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

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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

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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

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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

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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

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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

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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

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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

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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

Finally CBDT Releases ITR 6 for e-filing for AY 2013-14 / FY 2012-13

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CBDT has released ITR 6 for e-filing or Online filing of Income tax Return to be used by a company, other than a company claiming exemption under section 11 for Assessment year 2013-14 or Financial Year 2012-13. The ITR-6 can be downloaded from the following website :- https://incometaxindiaefiling.gov.in/

1. Assessment Year for which this Return Form is applicable

This Return Form is applicable for assessment year 2013-2014 only i.e., it relates to income earned in Financial Year 201 2-13.

2. Who can use this Return Form?

This Form can be used by a company, other than a company claiming exemption under section 11.

3. Annexure-less Return Form

No document (including TDS certificate) should be attached to this Return Form. All such documents enclosed with this Return Form will be detached and returned to the person filing the return. Tax-payers are advised to match the taxes deducted/collected/paid by or on behalf of them with their Tax Credit Statement (Form 26AS). (Please refer to www.incometaxindia.gov.i n)

4. Manner of filing this Return Form This Form has to be compulsorily furnished electronically under digital signature to the Income Tax Department.

5. Codes for filling this Return Form

(i) Under the heading ‘Filing Status’ in the Return Form the relevant box needs to be checked regarding section
under which the return is being filed on the basis of following.

Sl. No.	How the return is filed
i.	On or before the due date as provided under section 139(1)
ii.	After the due date under section 139(1) but before the expiry of one year from the end of relevant assessment year as per section 139(4)
iii	Revised Return under section 139(5)
iv	In response to notice under section 139(9) for removal of defects
v.	In response to notice under section 142(1)
vi.	In response to notice under section 148
vii.	In response to notice under section 153A
viii.	In response to notice under section 153C
ix.	Under section 92CD to give effect to advance pricing agreement entered with the Board

(ii) Under the head Audit Information, if the assessee is liable for Audit u/s 44AB and the accounts have been audited by an accountant, the details of such audit report along with the date of furnishing it to the department has to be filled. Further, if the assessee is liable to furnish other audit report the section under which audit is required and the date of furnishing it to the department (if audit has been carried out under that section) has to be filled. From A.Y. 2013-14 it has become mandatory to furnish audit reports (if the audit has been carried out) under the following sections electronically on or before the date of filing the return of income.

Section under which Audit report is mandatorily to be filed electronically (if the audit has been carried out) on or before the date of filing the return of income
Sl.	Section	Sl.	Section
1.	10(23C)(iv), 10(23C)(v), 10(23C)(vi), 10(23C)(via)	7.	80-IC
2.	10A	8.	80-ID
3.	12A(1)(b)	9.	80JJAA
4.	44AB	10.	80LA
5.	80-IA	11.	92E
6.	80-IB	12.	115JB

Salaried with total income upto Rs. 5 lakh also to FIle IT return for A.Y. 2013-14

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CBDt has vide its press release dated 22.07.2013 clarified that exemption from filing return of income for salaried employees having total income upto Rs. 5 lakhs including income from other sources upto Rs. 10,000/- was only for assessment year 2011-12 and 2012-13 respectively. The exemption was given considering ‘paper filing of returns’ and their ‘processing through manual entry’ on system.

However, this year the facility for online filing of returns has been made user-friendly with the advantage of pre-filled return forms. These E-filed forms also get electronically processed at the central processing centre in a speedy manner. Hence, the exemption provided during the last two years is not being extended for assessment year 2013-14.

Interest on Income tax Refund cannot be denied if assessee is not at fault – CBDT

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Instruction No. 7/2013

F. No.312/54/2013·0T

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, the 15th July, 2013

To
All Chief-Commissioners of lncome Tax
All Director General of Income Tax
Subject: Payment of interest u/s 244A of Income Tax Act 1961 when assessee is not at fault -regarding.
Sir/Madam,
Hon’ble Delhi High Court vide its judgement in case of Court On Its Own Motion Vs, UOI and Others in W.P,(C) 2659/2012 dated 14.03.2013 has issued seven Mandamus for necessary action by the Income Tax Department. One Mandamus is on payment of interest u/s 244A of the Income Tax Act 1961 when the assessee is not at fault.
2. On this issue, the Hon’ble Court has observed as under:

