The Companies Act

The Companies Act, 2013 passed by the Parliament has received the assent of the President of India on 29th August, 2013. The Act consolidates and amends the law relating to companies. The Companies Act, 2013 has been notified in the Official Gazette on 30th August, 2013. Some of the provisions of the Act have been implemented by a notification published on 12th September, 2013. The provisions of Companies Act, 1956 is still in force.

Companies Act 2013: Is it race against time for India Inc? Most companies will now be required to have at least one woman and two independent directors, keep a register of beneficial investments and entities - including those taking money from the public, and establish a vigil mechanism to address grievances of directors and employees. Read more at: http://www.moneycontrol.com/news/current-affairs/companies-act-2013-is-it-race-against-time-for-india-inc_1060265.html?utm_source=ref_article

From April this year Companies Act 2013 will come into force. The ministry is likely to notify the remaining rules by tonight. But the rules for 11 chapters were notified today. These include rules on incorporation, prospectus & allotment of securities, share capital & debentures, registration of charges, management & administration, declaration & payment of dividend , accounts, appointment & qualification of directors meetings of board & its powers and CSR. Notification of rules for another 10 chapters under the Companies Act 2013 paves the way for most of the provisions to come into effect from April 1, a time-frame which some quarters feel could pose challenges for India Inc. Most companies will now be required to have at least one woman and two independent directors, keep a register of beneficial investments and entities - including those taking money from the public, and establish a vigil mechanism to address grievances of directors and employees. Is it a tall order to expect India Inc to transit to the new companies rules by April 1? - Dolphy D'souza of E&Y and Vivek Gupta of BMR Advisors discuss the pros and cons of this transition in an exclusive interview with CNBC-TV18's Shereen Bhan and Payaswini Upadhayay.

Read more at: http://www.moneycontrol.com/news/current-affairs/companies-act-2013-is-it-race-against-time-for-india-inc_1060265.html?utm_source=ref_article

ICAI Conducting Live Webcast

ICAI conducting live webcast for Tax Amendments in May 2014 Exams and Accounting Standards - An Overview :-) 

IPCC : 29th Mar 2014 from 1:00 PM to 5:00 PM
CA Final : 5th April 2014 from 1:00 PM to 5:00 PM

Live webcast at : http://icaitv.com/live/icai290314/ 

You can Download Tax Amendments Material here : 
http://pullaharshavardhan.blogspot.in/2013/12/taxation-supplimentary-material-icai.html

CIT Vs. Ram Singh (Rajasthan High Court

CIT Vs. Ram Singh (Rajasthan High Court

Strictures passed regarding poor quality of orders of the ITAT. Government urged to ensure that only competent persons are appointed Members of the ITAT

The department filed an appeal in the High Court contending that the Tribunal had disposed off the appeals filed before it (relating to rejection of books of account u/s 145 and estimation of gross profit) without giving any reasons. HELD by the High Court:

(i) We find the judgments of the ITAT being the stereo typed, non-speaking, unreasoned, arbitrary and whimsical;

(ii) We cannot avoid observing that of late the quality of orders that are come out from the Tribunal in exercise of its appellate power under section 256 of the Act are found to be wanting and in many respect and many a times the orders are very prefecture, even non-speaking orders and has no correlation to the fact situation that prevails in a given case;

(iii) We also notice that the members of the Tribunal have developed an unhealthy habit of quoting totally unrelated judgments which are not applicable at all to the facts of the case, to pass orders not otherwise sustainable on facts or in law. We strongly deprecate such a tendency on the part of the members of the Tribunal, which is quite naturally a professional Tribunal comprised of expert members, one member from the Revenue side and another member from the accounting side, with considerable experience in their respective fields and to whom we can attribute expertise. We feel sorry that the confidence posed by the Legislature is not being justified by passing orders that are outcome from the Tribunal now-a-days;

