MCA clarification on applicability of Section 372A of of Companies Act, 1956

PrintPDF

General Circular 18/2013,

Dated: 19/11/2013

No. 17/202/2013-CL-V

Sub: – Clarification with regard to applicability of provision of Section 372A of the Companies Act, 1956.

Sir,

This Ministry has received number of representations consequent upon notifying Section 185 of the Companies Act, 2013 dealing with loans to directors which is corresponding to Section 295 of the Companies Act, 1956. Section 186 of the Companies Act, 2013 is yet to be notified.

It is clarified that Section 372A of the Companies Act, 1956 dealing with inter-corporate loanscontinue to remain in force till section 186. of the Companies Act, 2013 is notified.

This issues with the approval of competent authority

Yours Faithfully,

(Kamna Sharma)

Assistant Director

TDS U/s. 194C applies on Bus rent paid by assessee school to transporter for carrying students

PrintPDF

IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH ‘B’: NEW DELHI)

BEFORE SHRI U. B. S. BEDI, JUDICIAL MEMBER
And
SHRI T. S. KAPOOR, ACCOUNTANT MEMBER

ITA Nos.4878 & 4879/DEL/ 2012
(Assessment Years :2008-09 & 2009-10)

ACIT (TDS) Vs. Delhi Public School

A careful consideration of the assessment order would reveal that AO while holding that assessee is liable for deduction of tax at source under the provisions of sec. 1941 of the Act has mainly rested his case on the ground that is the “rent” as defined in explanation u/s 1941 and the assessee has paid rent in respect of buses utilized by him being in the nature of plant. In our opinion, simply for the reason that “rent” being explained under explanation given u/s 1941 in respect of a plant will not make the relevant payments liable for deduction u/s 1941. The sum and substance of the transaction has to be seen and it has to be decided that under which section thecase of the assessee would fall. If one goes by the logic adopted by the AO, then the same will also be equally applicable in respect of Sec. 194 C where also under explanation-III to sub sec (2) of sec. 194C, the “work” has been defined or explained which according to clause(c) thereto includes “carriage of goods and passengers by any mode of transporter other than by railways.” According tothe transport contract entered into by the assessee, the activity of the transport contractor will be a simple activity of carriage of passengers by any mode of transport other than by railways. The object of the assessee to enter into such agreement was a simple activity of carrying its students and staff from their homes to the school and similarly from school to their homes. The assessee has no responsibility whatsoever regarding the buses to be utilized for that purpose which was the sole responsibility of the transport contractor. The transport contractor only was liable to keep and maintain the required number of buses for such activity at their own expenses with the specified standards. Therefore, the said contract is purely in the nature of services rendered by the transportcontractor to the assessee. The assessee was not having any responsibility whatsoever regardingthe transport vehicles used in such activity. As against that, “rent” which is defined in explanation to sec. 194 inter-alia is for the use of “plant” which according to the AO includes buses. Hence, according to the facts of the present case, assessee itself has not utilized the buses being plants but they were used by the transport contractor for fulfilling the obligations set out in the contract agreement. Therefore, the provisions of Sec. 194 I could not be applied to the facts of the present case and it has to be held that assessee has rightly deducted tax at source under the provisions of sec. 194C of the Act.

Online Request for refund of Excess TDS deposited

PrintPDF

Much awaited form 26B for online request for refund of Excess TDS deposited has been enabled on TRACES. To apply online please login to TRACES

After Logging

o    Deductors can navigate to ‘Statement / Payments’ -> ‘Request for Refund’

Import of Gold allowed for export under Advance Authorisation / Duty Free Import Authorization

PrintPDF

RBI/2013-14/367
A. P. (DIR Series) Circular No.73

November 11, 2013

To

All Scheduled Commercial Banks which are Authorised Dealers (ADs) in
Foreign Exchange/ All Agencies nominated for import of gold

Madam / Sir,

Import of Gold by Nominated Banks /Agencies/Entities

Attention of Authorised Persons is drawn to the Reserve Bank’s A.P. (DIR Series) Circular No. 25 dated August 14, 2013 on the captioned subject.

2. Government of India and the Reserve Bank of India have been receiving representations related to Advance Authorisation (AA) / Duty Free Import Authorisation (DFIA). Taking into account these representations and in consultation with the Government of India, it has been decided to issue the following clarifications:

Any authorisation such as Advance Authorisation (AA) / Duty Free Import Authorization(DFIA) is to be utilised for import of gold meant for export purposes only and no diversion for domestic use shall be permitted.For any AA / DFIA issued prior to 14th August 2013 the condition of sequencing the imports prior to exports shall not be insisted upon.

3. Notwithstanding any of the foregoing directions, entities/units in the SEZ and EoUs, Premier and Star Trading Houses (irrespective of whether they are nominated agencies or not) are permitted to import gold exclusively for the purpose of exports only.Similarly, exports toward sfulfillment of obligation under AA/DFIA scheme shall not qualify as export for the purpose of the scheme of 20:80.

4. Authorised Dealers may please bring the contents of this circular to the notice of their constituents and customers concerned.

