Index Forthcoming Events ... 02 Direct Tax Updates ... 03 Corporate Citizenship ... 04 26QB ... 04 Service Tax Updates ... 05 Companies Act, 2013 ... 06 Offences and Prosecution ... 09 Due Date Planner ... 10 PhotoFlash ... 11 THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA Tel. : E-mail : Web : ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi - 110002. +91 (11) 39893989 [email protected]www.icai.org “ICAI Bhawan”, Kalali-Tandalja Road, Atladra, Vadodara - 390 012. +91 (265) 2681115 / 2680593 [email protected]www.baroda-icai.org BARODA BRANCH OF WIRC OF ICAI Telefax : E-mail: Web : WESTERN INDIA REGIONAL COUNCIL Tel. : Email : Web : ICAI Tower, Plot no C-40, G Block Opp MCA Ground, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051 +022-33671400/33671500 [email protected]www.wirc-icai.org CA. Nayan R. Kothari 98244 33445 CA. Yash Bhatt 99243 88339 CA. Viral Shah 98243 62211 CA. Arpan Dodia 98983 83530 CA. Ashish Parikh 98252 31545 CA. Abhishek Nagori 94260 75397 Chairman Vise-Chairman Secretary Treasurer Immediate Past Chairman Ex-officio CA. Dhiren Parikh 93762 11099 CA. Kejal Pandya 98259 77220 CA. Amar Doshi 93749 63993 Managing Committee Editorial Team CA. Nayan R. Kothari CA. Amar Doshi CA. Ashok Thakkar CA. Rahul Parikh CA. Neena S. Patel CA. Bhupesh Porwal CA. Hitesh Agrawal CA. Prabhat Doshi CA. Prashant Upadhyaya VOLUME - III JULY 2014 l ` 20/- COPY Baroda Branch of Western India Regional Council of The Institute of Chartered Accountants of India The Institute of Chartered Accountants of India (Setup by an Act of Parliament) NEWSLETTER Chairman's Communication Dear Professional Colleagues, I would like to congratulate all of you and wish you all the best for the CA Day, i.e. July 1, 2014. Lot of responsibilities lies on our shoulders which reflected in the speech of Shri Narendra Modi last year - "It is well known that a doctor treats the diseases but few people know that a CA looks after the health of the society,". In past months we successfully completed DTRC, Full Day Seminar on Companies Act, 2013, 3 days beginners’ workshop on Indirect Taxes and Full Day Workshop on Information Technology. We completed the certificate course on Valuation too. We had an opportunity to meet our Finance Minister Shri Saurabh Patel for felicitation. We discussed our concerns and gave suggestions for the Budget of Gujarat State. We also met Prof. Yogesh Singh, Vice-Chancellor of MSU and decided to have a committee for research and sharing of knowledge. In the coming month we are having celebration of CA day with various programs like Cyclothon, Flag Hosting, Blood Donation program, Tree Plantation program and an evening unique participative entertainment event “Musical Housie”. We had also planned an interactive program - CFO meet with CMII of ICAI. To unlearn the old companies act and learn the new one we are organising a series of Company Law Refresher course (CLRC) for 6 days in this month. I request the members to take fullest advantage of all the programs. India’s current economic slowdown is rooted in various aspects including slowdown in manufacturing, economic conditions in Europe & USA, decrease in employment, consumption & saving patterns, CAD etc. The macro-economic scenario in FY14 will have lot of impact on the budget. We all are awaiting the budget now with lot of anxiety and believe that “ ache din aane wale hain”. Let us also take a step forward and do for something for “ache din” of the country. Your Chairman CA. Nayan R. Kothari
Transcript
Index
Forthcoming Events ... 02
Direct Tax Updates ... 03
Corporate Citizenship ... 04
26QB ... 04
Service Tax Updates ... 05
Companies Act, 2013 ... 06
Offences and Prosecution ... 09
Due Date Planner ... 10
PhotoFlash ... 11
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
Tel. :E-mail : Web :
ICAI Bhawan, Post Box No. 7100,Indraprastha Marg, New Delhi - 110002.
Baroda Branch of Western India Regional Council ofThe Institute of Chartered Accountants of India
The Institute of Chartered Accountants of India(Setup by an Act of Parliament)
NEWSLETTER
Chairman's CommunicationDear Professional Colleagues,
I would like to congratulate allof you and wish you all the bestfor the CA Day, i.e. July 1,2014. Lot of responsibilitieslies on our shoulders whichreflected in the speech of ShriNarendra Modi last year - "It iswell known that a doctor treatsthe diseases but few peopleknow that a CA looks after thehealth of the society,".
In past months we successfully completed DTRC, Full Day Seminar on Companies Act, 2013, 3days beginners’ workshop on Indirect Taxes and Full Day Workshop on Information Technology.We completed the certificate course on Valuation too.
We had an opportunity to meet our Finance Minister Shri Saurabh Patel for felicitation. Wediscussed our concerns and gave suggestions for the Budget of Gujarat State. We also met Prof.Yogesh Singh, Vice-Chancellor of MSU and decided to have a committee for research andsharing of knowledge.
In the coming month we are having celebration of CA day with various programs like Cyclothon,Flag Hosting, Blood Donation program, Tree Plantation program and an evening uniqueparticipative entertainment event “Musical Housie”. We had also planned an interactive program- CFO meet with CMII of ICAI.
To unlearn the old companies act and learn the new one we are organising a series of CompanyLaw Refresher course (CLRC) for 6 days in this month. I request the members to take fullestadvantage of all the programs.