(iv) It is high time the method of recruitment to the Tribunal is also reviewed by the authority concerned and at least henceforth it is ensured that the members of some standing, integrity and competence are put in place as members of the Tribunal and not all and sundry;

(v) The Legislature, particularly the Union Parliament may also take note of such tendency on the part of the Tribunal and ensure for suitable legislative measure so that the purpose and the object with which such Tribunals are constituted really subserve not only the interest of aggrieved assessee but also to ensure that the Revenue’s interest is not simply scarified or jeopardized by errant members;

(vi) Registrar General of this court is directed to send copies of this judgment to the Law Commission of India, Secretary to Department of Revenue, Ministry of Finance,. Government of India, Secretary to Government, Ministry of law and Parliamentary Affairs, Government of India and the Central Board of Direct Taxes (CIT Vs. Gauthamchand Bhandari 347 ITR 491, 499 (Kar) and several other judgements referred to)

Note: By the above order, 81 appeals were remanded to the ITAT for fresh decision. See also Guidelines to Hon’ble Members of ITAT for drafting orders andVodafone & The Art Of Writing Judgements

Sec 154 cannot be resorted for applying sec 115JB of Income Tax Act,1961

In the case of Cardinal Drugs Pvt Ltd.Hon’ble ITAT has observed that therewas no scope for the A.O. to haveresorted to the provision of Section 154 of the Act for the purpose of enhancing the income of the assessee.by stating as under:-

The A.O. on long drawn process of reasoning should not have passed the order under Section154 of the Act. The issue raised by the A.O. in proceeding under Section 154 of the Act is highly debatable which requires the issue to be reconsidered by the A.O.about applicability of the provision of Section 115JB of the Act which was notraised by the A.O. in assessment or appellate proceedings. Therefore, A.O. has no power to review his entire assessment order and to make certain additions which are not part of the record. The assessee has declared all particulars regarding assessment and assessment to be framed under Section 115JB of the Act. When the A.O. has consciously taken the view to frame a regular assessment and made certain additions, which have been deleted by the ld. CIT(A) and confirmed by the Tribunal, the A.O. is not empowered to take a contrary view to review the entire assessment order already framed. It is against the spirit of provision of Section 154 of the Act.

Source- ACIT Vs. M/s Cardinal Drugs Pvt. Ltd. (ITAT Agra) , ITA No. 299/Agr/ 2012, Date of pronouncement – 08.08.2013

Income Tax Offices to remian open on 29th, 30th and 31st March 2014

Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, New Delhi

F.No.225/138/2014/ITA.II, Dated – 24 March, 2014...

Order under Section 119(1) of the Income tax Act, 1961.

The Financial Year 2013-14 closes on 31.3.2014. In view of closer of office on 29th and 30th of March being Saturday and Sunday, and also on 31st March at some stations being Gudi Padava, Ugadi etc., the field Income Tax Offices through-out India shall remain open and the receipts counters shall also work during normal office hours on 29th, 30th and 31st of March, 2014. This direction is issued for administrative convenience by the Central Board of Direct Taxes in exercise of powers conferred under section 119 of the Income Tax Act, 1961.

Special arrangements may also be made by way of opening additional receipt counters, wherever required on 29th, 30th and 31st March 2014 to facilitate filing of return of income and other related work of tax payers. These instructions may be given wide publicity.

Income Tax Act - section 80EE

A new section has been introduced in the income tax act i.e. Section 80 EE. This section has been introduced to cater to the need for affordable housing. This section allows for a deduction up to Rs. 100000/- for the AY 2014-15 (i.e. FY 2013-14) to individual assesses for interest payable on their housing loan. Few conditions are required to be satisfied for this section to be applicable.

1)Â The loan is sanctioned between the FY 1/4/2013-31/3/2014.

2)Â The loan sanctioned does not exceed Rs. 25 Lakh.

3)Â The value of residential house does not exceed Rs. 40 Lakhs.