“31. In the affidavit filed on 2911 January, 2013, the respondents have stated as under:-

‘Where an assessee makes a mistake in the claim 0/ TDS in the e-return and the return is processed and a demand is raised and subsequently, the assessee rectifies the mistake in the claim and files an online rectification application, the same is processed and on any excess TDS is refunded, the interest under section 244A is granted as per the I. T Act after excluding the period of delay attributable to the assessee in terms a/sub-section 2 of section 244A of the Income Tax Act, 1961″

32. An assessee can be certainly denied interest if delay is attributable to him in terms of sub-section (2) to Section 244A, However, when the delay is not attributable to the assessee but due to the fault of the Revenue, then interest should be paid under the said Section. False or wrong uploading of past arrears and failure to follow the mandate before adjustment is made under Section 245 of the Act, cannot be attributed and treated as fault of the assessee.

These are lapses on the part of the Assessing Officer i.e. the Revenue, Interest cannot be denied to the assessees when the twin conditions are satisfied and in favour of the assessee. However, even in such cases Assessing Officer may deny interest for reasons to he recorded in writing if the assessee was in fault and responsible for the delay. This is the fourth mandamus which we have issued.”

3. In view of the direction of the Hon’ble Court, I am directed to convey that in no case should interest u/s 244A of the Act be denied to the assessee where the assessee is not at fault. The observation of the Hon’ble High Court in Para 32 above be strictly kept in mind while dealing with such matters.

4. I am further directed to state that the above be brought to the notice of all officers working under your jurisdiction for necessary and strict compliance.

Ekta Jain,

Deputy Secretary to the Government of India

ITAT explains Tax Treatment of ESOP discount (difference between market & issue price)

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Issue – Whether discount on issue of Employee Stock Options is allowable as deduction in computing the income under the head profits and gains of business?

Briefly stated the facts of the case are that the assessee is engaged in the manufacture of Enzymes and Pharmaceutical ingredients. It formulated the ESOP 2000. A trust was set up under the name and style of “Biocon India Limited Employees Welfare Trust” for giving effect to the ESOP 2000 and another ESOP 2004 which was launched subsequently but during one of the years under consideration. The assessee claimed deduction of Rs. 3,38,63,779 as `Employee compensation cost’ u/s 37 of the Income-tax Act, 1961 (hereinafter called `the Act’) representing discount under the ESOP 2000. In the assessment completed u/s 143(3), the Assessing Officer (hereinafter also called `the AO’) disallowed the said claim on the ground that there was no specific provision entitling the assessee to deduction u/s 37(1) in this regard. He further held that the Securities and Exchange Board of India (Employee Stock Option Scheme And Employee Stock Purchase Scheme) Guidelines, 1999 (hereinafter called `the SEBI Guidelines’ or `the Guidelines’), on which the assessee had placed strong reliance in support of the deduction, would not apply as these cannot supersede the taxing principles.

There is no weight in the contention of the ld. AR that there is no specific provision in the Act on the ESOP discount. It is axiomatic that the taxation rules are always embodied in the relevant Act, either in a specific or a general manner. These can be specific by making a clear cut provision in respect of deductibility of a particular item of expense or taxation of a particular item of income. General provisions are those which set out the overall principles to govern the deductibility or taxability of unspecified items. For example, the definition of `income’ u/s 2(24) has been given by the Act in an inclusive manner. There have been enshrined clauses (i) to (xvi) dealing with the items specifically listed. However, the provision has been couched in such a way so as to include general items of receipts having character of income, even though not specifically mentioned. Similar is the position regarding deductions. Under the head `Profits and gains of business or profession’, there are sections granting deductions in respect of specific expenses or allowances. Similarly, there is section 37(1), which grants deduction for expenses not specifically set out in other sections, if the conditions stipulated in the section, are fulfilled. All other items of expenses, which fulfill the requisite conditions, gain deductibility under section 37(1). To put it in simple words, this section is a specific provision for granting deduction in respect of the unspecified or the general categories of expenses. Discount on ESOP is a general expense and hence covered by the specific provision of section 37. The contention of the ld. AR that there is no provision in the Act dealing with the deductibility of ESOP discount, is therefore, devoid of any merit. This concludes the question of granting of deduction of discount during the vesting period.

