CA M GARG

The difference between NRE and NRO accounts

2011-08-22T01:13:00.000-07:00

There are two options an NRI interested in opening a bank account in India can choose from – an NRE or an NRO account. Are you an NRI keen on getting a bank account opened in India? Then it would be advantageous to know how these two types of accounts differ and which one is right for you.

The Government of India has permitted NRIs to open rupee accounts in India in order to repatriate funds from their home countries. The two most common accounts are the NRE and NRO accounts. Let’s take a closer look at them.

What’s an NRE account?
A Non-Resident External (NRE) account is a bank account that’s opened by depositing foreign currency at the time of opening a bank account. This currency can be tendered in the form of traveler’s checks or notes.

What’s an NRO account?
A Non-Resident Ordinary (NRO) account is the normal bank account opened by an Indian going abroad with the intention of becoming an NRI. An NRI can also open this account by sending remittances from his home country or by transferring funds from his other NRO account. It offers the same facilities as an NRE account, except that any repatriation done through this account should be reported to RBI by filling up prescribed forms.

How do NRE and NRO accounts differ?
Funds remitted from overseas sources or local funds that would otherwise have been sent to the accountholder abroad can instead be transferred to NRE Accounts. On the other hand, local funds that aren’t eligible to be remitted abroad must be credited to an NRO account.

Can you transfer funds fromanNREto anNROaccount and vice versa?
It’s easy to transfer funds fromanNREto an NRO account. But it’s not possible to transfer funds from an NRO account to an NRE account. Once you transfer funds fromanNREtoanNRO account, the amount is non-repatriable. Consequently, you cannot transfer it back.

What’s the difference in the tax treatment for interest earned on an NRE and an NRO account?
The interest earned on any type of NRO bank as well as the credit balances in this kind of account are taxed under the account holder’s tax bracket. On the other hand, interest earned on the NRE account is totally exempted from income tax, and the credit balances in the account don’t attract any wealth tax. Any gift given to a close relative doesn’t attract gift tax

Technical support - Digital Signature use

2011-08-13T00:53:00.000-07:00

Errors while signing on the form

Error message: Signer's identity unknown" (Shows a "?" mark) while signing the PDF document.

Solution: The message you get because Adobe software do not have the trust root certificate of CCA & TCS. You can go ahead and upload this file the MCA application will take care of the same. Incase you want to resolve this please follow the steps below.
Right click on the box with your signature in the eform and select "Properties".
A wizard will open up, Click on "Show Certificate" button .
On the right side top select "Trust" Tag.
You will see Red Cross mark against each settings.
Click on "Add to Trust Identities" button.
A adobe security message will come up , click "OK"
Under Trust Settings Check all the check boxes and click "OK"
Click on "Verify signature" button on the fist window and click "OK"
For further assistance please log the complaint ticket on MCA portal (Link below) http://www.mca.gov.in/DCAPortalWeb/dca/MyMCALogin.do?method=setDefaultProperty&mode=23
Error message: "Digital Signature Verification failed or Your CA is not Trusted" or Getting email id as "helpdesk@tcs-ca.tcs.co.in" or Windows has blocked this software because it can't verify the publisher Name: Assure SignContorl.Cab :Publisher:Unknow publisher on MCA portal.

Solution: Check whether the trust chain installed along with the certificate .If not, install the trust chain as per the below mentioned path.
Visit our TCS-CA web site: https://www.tcs-ca.tcs.co.in> click on Current certificates Under CA certificates> and click on each certificate(CCA2007 &TCSCA)> open>and install the same by clicking "Install certificate" until import was successful.
Once the same is completed then follow below instructions .Please note that the same has been sent by MCA .Hence, try the same once and if you are still facing the problem ,contact MCA help line on email id "appl.helpdesk@mca.gov.in" for further assistance.

Ensure that you are logged-in to the computer as 'Administrator' and 'ActiveX' control settings in 'Internet Explorer' are enabled, as per steps given below:
Open 'Internet Explorer' >Tools > Internet Options > Security.
Click "Internet" and change the Security Settings to "Medium".
Click "Custom Level" Button.
Enable the "Download Signed ActiveX controls" option.
Enable the "Run ActiveX controls and Plugins" option.
Enable the "Script ActiveX controls marked safe for scripting" option.
Enable the "Download unsigned ActiveX controls" option.
If all the settings are enabled and you have administrator rights then a control should get downloaded on your machine on accessing the Register DSC facility for Director or Manager/Secretary or Practicing Professional. You can check for the same by
1. Open Internet Explorer
2. Tools->Internet Options
3. General->Settings->View Objects
A control named 'AssureSignControl Control' should be present. If it doesn?t exist then it implies that admin rights are not set on your profile.
Please contact your local administrator for the same.
Error Message: Creation of the signature could not be completed :Platform exception, Key does not exists, 2148073494

Solution: Please call us on below mentioned no?s for further assistance in this regard
Toll free: 18004252922 and direct Line 040-6667 3524/25/26.
Error message :
1. The following signatures on the form are not valid :Director/Manager/Managing Director. OR
2. Following errors have occurred in the prescrutiny. Please click to view the errors :
Signature validation failed for signature field for practicing professional. The person is not authorized to sign on this field. OR
3. Creation of this signature could not be completed Error encountered while signing:
Platform exception,Bad UID Error code: 2148073504
Platform exception,Access denied Error code: 2148073488

Solution:Please raise a support ticket on MCA portal (Link below)
http://www.mca.gov.in/DCAPortalWeb/dca/MyMCALogin.do?method=setDefaultProperty&mode=23
You can also mail to appl.helpdesk@mca.gov.in for further assistance in this regard.
Error Message: The windows Cryptographic Service Provider reported an error:The keyset is not defined.Error code:2148073497

Solution: Need to check whether the certificate is present along with the exchange key& corresponding root certificates and smart card is started. If yes then please contact MCA help line for further assistance in this regard.
Error Message:Platform exception.Cannot find the certificate and private key for decryptionError Code:2148081675

Reason : The above error occurs if the certificate does not have the exchange key

Solution: Need to check whether the certificate is present along with the exchange key& corresponding root certificates. If yes then there is no problem at the certificate and please contact MCA help line for further assistance in this regard.
Error Message:Creation of the signature could not be completed Platform exception.The operation requires a smart card,but no smart card is currently in the device. Error code:2148532236

Reason : The above error would occurs if the smart card services is not enabled

Solution : If you are using the certificate from any USB Token. Please ensure that same is plugged in token to USB port and check whether the Smart card services is started. Check accordingly and proceed further.
Error message on IT portal :
1. You might not have inserted the USB Token
2. Capicom.dll is absent on your system32 directory
3. No supported drivers installed on your system
For 2&3 Contact your System/Token vendor.

Solution: Please contact us on below mentioned no's for further assistance in this regard.
Toll free: 18004252922 and direct Line 040-6667 3524/25/26.
Error message: The message contents may have been altered would occur while verifying the signed mail at recipient end.

Solution:This message occurs if more text is added or removed from the mail content after signing.
For ex: Some of the mails at the bottom will have "DISCLAIMER" .Actually ,this Disclaimer is attached from the server side to the signed message and it will be added after the signing is completed . So, at the recipient end, while verifying the signed mail, this error would occur since the text "DISCLAIMER" has added after mail is signed.
Error Message: "Signature is Null" on NSDL Portal while logging by using Digital signature certificate.

Reason: Please check with NSDL whether the serial number of the certificate which you are using is mapped to the corresponding Login Id which is used for login on NSDL portal.
Error message : You do not have a valid digital certificate. Please get a Digital Certificate from a CCA approved Certification Authority.

Solution: If the certificate that you are using is a renewed one then ensure that the certificate details have to be updated on IREPS site before using the same. If not then find the below instructions for the error encountered.
Ensure that need to perform the below instructions on the system from where the certificate is being used for IREPS activities.
you have to check whether the certificate is present under personal tab of IE browser [Path to check the certificate in IE browser : Tools> Internet options>content>certificates>personal ] [If you have the certificate in any USB Token then ensure that need to plug-in the same to USB port of the system.]
Need to check whether the same certificate is also present in Other people tab of IE browser [Path to check the certificate in IE browser : Tools> Internet options>content>certificates> Other people]
Need to check the security settings as given on IREPS homepage by clicking on "system Settings" Under "Resources".
Check the date format of the system by following mentioned path
Under control panel>Click on Regional & languages>Click on Customize>Click on Date>where check the date format against Short date format .Same should be M/d/yyyy.

Once you check all the settings then try to register/ place the tender on IREPS portal. Incase if the problem still persists then contact IREPS for further assistance in this regard.
Error message : "Unable to retrieve the Signature" / "Please use the same digital signature certificate which has been attached to your profile" on IREPS Portal

Solution : Please check the below instructions.
Check at the certificate end whether everything is fine (i,e certificate is with in the validity period, exchange key and valid trust chain (i,e TCS & CCA) ,certificate category (i,e Class-III-Company) and appearing under Personal tab of IE browser)
Same Certificate is in Other people tab of IE browser
Check the security settings as given on IREPS homepage by clicking "system Settings" Under "Resources".

Error message : Welcome to Indian Railways E-Procurement System. Your request for registration to www.ireps.gov.in can not be accepted due to the following reason(s)
1. Company/Firm name already exists.
2. Company/Firm name and user name in digital signature and your request does not match.
3. Digital signature attached by you are not Class III type with Company/Firm name as per stipulation of IREPS system.
4. Digital signature attached by you is not valid.
You may take further corrective action and can submit your request for registration afresh.

Solution: Please check the above all instructions whether you are following accordingly. If yes and even though , facing the problem then need to check below conditions.
Check the security settings as given on IREPS homepage by clicking "system Settings" Under "Resources".
Have the valid certificate in both personal & other people tab of IE browser
Control panel>Click on Regional and Language options>Click on Customize>Click on Date>In the Short date format field , the date format should be M/d/yyyy.

Error message: "Signing Failed Reason" while placing the tender on DGS & D portal

Solution : Access the site : http://dgsnd.gov.in >Click on Indentor's Page >Click on Click Here(E-Lock software) This solution would solve the problem. Incase the problem still persists then please contact concerned e-tender for further assistance in this regard.
Error message: Your Machine is Not Ready for Certificate Mapping on NALCO e-tender

Solution : Need to check the security level whether it is medium and all active x controls & plug-ins are enabled under Tools>Internet options>security>Custom level of IE browser. If not make the changes and once the changes are done then you would be asked for installing a control. So, do install the same and once it is done then try to use the certificate on said e-tender
Error message: PKI Based security "Sorry Authentication failed" on https://www.tenderwizard.com portal.

