S P C M ASSOCIATES Chartered Accountants Audit

S P C M & ASSOCIATES Chartered Accountants Audit Direct Taxes Indirect Taxes Company Law Management Consultancy Newsletter MAY 2015 EDITORIAL INCOME TAX & WEALTH TAX MVAT & CST Sincerity Professionalism & Commitment is our Motto C. A. Suhas P. Bora 1211 B, Shukrawar Peth, Subhash Nagar Lane No. 4, Pune 411 002, Ph. : (020) 24479119 Telefax (020) 24486663 Email : abhay. bora@spcm. co. in SERVICE TAX COMPANY LAW ARTICLE SECTION DUE DATE CHART C. A. Pradip M. Kataria 207, Nav Maharashtra House, 43, Shaniwar Peth, Pune 400 030 Telefax : (020) 24478059/69 DISCLAIMER : Every effort has been made to ensure accuracy in the information. The publishers do not hold themselves responsible for errors that may have arisen. Please take professional advice for further implementation. All rights reserved. STRICTLY FOR PRIVATE CIRCULATION BY INVITATION

From the Editors Desk - CA Suhas P. Bora Dear All, Greetings and a very good morning to all of you. As you know the months of March and April each year have always been taxing for tax professionals. This particular year the issue was compounded by the fact for income tax assessment due to the restructuring that was initiated in December and January. This was further accentuated by the resultant changes in incumbent officers that made it difficult for the assesses as well as tax representatives. The outcome of all that was visible in too many high pitch assessments and corresponding increases in number of appeals. Let us hope that the current year would turn to be better one. We are also witnessing an increase in litigation under taxation laws across the years. There are certain measures, both within direct and indirect tax regimes which can be effectively used to either avoid litigation or to mitigate the impact of same. We are now into the second month of new fiscal year 2015 -16 with a sense of optimism. Though this optimism is guarded, but the initial signs are encouraging. The various decisions taken by the government on policy fronts as well as economy data suggest a sure signs of revival in the economy. This has also prompted the rating agencies to revise the rating somewhat upwards for the country. This is contrasted with a certain sense of dejection in public mind on the pace of improvement expected from the governance. May be the expectation that were built up in run up to general elections were just too high. One is surely witnessing a quick response turnaround from the governance this time. The manner in which certain clarifications in respect of Companies Act 2013 were issued is illustrative of that decision making process. The government in its battle against the black money has taken the first step by introducing a suitable legislation in the Parliament. "The undisclosed Foreign Income and Assets (Imposition of tax) Bill 2015 should be seen as the first step towards a cleaner economy. Let us hope that this is followed up with provisions to deter creation of ill-gotten wealth within the country. Home 2

From the Editors Desk - CA Suhas P. Bora I would like to thank all those who have contributed to this communication and for sharing their knowledge for the benefits of readers and I am sure that all updates and articles in this communication give ideas to the readers for possible exploration of the different avenues in appropriate circumstances. By the time this write-up reaches all, vacation mood would have set in. This also reminds me of my golden childhood days and summer vacations. Wish you all a restful vacation! With all my wishes. CA Suhas P. Bora Home 3

Recent Update - Income Tax - CA Suhas P. Bora, CA Mehul Jain A. Notifications 1. CBDT Notifies ITR-1 ITR-2 ITR-4 S ITR-V for A. Y. 2015 -16 with several Changes CBDT has notified ITR 1, ITR 2 & ITR 4 S for AY 2015 -16 and amended Rule 12 vide Notification No. 41/2015, Dated-15 th day of April, 2015. For AY 2015 -16, ITR 1, ITR 2 & ITR 4 S where returned income is greater than 5 Lakhs or where Refund is claimed (except where the person is 80 years or more and filing ITR 1 or 2) and ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7 are mandatorily required to be e-Filed. EVC (Electronic Verification Code) has been included as a mode for verification of e-Filed return. Departmental utilities shall be made available shortly. Notifications are available at the website of the Income Tax Department- www. incometaxindia. gov. in. : - 2. Notification No. 39/2015 [F. No. 142/02/2015‐TPL] / SO 1002(E) : Income‐tax (6 th Amendment) Rules, 2015 Dt - 13 th April, 2015 In the Income‐tax Rules, 1962, in rule 2 BB, in sub‐rule (2), exempted amount transport allowance to employees is increase from Rs. . 800. 00 per month to Rs. 1600/- per month in case of norml employees and in case of disabled employees as referred in sr. no 11 of the table it is increased to 3200 per month from Rs. 1600. 00 per month. B. Circulars No capital Gain on Rollover/Extension of Fixed Maturity Plans (FMPs) in same scheme, CIRCULAR NO. 6/2015, Dated: April 9, 2015 In respect of Capital gains in respect of units of Mutual Funds under the Fixed Maturity Plans on extension of their term, it is hereby clarified that no capital gains will arise at the time of exercise of the option by the investor to continue in the same scheme. The capital gains will, however, arise at the time of redemption of the units or opting of the scheme, as the case may be. [F. No. 133/39/2014 -TPL] Home 4