5 The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999), and are without prejudice topermissions / approvals, if any, required under any other law.

Yours faithfully,

(Rudra Narayan Kar)
Chief General Manager-in-Charge

NOC from respective financial sector regulator NOT required for transfer of shares from Residents to Non-Residents

PrintPDF

Now onwards No Objection Certificate (NOC) is NOT required to be obtained from the respective financial sector regulator/regulators of the investee company as well as transferor and transferee entities in case of transfer of shares from Residents to Non-Residents where the investee company is in the financial services sector.

Such NOC(s) were used to be filed with the form FC-TRS to the AD bank ontransfer of such shares.

Conditions for raising of Capital abroad by unlisted companies incorporated in India

PrintPDF

RBI/2013-14/363
A.P. (DIR Series) Circular No. 69, Dated : November 8, 2013

Amendment to the “Issue of Foreign Currency Convertible Bonds and Ordinary shares (Through Depository Receipt Mechanism) Scheme, 1993”

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No.11 dated September 5, 2005 regarding issue of American Depository Receipts (ADRs)/ Global Depository Receipts (GDRs) read with Paragraph 4 of Schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA.20/2000-RB dated May 3, 2000, as amended from time to time, in terms of which unlisted Indian companies which have not yet accessed Global Depository Receipts/ Foreign Currency Convertible Bond route for raising capital in the international market were required to have prior or simultaneous listing in the domestic market.

2. On a review, it has now been decided to allow unlisted companies incorporated in India to raise capital abroad, without the requirement of prior or subsequent listing in India, initially for a period of two years, subject to conditions mentioned below. This scheme will be implemented from the date of the Government Notification of the scheme, subject to review after a period of two years. The investment shall be subject to the following conditions:

(a) Unlisted Indian companies shall list abroad only on exchanges in IOSCO/FATF compliant jurisdictions or those jurisdictions with which SEBI has signed bilateral agreements;

(b) The ADRs/ GDRs shall be issued subject to sectoral cap, entry route, minimum capitalisation norms, pricing norms, etc. as applicable as per FDI regulations notified by the Reserve Bank from time to time;

(c) The pricing of such ADRs/GDRs to be issued to a person resident outside India shall be determined in accordance with the captioned scheme as prescribed under paragraph 6 of Schedule 1 of Notification No. FEMA. 20 dated May 3, 2000, as amended from time to time;

(d) The number of underlying equity shares offered for issuance of ADRs/GDRs to be kept with the local custodian shall be determined upfront and ratio of ADRs/GDRs to equity shares shall be decided upfront based on applicable FDI pricing norms of equity shares of unlisted company;

(e) The unlisted Indian company shall comply with the instructions on downstream investment as notified by the Reserve Bank from time to time;

(f) The criteria of eligibility of unlisted company raising funds through ADRs/GDRs shall be as prescribed by Government of India;

(g) The capital raised abroad may be utilised for retiring outstanding overseas debt or for bona fide operations abroad including for acquisitions;

(h) In case the funds raised are not utilised abroad as stipulated above, the company shall repatriate the funds to India within 15 days and such money shall be parked only with AD Category-1 banks recognised by RBI and shall be used for eligible purposes;

(i) The unlisted company shall report to the Reserve Bank as prescribed under sub-paragraphs (2) and (3) of Paragraph 4 of Schedule 1 to FEMA Notification No. 20.

3. A copy of the Press Release dated September 27, 2013 issued by Ministry of Finance, Government of India and the Government Notification dated October 11, 2013 are annexed (Annex 1and 2, respectively).

4. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Rudra Narayan Kar)
Chief General Manager-in-Charge

RBI : Banks to ensure Timely Issue of TDS Certificate to Customers

PrintPDF

RBI/2013-14/361
DBOD.No.Leg.BC.65/09.07.005/2013-14

November 6, 2013

All Scheduled Commercial Banks
(excluding RRBs)

Dear Sir/Madam,

Timely Issue of TDS Certificate to Customers

It has been brought to our notice that, some banks are not providing TDS Certificate in Form 16A to their customers in time, causing inconvenience to customers in filing income-tax returns timely.

2. The matter has been examined and with a view to protect interest of the depositors and for rendering better customer service, banks are advised to provide to their customers from whose income tax has been deducted at source, TDS Certificate in Form 16A. Banks are advised to put in place systems that will enable them to provide Form 16A to the customers within the time-frame prescribed under the Income Tax Rules. Banks should avoid waiting till the last moment.

3. This advice is issued under Section 36 (1) (a) of the Banking Regulation Act, 1949 (10 of 1949).

Unless the services are offered advances cannot change the nature from ‘advance’ to that of the ‘receipt’

PrintPDF

DCIT Vs. Shri Arvinder Singh Soin (ITAT Delhi) , ITA No. 738/Del/2013 Date of Decision: 20.09.2013

The appellant is a doctor, surgeon specializing in liver transplant. It is a fact that the appellant is following mercantile system of accounting on a regular basis. The appellant has received life time consultancy fees which is accounted as advance from patients as per the principles of mercantile system of accounting.This is nothing but advance from patients to be utilized in due course as per the scheme.

