RBI eases FDI norms on issue of equity shares

The Reserve Bank of India (RBI) has eased foreign direct investment (FDI) norms, allowing Indian companies to issue shares/convertible debentures to a person resident outside India against any payables, subject to certain conditions like entry route, sectoral cap, pricing guidelines and compliance with the applicable tax laws.

As of now an Indian company may issue shares/convertible debentures under the automatic route to a person resident outside India against lump-sum technical know-how fee, royalty, external commercial borrowings (ECBs) (other than import dues deemed as ECB or Trade Credit as per RBI guidelines) and import payables of capital goods by units in Special Economic Zones subject to certain conditions like entry route, sectoral cap, pricing guidelines and compliance with the applicable tax laws.

As per the new norms, such equity shares can be issued against any other funds payable by the investee company, remittance of which does not require prior permission of the government or RBI under FEMA.

The riders being that the shares shall be issued in accordance with the extant FDI guidelines on sectoral caps and pricing guidelines, etc.

Also, the issue of equity shares under this provision shall be subject to tax laws as applicable to the funds payable and the conversion to equity should be net of applicable taxes.

The relevant circular is enclosed for reference.

Hope you find the update useful.

Note: The above update is just for reference and does not constitute an advice or an opinion.  As always, professional assistance is highly recommended before acting on the above.

Warm Regards,

 

CA. Pravesh Kumar M
Pravesh�Kumar & Associates

Tax Audit Delhi High Court update

Delhi High Court once again Adjourned the Tax Audit Deferment case to Monday. Court ask cbdt to file an affidavit that no penal provision and no section 271 1 (c) in case Assesse file the return and then revised it later. Also asked for 25 days black out period of new utility.

Tax Audit Deferment case with Delhi High Court update

Tax Audit Deferment case with Delhi High Court.
Court asked the CBDT for revenue losses in case ITR date extended to 31st Oct. CBDT lawyer not able to answer and Court Adjourned the case tomorrow for final hearing.
CASANSAAR team was there for all live updates.
Hoping date will be extended to 31st Oct.

Supreme Court on Sec 113

CIT vs. Vatika Township (Supreme Court – Full Bench) S. 113 Proviso inserted by FA 2002 w.e.f. 01.06.2002 to impose surcharge in search assessments is not clarificatory or retrospective. Suresh Gupta 297 ITR 322 (SC) overruled A search and seizure operation u/s 132 was conducted on 10.02.2001 pursuant to which an assessment order for the block period from 01.04.1989 to 10.02.2000 was passed on 28.02.2002 at a total undisclosed income of Rs.85 lakhs. Tax was charged at the rate prescribed in s. 113. Subsequently, a Proviso was inserted to s. 113 by the Finance Act 2002 w.e.f. 01.06.2002 to provide for the levy of surcharge at 10%. The AO took the view that the said amendment was clarificatory in nature and he levied surcharge by passing an order u/s 154. However, the Tribunal and High Court upheld the assessee's claim that the said amendment was prospective in nature and did not apply to block periods falling before 01.06.2002. However, the plea of the assessee was rejected by the Supreme Court in Suresh N. Gupta 297 ITR 322 (SC) (followed in (Rajiv Bhatara (SC)) and it was held that the said proviso is clarificatory in nature and applied to earlier block periods. When the present case reached the Supreme Court, the Bench was of the view that the issue ought to be referred to a larger Bench of 5 judges. HELD by the Full Bench of the Supreme Court:     (iv) There cannot be imposition of any tax without the authority of law. Such a law has to be unambiguous and should prescribe the liability to pay taxes in clear terms. If the concerned provision of the taxing statute is ambiguous and vague and is susceptible to two interpretations, the interpretation which favours the subjects, as against there the revenue, has to be preferred. This very principle is based on the "fairness" doctrine as it lays down that if it is not very clear from the provisions of the Act as to whether the particular tax is to be levied to a particular class of persons or not, the subject should not be fastened with any liability to pay tax.  (vi) Consequently, the conclusion in Suresh N. Gupta 297 ITR 322 (SC) treating the proviso to s. 113 as clarificatory and giving it retrospective effect is not correct and is overruled.

Guidance note on tax audit

Updated Guidance note on tax audit by ICAI

http://220.227.161.86/34728gn-taxaudit-dtcicai.pdf

Consequences of late filling of return

Assessee file return any time even up to march 2015 in case of audit also. Only following consequence.