Discount under ESOP is in the nature of employees cost and is hence deductible during the vesting period w.r.t. the market price of shares at the time of grant of options to the employees. The amount of discount claimed as deduction during the vesting period is required to be reversed in relation to the unvesting/lapsing options at the appropriate time. However, an adjustment to the income is called for at the time of exercise of option by the amount of difference in the amount of discount calculated with reference the market price at the time of grant of option and the market price at the time of exercise of option.

No accounting principle can be determinative in the matter of computation of total income under the Act. The question before the special bench is thus answered in affirmative by holding that discount on issue of Employee Stock Options is allowable as deduction in computing the income under the head `Profits and gains of business or profession’.

Chairman SEBI can Authorize Search and Seizure Operations to Crack Down Ponzi Schemes

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An Ordinance to Amend the Securities Laws Promulgated; SEBI would have now Powers to Regulate any Pooling of Funds Under An Investment Contract Involving A Corpus Of Rs.100 Crore Or More, Attach Assets In Case Of Non-Compliance And Chairman SEBI would have Powers to Authorize The Carrying out of Search and Seizure Operations, As Part of Efforts to Crack Down on Ponzi Schemes

The President was pleased to promulgate an Ordinance to amend the Securities Laws today. This was consequent to the approval of the Cabinet, which met on July 17, 2013, to amend Securities and Exchange Board of India (SEBI) Act and related Acts for providing more powers to the capital markets regulator for enforcement against illegal Collective Investment Schemes and to curb insider trading.

Owing to new and innovative methods of raising funds from investors, such as art funds, time-share funds, emu /goat farming schemes, there has been regulatory gap /overlap regarding types of instruments / fund raising. At the same time, SEBI receives complaints against unapproved fund raising activities of certain companies that claim that they do not come under the purview of SEBI Collective Investment Scheme regulations. With the amendments in force now, SEBI would have powers to regulate any pooling of funds under an investment contract involving a corpus of Rs.100 Crore or more, attach assets in case of non-compliance and Chairman SEBI would have powers to authorize the carrying out of search and seizure operations, as part of efforts to crack down on ponzi schemes.
Besides, SEBI would have powers to seek information, such as telephone call data records, from any persons or entities in respect to any securities transaction being investigated by it. Establishment of Special Courts enabled by this Ordinance would fast-track the resolution of pending SEBI related cases.
These amendments to the SEBI Act, SCR Act and the Depositories Act were finalized after detailed consultations with SEBI and other Ministries and Departments including MHA, DoT, MCA, DFS etc. Government believes that these amendments would give SEBI the legal backing to clamp down on unscrupulous entities that are using newer methods to take gullible investors for a ride. The promulgation of the Ordinance demonstrates the firm commitment and resolve of the Government to act with speed and alacrity to curb irregularities and frauds in securities market.

Guidelines for Weighted Deduction @ 150% of Expenditure Incurred on skill Development U/s. 35CCD

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GOVERNMENT OF INDIA

MINISTRY OF FINANCE

( DEPARTMENT OF REVENUE )

