Commodity Transaction Tax (Chapter VII) effective from July 1, 2013

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GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION 45/2013

New Delhi, the 19 June, 2013

S.O. 1768 (E).- In exercise of the powers conferred by sub-section (2) of section 115 of the Finance Act, 2013 (17 of 2013), the Central Government hereby appoints the 1^st day of July, 2013 as the date on which Chapter VII of the said Act shall come into force.

Govt notifies Commodity Transaction Tax Rules & Forms for return & appeals filing

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GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 46/2013

New Delhi, the 19^th June, 2013

COMMODITIES TRANSACTION TAX RULES, 2013

S.O. 1769 (E).- In exercise of the powers conferred by sub-sections (1) and (2) of section 133 of the Finance Act, 2013 (17 of 2013), the Central Government hereby makes the following rules relating to commodities transaction tax, namely:-

1. Short title and commencement. ─ (1) These rules may be called the Commodities Transaction Tax Rules, 2013.

(2) They shall come into force on the 1^st day of July, 2013.

2. Definitions. ─ (1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Finance Act, 2013 (17 of 2013);

(b) “authorised bank” means any bank as may be appointed by the Reserve Bank of India as its agent under the provisions of sub-section (1) of section 45 of the Reserve Bank of India Act, 1934 (2 of 1934);

(c) “Form” means a Form set out in the Appendix to these rules.

(2) Words and expressions used and not defined in these rules but defined in the Act, the Forward Contracts (Regulation) Act, 1952 (74 of 1952), the Income-tax Act, 1961 (43 of 1961), or the rules made thereunder, shall have the meanings respectively assigned to them in those Acts and rules.

3. Agricultural commodities. ─ For the purposes of clause (7) of section 116 of the Act, the agricultural commodities shall be the following, namely:-

(i) Almond

(ii) Barley

(iii) Cardamom

(iv) Castor Seed

(v) Channa/Gram

(vi) Copra

(vii) Coriander/Dhaniya

(viii) Cotton

(ix) Cotton seed Oilcake/Kapasia Khali

(x) Guar Seed

(xi) Isabgul Seed

(xii) Jeera (Cumin Seed)

(xiii) Kapas

(xiv) Maize Feed

(xv) Pepper

(xvi) Potato

(xvii) Rape/Mustard Seed

(xviii) Raw Jute

(xix) Red Chilli

(xx) Soya bean/seed

(xxi) Soymeal

(xxii) Turmeric

(xxiii) Wheat

4. Rounding off value of taxable commodities transaction, commodities transaction tax, etc. ─ The value of taxable commodities transaction and the amount of commodities transaction tax, interest and penalty payable, and the amount of refund due, under the provisions of Chapter VII of the Act shall be rounded off to the nearest rupee and, for this purpose, where such amount contains a part of a rupee consisting of paise then, if such part is fifty paise or more, it shall be increased to one rupee and if such part is less than fifty paise it shall be ignored.

5. Payment of commodities transaction tax. ─ Every recognised association, who is required to collect and pay commodities transaction tax under section 119 of the Act, shall pay the amount of such tax to the credit of the Central Government by remitting it into any branch of the Reserve Bank of India or of the State Bank of India or of any authorised Bank accompanied by a commodities transaction tax challan.

6. Return of taxable commodities transactions. ─ (1) The return of taxable commodities transactions required to be furnished under sub-section (1) of section 120 of the Act shall be in Form No. 1, verified in the manner indicated therein, and may be furnished in any of the following manners, namely:-

(i) furnishing the return in paper form;

(ii) furnishing the return electronically under digital signature:

Provided that where the return is furnished in the manner provided in clause (i) the particulars required to be furnished in the Schedules to Form No. 1 referred to in sub-rule (1) shall be furnished on a computer media, in accordance with the following, -

(a) the computer media conforms to the following specifications:-

(i) CD ROM of 650 MB capacity or higher capacity; or

(ii) Digital Video Disc;

(b) if the data relating to the Schedules are copied using data compression or backup software utility, the corresponding software utility or procedure for its decompression or restoration shall also be furnished; and

(c) the return shall be accompanied by a certificate regarding clean and virus free data.

(2) The return of taxable commodities transaction entered into during a financial year shall be furnished on or before the 30th June immediately following that financial year.

(3) The Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the returns in the manners specified in clause (ii) of sub-rule (1).

7. Return by whom to be signed. ─ The return under sub-section (1) of section 120 of the Act shall be signed and verified in the case of a recognised association, ─

(i) being a company, by the managing director or a director thereof; and

(ii) in any other case, by the principal officer thereof.

8. Time limit to be specified in the notice calling for return of taxable commodities transaction. ─ Where an assessee fails to furnish the return under sub-section (1) of section 120 of the Act within the time specified in sub-rule (2) of rule 6, the Assessing Officer may issue a notice to such person requiring him to furnish, within thirty days from the date of service of the notice, a return in the Form prescribed in rule 6 and verified in the manner indicated therein.

9. Notice of demand. ─ Where any tax, interest or penalty is payable in consequence of any order passed under the provisions of Chapter VII of the Act, the Assessing Officer shall serve upon the assessee a notice of demand in Form No. 2 specifying the sum so payable.

10. Prescribed time for refund of tax to the person from whom such amount was collected. ─ Every assessee, in case any amount is refunded to it on assessment under sub-section (2) of section 121 of the Act, shall, within thirty days from the date of receipt of such amount, refund the same to the concerned person from whom it was collected.

