Yourwait for that big I- T refund just got longer
VRISHTI BENIWAL
New Delhi, 24 November
If you are expecting a huge incometax (I- T) refund, you may have to
wait a bit longer than you earlier thought. To limit the government's
fiscal deficit for the financial year at 4.8 per cent of gross
domestic product (GDP), despite rising subsidies, the finance ministry
has decided to go slow on I- T refunds, besides slashing Plan
expenditure substantially.
According to officials, small I- T refunds are being cleared but the
big ones — those running into lakhs of rupees — are being held back
for now. That is because tax collections have remained subdued so far,
making it difficult for the government to meet its direct- tax
collection target of ₹ 6,68,108 crore for 2013- 14.
The direct- tax collection (net of refunds) in the April- September
period this year increased only 13.33 per cent — compared with the
projected 19 per cent growth — to ₹ 2,84,339 crore. The refund claims
during the period, on the other hand, increased a mere 3.13 per cent
to ₹ 53,568 crore.
"More than 80 per cent of the refunds are being given, but most of
these are for small amounts," says a finance ministry official, asking
not to be identified.
A further moderation in income- tax refunds is likely to be seen in
the remaining months of the current year. In 201213 — the total
refunds in the year had fallen about 13 per cent from the previous one
to ₹ 82,704 crore — too, the refunds had come down in the second half.
However, slowing down refunds may not be enough to contain fiscal
deficit at 4.8 per cent this year, given that the rate of economic
growth ( without adjusting for inflation) is expected to be lower than
that projected in the Budget, pushing up fiscal deficit ( as per cent
of GDP). Also, arise in the government's expenditure on subsidies is
exerting pressure on the non- Plan side — the petroleum subsidy is
likely to be around ₹ 1 lakh crore, against ₹ 61,772 crore provided
for in the Budget.
So, Plan expenditure could see a cut. Expenditure of ministries like
rural development, health & family welfare and human resource
development would be slashed heavily in the Revised Estimates for
2013- 14. The communications &IT, home and power ministries are among
other ministries to see significant expenditure cuts.
According to officials, the Plan expenditure cut in 2013- 14 would be
under the same heads as in 2012- 13. Almost all departments had seen
Plan expenditure cuts in 2012- 13 — the reduction was steeper for the
ministries mentioned. This had helped bring Plan expenditure down by ₹
92,000 crore, or 17 per cent of the Budget estimate for 2012- 13. This
year, the cut is likely to be heavy but a little less than in 2012-
13, so that growth prospects are not hit.
Turn to Page 16 >
Large claims being put on hold to contain fiscal deficit for 2013- 14
at 4.8% of GDP TIMING THE BENEFITS
I- T refunds (₹ cr)
2009- 10 2010- 11 2011- 12 2012- 13
Source: Finance ministry
57,000 73,000 95,000 82,704
________________________________
Click here to read
Yourwait for that big I- T...
>FROM PAGE 1
"Every effort will be made to lower wasteful expenditure, so that the
fiscal deficit is contained —without compromising on GDP growth. Any
funding related to election work or where funds have been utilised is
not being reduced," says another official.
With issues related to the external sector on the wane, the finance
ministry is focusing on growth and inflation. These are going to be
priorities before the country goes to polls in 2014.
Officials say growth in the second half of 2013- 14 would be better
than in the first, especially with a slow growth rate in the same
period last year ( low base) giving statistical advantage.
Lower current account and fiscal deficits will further support growth, they add.
The finance ministry expects the country's GDP growth rate for the
year to be 55.5 per cent. Independent analysts, however, expect it to
be less than five per cent.
BRIEF CASEN [1] M J ANTONY
SC: No overkill in cheque bounce cases
Once the amount in a dishonoured cheque is paid with interest and
compensation, the payee cannot insist on criminal prosecution of the
directors of afirm who issued the cheque. The object of Section 138 of
the Negotiable Instruments Act, which makes issuing of cheques without
sufficient balance in the account an offence, is meant to " inculcate
faith in the efficacy of banking operations and credibility of
transactions. It is not meant only to punish the guilty," the Supreme
Court has stated in the judgment, Lafarge Aggregates & Concrete India
Ltd vs Sukarsh Azad. In this case, directors of a construction company
issued a cheque to Lafarge, but it was dishonoured by the bank leading
to a criminal complaint before the magistrate. The directors moved the
high court and offered to pay the amount with interest. The high
court, therefore, quashed the complaint. Lafarge was not satisfied
with that and appealed to the Supreme Court for prosecution of the
directors. The court dismissed the appeal observing that the directors
were willing to pay double the amount. It stated that Lafarge did not
appear before the high court without sufficient reason, leading to an
ex parte order quashing the complaint. Moreover, it approached the
Supreme Court after a long lapse of time. Under these circumstances, "
if the amount offered including interest and compensation was not
acceptable to Lafarge, it is their choice," the judgment said, "but
that would not allow them to prosecute the directors in pursuance of
the complaint."