NOTIFICATION No. 54/2013

Dated : July 15, 2013

In exercise of the powers conferred by section 295 read with sub-section (1) of section 35CCD 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 (10th 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 (hereafter referred to as the said rules), after rule 6AAE, the following shall be inserted, namely:-
“6AAF. Guidelines for approval of skill development project under section 35 CCD.-
(1) A skill development project shall be considered for notification if it is undertaken by an eligible company and the project is undertaken in separate facilities in a training institute.
(2) The eligible company, before undertaking any skill development project, shall make an application for notification of such project under sub-section (1) of section 35CCD, in duplicate, in Form No.3CQ, to the National Skill Development Agency (hereinafter referred to as the NSDA).
(3) The eligible company shall also send a copy of the application in Form No. 3CQ to the Commissioner of Income-tax or the Director of Income-tax, as the case may be, having jurisdiction over the case, accompanied by the acknowledgement receipt as evidence of having furnished the application form in duplicate to the NSDA.
(4) The application shall be accompanied by the following, namely:-
(a) detailed note on the skill development project to be undertaken by the eligible company;
(b) details of the expenditure expected to be incurred on the project and expected date of completion of the project; and
(c) a letter of concurrence from the training institute in which the skill development project is to be undertaken.
(5) If any defect is noticed in the application referred to in sub-rule (2) or if any relevant document is not attached thereto, the NSDA shall, before the expiry of one month from the date of receipt of the application in its office, intimate the defect to the applicant for its rectification.
(6) The applicant shall remove the defect within a period of fifteen days from the date of such intimation or within such further period as, on an application made in this behalf, may be extended by the NSDA, so however, that the total period for removal of the defect does not exceed thirty days, and if the applicant fails to remove the defect within such period so allowed, the NSDA shall send its recommendation for treating the application as invalid to the CBDT.
(7) On receipt of recommendation of the NSDA under sub-rule (6), the CBDT, if satisfied, may pass an order treating the application as invalid.
(8) If the application form is complete in all respects, the NSDA may make such inquiry or call for such documents from the eligible company or the training institute as it may consider necessary for satisfying itself regarding the genuineness of the current and proposed activity of the applicant and send its recommendation to the CBDT for grant of approval or rejection of the application before the expiry of the period of two months to be reckoned from the end of the month in which the application form complete in all respects was received in its office.
(9) The Commissioner of Income-tax or the Director of Income-tax, as the case may be, having jurisdiction over the case shall send his recommendation to the NSDA for grant of approval or rejection of the application, after considering the compliance of the applicant with the various provisions of Income-tax Act, 1961 and Wealth-tax Act, 1957, before the expiry of the period of one month to be reckoned from the end of the month in which the copy of the application was received in his office.
(10) If the NSDA recommends the grant of approval under sub-rule (8), the CBDT shall, within a period of fifteen days from the end of the month in which it receives the report from the NSDA, under subsection (1) of section 35CCD, issue a notification in Form No. 3CR to be published in the Official Gazette specifying the skill development project subject to conditions mentioned in rule 6AAG or such other conditions, as it may deem fit, to be effective for such period not exceeding three assessment years and if the NSDA recommends the rejection of the application under sub-rule (8), the CBDT shall pass an order rejecting the application.
(11) If the CBDT is satisfied with the activities of the skill development project during the period of notification, it may notify the said project for a further period in consultation with the NSDA.
(12) A copy of the notification issued under sub-rule (10) or sub-rule (11) shall be sent to the applicant, the NSDA, the training institute and the Commissioner of Income-tax or the Director of Income-tax, as the case may be, having jurisdiction over the case.
(13) The CBDT may rescind the notification issued under sub-rule (10) or sub-rule (11) at any time, if it is satisfied that the eligible company or the training institute, as the case may be, has ceased its activities or its activities are not genuine or the activities of the skill development project are not being carried out in accordance with all or any of the relevant provisions of the Act or this rule or rule 6AAG or the conditions subject to which the notification was issued.
(14) An order rescinding the notification shall not be passed unless the applicant has been given an opportunity of being heard in the matter.
(15) A copy of any order invalidating or rejecting the application or rescinding the notification shall be sent to the applicant, the training institute, the NSDA and the Commissioner of Income-tax or the Director of Income-tax, as the case may be, having jurisdiction over the case.
6AAG. Conditions subject to which a skill development project is to be notified under section 35CCD.
(1) The company undertaking skill development project shall maintain separate books of account of the skill development project notified under sub-section(1) of section 35CCD, and get such books of account audited by an accountant as defined in the Explanation below sub-section(2) of section 288.
(2) The audit report referred to in sub-rule (1) shall include the comments of the auditor on the true and fair view of the books of account maintained for skill development project, the genuineness of the activities of the skill development project and fulfillment of the conditions specified in the relevant provisions of the Act or the rules or the conditions mentioned in the notification issued under sub-rule (10) or sub-rule (11) of rule 6AAF.
(3) A skill development project in respect of existing employees of the company shall not be eligible for notification under sub-section (1) of section 35CCD, where the training of such employees commences after six months of their recruitment.
(4) All expenses (not being expenditure in the nature of cost of any land or building), incurred wholly and exclusively for undertaking a notified skill development project shall be eligible for deduction under section 35CCD:
Provided that any expenditure incurred on the skill development project which is reimbursed or reimbursable to the company by any person, whether directly or indirectly, shall not be eligible for deduction under section 35CCD.
(5) The company shall, on or before the due date of furnishing the return of income under sub-section (1) of section 139, furnish the audited statement of accounts of the skill development project for the previous year along with the audit report and amount of deduction claimed under sub-section (1) of section 35CCD to the Commissioner of Income-tax or the Director of Income-tax, as the case may be.
(6) If the Commissioner of Income-tax or the Director of Income-tax, as the case may be, is satisfied that the,-
(a) company as not maintained separate books of account for the skill development project or has not got such books of account audited by an accountant in accordance with sub-rule (1);
(b) company has not furnished the documents referred to in sub-rule (5);
(c) company has ceased to carry out activities of skill development project;
(d) activities of skill development project of the company are not genuine; or
(e) activities of the skill development project of the company are not being carried out in accordance with the relevant provisions of the Act or the rules or the conditions subject to which the notification was issued,
he shall, after making appropriate inquiries, furnish a report on the circumstances referred to in clause (a) to (e) to the CBDT for appropriate action under sub-rule (13) of rule 6AAF.
(7) If the NSDA is not satisfied about the genuineness of the activities of the notified skill development project, the NSDA shall send its recommendation to the CBDT for appropriate action under sub-rule (13) of rule 6AAF.
6AAH. Meaning of expressions used in rule 6AAF and rule 6AAG
For the purposes of rule 6AAF and rule 6AAG-
(i) “eligible company” means a company, which is-
(a) engaged in the business of manufacture or production of any article or thing, not being an article or thing mentioned at serial number 1 and serial number 2 of the list of articles or things specified in the Eleventh Schedule; or
(b) engaged in providing services mentioned in column (2) of the Table below:

TABLE

S.No.	Particulars
1.	Accounting services
2.	Architect services
3.	Automobile repair or maintenance
4.	Banking, insurance and financial services including ATM installation, maintenance and operations or banking correspondents or insurance agents
5.	Beauty and cosmetology, including hair styling or manicurists or pedicurists
6.	Cable operators or Direct To Home (DTH) services
7.	Cargo Handling and stevedoring services
8.	Construction including painting or woodwork or plumbing or flooring or electrical wiring or installation or maintenance of lifts
9.	Courier services
10.	Design services including fashion or gems and jewellery or apparel or industrial designing
11.	Event management
12.	Facilities management, housekeeping, cleaning services
13.	Fire and safety services
14.	Food processing or preservation services, including post harvesting and post farm-gate skills
15.	Health and Wellness services including spa or nutritionists or weight management or health instructors or yoga or gym trainers
16.	Home decor services, landscaping
17.	Hospital and Healthcare services, such as Lab technicians, nursing and other paramedical staff
18.	Hospitality, including culinary skills or catering services
19.	and related services such as driving or operation of heavy machinery equipment, forwarding agents, packers and movers
20.	Market research services
21.	Media or film or advertising
22.	Mining and extraction of mineral resources, including hydrocarbons
23.	Packaging and Warehousing, including both ambient temperature storage and cold storage, operation of Internal Container Depots and Container Freight Stations
24.	Port and maritime services such as dredging, piloting, tug boat operations, shipbuilding, ship scrapping, bunkering
25.	Power Sector Services, including those required for erection or installation or maintenance of equipment or towers, etc. in generation, transmission or distribution sector projects
26.	Private Security, including guards, supervisors, installation and maintenance of security equipment etc.
27.	Refrigeration and air-conditioning
28.	Repair and maintenance services, including Installation and servicing of household goods or white goods
29.	Retail marketing, including shop floor assistants or merchandisers
30.	Telecom services, including erection and maintenance of towers
31.	Travel and tourism, including guides or ticketing or sales or cab drives

(ii) “Training institute” means a training institute set up by the Central or State Government or a local authority or a training institute affiliated to National Council for Vocational Training or State Council for Vocational Training.
(iii) “National Council for Vocational Training” means the National Council for Training in Vocational Trades established by the resolution of the Government of India in the Ministry of Labour (Directorate General of Resettlement and Employment) No.TR/E.P.-24/56, dated the 21st August 1956 and re-named as the National Council for Vocational Training by the resolution of the Government of India in the Ministry of Labour (Directorate General of Employment and Training) No.DGET/12/21/80-TC, dated the 30th September, 1981.
(iv) “State Council for Vocational Training” means a State Council for Training in Vocational Trades established by the State Government.”.
3. In Appendix-II of the said rules, after Form No. 3CP, the following forms shall be inserted, namely:-

“FORM NO.3CQ
[See rule 6AAF]

