TIOL-DDT 2367 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif"><s><strong><font size="2"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=20079"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2014_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="250" height="123" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font></strong></s></font><font color="#663399" size="3">TIOL-DDT 2367</font><br> 04.06.2014 <br> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Wednesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Get those Name Boards repainted - Compliance with Companies Act 2013 </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>JUSTICE</strong> MC Chagla once remarked that every moment of our life is spent in either complying with or contravening some law. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It appears that almost all the Companies in India are contravening certain provisions of the Companies Act 2013. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Section 12(3)(a) of the Act, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Every Company shall <em>paint or affix its name, and the address of its registered office, and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters, and if the characters employed therefor are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages;</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, if your name and address are painted in English, you must add a local language also. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per Section 12(3)(c) of the Act, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Every Company shall <em>get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications;</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the Company has changed its name in the last two years, the former name should also be included in the name boards and letters mentioned above. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What happens if you don't</strong>? In case of any default in complying with these requirements, the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding one lakh rupees. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What happens after the maximum penalty of one lakh rupees is paid? Is no further penalty payable for life? Well, the law is not very clear on that. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Law is already two months old and if you have not changed your name boards and letterheads, please do so before the sleuths of the Corporate Affairs Ministry swoop on you. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Liberalised Remittance Scheme (LRS) for resident individuals-Increase in the limit from USD 75,000 to USD 125,000 </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI</strong> has decided to enhance the existing limit of USD 75,000 per financial year (April-March) to USD 125,000 with immediate effect. Accordingly, banks will now allow remittances up to USD 125,000 per financial year, under the Scheme, for any permitted current or capital account transaction or a combination of both. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Scheme should not be used for making remittances for any prohibited or illegal activities such as margin trading, lottery, etc. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=280&filename=notification/rbi/2013/rbi13cir138.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI/2013-14/624 A.P. (DIR Series) Circular No.138, Dated: June 03, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export Credit Refinance Facilities </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI</strong> has decided to reduce the eligible limit of export credit refinance (ECR) facility from the level of 50 per cent of the outstanding rupee export credit eligible for refinance as at the end of the second preceding fortnight to 32 per cent with immediate effect. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=347&filename=notification/rbi/2014/rbi014noti016.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI/2013-14/621 MPD.BC.372/07.01.279/2013-14, Dated: June 03, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Maintenance of Statutory Liquidity Ratio (SLR) </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI</strong> has decided to reduce the Statutory Liquidity Ratio (SLR) of Scheduled Commercial Banks and Local Area Banks from 23.0 per cent of the Net Demand and Time Liabilities (NDTL) to 22.5 per cent with effect from the fortnight beginning June 14, 2014. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is likely to expand banks' resource base by about Rs. 40,000 crores. This amount, now invested in government securities, could get released for lending purposes and corporates can expect more bank loans. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=347&filename=notification/rbi/2014/rbi014noti017.htm"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RBI/2013-14/622 BC.117/12.02.001/2013-14, Dated: June 03, 2014 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Disallowance of State Levies as Eligible Deductions from Income Under The Income Tax Act - Jaya objects </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> a memorandum submitted to the Prime Minister yesterday, Tamil Nadu Chief Minister Jayalalithaa stated: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The Finance Bill 2013, contains an extremely retrograde, anti-federal provision. Clause 7 of the Bill amended Section 40 of the Income Tax Act which has made any levy by a State Government by way of privilege fee, license fee, royalty etc., on State Public Sector Undertakings not deductible for the purpose of computation of income. All such levies are legitimate statutory levies and as such were deductible from the income of the State Public Sector Undertakings under Section 37 of the Income Tax Act. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Clause 7 of the Finance Bill 2013 is objectionable because: </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>++ It amounts to an indirect taxation of the income of State Governments and hence is violative of the spirit of Article 289 of the Constitution of India which exempts the property and income of a State from Union taxation. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>++ It is discriminatory as it applies only to State PSUs but not to Central Public Sector Undertakings. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>++ As presently worded it gives very wide discretion to Income Tax Authorities to interpret it in an arbitrary manner. