Search This Blog

Saturday, March 30, 2013

Change in shareholding by 2% or more to be disclosed now even if resultant shareholding falls below 5%

Print Friendly and PDFPrintPrint Friendly and PDFPDF
NOTIFICATION NO. LAD-NRO/GN/2012-13/36/7368, DATED 26-3-2013
In exercise of the powers conferred under section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to amend the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, namely:-
1. These regulations may be called the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2013.
2. They shall come into force on the date of their publication in the Official Gazette.3. In the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 -
(i) in regulation 10,
(a) in sub-regulation (3),
(1) after the words “buy-back of shares”, the words “by the target company” shall be inserted.
(2) for the words “on which the voting rights so increase” the words “of the closure of the said buy-back offer”, shall be substituted.
(b) in sub-regulation (4), in the second proviso to clause (c), for the words “on which the voting rights so increase” the words “of closure of the buy-back offer by the target company”, shall be substituted.
(ii) in regulation 13,
(a) in sub-regulation (2),
(1) in clause (g) for the words, figures and numbers “special resolution is passed for allotment of shares under sub-section (1A) of section 81 of the Companies Act, 1956 ” the words “the board of directors of the target company authorises such preferential issue.”, shall be substituted.
(2) in clause (h) for the words and numbers “such increase in the voting rights beyond the relevant threshold stipulated in regulation 3″ the words “closure of the buy-back offer by the target company”, shall be substituted.
(b) after sub-regulation (2), the following new sub-regulation shall be inserted, namely -
“(2A) Notwithstanding anything contained in sub-regulation (2), a public announcement referred to in regulation 3 and regulation 4 for a proposed acquisition of shares or voting rights in or control over the target company through a combination of, -
(i) an agreement and any one or more modes of acquisition referred to in sub-regulation (2) of regulation 13, or
(ii) any one or more modes of acquisition referred in clauses (a) to (i) of sub-regulation (2) of regulation 13,
shall be made on the date of first such acquisition, provided the acquirer discloses in the public announcement the details of the proposed subsequent acquisition.”
(iii) in regulation 22, after sub-regulation (2), the following new sub-regulation shall be inserted, namely -
“(2A) Notwithstanding anything contained in sub-regulation (1), an acquirer may acquire shares of the target company through preferential issue or through the stock exchange settlement process, other than through bulk deals or block deals, subject to ,-
(i) such shares being kept in an escrow account,
(ii) the acquirer not exercising any voting rights over such shares kept in the escrow account:
Provided that such shares may be transferred to the account of the acquirer, subject to the acquirer complying with requirements specified in sub-regulation (2).”
(iv) in regulation 23, in sub-regulation (1), after clause (c), the following proviso shall be inserted, namely-
“Provided that an acquirer shall not withdraw an open offer pursuant to a public announcement made under clause (g) of sub-regulation (2) of regulation 13, even if the proposed acquisition through the preferential issue is not successful.”
(v) in regulation 29, sub-regulation (2), shall be substituted with following, namely-
“Any person, who together with persons acting in concert with him, holds shares or voting rights entitling them to five per cent or more of the shares or voting rights in a target company, shall disclose the number of shares or voting rights held and change in shareholding or voting rights, even if such change results in shareholding falling below five per cent, if there has been change in such holdings from the last disclosure made under sub-regulation (1) or under this sub-regulation; and such change exceeds two per cent of total shareholding or voting rights in the target company, in such form as may be specified.”

Amount not allowed for non deduction of TDS is eligible for deduction U/s. 80IB

Print Friendly and PDFPrintPrint Friendly and PDFPDF
ITAT PUNE BENCH ‘B’
Income-tax Officer, Ward-9(3), Pune
v.
Kalbhor Gawade Builders
IT Appeal No. 386 (PN.) of 2011
[ASSESSMENT YEAR 2007-08]
Date of Pronouncement- 30.10.2012
 
We are not inclined to interfere with the finding of the CIT(A) because on account of violation of conditions prescribed under clause (ia) the implication u/s.40(a) would be that the said amount will not be deducted in computing income chargeable under the head ‘profits and gains of business or profession’. The same will form part of profits and gains of business or profession of the assessee which could be included along with income under all the other heads in the assessee’s gross total income. Once the said amount in question was disallowed u/s. 40(a)(ia), the same constituted a part and parcel of the assessee’s profits and gains from the business, which in turn would comprise a part of its gross total income and would be eligible for deduction in accordance with and to the extent specified by section 80IB. In case there is no other income from which amount could be disallowed in computing profit and gains of business was derived. Accordingly assessee was eligible to claim deduction u/s.80IB in respect of this amount. In this background the CIT(A) held that income representing the amounts of addition made on account of disallowance u/s. 40(a)(ia) is not derived from eligible business then what other activity was the said income derived from. In order to have an income there must be a source. As such any addition made to the business income went to increase the business profit but such business profit being fully exempt under the provisions of section 80IB(10), the additional amount too was eligible to claim deduction and could not be taxed separately held by the CIT(A). This reasoned factual finding need no interference from our side.