India’s current economic slowdown is rooted in various aspects including slowdown inmanufacturing, economic conditions in Europe & USA, decrease in employment, consumption &saving patterns, CAD etc. The macro-economic scenario in FY14 will have lot of impact on thebudget. We all are awaiting the budget now with lot of anxiety and believe that “ ache din aanewale hain”. Let us also take astep forward and do forsomething for “ache din” of thecountry.
Your Chairman
CA. Nayan R. Kothari
Baroda Branch of WIRC of ICAI
It is not the position, but the disposition. 2
Forthcoming EventsBRANCH EVENTS
Seminar on analysis of Union Budget 2014
Day & Date :
Time :
Topic :
Faculty :
Fees :
Venue :
Saturday, 13.07.2014
10.30 am to 01.00 pm
Clause to clause analysis of Indirect Tax
provisions in Union Budget 2014
CA. Anirudh Sonpal, VadodaraCA. Saurabh Soparkar, Ahmedabad
Rs. 200/-
ICAI Bhawan
CPE Hrs. 2
Company Law Refresher Course (CLRC) CPE Hrs. 18
Day , Date & Time Topic Faculty
Fees :
CPE :
Venue :
Saturday; July 5, 2014(05.00 to 08.30 pm) shares, Bonus & Buyback of shares
CSR & Corporate Governance
Sunday; July 6, 2014(09.00 am to 12.30 pm) Board Committee and Board Meeting, Managerial Remuneration
Management and Administration of Company AGM & EGM
Friday; July 11, 2014(03.30 to 07.00pm)
Saturday; July 12, 2014(03.30 to 07.00pm) Auditors including Rotation of Auditor, Ceiling of Audit,
Friday; July 18, 2014(05.00 to 08.30 pm) Loan to Director, Loans & Investment by Company,
Restriction on Powers of Board
Saturday; July 19, 2014(05.00 to 08.30 pm) Private Limited Co. Vs. LLP
Formation of Private Limited Companies including OPC,Dormant Companies including drafting of MOA/ AOA
Rs. 2400 for the entire CLRC (Rs. 500 per session)
18 hours for the entire CLRC (3 hours per session)
ICAI Bhawan, Baroda
Share Capital including Allotment and Transfer of CS. Bhairav Shukla, Surat
Directors Appointment and Qualification including CA. Mehul Shah, Mumbai
Related Party Transactions , RPT Vis a vis AS 18 CS. Makrand Joshi, MumbaiDisclosure of Interest, KMP and case study
Provisions related Accounts and Audit - Audit and CA. Nilesh Vikamsey, Mumbai
Provisions related to Deposit and Registration of Charges CA. Shushrut Chitale, Mumbai
New changes specific to Private Limited Company, CS. M. C. Gupta, Ahmedabad
Workshop For Accountants
Day , Date & Time Topic Faculty
Fees :
Venue :
Monday, July 7, 2014(06.00 to 08.00 pm)
Tuesday, July 8, 2014(06.00 to 08.00 pm)
Monday, July 14, 2014(06.00 to 08.00 pm)
Tuesday, July 15, 2014(06.00 to 08.00 pm)
Rs. 50/- per session
ICAI Bhawan, Baroda
TDS Compliances CA. Nirav Shah, Vadodara
Finalization of Accounts CA. Kejal Pandya, Vadodara
Indirect Tax Compliance CA. Abhay Desai, Vadodara
Effective use of TALLY for Accountants CA. Farhad Wadia, Vadodara
Exemption U/s. 54,54F & 54EC of IT Actand other issues of taxation
Day & Date :
Time :
Faculty :
Tuesday, 08.07.2014
6:00 pm to 8:00
CA. Amar Shah
pm
STUDY CIRCLE
CPE Hrs. 2
Works Contract under VAT
Day & Date :
Time :
Faculty :
Tuesday, 22.07.2014
6:00 pm to 8:00
CA. Prakash Thakkar
pm
CPE Hrs. 2
Fees :
Venue :
Rs. 200/- per person per Study Circle
Conference Room, ICAI Bhawan
Annual General Meeting of the Baroda Branch of WIRC of ICAI on 30.07.2014, 6 pm onwards at ICAI Bhawan, Baroda
Baroda Branch of WIRC of ICAI
Men take only their needs into consideration, never their abilities.3
Direct Tax UpdatesCompiled by CA. Narendra Hindocha
1. Revised Direct Taxes Code
2. Maternity hospitals-whether theytreat illness
3. Sale of goodwill by a professional
Following para attracted my attention
Deduction for CSR expenditure inbackward regions and districts:
The CSR expenditure cannot beallowed as a business deduction as it isan application of income. Allowingdeduction for CSR expenditure wouldimply that the government would becontributing one third of thisexpenditure as revenue foregone.
I wonder whether the sameconsideration will apply to the CSRexpenditure which is now mandatoryunder the new Company law.
It also does away with settlement ofcases by Settlement Commission.
Further, losses of new units eligible forinvestment based incentive will not beallowed to be setoff against profits ofother units.
Section 10(23C) provides forexemption of income of hospital fortreatment of persons suffering fromillness. From first impression, youwould not see any difference betweenmaternity hospitals and otherhospitals. However, when it is a caseof claim for exemption, the AssessingOfficer is inclined to look at it with amagnifying glass. It is a differentmatter that most would not notice thiseven with magnifying glass. TheAssessing Officer disallowed theexemption on the ground thatpregnancy his not an illness. In twoappeals, his view was upheld but theHigh Court, in case of Nehru PrasutikaAspatal Samiti vs Commissioner OfIncome Tax that the exemption wasavailable considering that l ifethreatening conditions were oftenassociated with delivery.
