Extension in the time limit for filing ITR-V forms relating to Income Tax Returns filed electronically

NOTIFICATION NO. 1/2013 [F. NO. DIT(S)-III/ITR-V EXTENSION/ 2012-13] UNDER CPR SCHEME 2011, DATED 7-1-2013

In exercise of its powers under clause (ii) of Para 14 read with clause (7) of Para 4 of the 'Centralized Processing of Returns Scheme, 2011', issued vide CBDT Notification No. SO 16(E), dated 4-1-2012, the Director General of Income Tax (System) hereby extends the time limit for filing ITR-V forms relating to Income Tax Returns filed electronically (without digital signature Certificate) for A.Y. 2010-11 [Filed during F.Y. 2011-12] and for ITRs of A.Y. 2011-12 [filed on or after 1-4-2011] till 28th February, 2013. In respect of returns filed for A.Y. 2012-13 for which ITR-V forms are yet to be received at CPC and time of 120 days has also elapsed, time limit for filing of ITR-V is extended upto 31st March, 2013 or 120 days from the date of uploading of the electronic return data, whichever is later.
This direction is issued to mitigate the hardship and grievance of the tax payers who have been prevented by reasonable causes to file the ITR-V in time.

Position of Company Secretaries under Companies Bill, 2011

Position of Company Secretaries under Companies Bill, 2011

1.   Company Secretaries as Key Managerial Personnel (KMP) (Clause 203)

In clause 203 of the Companies Bill, 2011, the Company Secretaries are recognized as whole-time key managerial personnel along with Managing Director, Chief Executive Officer and managers. Also Companies Bill, 2011 has made the appointment of Company Secretary mandatory.

As per clause 203 of Companies Bill, 2011, every company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel,—

i. Managing director, or Chief Executive Officer or manager and in their absence, a whole-time director; and

ii. Company Secretary [Company Secretary here means a Member of the Institute of Company Secretaries of India.]

Companies Bill 2011, also provides the definition of Key Managerial Personnel under Clause 2(51) of the Bill, which is as follows:

“Key Managerial Personnel”, in relation to a company, means—

(i) the Chief Executive Officer or the managing director or the manager;

(ii) the Company Secretary;

(iii) the Chief Financial Officer if the Board of Directors appoints him; and

(iv) such other officer as may be prescribed;

Every Company Secretary being a KMP shall be appointed by a resolution of the Board which shall contain the terms and conditions of appointment including the remuneration. If the vacancy in the office of KMP is created, the same has to be filled up by the Board at a meeting of the Board within a period of six months from the date of such vacancy [clause 203(2) & (4)].

2.   Company Secretaries as Experts

The definition of “Expert” given in clause 2(38) also includes Company Secretaries.

“expert” includes an engineer, a valuer, a chartered accountant, a company secretary, a cost accountant and any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force;

Role of Experts has been mentioned clause 26 & 388 regarding prospectus, clause 211 regarding The Serious Fraud Investigation Office, clause 232 regarding mergers & amalgamations, clause 259 regarding appointment as Company Administrartor, clause 442 regarding appointment as mediation & conciliation member.

3.   Non- appointment of CS – no defence available now

Under section 383A of the Companies Act, 1956, a defence of “poor economic condition” was available regarding non-appointment of company Secretary. By Companies Bill, 2011, the same defence has been removed. Now a company falling in the criteria to appoint CS, cannot escape its liability to appoint a company Secretary just because poor economic condition.

4.   Provision of penalty for non-appointment of CS

Earlier the penalty for non-appointment of company Secretary was Rs. 500 per day. But considering the appointment of company Secretary important, Companies Bill, 2011 propose the penalty for non-appointment of CS as follows:

a.   On company – one lakh rupees which may extend to five lakh rupees.

b.   On every director and KMP who is in default – 50,000 rupees and 1,000 rupees per day if contravention continues.

5.   Certification of Annual Return of the company (Clause- 92)

A much detailed role has been proposed for company secretaries in employment and in practice as well through clause 92 of the Companies Bill, 2011. As per clause 92 of the new Companies Bill, 2011, every company shall prepare its Annual return in the prescribed form containing the particulars as they stood on the close of the financial year regarding just like previous Section 159 of the Companies Act, 1956.

