VnV Knowledge Buffer: July 2013

Monday, 29 July 2013

Form 15g - if declaration is wrong

In India, We take most of the laws/Rules as granted one & feel we are complying with rules without studying in depth of penalty provisions of law. Indian Income Tax Rules /sections are one of those laws. Most of the people feel or under impression that it is easiest law that any common person understand & can comply on his own without much study. This impression became more these days after introduction of E forms of ITR. This Article is intended to give more idea on how much dangerous to sign and submit Form 15G without knowing the impact of wrong declaration. Recently Income Tax Department has introduced new section - PART A1 in Form 26AS - Annual Tax Statement under Section 203AA of the Income Tax Act, 1961. PART A1 is related to Details of Tax Deducted at Source for 15G / 15H. So Income Tax Department can easily track use & misuse of Form 15G/H like TDS details on line. Form 15G/H is a type of declaration to be filed by an individual or a person (not being a company or the firm) in order to receive certain payments (dividends, interest on securities, interest other than interest on securities, national saving schemes, interest on units) without deduction of tax at source (TDS). Generally Banker will advise depositor to give Form 15G/H whenever new FD is created so that banker can save himself from liability of deducting TDS as per IT Act. Customer (depositor) will be happier to give Form 15G/H to avoid tax. Both are acting without knowing implication of wrong declaration of this Form. Form 15G/H is boon for a person who has Taxable Income less than maximum amount which is not chargeable to income tax. It is boon because he can get his full Interest Income without deduction at source by banker But Form 15G/H becomes a Suicide form for the people who had signed & given to banker ( may be wrongly guided/pursued by manager) if he has Taxable Income in that year ( salary, house property, business Income & other Income). Narrated in the impact part of this article. Difference between Form 15G and 15H Both the Forms are same. The difference is only that Form 15G has to be filed by persons below 60 years of age and Form 15H has to be filed by persons above 60 years of age. Here, the word person refers to individual or person (not being a company or firm). So, HUF and Association of Persons can also use this form. Certain points require strict attention regarding Form 15G/H:- 1) PAN is mandatory for making declaration using Form 15G/H from 01/04/2010. 2) Irrespective of the fact that Form15G/H has been filed or not, such income has to be mentioned under proper head while filing the return. 3) These Forms are deposited in two copies, one of which is forwarded to the IT department. So, the Income Tax Authorities can make further inquiries regarding the same income. 4) It should be deposited at the beginning of each financial year. 5) These Forms should be deposited at each and every branch where the deposit has been made. For example, if you have made deposits at three different branches of Axis Bank, then you have to submit the Forms at each branch separately. 6) These Forms can only be used for payments like dividends, interest on securities, interest other than interest on securities, national saving schemes, interest on units. For other types of payments, these forms cannot be used. 7) These Forms are not applicable for NRIs IMPACT OF WRONG DECLARATION Snap shot of declaration part of Form 15G herewith. Any Wrong declaration in this form will attract Section 277 of Income Tax Act. Since Income Tax Department has modified Form 26AS – Online Tracker of Income, It is adviseable for all assessee especially salaried class to resist themselves "NOT SIGNING" form Form 15G/H. Assessee will be penalized under 277 along with huge penalty for concealment & Interest from day of wrong declaration. Even your source of Income for that Fixed Deposit will be under scruitiny. It is always better to disclose correct Income. LAST but not least, any declaration or filing of Form including ITR will become SUICIDE ACT for people if they commit mistake knowingly or unknowingly. IGNORANCE OF LAW IS NOT ACCEPTABLE. Law is a specialized knowledge. So do act only if you know law in full. CA. Chikkerur C R B.com, MBA, DISA & LLB

Tuesday, 23 July 2013

Salary earners up to Rs 5 lakh need to file I-T return: CBDT

NEW DELHI: Unlike the past two years, salaried persons earning up to Rs 5 lakh annually will have to file income tax returns, Central Board of Direct Taxes (CBDT) said on Monday.

The CBDT had exempted salaried employees having total income of up to Rs 5 lakh including income from other sources upto Rs 10,000 from the requirement of filing income tax return for assessment year 2011-12 and 2012-13, respectively.

"The exemption was available only for the assessment years 2011-12 and 2012-13...the exemption provided during the last two years is not being extended for assessment year 2013-14," the CBDT said in a statement.Earlier in May, the CBDT had made E-filing of income tax return compulsory for assessment year 2013-14 for persons having total assessable income exceeding Rs 5 lakh. The CBDT said the exemption was given considering paper filing of returns and their processing through manual entry on system. It said the exemption has been not been extended as 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, it said. "Taxpayers are encouraged to file their returns electronically. E-filing is an easy, fast and secure method of filing of income tax return. Moreover, digital signature is not mandatory for these taxpayers...," the ministry added.

For filing returns, an assessee can transmit the data in the return electronically by downloading ITRs, or by online filing. Thereafter the assessee had to submit the verification of the return from ITR-V for acknowledgement after signature to Central Processing Centre. The tax department will set up special return receipt counters for salaried tax payers from July 25 to 31 at Pratayakshar Bhawan, New Delhi. "As returns of income above Rs 5 lakh have to be e-filed online mandatorily, the same will not be received at any of these special counters. Only paper return of income upto Rs 5 lakhs can be filed at these counters," the Finance Ministry added. In the past, the special counters operated from Pragati Maidan and Mayur Bhavan.

Saturday, 20 July 2013

Get Unique records

Did you know in the excel you can list out the unique records and delete the duplicates. This function is available in ‘Data>>Remove Duplicates’

How effective are the Cheque bouncing provisions under negotiable instruments act, 1881?