Solution : If you are using the certificate from any USB token then need to check whether the correct password is provided to token. If yes and even though getting the problem then request you to check with the concerned e-tender if the corresponding certificate SRNO need to be mapped to the user id with which you are logging on said portal.

Others

Error Message : "Records not available" after logging on TCS-CA webporta.

Reasons & Solution:
You must be trying to access the records with the wrong User-Id. Solution: Check the user id that you are using is the same as the user id when you registered for Digital Signature certificate request.
If renewal request has already been placed under renewal link.
If you are trying to renew the certificate 30 days before & after expiry of the certificate since renewal link on TCS-CA web portal will only be available exactly 30 days before and after from the date of expiry of the certificate including time.
Please check the above all mentioned reasons and proceed further.
Error Message: Certificate got generated with wrong Email-Id which was given at the time of enroll

Solution: Once the certificate is generated the details cannot be changed. The Authentication PIN mail is an automated one and can be sent only to that email-ID provided during online enrollment. Hence, a valid email ID has to be provided during enrollment. Before the online request is generated, there is a prompt to check the email ID once again.

So, in this case solution is
Please check if the email id can be created as provided in the online enrollment.If the same is possible then you may utlilize get authentication pin for getting the authentication pin.
If the email id creation as given in the enrollment form is not possible then only solution is to revoke the existing certificate and apply for a fresh certificate on a chargeable basis.

Error Message: Authentication failed.

Solution: This error happens in two situations.
If you give wrong User ID or password for during Member Login on TCS-CA web portal. In this case, you may please contact your Registration Authority for resetting password of User ID member login.
If you give wrong password while logging into the token.In this case , It is advised that not to access the token with the wrong password since token will be blocked after maximum no. of attempts. Hence, please contact you Registration Authority whom did you approach for obtaining the certificate for further assistance in this regard.

Error message :You may have disabled Active X controls (Object Error)

Solution : In Internet Explorer (IE)browser, Tools>Internet options>security>select Trusted sites>Click on Sites> where add the TCS-CA site https://www.tcs-ca.tcs.co.in in the box provided (I.e. Add this website to the zone). Now click on Add and close

Now again, Under Tools>Internet options>security>Select trusted sites>Click on Custom level of IE browser. Set the Reset custom settings to Medium then click on "Reset" > Click yes on the pop box. Check whether all activeX controls are enabled. If no, then make all the activeX controls enable. click on OK > Click yes on the pop box.

Please find the below procedure to install the cab file
Download the TCSCADataSigner.cab file from link http://www.tcs-ca.tcs.co.in/controls/TCSCADataSigner.cab and save on your machine.
Extract all the files to a loation.
Go to Start -> Run
Type regsvr32 <> at the command prompt.
<> needs to be replaced by the full path to the ocx.
For example: If you have saved TCSCADatasigner.ocx in C drive,then type the following at the command prompt:regsvr32 c:\TCSCADatasigner.ocx

Service of documents by e-mode instead of Under Posting Certificate (UPC)

2011-05-28T03:38:00.000-07:00

Ministry of Corporate Affairs General Circular No. 17 dated 21 April 2011
21 Apr 2011
Service of documents by e-mode instead of Under Posting Certificate (UPC) - Clarification
All the Regional Directors,

All the Registrar of Companies/ Official Liquidators

Subject:- Green Initiatives in the Corporate Governance - Clarification regarding service of documents by e-mode instead of Under Posting Certificate (UPC).

Sir,

The Ministry of Corporate Affairs has taken a "Green Initiative in the Corporate Governance" by allowing paperless compliances by the Companies after considering sections 2, 4, 5, and 81 of the Information Technology Act, 2000 for legal validity of compliances under Companies Act through electronic mode.

Section 53 of the Companies Act, 1956 provides service of documents under 'Certificate of posting' as one of the accepted mode of service. Whereas the Department of posts has recently discontinued the postal facility under 'Certificate of posting' vide their letter dated 23.02.2011. The Information Technology Act, 2000 also permits service of documents etc., in electronic mode.

Keeping in view of above, it is hereby clarified that a company would have complied with Section 53 of the Companies Act, if the service of document has been made through electronic mode provided the company has obtained e-mail addresses of its members for sending the notice/documents through e-mail by giving an advance opportunity to every shareholders to register their e-mail address and changes therein from time to time with the company.

In cases where any member has not registered his e-mail address with the company, the service of document etc will be effected by other modes of service as provided under section 53 of the Companies Act, 1956.

Amendment in FCRA Act w.e.f 1 May 2011

2011-05-21T21:30:00.000-07:00

The Foreign Contribution (Regulation) Act, 2010 has come into effect from May 1, 2011. The Ministry of Home Affairs has issued the necessary Gazette Notification vide S.O. 999 (E) dated the 29th April, 2011 in this regard.

The Ministry of Home Affairs has also issued a Gazette Notification vide G.S.R. 349 (E) dated the 29th April, 2011 notifying the Foreign Contribution (Regulation) Rules, 2011 made under section 48 of FCRA, 2010. The FCR Rules, 2011 have come into force simultaneously with FCRA, 2010.

Salient Features of the Act
• Any association granted prior permission or registered with the Central Government under Section 6 or under the repealed FCRA, 1976, shall be deemed to have been granted prior permission or registered, as the case may be, under FCRA, 2010 and such registration shall be valid for a period of five years from the date on which the new Act has come into force.

• While the provisions of the repealed FCRA, 1976 have generally been retained, the FCRA, 2010 is an improvement over the repealed Act as more stringent provisions have been made in order to prevent mis-utilisation of the foreign contribution received by the associations.

• Any organisation of a political nature and any association or company engaged in the production and broadcast of audio or audio visual news or current affairs program have been placed in the category prohibited to accept foreign contribution.

• A new provision has been introduced to the effect that no person who receives foreign contribution as per provisions of this Act, shall transfer to other person unless that person is also authorized to receive foreign contribution as per rules made by the Central Government.

• Another new provision has been made to the effect that foreign contribution shall be utilized for the purpose for which it has been received and such contribution can be used for administrative expenses up to 50% of such contribution received in a financial year. However, administrative expenses exceeding fifty per cent of the contribution to be defrayed with the prior approval of the Central Government.

• New provisions have been made for suspension as well as cancellation of registration granted for violation of the provisions of the Act. Such provisions did not exist in the repealed Act.

• New provision has also been made for management of foreign contribution and assets created out of such contribution of persons whose certificates have been cancelled.

• Under the repealed Act, there was no time limit regarding the validity of registration certificate granted to the associations etc. for accepting foreign contribution. FCRA, 2010 provides that the certificate granted shall be valid for a period of five years and the prior permission shall be valid for the specific purpose or specific amount of foreign contribution for which permission was granted. Further, every person who has been granted a certificate shall renew it within six months before the expiry of the period of certificate.

• No funds other than foreign contribution shall be deposited in the FC account to be separately maintained by the associations etc. Every bank shall report to such authority, as may be prescribed, the amount of foreign remittance received, sources and manner and other particulars.

• Provision has been made for inspection of accounts if the registered person or person to whom prior permission has been granted fails to furnish or the intimation given is not in accordance with law.

• A new provision has been introduced to the effect that the assets of any person who has become defunct shall be disposed of in such manner as may be, specified by the Central Government.

• A new provision has been introduced to the effect that any person, who knowingly gives false intimation and seeks prior permission or registration by means of fraud, false representation or concealment of material fact, shall, on conviction by Court, would be liable to imprisonment for a term which may extend to six months or fine or with both.

• Any person contravening the provisions of the Act shall be punishable with imprisonment for a term which may extend to five years or with fine or with both.

Salient Features of the Rules

• Guidelines for declaration of an organisation to be of a political nature, not being a political party have been prescribed.

• Activities to be treated as speculative activities have been defined.

• Expenditure constituting 'Administrative expenses' has been clearly defined.

• Modalities for submission of application for obtaining registration or prior permission to receive foreign contribution have been given in detail in the Rules and Forms for filing the applications.

• The applications for obtaining registration or prior permission shall have to be made electronically on-line, and shall have to be followed by forwarding the hard copy of the on-line application, duly signed, together with the required documents within thirty days of the submission of the on-line application, failing which the request of the person shall be deemed to have ceased.

• Any person whose request has ceased shall be able to prefer a fresh on-line application only after six months from the date of cessation of the previous application.

• No person would be permitted to prefer a second application for registration or prior permission within a period of six months after submitting an application either for the grant of prior permission for the same project or for registration.

• A new provision has been made for submission application fee. The fee for obtaining registration or prior permission would be Rs. 2000/- and Rs. 1000/- respectively.

• Applications made for registration or prior permission under the repealed FCRA, 1976 but not disposed of before the date of commencement of these rules shall be deemed to be an application for registration or prior permission, as the case may be, under the new Rules, subject to the condition that the applicant furnishes the prescribed fees for such registration or prior permission, as the case may be.

• Every person who has been granted registration or prior permission shall maintain a separate set of accounts and records, exclusively, for the foreign contribution received and utilised.

• Every certificate of registration issued to a person shall be liable to be renewed after the expiry of five years from the date of its issue on proper application and application for its renewal shall have to be made in the prescribed form accompanied by a fee of Rs. 500/- six months before the date of expiry of the certificate of registration. A person implementing an ongoing multi-year project shall apply for renewal twelve months before the date of expiry of the certificate of registration.

• In case no application for renewal of registration is received or such application is not accompanied by the requisite fee, the validity of the certificate of registration of such person shall be deemed to have ceased from the date of completion of the period of five years from the date of the grant of registration. If the validity of the certificate of registration of a person has ceased in accordance with the provisions of these rules, a fresh request for the grant of a certificate of registration may be made by the person to the Central Government as per the provisions of the Rules.

• In case a person who has been granted a certificate of registration or prior permission receives foreign contribution in excess of one crore rupees, or equivalent thereto, in a financial year, he/it shall place the summary data on receipts and utilisation of the foreign contribution pertaining to the year of receipt as well as for one year thereafter in the public domain. Besides, the Central Government shall also display or upload the summary data of such persons on its website for information of the general public.

• In case the certificate of registration is suspended under the relevant provisions the Act, up to twenty-five per cent of the unutilised amount may be spent, with the prior approval of the Central Government, for the declared aims and objects for which the foreign contribution was received. The remaining seventy-five per cent of the unutilised foreign contribution shall be utilised only after revocation of suspension of the certificate of registration.

• The amount of foreign contribution lying unutilised in the exclusive foreign contribution bank account of a person whose certificate of registration has been cancelled shall vest with the banking authority concerned till the Central Government issues further directions in the matter.