Income Tax & Wealth Tax - CA Suhas P. Bora, CA Mehul Jain C. Recent Reported Decisions - High Court and ITAT 1. Assistant Commissioner Of Income Tax Vs. Bharti Infotel Ltd (2015) 43 CCH 0374 Del Trib. Legislation Referred to Section 115 JB, 148 When no addition is made for the reasons recorded for issuance of notice u/s 148 of the Act, the AO ceases to possess jurisdiction u/s 147 of the Act to tax any other income. 2. COMMISSIONER OF INCOME TAX vs. HARIRAM BHAMBHANI (2015) 92 CCH 0046 Mum. HC It is not the entire sales consideration which is to be brought to tax but only profit attributable on total unrecorded sales consideration which alone could be subject to income tax while considering a case of taxability with respect undisclosed income. 3. COMMISSIONER OF INCOME TAX vs. FINE JEWELLERY (INDIA) LTD (2015) 92 CCH 0045 Mum HC In the 263 Proceedings under Incme tax act, 1961 , If query is raised during assessment proceedings and responded to by assessee, mere fact that it is not dealt with in AO would not lead to a conclusion that no mind had been applied to it. D. Unreported Decisions 1. ACIT V Pravin Shah. ITAT Mumbai Bench Bogus purchases: Facts that suppliers names appear in the list of hawala dealers of the Sales Tax department and that assessee is unable to produced them does not mean that the purchases are bogus if the payment is through banking channel and GP ratio becomes abnormally high. 2. Nivi Trading Ltd vs. UOI (Bombay High Court) In the reassessment proceedings u/s 147 reopening (even of section 143(1) assessment) on the ground that a specific aspect requires verification is not permissible. Home 5

Income Tax & Wealth Tax - CA Suhas P. Bora, CA Mehul Jain 3. DCIT vs Aanjaneya Life care Ltd (ITAT Mumbai) Penalty u/s 221(1) cannot be levied for non payment of SA tax if the assessee has financial hardship. 4. Rita Stephen Pinto vs ITO (ITAT Mumbai) While making addition u/s 68 on credit received during the year can be assessed as unexplained cash credits. Credits of earlier year even if unexplained cannot be assessed. 5. Mrs. Archana Kapoor vs. ITO, ITA Nos. 6037/M/2013, Bench: A, dated 13/3/2015, AY 2008 -09 (ITAT Mumbai) Penalty - Concealment/furnishing inaccurate particulars of income–Amount offered by way of revised return/computation, beyond time prescribed u/s. 139(5) – Sec. 271(1)(c) 6. Mrs. Pushpalata Omprakash Bhandari vs. DCIT, ITA No. 2008/PN/2012 dated 18 -3 - 2015, A. Y. 2005 -06, (Pune, ITAT) Share Transaction – Merely because several stock brokers and managers were found indulging in large scale manipulations in purchases and sale of some of the shares – Assesssee’s transactions could not be treated as bogus Home 6

SALES TAX UPDATES - Adv Abhay Bora A. RECENT AMENDMENTS 1) FAQ for Annual e Return Annexures The Sales Tax Department has posted FAQ’s and clarification for Annual e Return Annexures to be filed in case of Dealers who are not eligible to file form 704 Audit Report as per provisions laid down u/s 61 of MVAT Act, 2002. As per provisions u/r 17(4) of MVAT Rules, 2005, the dealers who are not eligible to file form 704 audit report (as per section 61 of MVAT Act, 2002) , have to file Annual e Return Annexures from FY 2011 -12 onwards. For the Periods Prior to FY 2011 -12, the dealers who are not eligible to file form 704 audit report, are not required to file Annual e Return Annexures. In Annual e Return Annexure following Applicable Annexures/sheet should be filled and uploaded – a) For FY 2011 -12, 2012 -13 and 2013 -14 : Annexure J 1, J 2, C, D, G, H and I. b) From FY 2014 -15 onwards : Annexure C, D, G, H and I (From FY 2014 -15 onwards, on HOME Page of Annual e Return Annexure, Select Option as No for Annexure J 1 and J 2. As From FY 2014 -15 onwards, for Annexure J 1 and J 2, Dealers have to upload Regular e Return Annexure, as per the periodicity of return filing. Hence to avoid Duplication of Data, Annexure J 1 and J 2 are not required to be filled from FY 2014 -15 in Annual e Return Annexure. 2) Input Tax Credit – J 1 - J 2 mismatch Under the Income Tax Act, the tax credit of every assessee is available on the TRACES link of Income tax website on the basis of the PAN in form of statement known as 26 AS. ON the similar lines, the Sales Tax Department has provided the data for input tax credit of every dealer on the website www. mahavat. gov. in. The Dealer Information System J 1 -J 2 Mismatch report is updated to display figures upto Feb 2015 in the case of Monthly Return filers and upto December 2014 in the case of Quarterly Return filers and upto September 2014 in the case of Six-monthly Return filers. It is observed that due to the difference in the periodicity of Dealer and the Supplier, the finding of mismatch is becoming very difficult. To overcome the said difficulty, find a raw data excel sheet attached to check J 1 J 2 mismatch report downloaded from “mahavat” website to take corrective action at early stage. The procedure to be followed is as under: 1) Download the excel sheet 2) In the sheet "Reg. Return Annex J 2 copy" copy and paste special values from the J 2 of e-regular return annexures submitted by dealer in column B, C and D. 3) In the Column A write the month for which data is copied in column B, C and D just as a identifier. Home 7