What is Cheque Truncation & Cheque Truncation in India

Print Friendly and PDFPrintPrint Friendly and PDFPDF

1. What is Cheque Truncation?
Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point with the presenting bank en-route to the drawee bank branch. In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc. Cheque truncation thus obviates the need to move the physical instruments across branches, other than in exceptional circumstances for clearing purposes. This effectively eliminates the associated cost of movement of the physical cheques, reduces the time required for their collection and brings elegance to the entire activity of cheque processing.
2. Why Cheque Truncation in India?
As explained above, Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the scope for clearing-related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-related problems, thus benefitting the system as a whole. With the other major products being offered in the form of RTGS and NEFT, the Reserve Bank has created the capability to enable inter-bank and customer payments online and in near-real time. However, as cheques are still the prominent mode of payments in the country and Reserve Bank of India has decided to focus on improving the efficiency of the cheque clearing cycle, offering Cheque Truncation System (CTS) as an alternative. As highlighted earlier, CTS is a more secure system vis-a-vis the exchange of physical documents.
In addition to operational efficiency, CTS offers several benefits to banks and customers, including human resource rationalisation, cost effectiveness, business process re-engineering, better service, adoption of latest technology, etc. CTS, thus, has emerged as an important efficiency enhancement initiative undertaken by Reserve Bank in the Payments Systems area.
3. What is the status of CTS implementation in the country?
The Reserve Bank has implemented CTS in the National Capital Region (NCR), New Delhi and Chennai with effect from February 1, 2008 and September 24, 2011. After migration of the entire cheque volume from MICR system to CTS, , the traditional MICR-based cheque processing has been discontinued in these two locations.. Based on the advantages realised by the stakeholders and the experienced gained from the roll-out in these centres, it has been decided to operationalise CTS across the country. Accordingly, Grid based CTS clearing has since been started in in Chennai by including a few banks from Coimbatore and Bengaluru with effect from March 2012. It has also been envisaged to bring all the bank branches in the states of Tamilnadu, Kerala, Karnataka, Andhra Pradesh and the Union Territory of Puducherry under Chennai Grid in a phased manner
4. What is the new approach to CTS implementation in the country?
The new approach envisioned as part of the national roll-out is the grid-based approach.
Under this approach the entire cheque volume in the country cleared across numerous locations will be consolidated into a much fewer number of grids. The concept of region wise grids will be replaced and operational freedom will be given to the operator in deciding the number of grids required to expand the reach of CTS Pan-India and also on choosing the locations for each grid for optimum use of the resources.
Each grid will provide processing and clearing services to all the banks under its jurisdiction,. Banks, branches and customers based at small / remote locations falling under the jurisdiction of a grid would be benefitted, irrespective of whether there exists at present a formal arrangement for cheque clearing or otherwise.
5. Is it possible to briefly explain the entire process flow in CTS?
Yes. In CTS, the presenting bank (or its branch) captures the data (on the MICR band) and the images of a cheque using their Capture System (comprising of a scanner, core banking or other application) which is internal to them, and have to meet the specifications and standards prescribed for data and images.
To ensure security, safety and non-repudiation of data / images, end-to-end Public Key Infrastructure (PKI) has been implemented in CTS. As part of the requirement, the collecting bank (presenting bank) sends the data and captured images duly signed and encrypted to the central processing location (Clearing House) for onward transmission to the paying bank (destination or drawee bank). For the purpose of participation the presenting and drawee banks are provided with an interface / gateway called the Clearing House Interface (CHI) that enables them to connect and transmit data and images in a secure and safe manner to the Clearing House (CH).
The Clearing House processes the data, arrives at the settlement figure and routes the images and requisite data to the drawee banks. This is called the presentation clearing. The drawee banks through their CHIs receive the images and data from the Clearing House for payment processing. The drawee CHIs also generate the return file for unpaid instruments, if any. The return file / data sent by the drawee banks are processed by the Clearing House in the return clearing session in the same way as presentation clearing and return data is provided to the presenting banks for processing. The clearing cycle is treated as complete once the presentation clearing and the associated return clearing sessions are successfully processed. The entire essence of CTS technology lies in the use of images of cheques (instead of the physical cheques) for payment processing.
6. What type of cheques can be presented for clearing through CTS?
All types of cheques can be presented for clearing through CTS. It is no different from the use of traditional clearing infrastructure for clearing paper cheques. Cheques presented as part of Speed Clearing are handled in CTS as well (for more details on Speed Clearing, the related FAQs may be referred to). Incidentally, given the fact that images of cheques (and not the physical cheques) alone need to move in CTS, it is possible for the removal of the restriction of geographical jurisdiction normally associated with the paper cheque clearing. For reaping this benefit , the concept of Grid-CTS clearing is being envisaged as part of roll-out of CTS at Chennai. Under the grid clearing, cheques drawn on centres included in the grid will be cleared as part of local clearing.
7. Will there be any change in the process for the customers?
No. There is no change in the clearing process for customers. Customers continue to use cheques as at present, except to ensure the use of image-friendly-coloured-inks while writing the cheques. Of course, such of those customers, who are used to receiving the paid instruments (like government departments) would also receive the cheque images. Cheques with alterations in material fields (explained in detail later) are not allowed to be processed under the CTS environment.
8. What are the benefits of CTS to customers of banks?
The benefits are many. With the introduction of imaging and truncation, the physical movement of instruments is stopped. The electronic movement of images of cheques speeds up the process of settlement and can facilitate reduction in the clearing cycles as well. Moreover, there is no fear of loss of instruments in transit. Further, limitations of the existing clearing system in terms of geography or jurisdiction can be removed, thus enabling consolidation and integration of multiple clearing locations managed by different banks with varying service levels into a nation-wide standard clearing system with uniform processes and practices.
CTS also benefits issuers of cheques. Use of images obviates the need to handle and move physical cheques at different points. The scope for frauds inherent in paper instruments is, thus, greatly reduced. The Corporates if needed can be provided with images of cheques by their bankers for internal requirements,if any. As only the images move, the time taken for receipt of paid cheques is reduced which also gives an early opportunity to the issuers of cheques to detect frauds or alterations, if any, in terms of what (and to whom it) was issued and what (by whom it) was realised.
CTS brings elegance to the entire activity of cheque processing and clearing. Cheque frauds can be greatly reduced with introduction of minimum security features prescribed under CTS Standards 2010, such as embedded verifiable features such as bar-codes, encrypted codes, logos, watermarks, holograms, etc., for early interception of altered / forged instruments. Obviating the need to move the physical cheques is extremely beneficial in terms of cost and time savings.
The benefits from CTS could be summarized as follows –
  • Shorter clearing cycle
  • Superior verification and reconciliation process
  • No geographical restrictions as to jurisdiction
  • Operational efficiency for banks and customers alike
  • Reduction in operational risk and risks associated with paper clearing
9. If a customer desires to see the physical cheque issued by him for any reason, what are the options available?
Under CTS the physical cheques are retained at the presenting bank level and do not move to the paying banks. In case a customer desires, banks can provide images of cheques duly authenticated. In case, however, a customer desires to see / get the physical cheque, it would need to be sourced from the presenting bank, for which a request should be made to his/her bank. An element of cost / charge may also be involved for the purpose. To meet legal requirements, the presenting banks which truncate the cheques need to preserve the physical instruments for a period of 10 years.
10. How would be the uniqueness of a physical cheque be captured and imparted to the cheque image ?