On verification of the evidence given during appeal proceedings which was given to Assessing Officer also for his comments, it is found that the appellant has not utilized the amount during the year. This was booked only at the time of actual consultations with  the doctor in due course. The appellant has given ample proof in order to prove his contentions. Copy of balance sheet, P & L account and Form 3CD for financial years 2009-10 & 2010-11 also are evidence that the appellant has accounted the said evidences in the subsequent years on realization of the same. The appellant has received the amount as advance in contemplation of the services to be offered in future. Unless the services are offered the said advances cannot change the nature from ‘advance’ to that of the ‘receipt’. Once the services have been offered, the appellant has brought the amounts to his income at that time. The scheme of life time consultancy has been perused in detail. The name is only life time, whereas services are meant for a period of 48 months post surgery with a period of 12 months immediately after the surgery as free of charge, meaning there by the amount of advance would have to be exhausted with in a period of three years from surgery or else would have to be returned in case of non utilization of the same or in case of death of the patient. The appellant has done exactly the same. The appellant has accounted the said advances as and when realized. The same are accounted in the years of realization. Sufficient proof in the name of balance sheet and P & L account and Form 3CD to support the case ofthe appellant has been filed, which is enough proof to accept that what has been received as advance under the life time consultancy fee is only to be taxed as income when services to that effect are offered. Till then the amount remains a liability in the books of the appellant. Considering the details filed it is found that the advance need not be booked at the time of receipt nor it is a registration charge. The appellant has strictly followed the principles of mercantile system of accounting. Accordingly, I hold that the appellant has correctly followed the principles of mercantile system of accounting and the amount of advance received during the year cannot be booked as income. The disallowance to that effect is directed to be deleted.

Immunity From Penalty U/s. 271(1)(c) Available For Belated Returns

PrintPDF

INCOME TAX APPELLATE TRIBUNAL, “G” BENCH, MUMBAI

BEFORE SHRI RAJENDRASINGH, ACCOUNTANT MEMBER

AND SHRI AMIT SHUKLA, JUDICIAL MEMBER

ITA no. 7737/Mum./2011 – Assessment Year: 2008-09)

Income Tax Officer (Central)

v/s

Mr. Gope M. Rochlani

Date of Order – 24.05.2013

In our considered opinion, once the legislature has not specified the “due date” as provided in section 139(1) in Explanation 5A, then by implication, it has to be taken as the date extended under section 139(4). In view of the above, we hold that the assessee gets the benefit / immunity under clause (b) of Explanation to section 271(1)(c) because the assessee has filed its return of income within the “due date” and, therefore, the penalty levied by the Assessing Officer cannot be sustained on this ground. Even though we are not affirming the findings and the conclusions of the learned Commissioner (Appeals), however, as per the discussion made above, penalty is deleted in view of the interpretation of Explanation 5A to section 271(1)(c). Consequently, the ground raised by the Revenue is treated as dismissed.

Fees & Penalty for late / Non filing of TDS Return

PrintPDF

No filing or Late filing of TDS returns or TDS statement shall invite 2 penal consequence 1.Fee for late filing U/s 234E and 2. Penalty for late filing or Non filing of TDS statement U/s 271H.

Fee U/s 234E for late filing of TDS Statement:

If you filed late income tax return, there is consequential penalty in form of interest u/s 234A if there was tax due as per return. Similarly in the same chapter new section 234E has been proposed to be effective from 1^st of July 2012, with heading “Levy of Fee in certain case” deductor will be liable to pay by way of fee of Rs 200 per day till the failure to file TDS statement continues, However, the total fee cannot exceed the amount of TDS deductible for which statement was required to be filed.

Penalty for late filing or non- filing TDS statement

Similarly a new penalty provision has been inserted as section 271H which provides that a deductor shall pay penalty of minimum Rs 10,000 to Rs 1 lakh for not filing the TDS statement within one year from the specified date within which he was supposed to file the statement. This amendment is also effective from 1st July 2012.

Thus, if the present due time for filing TDS statement is taken, the time up to which thepenalty u/s 271H cannot be imposed are explained for any tax deduction for FY 2012-13.
At the time of preparing statements of tax deducted, the deductor is required to mandatorily quote:

(i)  his tax deduction and collection account number (TAN) in the statement;

(ii) his permanent account number (PAN) in the statement except in the case where the deductor is an office of the Government( including State Government). In case of Government deductors “PANNOTREQD” to be quoted in the e-TDS statement;

(iii) the permanent account number PAN of all deductees;

(iv)furnish particulars of the tax paid to the Central Government including book identification number or challan identification number, as the case may be.

(v) furnish particular of amounts paid or credited on which tax was not deducted in view of the issue of certificate of no deduction of tax u/s 197 by the assessing officer of the payee

Issue Of Income Tax Refund Refunds Without Adjustment Of Demand

PrintPDF

DIRECTORATE OF INCOME TAX(SYSTEMS)

ARA Centre, Ground floor, E-2, Jhandewalan Extension,

New Delhi-110055.