MVAT & CST - Adv Abhay Bora 4) Enter the row nos. as required in Column G after finishing copying all J 2 data. 5) Download ITC Excel Report from the Mahavat website for the period upto which you have submitted e-Regular Returns Annexures. 6) Copy the details from A 1 to Column O and last row of the report. 7) Paste the data in the sheet "Dept J 1 J 2 Mismatch Report" at A 4 ( just select A 4 and paste data). 8) Modify the formula in row 8 column S (coloured) as per instructions mentioned in Column W. 9) After modifying the formula copy the formula till the last row of data filled in. 10) Just check the difference appearing in Column T which needs your attention. 11) Just for verification, see that Column R shows all zero. Hope this will be useful to all of you. Please share the difficulties faced or any suggestion to modify the same to make it more useful. B. IMPORTANT JUDGEMENTS 1. Whether Service Tax is part of Sale price. Appellant, M/s. Sujata Painters undertakes the works contract of powder coating/ painting on the material supplied by contractee. The job is done on the steel items like window section, M. S. Panel, boxes, doors etc. The appellant uses goods like powder paints thinner etc. in execution of such works contract. The contract is a works contract of powder coating and powder painting. The contract being works contract, appellant opted to pay the tax on value of goods supplied as per rule 58 of the MVAT Rules. It has issued an invoice calculating the value of goods involved in execution of works contract of which property is transferred as per proviso to Rule 58 at 80% of the contract value, 20% being labour and service charges as per table at sr. No. 9 appended to proviso rule 58. It has calculated the VAT on 80% at 4% and service tax on 40% at 12%. The Question raised by the appellant was that whether the service tax paid by the company on the transaction forms the part of sale price liable to tax u/s. 2(25) of the MVAT Act? The Tribunal has held that Service tax cannot form the part of sale price u/s. 2(25) of the MVAT Act in a transaction wherein the sale price is determined subject to Rule 58 of the MVAT Rules and is not liable to VAT Second Appeal No. 18 of 2013 dtd. 09/03/2015 in case of M/s. Sujata Painters v/s. The State of Maharashtra, and VAT Second Appeal No. 63 of 2014 dtd. 09/03/2015 in case of M/s. B. L. Kashyap and Sons Ltd. v/s. The State of Maharashtra Home 8

SERVICE TAX CORNER - CA Chetan Parakh Backdrop in introduction of Point of Taxation Rules (POT): In any fiscal laws, the concept of levy, collection and payment of tax to the Government are the fundamental aspects. Levy of tax is directly linked with the taxable event. Once the event has become taxable, then comes the question of collection of tax. The governing Statute of such taxable event will provide for the time period or the occurring of such event on which tax will be paid. In case of Services due to the intangible nature identification of point in time at which the service was provided or completed is always subject to the legal wrangle. Hence, the Finance Act 1994, since 1 st July 1994 has assessed and collected tax on Services Service tax only on Cash basis (i. e. ) Service tax has to be discharged to the Government only on the receipt of the consideration. The event of receipt of consideration, being easily identifiable, did not raise any issue. However, it is in deviation to the principles applied in the case of Central Excise and VAT. Since all the taxes levied under indirect taxation viz. Central Excise, VAT and Service Tax are proposed to be brought under single umbrella of Goods and Service Tax (GST), it has become necessary to have the common base for levy and collection of tax in respect of all the cases. Therefore, Point of taxation Rules, 2011 has been introduced in Service Tax law to bring Uniformity in levy and collection of all these taxes. Significance of Point of Taxation: The point of taxation is significant for determining the following: i. Applicability of rate of service tax: The service tax rate shall be the rate prevailing on the date on which the service is deemed to be provided as per the Point of Taxation Rules, 2011. Earlier the rate prevailing at the time of raising the invoice was considered for charging service tax, irrespective of date of realization. ii. Payment of Service Tax: The service tax has to be paid to the credit of Central Government within due dates immediately the following month in which the services are deemed to be provided as per the Point of Taxation Rules, 2011. iii. Adjustment for non-provision of service: In case of assessee who has issued an invoice/ received payment towards a service to be provided and has not provided service (in full or part), he is eligible to take the credit of excess ST paid by him if he: (a) Refunded the payment along with the ST to the receiver of service or (b) Issued a credit note for the value of service not so provided to the person to whom he has issued invoice. Home 9