1. He may have to pay Interest U/s. 234A of the Income Tax Act, 1961 on taxes outstanding.
2. Losses if any may not be allowed to be carried forward under the provisions of section 80 Read with section 139(3) of the Income tax Act, 1961.
3. To claim deduction of statutory expenses falling under section 43B,       Assessee have to pay these Statutory on or  before the filing of ITR or Due Date of return filing (Due Date of ROI is 30.09.2014) whichever is earlier.
4. Some of the deduction i.e. Under Section 10A, which requires Assessee to file his return on or before the due date specified under sub section (1) of section 139 may not be allowed to Assessee.
5. If Assessee not able to file his Return on or before 30.09.2014 he may not be able to revise his Return of Income.

Case Law on Bogus Purchases

IT: Where purchases were supported by bills, entries were made in books of account and payment was made by cheque, said purchases could not be held as bogus purchases

IT: Commission paid through account payee cheques on account of sales canvassed by party was not bogus payment

■■■

[2013] 40 taxmann.com 206 (Gujarat)

HIGH COURT OF GUJARAT

Commissioner of Income-tax-I

v.

Nangalia Fabrics (P.) Ltd.*

AKIL KURESHI and ms. SONIA GOKANI, JJ.

Tax Appeal No. 689 of 2010†

APRIL  22, 2013 

I. Section 68 of the Income-tax Act, 1961 - Cash credit [Unverifiable purchases] - Assessing Officer found that purchases made by assessee could not be verified as parties were untraceable - Accordingly, he made addition to assessee's income - However, Tribunal held that since purchases were supported by bills, entries were made in books of account and payment was made by cheque, addition should have to be deleted - Whether issue being based on facts, required no consideration - Held, yes [Para 4] [In favour of assessee]

II. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of [Commission] - Whether where brokerage commission was paid through account payee cheques for sales canvassed by a party and also in consideration of collection recovered from purchaser, said commission payment could not be held to be bogus - Held, yes [Para 6] [In favour of assessee]

Sudhir M. Mehta  for the Appellant.

ORDER

 

Ms. Sonia Gokani, J. - Aggrieved by the order of the Income Tax Appellate Tribunal dated 28.10.2009, revenue has challenged the said order in this tax appeal proposing following substantial questions of law:

"1.		Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting Rs. 1,27,02,869/- made by the assessing officer on account of unverifiable purchases?
2.		Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in deleting disallowance of Rs. 72,37,808/- made by the Assessing Officer on account of brokerage commission?"

2. We have heard learned counsel Mr. Mehta for the revenue and learned senior counsel, Mr. Soparkar for the assessee-respondent. The first question pertains to the addition made by the Assessing Officer and reduced by 5% from the total amount of Rs. 1.27 crores (rounded off) by the CIT and deleted in its entirety by the Tribunal.

3. The question pertains to the purchases made by the assessee-respondent. On account of unverifiable purchases, the Assessing Officer made additions to the tune of Rs. 1.27 crores. He was of the opinion that none of the parties could be located and therefore, such purchases were held to be bogus. When it was challenged before the CIT(A), the CIT(A) was of the opinion that they could not be held bogus as the corresponding sales had been effected by the respondent in the next year. In subsequent year also and in the past, such purchases were made which were never questioned. When challenged before the Tribunal on the basis of the facts presented before us, it held that these purchases could not be held bogus by holding thus:

"13. We have considered the rival submissions and the materials placed on record. The purchases are supported by bills, entries in the books of account, payment by cheque and quantitative details Assessing Officer did not find any inflation in purchase price or inflation in consumption or suppression the production. The addition had been made only on the ground that the parties are not traceable. Assessee had made payment through crossed cheques and assessing officer did not find that payment made came back to assessee. Assessing Officer has made addition in respect to the outstanding amount as on 31.3.2001 which has been cleared in the succeeding years. The ratio of the creditor to the purchases is normal considering the past records of the assessee. The creditors were outstanding owing to liquidity as assessee is also required to get credit in respect of sales also. Even otherwise provision of section 68 is not attracted to amounts representing purchases made on credit as held in the case of Panchan Dass Jain cited supra. The addition for bogus purchases cannot also be sustained in full or in part in view of the various cases laws cited by the assessee and in view of the facts that the decision of Vijay Proteins Ltd. and Sanjay Oil Cake Industries are not applicable to the facts of the assessee's case. Assessee's case is covered by the decision of Hon'ble Gujarat High Court in case of Kashiram Textile Mills. In view of the matter, addition made by the assessing officer is deleted. Ground No.1 of Assessee's appeal is allowed and ground No.1 of Revenue's appeal is dismissed."