How effective are the Cheque bouncing provisions under negotiable instruments act, 1881? Introduction: Section 138 to 147 were incorporated in Negotiable Instruments Act, 1881(NI Act) with a view to promote the efficacy of the banking operations and to enhance the credibility of the cheques in business transactions. The NI Act makes the drawer of cheque liable for penalties in case of dishonour of cheques due to insufficiency of funds or for the reason that it exceeds the arrangements made by the drawer. The NI Act also contains sufficient safe guards to protect the drawer of cheques by giving him an opportunity to make good the payment of dishonoured Cheque when a demand is made by the payee. This Article analysis’s the effectiveness or lack of effectiveness of the cheque bouncing provisions. Scheme of NI Act with regard to cheque bouncing Before we get into the main topic, it is necessary to refer to the relevant provisions relating Offence and procedure for filing of complaint under Section 138 of the N I Act. When an offence under the Act is deemed to have been committed An offence under the NI Act shall be deemed to have been committed, if the following conditions are satisfied (Section 138): • Cheque must have been drawn by a person(the drawer) in favour of a payee on his bank account for making payment • Such payment must be either in whole or partial discharge of a legally enforceable debt • Cheque must have been returned by the Banker to the payee or holder in due course due to insufficient balance in the account of the drawer or it exceeds the arrangement he had with the bank, Proviso requires fulfillment following additional conditions • Cheque must be presented within a period of 6 months from the date of cheque or its validity period which ever is earlier. (Cheque validity period is now reduced to 3 months) • The payee or holder in due course must demand payment of the cheque amount by written notice within 15 days of receipt of notice • Such notice must be issued within 30 days from the date of receipt of intimation of dishonour from bank and • The drawer of cheque fails to pay demanded sum within 15 days from the date of receipt of the notice Presumption in favour of holder There is a presumption in favour of the holder of cheque that he received the cheque in discharge of a legally enforceable whole debt or part of the debt, Unless contrary is proved, (Section 139). When cause of action arises for filing a complaint? Once the drawer fails to make payment within 15 days from the date of receipt of notice from the payee, the cause of action arises for filing a complaint on expiry of notice period period. The complaint has to be filed within 30 days from the date of cause of action and in the relevant court of Metropolitan Magistrate or Judicial Magistrate having jurisdiction. Recently the Supreme court in the case of MSR Leathers V S planniappan & Anr, reversed its earlier judgment in Sadanandan Bhadran v. Madhavan Sunil Kumara and held that a payee or holder of a cheque can now issue a statutory notice to the drawer each time the cheque is dishonoured and institute proceedings on the basis of a second or successive statutory notice as well. Section 142 of Act mandates that no court shall take cognizance of the offence unless a complaint in writing is given by the payee or holder in due course as the case may be and such complaint has to be made within one month from the date of cause of action. Amendments to NI Act Now let us examine how the amendments made to NI Act with the insertion of Sections 143 to 147(effective from 06.02.2003) brought strength to deal with certain deficiencies noticed in the Act. Salient features of amendments are as follows:- • Time limit for issuance of notice: It increased the time limit for issuance of notice for demanding payment of dishonoured cheque amount from 15 days to 30 days from the date of receipt of banker’s Memo of dishonour.(Section 138} • Punishment term: Imprisonment term has been extended up to 2 years in place of one year. similarly fine can be levied up to twice the amount of the cheque dishonoured {Section 138} • Mode of service of summons: Approved serving of summons by post/courier approved by session’s court for speedy trial/ prosecution. In case of refusal to receive summon, it shall be deemed to have been duly served on certification by the authorized person of postal dept or courier for this purpose{Section 144} • Evidence on affidavit: Evidence of complainant may be given by him by way of an affidavit and such an evidence can be a basis for issuance of summons. A discretion has been given to court to accept affidavit on evidence and only on request of the accused summon. {Section 145} • Bankers Memo as evidence: Allowed acceptance of Bankers memo of dishonour as prima facie evidence {Section 146} • Compounding of offence: Another notable feature is that Section 147 provides for compounding of the offence which means an escape route is provided for avoiding imprisonment even during the trial. It is evident from the above amendments that the main thrust of these amendments was to provide for a speedy and time bound trial. Courts have been given power to try the offence by summary trial for expeditious disposal of 138 cases and Section 143 states that endeavor shall be made to complete the trial within 6 months from the date of the complaint. How effective is the NI Act after these amendments? Despite existence of well framed law on paper, why the number of pending cases u/s 138 is quite alarming. Let us now look for the possible causes for delay in 138 cases which can be avoided or improved for better result.It is very disappointing to note that cheque bouncing cases are taking at least 3- 5 years just like a civil suit for recovery of money. Thus the very purpose of the NIAct is defeated by the slow process. 1. Recently it is reported in a news paper that about 30% of pending in the country are relatable to NI act cases and violations under MV act which is a cause for huge concern. This is an indicator of the state of affairs. One of the reasons is less number of judicial magistrates in comparison to the increasing number of 138 cases. 2. Banks have been offering loans more liberally and collect post dated cheques in advance and in many of the cases the judgment of the financial capacity is wrong or in their endeavor is to reach targets for loans disbursal 3. In many of the courts, Magistrates are caught in dilemma about as to whether CRPC is to be followed or special provisions of NI act to are to be followed. A discretion has been given to the courts and every magistrate has to exercise such power judiciously. 4. It is noticed that some of the courts still follow the archaic system of for serving of summons which takes at least 6 months while the upper time limit of 6 months is specified for disposal. E-mails /Fax/fast courier are not used for serving of summons and In many cases, the accused manages with the post department dak server and returns the summon resulting in serving of summons second time. 5. Adjournments are granted liberally and no efforts are made to complete evidence and cross examination on the same day. This is the usual practice adopted by the advocate of the accused for mutual benefit. What is the way forward ? Newly inserted provisions of the Act would be rendered nugatory if complaints filed under Section 138 of the Act are not disposed of expeditiously. The judicial system itself is portrayed in poor light, when Section138 cases take 3 to five years before they are finally adjudicated by the Magistrate. • There should be fast track courts to deal exclusively 138 cases. • Number of unfilled vacancies of posts of Magistrates must be kept to the minimum. • The Courts have to be strict in not allowing adjournments to the accused and endeavor should be made to dispose off cases within 6 months from the date of complaint or a maximum period of one year. • Appeals should not be allowed unless the accused gives valid reasons or brings out deficiencies in judgment of lower court. • Frivolous appeals should be dismissed as sufficient safeguards exist to take care of interests of accused. Once fine levied or imprisonment should not be reduced in appeals so that the punishment acts as deterrent. • Amendments should be made to empower Courts to direct accused for deposit of full amount of the cheque before the trial starts as it will compel accused to settle for compounding at the earliest. • Courts must adopt suitable and effective procedure to achieve the objective of the Act. Even the Supreme court in its recent judgments interpreted the provisions and reversed its earlier judgments to strengthen the faith in the NI act and it remarked that any narrow interpretation will benefit offenders and not the payee. Recent trend of Supreme court judgments In the case of Ms. Laxmi Dyechem Vs State of Gujarat & Ors leathers Vs Palaniappan division bench of Apex court set aside the verdict of Gujarat High Court which had held that criminal proceedings for dishonouring of cheque can be initiated only when the cheque is dishonoured because of lack of sufficient amount in the bank account and not in case where a cheque is returned due to mismatch of signature of account holder. In the case of MSR Leathers V S planniappan & Anr , the Apex court reversed its earlier judgment in Sadanandan Bhadran v. Madhavan Sunil Kumara (1998) 6 SCC 514 and held that a payee or holder of a cheque can now issue a statutory notice to the drawer each time the cheque is dishonoured and institute proceedings on the basis of a second or successive statutory notice as well. Conclusion: At a time when the Apex court and other courts have been passing landmark judgments to strengthen faith in cheques, the Inter Ministerial group’s suggestion for settlement of cheque bouncing cases out of court by invoking arbitration and conciliation, Lokadalats on the lines of section 89 of CPC comes as a shocker, Another big road block is likely to come. If suggestions of IMG, are accepted, it may result in going back to the days of filing of suits for recovery of money. Instead of this the Government aught to focus on improving the infrastructure facilities and efficacy of the courts which will facilitate expeditious disposal G. S. Rao Deputy General Manager(Legal) OCL India Limited Tags: Cheque bouncing, NI Act References: Judgments of Supreme court.

