Income Tax Updates

1. No denial of sec. 54F benefit due to non-completion of construction in all respects within 3 years

2. Time-limit of one year to file refund claim doesn't apply to amount wrongly paid as 'Service Tax'

3. ITR 6 RELAESE4. MEF­2015 instructions If you feel any problem in online submission of MEF, Please call on below noted contact details.

In Detailed

1. No denial of sec. 54F benefit due to non-completion of construction in all respects within 3 years

 [2015] 60 taxmann.com 74 (Karnataka)

HIGH COURT OF KARNATAKA

Commissioner of Income-tax, Bangalore v. Smt. B.S. Shanthakumari

2. Time-limit of one year to file refund claim doesn't apply to amount wrongly paid as 'Service Tax'

August 6, 2015[2015] 59 taxmann.com 401 (Kerala)

Excise & Customs : Section 11B of Central Excise Act, 1944 applies only to amount having colour of 'tax'; amount wrongly paid as 'service tax' without even charge of service tax, does not colour of 'tax' and therefore, time-limit of section 11B would not apply to refund of said amount

 [2015] 59 taxmann.com 401 (Kerala)

HIGH COURT OF KERALA

Geojit BNP Paribas Financial Services Ltd. v. Commissioner of Central Excise, Customs & Service Tax*

3. ITR 6 RELAESE
www/incometaxindia.gov.in

4. MEF­2015 instructions

                 

Points which shall be carefully read and be taken care for Multipurpose Empanelment Form (MEF) for the year 2015‐16

1      All the members in full time practice are advised to fill the MEF Form and shall submit full details in the MEF as this panel will also be available for the assignments other than the bank branch audit. The applicants falling under "cooling/rest" for Bank Branch Auditors Panel should also submit MEF as cooling/rest year does not count for the particular year of non­application.

²               Last date for submission of applications on the website www.meficai.org is 31^stAugust, 2015. Members are advised to fill MEF well in advance to avoid last minute rush.

3      Please use Internet Explorer 6.0/ Mozilla Firefox 7.0 or later versions to fill MEF 2015­16.

4      The information filled in by the applicant in MEF can be edited/modified any number of times before final online submission.

5      All correspondence, acknowledgement, discrepancy letters, etc. will preferably be through e­mail only. Please fill up e­mail id correctly and ensure that it is active.

6      It is must to provide correct contact details i.e. telephone number, e­mail­id also to keep track of these as and when allotment procedure starts.

7      (a) Unique Code Number (UCN) is very important as it facilitates compiling the applicants' bank audit experience. Therefore, an applicant must ensure that correct UCN appears in the MEF.

(b)              If the applicant has never been allotted UCN at any point of time, we would like to inform that UCN will be allotted to all eligible applicants at the time of preparation of the Bank Branch Auditor's Panel.

(c)If UCN was allotted earlier, please mention this in Memorandum of changes in case it is not appearing in the MEF and also in the hard copy of the declaration. The changes will be incorporated in MEF Database after due verification.

(d)              For MEF 2015­16, UCN will also be allotted to the non­eligible applicants for Bank Branch Auditors’ Panel so that their data can be sent to the requisite authorities for other bank audits and other assignments. However, the following applicant will not be allotted UCN :

I.   Member practicing in his individual name not holding full time CoP and/or associated as partner/ proprietor/Chartered Accountant employee in any other firm.

II. In case of firm, if none of partner/proprietor is

exclusively associated^# with the firm.

holding fulltime Certificate of Practice (CoP).

^# A member is not treated as exclusively associated with the firm if he is a partner in any other firm or is a sole proprietor of any other proprietary firm or is a paid employee elsewhere.

Therefore, you can apply for Multipurpose Empanelment Form without UCN also.

8      Applicant practicing in individual name should continue to use the same UCN in case he forms a sole proprietary concern.

9      Members may note that experience in capacity, as articled/audit assistant or paid employee/assistant should not be added in experience columns’ to be mentioned in questions of MEF.