4)Â The assessee does not own any other residential house as on the date of sanction of the loan. In other words, this house is supposed to be his self occupied property.

5)Â The assessee is a first time home buyer

Where the interest payable is less than Rs. 100000/- for AY 2014 – 15, then the balance amount shall be allowed in AY 2015-16. If a deduction under this section is allowed for any interest, no deduction shall be allowed in respect of such interest under any other provisions of the Act. The benefit under this section is mainly for one time primarily for AY 2014-15 and to a certain extent for AY 2015-16 for balance interest as mentioned above.

Also it is important to note that this deduction is in addition to the deduction of Rs. 150000/- in respect of interest on loans for self occupied property U/s 24(b). This is the current scenario as per the tax laws i.e. there is a maximum deduction of Rs. 150000/- on interest on housing loan for one’s self occupied property.

In my opinion, this new section would benefit the low to medium income section of assesses. It will greatly benefit such people who are first time house buyers as not only do they get a deduction up to Rs. 150000 for interest paid on housing loan but also an additional deduction of Rs. 100000/- from their gross total income as a result of introduction of this section.

It can be said that since the maximum cap of housing loan amount is Rs. 25 lakhs, on an average the yearly interest obligation on such loans amounts to Rs. 2.5 – 2.75 lakh. Thus as a result of this section, an individual can now effectively claim this entire interest expense as a deduction (i.e. 150000/- as per Section 24 (b) + Rs. 100000/- as per Section 80EE) from his gross total income and reduce his tax obligation accordingly.

COMPARISON OF FIXED DEPOSIT INTEREST RATES BY INDIAN BANKS - 2014

COMPARISON OF FIXED DEPOSIT INTEREST RATES BY INDIAN BANKS -  2014

(Check Highest Rate of Interest Paid by Banks in India / Maximum Rate of Interest Paid by Indian Banks. Best Fixed Deposit Rates by Banks)
 

Which Banks Pay the Highest Rate of Interest on Fixed Deposits in 2014 ? Best Rate of Interest on Fixed Deposits in India in 2014 ? Comparative Bank Rates in India. Latest Deposit Rates of Banks in India 2014

 

We give below the Highest Rate of Interest or the maximum rate of interest on Fixed Deposits in certain buckets offered by banks in India in 2014 (in the second week of March 2014) :-

Name of the Bank	Period of fixed Deposit	Rate of Interest(%)
Lakshmi Vilas Bank	1 year	9.75%
Oriental Bank of Commerce	91 days to 179 days	9.75%
DCB Bank	24 months to 36 months	9.60%
South Indian Bank	400 days	9.50%
Lakshmi Vilas Bank	Above 1 year - less than 2 years	9.50%
Oriental Bank of Commerce	46 days to 90 days	9.50%
City Union Bank	1 year & above and upto 2 years	9.50%
Tamilnad Mercantile Bank Ltd	12 months - 2 years	9.50%
Karnataka Bank	1 Year to 2 Years	9.50%
DCB Bank	13 month	9.40%
IDBI Bank	500 days	9.30%
Bank of India	1 year	9.25%
Catholic Syrian Bank	365 days to and including 24 months	9.25%
Tamilnad Mercantile Bank Ltd	Above 5 years - 10 Years OR Above 2 years < 5 years	9.25%
ING Vysya Bank	366 days to 730 days	9.25%
Central Bank of India	555 days	9.25%
Syndicate Bank	444 days	9.25%
Dhanalakshmi Bank	375 days	9.25%
Indus Ind Bank	2 years 6 months to below 2 years 9 months	9.25%
Lakshmi Vilas Bank	2 years - less than 3 years	9.25%
City Union Bank	Above 2 years & upto 5 years	9.25%
Karur Vysya Bank	271 days upto including 1 year	9.25%
Karnataka Bank	Above 2 years to 3 years	9.25%
South Indian Bank	2 years	9.25%

CBI Arrests Two ACIT in an Alleged Bribery Case of Rs. Ten Lakhs

CBI ARRESTS TWO ASSISTANT COMMISSIONERS OF INCOME TAXIN AN ALLEGED BRIBERY CASE OF Rs.TEN LAKHS

The Central Bureau Of Investigation has today arrested an Assistant Commissioner of Income Tax, Aaykar Bhavan, S.T. Nagar, Thrissur along with another Assistant Commissioner ofIncome Tax in an alleged bribery case of Rs. Ten lakhs.

