/ INCOME TAX

NO PENALTY ON SEIZURE OF GOLD IF ASSESSEE ADMITTED THAT IT WAS DERIVED OUT OF UNDISCLOSED INCOME AND PAID TAXES THEREON

NO PENALTY ON SEIZURE OF GOLD IF ASSESSEE ADMITTED THAT IT WAS DERIVED OUT OF UNDISCLOSED INCOME AND PAID TAXES THEREON

Section 271(1)(c), read with sections 69A and 271, of the Income-tax Act, 1961 – Penalty for concealment of income:-

Where assessee made statement regarding seized unaccounted gold and explained manner in which same was derived and treating its value as income paid tax, penalty was not to be levied under section 271(1)(c)(Andhra Pradesh and Telangana)-High Court Of Andhra Pradesh And Telangana -L. Giridharlal & Co. v. Income-tax Officer Search was conducted in assessee’s premises and gold was seized  Assessing Officer did not accept explanation of assessee regarding unaccounted gold and initiated penalty proceedings.However, it was found that assessee had made statements under section 132(4) regarding said gold and explained manner in which same was derived.Further, value of seized gold was treated as income of assessee and assessee paid tax thereon.It was held that assessee’s case fitted into clause (2) of Explanation 5 of section 271(1) which brought immunity to assessee and, hence, penalty was not to be levied.

CASE REVIEW:-

Asstt.CIT V.Gebilal Kanhaialal, HUF [2012] 348 ITR 561/210 Taxman 244/25 taxmann.com 214 (SC) (para 10) followed.

No reassessment on basis of info received from DIT, Investigation without recording his own satisfaction by AO:-

Section 69, read with sections 11, 12, 147 and 148, of the Income-tax Act, 1961 – Unexplained investments, Unsecured loan.

Where in reassessment, Assessing Officer made additions on account of unsecured loans merely on basis of information from DIT Investigation without recording his own satisfaction for issuing reassessment, reassessment was not valid.

[2015] (Delhi – Trib.) -ITAT DELHI – Monarch Educational Society v.Income-tax Officer (Exemption):-

Notice of reassessment was issued to assessee-trust on ground that assessee made accommodation entries and arranged funds through prohibited means.

Assessing Officer issued notice under section 148 on basis of same material which was before him during original assessment.

Assessing Officer simply reproduced details received from Director of Income-tax, Investigation and recorded his satisfaction without any verification and examination of information received and only mentioned that he had reason to believe that income chargeable to tax had escaped assessment.

He made additions on account of unsecured loans which had not been mentioned in reasons recorded for issuance of notice – Whether reassessment was not valid.

CASES REFERRED TO:-

Rajat Export Import India (P.) Ltd. v. ITO [2012] 341 ITR 135/206 Taxman 50/18 taxmann.com 311 (Delhi) (para 12), Signature Hotels (P.) Ltd. v. ITO [2011] 338 ITR 51/[2012] 20 taxmann.com 797 (Delhi) (para 13), Jai Bharat MarutiLal v. Asstt. CIT [2013] 351 ITR 342/215 Taxman 113 (Mag.)/33 taxmann.com 361 (Delhi) (para 13) and RashiBuildcon (P.)Ltd. [IT Appeal No. 407 (Agra) of 2012] (para 13). (more…)

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/ INCOME TAX

No more sending ITR-V by post after income tax filing – Verification with Aadhar card introduced:-

No more sending ITR-V by post after income tax filing – Verification with Aadhar card introduced

CBDT vide its circular no 41/2015 dated 15.04.2015 recently announced that taxpayers who filed their income tax returns online will no longer have to send the paper acknowledgement by post to CPC Bangalore, if they have aadhar card which can be used for verification purpose.

Instead of manual verification, a new Electronic Verification Code has been introduced to verify the e-returns. For that one will have to mention their aadhar card number in ITR form, and tax-payer will get an OTP number on their mobile for verification, which needs to be completed on the website of tax filing. Below is a snapshot of the new ITR form where aadhar card number is asked in case you have it.

Issues with the legacy system:-

Earlier the process was like this. Once you e-filed your tax returns, you then had to send the acknowledgement copy within 120 days to CPC Bangalore. Only those who had signatures could do verification online, but it was very rare, hence millions of tax-payers had to take the pain of manually sending the form. However, the old system was not robust and a big number of people used to get messages that their acknowledgement has not reached tax department and other manual errors used to happen. (more…)

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/ Indirect Tax

TACKLED OF NEW SERVICE TAX CHANGES APPLICABLE FROM 1st JUNE 2015

TACKLED OF NEW SERVICE TAX CHANGES APPLICABLE FROM 1st JUNE 2015

As the service tax rate 14% will be applicable from 1st June 2015 vide Notification No. 14/2015.