10    In case the applicant was appointed as Central/Branch Statutory Auditor of a Public Sector Bank in the previous financial year, the following may be noted to avoid conflict of Interest :

a.   Don’t associate with the same Bank (of which the applicant is appointed as statutory auditor) or any of its subsidiaries/associates, as concurrent/internal/income and expenditure or revenue auditor/stock auditor/ accounts etc of the bank/branch of banks & monitoring of borrowing sick unit.

b.   Don’t take a loan (including outstanding on credit card) from/give a guarantee to a loan from the same Bank (of which the applicant is appointed as statutory auditor) or any of its subsidiaries/associates.

c.    Don’t accept the position of a Director on the Board of the same Bank (of which the applicant is appointed as statutory auditor) or any of its subsidiaries/associates.

11    If an applicant has done audit of two or more than two entities or Statutory Central and/or as well as branch audit of a Bank for the same year, then it should be counted as one year experience only, while filling­up various questions of MEF.

12    The Institute reserves right to call for additional information including financial documents, annual financial statements, income tax & service tax returns and such other documents, from the applicant as may be considered appropriate.

13    While every care is taken in preparing the panel, in the event of any inadvertent mistake or omission, the Institute will not be responsible in any manner.

http://localhost:9000/MEFICAI2015_Deve/innerpage.jsp                 1/3

03/08/2015                                                                 MEF­2015 instructions

14    The Institute does not undertake any responsibility with regard to the allotment of audit.

15    PROCEDURE FOR LOGGING INTO MEF:

MEF is designed differently in case of sole proprietary concern, partnership/LLP concern and members practicing in individual name and therefore, the applicant should select his option carefully.

i.   The Partnership firm converted into Limited liability partnership (LLP) should use their old Firm Registration No. (FRN) to login to MEF. For example your FRN is 100000C and LLP registration No. S200000 please use 100000C and its date of Establishment.

ii.   The new Limited liability partnership (LLP) should use its LLP registration No. and date of Establishment.

Visit www.meficai.org and select your option for empanelment as a sole proprietor/partnership concern/individual.

Remember the PASSWORD for future reference, as you would be able to log into your form using this password ONLY.

16    All the information being sourced from Institute database is static (not editable) and the same will be appearing with green background. Applicants, who do not agree with the details appearing in these fields, should fill in the Memorandum of Changes.

17    Status of the applicant as on 01.01.2015 will be considered for categorisation of the applicant for Bank Branch Auditors’ Panel, subject to the following:

(a). In case, any of the partner resigns during the period from 01.01.2015 till the date of final preparation of the panel for submission to RBI (tentatively in October, 2015), the same will be given effect to as per the data base of the Institute and provisional category as on 01.01.2015 as mentioned in acknowledgement will stand modified accordingly. This means the credit will be given for only those continuing partners (from out of the partners as on 01.01.2015) who have signed the declaration, for categorisation in Bank Branch Auditors’ Panel. Further, the credit will not be given for the partners who have joined subsequent to 01.01.2015.

(b). In case any of the Chartered Accountant employee as on 01­01­2015 resigns during the period from 01.01.2015 till the date of final preparation of the panel for submission to RBI (tentatively in October, 2015), and another Chartered Accountant employee joins during the same period, category as mentioned in acknowledgement will remain unchanged.

18    COMPLAINT FILING MECHANISM

a.   In case, an applicant faces any problem in accessing, operating or submission of MEF, complaint may be lodged by accessing complaint­box link available on www.meficai.org

b.   Applicants can lodge their complaint by using either MEF No./ MRN / FRN

c.    Complaint number will be displayed on the system after successful lodging of complaint. Please note the complaint number for future reference. Applicant would be able to view the status of their complaints by using MEF No. /Complaint No./MRN/FRN.

d.   All the complaints lodged by the applicant would be looked into by PDC Secretariat.

19.   In case, the complaint is not resolved or replied within a week, members can call at 011­30110444, 30110438, 30110440, 30110451, 30110480 and 30110508.

20.  SUBMISSION OF DOCUMENTS

A hard copy of the Declaration duly signed by all (the continuing) partners/ proprietor/ member practicing in individual name accompanied by a print of acknowledgement of submission of MEF must be sent to ICAI by courier/speed post/hand delivery at the following address in an envelope superscribed with "DECLARATION FOR MEF 2015­16" so as to reach on or before 15^thSeptember 2015.