• If a person whose certificate of registration has been cancelled transfers/has transferred the foreign contribution to any other person, the provisions of sub-rule (1) of this rule shall apply to the person to whom the fund has been transferred.

• Every bank shall send a report to the Central Government within thirty days of any transaction in respect of receipt of foreign contribution by any person who is required to obtain a certificate of registration or prior permission under the Act, but who was not granted such certificate or prior permission as on the date of receipt of such remittance. The report shall contain the details regarding name and address of the donor, name and address of the recipient, account number, name of the Bank and Branch, amount of foreign contribution (in foreign currency as well as Indian Rupees), date of receipt, manner of receipt of foreign contribution (cash/cheque/electronic transfer etc.).

• The bank shall also send a report containing the above details to the Central Government within thirty days from the date of such last transaction in respect of receipt of any foreign contribution in excess of one crore rupees or equivalent thereto in a single transaction or in transactions within a duration of thirty days, by any person, whether registered or not under the Act.

• Every person who receives foreign contribution under the Act shall submit a report, duly certified by a chartered accountant, in the prescribed Form, accompanied by an income and expenditure statement, receipt and payment account, and balance sheet for every financial year beginning on the 1st day of April within nine months of the closure of the financial year, to the Secretary to the Government of India, Ministry of Home Affairs, New Delhi. The annual return in the prescribed Form shall reflect the foreign contribution received in the exclusive bank account and include the details in respect of the funds transferred to other bank accounts for utilisation. If the foreign contribution relates to articles or foreign securities, the intimation shall be submitted in the prescribed Forms.

• Every such return in shall also be accompanied by a copy of a statement of account from the bank where the exclusive foreign contribution account is maintained by the person, duly certified by an officer of such bank. The accounting statements referred to above shall be preserved by the person for a period of six years. A ‘NIL’ report shall be furnished even if no foreign contribution is received during a financial year.

• Foreign contribution received by a candidate for election, referred to in section 21, shall be furnished in the prescribed Form within forty-five days from the date on which he is duly nominated as a candidate for election.

• An application for revision of an order passed by the competent authority under the Act shall be made to the Secretary, Ministry of Home Affairs, Government of India, New Delhi on a plain paper. It shall be accompanied by a fee of Rs. 1000/-

• An application for the compounding of an offence may be made to the Secretary, Ministry of Home Affairs, on a plain paper and shall be accompanied by a fee of Rs. 1000/-.

• The Central Bureau of Investigation or any other Government investigating agency that conducts any investigation under the Act shall furnish reports to the Central Government, on a quarterly basis, indicating the status of each case that was entrusted to it, including information regarding the case number, date of registration, date of filing charge sheet, court before which it has been filed, progress of trial, date of judgment and the conclusion of each case.

• Any information or intimation about political or speculative activities of a person shall be furnished to the Secretary to the Government of India in the Ministry of Home Affairs, New Delhi
. Such information or intimation shall be sent by registered post.
Any person intending to transfer the foreign contribution may make an application to the Central Government in the prescribed Form. The Central Government may permit the transfer in respect of a person who has been granted the certificate of registration or prior permission under, in case the recipient person has not been proceeded against under any provision of the Act. Any transfer of foreign contribution shall be reflected in the prescribed returns by the transferor and the recipient.

• In case the foreign contribution is proposed to be transferred to a person who has not been granted a certificate of registration or prior permission by the Central Government, the person concerned may apply for permission to the Central Government to transfer a part of the foreign contribution, not exceeding ten per cent, of the total value of the foreign contribution received. The application shall be countersigned by the District Magistrate having jurisdiction in the place where the transferred funds are sought to be utilised. The District Magistrate concerned shall take an appropriate decision in the matter within sixty days of the receipt of such request from the person. The donor shall not transfer any foreign contribution until the Central Government has approved the transfer.

• The Foreign Contribution (Regulation) Act, 2010 (42 of 2010) dated the 26th September, 2010 was notified in The Gazette of India – Extraordinary – Part II - Section I dated the 27th September, 2010. However, the Act was to come into force on such date as the Central Government may, by notification in the Official Gazette appoint. Consequently, the earlier Act, viz., the Foreign Contribution (Regulation) Act, 1976 has also been repealed.

An overview of New Section 44AD of the Income Tax Act, 1961 that comes into effect from A.Y. 2011-2012

2011-05-11T21:01:00.000-07:00

An overview of New Section 44AD of the Income Tax Act, 1961 that comes into effect from A.Y. 2011-2012

Section:44AD – Special provision for computing profits and gains of business on presumptive basis.

(1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid amount claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.

(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed:

Provided that where the eligible assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40.

(3) The written down value of any asset of an eligible business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

(4) The provisions of Chapter XVII-C shall not apply to an eligible assessee in so far as they relate to the eligible business.

(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business as lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section.

Explanation.—For the purposes of this section,—
(a) “eligible assessee” means,—
(i) an individual, Hindu undivided family or a partnership firm, who is resident, but not a limited liability partnership firm as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009); and
(ii) who has not claimed deduction under any of the sections 10A, 10AA, 10B, 10BA or deduction under any provisions of Chapter VIA under the heading “C. Deductions in respect of certain incomes” in the relevant assessment year;

(b) “eligible business” means,—

(i) any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE; and

(ii) whose total turnover or gross receipts in the previous year does not exceed an amount of sixty lakh rupees.

Discussion:

Ø What was 44AD earlier to A.Y. 2011-2012?
The section heading was as “Profits and gains of business of civil construction” whereby it was applicable to only such assessees who were engaged in business of civil construction.

Ø What is 44AD w.e.f. A.Y. 2011-2012?
The Finance (No. 2) Act, 2009 has expanded the scope of this section beyond the assessee who are engaged in business of civil construction.

Ø Who is eligible assessee?

a. Individual
b. Hindu Undivided Family
c. Partnership Firm, who is resident.
However, this section has excluded a limited liability partnership firm from its scope.

Further, this section is applicable only to those assessee who have not claimed deductions under the sections 10A, 10AA, 10B, 10BA or under the provisions of Chapter VI-A under the heading “C. Deductions in respect of certain incomes”, i.e. sections 80HH to 80RRB.

Ø What is eligible business?
a. Any business other than the business of plying, hiring or leasing of goods carriages that is covered by section 44AE;
b. The business whose turnover or gross receipts do not exceed ` 60 lakhs.

Ø What is the income deemed under this section?

The income deemed under this section shall be an amount equal to or higher than 8% of the turnover or gross receipts of the business. Such amount shall be deemed to the income charged under the head “Profits and gains of business or profession”.

Ø What are the other consequences?

a. The deductions under sections 30 to 38 shall be assumed to have already been given full effect. No further deduction shall be allowed under this sections.

b. The WDV of the assets used in the eligible business shall be deemed to have calculated as if the eligible assessee had been allowed the deduction of the depreciation for each of such assessment years.

c. The salary and interest to partners are still allowable subject to the limits prescribed under section 40(b)

Ø What are the provisions relating to Advance Tax?

The assessees opting for this section shall be exempted from the provisions of Chapter XVII-C i.e. advance tax. The eligible assessee shall not be required to comply with the provisions relating to advance tax.

Ø What about maintaining books of accounts?

The eligible assessee opting for this section need not maintain the books of accounts related to the eligible business.

Ø What if the income of the assessee is less than the deemed rate, i.e. 8 %?

The assessee has an option to declare income lower than what is deemed in this section. However, he has to fulfill certain conditions and compliances for that. Those compliances are as below:

a. Maintain the books of account and other documents as required under section 44AA
b. Get the books of accounts audited under section 44AB

Ø What about the section 44AF?

The earlier section 44AF which read as “Profits and gains of retail business” shall become inoperative from the assessment year 2011-2012

Director’s Relatives (Office or Place of Profit) Amendment Rules, 2011

2011-05-01T06:03:00.000-07:00

Director’s Relatives (Office or Place of Profit) Amendment Rules, 2011

COMPANIES ACT

RULES/AMENDMENT RULES

Company Law : Director's Relatives (Office or Place of Profit) Amendment Rules, 2011 - Amendment in rules 3 and 7

NOTIFICATION [F.NO. 17/75/2011-C.L.V], DATED 6-4-2011

In exercise of the powers conferred by clause (b) of sub-section (1) of section 642, read with sub-section (1B) of section 314 of the Companies Act, 1956, the Central Government hereby makes the following rules to amend the Director's Relatives (Office or Place of Profit) Rules, 2003, namely:-

1. (1) These rules may be called Director's Relatives (Office or Place of Profit) Amendment Rules, 2011.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Director's Relatives (Office or Place of Profit) Rules, 2003, (hereinafter referred to as the said rules), in rule 3, for the figures "50,000", the figures "2,50,000" shall be substituted.

3. In the said rules, for the figures "50,000", the figures "2,50,000" shall be substituted.

4. In the said rules, for rule 7, the following rule shall be substituted, namely:—

The selection and appointment of a relative of a director holding office or place of profit in the company shall be approved by adopting the same procedure applicable to non-relatives :

Provided that, in the case of listed public companies, the selection of director for holding place of office or profit in the company shall have to be also approved by a Selection Committee.

Explanation.- For the purpose of this sub-rule, the expression "Selection Committee" means a committee, the majority of which shall consist of independent directors and an expert in the respective field from outside the company:

Provided that in case of unlisted companies, independent directors are not necessary but outside experts should be there in the Selection Committee:

Provided further that in the case of private companies, independent directors and outside experts are not necessary.

