year

Cost Inflation Index for calculation of Capital Gains for FY 2014-15 is 1024. Notification 31/2014 [F No 142/3/2014-TPL] of  11-6-2014.

Maharashtra BUDGET

The Maharashtra BUDGET for 2014-2015 is announced today 5th June, 2014 and the main tax proposals in respect of Maharashtra VAT and Profession Tax are -
Registration limit increased to 10 lakhs
VAT Audit limit raised to 1 crore from FY 2013-2014
Late Fee reduced to Rs.2,000/- for late upto 1 month in filing Return
Pending Returns can be filed with Tax, interest and Late Fee of Rs.1,000/-.
Retailer composition @1% of total turnover or @1.5% of taxable turnover
No 30(4) penal interest if additional demand as audit or investigation is less than 10% of tax paid with returns.
Rate of Tax on Cotton reduced to 2%
Profession Tax limit for salaried persons increased to Rs.7,500/-

Representation on Companies Act,2013

Companies Act Needs Comprehensive Review: CII President Jun 04, 2014

CII has called for a comprehensive review of the Companies Act 2013 and Companies Rules, 2014 issued thereunder. "Due to the hurried pace in which the Companies Act, 2013 and the Companies Rules, 2014 were implemented, the industry barely got an opportunity to absorb and understand the provisions or their impact in their entirety. Many new concepts are being introduced in the legislation for the first time, and practices with respect to these need to be allowed to evolve over time. However, the rush to notify the Act has introduced disruptive features making it harder for corporates to ensure compliance", said Mr Ajay Shriram, President, CII, referring to the fact that the final set of Rules were released in the last week of March 2014 to be implemented from April 1, 2014. Mr Shriram further added that "the Government needs to trust Industry. One or two incidence of corporate malfeasance should not lead to mistrust of the entire spectrum of corporate India and should not make normal business activities difficult. While the country is looking to improve its image after a series of setbacks like retrospective changes to tax laws, poor economic conditions, etc, an unclear and cumbersome Companies Act would make things worse. India already ranks very low in terms of ease of doing business and the new act will further add to the cost and complications of doing business". In absence of any unambiguous clarifications from the Ministry of Corporate Affairs, companies are resorting to different interpretations of the provisions. There is no uniform interpretation of even items of ordinary business such as appointment of Independent Directors. CII has made detailed representation to the Government on the subject. Some of the key issues highlighted include: One, clarity is required vis-à-vis transitional provisions. For example, while the Act provides transitional period of one year for the appointment of independent directors, constitution of Audit Committee and Nomination & Remuneration Committees is mandatory with effect from 1 April 2014. The two requirements need to be aligned. Two, Directors of the Nomination and Remuneration Committee are expected to prescribe the criteria for evaluation of all directors; carry out evaluation of every director's performance and recommend the appointment and removal of directors. It is also required to lay down remuneration policies. Provisions such as this could make board's functioning difficult resulting in break-down of trust and too much caution. The Act should lay down specific and objective parameters in this regard. Three, provisions pertaining to Related Party Transactions indirectly seeks to vest power in minority in most of cases which is against the fundamental principle of shareholders' democracy and majority rule. Legislation should balance interests of multiple stakeholders and equity must apply to both big and small shareholders to avoid misuse of the provisions by any class – majority or minority Further, the compliance requirement to obtain prior approval of audit committee for all related party transactions is too onerous and may result in Audit Committees not being able to give due focus to key items. . Further, transactions between a holding company and its 100% subsidiary does not compromise interests of any stakeholders. However, it still has to comply with all procedural requirements as transactions with other parties. Four, a careful review of the mandate of the Audit Committee is also required.  It is for the auditors to monitor and confirm the effectiveness of the systems, processes and controls to the Audit Committee. A reverse obligation on the Audit Committee is clearly unwarranted. Requiring the Audit Committee to evaluate risk management system is also unreasonable. Five, corporates should be allowed adequate legroom to comply with the CSR provision in a self-responsible manner. Incidental and supplementary activities even if related to Company's business should be allowed as CSR so long as they fall in the activities specified in schedule VII. Onerous provisions would hold back innovation, defeat legislative intent and shift the focus from 'comply with conscience' to 'tick-box compliance.' Government had in fact assured that it will authorize the Boards to choose the scope of CSR activities as it deems fit – this power has not been given in the Act as of now. Six, private companies which are neither subsidiaries of listed companies nor have substantial borrowings from banks or financial institutions should be exempted from certain provisions of the Act. Such companies should not be treated at par with other public interest entities. Seven, applicability of the requirement of rotation of auditors for companies other than listed companies is also prescribed under the Act. CII strongly suggests that private companies and public companies which do not have substantial public funding be exempted from this requirement. In addition to the above, there are several inconsistencies between the Act and Rules and at times within the Act itself. CII has highlighted these anomalies in its detailed representation. CII has all along underscored the need for ensuring that the new law aims at progression and development of business instead of impeding it. Law needs to contemplate and weigh up the interests not just of stakeholders but also take forward the business objects of the corporates. At a time when the situation warrants decentralisation of decision making to lower levels, the new act is proposing more centralization at Board levels.  CII hopes that the new government would take into consideration the difficulties being faced by corporates and take corrective steps in consultation with all

