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

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General Circular 18/2013,

Dated: 19/11/2013

No. 17/202/2013-CL-V

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

Sir,

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

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

This issues with the approval of competent authority

Yours Faithfully,

(Kamna Sharma)

Assistant Director

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

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

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

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

ACIT (TDS) Vs. Delhi Public School

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

Online Request for refund of Excess TDS deposited

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

After Logging

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

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

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

November 11, 2013

To

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

Madam / Sir,

Import of Gold by Nominated Banks /Agencies/Entities

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

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

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

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

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

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

Yours faithfully,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Yours faithfully,

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

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

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

November 6, 2013

All Scheduled Commercial Banks
(excluding RRBs)

Dear Sir/Madam,

Timely Issue of TDS Certificate to Customers

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

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

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

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

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

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

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

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

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INCOME TAX APPELLATE TRIBUNAL, “G” BENCH, MUMBAI

BEFORE SHRI RAJENDRASINGH, ACCOUNTANT MEMBER

AND SHRI AMIT SHUKLA, JUDICIAL MEMBER

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

Income Tax Officer (Central)

v/s

Mr. Gope M. Rochlani

Date of Order – 24.05.2013

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

Fees & Penalty for late / Non filing of TDS Return

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

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

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

Penalty for late filing or non- filing TDS statement

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

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

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

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

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

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

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

Issue Of Income Tax Refund Refunds Without Adjustment Of Demand

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DIRECTORATE OF INCOME TAX(SYSTEMS)

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

New Delhi-110055.

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

To

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

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

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

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

Madam /sir,

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

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

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

3. it is requested to issue directions to the Assessing Officers under respective charges to make compliance of the aforesaid decision, perform necessary verification and correction following the procedure as per Sec.245 of the I.T.Act and communicate its findings on adjustable demand to CPC. Bengaluru, who will then process the refund and adjust the demand. The communication to CPC, Bengaluru, may also be give on its e-mail Id cit.cpc.bangalore@incometaxindia.gov.in

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

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

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

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

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

No. 52/17/CAB-2011

Sd/-