SERVICE TAX CORNER - CA Chetan Parakh DETERMINATION OF POINT OF TAXATION (Rule 3): As per Rule 3, the Point of Taxation for any Service in general shall be – 1. Date of invoice or Amount Received, whichever is earlier, if the invoice is issued within 30 days, from the date of completion of the provision of Service. 2. Date of completion / provision of service or payment, whichever is earlier, if the invoice is not issued within the prescribed period as above. Similarly, any advance is received then the POT shall be the date of receipt of such advance. Illustration : Sr. No. Date of completion of invoice service Date on Point of which taxation payment received May 02, 2015 April 30, 2015 1 April 10, 2015 April 30, 2015 2 April 10, 2015 May 15, 2015 Apri 30, 2015 3 April 10, 2015 May 2, 2015 April 15, 2015 4 April 10, 2015 May 26, 2015 April 10, 2015 Remarks Invoice issued within 30 days and before receipt of payment. Invoice not issued within 30 days and payment received after completion of service Invoice issued within 30 days but payment received before invoice. April 5, 2015 and Invoice not issued within 30 (part) and April 10, 2015 for days. Part payment before April 25, 2015 respective completion, remaining later. (remaining) amounts Significance of Rule 3 – The following points have to be considered: 1. Time of issue of invoice is relevant only if it is within the stipulated period of 30 days from the date of completion of event as specified in the contract. 2. Payments actually received are relevant only in respect of payments received before the time of issue of invoice, and that too only in cases where invoice is issued in time. Home 10

SERVICE TAX CORNER - CA Chetan Parakh 3. In case of continuous contracts, the date of completion of an event and time schedule for intermediate payment as specified in the contract must be considered, and the actual date of completion of event and the actual date and quantum of payment received have no relevance. When a Service is completed: The Ministry has clarified vide Circular No. 13/2011 -ST, dated 18 -7 -2011 that ‘the test for the determination whether a service has completed would be the completion of all the ‘related’ activities that place the provider in a situation to be able to issue an invoice and that ‘however such activity does not include flimsy or irrelevant grounds for delay in issuance of invoice’. Determination of POT in case of Continuous Supply of Service: From 01. 04. 2012, Rule 6 governing the provisions relating to Continuous Supply of Service was omitted and merged with Rule 3. Hence, as per Explanation to Rule 3 it is provided that in case of continuous supply of service where the provision of whole or part of the service is determined periodically in terms of a contract, which requires the receiver of the service to make payment to service provider, the date of completion of such events as specified in the contract shall be deemed to be the date of completion of provision of service. Illustration : XYZ Ltd is a building contractor and has agreed to provide works contract services by way of constructions. Determine the POT if the terms of payment of total Rs. 200 Lacs are finalized as below: Installm Date of completion Date of invoice ent of service Date of Payment POT 1 1 April 2014 5 April 2014 4 April 2014 Date of payment : 04 April 2014 2 1 July 2014 10 July 2014 15 July 2014 Date of invoice : 10 July 2014 3 1 Sept 2014 5 Oct 2014 10 Oct 2014 Date of service : 01 Sept 2014 4 5 Nov 2014 10 Nov 2014 Date of invoice : 10 Nov 2014 Home 11

SERVICE TAX CORNER - CA Chetan Parakh SOLUTION Installme nt Amoun Event on which consideration Date of t payable completion of such event Date of Invoice (Do. I) Date of Payment (Do. P) 1 10 Signing of Agreement 1 April 2014 5 April 2014 4 April 2014 2 40 Construction upto Plinth level 1 July 2014 10 July 2014 15 July 2014 3 40 Completion of Finishing 1 Sept 2014 5 Oct 2014 10 Oct 2014 4 10 Handing over of Possession 5 Nov 2014 10 Nov 2014 In the next month, we shall discuss the impact of proposed amendment in the finance bill, 2015 about change in rate of service tax. Home 12

Amendments Under Company Law -CA. Manoj Jain -CS Aditi Deo Salient Features of Companies (Auditor’s Report Order 2015)CARO – 2015 (As per Notification of Ministry of Corporate Affairs) 1. Effective From - To come into force on the date of its publication in official gazette 2. Financial Year - For the financial years on or after 01. 04. 2014 Auditor will include statements as per CARO, 2015 in their auditor report for the Financial Statement prepared for FY ending 31 st March 2015. 3. Applicability - CARO 2015 shall apply to every company including a foreign company as defined u/s (42) (3) of the Act 2013 4. To whom it is not applicable – A banking company as defined in clause ( C ) of section 5 of the banking regulation Act. 1949 (10 of 1949); Insurance Companies defined under the Insurance Act 1938 the Act. - In old Act insurance company was defined in new Act no Definition. A company licensed to operate under section 8 of the Act ; One person company A private Limited company a) with a paid up capital and reserves not more than Rs. 50 Lakhs and b) Which does not have loan outstanding rupees 25 Lakhs from any bank of financial institution and c) Does not have a turnover exceeding rupees 5 crores at any point of time during the financial year. Home 13

Amendment s Under Company Law -CA. Manoj Jain -CS Aditi Deo 5. Impact on Small Companies Small companies under Companies Act 2013 will not get covered unless the outstanding loan crosses the stipulated limits. 6. Major Changes in Annexure to Audit Report SR NO. a. . b. c. PARTICULARS REMARKS FIXED ASSETS REPORTING ON REPAYMENT OF LOANS GRANTED BY THE COMPANY Requirement to report disposing of substantial part of fixed assets during the year, if any, has been removed. Reporting of loans taken by the Company not included in CARO, 2015 Reporting on rates charged not required under CARO 2015. INTERNAL CONTROL SYSTEM Reporting on adequate internal control procedure for sale of services also included under CARO 2015. d. PAYMENT OF APPLICABLE TAX e. DEPOSIT CARO 2015 Mandates the reporting whether amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act 1956 and rules made there under. Comments are to be made in case of deposits on notice sent by CLB (Company Law Board) as well As National Company Law Tribunal (NCLT). Home 14