No liability to pay service tax again if assessee has deposited the service tax under wrong accounting code

No liability to pay service tax again if assessee has deposited the service tax under wrong accounting code We are sharing with you an important judgement of the Hon’ble CESTAT, Mumbai in the case of Arcadia Share & Stock Brokers Pvt. Ltd. Versus Commissioner of Central Excise & Customs, Goa [2013 (7) TMI 330 - CESTAT MUMBAI] on following issue: Issue: Whether the assessee is required to pay service tax again if he has deposited service tax under the wrong accounting code? Facts & Background: M/s Arcadia Share & Stock Brokers Pvt. Ltd. (“the Appellant”) was engaged in rendering stock broker services. However, the Appellant discharged service tax liability under the wrong accounting code i.e. service tax was remitted under the accounting code for education cess. The Department confirmed demand against the Appellant for non-payment of service tax under proper accounting code. The Appellant appealed against the order of the Department before the lower appellate authority who rejected the appeal and hence the Appellant appealed before the Hon’ble CESTAT. Held: It was held by the Hon’ble CESTAT that the Appellant is not required to pay service tax again in as much as they have paid service tax to the Government albeit under the wrong accounting code. The Hon’ble CESTAT relied on the Board’s clarification in Circular No. 58/07/2003-CX(ST) dated May 20, 2003 (“the Circular”). The Board has clarified in the Circular that an assessee shall not be asked to pay service tax again if he has paid service tax under a wrong accounting code. Further, similar decision was made by the Hon’ble Delhi Tribunal in the case ofPepsico India Holding Pvt. Ltd. vs. Commissioner of Central Excise, Allahabad 2010 (255) ELT 299 (Tri-Del)wherein it was held on basis of the Circular that the assessee is not liable to pay service tax again if he has discharged the service tax liability even though under a wrong accounting code. Therefore, relying on the Circular and the above judgment, the Hon’ble Mumbai Tribunal rejected the contention of the authorities and decided the case in favour of the Appellant. Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us. Thanks & Best Regards Bimal Jain FCA, FCS, LLB, B.Com (Hons) E-mail: bimaljain@hotmail.com Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon. Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.

What and Why Compliance Certificate

What and Why Compliance Certificate COMPLIANCE CERTIFICATE (1) Every Company not required to employ a whole time secretary under sections 383A(1) of the Act and having a paid-up share capital of Rs. 10,00,000/- or more but less than Rs. 5,00,00,000/- shall obtain a Secretarial Compliance Certificate from a company secretary in whole time practice and shall be laid by the company in its annual general meeting (2) The said company shall file with ROC the said Secretarial Compliance Certificate in the prescribed form (E form 66 ) download from (http://www.mca.gov.in/MCA21/Download_eForm_choose.html) (3) Where the annual general meeting of such company for any year has not been held, such Secretarial Compliance Certificate has to be filed with the Registrar within thirty days from the last day on or before which that meeting should have been in accordance with the provision of the Act. (4) A copy of such certificate shall be attached with Board's report referred to in section 217. Compliance Certificate Presentation For more about procedure and check list please download the below link. http://www.caclubindia.com/share_files/compliance-certificate--57752.asp LEGAL FRAMEWORK Sec.383A. Certain companies to have secretaries— Every company having such paid-up share capital as may be prescribed shall have a whole time secretary, and where the Board of directors of any such company comprises only two directors, neither of them shall be the secretary of the company: Provided that every company not required to employ a whole-time secretary under sub-section (1) and having a paid-up share capital of ten lakh rupees or more shall file with the Registrar a certificate from a secretary in whole-time practice in such form and within such time and subject to such conditions as may be prescribed, as to whether the company has complied with all provisions of this Act and a copy of such certificate shall be attached with Board's report referred to in section 217. (1A) If a company fails to comply with the provisions of sub-section (1), the company and every officer of the company who is in default, shall be punishable with fine which may extend to 10[five hundred rupees] for every day during which the default continues: Provided that in any proceedings against a person in respect of an offence under this sub-section, it shall be a defence to prove that all reasonable efforts to comply with the provisions of sub-section (1) were taken or that the financial position of the company was such that it was beyond its capacity to engage a whole-time secretary. Where, at the commencement of the Companies (Amendment) Act, 1974 (41 of 1974) (a) any firm or body corporate is holding office, as the secretary of a company, such firm or body corporate shall, within six months from such commencement, vacate office as secretary of such company; (b) any individual is holding office as the secretary of more than one company having a paid-up share capital of rupees twenty-five lakhs or more, he shall, within a period of six months from such commencement, exercise his option as to the company of which he intends to continue as the secretary and shall, on and from such date, vacate office as secretary in relation to all other companies]. The Companies (Compliance Certificate) Rules, 2001 G.S.R. 52(E).- In exercise of the powers conferred by sub-section (1) of section 642 read with proviso to sub-section (1) of section 383A of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the following rules, namely: - 1. Short Title and Commencement: (1) These rules may be called The Companies (Compliance Certificate) Rules, 2001. (2) They shall come into force on the date of their publication in the Official Gazette. 2. Definition :In these rules, unless the context otherwise requires: (a) “Act” means the Companies Act, 1956 (1 of 1956); (b) “Certificate” means a certificate referred to in the proviso to sub-section (1) of section 383A of the Act; (c) “Form” means Form appended to these rules; and (d) The words and expressions used in these rules but not defined in these rules shall have the same meanings respectively assigned to them in the Act. 3. Other Conditions: (1) Every company not required to employ a whole-time secretary under subsection (1) of section 383A of the Act and having a paid-up share capital of ten lakh rupees or more shall obtain a certificate from a secretary in whole-time practice. (2) The company referred to in sub-rule (1) shall file with the Registrar a certificate in Form or as near thereto as circumstances admit in respect of each financial year within thirty days from the date on which its annual general meeting was held: Provided that where the annual general meeting of such company for any year has not been held, there shall be filed with the Registrar such certificate within thirty days from the latest day on or before which that meeting should have been held in accordance with the provisions of the Act. (3) Every secretary in whole-time practice for the purpose of issue of certificate referred to in sub-rule (2) shall have right to access at all times to the registers, books, papers, documents and records of the company whether kept in pursuance of the Act or any other Act or otherwise and whether kept at the registered office of the company or elsewhere and shall be entitled to require from the officers or agents of the company, such information and explanations as the secretary in whole-time practice may think necessary for the purpose of such certificate. (4) Every certificate referred to in sub-rule (2) shall be laid by the company in its annual general meeting. FORM [SEE RULE 3] COMPLIANCE CERTIFICATE To, The Members, __________________(Name of the company) I/We have examined the registers, records, books and papers of ___________ Limited (the Company) as required to be maintained under the Companies Act, 1956, (the Act) and the rules made thereunder and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on 31st March, 20___. In my/our opinion and to the best of my/our information and according to the examinations carried out by me/us and explanations furnished to me/us by the company, its officers and agents, I/we certify that in respect of the aforesaid financial year. 1. the company has kept and maintained all registers as stated in Annexure `A’ to this certificate, as per the provisions and the rules made thereunder and all entries therein have been duly recorded. 2. the company has duly filed the forms and returns as stated in Annexure `B’ to this certificate, with the Registrar of Companies, Regional Director, Central Government. Company Law Board or other authorities within the time prescribed under the Act and the rules made thereunder. 3. the company being private limited company has the minimum prescribed paid-up capital and its maximum number of members during the said financial year was ________ excluding its present and past employees and the company during the year under scrutiny: (i) has not invited public to subscribe for its shares or debentures; and (ii) has not invited or accepted any deposits from persons other than its members, directors or their relatives. 4. the Board of Directors duly met _______times on ________ (dates) in respect of which meetings proper notices were given and the proceedings were properly recorded and signed including the circular resolutions passed in the Minutes Book maintained for the purpose. 5. the company closed its Register of Members, and/or Debenture holders from ______ to _______ and necessary compliance of section 154 of the Act has been made. 6. the annual general meeting for the financial year ended on _______ was held on ______ after giving due notice to the members of the company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose. 7. _______ extra ordinary meeting(s) was/were held during the financial year after giving due notice to the members of the company and the resolutions passed thereat were duly recorded in the Minutes Book maintained for the purpose. 8. the company has advanced loan amounting to Rs._________ to its directors and/or persons or firms or companies referred in the section 295 of the Act after complying with the provisions of the Act. 9. the company has duly complied with the provisions of section 297 of the Act in respect of contracts specified in that section. 10. the company has made necessary entries in the register maintained under section 301 of the Act. 11. the company has obtained necessary approvals from the Board of Directors, members and previous approval of the Central Government pursuant to section 314 of the Act wherever applicable. 12. the Board of Directors or duly constituted Committee of Directors has approved the issue of duplicate share certificates. 13. the Company has: (i) delivered all the certificates on allotment of securities and on lodgement thereof for transfer/transmission or any other purpose in accordance with the provisions of the Act. (ii) deposited the amount of dividend declared including interim dividend in a separate Bank Account on __________which is within five days from the date of declaration of such dividend. (iii) paid/posted warrants for dividends to all the members within a period of 30 (Thirty) days from the date of declaration and that all unclaimed/unpaid dividend has been transferred to Unpaid Dividend Account of the Company with _________Bank on _____________. (iv) transferred the amounts in unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued thereon which have remained unclaimed or unpaid for a period of seven years to Investor Education and Protection Fund. (v) duly complied with the requirements of section 217 of the Act. 14. the Board of Directors of the company is duly constituted and the appointment of directors, additional directors, alternate directors and directors to fill casual vacancies have been duly made. 15. the appointment of Managing Director/ Whole-time Director/Manager has been made in compliance with the provisions of section 269 read with Schedule XIII to the Act and approval of the Central Government has been obtained in respect of appointment of _______________ not being in terms of Schedule XIII. 16. the appointment of sole-selling agents was made in compliance of the provisions of the Act. 17. the company has obtained all necessary approvals of the Central Government, Company Law Board, Regional Director, Registrar or such other authorities as may be prescribed under the various provisions of the Act as detailed below:- 18. the directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder. 19. the company has issued________ shares/debentures/other securities during the financial year and complied with the provisions of the Act. 20. the company has bought back___________ shares during the financial year ending _______ after complying with the provisions of the Act. 21. the company has redeemed ________ preference shares/debentures during the year after complying with the provisions of the Act. 22. the company wherever necessary has kept in abeyance rights to dividend, rights shares and bonus shares pending registration of transfer of shares in compliance with the provisions of the Act. 23. the company has complied with the provisions of sections 58A and 58AA read with Companies (Acceptance of Deposit) Rules, 1975 the applicable directions issued by the Reserve Bank of India/ any other authority in respect of deposits accepted including unsecured loans taken, amounting to Rs.________ raised by the company during the year and the company has filed the copy of Advertisement/Statement in lieu of Advertisement/ necessary particulars as required with the Registrar of Companies ________ on __________.The company has also filed return of deposit with the Registrar of Companies/Reserve Bank of India/other authorities. the amount borrowed by the Company from directors, members, public, financial institutions, banks and others during the financial year ending ________ is/are within the borrowing limits of the company and that necessary resolutions as per section 293(1)(d) of the Act have been passed in duly convened annual/extraordinary general meeting. 25. the company has made loans and investments, or given guarantees or provided securities to other bodies corporate in compliance with the provisions of the Act and has made necessary entries in the register kept for the purpose 26. the company has altered the provisions of the memorandum with respect to situation of the company’s registered office from one state to another during the year under scrutiny after complying with the provisions of the Act 27. the company has altered the provisions of the memorandum with respect to the objects of the company during the year under scrutiny and complied with provisions of the Act. 28. the company has altered the provisions of the memorandum with respect to name of the company during the year under scrutiny and complied with the provisions of the Act. 29. the company has altered the provisions of the memorandum with respect to share capital of the company during the year under scrutiny and complied with the provisions of the Act. 30. the company has altered its articles of association after obtaining approval of members in the general meeting held on ________ and the amendments to the articles of association have been duly registered with the Registrar of Companies. 31. a list of prosecution initiated against or show cause notices received by the company for alleged offences under the Act and also the fines and penalties or any other punishment imposed on the company in such cases is attached. 32. the company has received Rs. ________ as security from its employees during the year under certification and the same has been deposited as per provisions of section 417(1) of the Act 33. the company has deposited both employee’s and employer’s contribution to Provident Fund with prescribed authorities pursuant to section 418 of the Act Note: The Qualification, reservation or adverse remarks, if any, may be stated at the relevant places. Place: Signature: Date : Name of Company Secretary: C. P. No.: Annexure A Registers as maintained by the Company 1. ---------------u/s------------- 2. ---------------u/s------------- 3. ---------------u/s------------- Annexure B Forms and Returns as filed by the Company with the Registrar of Companies, Regional Director, Central Government or other authorities during the financial year ending on 31st March, 20______ . 1. Form No.-------------------Filed u/s---------------for----------------------- 2. Form No.-------------------Filed u/s---------------for----------------------- 3. Form No.-------------------Filed u/s---------------for----------------------- Thanks and Regards K.V.SAVEESH NAIR Email: kvsaveeshnair@gmail.com