11. Form of appeal to Commissioner of Income-tax (Appeals). ─ (1) An appeal under sub-section (1) of section 129 of the Act to the Commissioner (Appeals) shall be made in Form No. 3.

(2) The form of appeal prescribed by sub-rule (1), the grounds of appeal and the form of verification appended thereto relating to an assessee shall be signed and verified by the person who is authorised to sign the return of taxable commodities transactions under rule 7, as applicable to the assessee.

12. Form of appeal to Appellate Tribunal. ─ An appeal under sub-section (1) or subsection (2) of section 130 of the Act to the Appellate Tribunal shall be made in Form No. 4, and where the appeal is made by the assessee, the form of appeal, the grounds of appeal and the form of verification appended thereto shall be signed by the person specified in rule 7.

CBDT Amends Format of Form 3CEB – More reporting compliance by the Auditors

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In pursuance of the changes made by the Finance Bill 2012 bringing specified domestic transactions under the ambit of Transfer Pricing Regulations, CBDT has amended the format of Form 3CEB vide notification number 41 dated 10 June 2013. The said notification also amends Rule 10A, 10AB, 10B, 10C, 10D and 10E.

The new format of Form 3CEB includes reporting on specified domestic transactions:

Following are the additional reporting requirements in New Format of Form 3CEB:

1. At Point 4 – Nature of Business or Activity of the Assessee (as per the Code for nature of business to be filled as per the instructions for filling form ITR 6;
2. At Point 8 – Aggregate Value of International Transactions as per books of Accounts;
3. At Point 9 – Aggregate Value of Specified Domestic Transactions as per books of Accounts;
4. At Point 15 – Particulars in respect of transactions involving guarantee;
5. At Point 16 – Particulars in respect of international transactions of purchase or sale of marketable securities, issue and buyback of equity shares, optionally convertible / partially convertible / compulsorily convertible debentures or preference shares;
6. At point 18 – Particulars in respect of international transactions arising out / being part of business restructuring or reorganizations;
7. At point 19 – Particulars of any other transactions including the transactions having a bearing on the profits, income, losses or assets of the assessee;
8. At point 20 – Particulars of Deemed International Transactions;
9. From Point 21 – 25 – Particulars in respect of Specified Domestic Transactions

Soon, you may not have to post acknowledgement of ITR to Bangalore

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Millions of taxpayers filing electronic I-T returns will soon get relief from sending by post the mandatory paper verification form (ITR V- Acknowledgement) as the CBDT has decided to soon stop this practice.

The Central Board of Direct Taxes (CBDT), administrative authority of the Income Tax department, will now instead introduce electronic verification of these online returns.

No disallowance U/s. 40(a)(ia) for default of short-deduction of TDS

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Apollo Tyres Ltd vs. DCIT (ITAT Cochin), I.T.A No.31/Coch/2010,Date of pronouncement: 29-05-2013

 

The Mumbai Bench found that short deduction of TDS, if any, could have been considered as liability under the Income-tax Act as due from the assessee. Therefore, the disallowance of the entire expenditure, whose genuineness was not doubted by the assessing officer is not justified. A similar view was also taken by the Kokatta Bench of this Tribunal in the case of CIT vs M/s S.K. Tekriwal (supra). In this case, on appeal by the revenue, the Calcutta High Court confirmed the order of the Kolkatta Bench of the Tribunal.

In view of the above, this Tribunal is of the considered opinion that section 40(a)(ia) does not envisage a situation where there was short deduction / lesser deduction as in case of section 201(1A) of the Act. There is an obvious omission to include short deduction / lesser deduction in section 40(a)(ia) of the Act. Therefore, this Tribunal is of the considered opinion that in case of short / lesser deduction of tax, the entire expenditure whose genuineness was not doubted by the assessing officer, cannot be disallowed. Accordingly, the orders of lower authorities are set side and the entire disallowance is deleted.

Focus on non-filers and stop-filers to enhance tax base – CBDT Chairman

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A WORD FROM CHAIRPERSON, CBDT

My Dear Members of the Aayakar Family,
On my elevation as Chairperson of CBDT, I take the first opportunity to greet you all and thank you for your good wishes I received during these days. I feel greatly humbled by the confidence reposed in me for leading this great Service.
I am conscious of the fact that standards of performance set by my predecessor have, indeed, been high and would warrant a whole- hearted and concerted effort to match them.
As you all know, our Hon’ble Finance Minister, immediately after his taking over the charge in August, 2012, gave us the guiding principles of non-intrusive and non-adversarial tax administration, to be followed in the day-to-day working and to create environment for voluntary compliance. I am also conscious of the fact that the Hon’ble Finance Minister has empowered us with adequate infrastructure, technological enablement, compatible legislation and requisite manpower. The latest restructuring of manpower thereby approving creation of 1349 posts in IRS Cadre and 19402 posts in non IRS Cadres, totaling 20751 additional posts in the department, is the epitome of support which he has accorded us. The onus is on us now, to come up to the expectations put on us by him and people of this country.

As tax collectors of the country, we have a pivotal role to play in national growth. The huge target of budget collection, for the year 2013-14, may not be an easy task but we should consider that the base of only about 3.5 crore assesses, a mere 2.9% of national population, wherein only 42,800 show annual income over Rs. One Crore, is too small for a country like ours. For sure, potential for tax collection is much higher than what we achieve at present.

While our endeavour would be to promote voluntary compliance and provide a hassle-free service to the honest tax payers, we would also need to focus on non-filers and stop-filers in order in order to enhance the tax base and augment tax collection. We aim at achieving a tax regulation regimen in India which can match the best in the world. I have, thus, a legacy to uphold and develop it further so that the coming batches of officers and staff feel proud of holding a position in this department.