CTS in India mandates the use of prescribed image specifications only. Images that do not meet the specifications are rejected. As the payments are made on the basis of the images, it is essential to ensure the quality of the images. To ensure only images of requisite quality move in the CTS processing cycle, there is a rigorous quality check process at the level of the Capture Systems and the Clearing House Interface (of the presenting bank). The solution encompasses Image Quality Assessment (IQA) at different levels. The presenting bank is required to perform the IQA during the capture itself. Further IQA is done at the gateway before onward transmission to clearing house. The images are captured with digital signatures of the presenting bank and thereafter transmitted to the Clearing House and then to the paying banks. Further, the paying banks, if not satisfied with the image quality or for any other reason, can ask for the physical instrument to facilitate payment processing.
Further, the new cheque standard “CTS-2010″ prescribes certain mandatory and optional security features to be available on cheques, which will also add to the uniqueness of the images.
11. What are the image specifications in CTS in the Indian context ?
Imaging of cheques can be based on various technology options. The cheque images can be Black & White, Gray Scale or Coloured. These have their associated advantages and disadvantages. Black & White images are light in terms of image-size, but do not reveal all the subtle features that are there in the cheques. Coloured images are ideal but increase storage and network bandwidth requirements. Gray Scale images are mid-way. CTS in India uses a combination of Gray Scale and Black & White images. There are three images of each cheques that need to be taken – front Gray Scale, front Black & White and back Black & White.
12. How are the images of cheques taken ?
Images of cheques are taken using scanners. Scanners also function like photo-copiers by reflecting the light passed through a narrow passage on to the document. Tiny sensors measure the reflection from each point along the strip of light. Reflectance measurements of each dot is called a pixel. Images are classified as black and white, gray-scale or colour based on how the pixels are converted into digital values. For getting a gray scale image the pixels are mapped onto a range of gray shades between black and white. The entire image of the original document gets mapped as some shade of gray, lighter or darker, depending on the colour of the source. In the case of black and white images, such mapping is made only to two colours based on the range of values of contrasts. A black and white image is also called a binary image.
13. How the image and data transmitted over the network is secured ?
The security, integrity, non-repudiation and authenticity of the data and image transmitted from the paying bank to the payee bank are ensured using the Public Key Infrastructure (PKI). CTS is compliant to the requirements of the IT Act, 2000. It has been made mandatory for the presenting bank to sign the images and data from the point of origin itself. PKI is used throughout the entire cycle covering capture system, the presenting bank, the clearing house and the drawee bank. The PKI standards used are in accordance with the appropriate Indian acts and notifications of Controller of Certifying Authority (CCA)
14. What is Cheque Standardisation and what does CTS 2010 Standard mean ?
Standardisation of cheque forms (leaves) in terms of size, MICR band, quality of paper, etc., was one of the key factors that enabled mechanisation of cheque processing. Over a period of time, banks have added a variety of patterns and design of cheque forms to aid segmentation, branding, identification, etc., as also incorporated therein a number of security features to reduce the incidence of cheque misuse, tampering, alterations, etc. Growing use of multi-city and payable-at-par cheques for handling of cheques at any branches of a bank, introduction of Cheque Truncation System (CTS), increasing popularity of Speed Clearing, etc., were a few aspects that led to prescription of certain minimum security features in cheques printed, issued and handled by banks and customers uniformly across the banking industry. A Working Group was set-up by RBI for examining further standardisation of cheque forms and enhancement of security features therein. Accordingly, certain benchmarks towards achieving standardisation of cheques issued by banks across the country have been prescribed like – quality of paper, watermark, bank’s logo in invisible ink, void pantograph, etc., and standardisation of field placements on cheques. In addition, certain desirable features have also been suggested to be implemented by banks based on their need and risk perception.
The set of minimum security features would not only ensure uniformity across all cheque forms issued by banks in the country but also help presenting banks while scrutinising / recognising cheques of drawee banks in an image-based processing scenario. The homogeneity in security features is expected to act as a deterrent against cheque frauds, while the standardisation of field placements on cheque forms would enable straight-through-processing by use of optical / image character recognition technology. The benchmark prescriptions are collectively known as “CTS-2010 standard“. Indian Banks Association (IBA) and National Payments Corporation of India (NPCI) are co-ordinating with the banks on implementation of the new standard. Accordingly, the cheques issued are tested and certified by NPCI and only after such cerification the cheques would be issued to the customers.
All banks providing cheque facility to their customers, have been advised to issue only ‘CTS-2010′ standard cheques not later than April 1, 2012 on priority basis in northern and southern region which will be part of the northern and southern CTS grids respectively and across the country by September 30, 2012 through a time bound action plan.
15. What is the prescription relating to alterations / corrections on cheque forms ?
The prescription on prohibiting alterations / corrections on cheques has been introduced to curtail cheque frauds on account of alterations in the various fields of cheques and to give protection to customers as well as banks. No changes / corrections can be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee’s name, courtesy amount (amount in figures) or legal amount (amount in words), fresh cheque leaves should be used by customers. This would help banks in identifying and controlling fraudulent alterations. This prohibition is applicable to cheques cleared under the image based Cheque Truncation System (CTS) only and is effective from December 1, 2010. It is not applicable to cheques cleared under other clearing arrangements for the present.
16. What are the precautions required to be taken by the banks / customers to avoid frauds
Banks / Customers should use “CTS 2010″ cheques which are not only image friendly but also have more security features. Customers may request/insist their banks for cheque forms that are compliant with the “CTS 2010″ standard. They should preferably use dark coloured ink while writing cheques and avoid any alterations / corrections thereon. Preferably, a new cheque leaf may be used in the event of any alterations / corrections as the cheque may be cleared through image based clearing system as enumerated in 15 above. Banks should exercise care while stamping the cheque forms, so that it does not interfere with the material portions such as date, payee’s name, amount and signature. The use of rubber stamps, etc, should not overshadow the clear appearance of these basic features in image. It is necessary to ensure that all essential elements of a cheque are captured in an image during the scanning process and banks / customers have to exercise appropriate care in this regard.
17. What are the modes in which banks can participate in CTS ?
There are two modes in which banks may participate in CTS –
  1. Direct membership: Banks may participate as direct member provided they have a settlement account with the settlement bank and have put in place necessary infrastructure for participating in CTS.
  2. Indirect / Sub-membership: Banks may become sub-members / indirect members of the direct members by using the infrastructure and / or settlement services of the direct members. The settlement for such indirect / sub-member could be done either directly (if such banks have settlement accounts with the settlement bank) or through the direct member through whom they are participating.
18. Is the infrastructure requirement for participating the CTS the same for all banks ?
The infrastructure required at the banks’ end for participating in CTS are dedicated connectivity from the bank’s gateway to the Clearing House, prescribed hardware and software for the CTS application.
RBI provides member banks with the CHI (software). Banks need to procure hardware and other software such as operating system, database and a bouquet of third party software for the CHI. They also need to procure the application software for their capture systems.
The hardware requirement / sizing is based on the volume of cheques processed by banks. Based on the volume the CHI is categorised into four types and the hardware requirement is different for each category.
The bandwidth requirement for each bank is calculated based a number of factors like the peak inward and outward volume of the bank, average size of an image, efficiency factor of the network, etc. In addition, future requirements have been taken into consideration while calculating the bandwidth requirement.
19. Whether the Cheque Truncation System has legal sanction?
With amendments in the Sections 6 and 1(4), coupled with the introduction of 81 A to the Negotiable Instruments Act, 1881, truncation of cheques is now legalized.
20. In case of need for any further clarifications, who can be approached for guidance ?
For any further clarifications the Contact Persons are –
The General Manager, National Clearing Cell, Reserve Bank of India, 7th Floor, Tower 1, Jeevan Bharati Building, Connaught Place, New Delhi – 110 001.
The Chief Executive Officer, National Payment Corporation of India, C-9,8th Floor, RBI Premises, Bandra-Kurla Complex, Bandra (East), Mumbai-400 051,