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Clearly this provision is ill-conceived and misguided and has no place in a federal polity like ours. I request the Hon'ble Prime Minister to revisit the issue and nullify the impact of Clause 7 of the Finance Act 2013, when the Main Union Budget for 2014-15 is presented. </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the issue is serious, Amma's draftsmen have been callous like all babus. The Finance Bill 2013 does not exist any more - it is the Finance Act 2013 and the clause is not 7. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Give us CST Compensation - Jaya </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MADAM</strong> Chief Minister also wanted the Prime minister to clear the CST dues. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>As part of the road map for the implementation of GST, the Central Sales Tax (CST) rate was reduced from 4% to 3% with effect from 1.4.2007 and further brought down to 2% with effect from 1.6.2008. The Government of India agreed to implement various non revenue measures and direct release of funds to compensate the States for the revenue losses. The Government of Tamil Nadu has been submitting its compensation claims regularly but has not received the promised compensation in full. As against the State Government's claim of Rs.9676.46 crores for the period from 01.04.2007 to 31.03.2012, a sum of Rs.2636.50 crores alone has been released by GOI. A sum of Rs.7039.96 crores has to be reimbursed from GOI for pending compensation for the period up to 31.03.2012. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is one of the reasons why the States are not supporting the GST. </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/garment_shop.jpg" alt="" width="404" height="412" hspace="5" border="0" align="center"></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> - Thursday's cases</font></strong></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></font><font color="#663399">Customs/Central Excise</font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Condonation of delay of 1236 days - Delay due to pursuing litigation before wrong forum is condoned - Tribunal by Majority </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Appellant as a 'merchant exporter' claimed and obtained duty drawback amounting to Rs.67,42,724/- during the period June 2007 to September 2007. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The drawback sanctioned was objected to by the department and accordingly a SCN dated 20.08.2008 came to be issued. Subsequently, the Adjudicating Authority passed an o-in-o on 06.4.2009 confirmed the allegations leveled in the SCN. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Consequently, the appellant filed a Revision Application on 15.7.2009 before the joint Secretary who provisionally accepted the Applications. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether AO has powers u/s 37(1) to go into that aspect of relationships between assessee and auto dealers where commission paid is to be reduced every year merely because it was done in during initial years - NO: HC</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is engaged in the business of corporate insurance agency. It conducts business through extensive Maruti dealers' networks consisting of over 300 sales outlets and 400 dealer workshops spread throughout the country. It was a 100% owned subsidiary of Maruti Suzuki India Ltd, and had a business arrangement with National Insurance Co. Ltd as its licensed corporate insurance agent. It had filed a return for AY 2006-07 declaring an income of Rs.2,66,26,206/-. During assessment, AO issued notice u/s 143 (2) and the assessee filed its reply. The AO held that the assessee had debited Rs. 8,99,89,136/- as commission paid to Maruti dealers, on a total sum of Rs. 6,29,92,395/-. This amounted to 70% of the total receipts of insurance commission. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issues before the Bench are - Whether the assessing officer has powers u/s 37(1) to go into that aspect of relationships between the assessee and auto dealers where the commission paid is to be reduced every year merely because it was done in the initial years and Whether the fact that the commission payable was 90% in the first year and reduced to some extent in the latter years, is a consideration for the AO to conclude that, it necessarily has to be reduced further in the succeeding year. And the verdict goes in favour of the assessee. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Value of goods and materials supplied free of cost by service recipient to provider of taxable construction service would be outside taxable value or gross amount charged - matter no longer res integra - Appeal allowed: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS </strong>case has had an eight year journey but the day of 9th May proved lucky for the appellant. All the below mentioned orders were passed by the Bench on the same day. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Vide an order dated 18.07.2013 the appeal filed by the appellant in the year 2008 was dismissed for default. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By an application, they sought recall of this order. The Bench was satisfied with the cause shown and so after recalling the order, the appeal was restored to the file and the matter was taken up for hearing. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, the appellant had also filed an application seeking stay of all further proceedings for realization of the adjudicated liability. The Bench observed that since the substantive appeal was being disposed of, the application is infructuous and so dismissed the same. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The facts are that the appellant had entered to an agreement with M/s National Thermal Power Corporation Ltd. (NTPC) for executing offsite civil works for a Super Thermal Power Project Stage II and SG area civil works package for the Super Thermal Power Project Stage I in Bilaspur District. The works executed by the appellant involved components falling within the ambit of taxable services classified as <em>"commercial or industrial construction"</em> service, defined in Section 65 (25b) readwith Section 65 (105) (zzq) of the Act. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns Tomorrow for the judgements </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have a nice day. </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>