A case was registered U/s 109 of IPC r/w Sec. 12 of PC Act, 1988 & Sec. 7 of PC Act, 1988 against an Assistant Commissioner of Income Tax, Aaykar Bhavan, S.T. Nagar, Thrissur and a Auditor of a Thrissur based private firm of Chartered Accountants.The complainant in this case had alleged that he was regularly paying income tax as per his business transactions. The Income tax authorities had issued a notice to his firm during 2012 stating therein, that they wanted to scrutinise the accounts of his firm for the fiancial year 2010-2011. Accordingly the book of accounts were produced through his Auditor of a Thrissur based private firm of Chartered Accountants. The Auditor informed the complainant that his firm’s books of accounts were scrutinised by the Assistant Commissioner ofIncome Tax Thrissur and informed through the auditor that he has to be paid Rs.50 lakhs as penalty for the contravention of the Income Tax Act & Rules and allegedly demanded Rs.10 lakhs as bribe to settle the matter. The complainant alongwith his auditor visited the office of Assistant Commissioner of Income Tax and during this time, the Public Servant allegedly reiterated his demand of Rs.10 lakhs for reducing the penalty from Rs.50 lakhs to Rs. one lakh.

CBI laid a trap and the Assistant Commissioner of Income Tax Thrissur alongwith his colleague another Assistant Commissioner of Income Tax were caught red handed while demanding & accepting a bribe of Rs.10 lakhs from the Complainant.

Both the arrested accused are being produced before the Court.

Source- CBI Press Release, New Delhi , 22.03.2014

TDS on Service Tax Amount under New Rule Read

TDS not to be Deducted on Service Tax Component shown Separately

Whether to deduct TDS on Service Tax Amount? This question had always put deductor in difficulty. The question always comes that whether TDS is to be deducted on the entire amount of the invoice i.e. including service tax or only on the payment made towards services i.e. excluding service tax.

Since there was no clarification on this, deductor, to be in safer side tends to deduct TDS on the entire invoice amount including service tax except in the case of rent under section 194I.

Circular No. 4/2008 : CBDT had earlier issued a Circular No. 4/2008 dated 28.04.2008 clarifying that TDS is to be deducted under section 194I of the Income-tax Act, 1961 on the amount of rent paid/payable without including the service tax amount.

Representations/letters have been received by CBDT seeking clarification whether such principle can be extended to other provisions of the Act also.

Verdict on the same question was given by the Rajasthan High Court dated 01.07.2013, in the case of CIT(TDS) Jaipur vs Rajasthan Urban Infrastructure – 2013-TIOL-663-HC-RAJ-IT. Court held that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act.

Circular 01/2014 : Following the above judgment, CBDT vice Circular 01/2014 dated 13.01.2014 has decided that wherever in terms of the agreement/ contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source on the amount paid/payable without including such service tax amount.

TDS on Service Tax under New Rule

Two points have to be complied to escape from deducting TDS on service Tax:

1. Applicable only to resident deductee; and
2. Service Tax is to be Shown Separately in the Invoice.

Lets see how this new rule works:

Service Tax shown separately	Service Tax not shown Separately
Value of Services:        40,00,000 Service Tax @ 12.36%:  4,94,400 Total Invoice Amount:   44,94,400 TDS @ 10%                   4,00,000 (Only on Value of Services)	Value of Services:        44,94,400 Total Invoice Amount:  44,94,400 (Including Service Tax) TDS @ 10%                  4,49,440 (On Value of Services + Service Tax Amount)
Before this Circular even if you have shown service tax separately, TDS is to be deducted as per case 2 except under section 194I.

