CA and CS HUB: September 2015

While some coworkers may have no qualms about letting you know they despise you, others will try to remain diplomatic and professional.
"Most coworkers won't overtly show their disdain for you so as not to cause trouble or jeopardize their own careers," says Lynn Taylor, a national workplace expert and the author of "Tame Your Terrible Office Tyrant: How to Manage Childish Boss Behavior and Thrive in Your Job." "They may make life difficult for you, but they'll probably try to stay under the radar. Still, there are subtle red flags that they're not out for your best interests."
You'll want to know those signs, says Taylor, so you can spot them when they're present and turn things around before it's too late.

"Of course, it's impossible to be liked by everyone in the office," she explains. But you should always strive to be sensitive to the needs of your fellow coworker; remain upbeat and friendly; communicate openly; and give colleagues the benefit of the doubt. "Those who do this have a far brighter career future," she says. "Plus, when have strong, healthy workplace relationships, you will be more effective and accomplished in your job."

Michael Kerr, an international business speaker and author of "The Humor Advantage," agrees. "When your coworkers like you, everything becomes easier," he says. "People have your back when you need it the most, you can ask for and get favors more easily, people will volunteer to help in times of need, and you can get far better cooperation even across departments." Being well liked will boost your morale which in turn will make you more productive, focused, creative, and successful in everything you do, he says.

Here are 17 subtle signs your coworkers secretly hate you. Keep in mind that you may just be misreading their body language or tone - the workplace is certainly not immune to human misunderstanding and no one is a mind reader. But if you notice you're the only victim of these behaviors, it probably means they don't like you.

- Your gut tells you they don't like you

If you feel like your coworkers don't like you, it could just be in your head. But it can also be true. If they treat you very differently than everyone else, you're probably not their favorite person. Trust your gut and continue looking for other signs if you have a strong feeling about this.

- They don't smile when you're around

We're not talking about the occasional bad day or mood swing. If your coworkers make a conscious effort not to smile when you're in the room, something isn't right.

- They can't maintain eye contact with you

It's difficult to look someone straight in the eye when you don't like or respect them, says Taylor. If you notice your colleagues avoid eye contact while speaking with you, those are probably the reasons.

"They're afraid that you may be able to detect hostility, so the path of least resistance is for them to look away or avoid being around you wherever possible," Taylor suggests.

- They avoid you

If you notice that your coworkers take the stairs when they see you waiting for the elevator, or they wait until you return from the break room before they head in, those are good signs they're avoiding you.

- They feed the rumor mill

This is childish and unprofessional behavior, but it happens in workplaces all the time: Someone doesn't like you, so they spread rumors.

- They don't acknowledge your presence

If your colleagues don't say "Good morning" when you arrive, or, "Have a great night" on their way out, they may be telling you they don't like you, says Taylor.

- They're short with you

If you ask, "How's it going?" and they always respond with "Ok" or "Fine" — or if their emails to always get straight to the point, and never begin with a friendly "Hello" or "Good afternoon," this may be a sign they're not a huge fan of you.

"If they sound like a moody teenagers, then that's a pretty big red flag," says Kerr.

- They give off negative body language

Whether it's a subtle eye roll, constantly assuming a closed off position with arms folded across their chest, or they don't look up from their computer screen when you enter their office, your coworkers' body language will often reveal their true feelings towards you, Kerr says.

- They never invite you to social events

If you never make the cut for lunch, happy hour, or project meetings over coffee, your coworkers may be trying to send you a message.

- They communicate with you primarily via email, even though you sit close by

If your coworkers don't like you, they'll probably try to limit their in-person communication with you. If you notice a shift toward more digital correspondence, that's a sign.

- They constantly disagree with you

Continuously gunning down your ideas is a sign they don't like you. "If it feels like someone shoots down every thought before you've even finished a sentence, then it's often because their dislike is so strong that they are biased against anything you suggest, even when it's a great idea," says Kerr.

- They never ask about your personal life

If you notice that your colleagues speak with each other about their kids or hobbies, but never brings up these topics with you, they're probably just not interested in hearing about your life, says Kerr.

- The don't ever include you in their office bantering or humor

"Joking around is a key way that relationships become cemented in any workplace, and not inviting you into the inner circle of bantering is a sign your coworkers may not feel comfortable around you enough to think of you as one of 'the team,'" says Kerr.

- They steal credit for your ideas

These coworkers could just be "glory hogs," says Taylor. But if they go out of their way to steal the limelight from you and only you, they may be trying to drive you out.

- They assume unauthorized power

Sometimes coworkers who want to muscle in on your position will play boss even when they have no authority, says Taylor.

- They create cliques that are reminiscent of high school

If you feel like you're in a scene from the movie "Mean Girls," and you're not invited to hang out or sit with any of the office cliques, your colleagues probably don't like you very much.

- There's a fundamental lack of trust

If you're questioned excessively about your motives or your coworkers only dole out information on a need-to-know basis, they may be trying to sabotage your career, says Taylor.

Source : ET wealth

10:16 pm
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Want your employees to stay with you forever? Try these five steps!

Career Tips

10:14 pm
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Important things to know about paying life insurance premium

Market Tips

Important things to know about paying life insurance premium

Most of us know that a premium is the price paid for buying an insurance policy but several premium-related aspects are less well understood. What determines discounts offered on life insurance policy premiums? What are the different types of life insurance premiums? Premium payment frequency and what happens if you forget to pay? Did you know tax benefit is available only on premium paid for life insurance policies in your name or in the name of specified relatives? Basic knowledge of these is necessary to be able to choose and maintain your life insurance policy.

What is life insurance premium?

Insurance is a contract between the insurance company and the life assured and every contract to be enforceable under law must involve a valid consideration. In this case, premium is the consideration which makes the contract complete.

An insurance premium is generally expressed as premium per thousand rupees of sum assured and is illustrated in the form of tables of premium rates by insurance companies. Premium varies across insurance plans, policy terms, sum assured and the age of the proposer. Periodicity or mode of premium payment depends on the type of policy chosen and also on the payment options that the policy offers.

In advance

Premium is required to be paid in advance and can be paid via cash up to Rs 50,000, (the limit set by IRDA for cash payments) cheque or DD. Further, most insurance companies have provided for payment of premium online.

Discounts offered on life insurance premiums

Often companies offer a discount on the premium rate payable on the basis of sum assured (SA) and the mode of payment of premium. In insurance jargon these discounts are called rebates.

Rebate for sum assured

Typically most companies offer rebates for higher SA (higher than a certain amount). This is because the cost of servicing of all policies of the same type being almost the same, a higher SA means lower servicing cost per unit of SA. Consequently, this translates to higher profits/returns per unit of SA or per unit of premium paid for the company.

Rebate for periodicity of premium

In case of periodic premium payment policies one can normally choose to pay premium annually, half yearly, quarterly or monthly depending on one's cash flow situation. However, higher the frequency of premium payment higher the cost of servicing (collection, processing and administrative costs) for the company. Also, if the premium is paid at one go for the whole year the funds are available (for investment) to the company for longer than in monthly mode of payment. Consequently, the company can earn more returns on the premium paid.

In case of single or limited premium payment policies this rebate is often already worked into the premium rate as the mode of payment is structurally built into the policy.

Rebate for online payment

It needs to be mentioned here that a company's servicing cost for premiums paid online is normally lower than for those paid physically. Additionally, the company also saves on commissions generally paid to agents in case of physically sold policies. Therefore, varying from company to company, rebate may have already been given before the online premium payment rates are quoted. Consequently, the premium rates quoted would already include the rebate, else the rebates offered may be higher than those offered for physical payment.

Extra Premium

The normal premium tables are meant for people who do not carry any additional risk or 'standard lives' in insurance parlance. In case of standard lives the ordinary premium rates are applied. However, in case of people who carry extra risk because they suffer from health problems such as diabetes or heart disease or work in hazardous occupation the insurer may charge extra premium over and above the normal rate.