F.NO.DIT(S)-III/CPC/2013-14/Refund Adjustment/ Dated:22.10.2013

To

The Chief Commissioner of Income Tax(CCA) (By Name)

Ahmedabad/ Bangalore/ Bhubaneswar/ Bhopal/ Chandigarh/ Chennai/ Guwahati/Hyderabad /Jaipur /Kanpur/ Kochi / KolkatalLucknow /Mumbai /Nagpur/ New Delhi /Patna/ Pune.

Subject: Data pertaining to notices issued u/s 245 by CPC, Bangalore where demand/refund is greater than Rs. 5000/- -reg.

Ref :Letter F.No. DIT(S)-111/CPC/2012-13/Demand Management/ dated 10/04/2013.

Madam /sir,

I have been directed to inform you that in pursuance to the decision of Full Board and minutes of the meeting dated 21/08/2013, the CPC is allowed to issue refunds without adjustment of demand as an interim measure in cases where either the outstanding demand against the assessee was less than Rs. 5000/- or claim of refund was less than Rs 5000/-

2. A list of CCIT-wise cases where such refund/demand in excess of Rs 5000/- exist, and notices u/s 245 have been issued is available on i-Taxnet (http://10.152.2.10/) on the following path:

Resources –> Downloads DIT_SYSTEMS -9 Notices issued u/s 245 from CPC for confirmation of demands by AOs

3. it is requested to issue directions to the Assessing Officers under respective charges to make compliance of the aforesaid decision, perform necessary verification and correction following the procedure as per Sec.245 of the I.T.Act 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

Due date to file e-Form 23C for Appointment of Cost Auditor extended to 30.11.2013

PrintPDF

General Circular No 17/2013, Date: 01st November, 2013

Subject: Relaxation of last date and additional fee in filing of e-Form 23C for Appointment of Cost Auditor.

1.Reference is invited to General Circular No. 14/2013 dated` 3rd September,2013 through which the last date of filing and to relax the additional fee applicable on e-form 23C was extended up to 31st October, 2013 or within 30 days of the commencement of the company’s financial year to which the appointment relates, whichever is later.

2. It has now been decided to extend the last date of filing and to relax the additional fee applicable on e-form 23C to 30th November, 2013 or within 30 days of the commencement of the company’s financial year to which the appointment relates, whichever is later.

No. 52/17/CAB-2011

Sd/-

Donations to Trusts / Institutions where Directors, their relatives hold position or are interested

PrintPDF

RBI/2013-14/205
UBD.BPD.(PCB).Cir. No. 7/09.72.000//2013-14

August 30, 2013

The Chief Executive Officer
All Primary (Urban) Co-operative Banks
Dear Sir/Madam,

Donations to Trusts and Institutions where Directors, their relatives hold position or are interested

Please refer to our Circular UBD (PCB)/BPD/Cir.43/09.72.00/2004-05 dated April 11, 2005, in terms of which Urban Co-operative Banks (UCBs) were advised that the normal donations to be made during a year should be restricted to a ceiling of 1% of the published profits of the bank for the previous year and such normal donations, together with those that may be made to National Funds and other funds recognized /sponsored by the Central /State Government, during a year, should not exceed 2% of the published profits of the bank for the previous year.

2. It has been brought to our notice that some of the UCBs have made contributions which are in the nature of donations to the Trusts for charitable or benevolent objective or for any exhibition in which the directors or relatives are interested. In view of this, UCBs are, with immediate effect, prohibited from giving donations to Trusts and Institutions, where directors, and/or their relatives hold position or are interested, even within the permissible ceiling of 1% of the published profits of the bank for the previous year.

3. The terms ‘relative’ and “interest, as used above, shall have the meaning as indicated in the Annex.

 

Annex

Definition of terms “relative” and “interest”

1. “relative”

The ‘relative’ of a director of the bank shall mean any relative of a director of the bank as indicated hereunder:

A person shall be deemed to be relative of another, if and only if, :-

a) they are members of a Hindu Undivided Family; or
b) they are husband and wife; or
c) the one is related to the other in the manner indicated below :

List of relatives

1. Father
2. Mother (including step-mother)
3. Son (including step-son)
4. Son’s wife
5. Daughter (including step-daughter)
6. Daughter’s husband.
7. Brother (including step-brother)
8. Brother’s wife
9. Sister (including step-sister)
10. Sister’s husband

2. “interest”

Trust in which directors /relatives of directors hold positions as Trustees, or are beneficiaries or involved in any capacity in the working of the trust, which is likely to influence the independence of the director(s).

Presidents gives Assent to Companies Act, 2013

PrintPDF

COMPANIES ACT, 2013 (ACT NO.18 OF 2013) HAS BEEN ASSENTED BY PRESIDENT OF INDIA

Madras HC explains principles when repairs is current and when non current

PrintPDF

HIGH COURT OF JUDICATURE AT MADRAS

Dated : 24.07.2013

Tax Case (Appeal) Nos.140 to 143 of 2013

489 to 491 of 2012 and 319 of 2013

and connected MPs

Tax Case (Appeal).No.140/2013:-

M/s.Super Spinning Mills Ltd.