S. 269SS not violated if Assessee borrows in cash from Relatives to meet urgent needs

Print Friendly and PDFPrintPrint Friendly and PDFPDF
HIGH COURT OF MADRAS
Commissioner of Income-tax – I
v.
Smt. M.Yesodha
TAX CASE (APPEAL) NO. 320 OF 2010
Date of pronouncement – 05.02.2013
 
In our considered view, in the light of the relationship between the assessee and her father-in-law, the Tribunal has rightly held that the genuineness of the transaction is not disputed, in which, the amount has been paid by the father-in-law for purchase of property and the source had also been disclosed during the assessment proceedings. If there was a genuine and bonafide transaction and the tax payer could not get a loan or deposit by account payee cheque or demand draft for some bona fide reason, the authority vested with the power to impose penalty has a discretion not to levy penalty.
The contention of the Revenue is that the amount received by the assessee from her father-in- has to be treated only as a loan and if is a loan, then the assessee is liable to pay penalty under Section 271D of the Income Tax Act. Whether it is a loan or other transaction, still the other provision, namely, Section 273B of the Income Tax Act, comes to the rescue of the assessee, if she ables to show reasonable cause for avoiding penalty under Section 271D of the Income Tax Act. The Tribunal has rightly found that the transaction between the daughter-in-law and father-in-law is a reasonable transaction and a genuine one owing to the urgent necessity of money to be paid to the seller. We find that this would amount to reasonable cause shown by the assessee to avoid penalty under Section 271D of the Income Tax Act.
The Tribunal, referring to the decision of this Court reported in Lakshmi Trust Co. (supra), has rightly allowed the appeal.