In the case of B.C. Srinivasa Setty,Supreme Court held that amountreceived on transfer of goodwill is notliable to be charged to tax under the
Head `Capital gains' as it is notpossible to contemplate a `cost ofacquisition thereof'. To bring suchamounts to tax, section 55(2)(a)provided that the cost shall be taken tobe Nil. However, section 55(2)(a)refers to goodwill of a business but not`profession'. In that context, it washeld that the term `business' does notinclude `profession' and henceamount received on transfer ofgoodwill will not attract the charge toIncome-tax- [2014] 41 taxmann.com81 (Chennai - Trib.)-Dr. K. Premraj v.Deputy Commissioner of Income-tax,
There is a tendency on the part of theAssessing Officers to add the amountsof liabilities remaining unpaid for a longperiod by using provisions of section41. Some additions on this groundhave been confirmed in appeal. Recentdecision of Gujarat High Court hasread the law correctly to the effect thatthere cannot be any addition undersection 41(1) unless cessation ofliability occurs during the year itself. Infact as regards any non-genuineliability, the addition is further notjustified considering that when therewas no liability, there was no questionof cessation thereof-Commissioner OfIncome Tax Versus Bhogilal RamjibhaiAtara- Tax Appeal NO. 588 of 2013.
According to Council GeneralGuidelines, 2008, a member couldtake maximum of 45 tax auditassignments. These guidelines arechanged to permit a member toconduct 60 audits in Financial year2014-15 and later financial years.
The decision of Gujarat High Court incase of The Commissioner Of IncomeTax Versus Moon Star Develpers andvarious other appeals appears to opena Pandora's box. According to thedecision, in case there is substantialunderutilization of FSI, the entire profitof the developer of the housing projectis not eligible for deduction undersection 80IB. The amount relating to
4. Liabilities outstanding for long
5. Ceiling on number of tax auditassignments
6. Deduction under section 80IB whenFSI not utilized fully
unutilized FSI is to be considered profitfrom sale of right in land and not profitfrom development of housing project.What is substantial underutilization isleft to be decided on a case to casebasis and that is what is most likely toresult in litigations which it may beclose to impossible of being resolvedin a fair manner. The reason for thedecision was that in most of the cases,utilization of FSI was only about 1/4thor 1/3rd. However, the deduction isdisallowed in all cases. In one of thecases, FSI utilisation was about 66%.The Department may apparently claimthat underutilization of 34% issubstantial and sufficient to denydeduction under section 80IB(10) tocorresponding extent.
Vide notification dated 1-11-2013,Cyprus is notified under section 94Aw i t h , i n t e r a l i a , f o l l o w i n gconsequences:
If an assessee enters into a transactionwith a person in Cyprus, then all theparties to the transaction shall betreated as associated enterprises andthe transaction shall be treated as aninternational transaction resulting inappl icat ion of transfer-pricingregulations including maintenanceof documentations [Section 94A(2)].No deduction in respect of any otherexpenditure or allowance arising fromthe transaction with the person locatedin Cyprus shall be allowed unless theassessee maintains and furnishes the
prescribed information [Section94(3)(b) read with Rule 21AC]. If anysum is received from a person locatedin Cyprus, then the onus is on theassessee to satisfactorily explain thesource of such money in the hands ofsuch person in the hands of thebeneficial owner, and in case of hisfailure to do so, the amount shall bedeemed to be the income of theassessee [Section 94A(4)]. Anypayment made to a person located inCyprus shall be liable for withholdingtax at 30 per cent or a rate prescribed inAct, whichever is higher [ Section94A(5)].
7. Action against hostile jurisdictions
Baroda Branch of WIRC of ICAI
Believe and act as if it were impossible to fail. 4
N Vaghul
Yogi Deveshwar
Ex-Chairman, ICICI Bank Limited
India continues to experience internal issuesthat are perhaps even more challenging thanthe potential external risks. There are thewise disparities in education, access to basicservices, income levels and standards ofliving among our people, regional and urban-rural asymmetries in development andeconomic growth and the resultant inabilityof significant portions of our population toparticipate in our country’s extraordinarygrowth and wealth creation. Indian businessmust take cognizance of these issues andapply its entrepreneurial capabilities,strengths in innovation and financial capitalto devise and implement solutions that willaccelerate resolution of these problems in asustainable manner. We must work towardsensuring that the disadvantages have equalopportunity to improve the quality of theirlives and are not left behind those with readyfruits of economic growth.
--Organizations are custodians of theinterests of all their stakeholders and mustact in consonance with them. Corporategovernance has become a key requirementf o r o rgan i z a t i ons , espec i a l l y asorganizational activities expend and grow incomplexity. It has also become a criticalparameter on which stakeholders evaluatethe organization. Recent events in thecorporate world globally have brought intofocus the consequences of unmitigatedcorporate greed and the resultant loss ofwealth for stakeholders. This has raisedserious questions on the corporate practicesadopted by organizations. Corporategovernance implies not only structure, but aset of basic values that must be instilledacross the organization”.
Chairman, ITC Ltd.