RBI Notification of regarding Amendment in PPF Scheme 1968

2010-12-30T05:42:00.001-08:00

MINISTRY OF FINANCE
(Department of Economic Affairs)
NOTIFICATION
New Delhi, the 7th December, 2010
G.S.R. 956 (E). – In exercise of the powers conferred by sub-section (4) of Section 3 of the Public Provident Fund Act, 1968 (23 of 1968), the Central Government hereby makes the following Scheme further to amend the Public Provident Fund Scheme, 1968, namely :-

1. (1) This scheme may be called the Public Provident Fund (Amendment) Scheme, 2010.
(2) It shall come into force on the date of its publication in the Official Gazette.
2. In the Public Provident Fund Scheme, 1968 in paragraph 9, in sub-paragraph (3), after the proviso, the following proviso shall be inserted, namely :-
“Provided further that an account opened on behalf of a Hindu Undivided Family prior to the 13th day of May, 2005, shall be closed after expiry of fifteen years from the end of the year in which the initial subscription was made and the entire amount standing at the credit of the subscriber shall be refunded, after making adjustments, if any, in respect of any interest due from the subscriber on loans taken by him. In the case of accounts opened on behalf of Hindu Undivided Family, where fifteen years from end of the year in which initial subscription was made, has already been completed, they shall also be closed at the end of the current year, i.e. the 31st day of March, 2011 and the entire amount standing at the credit of the subscriber shall be refunded, after making adjustments, if any, in respect of any interest due from the subscriber on loans taken by him.”
[F.No. F.7/4/2008-NS.II]
M. A. KHAN, Under Secy.
Note: The scheme was notified vide G.S.R. 1136(E), dated 15-6-1968 and amended vide G.S.R. 368(E), dated 1-8-72, G.S.R. 217(E), dated 9-3-79, G.S.R. 271(E), dated 16-3-83, G.S.R. 54(E), dated 7-2-84, G.S.R. 895(E), dated 23-6-86, G.S.R. 1013(E), dated 6-7-99, G.S.R. 908(E), dated 6-12-2000, G.S.R. 679(E), dated 4-10-2002, G.S.R. 768(E), dated 15-11-2002, G.S.R. 585(E), dated 25-7-2003, G.S.R. 690(E), dated 27-8-2003, G.S.R. 755(E), dated 19-11-2004, and G.S.R. 291(E), dated 13-5-2005.

Digital Signature Class 2 and/or, Class 3 for E Tendering, DGFT, MCA, Income Tax, Brokers etc

2010-12-29T20:25:00.000-08:00

Contact for Class II, Class II B, Class III B,Class III, DGFT at very reasonable price on same day. Tcs or E Mudhra for Class 2 and Class 3, and for DGFT safe Scrypt.
Contact
D sign Softech Private Limited
24-A, MIG DDA Flats, Rani Jhnasi Complex, Motia Khan,
Near Jhandewalan Gole Chakker, New Delhi- 110055.
Phone- 011 23522714/15, 011 43503600E Mail: dsignsoftech@gmail.com
URL: www.dsignsoftech.com
Mobile 9810135587

Amendment in 40a(ia) by finanace Act , 2010 is clarrifactory

2010-12-25T01:07:00.000-08:00

2010-TIOL-765-ITAT-AHM

IN THE INCOME TAX APPELLATE TRIBUNAL
BENCH 'B' AHMEDABAD

ITA No.3983/Ahd/2008
Assessment Year:-2005-2006

SHRI KANUBHAI RAMJIBHAI MAKWANA
RANGOLI COMPLEX, BHALEJ ROAD, ANAND
PAN NO: ACYPM8211D

Vs

INCOME TAX OFFICER
WARD-1, ANAND

Mahavir Singh, JM and D C Agrawal, AM

Dated: December 3, 2010

Appellant Rep by: Shri M G Patel, AR
Respondents Rep by: Shri K Madhusudan, SR-DR

Income tax – Section 40(a)(ia) - Whether the amendment brought out in Section 40(a)(ia) are clarificatory in nature and retrospective w.e.f 1st April 2005.

The assessee is a contractor and required to get work done through sub-contractors. During the course of assessment proceedings, AO required the assessee to produce the details of TDS deducted on sub-labour contract payments paid. The assessee intimated as regards to inadmissibility with regard to non-deduction of TDS. AO made addition for non deduction of tax. In appeal, CIT (A) partly allowed the appeal of the assessee within the amended provisions of section 40(a)(ia) which state that if tax had been deducted in the month of March and deposited with the Government before submission.

After hearing both the parties, the ITAT held: -

++ that the amendments brought out in Section 40(a)(ia) of the Act from time-to-time was clarificatory and when an amendment is declaratory and clarificatory in nature, the presumption against its retrospectivity is not applicable and amendments of this kind only declare. It is no doubt true that, ordinarily, a statute, and particularly when the same has been made applicable with effect from a particular date should be construed prospectively and not retrospectively. But this principle will not be applicable in a case where the provision construed is merely explanatory, clarificatory or declaratory it cannot be disputed that the object of the Explanation is to explain the meaning and intendment of the Act itself;

++ that the provisions of Section 40(a)(ia) as amended by the Finance Act, 2010 w.e.f 1-4-2010, which has newly been inserted by the Finance (No.2) Act, 2004, with effect from 1st April, 2005 to section 40 of the Act is remedial in nature, designed to eliminate unintended consequences which may cause undue hardship to the taxpayers and which made the provision unworkable or unjust in a specific situation, and is of clarificatory nature and, therefore, has to be treated as retrospective with effect from 1st April, 2005, the date on which section 40(a)(ia) has been inserted by the Finance (No.2) Act, 2004.

S. 50C applies to transfer of development rights in property

2010-12-24T03:55:00.000-08:00

The following important judgement is available for download at itatonline.org.

Arif Akhatar Hussain vs. ITO (ITAT Mumbai)

S. 50C applies to transfer of development rights in property

The assessee was co-owner of inherited property. He entered into an agreement with the developer for development of the property for a consideration of Rs. 63 lakhs and offered his share of the consideration to capital gains. The Stamp Valuing Authority valued the property at Rs.4.73 crores though the DVO valued it at Rs. 1.81 crores. The AO invoked s. 50C and adopted the DVO’s valuation as the consideration. This was confirmed by the CIT (A). Before the Tribunal, the assessee argued that there was a distinction between “rights in land & building” and the “land and building” and that s. 50C did not apply to “rights” in land & building such as development rights. It was pointed out that the fact that only development rights were transferred was borne out by the fact that the assessee was shown as owner of the property in the municipal records. It was also pointed out that the stamp duty law made a distinction between transfer of development rights and transfer of the property by imposing different rates of duty. HELD dismissing the appeal:

The economics of education: Govt Mints money taxing educational services

2010-12-22T20:16:00.000-08:00

The economics of education: Govt Mints money taxing educational services

22 December, 2010 Ahmedabad :
Education is a matter between the person and the world of knowledge and experience, and has little to do with school or college. However, schools and colleges are the breeding ground for our future generations. Education should be absolutely free from taxes. The government collects huge revenues in the guise of education cess. These funds are meant to be used for the welfare of students and for providing free education to the children of this country. Ironically, the same government has imposed service tax on the coaching and training institutes and the ultimate burden of this tax is passed on to the students.
A fundamental issue emerges that whether, the service provided by a not-for-profit organisation is liable for service tax. Various courts held contrary views and pronounced contrasting decisions. Before any final conclusion can be reached the Finance Act, 2010, has added an explanation in the definition of the taxable service to clarify that the term 'commercial' appearing in the relevant definition, only means that such training or coaching is being provided for a consideration, whether or not such training or coaching is conducted with a profit motive. This change is retrospective in nature with effect from 01.07.2003.
Constitutional validity of levy of service tax treating parallel college as "commercial training or coaching centre" within the meaning of Section 65(27) was raised in Malappuram Distt. Parallel College Assn. (STO 2005 Ker 122). A parallel college is always privately-owned and in most cases, it is a small scale institution with facilities similar to colleges. Whereas colleges are affiliated to universities, parallel colleges have no such official recognition.
The Kerala high court has struck down the demand of service tax from parallel colleges under commercial coaching and training service" as arbitrary and violative of article 14 of the constitution of India. The high court observed that there is no distinction between the two classes of students namely; the students studying in the colleges affiliated to universities and private students who take coaching in parallel colleges to write the same examinations. The high court further observed that the main reason why many students can't join regular colleges affiliated to universities is economical reasons. Further, on account of limited number of seats available in the affiliated colleges, the less brilliant will have to look for coaching elsewhere and they end up in parallel colleges. In any case, there can be no distinction between students undergoing private study in the parallel colleges and those undergoing course-study in the regular colleges, so long as the curriculum, the examinations written and the degrees obtained by them are one and the same.
Based on the above findings, high court held that "Therefore, levy of service tax for services rendered by parallel colleges which indirectly falls on the students, but by simultaneously providing exemption to regular affiliated colleges allowing the students therein study free of tax is patently discriminatory and violative of Article 14 of the Constitution of India."
Even in Circular No. 59/8/2003-S.T., dated 20.06.2003, the clarification was provided that some institutes like colleges, apart from imparting education for obtaining recognised degrees/ diploma/ certificates, also impart training for competitive examinations, various entrance tests etc. It is clarified that by definition, such institutes or establishments, which issue a certificate, diploma or degree recognised by law, are outside the purview of "commercial training or coaching institute". Thus, even if such institutes or establishments provide training for competitive examinations etc., such services rendered would be outside the scope of service tax.
Recently similar issue arose before tribunal - Bangalore, in case of 'Tandem Integrated Services' (STO 2010 CESTAT 414). In this case, it was held that the colleges apart from imparting education for obtaining recognised degrees/ diploma /certificates, also impart training for competitive examinations, such institutes or establishments are outside the purview of "commercial training or coaching institute". The benefits, as accorded to the regular colleges which are affiliated to university can't be denied to the appellants. Regular colleges affiliated to university are exempted from paying service tax for imparting training for the competitive examinations and various entrance tests etc., there is no reason for not extending the benefit to of being outside the purview of the service tax under the category of "commercial training or coaching".
Finally, it is held that these educational institutes are not liable to pay service tax, thereby giving a sigh of relief to thousands of students who were ultimately bearing these taxes.

A non-resident Indian can remit $1 mn from property sales

2010-12-21T04:37:00.000-08:00

A non-resident Indian can remit $1 mn from property sales

The prices of ancestral properties left in India by emigrating non-resident Indians (NRIs) have escalated beyond their belief. Little wonder they have developed a new and intense interest in claiming their share, especially with recession biting hard in the West. In the last few years, the ancestral homes in India are valued in crores.

So these amounts become very attractive for NRIs to claim and remit. In the recent past, the Reserve Bank of India (RBI) has revised the maximum amount that can be sent abroad without special permissions. However, these properties should not be agricultural land, a farm house or a plantation.

An NRI/PIO is allowed to send abroad up to $1 million from the sale of property in any one financial year. This amount should be the sale proceeds of property inherited by him out of rupee funds. This transfer is subject to production of documentary evidence in support of acquisition, inheritance or legacy of assets by the NRI, and a tax clearance or a no objection certificate from the Income Tax Authority. The $1 million remittance can also be made from the balances held in Non Resident Ordinary Rupee (NRO) Accounts.

After taking a dip following the financial crisis of 2008, property prices have bounced back and how. Despite the high price rise, more and more NRIs are keen to buy properties in India. Who can buy property in India? An NRI who is a citizen of India but residing outside, or a Person of Indian Origin (PIO). A PIO is defined as an individual (not a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan) who has held an Indian passport at any time or whose father or mother or grandfather or grandmother was a citizen of India.