I am fully aware that this department is full of talented, hard-working and dedicated officers and members of staff and that is my biggest strength. Believe me, I believe you and your potential and hope that each one of you will rise to the occasion and prove yourself to be an effective instrument in improving our working, in bringing about transparency and in making objective, fair and quick decisions with ethical base and humane touch. I want all of you to be ‘thinking’ persons, with ingenuity to think ways and means for the development of the Department and the well-being of the nation. Together, we can not only chart the course set for us, we can also take strides in a direction whereby every Indian should feel proud of our services.

Redemption fine and penalty to be clubbed to decide applicability of threshold limit prescribed -CBEC

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F.No.390/Misc./163/2010-JC

Ministry of Finance,

Department of Revenue,

Central Board of Excise & Customs

New Delhi 3^rd June, 2013

INSTRUCTION

Sub:- Reduction of Government litigation – providing monetary limits for filing appeals by the Department before CESTAT/High Courts and Supreme court – Regarding

I am directed to refer to Instruction of even number dated 17.8.2011 on the captioned subject.

Reference has been received regarding the application of the threshold limit prescribed vide Instruction ibid to cases where either redemption fine alone is in dispute or both redemption fine and penalty are in dispute. For example, in one case the Tribunal confirmed the duty but set aside the penalty of Rs. 5 lakhs and redemption fine of Rs. 15 lakhs imposed by the adjudicating authority. As the Instruction ibid did not specifically mention about redemption fine a clarification has been sought whether the word “penalty” mentioned in para 2 of the Instruction ibid would include redemption fine or otherwise.

The matter has been examined. Redemption fine is an option in the hand of the owner of goods to redeem goods confiscated by the department for violation of any provisions of the Customs Act. On the other hand, penalty is imposed on any person who violates the provisions of the Customs Act while importing or exporting the goods out of India. Therefore, the nature and scope of penalty is different from that of the redemption fine. While penalty is in persona, redemption fine is on goods. However, both redemption fine and penalty are imposed for violations of the statutory provisions. Therefore, even though redemption fine cannot be said to be covered under the word ‘penalty’ the treatment given to both redemption fine and penalty is required to be identical and hence, redemption fine and penalty would need to be clubbed to decide the applicability of threshold limit prescribed.

Accordingly, it is clarified that if the imposition of redemption fine alone is the subject matter of dispute, and if such redemption fine exceeds the monetary limits prescribed, then the matter could be litigated further in Courts and Tribunal. Further, if both the amount of redemption fine and penalty are in dispute and if such redemption fine and penalty is in dispute, taken together, exceed the prescribed monetary limit then the matter should be litigated further.

Instruction ibid stands suitably modified.

This issues with the approval of Chairperson (CBEC).

Implication of Advance Pricing Agreement (APA)

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The Finance Act’ 2012 has introduced Section – 92 CD relating to the Advance Pricing Agreement (APA) which came into force w.e.f. 1^st July’ 2012. An Advance Pricing Agreement is an agreement between the taxpayer and the tax authority on the pricing of future related party transactions. The Taxpayer and the tax authority agrees on the method to be used for determing the Arm Length Price (ALP) of the International transaction for a certain future period.

Scope and Objective of an Advance Pricing Agreement :-

Advance Pricing Agreement can be applied for various international transactions, like purchase or sale of raw materials, finished goods, providing services, financing arrangements, transfer and use of tangible/ intangible assets, etc. However, considering the time and resources required for concluding an APA, it is generally preferred to enter into an APA in respect of complex/ high value transactions. Certain jurisdictions also exclude routine transactions from scope of the APA.

There are three types of Advance Pricing Agreements mentioned below :-

1. Unilateral Advance Pricing Agreement – entered into between a taxpayers and the tax authority of the country where it is subject to taxation.
2. Bilateral Advance Pricing Agreement – entered into between the taxpayers and the tax authority of the host country and the foreign tax authority.
3. Multilateral Advance Pricing Agreement – entered between the taxpayers and the tax authority of the host country and more than one foreign tax authority.

Salient Features of the Advance Pricing Agreement Scheme:-

• Choosing a Transfer Pricing Method;
• Selecting Comparable uncontrolled companies or transactions;
• Deciding on the years over which comparables’ results are analyzed (the “analysis window”) and related matters;
• Adjusting the comparables’ results because of differences with the tested party ; constructing a range of Arm’s Length Results (ALP);
• Critical Assumptions;
• Testing results during the APA period and consequences of being outside the Arm’s Length range.

Effect of Advance Pricing Agreement u/s 92 CD :-

• It empowers CBDT, to enter into an advance pricing agreement with any person undertaking an international transaction.
• Such APAs shall include determination of the Arm’s Length Price (ALP) or specify the manner in which ALP shall be determined, in relation to an international transaction which the person undertake.
• The manner of determination of ALP in such cases shall be any method including those provided in subsection (1) of Section 92C, with necessary adjustments or variations.
• The ALP of any international transaction, which is covered under such APA, shall be determined in accordance with the APA so entered and the provisions of section 92C or section 92CA which normally apply for determination of ALP would be modified to this extent and ALP shall be determined in accordance with APA.
• The APA shall be valid for such previous years as specified in the agreement which in no case shall exceed five consecutive previous years.
• The APA shall be binding only on the person and the Commissioner (including income-tax authorities subordinate to him) in respect of the transaction in relation to which the agreement has been entered into. The APA shall not be binding if there is any change in law or facts having bearing on such APA.
• The Board is empowered to declare, with the approval of Central Government, any such agreement to be void-ab-initio, if it finds that the agreement has been obtained by the person by fraud or misrepresentation of facts.
• For the purpose of computing any period of limitation under the Act, the period beginning with the date of such APA and ending on the date of order declaring the agreement void-ab-initio shall be excluded. However, if after the exclusion of the aforesaid period, the period of limitation referred to in any provisions of the Act is than 60 days, such remaining period shall be extended to 60 days.
• The Board is empowered to prescribe a Scheme providing for the manner, form, procedure and any other matter generally in respect of the APA.