Traditionally, companies have participated inthe task of creating societal value throughphilanthropic activities. This approach,though well intentioned, has its limitations.Confined to philanthropy, corporates tend tolimit their CSR to only extending financialsupport to social projects. As a result, thereis a disproportionate focus on outlays ratherthan on outcomes. In such an approach, the
capacity to extend financial support faroutweighs the transformational capacity ofbusiness to create larger societal value.Global research by renowned experts suchas Prof. Michael Porter and Mark Kramer ofHarvard have however established that
delivered through astrategic business context is moremeaningful and scalable. Philanthropy, asnoble as it is, is seen to be less effective thanCSR that is linked to the context of business.And that to my mind is the critical differencewhich can make business’s socialcontribution more meaningful, scalable andsustainable. The focus of strategic CSR is onoutcomes that enhance the business contextand simultaneously add value to the socialdimension. A focus on outcomes spursproactive innovation to
Mentor, Educator, Contributor, SpiritualLeader
Corporate Citizenship is responsiblemembership of Industry, Community,Society, Country and Humanity, MotherEarth and the World. It also means a journeyin the direction towards the destination ofwell-being of all. Success of all stakeholdersis the essence of responsible citizenship.
The stakeholders are investors, customers,suppliers, one people, community andcountry. Corporate Power can influence eachof these stakeholders in both contributingand harming. It is the capacity to makedifference and to influence the future courseas referred to self and the stakeholders.Power is and basically, there arethree factors or aspects of power.
The three factors of power are knowledge,wealth and strength. These are considereddivine in Indian Human Value System and arerevered in the names ofand These three powers arethe core matter of three consciousness ofcreation, continuation and conclusion.
Corporate power enhances the corporategovernance. Corporate governance is theprocess of protecting existing wealth, addingnew wealth, taking care of equity towardspeople and all stakeholders and interactingagencies. It is ensuring the simultaneousperseverance and progress of Ethics,Excellence, Economy and Ecology, utilizing
societal value creation
deliver meaningful
social interventions optimizing resources
and capacities at hand.
‘Shakti’
‘Saraswati’, ‘Laxmi’
‘Parvati’(Devi).
G. Narayana, ‘GURUJI’
Corporate CitizenshipCompiled by CA. Bimal R. Bhatt
26QBCompiled by CA. C. I. Shah
c o r p o r a t e p o w e r a n d c o r p o r a t econsciousness through continuouscontributions.
Through balance integration of CorporateGovernance and Responsible CorporateCitizenship, Organizations can contribute topreserve, conserve and reserve the naturalresources and serve stakeholders.
Payment on transfer of certain immovableproperty other than agricultural land.
Explanation.— For the purposes of thissection,-
194-IA. (1) Any person, being a transferee,responsible for paying (other than the personreferred to in section 194LA) to a residenttransferor any sum by way of considerationfor transfer of any immovable property (otherthan agricultural land), shall, at the time ofcredit of such sum to the account of thetransferor or at the time of payment of suchsum in cash or by issue of a cheque or draftor by any other mode, whichever is earlier,deduct an amount
sum as income-tax thereon.
(2) No deduction under sub-section (1) shallbe made
(3) The provisions of section 203A shall notapply to a person required to deduct tax inaccordance with the provisions of thissection.
(a) "agricultural land" means agriculturalland in India, not being a land situate inany area referred to in items (a) and (b)of sub-clause (iii) of clause (14) ofsection 2;
(b) "immovable property" means any land(other than agricultural land) or anybuilding or part of a building.]
For example, If amount of property sold is70 Lakhs, would TDS be calculated at 20Lakhs or on 70 Lakhs?
TDS is to be deducted on the amountpaid/credited to the seller. In the above e.g.the deduction will be on total amount i.e. on70 Lakhs.
Here the mention of section 194 LA is made,
equal to one per cent of
such
where the consideration for the
transfer of an immovable property is less
than fifty lakh rupees.
Meaning there by that person so
deducting tax need not have TAN
Baroda Branch of WIRC of ICAI
For success, attitude is equally as important as ability.5
ofcourse it has very little value frompracticing view point however , the samehas been reproduced for the reference.
194LA. Any person responsible for paying toa resident any sum,
under any law forthe time being in force, of any immovableproperty (other than agricultural land), shall,at the time of payment of such sum in cash orby issue of a cheque or draft or by any othermode, whichever is earlier,
Provided that no deduction shall be madeunder this section where the amount of suchpayment or, as the case may be, theaggregate amount of such payments to aresident during the financial year does notexceed [two] hundred thousand rupees.
(i) "agricultural land" means agricultural landin India including land situate in anyarea referred to in items (a) and (b) ofsub-clause (iii) of clause (14) ofsection 2;
(ii) "immovable property" means any land(other than agricultural land) or anybuilding or part of a building.]
F i r s t o f g o t o t h e l i n kh t t p s : / / o n l i n e s e r v i c e s . t i n . e g o v -nsdl.com/etaxnew/tdsnontds.jsp, go to thelink Form 26QB please make sure thefollowing
Permanent Account No. (PAN) of Transferor(Payee/Seller)*
FOR any querry, the member may refer tofollowing link of nsdl.
ht tps:/ /www.t in-nsdl .com/TDS/TDS-FAQ.php
Buyer may approach any of the authorizedBank Branch to facilitate in making e-payment.
[Payment of compensation on acquisitionof certain immovable property.
Explanation.-For the purposes of thissection, -
however some important question hasbeen taken from the site
being in the nature of
c o m p e n s a t i o n o r t h e e n h a n c e d
compensation or the consideration or the
enhanced consideration on account of
compulsory acquisition
deduct an
amount equal to ten per cent of such sum as
income-tax thereon:
,
You may access the access the link‘View/Payment of TDS on property” on theTIN website. On entering the details as perthe acknowledgment slip, you will beprovided options to either Print theAcknowledgment Slip.
In case you desire to make an onlinepayment, on the same screen option forSubmit to the bank is provided wherein youhave to select the Bank for payment. You willbe taken to the netbanking login screenwherein you can make the payment online.