4. The issue is essentially based on facts. The Tribunal, having been satisfied by genuineness of the purchases as also specially considering the payments made through the cheques, was of the opinion that such addition could not be sustained. Issue, essentially and pre-dominantly based on facts, requires no consideration as no question of law arises.

5. The second question pertains to brokerage commission of Rs. 72,37,808/- disallowed by the Assessing Officer. The Assessing Officer disallowed the commission on the ground that M/s. Shree Shantinath Silk Industries did not maintain its record and its name did not appear on sale bill. When it was challenged before the CIT(A) it was of the opinion that the only one party had been examined by the Assessing Officer and the person examined for and on behalf of such party in fact was not dealing with sales, and therefore, would not be having any knowledge of the brokerage. After dealing with the issue at length, it sustained addition of Rs. 36.18 lacs (rounded off).

6. When CIT(A)'s order was challenged before the Tribunal, the Tribunal deleted the entire addition by observing thus:

"23. We have heard the rival submissions and the materials placed on record. We are inclined to agree with the submission made on behalf of the assessee and find that no evidence had been placed on record that the commission expense is bogus. Assessee made payment of commission expenses is bogus. Assessee made payment of commission through account payee cheques for sales canvassed by the party and also in consideration of the collection recovered from purchaser. Payments cannot be unreasonable particularly when M/s. Shree Shantinath Silk Industries is not related to the assessee and so even disallowance made by CIT(A) is not proper. We therefore delete the full disallowance of Rs. 72,37,808/- made by the assessing officer. Hence assessee's ground of appeal is allowed and revenue's ground of appeal is allowed and revenue's ground of appeal is dismissed."

7. This issue is again based on facts. Essentially, the Tribunal has, with cogent reasons dealt with the issue, no question of law, much less any substantial question of law arises. The Tax appeal is, resultantly, dismissed.

POOJA

 

* In favour of assessee.

† Arising out of Tribunal's order dated 28-10-2009. 

Forfeiture of advance money

Forfeiture of advance money against capital asset is now treated as income U/s 56(2)(ix) w.e.f. A.Y. 2015-16. But if any advance money is forfeited against any rural agricultural land then it cannot be treated as income U/s 56(2)(ix) because rural agricultural land is not a capital asset.
(urban agricultural land is a capital asset but rural agricultural land is not a capital asset).

Disclosure of unclaimed amount by Insurer

RDA mandates insurers to disclose details of unclaimed amount from October 2014.  

In an effort to arrest the growth of unclaimed money, IRDA has instructed insurance companies to disclose the details of unclaimed amount on their respective websites. The unclaimed amounts are accumulated through non-encashment of maturity proceeds by investors.

The regulator has asked insurance companies to disclose details of those policies where payment exceeds Rs 1,000. The regulation will come into effect from October 1, 2014.

In a circular, the regulator said, “All insurers are required to display the information about any unclaimed amount above Rs.1,000 of policyholders on their respective websites.”

In order to increase transparency, IRDA has asked insurers to set up a mechanism through which policyholders can get access to policy details by keying in their basic information like name and date of birth.  IRDA has instructed insurers to update such information on a half-yearly basis. The insurers have to provide search option in such disclosure for the convenience of policyholders.

IRDA data shows that the unclaimed amount lying idle with insurance companies increased by 60% to Rs. 4,866 crore in FY 2012-13 from Rs 3,038 crore in FY 2011-12. In FY 2009-10, the unclaimed amount was Rs 1,373 crore. The regulator attributed this to lack of awareness, delay in claim settlement process and change in address of policyholders.

Earlier in April, IRDA had mandated insurance companies to settle insurance claims through electronic payment mode. However, the regulator has asked insurance companies to make e-payment of those policies where payment exceeds Rs 10,000 (life insurance) and Rs 25,000 (non-life insurance).

Meanwhile, IRDA has directed insurance companies to get bank account details while issuing new policies. Insurers will have to collect proof of bank account (cancelled cheque) from policyholders. Policyholders can update their bank account details at any point of time. Term plans are exempted from this requirement