Now Annual Return is required to be signed by:

(i)                  A director and the Company Secretary, or where there is no Company Secretary, by a Company Secretary in whole-time practice.

It means that now in respect of all the companies, whether private or public, listed or unlisted, if no Company Secretary is appointed by the company, the Annual Return is compulsorily required to be signed by the Company Secretary in practice.

(ii)                 In case of listed companies and companies having such paid-up capital and turnover as may be prescribed, the Annual Return is also to be signed by a Company Secretary in whole-time practice certifying that the annual return states the facts correctly and adequately and that the company has complied with all the provisions of the Act, in the prescribed form.

It means, in case of a listed company, even if the Annual Return is signed by the Company Secretary in employment of the Company, it is further required to be signed by the Company Secretary in Whole time practice.

Also, in case of a company having such paid up capital and turnover as may be prescribed and even if the company is not listed, the Annual Return is required to be signed by the Company Secretary in whole time practice in addition to the Company Secretary in employment.

(iii)                In relation to a One Person Company and Small Company, the annual return is required to be signed by the Company Secretary, or where there is no Company Secretary, by one director of the company.

Penalty: If a Company Secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made there under, he shall be punishable with fine which shall not be less than Rs. 50,000/-, but which may extend to Rs.5.00 Lacs.

6.   Role of Company Secretary in Internal Audit (Clause – 138)

Clause 138 of the Companies Bill, 2011 gives discretion to the Board to appoint Company Secretary for conducting internal audit.

138. (1) Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company.

(2) The Central Government may, by rules, prescribe the manner and the intervals in which the internal audit shall be conducted and reported to the Board.

7.   Introduction of Secretarial Audit (Clause 204)

Clause 204 of the Companies Bill, 2011 explains the proposed provisions relating to Secretarial Audit which are as follows:

a.   Every listed company and a company belonging to other class of companies as may be prescribed (we have to wait till finalization of rules to understand the coverage) shall annex with its Board’s report a Secretarial Audit Report, given by a Company Secretary in Practice, in such form as may be prescribed.

b.   It shall be the duty of the company to give all assistance and facilities to the Company Secretary in Practice, for auditing the secretarial and related records of the company.

c.   The Board of Directors, in their report shall explain in full any qualification or observation or other remarks made by the Company Secretary in Practice in his report.

Penalty: If a company or any officer of the company or the Company Secretary in Practice, contravenes the provisions of this section, the company, every officer of the company or the Company Secretary in Practice, who is in default, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

This indicates that the Government is serious about good Corporate Governance.

8.   Functions of a Company Secretary (Clause 205)

Functions of a Company Secretary has been proposed for the very first time, which shall include,—

a.   to report to the Board about compliance with the provisions of this Act, the rules made there under and other laws applicable to the company;

b.   to ensure that the company complies with the applicable secretarial standards issued by ICSI and approved by Central Government;

c.   to discharge such other duties as may be prescribed.

This clearly indicates that law makers are quite serious regarding the position of Company Secretaries in the corporate and this is the reason why major responsibilities are prescribed for Company Secretaries in new Companies Bill, 2011.

9.   First time recognition of Secretarial Standards (Clause 118 & 205)

For the first time, the Secretarial Standards has been introduced and provided statutory recognition in the Act.

As per clause 118(10) of the Companies Bill, 2011:

“Every company shall observe Secretarial Standards with respect General and Board Meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 and approved by the Central Government.”

Further as per clause 205(1)(b) of the Companies Bill, 2011 the functions of Company Secretary includes the compliance of the applicable Secretarial Standards.

10.        Professional assistance to Company Liquidator (Clause 291)

The Company Liquidator may, with the sanction of the Tribunal, appoint one or more professionals including Company Secretaries to assist him in the performance of his duties and functions under the Act.

11.        Appearance Before NCLT (Clause 432)

Clause 432 of the Companies Bill, 2011, seeks to provide that a party to the proceeding may appear in person or authorise a Company Secretary or Legal practitioner to present the case before the Tribunal or the Appellate Tribunal.