These amendments will take effect from 1^st July’ 2012.

Clarification on SEBI’s Circular providing for the “Manner of Dealing with Audit Reports filed by Listed Companies”

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CIRCULAR NO. CIR/CFD/DIL/9/2013 June 5, 2013

Sub.: Clarification on SEBI’s Circular dated August 13, 2012 providing for the “Manner of Dealing with Audit Reports filed by Listed Companies”

1. SEBI has, vide circular dated August 13, 2012 providing for the “Manner of Dealing with Audit Reports filed by Listed companies”, mandated listed companies to submit either Form A (Unqualified/ Matter of Emphasis Report) or Form B (Qualified/ Subject To/ Except For Audit Report) along with the Annual Report to the Stock Exchanges. It is also envisaged that the qualified audit reports will be scrutinized by Qualified Audit Review Committee (QARC) and if necessary, the company will be required to restate its books of accounts to provide true and fair view of its financial position.

2. SEBI is in receipt of various queries with regard to restatement of books of accounts of listed companies envisaged in the captioned circular. The primary concern raised is whether the restatement of books of accounts needs to be carried out in the same financial year or in the subsequent financial year as a prior period item.

3. In order to address the aforesaid concern, it is clarified that the restatement of books of accounts indicated in Paragraph 5 of the said circular shall mean that the company is required to disclose the effect of revised financial accounts by way of revised pro-forma financial results immediately to the shareholders through Stock Exchange(s). However, the financial effects of the revision may be carried out in the annual accounts of the subsequent financial year as a prior period item so that the tax impacts, if any, can be taken care of.

4. This circular is issued in exercise of the powers conferred under Section 11 read with Section 1 1A of the Securities and Exchange Board of India Act, 1992.

5. All Stock Exchanges are advised to ensure compliance with this circular.

6. This circular is available on SEBI website at www.sebi.gov.in under the category “Legal Framework” and “Issues and Listing”.

Main features, Benefits & Advantages of Real Estate Bill, 2013

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Real Estate Bill to Protect the Interest of the Consumers and Promote Fair Play in Real Estate Transactions

The Real Estate (Regulation and Development) Bill, 2013, approved by the Union Cabinet yesterday is a pioneering initiative to protect the interest of consumers, to promote fair play in real estate transactions and to ensure timely execution of projects. This was stated by Sh. Ajay Maken, Union Minister of Housing & Urban Poverty Alleviation (HUPA) while addressing the media persons here today. He said that the Bill provides for a uniform regulatory environment, to protect consumer interests, help speedy adjudication of disputes and ensure orderly growth of the real estate sector.
Reiterating Government’s commitment to make real estate development transparent and consumer friendly, Shri Maken said that real estate and housing construction has been largely the concern of state institutions till the 80’s with very few private promoters and a nascent industry. With the liberalization of the economy, conscious encouragement was given to the growth of the private sector in construction, with a great deal of success, and the sector today is estimated to contribute substantially to the Country’s GDP. But currently the real estate and housing sector is largely unregulated and opaque, with consumers often unable to procure complete information, or enforce accountability against builders and developers in the absence of effective regulation.
Shri Maken expressed the hope that the proposed legislation would ensure greater accountability towards consumers, and to significantly reduce frauds and delays. The Bill aims at restoring confidence of the general public in the real estate sector; by instituting transparency and accountability in real estate and housing transactions which in turn will enable the sector to access capital and financial markets essential for its long term growth. The Bill is also expected to promote regulated and orderly growth through efficiency, professionalism and standardization. It seeks to ensure consumer protection, without adding another stage in the procedure for sanctions, he added.
Giving the details of the Bill, the Minister said that it contains elaborate provisions dealing with registration of real estate projects and registration of real estate agents with the Real Estate Regulatory Authority; functions and duties of promoters; functions and duties of real estate agents; rights and duties of allottees; establishment of Real Estate Regulatory Authority; establishment of Central Advisory Council; establishment of Real Estate Appellate Tribunal; offences and penalties; Finance, Accounts, Audits and Reports; etc.
Benefits and Advantages of Real Estate Bill, 2013
The Bill proposes to regulate transactions in the real estate sector and is in pursuance of the powers under Entries 6, 7 and 46 of the Concurrent List of the Constitution, which deals with Transfer of Property, Registration of Deeds and Documents, and Contracts. The draft Bill has been prepared after detailed deliberations with the State Governments and concerned Central Government Ministries, and after having suitably incorporated the suggestions received from them.