Circular 01/2014 dated 13.01.2014 reproduced hereunder:

Read more: http://www.indiantaxupdates.com/2014/02/04/tds-service-tax-amount-new-rule/#ixzz2wr8t5Sb1

Interest Rates on Public Provident Fund remains unchanged wef 1st April, 2014

Public Provident Fund Scheme, 1968 (PPF Scheme, 1968) and Senior Citizens Savings Scheme, 2004 (SCSS, 2004) – Revision of interest rates

The Government of India has revised rates of interest on various small savings schemes for the financial year 2014-15, Savings deposits of up to two years will fetch 8.4% against 8.2% earlier. But unfortunately there is no change in the interest rates of Public Provident Fund and Senior Citizens Savings Scheme, both of these scheme will fetch same interest as in the previous year at 8.7% p.a.

Accordingly, the rates of interest on PPF, 1968 and SCSS, 2004 for the financial year 2014-15, effective from April 01, 2014, on the basis of the interest compounding/payment built-in in the schemes, will be as under:

Scheme	Rate of Interest w.e.f. 01.04.2013	Rate of Interest w.e.f. 01.04.2014
5 Year SCSS, 2004	9.2% p.a.	9.2% p.a.
PPF, 1968	8.7% p.a.	8.7% p.a.

Read more: http://www.indiantaxupdates.com/2014/03/23/interest-rates-public-provident-fund-remains-unchanged-wef-1st-april-2014/#ixzz2wr8VAcms

Applicability of Standards/Guidance Notes/Legislative Amendments etc. for May, 2014 – Final Examination

http://220.227.161.86/32644bos22456.pdf

Applicability of Companies Act for Nov 2014

http://220.227.161.86/32800bos-announ15mar14.pdf

Supreme court Judgement On Income Tax Case

Sasi Enterprises vs. ACIT (Supreme Court)

January 31st, 2014

Prosecution for offence u/s 276CC for failure to file ROI can be initiated during the pendency of assessment proceedings. The statement in the individual returns of the partners that the firm has not filed a ROI as its’ accounts are not finalized does not absolve the firm of prosecution for non-filing of ROI

The offence u/s 276CC is attracted on failure to comply with the provisions of s. 139(1) or failure to respond to the notice issued u/s 142 or s. 148 within the time limit specified therein. The contention that pendency of the appellate proceedings is a relevant factor for not initiating prosecution proceedings u/s 276CC is not acceptable. S. 276CC contemplates that an offence is committed on the non-filing of the return and it is totally unrelated to the pendency of assessment proceedings except for second part of the offence for determination of the sentence of the offence, the department may resort to best judgment assessment or otherwise to past years to determine the extent of the breach. The language of s. 276CC is clear so also the legislative intention. If it was the intention of the legislature to hold up the prosecution proceedings till the assessment proceedings are completed by way of appeal or otherwise the same would have been provided in s. 276CC itself. Therefore, the contention that no prosecution could be initiated till the culmination of assessment proceedings, especially in a case where the appellant had not filed the return as per s. 139(1) of the Act or following the notices issued u/s 142 or s. 148 does not arise

E filling of I-T Returns :Taxpayers to get Digital Signatures

http://www.casansaar.com/news-detail/E-filing-of-I-T-returns-Taxpayers-to-get-Digital-Signatures/5328.html

SC – Assessee entitled to Interest U/s. 244A on refund of excess deduction of tax at source (TAS) made pursuant to order u/s 195

In the case of UOI Vs. Tata Chemicals Ltd Hon’ble SC  hekd that resident/deductor is entitled not only the refund of tax deposited under Section 195(2) of the Act, but tax has to be refunded with interestfrom the date of payment of such tax.