Extra premium is also charged for any additional insurance covers (called 'Add Ons' or 'riders' in insurance jargon) are bought along with the base policy.

Level premium

When the premium charged under a policy remains the same throughout the duration of the contract, it is called level premium. In this case premium level is guaranteed and cannot be changed by the company at a later date. This is advantageous for both the life assured and the insurance company and therefore most life insurance plans except some term insurance plans involve level premium payment.

Term insurance policies are associated with level premiums or increasing premiums depending on the type of policy and the insurance company. In term insurance policies the mortality risk of the life insured increases year by year and therefore the cost of insurance also increases yearly. Consequently, the premium chargeable also increases annually. However, in many term policies the insurer averages out the premium chargeable over the entire policy period and the average premium is charged as a level premium throughout the policy tenure. Such term insurance policies are characterized by level premium payments.

The advantages of level premium are:

-- As mortality risk increases with the age of the insured the actual premium chargeable at higher age is much more than that chargeable when a person is young. It may happen that the premium applicable when the life insured is older may be too high for him to pay and a policy lapse due to non-payment of premium would leave him without insurance cover at an age when he needs it most.

-- Persons with good health may drop out and the insurance company may be left with only sub-standard lives as time goes by.

-- It is administratively difficult for the insurance company to keep track of, levy and collect varying premiums.

Increasing and decreasing premium

A term plan with increasing premiums (as explained above) is a typical example of increasing premiums.

Decreasing premium is applicable in mortgage redemption policies where the premium goes down with the decrease in the policy holder's outstanding loan amount.

Single premium

Single premium policies are normally targeted at people who are in the higher income bracket or those who have idle money with them.

Non-payment & late payment of premium

In case the premium is not paid on the due date, the policy is considered as lapsed and the policyholder loses its benefits.

Most policy contracts, however, provide for a 'grace period', which gives the policy holder an additional period of time after the due date for the payment of the premium. During this period, he can pay the premium without any extra charge and the policy will still continue to be in force. For all life insurance policies other than term insurance, for monthly mode of payment, the grace period is usually 15 days, while for other frequency of payments (quarterly, half-yearly or yearly) it is usually one month but not less than 30 days (This means that in case of February generally 30 days grace is still given). For term insurance policies, the grace period is normally 15 days.

When a policy has lapsed, it can be revived and brought to its full force by payment of overdue premiums (with interest) and a declaration about state of health or fresh medical examination. However, a lapsed policy can be revived only if the insurer agrees to do so.

Tax benefit available only for premium paid for specified persons

Under Section 80C of the Income Tax Act, any amount paid by a policyholder towards life insurance premium for self, spouse or his/her children can be claimed as deduction from taxable income. Premium paid for policies in the name of any other third party (other than spouse or children) such as parents (father / mother / both) or in-laws is not eligible for deduction under section 80C. If a person is paying premium for more than one insurance policy, all the premiums can be included. The benefit is available for life insurance policies sold by all insurance companies - both public and private sector.

(The author is former zonal manager, Life Insurance Corporation of India)

Source : ET wealth

10:13 pm
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How to file tax return in case of dual employment

ITR

How to file tax return in case of dual employment

Considerable efforts have been made by the government to streamline the filing of return by taking various initiatives such as providing various alternatives (e-verification based on Aadhar Card, ATM card or through net banking facility). Meanwhile, focus has also been on the disclosure requirements in the ITRs, particularly in respect of the foreign assets which are held by residents.

Total number of tax filers in the country is close to 3.5 crores, of which around 2.4 crores are individual taxpayers of whom most of them are salaried. In this article, we have focused on the compliances which need to be considered by an individual who is employed with more than 1 employer during the year, while filing his return of income.

An Individual receiving salary from more than one employer has to offer total salary received by him from all employers during the year for computing his total income. In case of change of employment, employee should furnish to the successor employer details of the income under the head "Salaries" due or received from the earlier employer and also tax deducted at source therefrom. In case this is not done, it is likely that lower tax has been deducted due to basic exemption limit (generally Rs. 2.50 lacs) and eligible deduction (such as section 80C) considered by both employers. In such a case, Individual may need to pay the shortfall of tax on the total income (earlier as well as successor employment) as Self-Assessment Tax along with interest before filing of the return of income.

Please note that every employer deducting tax has to issue a TDS certificate in Form 16 by 31st day of May of the financial year immediately following the financial year in which the income was paid and tax deducted. If an Individual is employed by more than one employer during the year, each of the employers shall issue Part A of the certificate in Form No. 16 pertaining to the period for which such Individual was employed with each of the employers and Part B may be issued by each of the employers or the last employer at the option of the Individual.

If an Individual is employed by more than one employer during the year, each of the employers shall issue Part A of the certificate in Form No. 16 pertaining to the period for which such Individual was employed with each of the employers and Part B may be issued by each of the employers or the last employer at the option of the Individual.

The forms applicable in case of a salaried individual shall be either ITR-1 or ITR2A or ITR2 assuming that the individual does not have any business income. In case the resident individual has foreign asset or interest or is a beneficiary of such asset, he needs to mandatory e-file his return in ITR-2, which has a specific schedule on foreign asset.

Source : ET wealth

10:12 pm
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Loan to companies in which directors are interested

Companies Act 2013

Loan to companies in which directors are interested

Here is a way out for GROUP COMPANIES for proper compliance under section 185 of the Companies Act 2013 for loan to companies in which directors are interested. Section 185 of the Companies Act, 2013 states that: â€œNo company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person.

Now the question is definition of "Person" and "body corporate" as indicated in section 185 of the Act, so as to link the loan given to director, directly or indirectly;

Quote:

1. The Term "person" is not defined in the Act. But in such a case the definition in the General Clauses Act 1887 should be the guide. In Section 3 of the said Act, the word "person" includes a company or other association or body of individuals.

The word does not include a firm.

2. The term "Body corporate" is defined in the Act in section 2(11) as including a company incorporated outside India but does not include:-

(i) a co-operative society; and (ii) Any other body corporate which the central Government may specify in this behalf by notification.

3. Section 186 intended to govern the transaction by a company to "any person or body corporate ".

As stated above the word "person" includes individuals also. As section 185 seeks to regulate loans by a company to directors, MD and WTD, the word "person" presumably been included in the section along with "body corporate". UNQUOTE My idea is to incorporate a "Co-Operative society" and route inter corporate financial transaction which will be outside the purview of section 185 and 186.

Society under the societies act is not too complicated like NBFC. However, it is also important to understand certain basics and definitions under co-op societies Act. Hence I am furnishing relevant provisos to justify my idea as the CO-OP Societies Act is not applicable to companies under the companies Act 1956.

Important definitions under Co-operative Societies and companies act.

S. 4 - Societies which may be registered.

Subject to the provisions of this Act, a co-operative society which has its objects, the promotion of the economic interests or general welfare of its members or of the public, in accordance with co-operative principles, or a co-operative society established with the object of facilitating the operations of such a society, may be registered under this Act,

Provided that - No co-operative society shall be registered, if it is likely to be, economically unsound, or the registration of which may have an adverse effect on development of the co-operative movement

S. 5 - Registration with limited or unlimited liability

(1) A co-operative society may be registered with or without limited liability; Provided that - the liability of a co-operative society, of which any member is a co-operative society shall be limited

(2) The word "limited" or its equivalent in any Indian language shall be the last word in the name of a co-operative society registered under this Act with limited liability.