Report of Certified Valuer should be attached while filing E Form 18 to ROC

A few days ago, ICSI sent a mail to all the member of ICSI regarding giving the inputs to be included in the check list of various forms while pre-certification of E-Forms by the Practicing Professionals and the difficulties faced while pre-certification of forms by the Practicing Professionals. As the ICSI is proposing to issue Reference on Pre-Certification of E Forms to serve as guidance for Practicing Members, hence ICSI has invited the suggestion from all the members. In this process, I have raised some points and sent the same to ICSI. Some of which are as follows: There are some E Forms which we usually gone through like E Form 18, 32, 2 etc. 1. As per Form 18, we have to attach the Rent Deed, if on rent or Declaration from the Director if the office is not on rent/ Lease. And a Practicing Professional who is signing the E Form 18, have to tick the checkmark that he has personally visited the office building and checked that the building so exists. Dear Sir/ Madam, in this world of Globalization, where everyone want to capture the work from all around the world, I think it is impossible for a Professional to go personally and see the building of his client, by leaving his/ her Official Regular work aside. Moreover, a Professional may visit the Registered Office address of the company in his own city but it will not be possible for him to go and check in other cities/ States by leaving his regular work apart. In this way, he will either not get the work out of his City/ State and will have to depend upon other Professional of such other city, which is not Practicable. Hence, the solution to this E Form may be to get the valuation report from the Certified Valuer of the concerned City / State where the Registered Office is to establish that whether Building exists or not, what are the areas, what is on left side and what on the right side etc. 2. With regard to Form 32, most of the times, disputes have been seen that the Forge signatures have been put over the Resignation letter and have been filed simultaneously. Here, the Professionals just look over the Checklist i.e. resignation letter, Board Resolution and the Minutes copy which again can be forgery prepared. And in all this condition, Professional has to suffer as the Director with whom fraud has been done, claims that the Professional who has signed the E Form 32, is also a apart of Fraud. So to avoid this one suggestion I can give here is that the Director who is resigning must sign in presence of Professional who is going to affix his Digital Signatures. In such a way, professional will be sure that the signatures are not forge and the Director who is resigning will give all his particulars to Professionals along with valid proof. 3. In respect of Form 2, Professionals sign the E Form 2 on basis of Letter of Allotment, Certified true copy of the resolution and extracts of the meeting. Along with this, a letter from Bank Manager/ Official Clerk must be attached that a particular amount has been received from such person or from Personal account of the Director in such bank account OR as Compulsory attachment to E Form 2 must be there i.e. an attachment of a proper statement, given by the company, exhibiting in serial order that from whom a particular amount has been received in respect of share application, on which date the amount had been received, payment has been received in cash or by cheque etc. 4. Too much emphasis must be given over the Digital Signature Certificate. Like once the Digital Signatures have been registered, these should be registered again until the validity of such DSC expires. And in case, the director misplaces his signature before the expiry must write to the MCA so that the earlier registered Digital Signatures must be removed and the new one should be registered. Conclusion: From the above points, I just want to bring into the minds of esteemed Professionals that there are a still lot other things to be kept in mind while Pre-Certification, which should be sent to ICSI so that Professionals should file the E Forms with proper care and quality services should be given to clients. So, the view points of other esteemed Professionals are awaited at this TaxGuru Platform and should be sent to ICSI. Regards CS Mohit Saluja Mohit Saluja & Associates Company Secretary in whole time Practice Jalandhar Email id: csmohitsaluja@gmail.com