PF Contribution capped at Rs.6,500

The Provident Fund Office has allowed companies to cap their monthly Provident Fund contribution to employees at Rs. 6,500. At present, companies contribute an amount equal to at least 12 per cent of an employee's basic salary towards his/her PF. 

 

Now, when an employer deducts and deposits Employees' PF contributions upon more than the prescribed salary, it can be reduced to Rs. 6,500 per month and in that event, section 12 of the Employees' Provident Funds & Mis­cellaneous Provisions Act providing bar for not reducing wages will not be attracted unless the terms of the employment specifically provide so.

 

The full text of the circular is enclosed.

 

Hope you find the update useful.

 

Note: The above update is just for reference.  User discretion and professional assistance is highly recommended before acting on the above.

 

LRS Limit Increased to USD 125,000

Date: Jun 03, 2014

Liberalised Remittance Scheme (LRS) for resident individuals-Increase in the limit from USD 75,000 to USD 125,000

RBI/2013-14/624 A.P. (DIR Series) Circular No.138 June 3, 2014 To All Category – I Authorised Dealer Banks Madam/Sir, Liberalised Remittance Scheme (LRS) for resident individuals-Increase in the limit from USD 75,000 to USD 125,000 Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to the A.P.(DIR Series) Circular No 24 dated August 14, 2013 and the subsequent clarifications issued vide A.P. (DIR Series) Circular No 32 dated September 04, 2013 regarding the Liberalised Remittance Scheme (LRS) for Resident Individuals (the Scheme). 2. As indicated in paragraph 13 of the Second Bi-Monthly Monetary Statement, 2014-15, it has now been decided to enhance the existing limit of USD 75,000 per financial year (April-March) to USD 125,000 with immediate effect. Accordingly, AD Category –I banks may now allow remittances up to USD 125,000 per financial year, under the Scheme, for any permitted current or capital account transaction or a combination of both. 3. The Scheme should not be used for making remittances for any prohibited or illegal activities such as margin trading, lottery, etc. 4. All other terms and conditions shall remain unchanged. 5. AD-Category I banks may bring the contents of this circular to the notice of their constituents and customers concerned. 6. The directions contained in this Circular have been issued under Section 10(4) and 11(1) of the Foreign Exchange Management Act, 1992 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law. Yours faithfully, (C D Srinivasan) Chief General Manager

 

TDS Credit-Interest and Cost Payable

Assessee cannot be denied credit for TDS on the ground of Form 26AS mismatch because he is not at fault. Non-grant of TDS credit causes harassment, inconvenience & makes the assessee feel cheated. Dept to pay interest + costs of Rs. 25,000

The assessee filed a return in which he claimed a refund of Rs. 2.32 lakhs on account of excess TDS by the Government department. The return was processed by the Central Processing Centre (CPC) of the Income-tax Department at Bangalore and a refund of only Rs.43,740 was issued. No intimation was given to the assessee as to why the balance amount of Rs.1.88,630 was not refundable. The assessee filed an application u/s 154 for rectification of the mistake and asked for refund of the balance amount. As there was no response from the department despite several reminders, the assessee filed a writ petition in the High Court. HELD by the High Court allowing the Petition:

(i) The difficulty faced by the tax payers relating to credit of TDS was considered by the Delhi High Court in Court On its Own Motion vs. CIT 352 ITR 273 and the CBDT was directed to issue directions with regard to giving credit of unmatched and mismatched TDS certificates. Pursuant thereto, the CBDT issued Instruction No.5 of 2013 dated 8.7.2013 directing that where the assessee approaches the AO with requisite details and particulars in the form of TDS certificate as evidence against any mismatch amount the AO would verify whether or not the deductor had made payment of the TDS in the government account and, in the event, the payment had been made, credit of the same would be given to the assessee.