SEBI – Usage of electronic payment modes for making cash payments to investors

Print Friendly and PDFPrintPrint Friendly and PDFPDF
CIRCULAR No. CIR/MRD/DP/10/2013 March 21, 2013
Please refer to SEBI circular no. DCC/FITTCIR-3//2001 dated October 15, 2001 and circular no D&CC/FITTC/CIR-04/2001 dated November 13, 2001 on usage of ECS (Electronic Clearing Services) facility and warrants for distribution of dividends or other cash benefits to the investors.
2. Advancements in the field of electronic payment systems in the last decade have made available various other modes of electronic funds transfer viz. National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), etc. In view of such advancements, it has been decided to modify the framework as under:
(a) For making cash payments to the investors, companies whose securities are listed on the stock exchanges shall use, either directly or through their RTI & STA, any RBI (Reserve Bank of India) approved electronic mode of payment such as ECS [ LECS (Local ECS) / RECS (Regional ECS) / NECS (National ECS) ], NEFT, etc.
(b) Further, in order to enable usage of electronic payment instruments, companies whose securities are listed on the stock exchanges (or their RTI & STA) shall maintain requisite bank details of their investors -
(i) For investors that hold securities in demat mode, companies or their RTI & STA shall seek relevant bank details from the depositories. To this end, vide circular SEBI/MRD/DEP/Cir-3/06 dated February 21, 2006 and letter MRD/DEP/PP/123624/2008 dated April 23, 2008, depositories have been advised to ensure that correct account particulars of investors are available in the database of depositories.
(ii) For investors that hold physical share / debenture certificates, companies or their RTI & STA shall take necessary steps to maintain updated bank details of the investors at its end.
(c) In cases where either the bank details such as MICR (Magnetic Ink Character Recognition), IFSC (Indian Financial System Code), etc. that are required for making electronic payment are not available or the electronic payment instructions have failed or have been rejected by the bank, companies or their RTI & STA may use physical payment instruments for making cash payments to the investors. Companies shall mandatorily print the bank account details of the investors on such payment instruments.
3. Stock exchanges are directed to bring the provisions of this circular to the notice of all the companies whose securities are listed on the stock exchange and also to disseminate the same on their website.
4. All companies whose securities are listed on Stock exchanges and their RTI & STA are directed to comply with the provisions of the circular.
5. Depositories are directed to provide to companies (or to their RTI & STA) updated bank details of their investors.
6. This circular shall supersede circular no. DCC/FITTCIR-3//2001 dated October 15, 2001 and circular no D&CC/FITTC/CIR-04/2001 dated November 13, 2001.
7. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Refund cannot be adjusted by CPC without following procedure prescribed in sec. 245

Print Friendly and PDFPrintPrint Friendly and PDFPDF
DIRECTORATE OF INCOME TAX (SYSTEMS)ARA Centre, Ground floor, E-2, Jhandewalan Extension,
New Delhi-110055.
LETTER [F.NO.DIT(S)-III/CPC/2012-13/ DEMAND MANAGEMENT], DATED 21-3-2013
Subject: Directions of Hon’ble Delhi High Court in the Writ Petition (Civil) No.s 2659 & 5443 of 2012 — Order dated 14.03.2013 -Reg.
Please refer to the above mentioned subject.
2. As per Hon’ble Delhi High Court’s Order dated 14-3-2013, the Department requires to follow the procedure prescribed u/s 245 before making any adjustment of refund payable by the CFC, Bengaluru. Accordingly, the assessee must be given an opportunity to file response or reply and the reply will be considered and examined by the Assessing Officer before any direction for adjustment is made. The process of issue of prior intimation and service thereof on the assessee will be as per the law. The assessee will be entitled to file their response before the Assessing Officer mentioned in the prior intimation. The Assessing Officer will thereafter examine the reply and communicate his findings to the CPC, Bangaluru, who will then process the refund and adjust the demand, if any payable.
2. The number of high refund cases where demand is outstanding and also intimation u/s 245 has been issued by the CPC, Bengaluru, pertaining to each CCIT(CCA) region is being forwarded as per the enclosed Annexure I. The detailed list is also available on i-Taxnet on the following path:
Resources -l Downloads – l DIT_SYSTEMS – l REFUND_ERETURNS_PROCESSING_CPC_AY2012_13 (File Name) PANS-AY-2012-13_NOTICE-US-245-SENT.zip
3. It is requested to issue directions to the Assessing Officers under respective charges to make compliance of the aforesaid order and communicate its findings on adjustable demand to CPC, Bengaluru, who will then process the refund and adjust the demand. The communication to CPC, Bengaluru, may also be give on its e-mail id: cit.cpc.bangalore@incometaxindia.gov.in