Friday, 19 July 2013

Pass Percentage of CA Final and CPT, 2013

Pass Percentage of CA Final and CPT, 2013 Chartered Accountants Final Examination held in May, 2013 The details of percentage of candidates passed in the above examination is given below: Examination Group No. of candidates appeared No. of candidates passed % of pass FINAL Both Group 27556 2764 10.03 Group– I 45822 6319 13.79 Group–II 50354 9389 18.65 Common Proficiency Test (CPT) held in June, 2013 The details of percentage of candidates passed in the above said examination is given below. Gender No. of candidates appeared No. of candidates passed Pass Percentage Exam. Centres Male 86109 21906 25.44 376 Female 52637 15583 29.6 Total 138746 37489 27.02

Sunday, 14 July 2013

Specifying the Behavior of the Enter Key excel

When you type information into a cell, it is normal to press the Enter key at the end of your entry. Excel allows you to specify exactly what should happen after you press Enter. Basically, you can specify that nothing happen (the cell into which you entered information remains the currently selected cell) or that a different, adjacent cell is automatically selected.

To make your specification, follow these steps:

Display the Excel Options dialog box. (In Excel 2007 click the Office button and click Excel Options. In Excel 2010 and Excel 2013 display the File tab of the ribbon and click Options.)
At the left side of the dialog box, click the Advanced option

The first option in the Editing Options section of the dialog box is entitled After Pressing Enter, Move Selection. Either select or clear the check box, depending on whether you want the selection to move or not when pressing Enter.
If you select the After Pressing Enter Move Selection check box, use the Direction drop-down list to specify the direction of the cell that should be selected.
Click on OK.

Wednesday, 10 July 2013

Excel Tip

Excel's Auto Recover feature can be a real lifesaver after a crash. With Auto Recover enabled, Excel saves a copy of your workbook every 10 minutes (or uses a different interval that you can specify). In the event of an application crash, you can access these Auto Recover files to recover unsaved data.

Unfortunately, whenever you close a workbook intentionally (e.g . under any circumstances other than a complete application crash), all of the Auto Recover files are permanently deleted. If you accidentally clicked "Don't Save" when you really meant "Save," you're up a creek without a paddle.

In XL10+, however, you may be in luck. There's a handy option to keep the last Auto Recover file for just such an occasion, but it's not enabled by default. Do yourself a favour, and go turn it on now:

(1) Go to File | Options (Alt F | T).

(2) On the Save tab, place a tick next to Keep the last autosaved version if I close without saving .

(3) Choose OK.

Monday, 8 July 2013

Services Provided to Special Economic Zone (SEZ) Authorised Operations Exempted From Service Tax

The Central Government has decided to exempt the services on which service tax is leviable under section 66B of the said Act, received by a unit located in a Special Economic Zone (hereinafter referred to as SEZ Unit) or Developer of SEZ ( hereinafter referred to as the Developer) and used for the authorised operation from the whole of the service tax, education cess, and secondary and higher education cess leviable thereon. The exemption shall be provided by way of refund of service tax paid on the specified services received by the SEZ Unit or the Developer and used for the authorised operations: Where the specified services received by the SEZ Unit or the Developer are used exclusively for the authorised operations, the person liable to pay service tax has the option not to pay the service tax ab initio, subject to the conditions and procedure as stated below. This exemption will be given effect to in the following manner: i. The SEZ Unit or the Developer shall get an approval by the Approval Committee of the list of the services as are required for the authorised operations (referred to as the ‘specified services’ elsewhere in the notification) on which the SEZ Unit or Developer wish to claim exemption from service tax. ii. The ab-initio exemption on the specified services received by the SEZ Unit or the Developer and used exclusively for the authorised operation shall be allowed subject to the following procedure and conditions, namely:- • the SEZ Unit or the Developer shall furnish a declaration in Form A-1,verified by the Specified Officer of the SEZ, along with the list of specified services in terms of condition (I); • on the basis of declaration made in Form A-1, an authorisation shall be issued by the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be to the SEZ Unit or the Developer, in Form A-2; • the SEZ Unit or the Developer shall provide a copy of said authorisation to the provider of specified services. On the basis of the said authorisation, the service provider shall provide the specified services to the SEZ Unit or the Developer without payment of service tax; • the SEZ Unit or the Developer shall furnish to the jurisdictional Superintendent of Central Excise a quarterly statement, in Form A-3, furnishing the details of specified services received by it without payment of service tax; • the SEZ Unit or the Developer shall furnish an undertaking, in Form A-1, that in case the specified services on which exemption has been claimed are not exclusively used for authorised operation or were found not to have been used exclusively for authorised operation, it shall pay to the government an amount that is claimed by way of exemption from service tax and cesses along with interest as applicable on delayed payment of service tax under the provisions of the said Act read with the rules made thereunder. iii. The refund of service tax on (i) the specified services that are not exclusively used for authorised operation, or (ii) the specified services on which ab-initio exemption is admissible but not claimed, shall be allowed subject to the following procedure and conditions, namely:- • the service tax paid on the specified services that are common to the authorised operation in an SEZ and the operation in domestic tariff area [DTA unit(s)] shall be distributed amongst the SEZ Unit or the Developer and the DTA unit (s) in the manner as prescribed in rule 7 of the Cenvat Credit Rules. For the purpose of distribution, the turnover of the SEZ Unit or the Developer shall be taken as the turnover of authorised operation during the relevant period. • the SEZ Unit or the Developer shall be entitled to refund of the service tax paid on (i) the specified services on which ab-initio exemption is admissible but not claimed, and (ii) the amount distributed to it in terms of clause (a). • the SEZ Unit or Developer who is registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, or the said Act or the rules made thereunder, shall file the claim for refund to the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, the as the case may be, in Form A-4; • the amount indicated in the invoice, bill or, as the case may be, challan, on the basis of which this refund is being claimed, including the service tax payable thereon shall have been paid to the person liable to pay the service tax thereon, or as the case may be, the amount of service tax payable under reverse charge shall have been paid under the provisions of the said Act; • the claim for refund shall be filed within one year from the end of the month in which actual payment of service tax was made by such Developer or SEZ Unit to the registered service provider or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit; • the SEZ Unit or the Developer shall submit only one claim of refund under this notification for every quarter: Explanation.- For the purposes of this notification “quarter” means a period of three consecutive months with the first quarter beginning from 1st April of every year, second quarter from 1st July, third quarter from 1st October and fourth quarter from 1st January of every year. • the SEZ Unit or the Developer who is not so registered under the provisions referred to in clause (c), shall, before filing a claim for refund under this notification, make an application for registration under rule 4 of the Service Tax Rules, 1994. • if there are more than one SEZ Unit registered under a common service tax registration, a common refund may be filed at the option of the assessee. iv. The SEZ Unit or Developer, who intends to avail exemption or refund under this notification, shall maintain proper account of receipt and use of the specified services, on which exemption or refund is claimed, for authorised operations in the SEZ. Where any sum of service tax paid on specified services is erroneously refunded for any reason whatsoever, such service tax refunded shall be recoverable under the provisions of the said Act and the rules made there under, as if it is recovery of service tax erroneously refunded; Besides it, SEZ Unit or the Developer shall have the option not to avail of this exemption and instead take CENVAT credit on the specified services in accordance with the CENVAT Credit Rules, 2004. Words and expressions used in this notification and defined in the Special Economic Zones Act, 2005 (28 of 2005) or the rules made thereunder, or the said Act, or the rules made there under shall apply, so far as may be, in relation to refund of service tax under this notification as they apply in relation to a SEZ.