Application form for approval under sub-section (1) of section 35CCD of the Income-tax Act, 1961
1. (i) Name of the applicant company.
(ii) Address of the registered office of the applicant company.
(iii) Address of the principal place of business if it is different from registered office.
(iv) PAN of the Company.
(v) Date of incorporation of the company.
(vi) Enclose a copy of the Memorandum and Articles of Association.
(vii) If the skill development project of the company was notified earlier under sub-section (1) of section 35CCD, mention the notification number and date of the latest notification and furnish a
copy of the same.
(viii) Nature of business
(ix) If notification issued under sub-section (1) of section 35CCD was rescinded in the past, mention reasons on account of which the notification was rescinded.
[Enclose a copy of the Order(s) rescinding notification(s)]
(x) Date from which notification of skill development project is requested for.
(xi) Expected date of completion of project.
2. Purpose of the skill development project (Give a brief write up on the requirement of skill development project indicating the objectives of the project, stages of implementation, expected results and usefulness of the project.)
3. Details of expenses (other than land or building) expected to be incurred for skill development project.
4. Skill development projects undertaken by the applicant:
(i) skill development projects, if any, undertaken by the company during last five years along with their current status.
(ii) details of skill development projects, if any, which have been taken up in the past and which are underway on the date of filing of application.
5. Name and address of the training institute in which the skill development project is to be undertaken. (Enclose a copy of letter of concurrence from the training institute in which the skill development project is to be undertaken)
6. Details of Return of Income filed for the last three Assessment years:

Assessment Year	Turnover/Gross receipts	Total income	Tax payable as per return	Tax Paid	Assessed income details

7. Enclose copy of audited annual accounts of the company for the last three years.
8. Whether any penalty under clause (c) of sub-section (1) of section 271 was levied on the company during the last five years and details thereof.
9. Whether any tax demand is outstanding on the date of filing application.
Certified that the above information is true to the best of my knowledge and belief.
Place
Date

……………………………………..

Signature

……………………………………..

Designation

……………………………………..

Full Address

FORM NO. 3CR[See rule 6AAF]

Form for notification of skill development project under sub-section (1) of section 35CCD of the Income-tax Act, 1961

1. Name, address and PAN of the company
2. Name and address of the training Institute in which the skill development project is to be undertaken
3. Title of the skill development project
4. Purpose of the skill development project
5. Reference No. and date of the application
6. Date of commencement of the skill development project
7. Duration of the skill development project in months
8. Assessment year(s) for which the skill development project was notified (not exceeding three years)
9. Total expenses likely to be incurred for the skill development project (other than land or building)
10. Conditions, if any, subject to which skill development project is notified.
Place :
Date :

(Signature)

(Name and Designation)

Copy to:
(1) The applicant.
(2) Training institute.
(3) National Skill Development Agency.
(4) The Commissioner of Income-tax/Director of Income-tax.”.

F. No. 142/29/2012-SO(TPL)

(J. Saravanan)
Under Secretary to the Government of India.

Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) vide notification number S.O.969(E), dated the 26th March, 1962 and last amended by the Income-tax (9th Amendment) Rules, 2013, vide notification number S.O.2017(E), dated the 4th July, 2013.

Payment of interest on overdue public deposits freezed on the orders of enforcement authorities

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RBI/2013-14/121
DNBS.PD/CC.No.350/03.02.001/2013-14

July 04, 2013

Payment of interest on overdue public deposits

Kindly refer to clause (10) of paragraph 4 of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2007. NBFCs are at times required to freeze the term deposits of customer based on the orders of the enforcement authorities or the deposit receipts are seized by the enforcement authorities. As doubts have been raised on the payment of interest on such deposit which have either been seized by the government authorities, and/or have been frozen till further clearance is received by the concerned government authorities, the NBFCs are advised to follow the procedure mentioned below:

1. A request letter may be obtained from the customer on maturity. While obtaining the request letter from the depositor for renewal, NBFCs should also advise him to indicate the term for which the deposit is to be renewed. In case the depositor does not exercise his option of choosing the term for renewal, NBFCs may renew the same for a term equal to the original term
2. No new receipt is required to be issued. However, suitable note may be made regarding renewal in the deposit ledger
3. Renewal of deposit may be advised by registered letter / speed post / courier service to the concerned Government department under advice to the depositor. In the advice to the depositor, the rate of interest at which the deposit is renewed should also be mentioned.
4. If overdue period does not exceed 14 days on the date of receipt of the request letter, renewal may be done from the date of maturity. If it exceeds 14 days, NBFCs may pay interest for the overdue period as per the policy adopted by them, and keep it in a separate interest free sub-account which should be released when the original fixed deposit is released

However the final repayment of the principal and the interest so accrued should be done only after the clearance regarding the same is obtained by the NBFCs from the respective Government agencies.