Improper advice by CA no ground of Appeal

ITAT dismisses assessee's plea to condone 2984 days delay in filing of appeal, rejects 'improper advice' given by CA firm as ground for condonation / "sufficient delay"; Tribunal taken aback by CA firm's affidavit, stating that it had advised assessee not to file an appeal with ITAT on same issue for later AYs and rather file a 'rectification or review' plea with AO once Tribunal settled the issue; "Inconceivable that a C.A would have advised the assessee to wait for outcome of a past appeal to decide about the course of action to be taken for the years under consideration", observe Tribunal members; Such advise by a CA badly damages prestige and reputation enjoyed by CA profession, urges ICAI to take strict disciplinary action and immediate steps to stem the "deteriorating standards" & "alarming practices" among some CAs; Criticises ICAI for allowing CA coaching classes to "mushroom", consequently leading to 'manufacturing' of Chartered Accountants and replacement of analytical thinking by 'spoonfeeding'; Expresses doubts over efficacy of CPE seminars, if such advices are given by CAs attending them; Rejects affidavits given by both the CA firm & assessee, remarks that conduct of assessee beyond comprehension of "human conduct and probabilities" : Mumbai ITAT

The ruling was delivered by ITAT bench of Shri. D. Manmohan and Shri.B.R.Baskaran.

[TS-548-ITAT-2014(Mum)]

CA journal at home address

Announcement

Get your copy of Journal at your Residential Address

The Editorial Board is pleased to inform the ICAI Members, particularly the Members in Industry, that now they can opt their ‘Residential Address’ to receive the copy of The Chartered Accountant journal by following the below mentioned procedure.

Go to the ‘Members’ section placed on the top bar of ICAI website (www.icai.org). The required link in the ‘Members’ section is titled ‘Members: Update Your Residential and Professional Addresses’ (http://www.icai.org/addupdate/). Fill the Membership No and Date of Birth to open the Form. In the Form only tick the option “Do you want to get your journal on Residential Address” at the bottom of the Form. Thereafter you will get your copy of the Journal at your residential address.

Any queries or complaints in this regard can also be sent by email at journal@icai.in or contact at 0120-3045921.

For more details, please look at Announcements section in ICAI Website. 

Scrutiny guidelines issued by CBDT

Scrutiny guidelines issued by cbdt
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

North-Block, IT (A-II) Division
New Delhi the 2 nd day of September, 2014

To,
All Pr. Chief-Commissioners of lncome·tax/Chief Commissioners of Income-tax
All Pr. Directors-General of Income-tax/Directors-General of Income-tax

 

Sir/Madam

Subject: Compulsory Manual selection of cases for scrutiny  during the financial Year 2014·15-regd:-

1.    In Suppression of earlier Instructions on the above subject, the Board hereby lays down the following  procedure and criteria  f  manual selection  of  returns/cases  for  scrutiny during the financial-year 2014·2015:-

(a)    Cases involving addition in an earlier assessment year in excess of Rs. 10 lakhs on a  substantial and recurring question of law or fact which is confirmed in appeal or is pending before an appellate authority.

(b)   Cases involving addition in an earlier assessment year on the Issue of transfer pricing in excess of Rs. 10 crore or more on a substantial and recurring question of law or fact which is confirmed in appeal or is pending before an appellate authority

(c)    All assessments pertaining to Survey under section 133A of the Act excluding the cases where there are no impounded books of accounts/documents  and returned income excluding any disclosure made during the Survey is not less than returned income  of   preceding  assessment  year.   However,  where  assessee  retracts the disclosure made during the Survey will not be covered by this exclusion.

(d)   Assessments  in search and seizure cases to be made under section 158B, 158BC, 158BD, 153A & 153C read with section 143(3) of the Act and also for the  turns filed for the assessment year relevant to the previous year in which authorization for search and seizure was executed u/s 132 or 132A of the Act

(e)    Returns filed in response to notice under section 148 of the Ac

(f)    Cases where registration u/s 12AA of the IT Act has not been granted or has been cancelled  by  the  CIT/DIT  concerned,  yet  the  assessee  has  been   found to  be claiming tax-exemption  under section 11of the Act.  However, where such orders of the CIT/DIT have been reversed/set-aside in appellate proceedings, those cases will not be selected under this clause.

(g)   Cases where order denying the approval u{s 10(23C) of the Act or withdrawing the approval already granted has been passed by the Competent Authority, yet the assessee has been found claiming tax-exemption under the aforesaid  provision of the Act.

(h)    Cases in respect of which specific and verifiable information  pointing out tax evasion  is given by Government Departments/ Authorities. The Assessing Officer shall record reasons and take prior approval from jurisdictional  Pr. CCIT/CCIT Pr. DGIT/DGIT concerned before selecting such a case for scrutiny.

2.    Computer Aided Scrutiny Selection (CASS): cases are also being selected under CASS on the basis of broad based selection filters. List of such cases shall be separately intimated In due course by the DGIT(Systems) to the jurisdictional authorities concerned.

