Scheme of 1 Percent interest subvention on housing loans up to Rs. 10 lakh

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RBI/2010-11/ 399

We have since received further clarifications from Government of India as under which may be noted while submitting claims for reimbursement.

a) Housing loans extended to Non Resident Indians (NRIs), for construction of farm houses and to staff members of the banks are not eligible for subsidy under the Scheme.

b) While calculating the interest subsidy, each disbursement may be treated as a separate loan and for each disbursement, subsidy claim may be made for twelve instalments. For loans fully disbursed at one stroke, subsidy will be provided upfront on the entire amount of the loan disbursed. Subsidy has to be calculated for 12 months period from the date of disbursement of the loan following the reducing balance of EMI.

c) Loans sanctioned prior to October 01, 2009 would not qualify for reimbursement under the Scheme.

d) All SCBs should use their own funds for upfront credit of subsidy till the same is reimbursed by Government of India.

e) Banks are advised to submit their claims in the prescribed format (excel) supplied by us, on a monthly basis in respect of allhousing loans eligible for subsidy under the Scheme.

All Scheduled Commercial Banks (excluding RRBs) are advised to implement the Scheme vigorously and the benefits of the Scheme may be provided to all eligible customers/beneficiaries expeditiously. Banks may also note to submit both hardcopy and soft copy of the claim format together.

Govt relaxes norms for filing accounts, fixing CEO salary

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For ensuring ease of doing business, the government today announced flexibility for corporates to finalise accounts and exempted unlisted companies having inadequate or no profit from seeking approval for CEO’s salary. Addressing his first press conference after taking over the new assignment, Corporate Affairs Minister Murli Deora said that he would like to ensure that corporates “devote their time and effort inrunning their enterprises than spending time in the corridors of government offices”.

By amending rules, the government has decided to allow holding companies not to physically attach the accounts of all subsidiaries along with their annual report.

Mr. Deora said that for large and globalised companies with many and geographically scattered subsidiaries attaching accounts of subsidiary firms with themselves become difficult.

However, this has been done without compromising the disclosure norms because the key accounting data in regard to subsidiary companies would be found in the consolidated accounts of the parent firm.

The unlisted companies, which have no shareholders in the form of general public, and are making no or inadequate profit, are being exempted from seeking approval for remuneration for top management.

However, the managerial remuneration would be subject approval by the special resolution of the shareholders.

For companies that have closed operations and are not filing annual returns, the MCA has launched a scheme for easy exit. The scheme, which was to close on January 31, have been extended till April this year.

Another initiative includes exempting companies in the areas of defence, space, research, export-oriented units, shipping,airlines, hotels and trading, from giving quantity details about their business.

India ranks 134th out of 183 nations in terms of ease of doing business.

Schedule XIII of the Companies Act 1956 Being Amended- Unlisted Companies shall not Require Government Approval for Managerial Remuneration where they

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The Ministry of Corporate Affairs issued today a notification on Managerial Remuneration in unlisted companies having no profits/inadequate profits. The notification reads as under:

Managerial Remuneration in unlisted companies having no profits/ inadequate profits

1. Companies are divided into private limited and public limited companies. Public limited companies are of two types – listed companies (whose shares are listed on a stock exchange) and unlisted companies. Normally, the general public does not hold shares in unlisted companies. Private limited companies are not subject to any limits on managerial remuneration. Public limited companies (listed and unlisted) with no profits/ inadequate profits are currently required to approach the Ministry for approval in those cases where the remuneration of Directors/ equivalent managerial personnel exceeds certain limits.

2. The matter has been re-examined in the light of the evolving economic and regulatory environment. The primary purpose of regulations over managerial remuneration is to protect stakeholders, particularly shareholders and creditors. Unlisted companies are in several respects similar to private limited companies. A substantial number of the applications coming to the Ministry fall under this category and the Ministry’s limited manpower is disproportionately involved in this exercise. In the case of unlisted companies so long as the conditions specified in Schedule XIII, including special resolution of shareholders and absence of default on payment to creditors, are fulfilled approval will not be needed hereafter.

3. Accordingly, Schedule XIII of the Companies Act 1956 is being amended to provide that unlisted companies (which are not subsidiaries of listed companies) shall not require Government approval for managerial remuneration in cases where they have no profits/ inadequate profits, provided they meet the other conditions stipulated in the Schedule.

Amendment brought out in Section 40(a)(ia) are clarificatory in nature and retrospective w.e.f 1st April 2005

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Kanubhai Ramjibhai Makwana v. ITO

Business disallowance under section 40(a)(ia) - Payment to resident without deduction of tax-Amendment in section 40(a)(ia) by the Finance Act, 2010-Nature of amendment-Amendment made by the Finance Act, 2010 in section 40(a)(ia) is of clarificatory nature and hence would apply retrospectively from 1-4-2005.

In case of export of service, relevant date is the date when the payment of service exported has been received by the assessee

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Commissioner of Central Excise, Pune I Versus Eaton Industries P. Ltd. CESTAT, MUMBAI

Refund - export of services - relevant date - The Commissioner (Appeals) has held that in such a case the relevant date is the date when the payment of service (exported) is received by the assessee not the date when the service is provided. Against that order, Revenue is in appeal on the premise that the relevant date is the date of service tax paid as per Section 11B of Central Excise Act, 1944. - Held that: - it is very much clear in the case of export of service, the relevant date is the date when the paymentof service exported has been received by the assessee.

Consideration paid for goodwill on acquisition of running business is eligible for depreciation

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Koch Chemical Technology Group India Pvt. Ltd. (ITA No. 2680/Mum/09) dated 28 January 2011

The ruling seems to reiterate the view expressed by the Kerala High Court in the case of B. Raveendran Pillai v. CIT (Kerala) 7 Taxmann.com 92 (ITA No. 1741 of 2009) and by the Delhi High Court that depreciation would be allowable on goodwill where a business is purchased on a going concern basis, leading credence to the claim that depreciation on goodwill may be allowable based on the facts of the case.

Indian Government makes another amendment to the provident fund (PF) regulations

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Amendment to PF

• In the last two years, the Government of India has been making series of changes to the provident fund regulations.

• After inclusion of international workers (IWs) into the PF net, and also restricting their withdrawals, the Government of India, has made another change whereby it proposes to discontinue payment of interest on inoperative PF accounts.

• At present, even inoperative PF accounts are entitled to interest payment. In September 2010, Ministry of Labour proposed to increase the rate of interest from 8.5% per annum to 9.5% per annum.

• In terms of the amendment, a PF account will be regarded as inoperative if no application is made for withdrawal or transfer of balance within thirty six months from the date on which it became payable to the member. These inoperative PF accounts will not fetch any interest from 1st April 2011.

• PF account balance is payable to a domestic worker upon he/she ceasing employment/retirement/death. Domestic workers who do not make application for withdrawal/transfer after such an event will not be entitled to any interest once the accounts become inoperative.

• In the case of IWs accummulated PF balance is payable on retirement after attaining 58 years. Under the existing PF regulations, repatriated IWs have to retain their PF account in India until they attain 58 years. It is not clear whether the amended PF regulation could treat the repatriated IW PF accounts (which may not be operative for over thirty six months) as inoperative thereby depriving them of interest.