Clarification Regarding Applicability of SA 700 on Tax Audit Report under Section 44AB of The Income-Tax Act, 1961

As the members are aware that all audit reports in respect of audits of financial statements for period beginning on or after 1st April 2012 are to be issued in accordance with the requirements of SA 700(Revised) - Forming an Opinion and Reporting on Financial Statements. In this regard, ICAI has been receiving mails seeking clarification regarding applicability of SA 700 on tax audit reports, i.e. Form No. 3CA/3CB. Considering the fact that all tax audit reports are now mandatorily required to be filed online and that the format of tax audit report is prescribed by the Central Government, the Council in its 325th meeting held from 1st June to 3rd June, 2013 decided to defer the applicability of SA-700 (Revised) on the tax audit report under section 44AB of the Income-tax Act,1961 by one year i.e. the requirements of SA-700(Revised) are not applicable for tax audit reports filed up to 31st March, 2014. ICAI is further taking up the matter with the appropriate authorities so that suitable changes can be brought in the forms relating to tax audit.

How to filter cells by bold characters in Excel?

There could be various methods, here is one of the easiest and simple method using VBA

Step 1: Hold down the ALT + F11 keys to open the Microsoft Visual Basic for Application window.

Step 2: Click the Insert >> Module, and paste the following VBA code on the new Module window:

Function IsBold(rCell As Range)
IsBold = rCell.Font.Bold
End Function

Step 3: In the Cell D2, enter the formula of =IsBold(B2), and press the Enter key. If the string in Cell B1 are bold, it returns True in Cell D2, otherwise False.

Capital Gain exemption under section 54 & 54 F

If an individual transfers any long term capital asset and plans to reinvest the sale proceeds in a new residential house property then he is eligible to claim exemption u/s 54 and 54F to reduce his tax liability.

Still there are many doubts and confusion abouts its applicability under various circumstances, conditions, etc.

The same are dealt herewith with case laws:-

1) Date of purchase of New House- For the purpose of section 54, the date of agreement to purchase should be taken as the date of purchase and the date of registration of sale deed for purchase is not relevant - CIT v. R.L. Sood[2000] 108 Taxman 227/245 ITR 727 (Delhi).

2) No Restriction on location of the New House Property - An interesting thing to note about both the Exemptions u/s 54 & 54F are that there are no restrictions in regard to the location of the new house property. There are no provisions in both the sections which say that the new house property should be located in India. Thus if an individual or an HUF sells any Long term capital asset to purchase a new house property outside India, he can still claim exemption u/s 54 (sale of a residential house property) and u/s 54F (sale of any long term capital asset other than a residential house property.

3) Exemption is independent of the Residential Status - Both the above sections restrict the exemption to an individual or an HUF. But the sections do not decline the exemption on the basis of the residential status. Thus an NRI, residing outside India and having foreign income, can also claim exemption u/s 54 and 54F on the sale proceeds arising from the sale of any long term capital asset in India.

4) Purchase need not necessarily be on ‘cash and carry’ basis - The word ‘purchase’ in section 54 must be interpreted in its ordinary meaning, as buying for a price or equivalent of price by payment in kind or adjustment towards an old debt or for other monetary consideration. There is no stress in the section on ‘cash and carry’. Thus, where the eldest brother in a coparcenary comprising four brothers sold his own house and acquired the common house from his three brothers who executed release deeds for a consideration, there was a ‘purchase’ by the eldest brother of the share of each of the brothers for a price - CIT v. T.N. Aravinda Reddy [1979] 1 Taxman 40 (AP)/120 ITR 46 (SC).

5) Purchase’ does not mean that the new house must be registered in assessee’s name - For the purpose of attracting the provisions of section 54, it is not necessary that the assessee should become the owner of the property purchased. The word ‘purchase’ occurring in section 54(1) has to be given its common meaning, viz., buy for a price or equivalent of price by payment in kind or adjustment towards a debt or for other monetary consideration. Therefore, for the purpose of applicability of section 54, registration of the document is not imperative - Balraj v. CIT [2002] 123 Taxman 290/254 ITR 22 (Delhi).

6) Holding of legal title within prescribed time is not a pre-condition - Taking into consideration the letter as well as the spirit of section 54 and the word ‘towards’ used before the word ‘purchase’ in section 54(2), it seems that the word ‘purchase’ is not used in the sense of legal transfer and therefore, the holding of a legal title within a period of one year is not a condition precedent for attracting section 54 - CIT v. Dr. Laxmichand Narpal Nagda [1995] 211 ITR 804 (Bom.).

7) Date of taking possession relevant for computing time-limit - Date of taking over possession of property purchased, and not the date of registration of sale in favour of the assessee, is relevant for computing the prescribed time-limit - CIT v. Mrs. Shahzada Begum [1988] 173 ITR 397 (AP).

8) Purchase of portion of self-occupied house is also eligible for exemption- Section 54 nowhere states that a residential house which is purchased by the assessee so as to avail the exemption should not be the one in which the assessee was residing. One cannot argue that assessee is not entitled to exemption under section 54 merely because the assessee was residing in the house which was purchased by him. Thus, where the assessee sold a house property owned by her and out of the sale proceeds purchased 15 per cent share in another house property owned by her husband and son, exemption was allowable even though the assessee was residing in the said house prior to purchase, and continued to reside in the same house after purchase - CIT v. Chandanben Maganlal [2002] 120 Taxman 38 (Guj.).

9) Purchase of two flats converted into one residential unit - The contention that the phrase ‘a residential house’ in section 54 would mean one residential house does not appear to be the correct understanding. The expression ‘a residential house’ should be understood in a sense that building should be of residential in nature and ‘a’ should not be understood to indicate a singular number. When a Hindu undivided family’s residential house is sold, to say that the capital gain should be invested for the purchase of only one residential house is an incorrect proposition. After all, the Hindu undivided family property is held by the members as joint tenants. If the members keeping in view the future needs in event of separation, purchase more than one residential building, it cannot be said that the benefit of exemption is to be denied under section 54(1). Where assessee HUF purchased two residential flats adjacent to each other on same day by two separate registered deeds and vendor had certified that he had effected necessary modifications to two flats to make them one residential apartment, assessee’s claim for exemption could not be denied on ground that section 54(1) does not permit exemption for purchasers for more than one residential premises - CIT v. D. Ananda Basappa[2009] 180 Taxman 4/309 ITR 329 (Kar.).

10) Whether benefit is available on more than one house purchased - In case the assessee has purchased more than one house/flat within the period prescribed in section 54, it is for the assessee to claim relief against the purchase of any one of the house/flat provided the other conditions mentioned in the section are satisfied - K.C. Kaushik v. P.B. Rane, ITO [1990] 84 CTR (Bom.) 62.