ARTICLE SECTION UNDERSTANDING OF LAW RELATNG TO HUF (PART-3) - CA. Suhas P. Bora In the last Two Months we have discussed the basics of HUF, in this month we are discussing the few more important issues relating to HUF: DOCTRINE OF BLENDING OR IMPRESSING WITH THE CHARACTER OF HUF 1. What is the doctrine? If a Coparcener makes a declaration blending his individual property with that of HUF or impresses such property with the character of HUF property or throws the property in the common hotchpot – such property becomes H. U. F property and loses the character of individual or separate property. 2. Can a coparcener blend his individual property into his smaller HUF wherein he is a Karta, while continuing to be a member of the bigger HUF consisting of his father, himself and his brothers? A Coparcener can be coparcener of two joint Hindu families. The blending is at his option, he may blend his property with either of the HUF’s. In that view of the matter, a coparcener can blend his individual property with his smaller HUF, wherein he is Karta, while continuing to be a member of the bigger HUF consisting of his father himself and his brother. ( Refer : CIT v/s. M. M Khanna (1963) 49 ITR 232 (Bom). 3. What will be the position where the HUF consists of only his wife and minor daughter? The Supreme Court in Surjit Lal Chhabda vs. CIT (1975) 101 ITR 776 on the above question stated: “Kathoke Lodge was not an asset of a pre-existing joint family. Doctrine of blending or impressing with the Character of HUF party into the family hotchpot does not apply. The appellant has no son. His wife and unmarried daughter were entitled to be maintained by him from out of the income of Kathoke Lodge while it was his separate property. Their rights in that property are not enlarged for the reason that the property was thrown into the family hotchpot. Not being coparceners of the appellant, they have neither a right by birth in the property not the right to demand its partition nor indeed Home 15

ARTICLE SECTION UNDERSTANDING OF LAW RELATNG TO HUF (PART-3) - CA. Suhas P. Bora the right to restrain the appellant from alienating the property for any purpose whatsoever. Their prior right to be maintained out of the income of Kathoke Lodge remains what it was even after the property was thrown into the family hotchpot: the right of maintenance, neither more nor less. Thus, Kathoke Lodge may be usefully described as the property of the family after it was thrown into the common stock, but it does not follow that in the eye of Hindu law it belongs to the family as it would have if the property were to devolve on the appellant as a sole surviving coparcener. The property which the appellant has put into the common stock may change its legal incidents on the birth of a son but until that event happens the property in the eye of Hindu law, is really his. He can deal with it as a full owner unrestrained by considerations of legal necessity or benefit of the estate. He may sell it, mortgage it or make a gift of it. Even a son born or adopted after the alienation shall have to take the family hotchpot as the finds it. A son born, begotten or adopted after the alienation has no right to challenge the alienation. It was held that income from the Lodge shall be chargeable to tax in the individual hand. It shall be assessable in the hands of the HUF on birth or adoption of the son. (Refer S. K Bohra vs. CIT (1988) 173 ITR 400(Rajasthan). 4. Is it necessary for the HUF to have any ancestral property prior to receiving the property from one of the coparceners? No, it is not necessary for the HUF. Even an empty hotchpot can receive and hold any property that is thrown into it by the co-parcener (Refer: CIT vs. S. Sivaprakasa Mudaliar (1983) 144 ITR 285(Mad). 5. Can a female member of the family blend her individual property into the HUF? Blending is a power given only to coparceners. Since females are not coparceners, a female member of a joint family cannot blend her individual property with HUF property. However, such an act shall be considered as a gift and it shall become property of the HUF. (Refer Mallesappa vs. Desai (AIR (1961) SC 1298) and Pushpa Devi vs. CIT 91977) 109 ITR 730(SC). After 1 -9 -2005 daughter, being a comparcener can blend her individual property into the HUF. Home 16

ARTICLE SECTION UNDERSTANDING OF LAW RELATNG TO HUF (PART-3) - CA. Suhas P. Bora 6. What are the clubbing provisions in tax laws? The clubbing provisions u/s. 64(2) of the Income Tax Act as well as section 4(1 A) of the Wealth Tax Act shall apply. Under the Income Tax Act, the income arising from such converted property will be deemed to be income of the transferor individual. Moreover, on Partition of such property, in case such property is allotted to the wife of such individual the income arising there from shall continue to be taxed in the hands of the transferor individual. Income in respect of the property allotted to minor children till minority shall be clubbed in the hands of the father, on account of overriding provisions contained u/s. 64(1 A) of the Income tax Act. Similarly under the Wealth Tax Act the converted property is deemed to be the asset belonging to the individual and when such converted property has been the subject matter of partition, the converted property or any part thereof, which is received by wife of the individual on such partition shall be deemed to be the property belonging to such individual and as such will be includible in the wealth of such individual. Under Gift Tax Act such act is considered as a transfer and is liable to tax as gift in respect of the value excluding share of the transferor in the HUF. However, at present there is no gift tax. I hope that the Anlaysis of HUF as a taxable entity under the Income Tax and the peovisons of HUF under The Hindu Succession Act given in the 3 parts of this article must have clear most of the doubts in your mind on the subject. Home 17