Friday, March 15, 2013

IT dept to accept returns on 30th and 31st March, 2013

Print Friendly and PDFPrintPrint Friendly and PDFPDF

SECTION 119 OF THE INCOME TAX ACT, 1961 – INCOME TAX AUTHORITIES – INSTRUCTIONS TO SUBORDINATE AUTHORITIES – ORDER FOR FACILITATING FILING OF IT RETURNS BY TAX PAYERS FOR F.Y. 2012-13 ON 30th & 31st MARCH, 2013
ORDER [F. NO. 225/45/2013/ITA.II], DATED 13-3-2013
The Financial Year 2012-13 closes on 31-3-2013. In view of holidays on 27th and 29th of March and thereafter, on 30th and 31st March, being Saturday and Sunday it is directed that all the Income-tax Offices through out India shall remain open and the receipts counters shall also work during normal office hours on 30th and 31st of March 2013. The direction is issued for administrative convenience by the Central Board of Direct Taxes in exercise of powers conferred under section 119 of the Income-tax Act, 1961.
Special arrangements may also be made by way of opening additional receipt counters, wherever required on 30th and 31st March 2013 to facilitate filing of return of income and other related work of tax payers. These instructions may be given wide publicity.

Wednesday, March 13, 2013

‘Write-off’ of unrealized export bills – Export of Goods and Services – Simplification of procedure

Print Friendly and PDFPrintPrint Friendly and PDFPDF
RBI/2012-13/435
A.P. (DIR Series) Circular No. 88
March 12, 2013
To
All Category – I Authorized Dealer Banks
Madam / Sir,
“Write-off” of unrealized export billsExport of Goods and Services – Simplification of procedure
Attention of Authorized Dealer Category – I (AD Category –I) banks is invited to A.P. (DIR. Series) Circular No. 12, 30, 61, 40, 33 and 03 dated September 09, 2000, April 04, 2001, December 14, 2002, December 05, 2003, February 28, 2007 and July 22, 2010 respectively in terms of which the exporters were given limited powers of write-off and also AD Category – I banks have been permitted to accede to the requests for “write-off” made by the exporters, subject to the conditions, inter alia, that the exporter had to surrender proportionate export incentives, if availed of, in respect of the relative shipments.
2. With a view to further simplifying and liberalizing the procedure and for providing greater flexibility to all exporters as well as the Authorized Dealer banks, the earlier instructions have been reviewed. It has now been decided to effect, subject to the stipulations regarding surrender of incentives prior to”write-off” adduced in the A.P. (DIR Series) Circular No. 03 dated 22 July 2010, the following liberalization in the limits of “write-offs” of unrealized export bills:
  1. Self “write-off” by an exporter
    (Other than Status Holder Exporter) —————————————————– 5%*
  2. Self “write-off” by Status Holder Exporters —————————————— 10%*
  3. ‘Write-off” by Authorized Dealer bank ———————————————— 10%*
    *of the total export proceeds realized during the previous calendar year.
3. The above limits will be related to total export proceeds realized during the previous calendar year and will be cumulatively available in a year.
4. The above “write-off” will be subject to the following conditions:
(a) The relevant amount has remained outstanding for more than one year;
(b) Satisfactory documentary evidence is furnished in support of the exporter having made all efforts to realize the dues;
(c) The case falls under any of the undernoted categories :
(i)The overseas buyer has been declared insolvent and a certificate from the official liquidator indicating that there is no possibility of recovery of export proceeds has been produced.
(ii)The overseas buyer is not traceable over a reasonably long period of time.
(iii)The goods exported have been auctioned or destroyed by the Port / Customs / Health authorities in the importing country.
(iv)The unrealized amount represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organization;
(v)The unrealized amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value) remaining outstanding and turned out to be unrealizable despite all efforts made by the exporter;
(vi)The cost of resorting to legal action would be disproportionate to the unrealized amount of the export bill or where the exporter even after winning the Court case against the overseas buyer could not execute the Court decree due to reasons beyond his control;
(vii)Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges but the amount has remained unrealized consequent on dishonour of the bills by the overseas buyer and there are no prospects of realization.
(d)The exporter has surrendered proportionate export incentives (for the cases not covered under A. P. (DIR. Series) Circular No.03 dated July 22, 2010), if any, availed of in respect of the relative shipments. The AD Category – I banks should obtain documents evidencing surrender of export incentives availed of before permitting the relevant bills to be written off.
(e)In case of self write-off, the exporter should submit to the concerned AD bank, a Chartered Accountant’s certificate, indicating the export realization in the preceding calendar year and also the amount of write-off already availed of during the year, if any, the relevant GR / SDF Nos. to be written off, Bill No., invoice value, commodity exported, country of export. The CA certificate may also indicate that the export benefits, if any, availed of by the exporter have been surrendered.
5. However, the following would not qualify for the “write off” facility :
  1. Exports made to countries with externalization problem i.e. where the overseas buyer has deposited the value of export in local currency but the amount has not been allowed to be repatriated by the central banking authorities of the country.
  2. GR / SDF forms which are under investigation by agencies like, Enforcement Directorate, Directorate of Revenue Intelligence, Central Bureau of Investigation, etc. as also the outstanding bills which are subject matter of civil / criminal suit.
6. The respective AD banks may forward a statement in form EBW, in the senclosed format, to the Regional Office of Reserve Bank under whose jurisdiction they are functioning, indicating details of write-offs allowed under this circular.
7. AD banks are advised to put in place a system under which their internal inspectors or auditors (including external auditors appointed by authorised dealers) should carry out random sample check / percentage check of “write-off” outstanding export bills.
8. Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.
9. Authorized Dealers may bring the contents of the Circular to the notice of their constituents concerned.
10. 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.