3.    It is reiterated that the targets for completion or scrutiny assessments and strategy framing quality assessments as contained in Central Action Plan document for Financial Year 2014-15 has to  be complied with and it must be ensured that all scrutiny assessment orders including the cases selected under the manual criterion are completed through the AST system software only. Further, in order to ensure the quality of assessments being framed, Pr. CCslT/CCsIT/Pr.  DsGIT/DsGIT should evolve a suitable monitoring mechanism and by 30"' April, 2015, such authorities shall send a report to the respective Zonal Member with a copy w Member (IT) containing details of at least 50 quality assessment orders from their respective charges. In this regard, IT Authorities concerned must ensure that cases selected for publication in 'Let us Share' are Picked up only from t 'e quality assessments as reported.

4.    These instructions may be brought to the notice of all concerned. If considered  necessary, a supplementary guideline would be issued subsequently.

5.    Hindi version to follow

(Rotlit Garg)
Deputy·Se retary to the Government of India

F No. 225/229/2014/ITA-II

- See more at: http://abcaus.in/incometaxscrutinycriteria/cbdt-compulsory-manual-case-selection-during-fy-2014-15.html#sthash.X1ADoyWx.dpuf

CBDT To AOs: Respect Taxpayer’s Time And Don’t Make Them Wait

CBDT To AOs: Respect Taxpayer’s Time And Don’t Make Them Wait

The CBDT has issued an Office Memorandum dated 22.08.2014 in which it has pointed out that some AO’s issues notices to taxpayers/ witnesses/ representatives etc. indicating a standard time of appointment. Thus, many persons called for hearing etc on a day by an officer are given the same time for appearance and the persons are made to wait for their turn. It is pointed out that such actions, apart from causing avoidable inconvenience to the taxpayers/ witnesses/ representatives etc cause great embarrassment to the Government. All officers have been advised to strictly maintain the appointment schedule in spirit with the Citizen’s Charter, 2014 of the Department which specifically provides that the Department shall endeavour “to adhere to the schedule of appointments with taxpayers”. All Supervisory officers, i.e. the CCsIT, CsIT and the Addl. CsIT have been requested to ensure that officers reporting to them strictly comply with this instruction and avoid fixing multiple appointments at the same time. Instances of disregard to these instructions may be viewed seriously, it is added

Raising no. Of partners in LLP

(Raising of number of partners in CA Firm with reference to the provisions of Companies Act, 2013. - ICAI)
The Council of the Institute has clarified that the earlier restriction of maximum of 20 partners permitted for firms under section 11 of the Companies act, 1956 is no more applicable to the firms as Section 464 of the Companies Act, 2013 has been notified w.e.f 01.04.2014 wherein sub-section (1) provides for a maximum number of partners permissible for business firms at 100 and sub-section (2) provides that nothing in sub section (1) shall apply to an association or partnership, if it is formed by professionals who are governed by special Acts.

Accordingly, as per proviso to the said section, Chartered Accountants firms are now allowed to be registered/reconstituted with more than 20 partners w.e.f 01.04.2014 under the Indian Partnership Act as in the case of a firm under the Limited Liability Partnership

Circular on Pre-Deposit of Duty

CIRCULAR

THE CESTAT Registrar has issued a Circular stating that:

As there is confusion of adjustment of CENVAT credit against mandatory penalty, clarification have been sought from the Competent Authority. (Again the mysterious Competent Authority - who is the Competent Authority to clarify the Registrar's doubt?)

In the absence of any clarificatory circular on the issue, he has directed the Registry officials to register the appeals received on or after 06.08.2014 in the following cases:

1. If the mandatory deposit of duty or penalty has been made in cash and evidence is produced at the time of filing the appeal.

2. If the mandatory deposit of duty confirmed is made from CENVAT account and evidence thereof is produced. (He doesn't tell his staff as to what percentage of duty is to be the mandatory pre-deposit)

3. If the appellants have made deposit of the duty during investigation and if the same is more than the mandatory deposit as stipulated in the amendments.

Wherever further clarification is required the same will be issued after getting clarification from the Competent Authority.

What will he do if the pre-deposit of penalty is made from the CENVAT account? Will such appeals be not accepted by the Registry? Can the registry take such a decision? Should the appellant go to the High Court to get a direction to the Registry to register the appeal ?

 

F.No.15/CESTAT/General/2013-14

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST BLOCK NO.II, R K PURAM, NEW DELHI

Dated: August 28, 2014

 

CIRCULAR

 

Sub: Registration of appeals received on or after 06.08.2014 subsequent to amendment in the Customs Act, 1962, the Central Excise Act 1944 and the Finance Act, 1994- instructions- regd.