• The Bill will bring about standardization in the sector leading to healthy and orderly growth of the industry through introduction of definitions such as ‘apartment’, ‘common areas’, ‘carpet area’, ‘advertisement’, ‘real estate project’, ‘prospectus’ etc. Introduction of the concept of using only ‘carpet area’ for sale which has till now been ambiguously sold as super area, super built up area etc., will curb unfair trade practices.
• The Bill like other sectors such as telecom, electricity, banking, securities, insurance etc. provides for specialized regulation and enforcement which includes both curative and preventive measures, with powers to enforce specific performance, not available under the consumer laws. The Authority has powers to give directions for specific performance powers to impose penalty for non-registration of projects including imprisonment for continuous violation upto 3 yrs and impose penalty in case of other contraventions.
• The Bill proposes to register real estate agents which have hitherto been un-regulated, with clear responsibilities and functions, thereby leading to money trail and curbing money laundering. This clause has been added on the recommendations of the Department of Revenue, Ministry of Finance.
• The Bill aims to ensure consumer protection, by making it mandatory for promoters to register all projects, prior to sale; and only after having received all approvals from development/municipal authorities thereby protecting buyer investments.
• The Bill will promote transparency and fair and ethical business practices, relating to transactions, through disclosure of project details and contractual obligations vis-à-vis the project and the buyer, promoting informed choice for the buyers. This will substantially reduce the power asymmetry prevalent in real estate transactions.
• The Bill seeks to establish a regulatory oversight mechanism, through Real Estate Authority(s) and Appellate Tribunal in the States, to enforce accountability norms for the promoter buyer and the real estate agents.
• The Bill will infuse professionalism and promote planned development of the real estate sector through the promotional role of the Regulatory Authority.
• The Bill makes it mandatory upon the promoters to deposit 70% or such lesser per cent as notified by the Appropriate Government to cover the construction cost of the project of funds received by the Promoter in a separate bank account, for purposes of ensuring timely completion of projects to be used only for that project, which shall help in timely completion of projects, and prevent fund diversion.
• The Bill provides for a speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector.
• The Bill will catalyze domestic and foreign investment into the sector, thereby contributing to enhanced activity, and increase in GDP growth.

The main features of the Draft Bill:-

• Applicability of the Bill:

The proposed Bill is limited in its applicability to residential real estate i.e. housing and any other independent use ancillary to housing. The two important definitions in this regard are:
“real estate project means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of a colony into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or buildings and includes the development works thereof”
“apartment whether called dwelling unit, flat, premises, suite, tenement, unit or by any other name, means a separate and self-contained part of any immovable property located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for residential purposes, or for any other type of independent use ancillary to the purpose specified and includes any covered garage, whether or not adjacent to the building in which such apartment is located which has been provided by the promoter for the use of the allottee for parking any vehicle, or as the case may be, for the residence of any domestic help employed in such apartment”

• Establishment of Real Estate Regulatory Authority:

Establishment of one or more ‘Real Estate Regulatory Authority’ in each State/UT, or one Authority for two or more States/UT, by the Appropriate Government, with specified functions, powers, and responsibilities to exercise oversight of real estate transactions, to appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest;

• Registration of Real Estate Projects and Registration of Real Estate Agents:

Mandatory registration of real estate projects and real estate agents who intend to sell any immovable property, with the Real Estate Regulatory Authority;

• Mandatory Public Disclosure of all project details:

Mandatory public disclosure norms for all registered projects, including details of the promoters, project, layout plan, plan of development works, land status, carpet area and number of the apartments booked, status of the statutory approvals and disclosure of proforma agreements, names and addresses of the real estate agents, contractors, architect, structural engineer etc.;

• Functions and Duties of Promoter:

Duty of promoters towards disclosure of all relevant information and adherence to approved plans and project specifications, obligations regarding veracity of the advertisement for sale or prospectus, responsibility to rectify structural defects, and to refund moneys in cases of default;

• Compulsory deposit of seventy percent or such lesser percent as notified by the Appropriate Government, to cover the construction cost of the project, of funds received by the Promoter, in a separate bank account:

Provision to compulsorily deposit seventy percent or such lesser percent as notified by the Appropriate Government, of the amounts realized for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank within a period of fifteen days of its realization to cover the cost of construction and shall be used only for that purpose.

• Functions of Real Estate Agents:

Real estate agents not to facilitate the sale of immovable property which are not registered with the Authority required under the provisions of the Act, obligation to keep, maintain and preserve books of accounts, records and documents, obligation to not involve in any unfair trade practices, obligation to facilitate the possession of documents to allottees as entitled at the time of booking, and to comply with such other functions as specified by Rules made in that regard;

• Rights and Duties of Allottees:

Right to obtain information relating to the property booked, to know stage-wise time schedule of project completion, claim possession of the apartment or plot or building as per promoter declaration, refund with interest in case of default by the promoter, and after possession entitled to necessary documents and plans. Duty of allottees to make necessary payments and carry out other responsibilities as per the agreement;

• Functions of Real Estate Regulatory Authority:

The Authority to act as the nodal agency to co-ordinate efforts regarding development of the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector;

• Fast Track Dispute Settlement Mechanism:

Establishment of fast track dispute resolution mechanisms for settlement of disputes, through adjudicating officers (an officer not below the rank of Joint Secretary to the State Government) to be appointed by the Authority, and establishment of an Appellate Tribunal to hear appeals from the orders of the Authority and the adjudicating officer;

• Establishment of Central Advisory Council:

Establishment of Central Advisory Council to advise the Central Government on matters concerning implementation of the Act, with a mandate to make recommendations on major questions of policy, protection of consumer interest and to foster growth and development of the real estate sector. The Council to have among others, five representatives of State Governments, to be selected by rotation;

• Establishment of Real Estate Appellate Tribunal:

Establishment of Real Estate Appellate Tribunal, by the appropriate government to hear appeals from the orders or decisions or directions of the Authority and the adjudicating officer. The Appellate Tribunal is to be headed by a sitting or retired Judge of the High Court with one judicial and one administrative/technical member;

• Punitive Provisions:

Punitive provisions including de-registration of the project and penalties in case of contravention of the provisions of the Bill or the orders of the Authority or the Tribunal;

• Power to make Rules and Regulations:

Appropriate Government to have powers to make rules over subjects specified in the Bill, and the Regulatory Authority to have powers to make regulations.