On failure to deduct TDS on web charges amount is disallowable U/s. 40(a)(ia)

Print Friendly and PDFPrintPrint Friendly and PDFPDF
IN THE ITAT DELHI BENCH ‘A’
Assistant Commissioner of Income-tax
v.
Anand & Anand
IT Appeal Nos. 742 & 887 (Delhi) OF 2012
[ASSESSMENT YEAR 2008-09]
OCTOBER 15, 2012
 
Indisputably, payment of Rs. 29,857/- has been made to M/s Network Solutions for downloading software and provisions of sec. 194J of the Act are attracted. The provisions of said sec. 194J lay down that any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of (a) fees for professional services, or (b) fees for technical services, or (c) royalty, or (d) any sum referred to in clause (va) of section 28, shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque of draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent, of such sum as income-tax on income comprised therein. The ld. AR on behalf of the assessee did not deny that tax was required to be deducted at source in terms of the said provisions, but could not be deducted, payment having been made through the credit card by one Shri Gunjit Singh. As is apparent from the aforesaid provisions, mode of payment is immaterial. In these circumstances, when the ld. AR did not deny the applicability of provisions of sec. 194J of the Act, we are of the opinion that the ld. CIT(A) was justified in upholding the disallowance in terms of provisions of sec. 40a(ia) of the Act, TDS having not been deducted on payment made to Network Solutions.

S. 54F Exemption not available for addition / Modification / Extension made to existing house

Print Friendly and PDFPrintPrint Friendly and PDFPDF
HIGH COURT OF KERALA
Pushpa
v.
Income tax Officer
IT APPEAL NOS. 30 & 32 OF 2012
AUGUST 22, 2012
 
Sec. 54F provides that capital gains on transfer of capital assets shall not be charged in cases of investment in residential house. The section pointedly says that such eligibility would be available if the assessee has, within the period prescribed, constructed, a residential house. For the purpose of that section, the residential house so constructed is referred to as new asset. The object sought to be achieved by that provision is to exclude capital gains on transfers of certain capital assets from being charged provided the new asset is a residential house. Obviously, a new house is not something which is either an extension or addition made to an existing structure. As noted by this Court in Mrs. Meera Jacob (supra), the exemption is available only when the investment is in the construction of a house and not for investment in modification or renovation. The Bench also held that it is the conceded position that the assessee has not constructed any separate apartment or house. Sec. 54F does not provide for exemption on investment in renovation or modification of an existing ‘ house and what gains exemption is only construction of a house 

Revision in criteria for classifying Level II non-corporate entities for Accounting Standards

Print Friendly and PDFPrintPrint Friendly and PDFPDF
AnnouncementRevision in the criteria for classifying Level II non-corporate entities
1. The Council of the Institute with a view to harmonise the differences between the Accounting Standards issued by the ICAI and the Accounting Standards notified by the Central Government under the Companies (Accounting Standards) Rules, 2006, in February, 2008 issued the announcement titled as Harmonisation of various differences between the Accounting Standards issued by the ICAI and the Accounting Standards notified by the Central Government’1 wherein the Council prescribed the criteria for classifying the non-corporate entities in to Level I, Level II and Level III. As per the announcement Level II entities are:-

2. Non-corporate entities which are not Level I entities but fall in any one or more of the following categories are classified as Level II entities:(i) All commercial, industrial and business reporting entities, whose turnover (excluding other income) exceeds rupees forty lakh but does not exceed rupees fifty crore in the immediately preceding accounting year.
(ii) All commercial, industrial and business reporting entities having borrowings (including public deposits) in excess of rupees one crore but not in excess of rupees ten crore at any time during the immediately preceding accounting year.
(iii) Holding and subsidiary entities of any one of the above.
3. The Council of the Institute at its 321st meeting held on January 10-12, 2013 at New Delhi, considering recent changes in the enhancement of tax audit limit, decided to change the applicability of Accounting Standards for Level II entities from Rs. 40 lakhs to Rs. 1 Crore with ef fect from the accounting year commencing on or after April 01, 2012.
4.Accordingly, from the accounting year commencing on or after April 1st , 2012, criteria for classification of Level II entities is as follows:-
Level II Entities (SMEs)
Non-corporate entities which are not Level I entities but fall in any one or more of the following categories are classified as Level II entities:
(i) All commercial, industrial and business reporting entities, whose turnover (excluding other income) exceeds rupees one crore but does not exceed rupees fifty crore in the immediately preceding accounting year.
(ii) All commercial, industrial and business reporting entities having borrowings (including public deposits) in excess of rupees one crore but not in excess of rupees ten crore at any time during the immediately preceding accounting year.
(iii) Holding and subsidiary entities of any one of the above.