 

 

As there is confusion of adjustment of Cenvat Credit against mandatory penalty, clarifications have been sought from Competent authority. In absence of any classificatory Circular on the issue, all the DRs/ARs/TOs are directed that the appeals received on or after 06.08.2014 may be registered in following cases:

 

(i) If the mandatory deposit of duty or penalty, as the case may be, has been made in Cash and evidence thereof is produced at the time of filing appeal.

 

(ii) If mandatory deposit of duty confirmed is made from CENVAT account and evidence thereof is produced.

 

(iii) If the appellants have made deposit of the duty assessed subsequently, during investigation and if the same is more than the mandatory deposit as stipulated in the captioned amendments.

 

Whether further clarification is required the same will be issued after getting a clarification from the competent authority.

(A Mohan Kumar)
Registrar

NIL TDS – File Declaration for Non-filing of TDS statement on TRACES

NIL TDS – File Declaration for Non-filing of TDS statement on TRACES

 

 

Your urgent attention is invited to relevant CBDT Circulars and provisions of the Income Tax Act, mandating filing of TDS Statements and Issuance of TDS Certificates downloaded from TRACES. But If you are not required to submit  TDS statement for FY 2013-14 and not  filed any TDS Statements in FY 2013-14 , than you are required to submit a declaration by taking appropriate action as suggested under "Action to be taken" in this Article.

 

Currently, if there is no TDS to be deducted, no action is taken in terms of filing TDS return for the particular quarter. Due to this practice of non-intimation, the Income Tax department is not able to find out the difference between the following two types of deductors- 1. Deductors required to file return but not filed and 2. Deductors not required to file return due to NIL TDS. Henceforth, the persons who are not required to submit a return of TDS due to non applicability in any particular quarter shall have to submit a Declaration for the same on Traces as suggested in Point No. 3 of this article.

 

1. Mandatory filing of TDS Statements:  Under the provisions of section 200(3) of the Income Tax Act, 1961 read with Rule 31A, which reads as follows:

Every person responsible for deduction of tax under Chapter XVII-B, shall, in accordance with the provisions of sub-section (3) of section 200, deliver, or cause to be delivered, the following quarterly statements to the Director General of Income-tax (Systems) or the person authorised by the Director General of Income-tax (Systems), namely:

a. Statement of deduction of tax under section 192 in Form No. 24Q;

b. Statement of deduction of tax under sections 193 to 196D in-

•  Form No. 27Q in respect of the deductee who is a non-resident not being a company or a foreign company or resident but not ordinarily resident; and
• Form No. 26Q in respect of all other deductees.

It is, therefore, advised to file the applicable TDS Statements at the earliest to comply with the above provisions.

2. Implications of Non/ Late filing of TDS Statements:

• For Deductors: In case of late filing of TDS Statements, a fee shall be levied on the deductor u/s 234E of the IT Act which reads as under:
  • Where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues

• For Tax payers: Non/ Late filing of TDS statements results into the TDS Credit not being available to the deductees. They, therefore, will not be able to claim the credit for tax already deducted from the payments made to them. Please note that TDS Certificates will not be available until the TDS Statements are duly filed.

3. Actions to be taken and  Procedure for filing of Nil TDS return/ declaration for non filing of TDS statement:

• Please file the relevant TDS Statement without any further delay.

• If you are not required to file the same, please submit a declaration for Non-filing on TRACES. For this purpose, you can login to TRACES, navigate to "Statements/ Payments" menu and submit details under "Declaration for Non-Filing of Statements.

"Declaration for Non-Filing of a statement has been enabled on TRACES"

Important information regarding credit score ( CIBIL)

Important information regarding credit score
( CIBIL) :
With banks and RBI becoming more and more stringent about the loan eligibility of borrowers, you are probably aware by now that it is imperative for you to have a good Cibil score in order to qualify for a loan with an attractive rate of interest. In order to obtain a good Cibil score, you need to maintain a good credit history, the details of which will show up in your Cibil report. The Cibil score can, therefore, be compared to a grade or a rank based on how you have been servicing your credit.

Story

Now that you know the link between your credit history and credit score, you are naturally keen to do all you can to keep your Cibil credit score as high as possible. But have you ever wondered what goes into the constitution of your Cibil score? Here is a lowdown on the factors that have the greatest impact on your Cibil score.