RBI releases clarifications to queries on Guidelines for Licensing of New Banks in Private Sector

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The Reserve Bank of India today released on its website, clarifications to queries on the Guidelines for Licensing of New Banks in the Private Sector.

The Reserve Bank of India released the Guidelines for Licensing of New Banks in the Private Sector on its website on February 22, 2013. Following the issue of the guidelines, RBI issued a press release on March 7, 2013 inviting queries from intending applicants seeking clarifications on the guidelines and also stated that considering that the clarifications provided would be of wider interest and use for all intending applicants, the Reserve Bank would post the clarifications on its website.

In all, RBI has received 443 queries from 34 individuals/ organisations. Upto the end of March 31, 2013, RBI had received 71 queries from 9 individuals/ organisations. As many as 330 queries from 19 individuals/ organisations were received between 5th to 10th April, 2013, of which 240 queries from 10 individuals/ organisations were received on April 10, 2013, i.e. on the last date. Further, 42 queries were received after April 10, 2013. The clarifications to all the queries have been provided. A few queries have been clubbed with other related queries for the sake of clarity and continuity.

A good number of queries have brought out issues relating to the provisions in the guidelines on the eligible promoters, ‘fit and proper’ criteria, corporate structure of the Non-Operative Financial Holding Company (NOFHC), foreign shareholding and on transition time to the new structure. While interpreting the replies, it must be kept in view that though the replies are specific to the questions, these must be seen in the wider context of the guidelines.

What’s New:

Validity period of the in-principle approval

As per the guidelines for licensing of new banks in the private sector issued vide RBI Press Release dated February 22, 2013, the validity of the in-principle approval for setting up of the NOFHC / bank was one year from the date of issue and would lapse automatically, thereafter.

The queries received from intending applicants brought out several complex issues pertaining to re-organisation of the existing corporate structure, restructuring of businesses and meeting the regulatory requirements. In the above context, RBI has been requested to clarify as to whether it would provide more time for a smooth transition from the existing structures to that prescribed in the guidelines as also for meeting the regulatory requirements. It has therefore, been decided to extend the validity period of the in-principle approval from one year to 18 months. Accordingly, the provisions at para 4(K) (vi) of the guidelines stand modified. It is expected that this would provide sufficient time for the Promoters/Promoter Group to comply with the various stipulations in the guidelines and the terms and conditions that would be set out while granting the in-principle approvals to successful applicants.

Applicability of norms of other regulators

Some of the provisions in the guidelines relate to Non-operative Financial Holding Company (NOFHC) structure which envisages holding of the bank and other regulated financial services entities of the Promoters/Promoter Group under the NOFHC and prudential exposure norms for the regulated entities. These requirements overlap with regulatory norms prescribed by other sectoral regulators like SEBI and IRDA. In this regard, queries were raised on adherence to different sector specific requirements. Such issues were examined in consultation with SEBI and IRDA. It has been decided that while the structure prescribed in the guidelines is the preferred structure, the intending applicants should approach the other financial sector regulators for bringing the entities regulated by them under the NOFHC. Their decision in this regard would prevail. Therefore, at the minimum, the proposed bank and all RBI regulated entities will necessarily be under the NOFHC.

Employee provident fund guidance concerning international workers

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EMPLOYEES’ PROVIDENT FUND ORGANISATION

(Ministry of Labour & Employment, Govt. of India) Head Office

Bhavisnya Nidhl Bhawan, 14, Bhikaiji Cama Place, New Delhi — 110066

Na. IWU/7(11)2011/ Compliance./5037 , Dated- 23/05/2013
Subject: Smiling Compliance under Para 83 of Employees’ Provident Fund (Amendment) scheme 2010 and Para 43A of Employees’ Pension (Amendment) scheme 201 0-Regarding.
As you arc aware special provisions were made by the Crovernrnent in respect of International Workers by inserting Para 83 (vide GSR 706E dated 01/10/2008) and Pam 43A (vide GSR 705(E) dated 0111012008) in the Employees’ Provident Fund Scheme 1952 and Employees’ Pension Scheme 1995 respectively.
According to the Special provisions of the EPF Scheme 1952, contributions in respect of an International Worker (i.e. employer’s and employee’s) were required to be remitted by an employer on full pay (i.e. without ceiling of Rs.65001 per month) w.e.f. Iⁿ of November 2008 or from the date of joining, whichever was later. The restrictions on the diversion of 833% from the employer’s share of EPF contribution towards the employees’ pension fund was also done away with vide GSR 149 dated 03/09/2010. Thus, it is very clear that in respect of the International workers, the contributions had to.be deducted and remitted under EPF as well as EPS Scheme on full pay without any ceiling (Where “Pay” consist of basic wages, Dearness allowance, Retaining allowance (if any) and cash value of food concession (if any)).
In this context while scrutinising a case referred to the Head Office by the Embassy of Republic of Peru, the following serious aberrations were noticed:
1. Even though the international Worker had apparently joined service in a covered establishment (MIS Shipnet Software Solutions India Pvt. Ltd.) on 1/4/2009, the provident fund and pension contributions were deducted only from June 2009.