Tuesday, March 12, 2013

New Norms for Credit Cards

Print Friendly and PDFPrintPrint Friendly and PDFPDF
Reserve Bank of India (RBI) vide Circular dated 28.02.2013on “Security and Risk Mitigation Measures for Electronic Payment Transactions” has directed banks to put in place the following safety measures for Credit and Debit Card Transactions :
• All new debit and credit cards to be issued only for domestic usage unless international use is specifically sought by the customer. Such cards enabling international usage will have to be essentially EMV Chip and Pin enabled. (By June 30, 2013).
• Issuing banks should convert all existing Magstripe cards to EMV Chip card for all customers who have used their cards internationally at least once (for/through e-commerce/ATM/POS) (By June 30, 2013).
• All the active Magstripe international cards issued by banks should have threshold limit for international usage. The threshold should be determined by the banks based on the risk profile of the customer and accepted by the customer (By June 30,2013).
• Banks should ensure that the terminals installed at the merchants for capturing card payments (including the double swipe terminals used) should be certified for PCI-DSS (Payment Card Industry – Data Security Standards) and PA-DSS (Payment Applications – Data Security Standards) (By June 30,2013).
• Bank should frame rules based on the transaction pattern of the usage of cards by the customers in coordination with the authorized card payment networks for arresting fraud (By June 30, 2013).
• Banks should ensure that all acquiring infrastructure that is currently operational on IP (internet protocol) based solutions are mandatorily made to go through PCI-DSS and PA-DSS certification. This should include acquirers, processors/aggregators and large merchants (By June 30, 2013).
• Banks should move towards real time fraud monitoring system at the earliest.
• Banks should provide easier methods (like SMS) for the customer to block his card and get a confirmation to that effect after blocking the card.
• Banks should move towards a system that facilitates implementation of additional facilitates implementation of additional factor of authentication for cards issued in India and used internationally (transactions acquired by banks located abroad).
After discussions with Banks, the RBI had issued the guidelines vide Circular dated 28.02.2013 on “Security and Risk Mitigation Measures for Electronic Payment Transactions”.
This was stated by Minister of State for Finance, Shri Namo Narain Meena, in Lok Sabha today.

Addition on account of income arising out of waiver of interest by Banks as income from other sources

Print Friendly and PDFPrintPrint Friendly and PDFPDF
IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH ‘A’ CHANDIGARH
ITA No.586/Chd/2011 – Assessment Year: 2001-02
MOHAN BOTTLING CO PVT LTD
Vs
ASSTT COMMISSIONER OF INCOME TAX
ITA No.587/Chd/2011 -Assessment Year: 2001-02
PURE DRINKS (CALCUTTA) PVT LTD
Vs
ASSTT COMMISSIONER OF INCOME TAX
ITA No.588/Chd/2011 -Assessment Year: 2001-02
PURE DRINKS (BOMBAY) PVT LTD
Vs
ASSTT COMMISSIONER OF INCOME TAX
ITA No.589/Chd/2011 -Assessment Year: 2001-02
PURE DRINKS (NEW DELHI) PVT LTD
Vs
ASSTT COMMISSIONER OF INCOME TAX
ITA No.590/Chd/2011 -Assessment Year: 2001-02
PUNJAB BEVERAGES PVT LTD
Vs
ASSTT COMMISSIONER OF INCOME TAX
ITA No.591/Chd/2011- Assessment Year: 2001-02
SOUTHERN BOTTERS PVT LTD
Vs
ASSTT COMMISSIONER OF INCOME TAX
T R Sood, AM and Sushma Chowla, JM
 
Computing provisions of one head of income can be used for the purpose of computing income under that head only and cannot be used for computing income under another head. Therefore, remission of particular income u/s 41 can be taxed only under the head “business income” and this provision can not be read for computing the income under the head “income from other sources and we are of the opinion that remission of interest by the bank can not be charged to tax as income from other sources. Therefore, we do not find any force in the submissions of the ld. DR for the revenue that first appellate authority has rightly invoked S. 41 while computing income under the head ‘income from other sources’. Therefore, in our opinion, the amount of remission on account of interest cannot be charged as income under the head ‘income from other sources’ because there is no provision for the same. In any case this is only notional income because no deduction was ever claimed by the assessee and income was reflected just to square up the account of the bank.
As far as taxability of this amount u/s 41 is concerned, it was contended that the assessee has not claimed deduction on account of interest and the same has not been allowed by the Department. However, perusal of the assessment order or appellate order do not show that there is a finding to this effect. Therefore, we remit this issue back to the file of Assessing Officer with the direction to verify whether any deduction on account of interest towards bank was claimed and allowed and then decide the issue in accordance with law.

Friday, March 1, 2013

Govt to enable online filing of Wealth Tax Returns

Print Friendly and PDFPrintPrint Friendly and PDFPDF
Enabling provisions for facilitating electronic filing of annexure-less return of net wealth
Section 14 of the Wealth-tax Act provides for furnishing of return of net wealth as on the valuation date in the prescribed form and verified in the prescribed manner setting forth particulars of the net wealth and such other particulars as may be prescribed. Currently, certain documents, reports are required to be furnished along with the return of net wealth under the provisions of Wealth-tax Act read with the provisions of Wealth-tax Rules.
Sections 139C and 139D of the Income-tax Act contain provisions for facilitating filing of annexure-less return of income in electronic form by certain class of income-tax assessees. In order to facilitate electronic filing of annexure-less return of net wealth, it is proposed to insert new sections 14A and 14B in the Wealth-tax Act on similar lines.
Consequently, it is also proposed to amend provisions of section 46 of the Wealth-tax Act which provides for rule making powers of the Board.
These amendments will take effect from 1st June, 2013.
- See more at: http://taxguru.in/income-tax/govt-enable-online-filing-wealth-tax-returns.html#sthash.rK8qGo8E.dpuf