11) Whether benefit of exemption is available to Firm - A firm is not entitled to exemption under section 54 - CIT v. K. Gangiah Chetty & Sons [1995] 214 ITR 548 (Mad.).

When the partners used the property prior to the dissolution of the firm for their residence, it must be held that they were owners of the property and they were using the property in their own right for the purpose of residence - CIT v. M.K. Chandrakanth [2002] 125 Taxman 932/258 ITR 14 (Mad.).

12) Exemption is allowable in full even if house is partly purchased and partly constructed - The main purpose of the statute is to give relief for the acquisition of a new residential house. In that context, it does not really matter whether the new residential house is partly constructed or partly purchased - B.B. Sarkar v. CIT [1981] 132 ITR 150 (Cal.).

13) Exemption is allowable even if a share in new property is purchased - When the Act enables an assessee to get exemption from payment of tax in respect of purchase or construction of a residential house, purchase or construction of a portion of the house should also enable the assessee to claim the exemption. It is possible that a person may not be in a position to purchase the whole residential house at a time and in the circumstances an assessee might purchase a portion of the house or some interest in the house. Thus, where the assessee sold a house and from the sale proceeds purchased 15 per cent undivided share in a house property from her husband and her son, and she was earlier residing in that house, exemption under section 54 can be allowed - CIT v. Chandanben Maganlal [2000] 245 ITR 182 (Guj.).

14) Whether Refund can be Claimed - He can also claim refund if he has paid taxes on the capital gains arising on sale of long term capital asset by claiming exemption u/s 54 and 54F while filing the income tax return. After making the re-investment in a new residential house property outside India he can still claim exemption by filing his return within the due date.

15) Construction cannot precede sale of old house - To claim exemption under section 54, the construction of the new house should be within two years after the transfer of the existing house. The exemption is not available where the new construction is made before the transfer or sale of the existing house - Smt. Shantaben P. Gandhi v. CIT [1981] 129 ITR 218 (Guj.).

The date of commencement of the construction of the new house is not material. To get the benefit of section 54, the assessee must have constructed the new house within the prescribed period from the date of sale of the old house - CIT v. J.R. Subramanya Bhat [1987] 165 ITR 571 (Kar.).

16) Where property is owned by more than one person - The other Co-owners release their share or interest in the property in favour of one of the Co-owner, it will be deemed that the property has been purchased by the release. Such release also fulfill the condition under sec 54 as to purchase. - CIT v. T.N. Aravinda Reddy [1979] 120 ITR 46/2 Taxman 541 (SC)

17) Flats purchased under Self-financing scheme - As per CBDT Circular No. 471, dated 15-10-1986, cases of allotment of flats under the self-financing scheme of the Delhi Development Authority shall be treated as cases of construction for the purpose of capital gains and therefore, investment of capital gain in purchase of DDA Flat in the form of first instalment of price of flat within two years of sale of original property would entitle assessee to claim exemption in respect of capital gain even though construction of flat was not complete in two years - Smt. Shashi Varma v. CIT [1997] 224 ITR 106 (MP)/CIT v. Smt. Brinda Kumari [2001] 114 Taxman 266 (Delhi).

Assessee need not necessarily himself construct new house - The purpose behind the exemption under section 54(1) is that if any assessee sells his residential house and purchases a new house against the sale consideration, the capital gains arising out of the sale of the earlier house should not be taxed. Whether the assessee himself constructs the house or he gets it constructed by a contractor or a third party does not make any difference. The basic requirement for the purpose of relief under section 54(1) is that the assessee should invest the sale proceeds in the construction of a residential house, which has been constructed for the assessee. Thus, where the assessee sold a flat, and within two years entered into an agreement for the purchase of a new flat which was under construction, and paid the amounts in instalments within three years of the sale of the earlier flat, exemption is admissible - CIT v. Smt. Bharati C. Kothari [2000] 244 ITR 352 (Cal.).

18) Computation of deduction - Where investment in new house has not taken place in the year of transfer of old house, capital gains can be taxed only in the year in which time limits for making such investment expire - The application of the special provisions contained in clauses (i) and (ii) of section 54(1) does not depend on any election by the assessee and operates in all cases falling within section 54(1). The provisions of section 54(1) will prevail over the deeming fiction of section 45 which treats capital gain as the deemed income of the previous year. Therefore, the assessee cannot be subjected to pay income-tax on his capital gain until the expiry of the outer limit of one year or two years as the case may be, at the end of which alone it could be possible to compute difference between the amount of capital gain and the cost of the new asset and it is at this stage that the question of charging such difference under section 45 as income of the previous year can arise. It would be in consonance with section 54(1) if, instead of charging capital gain to income-tax in the previous year in which transfer of original asset took place, the ITO waits till the outer period of one year or two years as the case may be is over when he can work out the difference for charging it as income of the previous year, unless there is a communication on record that the event of such purchase or construction is not to take place or that it has already taken place during the assessment proceedings. If there is such a communication on record, the ITO can make the necessary adjustments and bring the capital gain to tax in the year of transfer of original asset itself without waiting for the expiry of the prescribed time limits of one year or two years. In such cases also, if the assessee purchases a new asset within one year or constructs a new asset within two years, the ITO is bound to amend the order of assessment so as to exclude the amount of capital gain not chargeable to tax under section 54(1) as laid down in section 155(8) - Harsutrai J. Raval v. CIT [2002] 122 Taxman 165/255 ITR 315 (Guj.).

Summary on section 54 exemption

The same are dealt herewith with case laws:-

11) Whether benefit of exemption is available to Firm - A firm is not entitled to exemption under section 54 - CIT v. K. Gangiah Chetty & Sons [1995] 214 ITR 548 (Mad.).When the partners used the property prior to the dissolution of the firm for their residence, it must be held that they were owners of the property and they were using the property in their own right for the purpose of residence - CIT v. M.K. Chandrakanth [2002] 125 Taxman 932/258 ITR 14 (Mad.).

Exemption on capital gains could not be refused to the assessee simply on the ground that the construction of the new house had begun before the sale of the old house - CIT v. H.K. Kapoor [1998] 150 CTR (All.) 128.The date of commencement of the construction of the new house is not material. To get the benefit of section 54, the assessee must have constructed the new house within the prescribed period from the date of sale of the old house - CIT v. J.R. Subramanya Bhat [1987] 165 ITR 571 (Kar.).

17) Flats purchased under Self financing scheme - As per CBDT Circular No. 471, dated 15-10-1986, cases of allotment of flats under the self-financing scheme of the Delhi Development Authority shall be treated as cases of construction for the purpose of capital gains and therefore, investment of capital gain in purchase of DDA Flat in the form of first instalment of price of flat within two years of sale of original property would entitle assessee to claim exemption in respect of capital gain even though construction of flat was not complete in two years - Smt. Shashi Varma v. CIT [1997] 224 ITR 106 (MP)/CIT v. Smt. Brinda Kumari [2001] 114 Taxman 266 (Delhi).

Wednesday, 3 July 2013

Applicability of Accounting standards

Can also be reviewed on https://sites.google.com/a/vnv.ca/intranet/resources/accounts/asapplicability

SMCs(Small and Medium Companies): It means a Company

(i) whose equity or debt securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India;

(ii) which is not a bank, financial institution or an insurance company;

(iii) whose turnover (excluding other income) does not exceed rupees fifty crore in the immediately preceding accounting year;

(iv) which does not have borrowings (including public deposits) in excess of rupees ten crore at any time during the immediately preceding accounting year; and

(v) which is not a holding or subsidiary company of a company which is not a small and medium-sized company.