Some of the Important Paras of the Hon;ble SC Order are as follows -

 The question before SC was, whether the resident/deductor is also entitled to interest on refund of excess deduction or erroneous deduction of tax at source under Section 195 of the Act.

We would begin our discussion by referring to circular No. 790, dated 20.04.2000, issued by the Board. Omitting what is not  necessary, the material portion of the circular is extracted:

“6. Refund to the person making payment under Section 195 is being allowed as income does not accrue to the non-resident. The amount paid into the Government account in such cases, is no longer ‘tax’. In view of this, no interest under section 244A is admissible on refunds to be granted in accordance with this Circular or on the refunds already granted in accordance withCircular No. 769.”

What the deductor/ resident primarily contend is that, what has been deposited by him is a tax, may be for and on behalf of non-resident/ foreign company and when the beneficial circular provides for refund of tax to the deductor under certain circumstances, the refund of tax should carry interest.

The circular issued by Central Board of Direct Taxes (“the Board” for short) is binding on the department. Binding nature of the circular is explained by this Court in the case of UCO Bank v. CIT 237 ITR 889, wherein this Court has observed that the circulars issued by the Board in exercise of its powers under Section 119 of the Act would be binding on the income tax authorities even if they deviate from the provisions of the Act, so long as they seek to mitigate the rigour of a particular Section for the benefit of the assessee. Therefore, we cannot be taking exception to the reasoning and conclusion reached by the authorities under the Act. However, the Tribunal and the High Court, have granted interest on the amount of tax deposited by the resident/ deductor from the date of payment on the ground, firstly, the refund of tax is directed by the first appellate authority in the appeal filed by the deductor/ resident under Section 240 of the Act and secondly, the Revenue for having retained the sum by way of tax has to compensate the person who had deposited the tax.

Section 240 of the Act provides for refund of any amount that becomes due to an assessee as a result of an order in appeal or any other proceedings under the Act. The phrase “other proceedings under the Act” is of wide amplitude. This Court has observed, that, the other proceedings under the Act would include orders passed under Section 154 (rectification proceedings), orders passed by the High Court or Supreme Court under Section 260 (in reference), or order passed by the Commissioner in revision applications under Section 263 or in an application under Section 273A.

A “tax refund” is a refund of taxes when the tax liability is less than the tax paid. As per the old section an assessee was entitled for payment of interest on the amount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the deductor/assessee had paid taxes pursuant to a special order passed by the assessing officer/Income Tax Officer. In the appeal filed against the said order the assessee has succeeded and a direction is issued by the appellate authority to refund the tax paid. The amount paid by the resident/ deductor was retained by the Government till a direction was issued by the appellate authority to refund the same. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the  money collected unauthorizedly by the Department. When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited. Even the Department has understood the object behind insertion of Section 244A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded. There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/ deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/ foreign company.

Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing Statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, therebeing no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course.

In the present case, it is not in doubt that the payment of tax made by resident/ depositor is in excess and the department chooses to refund the excess payment of tax to the depositor. We have held the interest requires to be paid on such refunds. The catechize is from what date interest is payable, since the present case does not fall either under clause (a) or (b) of Section 244A of the Act. In the absence of an express provision as contained in clause (a), it cannot be said that the interest is payable from the 1st of April of the assessment year. Simultaneously, since the said payment is not made pursuant to a notice issued under Section 156 of the Act, Explanation to clause (b) has no application. In such cases, as the opening words of clause (b) specifically referred to “as in any other case”, the interest is payable from the date of payment of tax. The sequel of our discussion is the resident/deductor is entitled not only the refund of tax deposited under Section 195(2) of the Act, but has to be refunded with interest from the date of payment of such tax.

Source- Union of India  Vs. M/s Tata Chemicals Ltd. , CIVIL APPEAL NO. 6301 OF 2011 Dated- 26.02.2014

Submitted by – CA Prarthana Jalan