-vs-

The Assistant Commissioner of Income-tax

 

The question as to whether the expenditure incurred on replacement of machinery is revenue or capital expenditure, particularly in the nature of replacements of parts, thus rests on the nature of expenditure incurred, vis-a-vis the benefit that the assessee derives. The ratio deductible from the decisions referred to above are:

(i) To decide the applicability of Section 31(i), the test is not whether the expenditure is revenue or capital in nature, but whether the expenditure is “current repairs”. The basic test is to find out whether expenditure is incurred to “preserve and maintain” an already existing asset and the expenditure must not be to bring a new asset into existence or to obtain a new advantage vide [2007] 293 ITR 201 (SC) (Commissioner of Income Tax Vs. Saravana Spinning Mills P. Ltd.)

(ii) Under Section 31(i), the deduction admissible is only for current repairs. Therefore, the question as to whether the expenditure incurred by the assessee conceptually is revenue or capital in nature is not relevant for deciding the question whether such expenditure comes within the etymological meaning of the expression “current repairs”. In other words, even if the expenditure is revenue in nature, it may not fall in the connotation of “current repairs” [2007] 293 ITR 201 (SC) (Commissioner of Income Tax Vs. Saravana Spinning Mills P. Ltd.)

(iii) A new asset or new/different advantage cannot amount to `current repairs’. – 2009-TIOL-86-SC-II (CIT Vs. Sri Mangayarkarasi Mills P. Limited)

(iv) Repair implies existence of a part of the machine which has malfunctioned, thereby requiring repair to that machinery, plant etc. Replacement cannot be a current repair, for, “replacement” and “current repair” do not go hand in hand . If one is to hold otherwise, it would only make Section 31(i) wholly redundant and absurd. Thus, replacement expenditure cannot be said to be `current repairs’ vide [2007] 293 ITR 201 (SC) (Commissioner of Income Tax Vs. Saravana Spinning Mills P. Ltd.) and 2009-TIOL-86-SC-II (CIT Vs. Sri Mangayarkarasi Mills P. Limited)

(v) Expenditure is deductible under section 37 only if it (a) is not deductible under sections 30-36, (b) is of a revenue nature, (c) is incurred during the current accounting year and (d) is incurred wholly and exclusively for the purpose of the business. – 2009-TIOL-86-SC-II (CIT Vs. Sri Mangayarkarasi Mills P. Limited);

(vi) Expenditure is of a capital nature when it amounts to an enduring advantage for the business and repair is different from bringing a new asset for the business. Further, bringing into existence a new asset or an enduring benefit for the assessee amounts to capital expenditure vide Lakshmiji Sugar Mills (P) Co. v. CIT (AIR 1972 SC 159) referred in 2009-TIOL-86-SC-II (CIT Vs. Sri Mangayarkarasi Mills P. Limited).

(vii) Therefore, whether an expenditure is revenue or capital in nature would depend on the facts of each case. – [2007] 293 ITR 201 (SC) (Commissioner of Income Tax Vs. Saravana Spinning Mills P. Ltd.)

Aircraft Owned & used by Assessee for travel of its Directors exempt from wealth Tax

PrintPDF

HIGH COURT OF DELHI AT NEW DELHI

Judgment reserved on : 03rd July, 2013

Judgment pronounced on: 1 1th July, 2013

WTA 1/2013

COMMISSIONER OF WEALTH TAX

versus

JAY PEE VENTURES LTD

 

The use of an aircraft for commercial purposes does not necessarily entail hiring to third parties, ferrying of passengers or leasing of the aircrafts for consideration. The intention of the legislature while creating the exception by using the expression “used by the Assessee for commercial purposes” was not to restrict the meaning of the words ‘commercial purposes’ to running the same on hire or as stock in trade.

TDS not deductible on service tax portion – Rajasthan HC

PrintPDF

HIGH COURT OF JUDICATURE FOR RAJASTHAN

BENCH AT JAIPUR

D.B. INCOME TAX APPEAL NO.235/2011,

D.B. INCOME TAX APPEAL NO.222/2011,

D.B. INCOME TAX APPEAL NO.238/2011,

D.B. INCOME TAX APPEAL NO.239/2011

Commissioner of Income Tax (TDS)

Versus

M/s. Rajasthan Urban Infrastructure

Date of Pronouncement : 01.07.2013

 

The assessee, Rajasthan Urban Infrastructure Development Project(in short ‘RUIDP’), is a project of Government of Rajasthan for the Infrastructure Development and Civic Amenities in the specified areas/cities in the State of Rajasthan. The project is financially assisted by the Loan from the Asian Development Bank through the Government of India. The project is working under the Urban Development Department of the Government of Rajasthan. The accounts are maintained on cash basis of accounting and also audited by the Chartered Accountant as per the requirement of the Asian Development Bank and also audited by the Department of Accountant General of Rajasthan. The RUIDP appoint the technical and project consultants on open tender basis and the limited companies as well as corporate consulting firms of repute are selected and appointed as per the laid down procedure. The assessee deduct the incometax at source from the payments made by it and deposit the same as per the relevant provisions of the Income Tax Act and the return for the same is filed in due time. It appears that main consultants are charging the service tax at the prevailing rates on the amount of fee payable as per the agreement and the same is paid by the assessee/RUIDP. The tax is deducted on fees and other payments of expenses as being part of contract, however, no TDS has been deduced on service tax in view of the term of contract.