The Secretary

Professional Development Committee

The Institute of Chartered Accountants of India

"ICAI Bhawan" Plot No­ A­ 29

Sector­ 62, NOIDA

Dist: Gautam Budh Nagar

Uttar Pradesh

PIN­ 201309

21.   Receipt of hard copy of the Declaration will not be individually acknowledged. The same will be displayed on the website mentioning MEF number within 15 days of receipt of the Declaration. Declarations will then be verified for completeness and correctness and discrepancy (ies), if any, will be intimated to the applicant by email.

Issue of shares under Employees Stock Options Scheme and/or sweat equity shares to persons resident outside India

RBI:

The Reserve Bank of India has issued circular on "Issue of shares under Employees Stock Options Scheme and/or sweat equity shares to persons resident outside India."

Issue of shares under Employees Stock Options Scheme and/or sweat equity shares to persons resident outside India

Attention of Authorised Dealer Category – I (AD Category-I) banks is invited to Regulation 8 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, notified by the Reserve Bank vide Notification No. FEMA. 20/2000-RB dated 3rd May 2000, as amended from time to time.

2. In terms of the extant instructions, an Indian company can issue shares under Employees’ Stock Option (ESOP) Scheme, by whatever name called, to its employees or employees of its Joint venture or Wholly owned overseas subsidiary/subsidiaries who are resident outside India, directly or through a Trust, provided that the scheme has been drawn in terms of regulations issued under the SEBI Act, 1992 and face value of the shares to be allotted under the scheme to non-resident employees does not exceed 5 per cent of the paid up capital of the issuing company. The Trust or Indian company has to ensure compliance with the above conditions and comply with the reporting requirement.

3. On a review, it has been decided that an Indian Company may issue “employees’ stock option” and/or “sweat equity shares” to its employees/directors or employees/directors of its holding company or joint venture or wholly owned overseas subsidiary/subsidiaries who are resident outside India, provided that :

1. The scheme has been drawn either in terms of regulations issued under the Securities Exchange Board of India Act, 1992 or the Companies (Share Capital and Debentures) Rules, 2014 notified by the Central Government under the Companies Act 2013, as the case may be.
2. The “employee’s stock option”/ “sweat equity shares” issued to non-resident employees/directors under the applicable rules/regulations are in compliance with the sectoral cap applicable to the said company.
3. Issue of “employee’s stock option”/ “sweat equity shares” in a company where foreign investment is under the approval route shall require prior approval of the Foreign Investment Promotion Board (FIPB) of Government of India.
4. Issue of “employee’s stock option”/ “sweat equity shares” under the applicable rules/regulations to an employee/director who is a citizen of Bangladesh/Pakistan shall require prior approval of the Foreign Investment Promotion Board (FIPB) of Government of India.

4. The issuing Company shall furnish to the Regional Office concerned of the Reserve Bank of India under whose jurisdiction the registered office of the company operates, within 30 days from the date of issue of employees’ stock option or sweat equity shares, a return as per the Form-ESOP (given as Annex to enclosed this circular).

5. Authorised Dealer banks may bring the contents of this circular to the notice of their constituents /customers concerned.

6. Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Fourth Amendment) Regulations, 2015 notified through Notification No. FEMA.344/2015-RB dated June 11, 2015, vide G.S.R. No. 484 (E) dated June 11, 2015.

7. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

UPDATES:

1. If assessee admits undisclosed income, substantiate manner and paid taxes on undisclosed income no penalty u/s 271AAA of the Income Tax Act can be levied – [SPS Steel and Power Ltd. v/s. ACIT, ITAT KOLKATA].
2. Genuine expenditure paid in cash cannot be disallowed u/s 40A (3) of the Income Tax Act –[DCIT vs. KolliGopal Krishna, ITAT Hyderabad].
3. RBI has notified two new forms NBS 8 and NBS 9 to be filed annually within 30 days of closing of financial year. NBS 8 is for NBFC-ND with assets size between 100-500 crore. NBS 9 is for NBFC-ND with assets size below 100 crore.
4. DGFT launches online payment facility for application fees through Credit/ Debit Cards.
5. India and USA have signed an Inter Governmental Agreement (IGA) to implement the Foreign Account Tax Compliance Act (FATCA) to promote transparency between the two nations on tax matters.
6. ICAI on 06.07.2015 announced the new scheme of education and training for CA course. Now, Commerce Graduates / Post-Graduates (with minimum 55% marks) or Other Graduates / Post-Graduates (with minimum 60% marks) and Intermediate level passed students of ICSI and ICWAI to enter directly to its Intermediate course.