SERVICE TAX EXEMPTION GRANTED TO LIFE INSURANCE

SERVICE TAX EXEMPTION GRANTED TO LIFE INSURANCE

NOTIFICATION NO

49/2012-Service Tax, Dated : December 24, 2012

In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.25/2012-Service Tax, dated the 20 th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), number G.S.R. 467 (E), dated the 20 th June, 2012, namely:-

In the said notification, after entry 26, the following shall be inserted namely:-

“26A . Services of life insurance business provided under following schemes -

(a) Janashree Bima Yojana (JBY); or

(b) Aam Aadmi Bima Yojana (AABY); ”.

F.No . 354 /190/ 2012-TRU

(Rajkumar Digvijay)
Under Secretary to the Government of India

Note.- The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 25/2012 - Service Tax , dated 20 th June, 2012, vide number G.S.R. 467 (E), dated the 20 th June, 2012 and was last amended by notification No. 44/2012-Service Tax, dated the 7 th August, 2012 vide number G.S.R. 620 (E), dated the 7 th August, 2012

10 Golden Rules to Live

Wouldn’t it be nice if you had some sort of instruction manual for life, a guide that tells you how you should live your life? Well, I’ve done my best to come up with something like that so here are..

10 Golden Rules to Live By

1 – Do unto others as you want others to do to you.

2 – Treasure your body for it is the vessel that guides you through your life. 

3 – Be honest and always tell the truth

4 – Success requires hard work, persistence and a little creativity.

5 – Make a difference to a least one other person’s life.

6 – Admit when you’re wrong and apologize.

7 – You can learn something from everyone.

8 – Don’t be scared, go through life as fearlessly as possible.

9 – Smile and laugh every single day.

10 – Count your blessings and be thankful for all the good things in your life.

The past is history, the future is a mystery and right now is a gift, that’s why they call it the “present”. You have no idea what tomorrow will bring, so be thankful for every single moment that you’re alive. Be grateful for your family, friends, and freedom. Be grateful for the food you eat, for the fact that you have a warm, dry place to sleep with a roof over your head. Soak up every single drop of life you can, because all you’ll ever have is this moment, right now.

Wishing Happy new year ...may god bless u and ur family with success, happiness  & good health!!!

CS MANOJ BHAGAT

Concealment penalty quashed as assessee was unaware of statute which disallows 'provision for bad-debts'

Where assessee instead of writing off bad debt, made a provision for bad debts under a bona fide belief that amount had become irrecoverable, penalty order passed under section 271(1)(c) for raising a false claim of bad debts was not sustainable

In the instant case, the assessee wrote off certain amount as provision for bad debts and claimed deduction for the same under section 36(1)(vii). However, AO disallowed the said claim and passed a penalty order under section 271(1)(c) for raising a false claim for bad debts. Further, the CIT(A) reversed the order of AO by holding that a mere technical error in claiming an irrecoverable amount wouldn't attract penalty provisions.

On appeal, the Tribunal held in favour of assessee as under:

1) It was an admitted fact that assessee's claim was legally invalid. However, in view of the uncertainty as to realization of debt, the assessee made a provision against its dues under the bona fide belief that the same was allowable, and there was no attempt to conceal this fact;

2) The inference as to the assessee's bona fides flow from its conduct of full disclosure. It was not necessary that the bona fides of assessee's explanation, which no doubt had to be shown by an assessee, was to be so only on the basis of some materials.

In view of the above, the matter was restored to the file of the AO to adjudicate the same afresh per a speaking order in accordance with law, allowing the assessee a proper opportunity to present its case - DCIT v. VRB INVESTMENT (P.) LTD. [2012] 28 taxmann.com 244 (Kolkata - Trib.)

Taxability of Gifts received from Relatives & Non Relatives

Taxability of Gifts received from Relatives & Non Relatives

If you receive a gift from any of your relatives or friends for Christmas or New Year or Pongal or any festival, worth more than Rs. 50000, as per income tax laws, it may be taxable income on your hands in certain situations.

Not only the income, if a person receives a gift, if the value of the gift is exceeding the certain limit then he/she must add it in his income and pay the income tax. There are certain exceptions on declaring the gifts as income.

Gifts received From Relatives

As per the Income tax act, the Gifts received from any of your relatives are fully exempt from tax. Whether you are received the gifts as Cash, Cheque or any goods. You are not liable to pay the tax for these gifts. Here the “relatives” term defines by the Income Tax act as follows :

·        Spouse of the individual

·        Brother or sister of the individual

·        Brother or sister of the spouse of the individual

·        Brother or sister of either of the parents of the individual

·        Any lineal ascendant or descendant of the individual

·        Any lineal ascendant or descendant of the spouse of the individual, Spouse of the person referred to in clauses (ii) to (vi).