S. 9 - Co-operative societies to be body corporate.

The registration of a co-operative society shall render it a body corporate by the name under which it is registered having perpetual succession and a common seal and with power to hold property, enter in to contracts, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it was constituted

S. 128 - Companies Act, 1956, not to apply

The provisions of the Companies Act, 1956 shall not apply to co-operative societies. Section 16 - Persons who may become members

(1) Subject to the provisions of Section 17, no person shall be admitted as a member of a cooperative society except the following namely, (a-1) an individual who needs the services of such co-operative society and is competent to enter into contract under the Contract Act 1872 (Central Act IX of 1872)

(a) a depositor

(b) any other co-operative society,

(d) the LIC of India, State Warehousing Corporation and such other institutions as may be approved by the State Government,

(e) a firm, a company or any other body corporate constituted under any law for the time being in force including a society registered under the Karnataka Societies Registration Act, 1960,

(f) a Market Committee established under the Karnataka Agricultural Produce Marketing(Regulation) Act, 1966,

(g) a local authority.

Source : Companies Act and CO-Op Societies Act
By GOpal Rathnam

10:11 pm
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Process involvement in preparation of annual return

ITR

Process involvement in preparation of annual return

Annual return is an important document, designed to provide information to stakeholders about the company, promoters, members, meetings and remuneration of directors and key managerial persons (KMP).

The intention of legislation under Companies Act, 2013 is to improve corporate governance and empower shareholders. The Act has incorporated a framework which is based on self-regulation but with enhanced disclosures and accountability on the part of companies and their managements.

The certification by directors and Company Secretary / Company Secretary in Practice prima facie establishes the correctness of particulars stated therein (Section 95).

As we know that Annual Return required to be signed by the Directors and Company Secretaries/Practicing Company Secretaries. Certain limits are there under Section 92 to decide the signing of Annual Return and Certification of Annual Return.

But before understanding of limit we should understand the role of Professional and responsibility of professional in preparation of Annual Return.

A. First Lets discuss what are the documents which required to prepare the Annual Return:

• Memorandum & Article of Association

• Statutory Registers

- Register of Members
- Register of Directors
- Register of Director Shareholding
- Register of Key Managerial Personnel
- Register of Related Party Contracts
- Register of Loan and Investment
- Register of Charge
- Register of Securities

• Minutes of the Meetings

- Board Meeting
- General Meeting
- Committee Meeting

• Attendance Sheet of the all Meetings

• Forms & receipts filed with the Registrar of Companies

• Indebtedness Certificate signed by Company Secretary/ CFO of the Company.

• Latest Audited Financial Statement

• Copy of Notice of Annual General Meeting

• List of Shareholders as on 1st April and 31st March

• List of Share Transfers during the Financial Year.

• Any orders received by the company from the High court or from any other regulatory body

• List of Promoters

Note:

Except the above mention information, if required professional can take Management Representation letter (MR Letter) from the Company.MR Letter should be suitably drafted.

Responsibility & Duties of Professional: While the Companies Act, 2013 provides a new and significant area of practice for Company Secretaries, it casts immense responsibility on the company secretaries.

WHILE SIGNING ANNUAL RETURN:

Annual Return should be signed by a Director and the Company Secretary, or where there is no company secretary, by a company secretary in practice: Provided that in relation to One Person Company and small company, by the director of the company.

While signing the Form MGT-7 (Annual Return) Company Secretary certifies that:

1. The returns state the facts, as they stood on the date of the closure of the financial year aforesaid correctly and adequately.

2. Unless otherwise expressly stated to the contrary elsewhere in this Return, the Company has complied with all the provisions of the Act during the financial year.

3. Whatever is stated in this form and in the attachments thereto is true, correct and complete and no information material to the subject matter of this form has been suppressed or concealed and is as per the original records maintained by the Company.

Let’s discuss all three points one by one:

First: According the point No. 1 The figures mention in Annual Return dated 31.03 is correct and adequately.

Second: In point No. XI in Annual Return Company have to give disclosure “Whether company has made all the Compliances and disclosure during the year” If form select YES that mean PROFESSIONAL IS CERTIFYING THAT not only the things mention in Annual Return along with this Company has complied with the All the provisions of the Companies Act, 2013 during the financial year.

Third: Whatever mentioned in this Annual Return is true, no facts are concealed and as per original record maintained by the Company. According to this point PROFESSIONAL IS CERTIFYING THAT he/shed checked all the original documents relating to the information mentioned in the Annual Return. Like: Minutes, Registers and list of information given in the starting of this Article etc.

WHILE CERTIFYING ANNUAL RETURN:

The PCS shall certify the Annual Return filed by all the Listed Company and every other Company having paid up share capital of Rs. 10 crore or more or turnover of Rs. 50 crore or more in Form No. MGT 8, stating following:

Certificate MGT-8 start with following wordings:

I/ We have examined the registers, records and books and papers of XYZ Limited/Private Limited (the Company) as required to be maintained under the Companies Act, 2013 (the Act) and the rules made there under for the financial year ended on 31st March.

During the aforesaid financial year the Company has complied with provisions of the Act & Rules made there under in respect of:

1. Its status under the Companies Act, 2013;

2. Maintenance of REGISTERS/RECORDS & making entries therein within the time prescribed therefore;

[Professional Certify that Company has maintaining the proper statutory registers and made the entry in the Registers in time]

3. Filing of FORMS and RETURNS as stated in the Annual Return, with the Registrar of Companies, Regional Director, Central Government, the Tribunal, Court or other authorities within/beyond the prescribed time;

[Professional Certify that Company has filed all the relevant form with respective departments during financial year)

4. Calling/ Convening/ HOLDING MEETINGS of Board of Directors or its committees, if any, and the meetings of the members of the company on due dates as stated in the annual return in respect of which meetings, proper notices were given and the proceedings including the circular resolutions and resolutions passed by postal ballot, if any, have been properly recorded in the Minute Book/registers maintained for the purpose and the same have been signed.

[Professional Certify that Company has hold the Meetings as per provisions of Companies Act, 2013. For the financial year 2015-16 Secretarial Standards compliance also required to be check]

5. Closure of Register of Members / Security holders, as the case may be.

6. Advances/Loans to its Directors and/or Persons or Firms or Companies referred in Section 185 of the Act;

[Professional certify that Company has complied with the provisions of Section 185 Loan to Director and person in which director interested (this is one of the most crucial section of Companies Act, 2013)]

7. Contracts/Arrangements with related parties as specified in section 188 of the Act;

[Check whether any contract with related party or not. If there are any transactions whether they are on arm length price, in ordinary course of business if not then whether company complied with the provisions of Section 188]

8. Issue or ALLOTMENT OR TRANSFER or transmission or buy back of securities/ redemption of preference shares or debentures/ alteration or reduction of share capital/ conversion of shares/ securities and issue of security certificates in all instances;

9. Keeping in abeyance the RIGHTS TO DIVIDEND, rights shares and bonus shares pending registration of transfer of shares in compliance with the provisions of the Act

10. Declaration/ payment of dividend; transfer of unpaid/ unclaimed dividend/other amounts as applicable to the Investor Education and Protection Fund in accordance with section 125 of the Act;

11. SIGNING OF AUDITED FINANCIAL STATEMENT as per the provisions of section 134 of the Act and report of directors is as per sub - sections (3), (4) and (5) thereof;

12. constitution/ Appointment/ re-appointments/ retirement/ filling up casual vacancies/ disclosures of the Directors, Key Managerial Personnel and the remuneration paid to them;

13. Appointment/ Reappointment/ filling up casual vacancies of AUDITORS as per the provisions of section 139 of the Act;

14. Approvals Required to be taken from the Central Government, Tribunal, Regional Director, Registrar, Court or such other authorities under the various provisions of the Act;

15. Acceptance/ Renewal/ Repayment of Deposits;

16. BORROWINGS FROM ITS DIRECTORS, Members, Public Financial Institutions, Banks and Others and Creation/ Modification/ Satisfaction of Charges in that respect, wherever applicable;

17. LOANS AND INVESTMENTS or Guarantees given or providing of Securities to other bodies Corporate or Persons falling under the provisions of section 186 of the Act ;

18. ALTERATION of the provisions of the MEMORANDUM and/ or ARTICLES OF ASSOCIATION of the Company;

After studying of above mention duties and responsibilities it is clear that it is not an easy job for the Professionals also to sign and certify the Annual Return. They have to certify that Company has complied with each and every compliance of Companies Act, 2013.