FLA Return by 15th July,2015

ANNUAL RETURN ON FOREIGN LIABILITIES AND ASSETS

• Act: Annual return on Foreign Liabilities and Assets has been notified under FEMA 1999. Return to be filed under A.P. (DIR Series) Circular No.145 dated June 18, 2014 and submitted to the Department of Statistics and Information Management, RBI, Mumbai

• Applicability: It is required to be submitted directly by all the Indian companies which have received FDI (foreign direct investment) and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year i.e. who hold foreign Assets or Liabilities in their balance sheets

• Due Date: FLA Return is mandatory under FEMA 1999 and companies are required to submit the same based on audited/ unaudited account by July 15 every year through official email id of any authorized person of company like CFO, Director, Company Secretary at fla@rbi.org.in

• Format: The FLA Return has to be submitted in excel based format, which has inbuilt checks and validations. The latest format of FLA Return is available on RBI’s web site at the following link:

https://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspx

For detailed FAQs on FLA Return you may please read more on the following link:

https://rbi.org.in/Scripts/FAQView.aspx?Id=95

• Non-compliance: Non-filing of FLA Return before due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA.

UPDATES:

1. Rent received from a property belonging to assessee’s husband is taxable under the head “House Property” and not under “Other Sources. [CIT v/s. Mina Deogun, High Court of Calcutta].

2. Penalty u/s 272B of the Income Tax Act cannot be imposed if there was reasonable cause of failure to quote valid PANs.

3. The CBEC vide Notification No. 18/2015-CE (NT) dt July 6, 2015 has specified the conditions, safeguards and procedures for issue of invoices, preserving records in electronic form, authentication of records and invoices by digital sign.

4. Construction of metro rail cannot be charged to service tax under Commercial or Industrial Construction Services. Mumbai - CESTAT.

5.The Supreme Court said on monday that capital market regulator Securities and Exchange Board of India (SEBI) has the power to probe Global Depository Receipts (GDRs).

6. MCA has notified new versions of e-Form's DPT-3, Form 4 LLP, CRA - 2, MSC – 3 and FC 1 with effect from 07.07.2015.

7. National Floor Level minimum wage enhanced from Rs.137 to Rs.160 per Day with effect from. 01.07.2015.

8. Competition Commission of India (CCI) has amended its regulations related to mergers and made them more forward looking.

NEW BATCH FOR CS FOUNDATION/EXECUTIVE/ PROFESSIONAL STARTING SOON

13 Exemptions to Private Companies

Ministry of Corporate Affairs has issued Notification dated June 5, 2015 by which it has provided various much awaited Exemptions to Private Companies other than the subsidiary of a public company  a summary of such exemptions is as follows :-