How the transaction with joint parties be filedin form 26QB ?
Online statement cum challan Form/ Form26QB is to be filled in by each buyer forunique buyer-seller combination forrespective share. E.g. in case of one buyerand two sellers, two forms have to be filled inand for two buyers and two seller, four formshave to be filled in for respective propertyshares.
a) Acknowledgment number for the Form26QB furnished is available in the Form26AS (Annual Tax Statement) of theDeductor (i.e. Purchaser/ Buyer ofproperty). The same can be viewedf r o m t h e T R A C E S w e b s i t e(www.tdscpc.gov.in) or
b) Taxpayer can also click the option ‘ViewAcknowledgment’ hosted on the TINwebsite. Taxpayer needs to enter PANof the Buyer and Seller, Total Paymentand Assessment Year (as mentioned atthe time of filing the Form 26QB) toretrieve the Acknowledgment Number.
After making the payment one has to wait forseven days for the details to be reflected onT R A C E S w e b s i t e -http;//www,tdscpc.gov.in/
As a first time user, you will have to registeron this website. Once you register whetheras seller or buyer, you will be able to obtainthe Form 16B or 26QB which has beenapproved and is reflected against your PANIN YOUR Form 26AS.
Please check the 26AS after seven days andyou will notice that the payment you haseffected against TDS on sale of property isreflected in Part F of 26AS. This will give thetotal detail like TDS Certificate number, name
if a person fails to save the generatedacknowledgement
of the deductee, PAN of the deductee,acknowledgement, total transaction amount,transaction date, TDS deposited , date ofdeposit status of booking and date ofbooking.
Once the payment is reflected in 26AS, youwill have to go to the TRACES again. Login tothe website, and click on “Downloads” .In thedropdown menu, click on requesteddownload, here fill in the acknowledgementnumber (9 digit) which is reflected on Form26AS Part F as mentioned above. View thestatus of application, which generates anapplication request number.
With in couple of hours, the application getsprocessed and you will be able to view yourForm 16Bn by putting in the request numberwhich you have obtained. Similar processhas to be followed by the seller to obtain form26QB. The entire process is system drivenand works very smoothly.
- (compiled from income tax website )
Judicial Decisions onExcise and Service Tax
Reviewed By: CA Anirudh Sonpal
I. S E R V I C E TA X V O L U N TA R YCOMPLIANCE ENCOURAGEMENTSCHEME
II. WORKS CONTRACT
1.1 The Delhi High Court, while dismissingthe petition filed by the assessee, heldthat there is no provision under theVCES,2013 to extend the date ofpayment of the first instalment of 50%and accordingly the declarant was noteligible to claim benefit of the scheme.
1.2 The Gujarat High Court, while allowingthe petition filed by the declarant,observed that amounts paid after01.03.2013 but before enactment ofthe VCES, 2013 on 10.05.2013 cannotbe excluded from the Form VCES-1declaration as such a stand wouldsubstantially mutilate the definition ofterm "tax dues' ; the Honourable Highcourt further observed that it is wellsettled in law that an authority cannot,through a circular or clarification,override the provisions of the statute.
[2014-TIOL-471-HC-Delhi]
[2014-TIOL-630-HC-Gujarat]
Baroda Branch of WIRC of ICAI
Happiness is not a goal, it is a by-product. 6
A five Judge Constitution Bench of theHonourable Supreme Court of India,while overruling the three Judge Benchof the apex court, has distinguishedbetween ‘Contract for Sale of Goods’and ‘Works Contract’ in the petitionfiled by Kone Elevator India Pvt Ltd andheld that supply, erection, installationand commissioning of l i f t atcustomer's premises constitutes‘Works Contract’.
3.1 The Honourable Allahabad High Court,while allowing the petition filed byGularia Chini Mills for cenvat creditclaimed of input services in course ofmanufacture of sugar, held, withreference to Rule 6 of the Cenvat CreditRules,2004:
1. Bagasse, generated as residue in thecourse of manufacture and used asboiler as generation of steam forr unning turbine in course ofmanufacture of sugar, was waste andhence not manufacture of exemptedgoods;
2. The electrical energy so generated frombagasse was neither excisable norexempted goods.
[Similar issue addressed by the DelhiTribunal in 2014-302-ELT-246 andAhmedabad Tribunal in 2014-302-ELT-258]
3.2 Cenvat Credit was eligible of exciseduty on Laptops, used to operate theAluminium Press and falling underChapter 84 of the Central excise Tariff;mere movability of such laptops cannotbe reason to hold that they are notcapital goods.
Provident Fund payable by hirer, onmanpower hired, was part of the grossamount as was the remuneration paidto the agency, and hence was to beincluded in the value of the taxableservice.
[2014-TIOL-57-SC]
[2014-34-STR-175-Allahabad H.C.]
[2014-302-ELT-308-Tribunal Delhi]
[2014-34-STR-225-Tri – Delhi]
III. CENVAT CREDIT
IV. VALUATION
V. MANUFACTURE
Process of cutting/slitting the jumborolls on paper by placing the carbonpaper in between two layers of thepaper does not amount to manufactureas no distinct product emerges and thepaper retains its identity
Interest was leviable on differential dutypaid subsequently on supplementaryinvoice after date of clearance since itindicates short payment on the date ofremoval.
[2014-302-ELT-310-Tribunal Delhi]
[2014-302-ELT-237-Gujarat H.C.]
