THE SUPREME COURT ORDER: MIXTURE OF TWO OR MORE PRODUCTS THAT DOES NOT CHANGE ESSENTIAL NATURE OF PRODUCT WILL NOT AMOUNT TO MANUFACTURE:- The Supreme Court in the case of M/s Satnam Overseas Ltd. Versus Commissioner of Central Excise, New Delhi, 2015 (318) E.L.T. 538 (S.C.) has held that a process of packing combination of mixture of …
LOAN TAKEN IN CASH MORE THAN RS. 20,000 TAKEN BY BUILDER TO MEET IMMEDIATE REQUIREMENT OF BUSINESS WON’T ATTRACT PENALTY Section 269SS, read with sections 273B and 271D, of the Income-tax Act, 1961 – Deposits – Mode of taking/accepting Circulars and Notifications: Circular Nos. 387 dated 6-7-1984 and 572, dated 3-8-1990:- Penalty under section 271D could not be …
The Resolutions for which MGT-14 has to be filed can be categorized in the following three categories:-
List of board resolutions required to be filed with ROC in form MGT-14
| S. No. | List of board resolutions required to be filed with ROC in form MGT-14 |
| A. | To issue securities, including debentures, whether in or outside India. (In case of shares issue of security means issue of Letter of Offer). |
| B. | To Borrow Monies.(Borrow Money from any sources including Director) |
| C. | To invest the funds of the Company.(Also follow provisions of Section 186) |
| D. | To grant loans or give guarantee or provide security in respect of loans. (Also follow provisions of Section 186) |
| E. | To approve financial statement and the Board’s report. |
| F. | To appoint internal auditors. |
| G. | To appoint Secretarial Auditor. |
| H. | To appoint or remove key managerial personnel (KMP) {KMP includes (MD, WTD, CEO, CFO & CS)} |
| I. | To make Political Contributions. |
| J. | To make calls on shareholders in respect of money unpaid on their shares. |
| K. | To authorize buy-back of securities under section 68. |
| L. | To Diversify the business of the company. |
| M. | To approve Amalgamation, Merger or Reconstruction. |
| N. | Take over a company or Acquire a controlling or substantial stake in another company. |
List of special resolution required to be file with ROC in form MGT-14
| S. No. | List of special resolution required to be file with ROC in form MGT-14 |
| Section – 8 | For a company registered under Section- 8 to convert itself into a company of any other kind or alteration of its Memorandum or Articles. |
| Section – 12 | Change of location of registered office in the same State outside the local limits of the city, town or village where it is situated. |
| Section – 13 | Change of registered office from the jurisdiction of one Registrar to that of another Registrar in the same State. |
| Section – 14 | Amendment of Articles of a private company for entrenchment of any provisions. (To be agreed to by all members in a private company). |
| Section – 14 | Amendment of Articles of a public company for entrenchment of any Provisions. |
| Section – 13 | Change in name of the company to be approved by special resolution. |
| Section – 13(8) | A company, which has raised money from public through Prospectus and still has any unutilized amount out of the money so raised, shall not Change its objects for which it raised the money through prospectus unless a special resolution is passed by the company. |
| Section – 27(1) | A company shall not, at any time, vary the terms of a contract referred to in the prospectus or objects for which the prospectus was issued, except subject to the approval of, or except subject to an authority given by the company in general meeting by way of special resolution. |
| Section – 271 (A) | A company may, after passing a special resolution in its general meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions, as may be prescribed. (Section still not applicable). |
| Section– 48(1) | Where a share capital of the company is divided into different classes of shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or by means of a special resolution passed at a separate meeting of the holders of the issued shares of that class. |
| Section – 62 (1) (c) | Private offer of securities requires approval of company by special resolution. |
| Section – 54 | Issue of Sweat Equity Shares. |
| Section – 66 (1) | Reduction of Share Capital. |
| Section – 67(3)(b) | Special resolution for approving scheme for the purchase of fully-paid shares for the benefit of employees. |
| Section – 68 (2)(b) | Buy Back of Shares. |
| Section – 71 (1) | A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption:-Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting. |
| Section – 94 | Keep registers at any other place in India. |
| Section – 149(10) | Re-appointment of Independent Director. |
| Section – 165(2) | Subject to the provisions of sub-section (1), the members of a company may, by special resolution, specify any lesser number of companies in which a director of the company may act as directors. |
| Section – 180(a) | To sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company or where the company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings. |
| Section – 180(b) | To invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation. |
| Section – 180(c) | To borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its paid-up share capital and free reserves, apart from temporary loans obtained from the company’s bankers in the Ordinary Course of Business. |
| Section – 180(d) | To remit, or give time for the repayment of, any debt due from a director. |
| Section – 185 | For approving scheme for giving of loan to MD or WTD. |
| Section – 186 | Loan & Investment by company exceeding 60% of paid up share capital or 100% of free reserve. |