ARTICLE SECTION FORMS/DECLARATIONS FOR CONCESSIONAL RATE OF TAX UNDER CST ACT Adv. Abhay. Bora 1) Form C – Interstate sale at concessional rate The sale is covered under section 8(1) of the CST Act. Forms C is to be submitted by the Buyer to avail concessional rate The following conditions should be fulfilled: a) Sale should be in the course of interstate trade and commerce made to a Dealer registered under CST Act. b) The goods are covered in the Registration Certificate of the purchasing dealer. c)Goods eligible for concessional rate on issue of C Form must be : 1. Goods for resale 2. Goods for use in manufacture of processing for sale. 3. Goods used in mining. 4. Goods used in power generation / distribution. 5. Goods to be used in Telecom Industries. 6. Containers and packing materials. d) Documentary evidence regarding Dispatch of goods is must. e) C Form should be issued for purchasing dealer on quarterly basis. The original declaration forms and all the relevant documents mentioned are verified at the time of Assessment/ Appeal for allowance of claim of CST Sale at a concessional rate of tax. 2) Form EI/ EII – Sale in Transit at Nil tax. The sale is covered under section 6(2) of the CST Act. Forms EI/ EII are issued by sellers of goods who sells goods by transfer of documents of title of goods i. e Sale in Transit. The following conditions should be fulfilled: Home 18

ARTICLE SECTION FORMS/DECLARATIONS FOR CONCESSIONAL RATE OF TAX UNDER CST ACT Adv. Abhay. Bora a) Sale should be in the course of interstate trade and commerce made to a Dealer registered under CST Act. b) The transaction of sale should be a tri - party transaction i. e buyer, seller and consignee in which first movement of goods should be interstate. c) The subsequent sale of goods should be during the course of movement of goods i. e sale in transit and should be done by transfer of title of ownership of goods. d) The delivery of goods should only be taken by the ultimate purchaser in the chain of buyers and sellers. If any dealer takes delivery of goods in between during the course of movement the sale is concluded and further sale cannot be treated as sale in transit. e) Documentary evidence regarding Dispatch of goods and endorsement of title of goods is must. f) Form should be issued by purchasing dealer against exchange of EI/ EII forms issued by the selling dealer on quarterly basis. The original declaration forms and all the relevant documents mentioned are verified at the time of Assessment/ Appeal for allowance of claim of CST Sale in transit at Nil rate of tax. 3) Form F: Branch / Consignment Transfers at Nil tax. The sale is covered under section 6 A of the CST Act i. e. Interstate transfer of goods otherwise than by way of sale. Form F is to be issued by the dealer who imports goods from other states from branches, consignment agents for movement otherwise than by way of sale. There are certain conditions to be fulfilled: a) Sale should be Interstate to own branch or consignment Agent nominated as per Agreement. Home 19

ARTICLE SECTION FORMS/DECLARATIONS FOR CONCESSIONAL RATE OF TAX UNDER CST ACT Adv. Abhay. Bora b) Branch or Consignment Agent to be registered under CST Act in respective State and addresses of all branches and consignment agents to be updated in CST Registration c) There should be no evidence of pre existing Sale of Goods proposed to be imported against issue of F Form, prior to dispatch against F Form. d) Documentary evidence regarding Dispatch of goods is must. e) The F Form should be issued with all the details properly filled up regarding Dispatch of goods and these details should match with the Consignment Sale Invoice. f) F Form should be issued for every month. The original declaration forms and all the relevant documents mentioned are verified at the time of Assessment/ Appeal for allowance of claim of CST transfer at Nil rate of tax. 4) Form H : Sale in the Course of Export at Nil Tax. The sale is covered under section 5 (2) of the CST Act i. e. Sale in the course of Export. H form is to be issued by the purchaser who further exports the goods outside the country within six months. There are certain conditions to be fulfilled a) Sale should be in the course of interstate trade and commerce made to a Dealer registered under CST Act. b) There must be an existing P. O of Foreign Buyer in the hands of the purchasing vendor for purchase of goods against issue of H Form. c) The goods purchased on H Form need to be exported outside the country within 6 months from the date of purchase. Home 20