Penalty on the Company Secretary for false statement

Company Secretaries must take care while certifying the annual return. Any failure or lapse on the part of PCS may attract penalty both under - the Companies Act 2013; and

- the Company Secretaries Act, 1980.

Monetary Punishment:

As per sub-section (6) of section 92 of the Act, If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.

Further, company secretary in practice may also attract penalty for false statements under section 448 and 447 of Companies Act, 2013.

Penal Provisions:

In view of this, a company secretary in practice may attract the penal provisions of section 448, for any false statement in any material particulars or omission of any material fact while certifying the Annual Return. However, a person will be penalised under section 448 only in case he makes the statement, which is false in any material particulars, knowing it to be false, or which omits any material fact knowing it to be material.

MCA vide its circular no. 10/2014 dated 07.05.2014 has clarified that Regional director/ ROC would initiate action under section 448 and 449 of the Act in the cases of submitting false or misleading or incorrect information.

Action by ICSI:

PCS may be liable for various actions by Disciplinary Committee of the ICSI as mentioned under section 21B (3) of Company Secretaries Act, 1980, in case, the Committee is of the opinion that a member is guilty of a professional or other misconduct as mentioned in clause 5,6,7,8, and 9 of Part I of second schedule to the act.

Cases u/s 448 and 449 also would be referred to the concerned Institute for conducting disciplinary proceedings against the errant member as well as MCA will debar the concerned professional from filing any document on the MCA portal in future.

Bare Act Language of Section 448

Section 448 provides that if in any return, report, certificate, financial statement, prospectus, statement or other document required by, or for the purposes of any of the provisions of this Act or the rules made thereunder, any person makes a statement, –

(a) which is false in any material particulars, knowing it to be false; or
(b) which omits any material fact, knowing it to be material, he shall be liable under section 447.

Bare Act Language of Section 447

Section 447 deals with punishment for fraud which provides that any person who is found to be guilty of fraud, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud. In case, the fraud in question involves public interest, the term of imprisonment shall not be less than three years.

Things to be Covered in MR Letter

1. Company has maintained all the Registers and Records.

2. Company has maintained all the Minutes.

3. Obtain the following Certificate from the Management

- Indebtedness of Company
- Number of Shareholder along with Shareholding pattern
- Transfer and Issue of Shares
- No. of Shareholder along with shareholding pattern as on 01.04.2014 & 31.03.2015

4. Details of Penalty/ Punishment on Company, Director and Officer.

5. Details of compounding of offence on Company, Director and Officer.

6. Any other things.

LIMITES OF CERTIFICATION AND SIGNING OF ANNUAL RETURN

Certification of Annual Return by a Company Secretary in practice.

As per Provisions of Section 92 of Companies Act, 2013 read with sub rule 2 of Rule 11 Chapter VII, Companies (Management and Administration) Rules, 2014.

a) all LISTED Companies

b) Every Company having;

c) • Paid-Up share capital of 10 Crore (Ten Crore) rupees or more or

• Turnover of 50 Crore (fifty Crore) rupees or more

Signing of Annual Return by a Company Secretary in practice.

As per Provisions of Section 92 of Companies Act, 2013 read with sub rule 2 of Rule 11 Chapter VII, Companies (Management and Administration) Rules, 2014.

a) All LISTED Companies
b) All PUBLIC Companies
c) Private Limited Company having:

• Paid up share Capital Exceeding 50 lac; or

• Turnover exceeding 2 Crore

a) One Person Company
b) Small company

(These are the companies exempted from signing of Annual Return by Company Secretary.)

♤ By CS Divesh Goyal ♤

10:09 pm
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No Penalty for disallowance based on accurate particulars submitted during scrutiny

high court judgments

No Penalty for disallowance based on accurate particulars submitted during scrutiny

Citation: – Income-tax Officer vs. M/s Besto Tradelink (P) Ltd, (ITAT Ahemdabad) Income Tax Appeal no 2652//Ahd/2011, Date of Pronouncement 9.06.2015

Brief of the case

In the case of Income-tax Officer vs. M/s Besto Tradelink (P) Ltd ITAT has held that that quantum and penalty proceedings under the Act stand on a different footing and each and every disallowance/addition does not lead to automatic imposition of penalty as held by hon’ble apex court in Reliance Petroproducts Ltd. 322 ITR 158 (SC), Penalty cant not be levied once assessee made accurate particular of income. Further, Penalty cannot be levied on disallowances of interest amount and the one under section 40A(3) only on the basis of assessee’s accurate particulars already submitted on record in the course of scrutiny.

Facts of the case

1. The assessee had claimed depreciation relief on wind mills of Rs.2.40 crores. It would also claim deduction of interest payment amounting to Rs.60,892/- towards unsecured loans and freight payment in cash of Rs.8,63,903/-.

2. The Assessing Officer found that the assessee had not become owner of the windmills in question so as to claim depreciation relief. And that it had advanced interest bearing loans without charging any interest. He also found that its freight payments made in cash violated section 40A(3) of the Act. This made him to disallow all the three claims in assessment order dated 18.3.2004. He also initiated penalty proceedings against the assessee under section 271(1)(c) of the Act.

3. AO has levied penalty by holding that the assessee had not disclosed about the vital fact qua its windmills in claiming depreciation, it was fully aware that the impugned interest on unsecured loans was not allowable and that its freight payments (supra) invited section 40A(3) of the Act. He treated the assessee’s case as that of furnishing of inaccurate particulars of income and imposed minimum penalty of Rs.95,86,108/-.

4. In quantum appeal against all these three disallowances stands rejected upto the “tribunal”.

5. Aggrieved by the decision of AO to levied penalty u/s 271(1)(c) , assessee filed an appeal from CIT(A) who has given relief to assessee by holding that:

Assessing officer levied penalty on the additions confirmed in appeal as mentioned in the penalty order referred earlier. The major addition on which penalty was levied is claim of depreciation on windmill. The said windmill was not transferred in the name of the appellant and therefore ownership was not proved and accordingly it is held that since appellant is not the owner of windmill, depreciation cannot be claimed. However it is not in dispute that appellant purchased windmill by entering into a MOD and also made the payment of purchase consideration. The proceeds of electricity generated through this windmill were also offered as income by the appellant. All these documents along with the documents submitted by the appellant for transferring the windmill in its name were submitted. It is clear that except the transfer of windmill in the name of appellant, all other procedures and paperwork were completed. Appellant claimed depreciation on the windmill by treating itself beneficial owner of the windmill. Several decisions allowed claim of depreciation in case of beneficial ownership including apex court decision in the case of Mysore minerals Ltd. However requirement of transfer was there as per MOU in this case, the transfer could not get completed and next year it was reversed.

Since several judicial decisions supported the view of claim of depreciation in case of beneficial ownership, appellant’s claim is held to be bonafide. The disallowance of depreciation is confirmed only because the windmill could not be transferred in the name of appellant. This cannot make the claim false or inaccurate. When there are decisions to support appellant’s claim, such claim will not be liable for penalty of concealment of income.

As regards levy of penalty on disallowance under section 40A (3), appellant submitted that this ground was not pressed before ITAT in quantum appeal however the payment was genuinely made towards freight charges. The disallowance is estimated at the rate of 20% as per the provisions of section 40 A (3). Appellant claimed that the payment was covered under rule 6DD however the same was not pursued in appeal. Since this is estimated disallowance not in respect of bogus claim or disallowable claim, penalty for inaccurate particulars cannot be levied on such disallowance.