Your repayment history (35%)

The first and most important thing that impacts your credit score is your repayment history and it accounts for 35% of your credit score. You need to clear all your bills and loan repayments well within the dates stipulated in order to maintain a good repayment history. Even a single default has a negative impact on your score.

What you owe your lenders (30%)

There are two basic considerations when it comes to calculating what you owe your lender, which is referred to as credit utilization. First is the total of your credit card limits sanctioned to you and secondly, the percentage of your money you are utilizing. Hence, your credit utilization ratio is calculated as balance outstanding on all your credit cards as a percentage of total credit limit on all your credit cards. If your credit utilization ratio is upwards of 30%, you profile as a customer is considered to be "risky."

How long have you been servicing debt (15%)

This may come as a surprise, but the amount of time you have been using credit also has an important bearing of 15% on your credit score. Therefore, if you have been servicing debt for a longer period of time and handling it responsibly, i.e., by making timely repayments, it is going to have a positive impact on your Cibil score.

The amount of new credit you have taken or applied for (10%)

Every time you apply for a new credit such as a loan or credit card, the banks and other financial institutions run an inquiry on your Cibil report to check your credit history to find out about your financial health and repayment capability. If there have been too many such inquiries on your Cibil report, it has a negative bearing on your credit score. This factor has a 10% weightage when it comes to calculating your credit score.

The mix of credit (10%)

Even though ours is primarily an EMI-led generation, Indians are, by nature, averse to the idea of credit. So if you have been avoiding credit like the plague and have a single type of credit, you cannot have a good credit score, especially if you have only unsecured loans like credit cards or a personal loan. This factor has a bearing of 10% on your Cibil score. In order to score high on this ground, you must have a healthy mix of credit comprising of secured and unsecured loans and have the ability to service them well in time. Those with a mix of various credit types such as mortgage, personal loan, car loan, credit card, etc are likely to score higher than those who have a single type of credit.

Now that you know what goes into the constitution of your credit score, you can use this information to find out the areas in which you are lagging, and thus improve your credit score. A good credit score will ensure that you get a loan without any hassles at best interest rates when you really need one.

MCA-Amendment to Schedule II & Clarification AS 10

 

Amendment to Schedule II of the Companies Act 2013

MCA has further amended Schedule II of the Companies Act 2013 with regards to useful life, residual value and component accounting. 

With regards useful life and residual value the revised requirements are;

 

"The useful life of an asset shall not ordinarily be different from the useful life specified in Part C and the residual value of an asset shall not be more than five per cent. of the original cost of the asset:

 

Provided that where a company adopts a useful life different from what is specified in Part C or uses a residual value different from the limit specified above, the financial statements shall disclose such difference and provide justification in this behalf duly supported by technical advice" 

With regards component accounting the revised requirements are;

 

"(a) Useful life specified in part c of the schedule is for whole of the asset and where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately.

 

(b) The requirement under sub-paragraph (a) shall be voluntary in respect of the financial year commencing on or after the 1st April, 2014 and mandatory for financial statements in respect of financial years commencing on or after the 1st April, 2015." 

The provisions relating to transitional provisions have also been amended. The revised language in paragraph 7 sub-paragraph (b) reads as below.

 
"after retaining the residual value, may be recognised in the opening balance of retained earnings where the remaining useful life of an asset is nil." 

 

 

 

 

 

 

MCA - Clarification regarding Accounting Standards (AS) 10 - Capitalization of Cost

MCA after receiving number of representations seeking clarifications on capitalization of costs in cases of Competitive Bid power projects has vide General Circular No. 35/2014 dated 27th August 2014 issued a Clarification regarding Accounting Standards (AS) 10 - Capitalization of Cost. The text of the same is reproduced as below :-

1.    Accounting Standards AS-10 and AS-16 prescribe the principles of capitalization of various costs based on the underlying concept that only such expenditure should be capitalized as form a part of the cost of fixed assets which increase the worth of the assets. Cost incurred during the extended delay in commencement of commercial production after the plant is otherwise ready does not increase the worth of fixed assets. Such costs cannot, therefore, be capitalized.

2.    Accounting Standard AS 16, inter alia provides guidance with regard to part capitalization where some units of a project are complete. In case one of the units of the project is ready for commercial production and is capable of being used while construction continues for the other units, costs should be capitalized in relation to that part once the part is ready for commercial production.

It is further clarified that AS 10 and AS 16 are applicable irrespective of whether the power projects are 'Cost Plus projects' or 'Competitive Bid projects'.

