Transition to IFRS

PrintPDF

Entities	Transition wef
Companies with over ` 1000cr Net Worth and Companies Listed in Sensex – 30/ Nifty – 50 / Overseas Stock Exchanges.	01.04.2011
Listed and unlisted companies with a net worth of over ` 500cr.	01.04.2013
All listed companies with a net worth of less than or equal to ` 500cr.	01.04.2014
SME’s and unlisted companies with a a net worth of less than or equal to ` 500cr.	Presently Exempted
Banking and Insurance Companies	Separate roadmap to be drafted

Additional fees to ROC increased

PrintPDF MCA has issues a release revising the fees payable as per Section 611(2) of the Companies Act, 1956 (except for form 5) as per below details with effect from 5th December, 2010:

Period of Delay	Fixed rate of additional fee
Upto 30 days	Two times of normal filing fee
More than 30 days and upto 60 days	Four times of normal filing fee
More than 60 days and upto 90 days	Six times of normal filing fee
More than 90 days	Nine times of normal filing fee

Notification No. 80/2010

PrintPDF Central Government has through this notification specified TATA AIG easy retire annuity plan of the TATA AIG Life Insurance Company Limited and the annuity plan of the ICICI Prudential Life Insurance Company Limited for the purposes of deduction under section 80C.

Impact of Direct Tax Code on Power Sector

PrintPDF “When archaic rules have to be replaced with new ones, the changes must be dramatic and path breaking. “ --- Union Finance Minister Pranab Mukherjee at the time of releasing the draft Direct Tax Code (Tax Code). The New Direct Tax Code (DTC) is said to replace the existing Income Tax Act of 1961 in India.

It is expected to be passed in the monsoon session of 2010 and is expected to be enforced from 1st April, 2012. During the budget 2010 presentation, the finance minister Mr. Pranab Mukherjee reiterated his commitment to bringing into force the new direct tax code (DTC) into force from 1st of April, 2011, but same could not be fulfilled and now it will be applicable from Financial Year 2012 – 2013

Impact on Power Sector

Current Scenario: As per the existing provisions of the Income Tax Act, 1961, an Undertaking set up in any part of India for the Generation or Generation and Distribution of power or Reconstruction or revival of a power generating unit if it begins to generate power at any time during the period beginning on 1st April, 1993 to 31st March, 2011 is eligible for Profit based deduction subject to fulfillment of other conditions stipulated under the provisions of the Income Tax Act, 1961.

Direct Tax Code (DTC) Proposals DTC 2010 would replace the Income Tax Act, 1961 and, hence, it is provided that the businesses eligible for profit-linked incentives under the Income Tax Act, 1961 regime as of 31 March 2012, whose tax holiday period has not expired, shall continue to be eligible for profit-linked tax incentives for the unexpired period, subject to the following conditions: · The method of computation of profits shall be as per DTC 2010, except that capital expenditure and pre-commencement business expenses will not be allowed as a deduction. · The period of deduction shall not include a period for which deduction was not allowable under the Income Tax Act, 1961. However, question may arise as to whether the restriction will apply only during the period of tax holiday or on a perpetual basis. Question may also arise if the limitation on grant of capital allowances, including depreciation, will also extend to assets acquired prior to March 2012 and which have already become part of the block of assets. · The taxpayer continues to satisfy the conditions as specified under Section 80IA of the Income Tax Act, 1961.

Effect on Undertaking set up on or after 1st April, 2012: · An Undertaking set up in any part of India for the Generation or Transmission or Distribution of power and if it begins to generate power at any time on or after 1st April, 2012 will be eligible for investment-based incentives wherein capital expenditure and expenditure prior to commencement of Business shall be allowed as Business Expenditure except expenditure incurred on acquisition of any Land including Long Term Lease, Goodwill or Financial Instrument. Moreover, the Direct Tax Code has also allowed Power Companies to offset Losses against the Profits of other infrastructure projects or corporate income in the current year as well as future years which is a welcome measure. The Direct Tax Code, 2010 has curtailed the some of the provisions of Income Tax Act, 1961 even though it is positive step for the Power Sector and beneficial to Existing as well as New Power Undertakings.

Cancellation of registration obtained under section 12A

PrintPDF

ü Section 12AA(3) currently provides that if the activities of the trust or institution are found to be non-genuine or its activities are not in accordance with the objects for which such trust or institution was established, the registration granted under section 12AA can be cancelled by the Commissioner after providing the trust or institution an opportunity of being heard.

ü The power of cancellation of registration is inherent and flows from the authority of granting registration. However, judicial rulings in some cases have held that the Commissioner does not have the power to cancel the registration, which was obtained earlier by any trust or institution under provisions of section 12A, as it is not specifically mentioned in section 12AA.

ü It is, therefore, proposed to amend section 12AA so as to provide that the Commissioner can also cancel the registration obtained under section 12A as it stood before amendment by Finance (No.2) Act, 1996.

ü This amendment is proposed to take effect from 1st June 2010.

Gift - Shares

PrintPDF

ü U/s 56 shares of a company (not being a company in which public are substantially interested) in excess of Rs. 50,000 received without consideration by a firm or a company (not being a company in which public are substantially interested) will be chargeable to income tax in the hands of the recipient under the head ‘Income from other sources’.

ü In case shares are received for a consideration, if fair market value of the shares exceeds by an amount of Rs. 50,000/- over the consideration, then such excess amount shall be chargeable to tax as said above.

ü The above provisions shall not be applicable if the shares are received by the company in a scheme of amalgamation as mentioned in clauses (via), (vic), (vid) or (vii) of section 47.

ü The above amendment shall take effect from 1^st June 2010.

Power of the High Court to condone delay in filing of appeals

PrintPDF

A. Section 260A

ü The existing provisions of section 260A(2) provide that an appeal against the order of Income-tax Appellate Tribunal can be filed before the High Court within a period of 120 days from the date of the receipt of the order by the assessee or the Commissioner.

ü It is now proposed to insert sub-section (2A) in section 260A of the Income-tax Act to specifically provide that the High Court may admit an appeal after the expiry of the period of 120 days, if it is satisfied that there was sufficient cause for not filing the appeal within such period.

ü Consequential amendments on similar lines are proposed to be made in section 27A of the Wealth-tax Act.

ü These amendments are proposed to take effect retrospectively from 1st October 1998.

B. Section 256

ü Under section 256 of the Income-tax Act, the Income-tax Appellate Tribunal could refer a case to the High Court. In case where the Income-tax Appellate Tribunal refused to refer a case to the High Court, the assessee or the Commissioner were allowed to file an appeal before the High Court against such refusal of the Tribunal within a period of six months from the date on which he was served with an order of refusal.

ü It is proposed to retrospectively insert sub-section (2A) in section 256 so as to empower the High Court to admit an application after the expiry of the period of six months, if it is satisfied that there was sufficient cause for not filing the same within such period.

ü Consequential amendments on similar lines are also proposed to be made in section 27 of the Wealth-tax Act.

ü These amendments are proposed to take effect retrospectively from 1st June 1981.