(ii) On facts, no effort has been made by the AO to verify whether the deductor had made the payment of the TDS in the government account. On the other hand, the Income-tax department has shown helplessness in not refunding the amount on the sole ground that the details of the TDS did not match with the details shown in Form 26AS. There is a presumption that the deductor has deposited TDS amount in the government account especially when the deductor is a government department. By denying the benefit of TDS to the Petitioner because of the fault of the deductor causes not only harassment and inconvenience, but also makes the assessee feel cheated. There is no fault on the part of the Petitioner. The fault, if any, lay with the deductor. The mismatching is not attributable to the assessee. The department must refund the amount within 3 weeks with interest. The department must also pay costs of Rs. 25,000 to the Petitioner. 

CBDT released ITR FORM ITR-3, ITR-4, ITR-5, ITR-6, ITR-7 for A.Y. 2014-15

CBDT released ITR FORM ITR-3, ITR-4, ITR-5, ITR-6, ITR-7 for A.Y. 2014-15.
Notification  No. 28/2014, Dt 30.05.2014
http://law.incometaxindia.gov.in/DIT/Notifications.aspx

SIT

Union Cabinet nods to constitution of SIT on black monies stashed abroad

May 28, 2014

CONSTITUTION OF SPECIAL INVESTIGATING TEAM (SIT) TO IMPLEMENT DECISION OF SUPREME COURT ON LARGE AMOUNTS OF MONEY STASHED ABROAD

PRESS RELEASE, DATED 27-5-2014

The Union Cabinet today approved constitution of Special Investigating Team (SIT) to implement the decision of the Hon'ble Supreme Court on large amounts of money stashed abroad by evading taxes or generated through unlawful activities.

The SIT will be headed by Hon'ble Mr. Justice M.B. Shah, former Judge of the Supreme Court as Chairman and Hon'ble Mr. Justice Arijit Pasayat, former Judge as Vice Chairman.

The Members of the High Level Committee will comprise:

i.		Secretary, Department of Revenue
ii.		Deputy Governor, Reserve Bank of India,
iii.		Director (IB),
iv.		Director, Enforcement
v.		Director, CBI
vi.		Chairman, CBDT,
vii.		Director General, Narcotics Control Bureau
viii.		Director General, Revenue Intelligence
ix.		Director, Financial Intelligence Unit
x.		Director, Research and Analysis Wing and
xi.		Joint Secretary (FT&IR-1), CBDT

The SIT has been charged with the responsibility and duties of investigation, initiation of proceedings and prosecution in cases of Hasan Ali and other matters involving unaccounted money. SIT shall have jurisdiction in the cases where investigations have already commenced or are pending or awaiting to be initiated or have been completed. SIT will prepare a comprehensive action plan including creation of necessary institutional structure that could enable the country to fight the battle against unaccounted money. The SIT should report to the court the status of work from time to time.

Revised TDS returns to be accepted without Original Provisional receipts

Revised TDS returns to be accepted without Original Provisional receipts wef 01.06.14

May 28
Circular No: NSDL/TIN/2014/024                                                                                               

Subject: Revised procedure for acceptance of e-TDS/TCS correction statements and upload of scanned documents to TIN Central System

Attention of all TIN Facilitation Centers (TIN-PCs) is invited to the procedure of acceptance of e-TDS/TCS correction statements and upload of scanned images as provided in chapter 6 and 7 of the TIN-PC Operating Manual (TOM).

As per approval from Income Tax Department, the procedure for acceptance of e-TDS/TCS correction statement stands revised. The same is intimated vide this circular. The revised procedure applicable with effect From June 1, 2014 is as per table below:

Sr. No. Documents to be accepted along with e- TDS/TCS correction statements – Existing procedure
1 Physical Form 27A Physical Form 27A
2 Statement Statistics Report (SSR)
3 Copy of Provisional Receipt of Original Statement
 In view of the above, TIN-PCs are required to accept e-TDS/TCS correction statements from Deductors/Collectors with .FVU file and duly signed Form 27A (generated from the latest File Validation Utility). The copy of Original Provisional Receipt and Statement Statistic Report need not be accepted from Deductor/Collector.

The verification of control total screen has to be carried out on the basis of information present on Form 27A.