ARTICLE SECTION FORMS/DECLARATIONS FOR CONCESSIONAL RATE OF TAX UNDER CST ACT Adv. Abhay. Bora d) The H Form should be issued with all the details properly filled up regarding purchase order of Foreign Buyer and these details should match with the Bil of Lading. e) The Qty. of goods exported as per invoice & Bill of Lading should Tally. f) All the cross refrences regarding Invoice No, Amount , Qty. , B/L No. , P. O No. should cross match on Invoices , Bill of Lading , H form Declaration and P. O. g) H Form should be issued for every Quarter. The original declaration forms and all the relevant documents mentioned are verified at the time of Assessment/ Appeal for allowance of claim of CST sale in the course of export at Nil rate of tax. 5) Form I : Sale to SEZ unit at Nil tax The sale is covered under section 8 (6) of the CST Act i. e. Sale to Special Economic Zone. I Form is to be issued by the developer of SEZ. a) Sale should be in the course of interstate trade and commerce made to a Dealer registered under CST Act. b) Sale of goods must be for the purpose of setting up, operation, maintenance, manufacture, trading, production, processing, assembling, repairing, reconditioning, re-engineering, packaging or use as packaging material or packing accessories in a unit located in Special Economic Zone or for development operation and maintenance of Special Economic Zone by a developer of Special Economic Zone. c) The registered Dealer should be authorized by the authority specified by the Central Govt to establish, develop or maintain the Special Economic Zone. The original declaration forms and all the relevant documents mentioned are verified at the time of Assessment/ Appeal for allowance of claim of CST sale to SEZ at Nil rate of tax. Home 21

ARTICLE SECTION FEMA – 1999 CA. Yogita S Muttha INVESTMENT IN INDIA BY NON-RESIDENT A. NRIs can invest in India as under: 1. Investment under Automatic Route with repatriation benefits 2. Investment with Government approval 3. Other investments with repatriation benefits 4. Investments up to 100% equity without repatriation benefits 5. Other investments by NRIs without repatriation benefits. 1. INVESTMENT UNDER AUTOMATIC ROUTE OF RBI WITH REPATRIATION BENEFITS NRIs can invest in shares/convertible debentures of Indian companies under the Automatic Route without obtaining Government or RBI permission except for a few sectors where Foreign Investment Promotion Board (FIPB) permission is necessary, or where the investment can be made only up to a certain percentage of paid up capital. 2. INVESTMENT WITH GOVERNMENT APPROVAL Investments not eligible under the Automatic Route, are considered by the Foreign Investment Promotion Board (FIPB), a high Powered inter-ministerial body under the chairmanship of Secretary, Department of Economic Affairs, subject to sectoral limits/norms. These investments also enjoy full repatriation benefits. 3. OTHER INVESTMENTS WITH REPATRIATION BENEFITS 1. Investment in units of domestic mutual funds 2. Investment in bonds issued by public sector undertakings 3. Purchase of shares of public sector enterprises being disinvested by Government of India. 4. Investment in government dated securities (other than bearer securities) or Treasury Bills NRIs are permitted to invest in the securities with repatriation benefits. 5. Investment in Non-Convertible Debentures by way of public issue in listed company 6. Non-convertible debentures of a company incorporated in India Home 22

ARTICLE SECTION FEMA – 1999 CA. Yogita S Muttha 4. INVESTMENT UPTO 100% EQUITY WITHOUT REPATRIATION BENEFITS 1 Capital contribution to any proprietary or partnership concern NRIs can invest by way of capital contribution in any proprietary or partnership concern in India provided the firm or the proprietary concern is not engaged in any agricultural/plantation activities or real estate business or print media on non-repatriation basis subject to certain conditions. 2 New issues of shares/debentures of Indian companies NRIs have been granted general permission to subscribe to the shares/convertible debentures of an Indian company on non-repatriation basis, and general permission is also available to an Indian company to issue shares or convertible debentures by way of new/rights/bonus issue to NRIs on non-repatriation basis provided that the investee company is not a chit fund or a Nidhi company or is not engaged in agricultural/plantation activities or real estate business (real estate business excludes business of township, construction of residential /commercial premises, roads, bridges etc. ) or construction of farm houses or dealing in Transfer of Development Rights. 5. OTHER INVESTMENTS BY NRIs WITHOUT REPATRIATION BENEFITS (i) Investment in Non Convertible Debentures (ii) Money Market Mutual Funds (iii) Deposits with companies (iv) Commercial Papers (v) The capital of a Firm / Proprietary concern in India, not engaged in any agricultural or plantation activity or real estate business Home 23

ARTICLE SECTION FEMA – 1999 CA. Yogita S Muttha B. INVESTMENT IN REAL ESTATE 1. All persons, whether resident in India or outside India, who are citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan, require prior permission of Reserve Bank for acquiring or transferring any immovable property in India. 2. A person resident outside India, who has been permitted by Reserve Bank to establish a branch, or office, or place of business in India (excluding a Liaison Office), has general permission of Reserve Bank to acquire immovable property in India, which is necessary for, or incidental to, the activity. However, in such cases a declaration, in prescribed form (IPI), is required to be filed with the Reserve Bank, within 90 days of the acquisition of immovable property. 3. An Indian citizen resident outside India does not require any permission to acquire any immovable property in India other than agricultural/plantation property or a farm house. 4. The NRIs/PIOs can freely rent out their immovable property in India without seeking any permission from the Reserve Bank. The rental income being a current account transaction is freely repatriable outside India. 5. Repatriation outside India, including credit to RFC, NRE or FCNR account, of sale proceeds of any immovable property situated in India, requires prior permission of the Reserve Bank except in circumstances stated in paragraph 6 below. 6. In the event of sale of immovable property, other than agricultural land/farm house/plantation property in India by a person resident outside India, who is a citizen of India, or a person of Indian origin, the Authorised Dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied: (i) the immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules/Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act, 1999; (ii) the amount to be repatriated does not exceed Home 24