VI. INTEREST & PENALTIES
Compiled by CA. Kalpit Bhagat
Analysis of the
along with Rules - Part 1Companies Act, 2013
Unlisted Public Companies
a) Companies business letters, Invoice,letter papers and all notices and otherofficial publications should contain thefollowing details:
b) Rotation of Auditor
I) Name
ii) Address of Registered Office
iii) Corporate Identity Number (CIN)
iv) Telephone number
v) E-mail id.
vi) Fax number and website addresses, ifany, shall also be printed
Every Company shall at the first AnnualGeneral Meeting appoint an individual ora firm as an auditor who shall hold officefrom the conclusion of that meeting tillthe conclusion of its 6th AGM. However,the Company shall place the matterrelating to such appointment forratification by members at every AGM.The Act provides for compulsory rotationof individual auditors in every 5 years andof audit firm in every 10 years provided:
i) If paid up share capital is Rs. 10crores / more
OR
ii) If borrowings from banks / FI is Rs.50 crores / more
A transactional period of 3 years hasbeen prescribed for existing companies
to comply with the provisions of therotation of the auditors. Thus, if an auditpartner or audit firm is due to completethe maximum prescribed term of five andten years respectively, the rotationalrequirement applies at the end of threeyear starting from 1st April, 2014.
The companies shall be required toappoint as internal auditor within 6months w.e.f. 1st April, 2014 provided:
i) If paid up share capital is Rs. 50crores / more
OR
ii) If Turnover is Rs. 200 crores / more
OR
iii) If borrowings from banks / FI is Rs.100 crores / more
OR
iv) If outstanding Deposits is Rs. 25crores / more
The Company needs to have an auditcommittee. It should have a minimum of3 directors with majority of independentdirectors and majority of the member ofthe committee should have the ability toread and understand the financialstatement provided:
I) If paid up share capital is Rs. 10crores / more
OR
ii) If Turnover is Rs. 100 crores / more
OR
iii) If borrowings from banks/ FI ordeposits is Rs. 50 crores / more
e) Requirement of Nomination andRemuneration Committee
Every company shall constitute anomination and remuneration committeeconsisting of 3 or more non executivedirectors of which not less than ½ shallbe independent directors provided:
i) If paid up share capital is Rs. 10crores / more
OR
ii)If Turnover is Rs. 100 crores / more
OR
iii) If borrowings from banks/ FI ordeposits is Rs. 50 crores / more
Further, every company with more than1000 shareholders, debenture holder,
c) Appointment of Internal Auditor
d) Requirement of Audit Committee
Baroda Branch of WIRC of ICAI
Nothing is good or bad, but thinking makes it so.7
deposit holders and any other securityholders shall constitute a StakeholdersRelationship committee consisting of achairperson who is a non executivedirector and such other member as maybe decided by the Board.
Companies to appoint following KMP ifpaid up share capital is Rs. 10 crores /more.:
i) Chief Executive Officer (CEO) orManaging Director (MD)
ii) Company Secretary (CS)
iii) Wholetime Director (WTD)
iv) Chief Financial Officer (CFO)
Company with following criteria shallappoint minimum two IndependentDirectors:
i) If paid up share capital is Rs. 10crores / more
OR
ii) If Turnover is Rs. 100 crores / more
OR
iii) If loans, debentures and deposits - isRs. 50 crores / more
Company with following criteria shallappoint atleast 1 women director:
i) If paid up share capital is Rs. 100crores / more
OR
ii) If Turnover is Rs. 300 crores / more
Director has to file Form DIR 11 within 30days from the date of resignationforwarding resignation to the Registraralong with reasons for the resignation.This is in addition to the existingrequirement of filing of resignation by theCompany.
Companies shall establish a VigilMechanism for their Directors andEmployees to report their genuineconcerns or grievances provided:
i) If Company accept Deposits fromPublic
OR
ii) If borrowings from banks/ FI is morethan Rs. 50 crores
f) Appointment of Key ManagerialPersonnel (KMP)
g) Appointment of Independent Directors
h) Appointment of Woman Director
i) Resignation of Director
j) Establishment of Vigil Mechanism
k) Voting Through Electronic Means
l) Acceptance of Deposits
m) Secretarial Audit Report
n) Annual Return Certification byPractising Company Secretary
E-voting has been now allowed for thecompanies having 1000 or moreshareholders subject to following:
i) Shall remain open for days rangingfrom 1 to 3 days
And
ii) Such voting period shall becompleted 3 days prior to the date ofthe general meeting.
Companies can accept Deposits frompersons other than its shareholders,provided:
i) Shareholders have approved byspecial resolution
And
ii) The special resolution is filed beforeaccepting Deposits
Subject to:
iii) If Networth is Rs. 100 crores /more
OR
iv) If Turnover is Rs. 500 crores / more
Companies are required to obtainSecretarial Audit Report in Form MR3Provided;
i) If paid up share capital is Rs. 50crores / more
OR
ii) If Turnover is Rs. 250 crores / more
The Annual Return is required to beprepared upto the date of the closure ofthe financial year. Earlier as perCompanies Act, 1956 the Annual Returnis to contain the information upto the dateof the Annual General Meeting of theCompany.
Further the Annual Return of everycompany needs to disclose theadditional information regarding:
i) Principal business activities of theCompany alongwith the particulars ofits holding, subsidiary and associateCompany
ii) Details of the promoters, keymanagerial personnel alongwith thechanges therein since the closure ofthe last financial year.
iii) Details of the other securities issued
by the Company
iv) Remuneration of the Directors andkey managerial personnel
v) Penalties and punishments imposedon the Company, its directors orofficers
vi) Details relating to the certification ofcompliances etc.