The dispute relates to a point as to whether TDS is to be deducted on the amount payable on account of service tax or not? The Tribunal has considered the agreement and recorded a finding that as per the term of contract, the amount of service tax was to be paid separately, therefore, the same was not subject to TDS.

On Appeal Honurable High Court has held as follows :-

We have considered the provisions of Section 194J of the Income Tax Act, in the light of Circulars dated 28.04.2008 and 30.06.2008. The words, “any sum paid”, used in Section 194J of the Act, relate to fees for professional services, or fees for technical services. As per the terms of agreement, the amount of service tax was to be paid separately and was not included in the fees for professional services or fees for technical services. In these circumstances, we are satisfied that the orders passed by the Appellate Authority as well as the Appellate Tribunal, are in accordance with the provisions of Section 194J of the Income Tax Act. The service tax was to be paid separately or not, is purely a question of fact and as per the agreement entered in the present case, it was to be paid separately and there is a finding of fact in this regard, recorded by the Appellate Authority as well as the Appellate Tribunal also. Even if the Circular dated 28.04.2008, is held to be not applicable in the present case, we find that the orders passed by both the authorities below, are in accordance with the provisions of Section 194J of the Income Tax Act, looking to the facts and circumstances of the present case.

S. 36(1)(v): Payment To LIC Towards Group Gratuity fund Allowable : SC

PrintPDF

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 447 OF 2003

Commner. of Income Tax, Coimbatore

Versus

M/s Textool Co. Ltd.

 

True that a fiscal statute is to be construed strictly and nothing should be added or subtracted to the language employed in the Section, yet a strict construction of a provision does not rule out the application of the principles of reasonable construction to give effect to the purpose and intention of any particular provision of the Act. (See : Shri Sajjan Mills Ltd. vs. Commissioner of Income Tax, M.P. & Anr. (1985) 156 ITR 585). From a bare reading of Sectin 36(1) (v) of the Act, it is manifest that the real intention behind the provision is that the employer should not have any control over the funds of the irrevocable trust created exclusively for the benefit of the employees. In the instant case, it is evident from the findings recorded by the Commissioner and affirmed by the Tribunal that the assessee had absolutely no control over the fund created by the LIC for the benefit of the employees of the assessee and further all the contribution made by the assessee in the said fund ultimately came back to the Textool Employees Gratuity Fund, approved by the Commissioner with effect from the following previous year.Thus, the conditions stipulated in Section 36(1) (v) of the Act were satisfied. Having regard to the facts found by the Commissioner and affirmed by the Tribunal, no fault can be found with the opinion expressed by the High court, warranting our interference.

S. 54 Exemption available on Acquisition of new flat in exchange of old flat

PrintPDF

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH ‘F’, MUMBAI

BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER &

SHRI VIVEK VARMA, JUDICIAL MEMBER

I.T.A. NO. 7159/Mum/2010 Assessment Year: 2006-07

Smt. Veena Gope Shroff, Vs. The Income Tax Officer

Date of Pronouncement: 04-07-2012.

 

The dispute is regarding allowability of exemption under section 54 of the Act and computation of long term capital gain in respect of exchange of old flat with a new flat and cash compensation under development agreement with the builder. The revenue authorities have held that since assessee had neither purchased a new flat or constructed a new flat, the provisions of section 54 are not applicable. We, however, do not subscribe with the view taken by revenue authorities. The exemption under section 54 is allowable in case the assessee transfers a residential house and within a period of 1 year before or 2 years after the date of transfer, purchases a new residential house or constructs a new residential house within a period of 3 years from the date of transfer. In this case, the assessee had exchanged old flat with new flat to be constructed by the builder under development agreement which amounts to transfer under section 2(47) of the Act. Thus, the only other condition which is required to be satisfied is that assessee either purchases a new residential flat within the prescribed limit or constructs a new residential flat within a period of 3 years from the date of transfer. The acquisition of a new flat under a development agreement in exchange of the old flat amounts to construction of new flat. This view is supported by the decision of the Tribunal in the case of another co-owner in the case of 3. K. Madan (supra). Therefore, the provisions of section 54 are applicable and assessee is entitled to exemption if the new flat had been constructed within a period of 3 years from the date of transfer.

The AR has also argued that entire cash compensation received by the assessee amounting to Rs. 11,25,800/- cannot be taxed as capital gain as assessee had invested a sum of Rs. 8,00,000/- lacs in NABARD bonds under section 54EC. Since cash compensation was part of consideration for transfer of the old flat and the assessee had invested the money in NABARD bonds, the exemption under section 54EC will be available. As regards the completion of new flat within a period of 3 years, assessee has filed a copy of letter dated 30.05.2007 of the builder in which it has been mentioned that the builder had applied for occupation certificate and possession was to be given on 14.6.2007, which in fact was given the very next day, i.e. 15-06-2007. We, therefore, allow the claim of exemption under section 54, and set aside the order of CIT(A) and direct the AO to allow the claim of the assessee.