As regards disallowance of interest, appellant submitted that tribunal found that assessee has proved the nexus still disallowance was confirmed and therefore the ITAT’s order to this extent is contradictory. The similar interest disallowance in the assessment year 2002-03 was deleted by CIT (A) which was upheld by ITAT. Considering the facts and decisions, penalty cannot be levied for interest disallowance.

Aggrieved against the said decision, the assessee has filed an appeal before ITAT

Issue

Whether penalty u/s 271 (1)(c) can be levied even in case where assessee is claimed is bonafide and even when accurate particular of income was made.

Tribunal decision / observations

1. that the assessee has already placed on record sufficient evidence of payments of Rs.2.40 crores being made to the vender entity along with copy of the purchase deed. It also applied for State government’s approval. Even the Revenue is fair enough not to dispute these facts. The assessee acquired these windmills in March, 2000. It also declared power generation income of Rs.9,44,146/-. The assessee further obtained insurance cover for the said windmills. It raised depreciation claim @ 100% in the impugned assessment year only. The same stood declined for want of ownership transfer.

2. It is evident that the assessee chose to hand over the windmills back to the vender since the State government had not accorded approval of the ownership transfer. The Revenue sought to tax the very sum of Rs.2.40 crores received in the following assessment year as capital gains. The tribunal in the subsequent year held that once it has not become owner in the impugned assessment year, no capital gain had arisen to be taxed on account of handing over the windmills back to the owner. All these facts indicate that the assessee has not furnished any inaccurate particulars of income. There is nothing attributable on assessee’s conduct in not possessing fullfledged ownership

3. We find that the hon’ble apex court in case of Mysore Minerals Ltd. Vs. CIT (1999) 239 ITR 775 interprets the ownership concept for the purpose of depreciation as under :-

‘’An overall view of the above said authorities show that the very concept of depreciation suggests that the tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset, is utilizing the capital asset and thereby loosing gradually investment caused by wear and tear; and would need to replace the same by having lost its value fully over a period of time.

It is well settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the Legislature in enacting section 32 would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purposes of his business or profession. Assigning any different meaning would not subserve the legislative intent. To take the case at hand it is the appellant-assessee who having paid part of the price, has been placed in possession of the houses as an owner and is using the building for the purpose of its business in its own right. Still the assessee has been denied the benefit of section 32..”

4. We reiterate that quantum and penalty proceedings under the Act stand on a different footing and each and every dis-allowance/addition does not lead to automatic imposition of penalty as held by hon’ble apex court in Reliance Petroproducts Ltd. 322 ITR 158 (SC).

5. Therefore, we hold that the Assessing officer had wrongly held assessee’s case as that of furnishing of inaccurate particulars of income under section 271(1)(c) of the Act. We also find in the same tune that the Assessing Officer has computed the other disallowances of interest amount and the one under section 40A(3) only on the basis of assessee’s accurate particulars already submitted on record in the course of scrutiny. Therefore, the impugned penalty qua these issues has also been rightly deleted.

Direct link to download the full text of the above judgement

http://www.itatonline.in:8080/itat/upload/729953074646769309113%245%5E1REFNOITA_No_2652-Ahd-2011.pdf

By CA Rahul Sureka

10:08 pm
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Reopening not permissible beyond four years if no failure on full disclosure

high court judgments

Reopening not permissible beyond four years if no failure on full disclosure

Case law Citation: United Shippers Ltd. Vs. UOI (Bombay High Court), WP no. 2331/2007, Date of Decision: 05.01.2015

Brief of the case:

In this case reopening u/s 148 was challenged by way of writ on the ground that assessment was reopened after the expiry of four years and reason recorded did not indicate any material which the petitioner has not fully and truly disclosed in the assessment proceedings. Also it was ground of the assessee that there was no application of mind and assessment was reopened on the basis of mere change of mind. It was requested to quash the notice u/s 148. Hon’ble HC after considering the facts and various case relied upon have allowed the writ petition.

Facts of the case:

AO had passed an order dated 27-01- 2003 under Section 143(3) of the Act by which the total income was determined at Rs.2,56,02,060/- after making certain dis-allowances.
One of the partial disallowances was a deduction under section 33AC of the Act which was claimed by the petitioner on the ground that the petitioner is engaged in the business of ‘Operation of Ships.’
On this count the petitioner had inter alia claimed a deduction of Rs.2,15,94,598/- however the Assessing officer allowed the same to an extent of Rs.1,82,28,205/-.
It is an admitted position that the notice in question issued under section 148 of the Act is issued by the Assessing Officer after expiry of a period of four years from the end of the relevant assessment year.
AO assumed that deduction u/s 33AC was wrongly granted to the assessee.
Assessee filed its objection against reopening of the case but same was rejected by AO after receiving a letter from the office of CIT (A) in which claim of deduction was rejected by CIT (A).
Contention of the revenue:

There was nothing inappropriate or illegal on the part of the Assessing Officer to re-open the assessment for the assessment year in question.
The reopening was initiated on the basis of the information received from the CIT (A) for the reasons as set out in the letter dated 13.2.2007 of the CIT (A) addressed to the CIT making observations on the nature of business of the petitioner which justified the reopening of the assessment as could be very well inferred that the income had escaped assessment.
Contention of the assessee:

The return of income for A.Y.2000-01 was filed along with all supporting documents including those required for claiming under section 33AC of the Act;
On the scrutiny and examination of the material documentary evidence placed before the Assessing Officer in the assessment proceedings, the assessment was completed by an order dated 27-1-2013, passed under section 143 (3) of the Act wherein deduction under section 33AC was allowed at Rs.1,82,28,705/- against the petitioner claim of Rs.2,15,94,598/-.
In re-opening the assessment the conditions prescribed under section 147 conferring jurisdiction for re-opening the assessment are not satisfied before issuing of a notice under section 148 of the Act as there was no failure to disclose fully and truly all material facts.
Mere change of opinion without any fresh tangible material could not be a ground to re-open an assessment.
The reopening could not have been at the suggestion of another authority.
As regards the partial dis-allowance under section 33AC in the assessment order dated 27.1.2003, the petitioner had filed a First Appeal before the CIT (A). The dis-allowance being maintained in the First Appeal the petitioner had approached the Tribunal. The Tribunal by an order dated 3.7.2007 had restored/remanded the issue in regard to the admissibility of the said deductions to be decided afresh by the Assessing Officer.
There are numerous documents which were produced before the AO which disclosed fully and truly all facts regarding claim u/s 33 AC.
Assessee drew attention of the court that assessment order dated 27.1.2003 passed under Section 143(3) of the Act in which the Assessing Officer has recorded that the petitioner is engaged in the business of owning and operating ships and barges. The Assessment Order also takes into consideration the claim of the petitioner for deductions under Section 33AC which was partially disallowed. The claim of the petitioner for deduction under Section 33AC of the Act was for an amount of Rs.2.15 crores. The Assessing Officer, however, allowed the same to the extent of Rs.1.82 crores. The Assessing Officer in partially disallowing the claim furnished detail reasons.
There was no material which can be said to be not fully and truly disclosed by the petitioner to the revenue during the course of assessment proceedings. It is thus, urged that action on the part of the revenue in reopening the assessment is wholly without jurisdiction and deserves to be quashed and set aside.
Held by the Court:

When an assessment is sought to be re-opened after expiry of four years from the end of the relevant assessment year, the proviso to section 147 of the Act stipulates a requirement that there must a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of income for that year. This is the primary and jurisdictional requirement being the mandate of the proviso to provision of section 147of the Act.
A perusal of the reasons as recorded by the AO, to reopen the assessment, even when they are read in its entirety do not indicate that the petitioner has not disclosed fully and truly all the material facts.
The petitioner by its letter dated 12.2.2002 had categorically disclosed the nature of its business activity as being engaged in ‘shipping operations.’ The petitioner in various documents as sought by the assessing officer in the course of assessment proceedings had disclosed nature of its activity to be operation of ships.
The AO attempt to reopen the petitioner’s assessment on the petitioner’s own disclosure can in no manner be termed as an appropriate exercise of his jurisdiction and authority under Section 147 so to reopen the assessment beyond the period of four years as this can in no manner be said to be any failure on the part of the petitioner to disclose fully and truly all the facts necessary for assessment.
The AO in issuing the impugned notice under section 148 of the Act has acted without jurisdiction and merely on a change of opinion and in the absence any material which could be said to be not disclosed fully and truly by the petitioner to the Assessing Officer so as to come to a conclusion that there is escapement of income from assessment.
The reason as furnished by the Assessing Officer to reopen the assessment does not indicate any material which the petitioner has not fully and truly disclosed in the assessment proceedings.
The petitioner has made full and true disclosure during the course of assessment proceedings in regard to the nature of its business. In the absence of these jurisdictional requirements the impugned notice is rendered wholly arbitrary and thus deserved to be quashed and set aside.

By Jagjeet Singh

10:07 pm
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Fees levied under section 234E is constitutional – Rajasthan HC

high court judgments

Fees levied under section 234E is constitutional – Rajasthan HC

Case law citation: M/s Dundlod Shikshan Sansthan Vs. UOI (Rajasthan High Court), Writ Petition No. 8672/2014, Date of Decision: 28.07.2015

Brief of the case:

In this case the constitutional validity of section 234E of the Act was challenged. Hon’ble HC has followed the decision of Hon’ble Bombay HC in the matter of Rashmikant Kundalia and ors. V/s Union of India & ors. (2015) 229 Taxman 596 (Bom) where the Hon’ble court has upheld the validity of Section 234E of the Income Tax Act, 1961, on the ground that the levy of fee of Rs.200/- per day on the late filing of the TDS returns, which is a duty cast on the person deducting TDS under section 200 of the Income Tax Act, is a compensatory fee, which is not in the nature of penalty. After relying the said decision the court has held section 234E constitutionally valid.

Facts of the case:

Appellant/Assessee was found defaulted in filing of TDS return in time and hence the AO held that assessee is liable to pay fees u/s 234E for delay in filing TDS return. AO raised a demand accordingly.
The fee was levied under section 200 for late filing of the returns, prior to the amendments made by the Finance Act, 2015 with effect from 1.6.2015 in Sections 200A, 246A and 272A providing for computation and appeal.
Aggrieved from the demand raised assessee preferred the present writ petition.
Contention of the revenue/respondents:

The Hon’ble Bombay HC in the case of Rashmikant Kundalia and ors. V/s Union of India & ors. (Supra) has held the impugned section as constitutional Valid.

Contention of the assessee/appellant:

The reasons given by the Central Government as well as the Income Tax Department for insertion of Section 200A do not justify the levy of fee, inasmuch as, there is no provision for condonation of delay. There may be variety of circumstances in which the delay may be occasioned for no fault of assessee.
He submits that there is hardly any time left in the fourth quarter in filing the TDS deducted by the assessee by challan and in filing of the return by 15th of next month. The fee thus assumes the character of penalty.
Prior to the amendment by the Finance Act 2015 by which sub-section (c) was added to Section 200A(1), there was no provision for computation of the fee for late filing of the TDS returns under section 200A and thus, in the absence of any machinery provisions, the levy of fee under section 200, which imposes a duty on the person deducting tax, was not justified.
Held by the Court:

There is no good ground to take a view different from the one taken by the Bombay High Court in Rashmikant Kundalia and ors. Vs. UOI (supra). The unamended Section 200 referred to the levy on the late filing of returns as penalty. It was thereafter termed as fee, which is a compensatory in nature.
On the question of filing of appeal, for which there was no provision prior to the amendment made by the Finance Act 2015 with effect from 1-6-2015, by which a provision of appeal has been inserted under section 246A against the order under sub-section (1) of Section 200A or sub-section (1) of Section 206CB, it was held by the Bombay High Court, in the facts of the case prior to the amendment, that simply because there was no remedy of filing appeal, the provisions of Section 234E cannot be said to be onerous. Now, since an appeal has been provided, this argument is no longer available for challenging the vires of Section 234E of the Income Tax Act.
The constitutional validity of the statutory provision is not amenable to challenged on the ground that the performance insisted upon by the statutory provision is too onerous or that the statute does not leave sufficient time or does not allow reasonable cause to be considered for violation of the provision.
The absence of any provision for condonation of delay and the appeal prior to amendments also did not make the imposition of late fees by Section 234E to be ultra vires.

By Jagjeet Singh

10:06 pm
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Revised Disclosure Formats under SEBI (Prohibition of Insider Trading) Regulations, 2015

SEBI

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Delhi HC dismisses ITR/TAR Due Date Extension Appeal

high court judgments

9:57 pm
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Rate of exchange of conversion of foreign currency wef 18th September, 2015

Government of India

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ICAI amends Website Guidelines

ICAI

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Download Taxation Mock Test Paper series 2 for CA IPCC Nov. 15 EXAMS

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Download SFM Case Studies on International Capital Budgeting for CA Final Nov. 15 EXAMS

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How to become a long term investor

Investment Tips

How to become a long term investoro become a long term investor

Whenever the equity markets crash, voices that call for the long-term view come back. There is an aura of nobility to longterm investing, and many like to belong to that club. But it is not an easy thing to do. Whatever is your view, if you find your investments losing value soon after you have invested, you cannot help regret the wrong timing.

Since no one knows what is the bottom, and since only luck can ensure you actually catch it, it is tough to invest in a falling market. So what does it take to be a longterm investor?

First, long-term investing is more about ability than willingness. You may have all the risk appetite that is needed, and the fearless attitude to take chances with the market. But if your financial position is such that you have to dip into the money you invested, even before it can begin to perform, it is tough to be long-term oriented.

It is important that you have a regular and sufficient income; are able to save consistently, indicating that you do not need all of the income you make; and have enough assets to back you up if this round of investments turn bad. You may like to take a long-term view, but you won't be able to do it if your finances are shaky. Identify that portion of your income that you can actually invest and forget about for the long-term. Be honest about that decision.

Second, long-term investing is an attitude and a tough one to develop. Many of us who have children like the notion that "they will all be fine in the end," but we do doubt that conviction quite often. We cannot magically become someone else when it comes to money. If we tend to be secretive, suspicious, control-oriented and performancedriven, failure of our investments will keep us anxious.

Even if we are otherwise positive and optimistic, we will hate our inability to do anything when the market crashes and erodes the value of what we have. We may dislike ourselves for the choices we made. We may allow the regret of the loss to eat into our confidence. We need to truly believe in positive long-term outcomes and not be eager to meddle too much, so we do not fix what has not gone wrong.

Third, long-term investing requires a value orientation. The dominant story in the Indian equity markets is about small businesses that grow big and become multi-baggers. In an economy like ours there is always the opportunity to solve a new problem, and do well enough so that a large amount of wealth is created for promoters and investors.

Therefore, investing in growth stocks that show spectacular potential, even if at higher prices, is a very preferred route to investing. Fund managers are lauded for such "finds" that become big winners. It is also the case that we love the run up in price of stocks, which makes momentum investing a favourite. In all this noise of winners, the good stocks that do well over the long-term are not big heroes. Long-term investing needs a strong belief in value.

Fourth, selection is a key process in longterm investing. It is not uncommon for investors to pick up something for a quick buck, and then console themselves that over the long-term things would get better. IPO investors, who began with a very shortterm view of selling off on listing, typically end up holding the stock when it fails to list at a premium. I know of some investors who are still in deep losses, in fond hope of recovery.