Further, the revised procedure for upload of scanned images of e-TDS/TCS correction Statements, is as per the following table wherein e-TDS/TCS statements are accepted on or after June 1, 2014.

Note: For e-TDS/TCS statements accepted upto May 31, 2014, the scanned images of Form 27A and Provisional Receipt needs to be scanned and uploaded as referred vide circular number NSDL/T1N/2011/009 dated May 6, 2011.

The version of TOM after the above said updates is 5.10. The version control sheet is attached as Anneyure A

In case of any clarifications, contact TIN Support Desk on 022-24994201.

For and on behalf of

NSDL e-Governance Infrastructure Limited

Bushan Maideo

Senior Vice President

Sharing of Asset Details from Wealth Tax Returns with PSBs - CBDT Instructions

Sharing of Asset Details from Wealth Tax Returns with PSBs - CBDT Instructions

IN a meeting on the performance of Public Sector Banks (PSBs) taken by Finance Minister on 5.3.2014, the PSBs raised concern that the details of assets as available in the Wealth Tax Returns of loan defaulters are not being shared by Income Tax Department with the Banks despite repeated requests.

Section 42B of the Wealth Tax Act 1957 states:

42B Disclosure of information respecting assessees:- Where a person makes an application to the Chief Commissioner or Commissioner in the prescribed form for any information relating to any assessee in respect of any assessment made under this Act, the Chief Commissioner or Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for in respect of that assessment only and his decision in this behalf shall be final and shall not be called in question in any court of law.

CBDT observes in a letter to all the Principal Chief Commissioners that in view of the fact that every Return of Wealth filed by the assessee is subject to assessment under section 16 of the Wealth Tax Act, the information contained therein qualifies for being supplied u/s 42B of the Wealth Tax Act, provided the CCWT/CWT is satisfied that supply of such information to PSBs is in public interest.

CBDT in this context clarifies that information on assets of loan defaulters to enable recovery of loans by PSBs from such defaulters is in public interest.

CBDT further clarifies that such information may be provided in respect of the borrower/mortgager/guarantor of the loan only. At the time of supply of such information a confidentiality clause may be included specifying that such information be used only for the purpose of recovery of loan and will not be shared with any other person/agency. An undertaking to this effect shall be obtained from the Bank (to be signed by an officer not below the rank of the Manager of the Branch concerned) before furnishing the information.

At the same time CBDT wants to protect its own interests. The Board directs that in order to ensure that the tax dues of the Department against the defaulter (if any) are safeguarded, an undertaking be obtained from the PSB to obtain a No Objection Certificate (NOC) from the jurisdictional CIT of the loan defaulter before appropriation of the surplus amount recovered from sale of immovable/movable asset of the defaulter, information in respect of which is shared, after adjustment of its loan dues.

CBDT wants the Principal Chief Commissioners to bring these guidelines to the notice of the Chief Commissioners, DGs and Commissioners of their charges.

CBDT Letter in F. No. 328/10/2014-WT, Dated: May 28, 2014

Prior approval of RBI in cases of acquisition/ transfer of control of NBFCs.

RBI CIRCULAR Regarding Prior approval of RBI in cases of acquisition/ transfer of control of NBFCs. The prior written permission of the Reserve Bank of India shall be required for – (i) any takeover or acquisition of control of an NBFC, whether by acquisition of shares or otherwise; (ii) any merger/amalgamation of an NBFC with another entity or any merger/amalgamation of an entity with an NBFC that would give the acquirer / another entity control of the NBFC; (iii) any merger/amalgamation of an NBFC with another entity or any merger/amalgamation of an entity with an NBFC which would result in acquisition/transfer of shareholding in excess of 10 percent of the paid up capital of the NBFC. (iv) Prior written approval of the Reserve Bank would also be required before approaching the Court or Tribunal under Section 391-394 of the Companies Act, 1956 or Section 230-233 of Companies Act, 2013 seeking order for mergers or amalgamations with other companies or NBFCs.

CAS can't write accounts and then audit.

FYI - CAs cannot undertake assignment of audit & accounting work together for same entity
Announcement on prohibition to undertake the assignment of audit and accounting work together for the same entity. – (20-05-2014)
No. ICAI/ESB/2014/03
It has come to the knowledge of some members that certain entities , while inviting tenders for services of chartered accountants for the assignment of statutory audit , are mentioning accounting and book keeping related works in the scope of works required to done by the auditor.
Members are hereby advised not to undertake such assignment since it is violative of the provisions of ‘Code of Ethics’ and ‘Guidance Note on Independence of Auditors’ for auditor of an entity to do book keeping work of the entity. The said prohibition in the case of Companies is further also mentioned in Section 144 of the Companies Act, 2013.