Every credit institution has to become a member of at least one Credit Information Company – RBI

PrintPDF

RBI/2013-14/157
RPCD.CO.RRB.BC.No.14/03.05.33/2013-14

July 23, 2013

The Chairman
All Regional Rural Banks (RRBs)
Dear Sir,

Credit Information Companies (Regulation) Act, 2005 – Compliance

Please refer to our circular RPCD.CO.RRB.No.32/03.05.33/2009-10 dated October 20, 2009 advising RRBs, that in terms of Section 15(1) of Credit Information Companies (Regulation) Act 2005, every credit institution has to become a member of at least one Credit Information Company within a period of three months from commencement of the Act or any extended time allowed by the Reserve Bank on application.

2. As RRBs are also credit institutions as defined in sub-section (f) of Section 2 of the Act, they would be required to take membership of at least one credit information company and provide credit data in the format as required by the Credit Information Company (CIC).

3. However, it has come to our notice that a large number of RRBs are not members of any Credit Information Company as required under the Act. Therefore immediate steps may be taken by RRBs to become members of at least any one CIC.

4. Please acknowledge receipt to our Regional Office concerned

Banks not to accept fresh/additional PDV / EMI Cheques if ECS Services are available

PrintPDF

The Chairman and Managing Director / Chief Executive Officer
All Scheduled Commercial Banks including RRBs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks/Local Area Banks
Madam / Dear Sir

Migration of Post-dated cheques (PDC)/Equated Monthly Instalment (EMI) Cheques to Electronic Clearing Service (Debit)

We invite a reference to our circular DPSS.CO.CHD.No.1622/04.07.05/2012-13 dated March 18, 2013 wherein all lending banks have been advised not to accept any fresh Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques in locations where the facility of ECS/RECS (Debit) is available and convert existing cheques in such locations into ECS/RECS (Debit) by obtaining fresh mandates.

2. However, instances of banks obtaining fresh cheques (both CTS-2010 and non CTS-2010 standard) in locations where the facility of ECS/RECS is available have been brought to our notice, thus necessitating a reiteration of our earlier instructions in this regard.

3. Accordingly, banks are advised to adhere to the following instructions with immediate effect:

1. No fresh/additional Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques (either in old format or new CTS-2010 format) shall be accepted in locations where the facility of ECS/RECS (Debit) is available. The existing PDCs/EMI cheques in such locations may be converted into ECS/RECS (Debit) by obtaining fresh ECS (Debit) mandates.
2. As indicated in our circular DPSS.CO.PD.No.497/02.12.004/2011-12 dated September 21, 2011, Section 25 of the Payment and Settlement Systems Act, 2007 accords the same rights and remedies to the payee (beneficiary) against dishonor of electronic funds transfer instructions under insufficiency of funds as are available under Section 138 of the Negotiable Instruments Act, 1881. Considering the protection available, there is no need for banks to take additional cheques, if any, from customers in addition to ECS (Debit) mandates.
3. Cheques complying with CTS-2010 standard formats shall alone be obtained in locations, where the facility of ECS/RECS is not available.

4. The above instructions are issued under section 18 of the Payment and Settlement Systems Act 2007 (Act 51 of 2007).

CENVAT credit can be utilized for payment of Service Tax under Reverse Charge

PrintPDF

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,

SOUTH ZONAL BENCH, AT BANGALORE.

M/s GE India Industrial Pvt. Ltd.

Versus

The Commissioner of Service Tax, Bangalore

Appeal No: ST/2134 OF 2010, Date of Order: 23.01.2013,

 

Issue – Whether a person who is not a actual service provider, but discharges the service tax liability on the Taxable Services, under Section 68(2) of Finance Act, 1994, as a deemed service provider, is entitled to avail the CENVAT credit on inputs/input services/capital goods for payment of GTA service tax, even if he is not using such inputs/input services/capital goods for providing taxable services by virtue of deeming legal fiction?

Held – In view of paragraph 2.4.2 of CBEC’s Excise Manual of Supplementary Instructions, the Hon’ble High Court answered the above question in the affirmative in favour of the assessee. The decision was rendered on 06.5.2010, i.e. long after a similar question was referred by a regular Bench of this Tribunal to Larger Bench in the case of Panchmahal Steel Ltd. (supra). Obviously, the referring Bench did not have the advantage of considering the High Court’s decision. At the present stage, one has to follow the view taken by the Hon’ble High Court, in the absence of any binding judicial precedent to the contra. Accordingly, it is held that the appellant was, during the material period, entitled to take CENVAT credit on input services and utilise the same for payment of service tax on the GTA service. Consequently, the impugned demands are liable to be set aside. In the result, the impugned order is set aside and this appeal is allowed.