The laws related to immovable property in India are complex and are not uniform from one state to another, said Rajan D. Gupta, a senior lawyer and a qualified accountant with SRGR Law Offices.

"A major concern is to determine the clear and marketable title of the land under question and to ensure that the land under question is free from any encumbrances such as litigation, prior mortgages, any third party interest or rights and any governmental actions such as compulsory acquisition proceedings," said Gupta.

"Again, in case of properties, especially agricultural properties, which are owned by farming families, there are a number of family law issues which again are myriad as there are a number of religions in India and most of them have their own characteristic legal frameworks."

Gupta said to ward off such issues and be almost certain about the legal status of the property to be acquired, it is advisable that a competent legal professional must be engaged to conduct a title check and due diligence of the property to be acquired.

"It is also important to engage such a professional who practises within the jurisdiction where the property is situated so that he/she is aware of the local legal compliances and issues," he added.

NRIs face many legal tangles about their properties in India. These relate to the purchase, transfer and ownership of property, power of attorney, management and eviction of tenants, remittance of the sale proceeds, illegal grabbing of their properties and other related issues.

Their legal cases have been pending in the courts for years, indeed decades. If an NRI is fighting a case with a resident Indian, he is at a disadvantage because the Indian is in no hurry while the NRI has limited time to attend to his case during his visit to India or make special trips for court appearances.

Source Economic Times

DSC Application Forms

2010-12-19T02:46:00.000-08:00

TCS Application Forms

Individual - Class 2

Government/Banking Users - Class 2

NRI - Class 2

Undertaking in case of Renewal

Company User - Class 2

Individual - Class 3

Company User - Class 3B

No s. 14A disallowance of interest on borrowed funds on basis that assessee ought to have used own funds to repay loans & not invest in shares

2010-12-03T20:39:00.000-08:00

The assessee earned dividend of Rs. 3 crores which was exempt u/s 10(34). As the assessee had borrowings of Rs. 31.98 crores out of total funds of Rs. 96.18 crores and investments in shares of Rs. 30.42 crores, the AO held that the interest on the borrowings had to be disallowed on a pro-rata basis u/s 14A. The AO held that the assessee ought to have used the surplus funds to repay the loans instead of investing in shares and that it was an indirect case of diversion of borrowed funds for investment in shares. This was upheld by the CIT(A). On appeal by the assessee, HELD allowing the appeal:

In view of Godrej Boyce Mfg Co 328 ITR 81 (Bom) Rule 8D is applicable only prospectively i.e. from AY 2008-09 and not for earlier years. The facts showed that the assessee had made the investment in shares out of its own funds and the borrowed funds were entirely utilized for the purpose of its business. The investment in shares in the current year was made from a separate bank account where the surplus funds generated in that year were deposited. The argument that the assessee could have utilized its surplus funds in repaying the borrowings instead of investing in shares and by not doing so, there was diversion of borrowed funds towards investment in shares to earn dividend income is not acceptable in view of CIT vs. Hero Cycles Ltd 323 ITR 518 where it was held, distinguishing Abhishek Industries 286 ITR 1 (P&H), that if investment in shares is made by an assessee out of own funds and not out of borrowed funds, disallowance u/s 14A is not sustainable. Accordingly, the disallowance of interest on borrowed funds was deleted.

See Also: CIT vs. Reliance Utilities 313 ITR 340 (Bom) (where it was held that a presumption could be drawn that investment for non-business purposes had come out of own funds), CIT vs. Leena Ramachandran (where it was held that s. 14A applies where shares are held as investment and the only benefit derived is dividend). See Also S. 14A & Rule 8D: A comprehensive analysis by Shri. K. C. Singhal, VP, ITAT, (Retd).

Large volume of purchase & sale of shares does not per se mean activity is business

2010-11-30T07:27:00.000-08:00

vs. SMK Shares & Stock Broking (ITAT Mumbai)
Friday, November 26th, 2010
(135.1 KiB, 534 DLs)

Large volume of purchase & sale of shares does not per se mean activity is business

The assessee, a broker in the BSE, disclosed short-term capital gains and long-term capital gains on sale of shares. The AO accepted the LTCG as such though he held that the STCG was assessable as “business profits” on the ground that the assessee was a stock broker & there was large volume and frequency (more than 300) transactions. On appeal, the CIT (A) reversed the AO. On appeal by the department to the Tribunal, HELD dismissing the appeal:

(i) It is no more res integra that a person can be both “Investor” as well as “Trader” in shares. (Draft Instruction No. 2005, Instruction No. 1827 dated 31.8.1989 & Circular No. 4/2007 dated 15.6.2007 referred). The assessee has to maintain the distinction between shares held as stock and those held as investments in its records;

(ii) While volume of transactions is an important indicator of the intention of the assessee whether to deal in shares as trading asset or to hold the shares as investor, it is certainly not the sole criterion. The AO’s conclusion that since sale and purchase had been determined by the volatility in the market, the same is against the basic feature of investor is not based on sound rational reasoning. A prudent investor always keeps a watch on the market trends and, therefore, is not barred under law from liquidating his investments in shares. The law itself has recognized this fact by taxing these transactions under the head “Short Term Capital Gains”. If the AO’s reasoning is accepted, then it would be against the legislative intent itself;

(iii) The fact that the assessee did not borrow funds for investment in shares is an important aspect which cannot be lost sight off while deciding the true intention of the assessee;

(iv) The fact that the AO accepted the assessee’s claim in earlier years that it was an investor is material because though the principles of res judicata do not strictly apply to income tax proceedings it is well settled law that the principles of consistency should not be ignored. Uniformity in treatment and consistency under the same facts and circumstances is one of the fundamentals of the judicial principles which cannot be brushed aside without proper reason;

(v) The fact that the AO accepted the offering of LTCG also showed that the assessee’s status as investor was accepted by him;

(vi) Some part of the STCG had arisen out the earlier investment which had been accepted as being on investment account. As the modus operandi of the assessee remained the same in regard to other shares purchased during the year, the assessee’s claim could not be negated only on the basis of frequency of the transaction (Gopal Purohit 228 CTR 582 (Bom), Sadhana Nabera 41 DTR 393 & Jayshree Pradip Shah considered).

Income tax - Whether profits from sale of shares held as long-term investments are to be taxed as business income or capital gains? - It is capital ga

2010-11-17T05:23:00.000-08:00

Income tax - Whether profits from sale of shares held as long-term investments are to be taxed as business income or capital gains? - It is capital gain, rules Delhi HC

By TIOL News Service

NEW DELHI, OCT 28, 2010: THE issue before the HC is - Whether profits from sale of shares held as long-term investments by an investment and finance company are to be taxed as business income or capital gains. And the HC decision rules that it is capital gains.

Facts of the case

The assessee is a company engaged in the business of sale and purchase of shares. It filed its return declaring an income of Rs.60,05,375/- in which it included short term capital gain at Rs.38,476/- and long term capital gain at NIL after set-off of long term capital loss of previous years amounting to Rs.2,08,24,174/-. In the course of assessment proceedings, the AO observed that in computation of the income filed, the assessee had shown long term capital gain at Rs.2,08,24,174/-which had been set off against the long term capital loss of the AY 1995-96 amounting to Rs.2,02,45,035/- and of the AY 1996-97 at Rs.5,79,139/-. On a query being raised by the assessing officer as to why sale of investment be not treated as business or trading receipts as the assessee is an investment company having main business of purchase and sale of shares, it was submitted by the assessee that it was registered as an investment and finance company having its main activity of investing its funds in long term securities like shares, debt and equity mutual funds, etc for generating dividend, interest and profit and loss on sale of investments and all the investments of the company are of long term nature and had not been held as stock-in-trade since the FY 1999-2000 in which year all the investments held as stock-in-trade were transferred to the investment portfolio. It was contended on behalf of the assessee that the said practice of taking all its securities under the investment head had since then been followed and the revenue had never raised any query on that score. However, the AO held that the income from the transactions of sale and purchase of shares was business income of the assessee company and were in fact purchased not for investment purposes but for the purpose of sale at a profit are liable to be taxed under the head business income and not under the head capital gain as declared by the assessee company. On the basis of aforesaid reasoning, the AO assessed the tax at Rs.3,25,82,805/- and initiated penalty proceedings u/s 271(1)(c) and directed charge of interest under Section 234B/234D accordingly.

The CIT(A) held that the profit arising on the sale of shares has to be treated as long term capital gains and, accordingly, the addition of Rs.2,65,77,430/- was deleted. The ITAT also decided the issue in favour of the assessee.

On further appeal by the Revenue, the High Court held that,

++ in the case at hand, the assessee had purchased the shares on 27th January, 1996 and the same were held for a span of 7 years and were sold during the year under consideration. The assessee had not involved himself in the business of buying and selling shares after 1st April, 1997. The assessee had not engaged itself as a dealer in debt mutual funds. Nothing has been brought on record to show that the assessee was engaged in the selling of shares. The object incorporated in the Memorandum of Association only refers to the fact that the assessee can deal in shares but, there was no regular activity on that score. The nature of activity, intention and conduct has significance. They play a pivotal role in the entire gamut of transaction;

++ as per the circular issued by the CBDT on 15th June, 2007, a tax payer can have two portfolios, that is, an investment portfolio comprising of securities which are to be treated as capital assets and a trading portfolio comprising of stock-in-trade which are to be treated as trading assets. The assessee is entitled to have income from both heads, namely, capital gains as well as business income. On a proper scanning of the facts that have been brought on record, there can be no iota of doubt that the shares that were made by the assessee as an investment gave rise to capital gains. Therefore, the concept of business income does not arise and hence, the findings recorded by the first appellate authority as well as by the Tribunal stand on terra firma.

Eight new taxable services w.e.f. 01-07-2010 under Service Tax Act

2010-07-08T21:27:00.000-07:00

Eight new taxable services w.e.f. 01-07-2010
CBEC has notified 8 new taxable Services w.e.f. 1.7.2010 vide Notification No.24/2010-Service Tax dated 22.6.2010.

The following are the new taxable Services introduced w.e.f. from 1.7.2010.