For example if you are receiving gift of Rs.100000 from your uncle (your mother’s brother), it is fully exempt from the Tax. Whenever you get the gifts please apply the relations in the above list to ascertain whether you are liable to pay any tax for the received gift.

Gifts received From Non-Relatives

Here non-relatives means anyone who doesn’t come under the above mentioned relation for you. In this case you are tax exempt up to maximum of Rs.50000 for a financial year. If you receive the gift worth more than Rs.50000, you are liable to pay the tax whatever you received excess of the limit. This rule applies when the gift is a sum of money, whether in cash, by way of cheque, bank draft or any articles which is value more than the Rs.50000.

For example you are receiving a gift of Company Shares from one of your team mate in your company or when you are receiving a gift of Rs.100000 (cheque) for the best performing in your company (not a bonus), Rs.50000 is liable to pay tax

My mother gifted me Rs. X amount. Is this taxable?

The simple answer is “NO”. Any gift in the form of articles, shares or cash are not taxable on your hand. If you want to understand the gift relatedincome tax laws, Under section 56 of the Income-tax Act, any money received without consideration which is exceeding Rs. 50000 is taxable on your hand. But, there is exception on certain situations.

The money is received from a relative, which includes, among others, any lineal ascendant or descendant of the individual is fully tax exempt on your hand. So, it is very clear that money received from your mother or father would be not taxable on your hand.

Another important point, if you want to claim the tax exemption on the gifts, please make sure that you have the gift deed executed and who is gifting signed on the papers. Without that the gift laws are not valid for claiming the exemptions. You may consult a lawyer for the documentation with respect to the gift transaction.

Marriage Gifts

One very happy feature of the provision of taxation of gifts is that any gift received from any person on the occasion of the marriage of the gift’s recipient would not be liable to income tax. There is no monetary limit attached to this exemption. Note that, if you receive any gifts at the time of engagement or the marriage anniversary if liable to pay the tax.

Special Tax Exempt gifts

The following list of gifts are fully exempted from Tax whether the it is received as Cash, or any other form of the material doesn’t affect the exemption.

1.     Gift received under a Will or by way of inheritance

2.     Gift in contemplation of death of the donor; Gift from any local authority

3.     Gift from any fund or foundation or university or other educational institution or hospital or any trust or any institution referred to in Section 10(23C)

4.     Gift from any trust or institution, which is registered as a public charitable trust or institution under Section 12AA

S. 2(22)(a)/2(24)(iv): Occupancy rights to shareholder taxable as “deemed dividend” but not as “benefit or perquisite”

S. 2(22)(a)/2(24)(iv): Occupancy rights to shareholder taxable as “deemed dividend” but not as “benefit or perquisite”

 Shantikumar D Majithia vs. DCIT (ITAT Mumbai)

The assessee was the substantial shareholder of a closely held company which owned a building. The Articles of the company provided that each shareholder would have occupancy rights to a flat on the condition that an interest-free refundable deposit be paid. The occupancy rights were transferable. The AO held that the grant of occupancy rights by the company amounted to a “distribution of assets” and that the same was assessable as “deemed dividend” in the hands of the assessee u/s 2(22)(a) to the extent of the accumulated profits. On appeal, the CIT(A) held that as the occupancy rights were given against payment of a refundable deposit, there was no “distribution of assets” and so no deemed dividend. Instead, he held that the occupancy rights conferred a “benefit/perquisite” on the assessee which was assessable u/s 2(24)(iv). On cross appeals before the Tribunal, HELD:

(i) U/s 2(22)(a), any distribution by a company of accumulated profits, whether capitalized or not, constitutes “dividend” if such distribution entails the release by the company to its shareholders of all or any part of the assets. As the assessee received the occupancy rights to the flat in perpetuity and could transfer them, it effectively meant that he had full ownership over the flat. Accordingly, the value of the flats was assessable as deemed dividend u/s 2(22)(a);

(ii) However, as the said occupancy rights were given in lieu of holding shares and an interest-free refundable deposit towards proportionate land cost and development cost and were transferable, there is no “benefit or perquisite” which is assessable u/s 2(24)(iv).