 

 

 

No waiver of arrears of penalties on individuals who are no more

PrintPDF

F.No.296/110/2012-CX-9

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

New Delhi, the 18th June, 2013

To
All Chief Commissioners
Sub: Review of Action Taken Report (ATR) on the Minutes of the Conference of Chief Commissioners and Directors General held on 28.08.2012 – waiver of arrears of penalties on individuals who are no more – reg.

Sir/Madam,

As you may be aware, during the Conference of Chief Commissioners and Directors General on 28th August, 2012, a point was raised that the arrears of penalties imposed on individuals, who are no more, may be waived off.

2. The issue has been examined and it is observed that there are contrary decisions in these judgements on the issue of recovery of amount of penalty, which has been imposed on an individual during his lifetime, from his legal heir against the personal properties left behind by the defaulters. The following judgements on this issue are relevant:

(i) Bhagwan Devi Banka and Others [1986(26)ELT 890(Pat)]

(ii) Tarak Nath Gayen and Others [1987(31) ELT 631(Calcutta)]

(iii) Omwati Vs UOI [2000(125)ELT 136(All.)]

(iv) Khadeeja Vs District Collector [2006(2)KLT 654]

3. It is observed that the hon’ble High Courts at Kerala and Patna have given judgements in favour of the department by ruling that the proceedings can be continued against the personal assets in the hands of the legal heirs. On the other hand, the hon’ble High Courts at Allahabad and Calcutta have ruled that the penalty imposed in such cases cannot be recovered from the legal representatives of the deceased. Therefore, the facts of the case in these judgments are not identical and the application of ratio of these judgments will depend on the facts on case to case basis.

4. Accordingly, it has been decided not to issue any instructions in this matter. The field formations may, therefore, take action to realise such arrears in accordance with the statutory provisions and legal pronouncements in this regard.

Pen drive is admissible evidence in Income Tax Proceedings

PrintPDF

Shri Chetan Gupta Vs. ACIT (ITAT Delhi) ,

ITA Nos. 1891, 1892 & 1893/Del/2012 ,

Date of pronouncement – 21.06.2013

 

Contention of the Assessee :- The alleged Pen drive is not an admissible evidence, therefore the recording of reasons and consequent 148 proceedings based on the reasons of such unreliable evidence are bad in law.
Held by ITAT
6.1. It is apparent that many of the transactions recorded in the alleged pen drive belong to various concerns and bank accounts of the assessee. Thus prima facie the pen drive and its contents have a relationship with the assessee, the burden to disprove the same is on him. Assessee has raised various objections about the intentions and irregularities committed by Punjab Police while carrying out the search and seizure of the alleged pen drive and taking out printouts as per the Cr. P.C., IPC , Indian evidence Act and Cyber Laws, which in our view have no effect on recordings of reasons for forming a belief about escapement.
6.2. Income Tax proceedings are non adversarial in nature and the entire exercise is directed to ensure a fair and proper assessment on the assessee. It is trite law that technical rules of Evidence Act and Cr. P. C. are not applicable to these proceedings. An evidence which indicates the income of the assessee is admissible in Income Tax proceedings. From the record it emerges that many of the entries mentioned in the pen drive belonged to various business concerns of the assessee in which he is associated in the capacities of director or partner. Similarly many entries pertained to his bank accounts and other persons. They are explained by the assessee though on prejudice basis, but the fact remains that the entries have correlation with assessees activities. In this view of the matter the contents of the pen drive become admissible evidence in Income Tax proceedings and form a basis for investigations and additions. Consequently we hold that pen drive and print outs thereof constitute admissible evidence in these proceedings. The reasons for reopening were recorded on the basis of these contents. In view of the fore goings the reasons recorded for escapement of income and the material available on record with AO have a live link with each other. Thus, we hold that the reasons for reopening the assessments were properly recorded by AO. This question is answered against the assessee.

Export of Goods and Software – Time period for realization and repatriation of export proceeds from April,13 onwards till September, 2013 is 9 Months

PrintPDF

RBI/2013-14/147
A.P. (DIR Series) Circular No.14

July 22, 2013

To
All Category – I Authorised Dealer Banks

Madam / Sir,

Export of Goods and Software – Realisation and
Repatriation of export proceeds – Liberalisation

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 52 dated November 20, 2012 extending the enhanced period for realization and repatriation to India, of the amount representing the full value of goods or software exported, from six months to twelve months from the date of export up to March 31, 2013. Further, in terms of A.P. (DIR Series) Circular No. 105 dated May 20, 2013 it was decided, in consultation with the Government of India to bring down the above stated realization period from twelve months to nine months from the date of export valid till September 30, 2013.

2. In this connection, it is clarified that as the realization and repatriation period stipulation in terms of A.P. (DIR Series) Circular No. 52 dated November 20, 2012 was valid till March 31, 2013 only, the time period for realization and repatriation of export proceeds from April 01, 2013 onwards till September 30, 2013, shall be reckoned as nine months from the date of export.

3. The provisions in regard to period of realization and repatriation to India of the full export value of goods or software exported by a unit situated in a Special Economic Zone (SEZ) as well as exports made to warehouses established outside India remain unchanged.s

4. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issued under sections 10 (4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(C. D. Srinivasan)
Chief General Manager