1. Games of chance (zzzzn)
2 Health services (zzzzo)
3 Maintenance of medical records (zzzzp)
4 Promotion of a ‘brand’ of goods, services, events, business entity etc. (zzzzq)
5 Commercial use or exploitation of any event organized by a person or organization (zzzzr)
6 Electricity Exchange Service (zzzzs)
7 Copyrights on Cinematographic films and sound recording (zzzzt)
8 Providing of preferential location or external / internal development of complexes (zzzzu)

Digital Certificate - Class 3 Platinum e -Tendering

2010-07-08T21:11:00.000-07:00

Digital Certificate - Class 3 Platinum
Class 3 Certificates are issued to individuals, organizations and devices and are applicable for personal and commercial use. They represent the highest degree of digital security available to individuals, devices, servers and organizations. Typically, they are used for Electronic Data Exchange (EDI), internet banking/broking, e-tendering and other web-based transactions where confidentiality and authenticity are critical.
You are required to by physically present during authentication and confirmation of applicant identity by the RA or Sub-CA, who issues the certificate provided you meet all requirements.
Individual
Class 3 Platinum Individual Certificates issued to individuals or devices and encompass primarily high end security-sensitive online activities.
Organization
These are digital certificates that are appropriate for digital signatures, encryption, electronic access control, e-commerce and online financial transactions that require a strong assertion of the customer's identity. The validation procedures for Class 3 Platinum Organization certificates includes confirmation that the subscriber organization does in fact exist, authorization from the organization for the certificate application and authorization for the person submitting the certificate application.
Refer Support Documents for the list of mandatory documents required when applying for Class 3 Platinum Certificates.
Class 3 Platinum Individual certificates are legally valid as per the Indian Information Technology Act, 2000

Support Documents
Support documents are mandatory when applying with e-Mudhra for Class 2 Gold and Class 3 Platinum Digital Signature Certificates.
For an individual
• Attested copy of any one of the following as identity proof (attestation may be by any Public Notary/Gazetted Officer/Bank Manager)
o Passport
o Driving License
o Voter's ID
o PAN card
o Company ID Number
For an Organization
• True copy of any one(from the Company Secretary/Director/Partner of the organization)
o Certificate of Incorporation
o Memorandum of Association/Articles of Association
o Partnership Deed
o Valid Business License
• True copy of any one (attested by Company Secretary/Director/Partner of the organization)
o Annual Report
o Income Tax Return
o Bank Details of the organization from the Bank
o Statement of Income issued by Chartered Accountant
• Authorization letter in favor of the certificate applicant from the organization
• Domain Name registration proof from the registrar of Domains (if applying for Server Certificate)
e-Mudhra offers three classes of Digital Signature Certificates for personal and commercial use. You can select the certificate class that best suits your requirements.
• Class 1 Silver
• Class 2 Gold
• Class 3 Platinum
Class 1 Silver is intended for personal use. It does not strongly authenticate identity and is therefore not applicable for commercial use.
Class 2 and Class 3 are managed certificates and are available for individuals, organizations and devices. They are applicable in all environments where proof of identity is an obligation. They are issued only after suitable verification processes have been completed by an RA or Sub-CA organization. Please refer Support Documents section for more details on requirements for successful identity verification.

Effective from 10th February, 2010
Class of e-Mudhra Digital Signature Certificate Validity in Years Price in INR
Class 1 Silver Individual One 99
Two 149
Class 2 Gold Individual One 899
Two 1149
Class 2 Gold Organisation One 899
Two 1149
Class 3 Platinum Individual One 1499
Two 1749
Class 3 Platinum Organisation One 1749
Two 2099
Class 3 Device one 7499
Two 11999
Terms of Pricing.
1. The prices indicated are on per DSC basis
2. No Service Tax & VAT applicable
3. The prices indicated are exclusive of token price
4. The prices are subject to change without prior notice
Guidelines to apply for certificate:
1. For Class 1 DSC, you can apply online
2. For Class 2 and 3 DSC, you are required to submit original application form accompanied by supporting credential documents and payment to the nearest RA
3. Application form may be downloaded from or obtained by contacting e-Mudhra or its nearest RA
4. You can apply only for DSC or for both DSC and token
5. Please ensure that your application is consistent and complete in all aspects to avoid delay in processing or rejection
6. e-Mudhra reserves the right to accept or reject any application for DSC
7. In case of cheque payments, DSC and/or token will be issued only after realization of the payment instrument
8. Customers can avail of support by contacting us over the telephone or through the web support facility available on www.dsignsoftech.com or call 9810135587

Link to apply
through https://www.e-mudhra.com/alliance/ag/c2gi2s/index.aspx

Even exempt income is taxable under MAT / s.115JB

2010-07-08T21:10:00.000-07:00

Rain Commodities vs. DCIT (ITAT Hyderabad Special Bench)
Even exempt income is taxable under MAT / s.115JB

The assessee credited its P&L A/c with an amount of Rs. 149.77 crores being the profit on sale of assets to its wholly owned subsidiary. As the said profits were not chargeable to tax u/s 47(iv), the assessee took the view that the same had also to be reduced from the “book profits” u/s 115JB. The Special Bench had to consider whether exempt income could be excluded from the computation of “book profits” u/s 115JB. HELD deciding against the assessee:

(i) The AO can alter the “book profit” only in two circumstances (a) if the P&L A/c is not drawn up in accordance with Parts II & III of Schedule VI to the Companies Act or (b) If accounting policies & standards, method & rate of depreciation have been incorrectly adopted for preparation of the P & L A/c. Except for the said two cases, the AO has no power to alter the net profit shown in the P&L A/c. Under (a), the AO cannot disturb the Net Profit shown by the assessee where there are no allegations of fraud or misrepresentation but only a difference of opinion as to whether a particular amount should be properly shown in the P&L A/c or Balance sheet;

(ii) Parts II & III of Schedule VI to the Companies Act do not permit the exclusion of capital gain from the P & L A/c. The P & L A/c is required to disclose every material feature including credits or receipts and debits or expenses in respect of non-recurring transactions or transactions of an exceptional nature including capital profits (Veekaylal Investments 249 ITR 597 (Bom) followed). Items referred to in the Notes are a part of the P&L A/c (Sain Processing 221 CTR 493 (Del) followed;

(iii) The assessee had included the said capital gains in the P & L A/c and it was not its’ case that same was not includible. The fact that the capital gains was exempt u/s 47(iv) does not mean it can be excluded from the “book profit” because no such exclusion was permitted under the Explanation to s. 115JB. The taxability of capital gain is relevant only for the purpose of computation of income under the normal provisions and has nothing to do with the computation of “book profits”. {N.J. Jose & Co 217 CTR 479 (Ker) (capital gains exempt u/s 54E) followed};

(iv) The argument that as s. 115JB (4) provides that “save as otherwise provided in this section all other provisions of the Act shall apply” does not mean that the exemption provisions of s. 47(iv) can be read into s. 115JB. This only means that while the computation has to be as per s. 115JB, anything over and above that will be subject to other provisions of the Act. Frig Sales 4 SOT 376 (Mum) overruled);
(v) Accordingly, in the absence of any provision for exclusion of exempted capital gain in the computation of book profit u/s 115JB, the assessee is not entitled to the exclusion claimed.
Note: Though the SB observed that it was not necessary for it to dwell upon a situation where the assessee has directly credited the profit on sale of asset to a reserve Account, it referred with approval to Bombay Diamond Co 33 DTR 59 where even profits not credited to the P&L A/c were held includible in Book Profits. Growth Avenue approved. Sutlej Cotton Mills 45 ITD 22 (Cal) (SB) which held that exempt capital gains had to be reduced from book profits was held not to be good law.

Formation of Mutual Fund

2010-05-17T05:43:00.000-07:00

Given below are the requirements, procedure and regulations involved during the formation of a Mutual Fund

Main requirements under SEBI (Mutual Funds) Regulations, 1996:

The following are the eligibility criteria for grant of a certificate of registration as per regulation 7 of SEBI (Mutual Funds Regulations) 1996 (Please see SEBI web site www.sebi.gov.in)

For the purpose of grant of a certificate of registration, the applicant has to fulfil the following, namely:-

(a) The sponsor should have a sound track record and general reputation of fairness and integrity in all his business transactions;

Explanation: For the purposes of this clause "sound track record" shall mean the sponsor should,-

(i) be carrying on business in financial services for a period of not less than five years; and

(ii) the net worth is positive in all the immediately preceding five years; and

(iii) the net worth in the immediately preceding year is more than the capital contribution of the sponsor in the asset management company; and

(iv) the sponsor has profits after providing for depreciation, interest and tax in three out of the immediately preceding five years, including the fifth year.

(aa) the applicant is a fit and proper person.

(b) in the case of an existing mutual fund, such fund is in the form of a trust and the trust deed has been approved by the Board;

(c) the sponsor has contributed or contributes atleast 40% to the net worth of the

asset management company;

Provided that any person who holds 40% or more of the net worth of an asset management company shall be deemed to be a sponsor and will be required to fulfil the eligibility criteria specified in these regulations;

(d) the sponsor or any of its directors or the principle officer to be employed by the

mutual fund should not have been guilty of fraud or has not been convicted of an offence involving moral turpitude or has not been found guilty of any economic offence.

(e) appointment of trustees to act as trustees for the mutual fund in accordance

with the provisions of the regulations;

(f) appointment of asset management company to manage the mutual fund and

operate the scheme of such funds in accordance with the provisions of these regulations;

(g) appointment of a custodian in order to keep custody of the securities and carry out the custodian activities as may be authorised by the trustees.

Application for Registration:

An applicant should apply for registration in form A prescribed under Schedule I of SEBI (Mutual Funds) Regulations 1996. It may be noted here that as per the proviso to Reg. 7 (c) of the Regulations, any person who holds 40% or more of the net worth of an asset management company shall be deemed to be a sponsor and will be required to apply in Form A.

While applying, please ensure that the main objects of the memorandum of the sponsor company permit it to carry on mutual fund activities. An applicant should also submit the following additional information for the sponsor as well as for the other shareholders in the proposed asset management company.

1. A complete list of your group/associate companies registered with SEBI in any capacity, also indicate the capacity in which they are registered and the SEBI Registration number. In case of foreign sponsors, details of registration of sponsor/any of its associate / group companies with any regulatory agency abroad (You may also refer to SEBI (Mutual Funds) Regulations for the definition of ‘associates’, ‘group’ and ‘control’.)

2. Whether any of the sponsor or its group/associate companies are listed in any of the recognised stock exchange(s) in India. If so, please furnish the details.

3. Whether there have been any instances of violation of or non-adherence to any securities related regulations and whether any action has been taken against you or any of your associate/group companies in this regard, by a regulatory agency in India or abroad; (please provide the following information)

(a) Top 10 monetary penalties in case of foreign entities and all monetary penalties in case of Indian entities, imposed against the sponsor or any associate of the sponsor (for irregularities/ violations in the financial services sector or for defaults in respect of shareholders / debenture holders and depositors, by by any financial regulatory body or government authority or settlement arrived with any financial regulatory body during the last five years and details thereof. Penalties awarded for economic offences may be disclosed only in case of sponsor.