How change in Service Tax rate should be tackled?

Please keep in mind the following yourself and prepare accordingly

  • Service Provision is complete till 05.2015 and Invoice raised till 31.05.2015 but Payment received on or after 01.06.2015-12.36% applicable
  • Service complete till 05.2015, Invoice raised on or after 01.06.2015 but Payment is received till 31.05.2015 -12.36%
  • Service Provision complete till 05.2015 and Invoice raised on or after 01.06.2015 and Payment also received after 01.06.2015-14%
  • Invoice raised till 05.2015 in advance and some part of total consideration has been paid till 31.05.2015 but Service Provision is being done on or after 01.06.2015 -12.36% for such part payment, 14% for balance to be recd
  • Entire consideration received till 05.2015 but no invoice raised till 31.05.2015 and no service provided -14%
  • Even if entire service has been provided on or after 06.2015 but both payment as well as invoicing has been done till 31.05.2015 then -12.36

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/ Indirect Tax

HIRING OF MOTOR VEHICLES – SERVICE TAX

HIRING OF MOTOR VEHICLES – SERVICE TAX Renting of any motor vehicle – 40% taxable Abatement of 60%. This is subject to the condition that input, input services  and capital goods , used for providing the taxable services has not been taken under the provision of CENVAT Credit Rules. In the case Services of Transport of passenger …

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/ Indirect Tax

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 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 …

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/ INCOME TAX

LOAN TAKEN IN CASH MORE THAN RS. 20,000 TAKEN BY BUILDER TO MEET IMMEDIATE REQUIREMENT OF BUSINESS WON’T ATTRACT PENALTY

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 …

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/ Company Law Compliances

LIST OF RESOLUTION FOR WHICH MGT-14 REQUIRES TO BE FILED

LIST OF RESOLUTION FOR WHICH MGT-14 REQUIRES TO BE FILED

The Resolutions for which MGT-14 has to be filed can be categorized in the following three categories:-

  • Board Resolutions
  • Special Resolutions
  • Ordinary Resolutions

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.

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/ Company Law Compliances

RECOGNIZES E-PRESENCE IN IMPLEMENTING SUCH ELECTRONIC MEETINGS BY MCA

RECOGNIZES E-PRESENCE IN IMPLEMENTING SUCH ELECTRONIC MEETINGS BY MCA

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.

  1. The notice of the meeting must inform the directors/shareholders regarding availability of participation through video conference and provide necessary information of the designated officer/secretary to whom the director/shareholder shall confirm in this regard and also get access to avail this facility.
  2. Every director must attend personally at least one meeting in a financial year of the company. Directors attending through videoconferencing will also be counted for the purpose of quorum. This will provide an enormous relief for the non-Indian directors who find it cumbersome to travel to India given the frequency of the meetings that are to be held.
  3. The chairman/secretary of the meeting shall
  • Ensure proper equipment for video conference is in place.
  • Prepare the minutes of the meeting.
  • Ensure that only the concerned director or authorized representative, as the case may be (i.e. in case the meeting is of shareholders), attends the meeting through electronic mode.
  • Take the necessary roll call at the start and at the end of the meeting which will be necessary for any motion to be passed.
  • At the close of the meeting, the chairman shall announce the summary of the decisions taken during the meeting with respect to the agenda items and names of the directors who were in favor or who opposed it. The video recording of this specific part of the meeting has to be preserved for a year.
  1. The place where the chairman/secretary will sit during the board meeting shall be taken as the place of the meeting. In case of Annual General Meeting, the chairman/secretary as well as the necessary quorum prescribed under section 174 of the Act, has to be physically present at the venue of the meeting, and which has to be held either at the registered office or at a place in the city, town, village where the registered office is situated.
  2. Draft minutes of the meeting will have to be circulated in soft copy within 7 days of the meeting for comments/confirmation to the directors who attended the meeting. The minutes shall also disclose the particulars of the directors who attended the meeting through electronic mode. Thereafter, the minutes shall be entered in the minute books, as prescribed under section 193 of the Act.6. Further, the listed companies will be required to provide videoconferencing connectivity in at least top 5 places in India based on the maximum number of members or at least 100 members (whichever is more) residing as per the address registered with the depositories.

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