If you are holding junk, it is unlikely to become gold only because you gave it time. What you hold has to be good, and you need to consistently check that it remains good enough to hold on to. If you can select good stocks, excellent; if not, you should be able to throw out what is not working. To assume that long-term investing is about picking up a few stocks and keeping them forever, is a mistaken notion. No one is entitled to riches by simply sitting around!

Fifth, the long-term tests the best of notions. In the 1980s, banking was dominated by the public sector. No one expected the private sector to have any role in a sensitive sector like banking. The task of taking on the public sector seemed too tough. Thirty years later, the top performing banks are all in the private sector. No one could have seen it coming.

The best names of the 1980s such as Century Textiles, Hindustan Motors, GE Shipping and ACC are not the leaders or winners today. To be a long-term investor, you need the humility to build a portfolio of stocks with the understanding that some of your stories will not play out. Blind bravado is the trait of an entrepreneur who invests in one stock, and slogs to make it big. Investors, who take the easy route of just putting in the money, need a portfolio to hedge.

Sixth, stories about how the indices moved up dramatically over the years guise an important fact. The stocks in the index have been replaced to ensure that only winners remained. In real-life investing, some of the stocks you own will lose money, and you would not replace them in fond hope of a revival.

The more losers you hold, the worse your performance. If you do not have the ability to accept your mistakes and take corrective action, you can be a long-term investor, but your portfolio may not do too well. It is not easy to select a set of stocks, review them regularly, and take calls on what is not working.

Mutual funds are the best bet for a simple long-term investor, since the fund managers do all this for you. Investing into a diversified equity fund, which has a mix of large and mid-cap equities, across sectors, is a good route to long-term investing. Ensuring that a small amount that you do not need immediately goes into such funds need no market timing. How much of your money will be allocated for the long-term in a personal decision, that critically depends on your income, your assets, your attitude and your approach to investing.

(The author is Chairperson, Centre for Investment Education and Learning)

Source : ET wealth

9:56 pm
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Five tips to reduce auto insurance premium

Investment Tips

9:55 pm
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Here's why obsession with making money may be bad for you

Career Tips

Here's why obsession with making money may be bad for you

It is generally believed that more wealth leads to more happiness. For most of us, money has been a constant pursuit ever since we stepped out of college and started working. We have come to believe that once we have enough wealth, we can do anything we want and lead a happy life. But we must also ask ourselves whether it is really money or happiness that we truly desire.

If more money brings more happiness, billionaires would be the happiest people on earth. If you read about their lives, you will discover that most of them came from humble backgrounds and worked their way to achieve success. But over time, many of them felt that they worked hard to achieve things they didn't need or had wished for. A lot of us are doing the same thing without realising that wealth alone can't make us happy.

A recent research reveals that one of the biggest fears of the wealthiest people is that their money is killing the drive and ambition of their children The study also found out that wealthy families have the most to fear from the third-generation family members when it comes to losing their inherited money. If the children get everything served to them on a platter and never get to see the hard work that goes into creating that wealth, they will hardly make judicious choices in spending that money.

Most descendants of nawabs or royal families of yesteryears are in abject poverty today. They inherited a lot of money but did not know how to manage it. Pursuit of money alone never leads to happiness or satisfaction. It can kill the entire purpose of life. The obsession with money can alter your thinking and even kill your morals.

You hear about how billionaires buy private islands, yachts and fancy cars. But there are also some generous among the super rich like Azim Premji, Warren Buffet, Ratan Tata and Bill Gates who believe in giving back to society. Investing guru Warren Buffet has pledged to donate 99% of his wealth, either during his life or when he dies. "I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing," he has said.

There are many stories of billionaires who have given away their fortunes because it made them feel miserable. These are people who eventually realised that the money in their accounts had a larger purpose than just increasing their bank balance.

(The author is MD and CEO, Bajaj Allianz General Insurance)

Source : ET wealth

9:54 pm
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Share Certificate under Companies Act, 2013

Companies Act 2013

Share Certificate under Companies Act, 2013

Gurminder Dhami

INTRODUCTION
Share simply put is a unit of ownership that represents an equal proportion of a company’s capital. Share has been defined in section 2(84) of Companies Act, 2013 according to which it means share in the share capital of a Company and include stocks.

Share certificate is an instrument which prima facie gives the title to the person whose name is mentioned there in to the shares.

Being an instrument which is deemed to be evidence of ownership of shares mentioned there in and there being in existence proper provisions in place regarding issuance, transfer, transmission etc. it is important to discuss provisions pertaining to share certificates in line with amendments made to the Companies Act, 2013 and relevant rules made thereunder.

MANNER OF ISSUANCE

Manner of issuance of share certificate has been provided in Section 46 of Companies Act, 2013 read with Companies (Share Capital and Debentures) Rules. As per the aforesaid section Articles of Association of a Company does not have an over-riding effect on provisions pertaining to issue of Share Certificates.

As envisaged in rule 5(1), in case a company issues any share capital, the share certificate can be issued only:

a. in pursuance of a Board resolution; and

b. on surrender of letter of allotment.[A]

The requirement of surrendering the letter of allotment is not applicable in cases of issue of

bonus shares or issue of shares against acceptance/renunciation letter (i.e. situation of right issue).

The Procedure in regard to signing of share certificates can be classified as under:-

COMPANY WHICH HAS COMMON SEAL
The common seal should be affixed in presence of and the share certificate should be signed by 2 Directors (one of whom shall be non-MD/WTD) authorized by the Board or committee thereof, if so authorized by the Board and Company Secretary or other person authorized by the Board.

In case of OPC (One Person Company), common seal can be affixed in presence of and the share certificate can be signed by a Director or person authorized by the Board and Company Secretary or other person authorized by the Board.

COMPANY WHICH DOES NOT HAVE COMMON SEAL
The share certificate should be signed by a Director and Company Secretary, where there is a Company Secretary otherwise it can be signed by 2 Directors (one of whom shall be non-MD/WTD).

In case of OPC (One Person Company) which does not have a common seal, provisions of signing the certificate are the same as they apply to an OPC having common seal except the requirement of affixing the seal.

Under the rules, there is a deeming provision which accepts the validity of printed facsimile signatures of Directors put by means of any machine, equipment, metal engraving, lithography or even affixing digital signature but not rubber stamp. However the responsibility of custody and granting permission of using the aforesaid lies with the Director only.

FORM OF CERTIFICATE

Share certificate shall be as per form SH-1 or as near to as possible which requires mentioning of the following:-

Name of Company, CIN & Registered office address
Nominal and paid up value
Name of holder and no. of shares held
Folio no., certificate no. and distinctive no(s).
TIME LIMIT & ENTRY IN REGISTER

As per Section 56(4) unless prohibited by any law, order of Court or any competent authority, the share certificate shall be issued within following timelines:-

Subscribers: within 2 months from Incorporation
Allotment: within 2 months of allotment
Transfer/Transmission: within 1[B] month of receipt of instrument of transfer (SH-4) or intimation of transmission as the case may be.
Rule 5(4) requires making entry of particulars of every share certificate issued in register of member (MGT-1).

As per regulation 2 of Table F of Schedule I to the Act one share certificate for all shares shall be issued free of cost and thereafter Rs. 20/- shall be charged for each certificate after the first in case of several certificates.