(b) Details of all cases of suspensions and cancellation of certificate of registration (for irregularities/ violations in financial services sector or for defaults in respect of shareholders, debenture holders and depositors) of the sponsor or any associate of the sponsor shall be disclosed for the last 10 years.

All disclosures on penalties and action taken as per (a) and (b) above against foreign entities may be limited to the jurisdiction of the country where the principal activities (in terms of income/ revenue) of the sponsors/ associate companies are carried out or where the headquarter is situated.

4. Declaration in terms of Regulation 7(d) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 that your sponsor company or any of your directors have not been found guilty of fraud or have not been convicted of an offence involving moral turpitude or have not been found guilty of any economic offence. If there are such cases, full details should be provided.

5. (a) Details of registration of your company/associate/group companies, which are registered/ required to be registered with Reserve Bank of India (RBI) as a Banking company or Non Banking Finance Company or in any other capacity.

(b) Details of disciplinary action taken by RBI against you or any of your group/associate companies. Please also inform us in case there is any default in repayment of deposits by you or any of your group / associate companies.

6. Whether any of the directors or employees of your company or your group / associate companies were ever associated with any organisation as a director or an employee against whom SEBI had initiated action of suspension or cancellation of certificate of registration or initiated any other action under the provisions of SEBI Act or launched any prosecution for acts committed during their association. If so, please furnish details.

Communication by SEBI:

SEBI will examine the application and a communication will be sent to you about your eligibility status. If you are found eligible, you will be required to undertake the following steps:

1. Incorporation of the Asset Management Company and the Trustee Company/Board of trustees:

For this purpose, you may submit two copies of the completed Memorandum and Articles of Association of the Asset Management Company and the Trustee Company for our forwarding to the Registrar of Companies.

Please ensure that these documents contain a clause that “notwithstanding anything mentioned in these documents, only those activities will be carried out which are permitted under the SEBI (Mutual Funds) Regulations. All the provisions of the SEBI (Mutual Funds) Regulations, 1996 and the Guidelines issued from time to time shall be applicable.”

Please also indicate the address of the ROC where these companies would be incorporated.

2. Auditor’s certificate:

After incorporation of the AMC and the Trustee Company, please submit a certificate from a Chartered Accountant certifying that:

(a) The sponsor has contributed at least 40% to the net worth of the AMC (Regulation 7 (c).

(b) The AMC has a net worth of not less than Rupees Ten Crore (Rupees 100 min), as required under regulation 21 (1) (f) of SEBI (Mutual Funds) Regulations, 1996 (the net worth should be furnished in the following format):

Paid-up capital _________

Plus free reserves of the company _________

less miscellaneous expenditure to the extent not written-off _________

less accumulated losses, if any _________

Less intangible assets, if any. _________

TOTAL NETWORTH _________

3. Filing of executed copies of Trust Deed and Investment Management Agreement.

Please file executed copies of trust deed and Investment Management Agreement along with a check list clearly mentioning where you have incorporated the clauses of contents of the trust deed and Investment Management agreement as per third schedule and fourth schedule of SEBI (Mutual Funds) Regulations.

4. Setting up of Infrastructure by the Applicant

After complying with the above requirements, a detailed note on the infrastructure facilities available with the Asset Management Company should be sent to SEBI, providing the following specific details:

(a) Details of the office premises and address.

(b) Organisation chart of the AMC, clearly specifying the responsibilities of various personnel.

(d) Justification of adequacy of personnel in fund management, equity research and other operational areas considering the expected size of mutual fund. At what stage, the number of key personnel will be reviewed, should be indicated.

(e) Systems support in terms of hardware and software.

(f) Arrangement made for investor services.

(g) Establishing the financial viability of sponsoring a Mutual Fund giving details of expected size of mutual fund over a period of time,

(h) Internal systems and control procedures developed to check insider trading and front running.

(i) Size of funds which the AMC feels competent to manage and the expertise available with the sponsor/AMC etc.

(j) Whether the compliance manual has been prepared to ensure that all provisions of SEBI (Mutual Funds) Regulations and Guidelines are complied with. (All guidelines issued to mutual funds are available on SEBI web site).

(k) Submission of completed Form C and Form D, providing details of trustee company and AMC, as given in First Schedule of SEBI (Mutual Funds) Regulations.

(l) Bio-data of the directors of the trustee company and the AMC in the prescribed format (Please refer to SEBI circular dated December 20, 2001 available on web site).

(m) Bio data of key personnel in hard and soft copies (Please refer to SEBI circular dated May 7,1997)

(n) Any other information relevant for application for registration.

5. Grant of Certificate of Registration

Once all above requirements have been complied with and requisite fees as per Second Schedule of Regulations has been paid, SEBI will grant certification of registration as a mutual fund and will approve AMC. SEBI may also conduct infrastructure inspection of the applicant before grant of certificate of registration.

DEDUCTED AT SOURCE - LATEST AMENDMENTS IN INCOME TAX RULES, 1962

2010-04-06T20:59:00.000-07:00

Rule 30 of the Income Tax Rules, 1962 ('Rules' for short) deals provides for the time and mode of payment to Government account of tax deducted at source or tax paid under section 192 (1A) of Income Tax Act, 1961 ('Act' for short). Rule 31 provides for the certificate of tax deducted at source or tax paid under section 192 (1A). The Central Board of Direct Taxes in exercise of powers conferred by section 295 of the Act made the Income Tax (First Amendment) Rules, 2010 which shall come into from 01.04.2010. Rule 2A of amendment Rules substituted the existing Rule 30 and Rule 31.
The substituted Rule 30 provides that all sums deducted in accordance with the provisions of -
Sec.192 - Salary;
Sec.193 - Interest on securities;
Sec.194 - Dividends;
Sec.194A - Interest other than 'Interest on Securities';
Sec.194B - Winnings from lottery or crossword puzzle;
Sec.194BB - Winnings from horse race;
Sec.194C- Payments to contractors and sub contractors;
Sec.194D - Insurance Commission;
Sec.194E - Payments to non resident sportsmen;
Sec.94EE - Payments in respect of deposit under NSS etc.,
Sec.94F - Payments on account of repurchase of units by mutual fund or UTI;
Sec.194G - Commission, etc., on the sale of lottery tickets;
Sec.194H - Commission or brokerage;
Sec.194I - Rent;
Sec.194J - Fees for professional and technology;
Sec.194K - Income in respect of units;
Sec.194L - Payment of compensation on acquisition of capital assets;
Sec.194LA - Payment of compensation on acquisition of certain immovable properties;
Sec.195 - Other items;
Sec.196A - Income in respect of units of non residents;
Sec.196B - Income from units;
Sec.196C - Income from foreign currency bonds or shares of Indian company;
Sec.196D - Income of Foreign Institutional Investors from securities.
Shall be paid to the credit of Central Government -
* In the case of deduction by or on behalf of the Government, on the same day;
* In the case of deduction by or on behalf of persons other than Government-
* In respect of sums deducted in accordance with the provisions of Sections 193, 194A, 194C, 194D, 194E, 194G, 194H, 194J, 195, 196A, 196B, 196C and 196D-
* Where the income by way of interest on securities referred to in above sections is credited by a person to the account of the payee as on the date up to which the accounts of such person are made, within two months of the expiration of the month in which that date falls;
* In any other case within one week from the last day of the month in which the deduction is made
* The Assessing Officer may, in special cases, and with the approval of the Joint Commissioner may permit any person to pay the income tax deducted from any income by way of interest on securities or any income by way of insurance commission or any income by way of commission or brokerage referred to in Section 194H quarterly on July 15, October 15, January 15 and April 15;
* In respect of sums deducted in accordance with the other provisions within one week from the last day of the month in which the deduction is made. The Assessing Officer may, in special cases, and with the approval of the Joint Commissioner permit an employer to pay income tax deducted from any income chargeable under the head 'Salaries' quarterly on June 15, September 15, December 15 and March 15.
* All sums paid under Sec.192(1A) shall be paid to the credit of the Central Government-
* In the case of payment on behalf of the Government, on the same day;
* In all other cases, within one week from the last day of each month on which the income tax is due under Sec. 192 (1B);
* The person responsible for making the deduction from any income chargeable under the head 'salaries' or the person who pays tax, referred in Sec. 192 (1A) or, in cases covered by Sec. 192 (5), the trustees shall pay the amount of tax so deducted to the credit of the Central Government by remitting it within two months of the expiration of the month in which that date falls into any branch of RBI or the SBI or any authorized bank accompanied by an income tax challan. Where the deduction or payment is made by or on behalf of Government, the amounts shall be credited within the time and in the manner aforesaid without production of a challan.
* The person responsible for making deduction under Sec. 193, 194, 194A, 194B, 194BB, 194C, 194D, 194E, 194EE, 194F, 194G, 194H, 194-I, 194J, 194K, 195, 196A, 196B, 196C and 196D shall pay the amount of tax so deducted to the credit of the Central Government within two months of the expiration of the month in which that date falls into any branch of RBI or SBI or any authorized banks accompanied by an income tax challan. Where the deduction is made by or on behalf of the Government the amount shall be credited within the time and manner aforesaid without production of a challan.
The substituted Rule 31 deals with the certificate of tax deducted at source or tax paid under Sec. 192 (1A). The certificate of deduction of tax at source or, the certificate of payment of tax by the employer on behalf of the employee, under section 203 to be furnished by any person deduction tax in accordance with Sec. 192 in Form 16.
In the case of an individual resident in India, where the income from salaries before allowing deductions under Sec. 16 of the Income tax Act, 1961 does not exceed Rs.1,50,000, the certificate of deduction of tax at source shall be in Form No.16AA.
The Certificate of tax at source shall be in Form No. 16A in case of section 193, 194, 194A, 194B, 194BB, 194C, 194D, 194E, 194EE, 194F, 194G, 194-I, 194J, 194K, 194LA, 195, 196A, 196B, 196C and 196D.
The above certificates shall be furnished within a period of one month from the end of the month during which the credit has been given or the sums have been paid or, a cheque or warrant for payment of any dividend has been issued to a shareholder. Where the income under Sec. 193 or 194A or 194C or 194D or 194E or 194G or 194H or 194-I or 194J or 195 or 196A(2) or 196B or 196C or 196D is credited by a person to the account of the payee as on the date up to which the account of such person are made, the certificate shall be issued within a week after the expiry of two months from the month in which income is so credited.
The certificate in the case of deduction of tax under Sec. 192 (1) or payment of tax by the employer on behalf of the employee under Sec. 192(1A) or 194D may be furnished within one month from the close of the financial year in which such deduction was made. Where payment of income tax deducted is permitted quarterly in accordance with clause (a) of the proviso to clause (b) of sub rule (1) of rule 30 may be furnished within fourteen days from the date of payment of income tax.
Where more than one certificate is required to be furnished to a payee for deductions of income tax made during a financial year, the person deducting the tax, may on request from such payee, issue within one month from the close of such financial year a consolidated certificate in Form 16A for tax deducted during whole of such financial year.
If the certificate is lost, the person deducting tax at source may issue a duplicate certificate of deduction of tax at source on a plain paper giving necessary details as contained in Form 16 or Form No. 16A as the case may be. The Assessing Officer before giving credit for the tax deducted at source on the basis of duplicate certificate shall get the payment certified from the Assessing Officer designated in this behalf by the Chief Commissioner or the Commissioner and shall also obtain an indemnity bond from the assessee.
The newly substituted Rule 31A provides that every person responsible for deducting tax in accordance with Sec.200 (3) of the Act, deliver or cause to be delivered to the Director General of Income Tax (systems) or the person authorized by the Director General of Income Tax (systems), quarterly statement in Form No. 24Q in respect of deduction at source under Sec. 192(1) and 192 (1A) and in Form No. 26Q in respect of other cases of deduction of tax at source on or before 15th July, 15th October, 15th January in respect of the first three quarters of the financial year and on or before the 15th June following the last quarter of the financial year.
Where the deductor is an office of Government or a company or a person required to get his accounts audited under Sec. 44AB in the immediately preceding financial year or the number of deductees' records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty, the person responsible for deducting tax at source and the principal officer in the case of a company shall deliver or cause to be delivered such quarterly statements on computer media.
A person responsible for deducting the tax at source and preparing quarterly statement shall quote his tax deduction and collection account number (TAN) and permanent account number (PAN) in the quarterly statement. The PAN shall not be required to be quoted where the tax has been deducted by or on behalf of the Government. The PAN of all persons in respect of whose income tax has been deducted shall be quoted. But the PAN shall not be required in respect of the persons to whom the second proviso to Sec. 139A (5B) of the Act applies. The particulars of the tax paid to the Government are to be furnished.
The person responsible for deducting tax at source and preparing quarterly statements on computer media shall prepare the quarterly statement as per the data structure provided by the e-filing Administrator designated by the Board for the purposes of administration of Electronic filing of Returns of Tax deducted at Source Scheme, 2003 supported by a declaration in Form No. 27A in paper format. In case any compression software has been used for preparing the statement such compression software shall be furnished on the same computer media. A label indicating name, PAN, tax deduction and collection account number and address of the person responsible for deduction of tax at source, the period to which the statement pertains and the volume number of the said computer media in case more than one volume of such media is used.
Dated: - April 5, 2010