2. The deduction of P.F, contribution as well as diversion of EPS contribution was not being made on full Pay from due dates.

The instant case pertains to Regional Office, Tambararn. However, other field offices also might be having similar cases where employers arc not remitting the contributions as per stipulated Law.

The employers need to be educated and updated appropriately about the special provisions relating to the International Workers because such violations of the provisions entail very serious consequences for the employers Jay way of liability towards both damages under section 14B and penal interest under section 7Q including prosecution under Section 14 of the EPF&M.P Act1952. At the same time, such monitoring lapses on the part of the EPFO field offices in ensuring proper administration of the special provisions relating to the International Workers shall cause embarrassment to the EPFO. However, more than anything else, an International Worker shall face financial loss and great difficulties when totalization of benefits is attempted under various Social Security Agreements.

The Regional PF Commissioners of the field offices are expected to streamline their enforcement machinery to ensure full compliance in respect of all International Workers. The data may be collected from FRROs for cross checking to ensure due compliance.

Willful defaulters may also be considered for booking under Law to have deterrent impact and ensuring strict compliance.

Expenditure incurred on maintenance, back-up and support services to existing hardware and software is revenue in nature

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 186 of 2013

COMMISSIONER OF INCOME TAX I….Appellant(s)
Versus
N J INDIA INVEST PVT LTD… .Opponent(s)

 

Issue pertains to expenditure of Rs.1.02 crores ( rounded off) expended by the assessee and whether the same should be treated as capital or revenue expenditure. For the assessment year 2008-09 the Assessing Officer noticed that the assessee had debited in the profit and loss account, amount of Rs.1.02 crores (rounded off) towards software support and maintenance charges. Out of which, a sum of R. 97.75 lakhs pertained to software development and upgradation charges. The Assessing Officer was of the opinion that software development and upgradation would give the assessee an enduring benefit and such expenditure, therefore, should be treated as capital in nature. After hearing the assessee on the issue, he disallowed such expenditure and treated the same as capital in nature.

In essence, these services, therefore, were in the nature of maintenance, back up and support service to the existing hardware and software already installed by the company for the purpose of its business. The Tribunal, in our opinion, therefore, rightly held that the expenditure was revenue in nature. The Tribunal observed that even the test of enduring benefit, may, in given set of circumstances, break down as held by Delhi High Court in the case of Commissioner of Income Tax vs. Asahi India Safety Glass Limited reported in (2011) 245 CTR Reports 529 in which it was observed, inter alia, that the expenditure which is incurred enables the profit-making structure to work more efficiently leaving the source of the profit- making structure untouched would be an expenditure in the nature of revenue.

No penalty U/s. S. 271(1)(c) for disallowance U/s. 40(a)(i) if TDS deducted next year

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INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI

BEFORE SHRI I. P. BANSAL, J. M. AND SHRI SANJAY ARORA, A. M.

I.T.A. No. 2415/Mum/2011
Assessment Year: 2003-04)

Dynatron Private Limited.

Vs.

Dy. CIT, Range 8(1), Mumbai

Appellant by : Shri Ajay R. Singh

Respondent by : Mrs. R. M. Madhavi

Date of Hearing : 14.05.2013

Date of Pronouncement : 29.05.2013

 

Merely because a claim (per the return of income) is a legal claim, or has a legal aspect to it – which would be in each case – the same by itself cannot be a cause for non levy of penalty in every case, as where there is no valid basis for the same (i.e., the legal claim). That is, the claim must rest on some reasonable premises or basis, i.e., have some basis to it. In CIT vs. Escorts Finance Ltd. [2010] 328 ITR 44 (Del), the hon’ble court found the assessee’s claim u/s.35D, said to be based on the opinion of its Chartered Accountant, a tax expert, as without basis in view of the clear language of the provision, extending the benefit of the said deduction to an industrial company, while the assessee-respondent was admittedly a finance company. In CIT vs. Zoom Communication (P.) Ltd. [2010] 327 ITR 510 (Del.), the claim was qua income-tax, barred by section 40(a)(ii), so that the plea of ‘omission’ was considered as not acceptable. In CIT vs. Usha International Limited [2013] 214 Taxmann.com 519 (Del), again, the claim was u/s.35CCA, which was found as de hors any basis. Penalty u/s.271(1)(c) of the Act was accordingly confirmed in all these cases by the hon’ble court, confirming thus that furnishing of a plausible explanation for default continues to be the building block or an essential ingredient for saving levy penalty u/s.271(1)(c) of the Act, and would apply even in respect of legal claims and, further, even after the decision in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC), which decision was considered in these cases.So, however, in the instant case, the deposit of TDS subsequently would operate as a mitigating factor. Though admittedly of little consequence in-so-far as the claim for deduction (as made per the return of income) for the relevant year is concerned in view of the clear language of the provision, it serves as a substantial compliance thereof. No doubt, it does not explain the basis of the claim for the current year; the provision itself providing for the contingency and consequence of delayed payment, deferring the claim to the year of actual payment – the fact remains that the deduction becomes exigible for the subsequent year. The terms of section are thus, as afore-noted, not absolute, so as to render the subsequent payment of TDS as of no consequence. The assessee would be entitled to claim the deduction for the immediately succeeding year, and which it has ostensibly not. In terms of the provision itself, therefore, it becomes a case of satisfaction of the principal condition for deduction, i.e., the payment of TDS, though subsequently. It is this that prompted us to state of the provision as having been substantially complied with. It would decidedly be a different matter if the provision made no such exception, as in that case there would be no question of the principal condition of the payment having been met and, thus, of the assessee being substantially compliant. This, therefore, serves as a valid explanation under Explanation (1B) to section 271(1)(c).