ARTICLE SECTION FEMA – 1999 CA. Yogita S Muttha a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in foreign currency non-resident account or b) the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held in non-resident external account for acquisition of the property; and (iii) in the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties. C. Bank Accounts for NRIs 1. Can an NRI maintain a bank account in India? Yes. NRIs can maintain accounts in rupees as well as in foreign currency. However, accounts in foreign currencies can be maintained with authorized dealers/ banks only. 2. What are the different types of rupee accounts that are permitted and can be maintained by NRIs? The three types of rupee accounts permitted, that can be maintained by NRIs are as follows: 1. NRE : Non-Resident (External) Rupee Account 2. NRO : Non-Resident (Ordinary) Rupee Account 3. FCNR – B: Foreign Currency (Non-Resident) Account (Banks) 3. What are NRE and NRO accounts? Non-Resident External (NRE) account is a rupee account from which funds are freely repatriable. It can be opened with either fund remitted from abroad or local funds maintained in NRE/ FCNR accounts, which can be remitted abroad. The deposits can be used for all legal purposes. The balance in the account is freely repatriable. Interest credited to the NRE account is exempt from tax in the hands of the NRI. Non-Resident Ordinary (NRO) account is a rupee account and can be opened with funds either remitted from abroad or generated in India. The amounts in such an account are generally nonrepatriable. However, funds in NRO accounts can be remitted abroad subject to/as per various directives in force at the time of repatriation. Home 25

ARTICLE SECTION REGISTRATION OF CHARGES WITH REGISTRAR OF COMPANIES. CA MANOJ JAIN CS ADITI JOSHI Definition Charge means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage Duty to register the charges It shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge holder together with the instruments, if any, creating such charge in Form CHG 1 on payment of fess with Registrar of Companies within 30 Days of its creation. Company can apply for the extension for the time limit up to 300 days to the ROC on payment of Additional fees as prescribed. If delay is beyond 300 days condonation of delay should be sought from the Central Government. After completion of the procedure of filling the form the registrar will issue certificate of registration. Power to the Lender If the borrower company fails to register a charge within a time prescribed above in that case lender has a right to apply to the Registrar of Companies for registration of charge. Registrar may issue notice to the company and ask for the cause of non compliance and can allow to register a charge with additional fees. Where the registration is effected on application of the person in whose favour charge is created that person shall be entitled to recover from the company the amount of fees or additional fees paid by him to the registrar for the purpose of registration of charge. Home 26

ARTICLE SECTION REGISTRATION OF CHARGES WITH REGISTRAR OF COMPANIES. CA MANOJ JAIN CS ADITI JOSHI The provisions apply to : A company acquiring any property or Any modification in terms of Agreement, terms, condition or the extent and operation of charge registered Date of Notice of charge Company should keep the register containing the details of the charges in the slandered format. Registrar of companies also maintained the record of the index of charges and it can be inspected by paying appropriate Fees. Satisfaction of Charges A company shall give intimation to the registrar about satisfaction of charge in full of any charge which is registered with the Registrar of companies within 30 days from the date of satisfaction of charge. Register sents a notice to the charge holder about satisfaction of charges and charge holder may show cause within 14 days why the satisfaction of charge should not be recorded and if no cause is shown within time limit registrar order that a memorandum of satisfaction shall be entered. Intimation about appointment of receiver or manager If any person obtains an order for the appointment of a receiver of or person of person to manage, the property, subject to charge, of a company or if any person appoints such receiver or person under any power contained in passing of order or of making of the appointment give notice of such appointment to the company and registrar along with a copy of the order or instrument. Punishment for contravention If any contravention is done by the company then it shall be punishable with fine not less than One Lakh and it may extend up to Ten Lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty five thousand rupees but which may extend to one lakh rupees or with both. Home 27

MONTHLY DUE DATES REGISTER FOR MAY 2015 ACT Particulars Due dates SERVICE TAX E- Payment of Service tax by Companies for April 2015 6 th May 2015 INCOME TAX TDS/TCS Payment for the month of April 2015 7 th May 2015 INCOME TAX TDS/TCS Quarterly Returns For January 2015 15 th May 2015 to March 2015. PROVIDENT FUND Provident Fund Payment for the month of April 15 th May 2015 LOCAL BODY TAX Payment of Local body tax for April 2015 20 th May 2015 EMPLOYEE Employee State Insurance Corporation STATE Payment for the month of April 2015 INSURANCE CORPORATION 21 st May 2015 MVAT/CST E-Payment of Monthly Tax & WCT TDS for April 2015 21 st May 2015 MVAT/CST E-filling of Monthly Returns for April 2015 31 st May 2015 PROFESSION TAX E-Payment of Monthly Tax for April 2015 31 st May 2015 LUXURY TAX E-Payment of Monthly Tax for April 2015 31 st May 2015 NOTE: If Due date is on Sunday or Public Holidays, the next working day is to be considered as due date. Home 28

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