2010-04-04T06:01:00.000-07:00

TDS RATE 2010-11

2010-04-03T10:00:00.000-07:00

D VAT AMENDMENT IN BUDGET 2010

2010-04-02T06:41:00.000-07:00

(TO BE PUBLISHED IN PART IV OF THE DELHI GAZETTE EXTRAORDINARY))
GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI
FINANCE (T&E) DEPARTMENT
DELHI SACHIVALAYA, I.P.ESTATE: NEW DELHI-02

No.F.3(30)/Fin.(T&E)/2009-10/jsfin/285 Dated : 01.04.2010
NOTIFICATION

Whereas the Lt. Governor of the National Capital Territory of Delhi is of the opinion that it
is expedient in the interest of general public so to do.
Now, therefore, in exercise of the powers conferred by section 103 of the Delhi Value
Added Tax Act, 2004 (Delhi Act 3 of 2005), the Lt. Governor of the National Capital Territory of
Delhi, hereby, makes the following amendments in the Schedules appended to the said Act,
namely:-
AMENDMENTS
1. In the First Schedule appended to the Delhi Value Added Tax Act, 2004 (Delhi Act 3
of 2005), hereinafter referred to as the "principal Act",-
(a) the commodity mentioned at Sl. No.73 and 74 shall be omitted;
(b) after commodity at Sl. No.75, the following commodities shall be added, namely :-
“76 Oral Iron Chelator Defarasirox.
77 Liquefied Petroleum Gas (LPG) for domestic use.".
2. In the Third Schedule appended to the principal Act, -
(a) the commodities mentioned at Sl. Nos. 20, 118, 165, 166, 168, 169, 171, 179, 181, 182,
184, 185 and 186 shall be omitted;
(b) for the commodity at Sl. No. 6, the following commodity shall be substituted, namely:-
“ 6 All utensils (including pressure cookers/pans) except utensils made of precious
metals”;
(c) for the commodity at Sl.No.24, the following commodity shall be substituted, namely:-
"24 Declared goods as specified in section 14 of the Central Sales Tax Act,
1956 but not including cereals, pulses, sugar, textiles, tobacco and Liquefied Petroleum
Gas (LPG) for domestic use ." ;
(d) for the commodity at Sl. No. 41, the following commodity shall be substituted,
namely:-
“41 Computers, telephone and parts thereof, teleprinter and wireless
equipment and parts thereof, Mobile phone and all mobile
accessories costing upto rupees ten thousand";
(e) in the commodity at Sl. No. 41A, in the table, in column 2, for entry against Sl.No.7,
the following entry shall be substituted, namely:-
"Uninterrupted Power Supplies (UPS) and their parts";
(f) for the commodity at Sl. No. 57, the following commodity shall be substituted, namely:-
“57 Readymade garments costing upto rupees five thousand but not including those
made up of khadi";
(g) for the commodity at Sl. No. 76, the following commodity shall be substituted,
namely:-
“76 Writing instruments costing upto rupees one thousand per piece, geometry boxes,
colour boxes, crayons and pencil sharpeners”;
(h) for the commodity at Sl. No. 81, the following commodity shall be substituted,
namely:-
“81 Kirana items namely ararote, singhara, kuttu & their atta, kala namak, sendha
namak, heeng, aam papar, mushrum, khumba and guchchi, goley ka burada, til,
rai, postdana, mungafali dana, sabudana, roli, mehendi patti, pisi mehendi”;
(i) for the commodity at Sl. No. 180, the following commodity shall be substituted,
namely:-
“180 Liquefied Petroleum Gas (LPG) other than for domestic use and Piped Natural
Gas (PNG)”
(j) after the commodity at Sl.No.187, the following commodities shall be added, namely :-
“188 Bio- inputs like bio- fertilizers, micro-nutrients and Plant Growth
Promoters.
189 Kerosene- stoves, Lanterns and Petromax and their spares.”.
3. In the Fourth Schedule appended to the principal Act, -
(a) in the commodity at Sl.No.1, for entry (v), the following entry shall be substituted,
namely:-
" (v) Diesel;";
(b) after the commodity at Sl.No.10, the following commodities shall be added, namely :-
"11 Aerated Drinks.
12 Watches costing above rupees five thousand”.
This notification shall come into force with immediate effect.
By order and in the name of the
Lt. Governor of the National
Capital Territory of Delhi,
Sd/-
(AJAY KUMAR GARG)
JOINT SECRETARY (FIN./PLG.)
No.F.3(30)/Fin.(T&E)/2009-10/jsfin/285 Dated : 01.04.2010

S. 10 (23C) (vi) benefit available even to profit-mongers: P&H High Court

2010-03-30T08:54:00.000-07:00

Pinegrove International Charitable Trust vs. UOI (P & H High Court)

S. 10(23C)(v) benefit cannot be denied merely because there are profits. In computing the profits, capital expenditure has to be deducted

S. 10(23C)(vi) provides that the income of any university or other educational institution existing solely for educational purposes and not for purposes of profit shall be exempt. The assessee was running a school solely for educational purposes and claimed exemption u/s 10 (23C) (vi). The exemption was denied /withdrawn on the ground that as the assessee had earned substantial profitshad not made efforts to lower its fees, the profits were not incidental and the assessee existed for profits. On a writ petition filed by the assessee, HELD allowing the challenge: year after year and

(i) To decide whether an institution exists solely for education and not to earn profit the predominant object of the activity has to be seen. The mere fact that an educational institution generates surplus after meeting the expenditure over a period of time does not mean that it ceases to exist ‘solely’ for educational. The test to be applied is whether the predominant object of the activity is to sub-serve the educational purpose or to earn profit. It should be seen whether profit-making is the predominant object of the activity or whether profit is incidental to the carrying of the activity. There is no requirement that the activity must be carried on in such a manner that it does not result in any profit. It would indeed be difficult for persons in charge of a trust or institution to so carry on the activity that the expenditure balances the income and there is no resulting profit. That would not only be difficult of practical realization but would also reflect unsound principle of management. (Surat Art Silk Cloth Manufacturers Association 121 ITR 1 (SC) and Aditanar Educational Institution 224 ITR 310 (SC) applied);

(ii) In computing the total income, capital expenditure incurred for the attainment of the objects of the society has to be deducted under the third proviso to s. 10(23C). There is no bar to doing so unlike the provisions of ss. 37 and 36 (1)(xii). This is also supported by clause 11 of Form 56D which has to be filed as per Rule 2CA and the case law on s. 11 which provide that capital expenditure constitutes “application of income”;

(iii) In Children’s Book Trust AIR 1992 SC 1456, the Supreme Court had observed in the context of the Delhi Municipal Corporation Act, 1957 that where a society was making systematic profits it could not claim exemption even if the profit was utilized only for charitable purposes. The observations were made in the context of an Act which is not pari materia to s. 10 (23C). Also the judgement cannot be applied because the scheme of s. 10(23C)(vi) permits the retention of 15% of the profits and the application of 85% thereof. Queens Educational Society 319 ITR 160 (Utt) dissented from;

(iv) The action of the CIT in withdrawing exemption u/s 10 (23C) (vi) will discourage and frustrate the object of the Govt to promote education by allowing private parties to set up educational institutions. If the stand of the Revenue is accepted no educational institution can be said to be existing solely for educational purposes as in every case there is bound to be a profit. S. 10(23C)(vi) would then be rendered otiose;

(v) The contention of the Revenue that exemption u/s 10 (23C) (vi) could only be given to a university or educational institution and not to a society registered under the 1860 Act is not acceptable because such a society constitutes ‘other educational institutions’. Aditanar Educational Institution 224 ITR 310 followed.

(vi) On facts, as the society’s application of income (after considering the capital expenditure) was more than 100%, it could by no stretch of imagination be held to be an educational institution existing for the purposes of making profit so as to be not entitled to exemption in view of the provisions of s. 10(23C) (vi).