Non-SMCs: Companies not falling within the definition of SMC are considered as Non- SMCs.

Ref.	Description	SMCs	Non-SMCs
A S–1	Disclosures of Accounting Policies	Y	Y
A S–2	Valuation of Inventories	Y	Y
A S-3	Cash Flow Statements	N	Y
A S-4	Contingencies and Events occurring after the Balance Sheet date	Y	Y
A S-5	Net Profit or Loss for the period, Prior Period items and changes in Accounting Policies	Y	Y
A S-6	Depreciation Accounting	Y	Y
A S-7	Construction Contracts	Y	Y
A S-9	Revenue Recognition	Y	Y
A S-10	Accounting for Fixed Assets	Y	Y
A S-11	The Effects of Changes in Foreign Exchange Rates	Y	Y
A S-12	Accounting for Government Grants	Y	Y
A S-13	Accounting for Investments	Y	Y
A S-14	Accounting for Amalgamation	Y	Y
A S-15	Employee Benefits	Partly (Note 1)	Y
A S-16	Borrowing Costs	Y	Y
A S-17	Segment Reporting	N	Y
A S-18	Related Party Disclosures	Y	Y
A S-19	Leases	Partly (Note 2)	Y
A S-20	Earnings Per Share	Partly (Note 3)	Y
A S-21	Consolidated Financial Statements	N	Y
A S-22	Accounting for Taxes on Income	Y	Y
A S-23	Accounting for Investments in Associates in Consolidated Financial Statements	N	Y
A S-24	Discontinuing Operations	Y	Y
A S-25	Interim Financial Reporting	Y (Note 4)	Y
A S-26	Intangible Assets	Y	Y
A S-27	Financial Reporting of Interests in Joint Venture	N	Y
A S-28	Impairment of Assets	Partly (Note 5)	Y
A S-29	Provisions, Contingent Liabilities and Contingent Assets	Partly (Note 6)	Y

NOTES

1. A S 15 : Employee Benefits

a) A Small and Medium-sized Company, as defined above, may not comply with recognition and measurement of short-term accumulating compensated absences, which are non-vesting (i.e., short term accumulating compensated absences in respect of which employees are not entitled to cash payment for unused entitlement on leaving).

b) It may not discount contributions and termination benefits that fall due more than 12 months after the balance sheet date.

c) It may not comply with recognition and measurement principle as laid down in paragraphs 50 to 116 and presentation and disclosure requirements laid down in paragraphs 117 to 123 of the standard in respect of accounting for defined benefit plans. However, such companies should actuarially determine and provide for the accrued liability in respect of defined benefit plans by using projected unit credit method and the discount rate used should be determined by reference to market yields at the balance sheet date on government bonds. The currency and term of the government bonds should be consistent with the currency and estimated term of the post-employment benefit obligations. Such companies should disclose the following actuarial assumptions

o the discount rates;

o the expected rates of return on any plan assets for the periods presented in the financial statements;

o the expected rates of return for the periods presented in the financial statements on any reimbursement right recognised as an asset in accordance with paragraph 103;

o medical cost trend rates; and

o any other material actuarial assumptions used.

An enterprise should disclose each actuarial assumption in absolute terms (for example, as an absolute percentage) and not just as a margin between different percentages or other variables.

Apart from the above actuarial assumptions, an enterprise should include an assertion under the actuarial assumptions to the effect that estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

d) It may not comply with the recognition and measurement principles laid down in paragraphs 129 to 131 of the Standard in respect of accounting for other long-term employee benefits. However, such a company should actuarially determine and provide for the accrued liability in respect of other long-term employee benefits by using the Projected Unit Credit Method and discount rate used should be determined by reference to market yields at the balance sheet date on government bonds.

2. A S 19 Leases:

Disclosures in respect of the following provisions are not applicable to SMCs

Leases in the Financial Statements of Lessees

For Finance leases:

(a) a reconciliation between the total of minimum lease payments at the balance sheet date and their present value. In addition, an enterprise should disclose the total of minimum lease payments at the balance sheet date, and their present value, for each of the following periods:

(i) not later than one year;

(ii) later than one year and not later than five years;

(iii) later than five years;

(b) the total of future minimum sublease payments expected to be received under non-cancellable subleases at the balance sheet date; and

(c) a general description of the lessee’s significant leasing arrangements including, but not limited to, the following:

i. the basis on which contingent rent payments are determined;

ii. the existence and terms of renewal or purchase options and escalation clauses; and

iii. restrictions imposed by lease arrangements, such as those concerning dividends, additional debt, and further leasing.

For Operating Leases:

(a) the total of future minimum lease payments under non-cancellable operating leases for each of the following periods:

(i) not later than one year;

(ii) later than one year and not later than five years;

(iii) later than five years;

(b) the total of future minimum sublease payments expected to be received under non-cancellable subleases at the balance sheet date;

(c) a general description of the lessee’s significant leasing arrangements including, but not limited to, the following:

(i) the basis on which contingent rent payments are determined;

(ii) the existence and terms of renewal or purchase options and escalation clauses; and

(iii) restrictions imposed by lease arrangements, such as those concerning dividends, additional debt, and further leasing.

Leases in the Financial Statements of Lessors

For Finance leases:

(a) a reconciliation between the total gross investment in the lease at the balance sheet date, and the present value of minimum lease payments receivable at the balance sheet date. In addition, an enterprise should disclose the total gross investment in the lease and the present value of minimum lease payments receivable at the balance sheet date, for each of the following periods:

(i) not later than one year;

(ii) later than one year and not later than five years;

(iii) later than five years;

(b) a general description of the significant leasing arrangements of the lessor; and

For Operating Leases:

(a) the future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following periods:

(i) not later than one year;

(ii) later than one year and not later than five years;

(iii) later than five years;

(b) a general description of the lessor ’s significant leasing arrangements.

3. A S 20 Earnings Per Share: Disclosure of diluted Earnings per Share is exempted for SMCs.

4. A S 25 Interim Financial Reporting: AS 25 is applicable only if a company/non-corporate entity elects to prepare and present an interim financial report. Only certain Non-SMCs/Level I entities are required by the concerned regulatory to present interim financial results, e.g., quarterly financial results required by the SEBI.

5. A S 28 Impairment of Assets: SMCs are allowed to measure the "Value in use" on the basis of reasonable estimate thereof instead of computing the value in use by present value technique. Consequently, the relevant provisions such as discount rate, etc. are not applicable for it.

6. A S 29 Provisions, Contingent Liabilities and Contingent Assets:

Disclosures in respect of the following provisions are not applicable to SMCs:

(A) For each class of provision:

(a) the carrying amount at the beginning and end of the period;

(b) additional provisions made in the period, including increases to existing provisions;

(c) amounts used (i.e. incurred and charged against the provision) during the period; and

(d) unused amounts reversed during the period.

(B) For each class of provision:

(a) a brief description of the nature of the obligation and the expected timing of any resulting outflows of economic benefits;

(b) an indication of the uncertainties about those outflows. Where necessary to provide adequate information, an enterprise should disclose the major assumptions made concerning future events, i.e. Future events that may affect the amount required to settle an obligation should be reflected in the amount of a provision where there is sufficient objective evidence that they will occur.

(c) the amount of any expected reimbursement, stating the amount of any asset that has been recognised for that expected reimbursement.