We may also, before parting, state that though the assessee may not have explained its case in this manner; the counsel, rather, misleading the court, the same is firstly borne out of the relevant law as well as the assessee’s conduct; it stating the primary facts in the course of the assessment proceedings itself, and on which no doubt has been expressed by the Revenue at any stage. In our clear view, therefore, this is not a fit case for levy of the penalty u/s. 271(1)(c) qua the non deduction of tax on the FTS payment of Rs. 4,52,538/-.

TDS U/s. 194IA on Immovable Property to be paid by Form 26QB; TDS certificate in Form 16B

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Notification No. 39/2013, Dated : May 31, 2013

S.O.1404(E) – In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called the Income-tax (Fifth Amendment) Rules, 2013.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962, (hereinafter referred to as the said rules) in rule 30,–

(a) after sub-rule (2), the following sub-rule shall be inserted, namely:-

“(2A) Notwithstanding anything contained in sub-rule (1) or sub-rule (2), any sum deducted under section 194-IA shall be paid to the credit of the Central Government within a period of seven days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No.26QB.”;

(b) after sub-rule (6), the following sub-rule shall be inserted, namely:-

“(6A) Where tax deducted is to be deposited accompanied by a challan-cum-statement in Form No.26QB, the amount of tax so deducted shall be deposited to the credit of the Central Government by remitting it electronically within the time specified in sub-rule (2A) into the Reserve Bank of India or the State Bank of India or any authorised bank.”;

(c) after sub-rule (7), the following sub-rules shall be inserted, namely:-

“(7A) The Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purposes of remitting the amount electronically to the Reserve Bank of India or the State Bank of India or any authorised bank and shall be responsible for the day-to-day administration in relation to the remitting of the amount electronically in the manner so specified.”;

3. In rule 31 of the said rules,–

(a) after sub-rule (3), the following sub-rule shall be inserted, namely:-

“(3A) Notwithstanding anything contained in sub-rule (1) or sub-rule (2) or sub-rule (3), every person responsible for deduction of tax under section 194-IA shall furnish the certificate of deduction of tax at source in Form No.16B to the payee within fifteen days from the due date for furnishing the challan-cum-statement in Form No.26QB under rule 31A after generating and downloading the same from the web portal specified by the Director General of Income-tax (System) or the person authorised by him.”;

(b) after sub-rule (6), the following sub-rule shall be inserted, namely:-

“(6A) The Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purposes of generation and download of certificates and shall be responsible for the day-to-day administration in relation to the generation and download of certificates from the web portal specified by him or the person authorised by him.”;

4. In rule 31A of the said rules, after sub-rule (4), the following sub-rule shall be inserted, namely:-

“(4A) Notwithstanding anything contained in sub-rule (1) or sub-rule (2) or sub-rule (3) or subrule (4), every person responsible for deduction of tax under section 194-IA shall furnish to the Director General of Income-tax (System) or the person authorised by the Director General of Income-tax (System) a challan-cum-statement in Form No.26QB electronically in accordance with the procedures, formats and standards specified under sub-rule (5) within seven days from the end of the month in which the deduction is made.”;

Rotate Officers between Customs and Central Excise – CBEC

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No.A.22013/3/2013-Ad.IIGovernment of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs

***

North Block, New Delhi

3^rd May, 2013.

To
All Chief Commissioners of Central Excise & Customs. All Directors General under CBEC.
Subject: Rotation of officers of IRS (C&CE) between Central Excise and Customs zones- regarding
Madam/Sir,

I am directed to reiterate the provisions of the Transfer Policy as contained in para 4.7 of the Transfer Policy dated 05.04.2011 that “the officers will, as far as possible, be rotated between the Customs and Central Excise branches every two years and adequate experience in Service Tax branch will also be ensured as far as possible. This shall be done after the Annual Transfers have been effected. At stations where there are separate Chief Commissioners of Central Excise and Customs, a committee of all such Chief Commissioners shall collectively decide on the rotation between the two branches at that station. At other stations, local rotation will be done jointly by the Chief Commissioners who exercise control over the posts located at that station”.

2. It is requested to meticulously adhere to the above instructions. A

compliance report in this regard may be furnished to the Board accordingly.

Acknowledgement by banks at the time of submission of Form 15-G / 15-H

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RBI/2012-13/516
DBOD.No.Leg.BC.100/09.07.005/2012-13

May 31, 2013

All Scheduled Commercial Banks
(excluding RRBs)
Dear Sir/Madam,

Acknowledgement by banks at the time of submission of Form 15-G / 15-H

As you are aware banks are not required to deduct TDS from depositors who submit declaration in Form 15-G/15-H under Income Tax Rules, 1962. However, it has been brought to our notice that despite submission of Form 15-G/15-H by customers, banks are deducting tax at source, at times, causing inconvenience to customers resulting in a number of complaints. Such instances arise because either the forms are misplaced or a track is not kept of forms received in the branches.
2. The matter has been examined by us in consultation with Indian Banks’ Association (IBA). With a view to protect interest of the depositors and for rendering better customer service, banks are advised to give an acknowledgment at the time of receipt of Form 15-G/15-H. This will help in building a system of accountability and customers will not be put to inconvenience due to any omission on part of the banks.