| Section – 196 | Appointment of a person as Managerial Personnel if, the age of Person is exceeding 70 year. |
| Schedule V | Remuneration to Managerial personnel if, profits of company are Inadequate. |
| Section – 271 (1) (b) | Special Resolution for winding up of the company by Tribunal. |
| Section – 271 (1) (b) | Special Resolution for winding up of company. |
| Rule 7(1) Chapter- I | Conversion of private company into One Person Company. |
NEW ITR FORMS FOR FY 2022-23 – TYPES & APPLICABILITY BRIEF INTRODUCTION Where offline ITRs were filed, greater importance be given on the type of ITR form applicable based on the source and quantum of the income of the taxpayer. However, with the advancement of technology, all these manual works is now done with the …
MCA issued two circular (Circulars) setting out the rules for the participation of the directors and shareholders in the meetings of the company electronically. MCA assessed the legal implications of allowing this practice in view of the provisions of the Information Technology Act, 2000 (“IT Act”) that deals with the legal recognition of the electronic records, dispatch and receipt of electronic information. The procedures provided in the notifications will have to be followed in addition to the existing practice of conducting the meetings with the physical presence of the directors/members as required under the Companies Act, 2013 (“Act”) Generally, board and shareholders’ meetings can be held provided the prescribed quorum is present which requires physical presence at the venue of the meeting, either directly or through alternates/proxies/authorized representatives. However, in the notifications, “electronic mode” alludes to a video conference facility which will facilitate concurrent communication by all participants. Presence by video conference will be akin to physical presence and will be counted towards the quorum. There following list of measures must be followed for implementing such electronic meetings.
MAURITIUS VS INDIA TRADE ROUTE MARRED? Introduction In a complete disregard to the decision of the Supreme Court of India (“SC”) in Union of India vs. azadi Bachao Andolan, (2003) 263 ITR 706, 263 ITR 706 (SC), which had permitted the Mauritian companies having tax residency certificates to benefit from the India-Mauritius tax treaty, Circular No. 789, …
According to a press report, joining a gamut of nations, the Indian government is considering a sweeping review of its FDI guidelines “following increasing risk of terror funds being parked in the country and other investments being fraught with security implications.” Justifying its stance in the name of a fear of terrorism is a new twist. Many countries, including the United States, have protectionist legislation favoring their nationals. As a consequence, the result is often decreased trade flows and an eventual increase in tariff barriers in total contrast to the spirit of the World Trade Organization.
The media reports that the eleven-year old National Security Council (“NSC”) has, in a secret report, suggested enactment of the National Security Exception Act. The purpose of the Act is to authorize the government to “suspend or prohibit any foreign acquisition, merger or takeover of Indian companies that could be considered damaging to national interest.” Subjecting foreign investment to scrutiny in sensitive industries is not uncommon. The Indian regulators already monitor and screen applications for investment from certain countries very closely, and, in some situations, necessitating an additional approval/endorsement from the Ministry of Finance.
While giving its ruling in an application filed by Fujitsu Services Limited, the Authority of Advanced Rulings (“AAR”) held that foreign companies transferring shares of a listed company can claim benefit of a lower rate of tax on capital gains arising from the transaction.
Facts of the case:-
Fujitsu Services Limited (“Fujitsu”), a company incorporated in United Kingdom had acquired shares of an Indian company Zensar Technologies Limited (“Zensar”) constituting 26.55% of the share capital of Zensar and such shares were held for over 12 months. These shares were listed on the National Stock Exchange and the Bombay Stock Exchange. On July 04, 2007, Fujitsu sold its entire shareholding to Jubilee Investments and Industries Limited (“Jubilee”), an Indian company and Pedriano Investments Limited (“Pedriano”), a Cyprus company. Jubilee and Pedriano deducted tax from the sale consideration @ 20% but Fujitsu contended that tax ought to be deducted at 10%, the rate applicable to long term capital gain (“LTCG”).
Issues before the AAR:-
Ruling of the AAR:
The AAR held that explanation to section 112(1) is applicable to the shares held by Fujitsu but what it actually had to rule over was whether Fujitsu could take the benefit of a lesser rate of tax as per the proviso to section 112(1) of the Act. The proviso states that where tax payable in relation to any income arising from the transfer of a long term capital asset such as a listed security exceeds 10% of the amount of capital gains before giving effect to the second proviso to section 48, then such excess tax will be ignored while computing the tax payable by the assessee. The second proviso to section 48 is not applicable to any LTCG if the capital gain arises to a foreign company from transfer of shares of an Indian company. The AAR held that the words “before giving effect to the second proviso to section 48” merely imply that any calculation done under proviso to section 48 of the Act will not be considered while computing capital gains.