PAN application revised

CBDT has revised PAN Application form 49A and 49AA wef from 16.05.2014 vide its notification no. 26/2014 , Dated- 16-5-2014. Revised Form 49A and 49AA provides option to get printed Mothers Name on PAN card.

Whistle Blowers Protection Act, 2011

Whistle Blowers Protection Act, 2011

 

 

Whistle Blowers Protection Act, 2011 is an Act of the Parliament of India which provides a mechanism to investigate alleged corruption and misuse of power by public servants and also protect anyone who exposes alleged wrongdoing in government bodies, projects and offices. The wrongdoing might take the form of fraud, corruption or mismanagement. The Act will also ensure punishment for false or frivolous complaints.

The Act was approved by the Cabinet of India as part of a drive to eliminate corruption in the country';s bureaucracy and passed by the Lok Sabha on 27 December 2011.The Bill was passed by Rajya Sabha on 21 February 2014 and received the President';s assent on 9 May 2014.The Act has not come into force till now.

Intent

An Act to establish a mechanism to receive complaints relating to disclosure on any allegation of corruption or willful misuse of power or willful misuse of discretion against any public servant and to inquire or cause an inquiry into such disclosure and to provide adequate safeguards against victimization of the person making such complaint and for matters connected therewith and incidental thereto.

Salient Features

• The Act seeks to protect whistle blowers, i.e. persons making a public interest disclosure related to an act of corruption, misuse of power, or criminal offense by a public servant.
• Any public servant or any other person including a non-governmental organization may make such a disclosure to the Central or State Vigilance Commission.
• Every complaint has to include the identity of the complainant.
• The Vigilance Commission shall not disclose the identity of the complainant except to the head of the department if he deems it necessary. The Act penalizes any person who has disclosed the identity of the complainant.
• The Act prescribes penalties for knowingly making false complaints.

HC on Restaurant Service- Validity & Double Taxation

High Court on Restaurant Service

 

HC dismisses writ, upholds constitutional validity of Sec 66E(i) of Finance Act declaring service portion in activity of supply of food and drinks as "declared services"; Article 366(29-A) of Indian Constitution does not indicate subsuming of service part in sale of food, it rather separates sale of food and drinks from service; Sec 65B(44) and Sec 66E(i) only charge service tax on service part and not on sale part, which indicate exclusion of sale element from service as interpreted by SC in Associated-Hotel and Northern Caterers cases; Rejects assessee's reliance on SC ruling in K Damodarsamy, calling it irrelevant for determining Parliament's power to levy service tax on service element in sale; However, HC shows reservation in the rule quantifying fixed sum towards service and its functioning in restaurant, vis-a-vis tax under VAT Act; 40% over which service tax is charged cannot be subject to VAT; Absent provision in VAT Act to bifurcate amount between sale and service, HC advises State Govt to frame rules / issue clarification in conformity with provisions under Finance Act to avoid double taxation on same amount; Also allows assessee to object to VAT levy on service portion of bill value before VAT Authorities  : Chattisgarh HC

Case Law on Section 50B

S. 50B applies only to a "sale" for a "monetary consideration" and not to a case of "exchange" of the undertaking for shares under a s. 391/394 scheme of arrangement

The assessee transferred its Lift Division to Tiger Elevators Pvt. Ltd under a scheme of arrangement u/s 391 & 394 of the Companies Act, 1956. The transfer of the undertaking took place in exchange of preference shares and bonds issued by Tiger Elevators as per a valuation report. The assessee claimed that the transfer was not liable to tax on capital gains on the basis that there was no "cost of acquisition" of the undertaking. The AO held that the transaction was a "slump sale" as defined in s. 2(42C) and that the gains had to be computed u/s 50B. This was upheld by the CIT (A). On appeal by the assessee to the Tribunal, the Tribunal accepted the claim of the assessee. On appeal by the department to the High Court HELD dismissing the appeal:

The definition of the term "slump sale" in s. 2(42C) means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sale. In Motors & General Stores (P) Ltd 66 ITR 692 (SC) it was held that a "sale" meant a transfer for a monetary consideration and that an "exchange" would not amount to a "sale". On facts, scheme of arrangement shows that the transfer of the undertaking took place in exchange for issue of preference shares and bonds. Merely because there was quantification when bonds/preference shares were issued, does not mean that monetary consideration was determined and its discharge was only by way of issue of bonds/preference shares. In other words, this is not a case where the consideration was determined and decided by parties in terms of money but its disbursement was to be in terms of allotment or issue of bonds/preference shares. All the clauses read together and the entire Scheme of Arrangement envisages transfer of the Lift Division not for any monetary consideration. The Scheme does not refer to any monetary consideration for the transfer. The parties were agreed that the assessee was to transfer the undertaking and take bonds/preference shares as consideration. Thus, it was a case of exchange and not a sale. Therefore, s. 2(42C) of the Act was inapplicable. If that was not applicable and was not attracted, then, s. 50B was also inapplicable. The judgement of the Delhi High Court inSRIE Infrastructure Finance Ltd 207 Taxman 74 (Del) is distinguishable on facts. There is no necessity to analyze the circumstances in which s. 50B was inserted in the statute book.

RBI on ECB

Date: May 16, 2014

External Commercial Borrowings (ECB) from Foreign Equity Holder - Simplification of Procedure

RBI/2013-14/594 A.P. (DIR Series) Circular No.130 May 16, 2014 To All Category – I Authorised Dealer Banks Madam/Sir, External Commercial Borrowings (ECB) from Foreign Equity Holder - Simplification of Procedure Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to the A.P. (DIR Series) Circular No. 05 dated August 01, 2005 as amended from time to time relating to the External Commercial Borrowings (ECB). Attention is also invited toA. P. (DIR Series) Circular No. 11 dated September 07, 2011, A.P. (DIR Series) Circular No. 29 dated September 26, 2011, andA.P. (DIR Series) Circular No. 31 dated September 04, 2013. 2. As per the extant ECB policy, ECBs from direct foreign equity holders (FEHs) are considered both under the automatic and the approval routes, as the case may be. ECBs from indirect equity holders and group companies and ECBs from direct FEH for general corporate purpose are, however, considered under the approval route. Further, any request for change of the ECB lender in case of FEH requires RBI's approval. 3. As a measure of simplification of the existing procedure, it has been decided to delegate powers to AD banks to approve the following cases under the automatic route: Proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors from indirect equity holders and group companies. Proposals for raising ECB for companies in miscellaneous services from direct / indirect equity holders and group companies. Miscellaneous services mean companies engaged in training activities (but not educational institutes), research and development activities and companies supporting infrastructure sector. Companies doing trading business, companies providing logistics services, financial services and consultancy services are, however, not covered under the facility. Proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors for general corporate purpose.ECB for general corporate purpose (which includes working capital financing) is, however, permitted only from direct equity holder. Proposals involving change of lender when the ECB is from FEH – direct / indirect equity holders and group company. 4. All other terms and conditions stipulated in the relative circulars shall continue to be applicable. 5. Other aspects of the ECB policy such as eligible borrower, recognised lender, permitted end-use, amount of ECB, all-in-cost, average maturity period, pre-payment, ECB liability:equity ratio, refinance of existing ECB, reporting arrangements, etc. shall remain unchanged. 6. These changes will come into force with immediate effect. 7. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers. 8. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (Rudra Narayan Kar) Chief General Manager-in-Charge

Dena Bank concurrent Audit

Applications for concurrent audit of Dena Bank for 2014-15
http://www.denabank.co.in/viewdetail.jsp?lang=0&did=139972780868505EA0AEA3057FD38A5D83AFAEE96DB32&id=0,47

NSE-BSE Circuit Rules

NSE-BSE Circuit Rules & Election Counting Timings for 16th may.

If 10% circuit till 1pm then mkt shuts for 45 minutes if 15% circuit till 1pm then mkt shuts for 15 minutes if 20% circuit anytime, mkt closed for the day if 10%circuit from 1-2.3 pm then mkt shuts for 15mins if 15% circuit from 1-2.30 pm then mkt shuts for 45mins if 20% circuit anytime, mkt closed for the day. post 2.30pm , if 10% circuit mkt will continue trading but if 15% post 2.30 pm then closed the day.

### election counting for general election 2014 due to start on 8.00 am on may 16 across 989 counting centres. Trends will be in by 11 am on Friday, final results on 4 pm