Notification on increase in PF Limit

EPF LIMIT INCREASED TO Rs.15,000 from Rs.6,500 wef 1^st Sept,2014

Henceforth, salaried people earning up to Rs. 15,000 a month will have to compulsorily maintain an employee provident fund account, with the Government notifying the new norm. Earlier the salary limit was Rs. 6,500 a month.

The minimum pension has also been hiked to Rs. 1,000/month, a longstanding demand of workers' representatives in the Employees Provident Fund Organisation (EPFO). All the revised schemes will be implemented from September 1.

The decisions had been taken by the EPFO trustees towards the end of the UPA's tenure, but had not been notified. After taking over in June, the Narendra Modi Government had assured trade unions that it would notify them within two weeks.

The Gazette notification, dated August 22, also raised the maximum assured sum under the Employees' Deposit Linked Insurance Scheme to Rs. 3 lakh.

Accordingly, in a circular issued on August 28, the EPFO has requested all regional PF commissioners to implement the schemes in "letter and spirit".

In his maiden Budget speech in July, Finance Minister Arun Jaitley had said that it was mandatory for salaried persons earning up to Rs. 15,000 a month to maintain PF accounts.

More subscribers

The move to hike the wage ceiling, as per EPFO estimates, will draw in about five million new PF subscribers. The hike in pension is expected to benefit 2.8 million pensioners, including 500,000 widows, some of whom have been getting a measly amount of Rs. 150-200 a month.

Orphaned children of the deceased subscriber will now get a maximum assured sum of Rs. 750 a month for 2014-15.

Railway Certificate-CENVAT Credit

CERTIFICATE ISSUED BY INDIAN RAILWAYS IS AN ELIGIBLE DOCUMENT FOR CENVAT CREDIT

 

 

Service tax on transportation of goods was effectively levied w.e.f. 1st Oct'12(though levied from 1st July'12, but was deferred till 30th Sep'12).

 

However, abatement of 70% was allowed vide N/N 26/2012-ST, hence effective rate of tax imposed was 3.708%.

 

Ministry of Railways issued a circular- TCR/1078/2011/2 ,dated 27th Jun'12 to deal with the issues arising out of the aforesaid levy & in para 4(xi) of the same, it was stated that on written request from customers, a consolidated certificate for each customer shall be issued by the authorised officer of Indian Railways(CCM/Dy. CAO) on monthly basis giving following details date-wise & rake-wise:

 

·         o Service Tax;

·         o Education Cess;

·         o Higher Education Cess; and

·         o Total Service Tax

 

 It further stated that the said certificate can be used by the customers for taking CENVAT. However, no corresponding amendment was made by Ministry of Finance in rule 9 of CENVAT Credit rules, 2004, which deals with the list of eligible documents for availment of CENVAT.·

 

 Now, vide N/N 26/2014-C.E.(N.T.), rule 9 of CENVAT Credit Rules, 2004 has been amended· & clause (fa) has been inserted therein to include following certificate as an eligible document for the purpose of availing CENVAT:

 

"a Service Tax Certificate for Transportation of goods by Rail (herein after referred to as STTG Certificate) issued by the Indian Railways, along with the photocopies of the railway receipts mentioned in the STTG certificate".

 

Henceforth, the eligibility stated vide circular issued by Ministry of Railways has finally been brought at par with CENVAT credit rules.

Notification No. 26/2014 – Central Excise (N.T.), dated 27-Aug-2014

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

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

 

Notification No. 26/2014 – Central Excise (N.T.)  New Delhi, the 27th August, 2014

 

G.S.R. (E). – In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely : –

 

1. (1) These rules may be called the CENVAT Credit (Eighth Amendment) Rules, 2014.

 

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

 

2. In the CENVAT Credit Rules, 2004, in rule 9, in sub-rule (1), after clause (f), the following clause shall be inserted, namely:-

 

"(fa) a Service Tax Certificate for Transportation of goods by Rail (herein after referred to as STTG Certificate) issued by the Indian Railways, along with the photocopies of the railway receipts mentioned in the STTG certificate; or" 

 

[F. No. 267/87/2013-CX.8]

(Pankaj Jain)

Under Secretary to the Government of India

 

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II,  Section 3, Sub-section (i), dated the 10th September, 2004, vide Notification No. 23/2004 –Central Excise (N.T.) dated the 10th September, 2004, vide number G.S.R. 600(E), dated the 10th September, 2004 and last amended vide Notification No. 25/2014 - Central Excise (N.T.) dated the 25th August, 2014 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 615 (E), dated the 25th August, 2014.