S.No.	Exemption Given	Section	Major Impact
1.	DEFINITION OF RELATED PARTY RELAXED WITH RESPECT TO SECTION 188 Does not include Holding, Subsidiary, Associate Company and sister concern(subsidiary of holding)	2(76)	Transactions entered with them and falling under section 188 does not require compliance of section 188. Note:- Although Holding company is excluded but Director(other than independent Director), KMP of holding company or their relative are still included in definition of Related Party. (Section 2(76)(ix))
2.	TIME LIMITS IN RIGHT ISSUE CAN BE REDUCED Sending of offer letter min 3 days period before opening of offer AND Minimum & maximum offer period of 15 & 30 days respectively Can be reduced, if 90% member give their consent in writing/electronic mode	62(1)(a)&62(2)	In case of emergency, the mentioned time limits an be reduced with consent of shareholders. Note:- The time limits cannot be increased, they can only be reduced.
3.	ACCEPTANCE OF DEPOSITS FROM MEMBERS MADE EASIER FOR CERTAIN PRIVATE COMPANIES Private Companies borrowing monies from members upto aggregate limit of paid-up share capital & free-reserves need not require to comply with conditions mentioned in section 73(2)(a) to (e). However details of money so borrowed shall be filed with ROC in manner as may be specified	73(2)(a) to (e)	If Such Company borrows money from member then no need to:– Issue Circular -File circular with ROC -Maintain Deposit repayment reserve -Provide deposit insurance
4.	NO NEED TO FILE MGT-14 FOR BOARD RESOLUTIONS. Any Board resolution mentioned in section 179 read with rule 8 ofCompanies (Meeting of Board & its power) Rules, 2014 is now not required to be filed with ROC.	117(3)(g)	Saving in ROC filing costs
5.	ARTICLES OF A PRIVATE COMPANY MAY OVERRIDE PROVISIONS PERTAINING TO 1.  Content & length of notice 2.  Explanatory Statement 3. Quorum 4. Chairman 5. Proxies 6. Restriction on voting rights 7. Show of hands & Poll (Position brought at par with Companies Act, 1956)	101 to 107 &109	Private Company may override by its articles mentioned provisions. However, a Private Company Cannot:- 1. Reduce quorum below 2 (In re- Ram Villas Press Publication Pvt. Ltd- Kerela HC) 2. Increase time limit of 48 hours for depositing proxy form (Section 105(4)) 3. Reject a proxy form if it fails to comply with specific requirement of AOA (Section 105(7)) 4. Restrict voting right of a member other than restrictions in section 106 (section 106(2))
6.	MAXIMUM NO. OF AUDIT IN CASE OF PRIVATE COMPANY RELAXED Text of notification:- “Other than OPC, Dormant, Small Companies and Private Companies having paid up capital of less than Rs. 100 Crores shall be inserted after 20 Companies.”	141(3)(g)	Limit of 20 Companies only includes:- 1. Public Companies 2. Private Companies having paid up capital of Rs. 100 crore or more
7.	CANDIDATURE NOT REQUIRED FOR APPOINTMENT OF DIRECTOR AT GENERAL MEETING	160	Amount of Rs. 1 lakh not required to be deposited at least 14 days before GM
8.	APPOINTMENT OF DIRECTORS NEED NOT TO BE VOTED INDIVIDUALLY	162	More than 1 director can be appointed via single resolution
9.	RESTRICTIONS ON POWERS OF BOARD NOT TO APPLY	180	Private Company can now without shareholder’s approval:- 1. Borrow exceeding paid up capital & free reserves. 2. Sell/lease/dispose off undertaking
10.	INTERESTED DIRECTOR CAN PARTICIPATE IN BOARD MEETING AFTER DISCLOSURE OF INTEREST	184	Interested Director can now participate in agenda in which he is interested. Note:- He Cannot be counted in Quorum (Section 174(3) explanation)
11.	LOANS/GUARANTEE/SECURITY CAN BE GIVEN TO DIRECTOR AND PERSON IN WHOM HE IS INTERESTED BY CERTAIN PRIVATE COMPANIES A private Company which has:- 1. Body Corporate should not be Shareholder 2. Not borrowed money from Bank/ Financial Institution/ Body Corporate exceeding lower of the following:- i.  Twice its Paid up capital ii. Rs. 50 crore 3.      No repayment default subsisting of such borrowings at time of giving loan	185	Giving of loans/ guarantee/security to Group Companies now possible
12.	RESTRICTION ON VOTING RIGHT IN GENERAL MEETING IN CASE OF RELATED PARTY TRANSACTION NOT APPLICABLE	188(1) 2nd proviso	Member although being related party to the concerned resolution can still cast his vote at GM.
13.	SHAREHOLDER’S RATIFICATION NOT REQUIRED FOR APPOINTMENT OF MD/WTD	196(4) &(5)	1. Shareholder’s Ratification in not required. 2. Schedule V not applicable. 3. MR-1 not required to be filed 4. T&C of appointment, remuneration not mandatory to be mentioned in resolution

 THESE EXEMPTIONS ARE NOT AVAILABLE TO A PRIVATE COMPANY WHICH IS A subsidiary of a public company. (section 2(71) proviso)