The companies need to certify annualreturn by Company Secretary only:
i) If paid up share capital is Rs. 10crores / more
OR
i) If Turnover is Rs. 50 crores / more
If a Company fails to file its annual returnthen it may lead to rigorous punishmentincluding prosecution.
As per Section 135 of the CompaniesAct, 2013 CSR is applicable to anycompany (whether private or public)having:
i) Net worth of Rs. 500.00 crores /more,
OR
ii) Turnover of Rs. 1000.00 crore / more
OR
iii) Net profit of Rs. 5.00 crore /moreduring any financial year
If any of the above criteria appliescompany has to spend in every financialyear at least 2% of the average net profitsmade during the three immediatelypreceding financial years, in pursuanceof its CSR Policy. The company can givepreference to the local area and areasaround it where it operates for spendingthe amount earmarked for CorporateSocial Responsibility activities.
Instead of specific list of cases in whichcharge was required to be registeredunder the Companies Act, 1956, underthe new Companies Act, all types ofcharges would be required to beregistered, whether created within oroutside India on its property or assets orany of its undertakings whether tangibleor otherwise and situated in or outsideIndia.
The Charge is to be registered with theROC within 30 days of its creation. Theadditional period for registration of
o) Corporate Social Responsibility (CSR)
p) Registration of charges
Baroda Branch of WIRC of ICAI
We are all in the gutter, but some of us are looking at the stars. 8
charge has been increased from 30 daysto 270 days (i.e. 300 days). If the chargeis not registered within 300 days, thenthe application will be required to bemade to the Central Government. (Underthe Companies Act, 1956 it was requiredto be made to the CLB after the expiry of60 days of creation of charge).
As per the amendment of the CompaniesAct, 2013 the companies need to takeapproval of the Board of Directors at theirmeeting for entering into any contractwith respect to sale, purchase or supplyof any goods or selling or otherwisedisposing of materials, or buyingproperty of any kind, leasing of propertyof any k ind, under wr i t ing thesubscription of securities etc.
In case of a company with a paid upshare capital of Rs. 10 Crores and more,the approval by way of special resolutionis needed for all RTPs which are not in the
q) Related Party Transactions
ordinary course of business and not atarm’s length.
As prescribed in the rules notified,approval by way of special resolution isrequired for
- Sale/purchase of goods exceeding 25%of turnover
- Selling/buying property exceeding 10%of net worth
- Leasing of property exceeding 10% ofnet worth/ turnover.
- Services exceeding 10% of net worth.
Every contract or arrangement enteredinto under this section for which approvalis required under this section, then theBoard needs to disclose all thesetransactions in its report alongwithnecessary justification.
Under the Companies Act, 2013 an
r) Intimation of Change of registeredoffice
intimation of change of registered office isrequired to be given within 15 days ofchange instead of 30 days as providedunder the Companies Act, 1956.
A Company may declare dividend for anyfinancial year out of the profits of theCompany for that financial year afterproviding for depreciation or out of theprofits of the Company for any previousfinancial year or years arrived at afterproviding for depreciation and remainingundistributed. Fur ther, instead oftransferring a fixed % of profits to reservesbefore declaring a dividend as it deemnecessary under the old Companies Act,1956 such transfer is not mandatory.
Companies are required to prepareConsolidated Accounts. For this purposesubsidiary company includes AssociateCompany and Joint Venture Company.
s) Declaration of Dividend
t) Consolidation of Accounts
Batch Starts From July 2014 On Sunday.
ERINA INFOTECHERINA INFOTECH
Sayaji Gunj Vadodara : 97278 09966
Baroda Branch of WIRC of ICAI
9
Explanation.—For the purposes of thissection, a willful attempt to evade any tax,penalty or interest chargeable or imposableunder this Act or the payment thereof shallinclude a case where any person—
(i) has in his possession or control anybooks of account or other documents(being books of account or otherdocuments relevant to any proceedingunder this Act) containing a false entryor statement; or
(ii) makes or causes to be made any falseentry or statement in such books ofaccount or other documents; or
(iii) willfully omits or causes to be omittedany relevant entry or statement in suchbooks of account or other documents;or
(iv) causes any other circumstance toexist which will have the effect ofenabling such person to evade any tax,penalty or interest chargeable orimposable under this Act or thepayment thereof.]
276CC. If a person willfully fails to furnish indue time [the return of fringe benefits whichhe is required to furnish under sub-section(1) of section 115WD or by notice givenunder sub-section (2) of the said section orsection 115WH or] the return of incomewhich he is required to furnish under sub-section (1) of section 139 or by notice givenunder [clause (i) of sub-section (1) ofsection 142] or section 148 8[or section153A], he shall be punishable,—
(i) in a case where the amount of tax,which would have been evaded if thefailure had not been discovered,exceeds [twenty-five] hundredthousand rupees, with rigorousimprisonment for a term which shallnot be less than six months but whichmay extend to seven years and withfine;
(ii) in any other case, with imprisonmentfor a term which shall not be less thanthree months but which may extend to[two] years and with fine:
Provided that a person shall not beproceeded against under this section forfailure to furnish in due time the [return of
Failure to furnish returns of income.
fringe benefits under sub-section (1) ofsection 115WD or] return of income undersub-section (1) of section 139—
(i) for any assessment year commencingprior to the 1st day of April, 1975; or
(ii) for any assessment year commencingon or after the 1st day of April, 1975, if—
(a) the return is furnished by him before theexpiry of the assessment year; or
(b) the tax payable by him on the totalincome determined on regularassessment, as reduced by the advancetax, if any, paid, and any tax deducted atsource, does not exceed three thousandrupees.]