The AAR stated that while computing captain gains of a listed security held for more than 12 months, the indexation formula spelt out in the second proviso to section 48 of the Act cannot influence the computation process. According to the AAR, second proviso to section 48 of the Act is only a method of computing capital gains and it does not imply that the non-resident or foreign companies, who cannot avail the indexation benefit, are not eligible to the reduced rates under proviso to section 112(1). Accordingly, the AAR finally ruled that Fujitsu can claim tax deduction at a lesser rate of 10% on the sale of shares of Zensar to Jubilee and Pedriano. (more…)
INDIA OPENED ECONOMY THROUGH FDI IN MULTI-BRAND RETAIL The much awaited news arrived on a Friday, hopefully, ending a protracted controversy. The Indian Government opened its economy to FDI in multi-brand retail on September 14, 2012, subject to specific conditions. At the end of 2011, the Cabinet had approved a proposal to introduce FDI in …
Section 271(1) (c), read with section 145, of the Income-tax Act, 1961 – Penalty – For concealment of income -Estimation of income.
Where no return had been filed by assessee and income was assessed on estimate basis by revenue, no penalty could be levied for concealment of income [2015] – HIGH COURT OF GUJARAT- Income-tax Officer v. Bombaywala Readymade Stores.
FACTS
During search excess stock was found on physical verification as against book stock worked out as on date of search.
Assessee did not file return of income for relevant year in which search had been conducted.
Assessing Officer completed assessment for relevant assessment year on basis of materials available with him.
Penalty proceedings were initiated for concealing particulars of income.
The assessee file appeal before CIT appeal where the decision came in favour of assessee cancelling the penalty.
Then the department filed an appeal before ITAT.
Hon’ble Tribunal also upheld the order of the Ld. CIT (A) cancelling the penalty levied u/s.271(1)(c) of the I.T. Act holding that since no return of income had been filed by the assessee, the assessee could not be penalized for concealment of income or furnishing of inaccurate particulars of income in terms of section 271(1)(c) of the I.T. Act and further holding that since the income is assessed on estimate basis penalty for concealment of income is not leviable, ignoring the fact that the inaction of not filing return of income itself can be considered as act of concealment of particulars of income, thus, provisions of section 27(1)(c) is attracted on the facts of the case.
On appeal to High Court, Hon’ble High Court held in favour of assesee as follows:
Question of Law before High Court
Since no Income Tax Return had been filed by assessee and income was assessed on estimate basis by revenue, Whether penalty under section 271(1)(c) could be levied for concealment of income.
ARGUMENTS BY DEPARTMENT
Department counsel submitted that the decision of the Hon’ble ITAT is against the objectives of penal provisions included in the Income Tax Act. The decision not only allows the assessee to go scot free even when discrepancies have been found in the business a result of a search and which have been upheld in quantum appeal. It also encourages the assessee for not complying with the duty of filing return of income u/s. 139 of the I.T. Act. The decision of the Hon’ble ITAT in fact rewards the assessee for not filing the return.
It is further submitted it is the primary responsibility of the assessee to file the return of income. The correct income for a particular year is best known to the assessee only. In spite of several opportunities given to it, the assessee failed to file the return of income. The AO had therefore no option but to compute the income to the best of his judgment and information available to him. It is important to note that there is no contention on the part of the assessee that it has not earned income. The only contention is that income is estimated and hence penalty is not leviable. The computation of income has reached finality, according to which the assessee has substantial income chargeable under the Act. The estimate of income was resorted to by the AO only as a last resort after the assessee failed to disclose the income by filing return of the income. Thus, the inaction on the part of the assessee itself is the act of concealment of particulars of income. The word “concealment” presupposes some act on the part of the assessee. In the present case, the inaction of not filing return of income itself can be considered as act of concealment of particulars of income. Thus, provision of section 271(1)(c) is attracted on the facts of the case. It is also pertinent to mention here that an assessee not filing the return of income and not showing the income therein cannot be better off or in advantageous position than the person filing the return of income and not showing the correct income in the return. Both the persons are equally responsible for concealment of particulars of income. Thus, even though Explanation 3 to section 271(1)(c) is not attracted, the provision of section itself, irrespective of any explanation, is attracted. (more…)