RENEWED/DUPLICATE SHARE CERTIFICATE

CIRCUMSTANCES UNDER WHICH ISSUED
Rule 6 contains provisions related duplicate/re-newed share certificate, which can be issued under following situations only on surrender of certificate:-

Defaced, mutilated, decrepit, worn out, torn certificates; or
Consolidation, sub-division, exhausting of place provided for recording transfers
However, requirement of surrendering of certificate will not apply in following cases:-

It is lost or destroyed
On replacement by the Company of all the existing certificates by new upon sub-division, consolidation, merger, demerger or any reconstitution subject to the condition that the issuance shall be in pursuance of a board resolution.
MANNER OF ISSUANCE- DUPLICATE CERTIFICATE
In case the certificate is lost or destroyed then a duplicate share certificate shall be issued with prior consent of the board[C] and on:-

Payment of fees[D] not exceeding Rs. 50/-[E] per certificate; and
Providing of evidence, indemnity and payment of out-of pocket expenses incurred in investigating the evidence
Writing on share certificate “duplicate issued in lieu of share certificate No.__”
* Rule 6(2)(c) provides that duplicate share certificate shall be issued on submission of complete documents within 3 months or 45 days as the case may be in case of unlisted and listed companies, respectively.

As per section 46(5) if a duplicate share certificate is issued with intent to defraud the company shall be punishable with minimum fine of 5 times the face value of shares involved and maximum upto 10 times or Rs. 10 crore whichever is higher and officers in default are liable under section 447.

MANNER OF ISSUANCE- RENEWED CERTIFICATE
In cases other than of lost/ destroyed, renewed share certificate shall be issued on:-

Payment of fees[F] not exceeding Rs. 50/-[G] per certificate; and
Surrender of old certificate to the Company
Writing on share certificate “Issued in lieu of share certificate No__ sub-divided/replaced/on consolidation”
* The Surrendered Share Certificate shall be immediately defaced by stamping/printing the word “cancelled” in Bold letters (Rule 7(3)).

** As per proviso to rule 6(1) no fee shall be taken in case of issue of renewed share certificate where place provided for recording transfers gets exhausted.

REGISTER OF RENEWED & DUPLICATE SHARES
A register in form SH-2 of every renewed/ duplicate share certificate shall be kept at the registered office or such other place[H] where the register of members is kept, containing following particulars:-

Name
& date of issue of old certificate
Suitable cross-reference to the register of members
Entries made in the register shall be authenticated by Company Secretary or such other persons as authorized by board for sealing & signing share certificate.

SHARE CERTIFICATE FORMS AND RELATED BOOKS

BLANK SHARE CERTIFICATE FORMS
As per rule 7 all blank Share Certificates should be in printed form and consecutively machine numbered. The Company Secretary or person authorized by the Board shall be responsible for giving account of these forms to the Board.

The custody of books and documents including blank share certificates forms shall be with:-

Company Secretary where there is one, or a Director specifically authorised by the Board if there is no Company Secretary.
Committee of the Board, if so authorised
PRESERVATION OF BOOKS
The preservation of books and documents relating to issuance of share certificate shall be done for a period of thirty years. However under following circumstances permanent preservation is required:-

Case of dispute
Register of duplicate share certificate (rule 6(3)(b))
DESTROYING SURRENDERED CERTIFICATES
As per rule 7(3) the surrendered share certificate may be destroyed after expiry of 3 years from date of surrender by authority of Board resolution in presence of person authorised by Board in this behalf. However, this shall not apply to share certificates surrendered for dematerialisation as per regulation 54(5) of SEBI (Depositories and Participants) Regulations, 1996.

FOOT NOTES

[A] The requirement of surrendering of letter of allotment is not applicable in case of issue of shares to subscribers to memorandum as the language of rule 5(1) starts with where a company issues any share capital.

[B] In case of listed companies 15 days as per clause 3 and 47(c) of listing agreement.

[C] The Power can be delegated to committee of Board as per general circular 19 /2014 dated 12.06.2014.

[D] As per clause 9(a) of listing agreement fees charged for torn, defaced, lost or destroyed share certificate cannot be more than as agreed with Stock exchange.

[E] Rs. 20/- as per regulation 3 of table F of Schedule I to the Act.

[F] As per clause 8(d) of listing agreement no fees will be charged for old, decrepit, worn-out or where the place for recording of transfer at back of share certificate gets exhausted.

[G] Rs. 20/- as per regulation 3 of table F of Schedule I to the Act.

[H] any place in India where more than one-tenth of total number of members entered in the register of members reside after passing special resolution at a general meeting, advance notice of which has been given to Registrar of Companies.

By Gurminder Dhami

9:52 pm
0 Comments

Whether Section 153C enables AO to issue notice to third parties on the basis of entries in some documents

high court judgments

Whether Section 153C enables AO to issue notice to third parties on the basis of entries in some documents

Case Law Citation-

The Commissioner Of Income Tax (Central) Vs. Mohan Meakins Limited & Ors. (Delhi High Court), Appeal No. ITA 429/2013-ITA 432/2013, Date of decision: 22-01-2015

Brief about the case

A search took place on 14.02.2006 in the premises of M/s Radico Khaitan.In the course of these search proceedings, various documents including reports narrating amounts alleged to have been received or receivable from various members of the UPDA and the basis thereof were recovered. The revenue also relied upon the statement of Mr. R K Miglani. On the basis of these materials, notice was issued under Section 153C to the assessee/respondents. The notice was challenged by the respective assessees on the ground that the documents could not constitute valid material since they did not “belong” to them. Persons in respect of whom a search is conducted and books of account, documents or assets are recovered and other persons (other than those persons referred to in section 153A) to whom books of account, documents or assets recovered belong, cannot be treated on the same basis for the purposes of assessing or reassessing their income. This ground was successfully pleaded before the Tribunal.

The revenue challenged the common order of the Income Tax Appellate Tribunal (ITAT) at the High Court of Delhi who opined that the ITAT should render specific findings as to the status of the documents and in that sense, connect with the concerned assessee’s third parties. Thereby the High Court remitted the matter to the ITAT for fresh consideration.

Facts of the case:

The assessee was issued notice under section 153C subject to a search conducted in the premises of M/s Radico Khaitan and Mr.R.K. Miglani Sec.General of Uttar Pradesh Distillery Association.
This notice was issued on the basis of documents recovered in the search premises.
The assessees challenged the validity of the notice on the ground that the documents did not constitute valid material as it did not belong to the assessees.
The material emanating from the alleged compilation of details from Mr. Miglani can be an information pertaining to the assessee disclosing the details of income or expenditure but that cannot be a document belonging to the assessee.
In this batch of appeals, the revenue challenges the common order dated 23.11.2012 of the Income Tax Appellate Tribunal (ITAT). The question of law sought to be urged is whether Section 153C enables the assessing officer to issue notice to third parties.
The Delhi Court is of the opinion that the ITAT should render specific findings as to the status of the documents and in that sense, connect with the concerned assessee’s third parties who were issued notice under Section 153C, and not merely the general nature of the documents in the form of production figures or amounts tabulated in a chart.
Accordingly the High Court dismissed the appeal and remanded back the matter to ITAT.
Contention of the Revenue

The Revenue urged that the notice issued to the assessee u/s 153C is constitutionally valid.
Further it contended that essentially both categories of persons viz.referred in section 153A and section 153C, are the same in as much as their books of account, assets, documents, etc., are seized or requisitioned, though from different locations.
Contention of the Assessee

The assessee challenged the validity of the notice on the ground that the documents did not constitute valid material as it did not belong to the assessee.
The material emanating from the alleged compilation of details from Mr. Miglani can be an information pertaining to the assessee disclosing the details of income or expenditure but that cannot be a document belonging to the assessee.
It appears that the ITAT has not rendered any specific findings on the status of such documents.
Having regard to these factors, this Court is of the opinion that the ITAT should render specific findings as to the status of the documents and in that sense, connect with the concerned assessee’s third parties who were issued notice under Section 153C, and not merely the general nature of the documents in the form of production figures or amounts tabulated in a chart.
The matter is remanded in entirety to ITAT for reconsideration.
Direct Link to download full text of the above Judgment/ Order from official website:

By CA Geeti Grover

9:50 pm
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