When penalty u/s 271 (1) ( c) was quashed ,prosecution could not stand.
299 ITR 363 H.T.POWER STRUCTURE (P)LTD V R.A. SHARMA 2008 hon’ableGUJARAT HIGH COURT HAS observed thatif part of the tax uhas been paid and forremaining amount of tax payable, extentionhas been sought for by the assessee,prosecution u/s 276 C was to be quashed.
Whether a company cannot be prosecutedfor offences u/s 276,277and 278. Sinceeach one of these section requiresimposit ion of mandatory term ofimprisonment with a fine and leaves nochoice to court to impose only a fine.
Whereas in case of section 276 CC onelandmark judgement of supreme court isworth noting
IN which the Hon’able supreme court hasobserved following.
IT: Benefit of proviso to section 276CC isavailable only to voluntary filing of return asrequired under Section 139(1) and saidproviso would not apply after detection offailure to file return and after a notice undersection 142(1)(i) or section 148 is issued
In respect of section 276C followingjudgments are noteworthy
SASI ENTERPRISE V ASSISTANTCOMMISSIONER OF INCOMETAX 2014 ,41 TAXMANN.COM
Offences and prosecutionhas been dealt with Under
chapter xxiiCompiled by CA. C. I. Shah
Offences and prosecution has been dealtwith Under chapterXXII, of the income taxAct. The purpose of this discussion is togive bird eye view to the members in view ofthe current notices are being issued to theassessee for the breach / violation of theprovisions of the income tax Act.
1. Person evading tax
2. Person failing to furnish return ofincome.
3. Person failing to furnish return insearch cases.
However the text of two limbs of the sectionare only produced here under:
Willful attempt to evade tax, etc.
276C. (1) If a person willfully attempts inany manner whatsoever to evade any tax,penalty or interest chargeable or imposableunder this Act, he shall, without prejudice toany penalty that may be imposable on himunder any other provision of this Act, bepunishable,—
(I) in a case where the amount sought to beevaded exceeds [twenty-five] hundredthousand rupees, with rigorousimprisonment for a term which shall notbe less than six months but which mayextend to seven years and with fine;
(ii) in any other case, with rigorousimprisonment for a term which shall notbe less than three months but whichmay extend to [two] years and with fine.
(2) If a person willfully attempts in anymanner whatsoever to evade the payment ofany tax, penalty or interest under this Act, heshall, without prejudice to any penalty thatmay be imposable on him under any otherprovision of this Act, be punishable withrigorous imprisonment for a term whichshall not be less than three months butwhich may extend to [two] years and shall,in the discretion of the court, also be liable tofine.
Section 276 has been broadly divided in tothree elements.
Failure is always temporary, only giving up makes it permanent.
Baroda Branch of WIRC of ICAI
Our attitude toward life determines life's attitude towards us.
Important Due Dates for July 2014Compiled by CA. Abhijit J. Kotecha
10.07.2014 Excise Returns - ( Monthly Return by Large Units / Return by EOU / Monthly return of receipt &consumption of each of Principal Inputs, assessees required to submit ER-5 return) June'14
the Working partners of the Partnership firm / LLP) Fin. Yr.: 2013-14
10
calling for filing of return of income
IT: Pendency of appellate proceedings relating to assessment is nota bar for initiating prosecution proceedings under section 276CC
IT: A firm is independently required to file return of income andmerely because partners of firm in their individual returns disclosedthat no return has been filed by firm due to non-finalization of booksof account, would not nullify liability of firm to file its return as persection 139(1)
IT: In term of provisions of section 278E, as regards prosecution ofoffence like section 276CC, Court has to presume existence ofmens rea and it is for accused to prove contrary and that too beyondreasonable doubt.
Regarding mens rea , Reasonable cause, Presumption we shalldiscuss in next letter.
FINANCIAL CONTROLLER(On Contractual Basis)
www.gsfdcltd.co.in
GSFDC Ltd. requires Financial Controller at its RegisteredOffice in Vadodara, on Contractual Basis. InterestedCandidates having ICWA/CA degree with minimum 5 yearspost qualification experience of having worked in public ltd.companies may visit our website
for further details to apply on or before 20.07.2014.
Gujarat State Forest Development Corporation Ltd.(A Govt. of Gujarat Undertaking)
Baroda Branch of WIRC of ICAI
PHOTOFLASH
11Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can
help with man with the wrong mental attitude.
Beginners Workshop on Indirect Taxes
CA. Pathik Shah on 04.05.2014 CA. Priyam Shah on 04.05.2014 CA. Abhay Desai on 11.05.2014CA. Nirav Shah on 27.04.2014
Certificate Course on Valuation
CA. Jayashankar on 03.05.2014 CA. Srinivasan on 04.05.2014 CA. Gagan Deep Singh on 10.05.2014
Dr PT Giridharan on 19.04.2014 CA. Narayanan on 20.04.2014 CA. TV Balasubramaniam on 26.04.2014
Direct Tax Refresher Course (DTRC)
CA. Amar Shah, CA. Sanjay Agrawal &CA. Manish Baxi on 07.06.2014
Adv. Kapil Goelon 31.05.2014
CA. Nihar Jamusariaon 31.05.2014
CA. N. C. Hegdeon 14.06.2014
CA. Vishal Gadaon 14.06.2014
Western Region CA Students Cricket League 12-13 April, 2014 Organised & Hosted by Baroda Branch of WICASA
Trophy presented by Mr. V. K. Bhatia, Zonal Head, Bank ofBaroda & CA. Manesh Mehta - Former Director, Bank of Baroda
Baroda Branch of WIRC of ICAI
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