2. Copy of Amending Notification No. DNBS 258/CGM (CRS)-2013 dated July 04, 2013 is enclosed for meticulous compliance.

Yours faithfully,

(C.R. Samyuktha)
Chief General Manager

Writing off of arrears of Central Excise duty, Customs duty and Service Tax – Constitution of Committees to advise the authority for writing off of arrears-reg

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Circular No. 971/5 /2013

F.No.296/10/2009-CX-9(Pt.)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Customs & Excise

New Delhi, the 29th May, 2013

To
All Chief Commissioners
All Directors General

Sub: Writing off of arrears of Central Excise duty, Customs duty and Service Tax – Constitution of Committees to advise the authority for writing off of arrears-reg.

Sir,

I am directed to refer to the Circular No. 946/07/2011 dated 01.06.2011 issued from this file number on the subject and to say that certain amendments have been made in the Delegation of Financial Power Rules, 1978 vide S.O. 3624 dated 14.12.2012. A copy of the said notification is enclosed.

2. With this amendment, the authorities competent to write-off the arrears of Central Excise and the Commissioner of Service Tax are also delegated powers to write-off the arrears of Service Tax as well. Consequently, the constitution of the Committees for examining the proposals for write-off of irrecoverable arrears and recommending deserving cases to the authority competent to order such write-off, also requires modification. Hence, para 4 & 5 of the Circular No. 946/07/2011 be substituted by the following:-

“4. The constitution of the Committees and the powers to write off, delegated to the competent authorities are as under:-

S. No.	Competent Authority	Constitution of the Committee	Powers delegated
1.	Chief Commissioner of Customs & Central Excise/ Central Excise/ Customs	Committee of two Chief Commissioners of Customs & Central Excise/ Central Excise/ Customs and the Chief Commissioner (TAR)	(a) Full powers for abandonment of irrecoverable amounts of fines and penalties imposed under the Customs Act, 1962, the Central Excise Act, 1944, the Gold Control Act, 1968 and the Finance Act, 1994; and

(b) To write off irrecoverable amounts of Customs or Central Excise duty or Service Tax upto Rs. 15 lakhs subject to a report to the Board.2.Commissioner of Customs & Central Excise / Commissioner of Customs / Commissioner of Central Excise/ Commissioner of Service TaxCommittee of two Commissioners of Customs & Central Excise/ Central Excise/ Customs/ Service Tax and one Commissioner (TAR) nominated by CC(TAR))(a) Full powers for abandonment of irrecoverable amounts of fines and penalties imposed under the Customs Act, 1962, the Central Excise Act, 1944, the Gold Control Act, 1968 and the Finance Act, 1994; and
(b) To write off irrecoverable amounts of Customs or Central Excise duty or Service Tax upto Rs. 10 lakhs subject to a report to the Chief Commissioner.
5. As regards write off of interest amount, it is clarified that once duty/ tax involved is written off, the interest due thereon would get automatically written off. It is also clarified that the duty/ tax involved in the case would determine the level of authority/Committee competent to write off the amount involved.”

DGFT – Import of electrical energy will not require authorization

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NOTIFICATION NO. 27 (RE-2013)/2009-2014

NEW DELHI, THE 5^th JULY, 2013

Subject: Amendment in the Import Policy of Electrical Energy under Exim Code 2716 00 00.

S.O. (E): In exercise of powers conferred under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 2.1 of the Foreign Trade Policy, 2009-2014, as amended from time to time, the Central Government hereby makes the following amendment in Chapter 27 of ITC (HS) 2012, Schedule 1 (Import Policy):

2. The import policy of Electrical Energy under Exim Code 2716 00 00 in Chapter 27 of ITC (HS) 2012, Schedule 1 (Import Policy) is revised from ‘restricted’ to ‘free’. Accordingly, the amended entry under Exim Code 2716 00 00 shall be as under:

Exim Code	Item Description	Policy	Policy Conditions
2716 00 00	Electrical Energy	Free

3. Effect of this Notification:

Henceforth, import of electrical energy will not require authorization.