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Bank fraud not a civil dispute
The Supreme Court last week set aside the judgment of the Madras High
Court and ordered prosecution of former directors of a bank who were
accused of fraud. Five persons who were managers of various firms were
charge- sheeted for siphoning of large amounts from Tamil Nadu
Mercantile Bank, one accused person alone presenting 1,278 cheques in
sham transactions, with the help of five managers of the bank itself.
They moved the high court to quash the charges and the court allowed
it. The high court felt that the transactions were basically of a
civil nature and the bank could go to the debt recovery tribunal to
recover the lost money. The Supreme Court stated that it was not
merely breach of contractual terms, but smacked of criminality.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Club canteen must getmunicipal licence
The catering department of a club in Mumbai must take licence to run
it, even if it does not make profit and the entry is only to its
members, the Supreme Court stated last week in the judgment of
Brihanmumbai Mahanagarpalika vs Willingdon Sports Club. The Bombay
High Court had earlier struck down the demand notices sent to the
club, holding that it was not an ' eating house' open to public.
However, the Supreme Court overruled it, observing that the definition
of eating house should be given a wider meaning. Though sport is the
main activity of the club, supply of food is an integral part of such
activity. The judgment explained: "Many join the club in the name of
availing sporting facilities only for the purpose of spending their
time in leisure and for enjoying the facilities provided by the
catering department." Even though profit is not the motto of the club,
it certainly gained by the catering facilities, the court added.
Insurer to pay double compensation
The Supreme Court has enhanced the compensation for an advocate who
suffered 70 per cent disability of his body and loss of earning in a
road accident and awarded ₹ 12.87 lakh as compensation. The motor
vehicles accident claims that the tribunal had granted him ₹ 8.87
lakh. The insurance company appealed to the Karnataka High Court,
which lowered it to ₹ 6.17 lakh drastically reducing the compensation
under the head ' loss of income due to disability'. The disabled man
appealed to the Supreme Court in the case, N Manjegowda vs United
Insurance Co Ltd. It doubled the damages given by the high court.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Garment exporters lose plea
The Delhi High Court last week dismissed writ petitions of a large
number of garment exporters who had challenged show cause notices
issued to them by the Apparel Export Promotion Council for not
fulfiling their quota under a 1999 Exim policy of allotment of
entitlements. Under the policy, export of garments and knit- wears to
certain countries such as the USA, Canada and the European Union known
as Quota Countries could be undertaken only on the basis of quota
allotted to the exporters by the council. The exporters also gave
undertakings to fulfil the quota allotted to them. If there was large
under- utilisation of the quota the council could forfeit their bank
guarantees. When show cause notices were issued to some defaulting
exporters in certain years, they challenged it in the high court.
Dismissing their petitions, the court stated in the judgment, Birdy
Fashions Ltd vs Union of India, that " imposing penalty on the
defaulting exporters in terms of the undertaking given by them to the
council sub- serves a valid public interest. In the absence of such
penalty, there may be further shortfall in the quota utilisation as
there would be no pressure on the exporters to achieve the desired
target."
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Doctors are not mere ' workmen'
Medical profession is a noble profession dedicated to the service of
society and therefore doctors cannot be classified as 'workmen'
entitled to invoke the Industrial Disputes Act, the Supreme Court
ruled last week while dismissing the appeal of the ESIC Medical
Officers' Association. The industrial tribunal had held that ESI
doctors were ' skilled' workmen. On appeal moved by the ESI
Corporation, the Delhi High Court declared that they were not workmen.
The association moved the Supreme Court which explained that the
medical profession is not a mere occupation that earns wages. It
requires extensive study, training and mastery of subject, like law or
teaching.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> No short- cut to high court
When a law provides for an appeal against an order of a subordinate
authority, an aggrieved person must take that route and should not
approach a high court by way of a writ petition, the Delhi High Court
ruled last week in a batch of cases, led by G K Granites vs Tata
Hitachi Construction Machinery Ltd. The disputes date back to the days
of the Monopolies and Restrictive Trade Practices ( MRTP) Commission,
whose functions were conferred on the new Competition Commission of
India ( CCI). While the MRTP law did not provide for an appeal, the
CCI provides for an appeal to its appellate body. Therefore, the high
court stated, citing Supreme Court judgments, that the appeals should
go to the Competition Appellate Tribunal first, and then to the
Supreme Court.
A weekly selection of key court orders
Preference shares to take the limelight?
HEMAL UCHAT
Under the Companies Act, 1956, ( 1956 Act), while equity shareholders
have definite power to control the company through voting rights,
preference shareholders only have conditional voting rights on the
matters which directly affect their interest in the company or on all
matters if the dividend on preference shares is in arrears for the
prescribed period.
Preference shares are considered as quasi- debt instruments since they
combine the features of equity as well as debt. On one side, they
carry a preferential right over the ordinary shares to receive
dividend at a fixed rate and on the other, they carry an equity risk
of not being secured, except to the preferential right of repayment in
case of winding- up of the company. Preference shares have proved
beneficial for investors, since such quasidebt instrument provides
protection to their investment by possessing voting rights on matters
affecting their interest, more so with the fixed rate of dividend. For
the promoters, issue of preference shares to investors ensures access
to capital without a need to provide any security, with a continued
control.
While the new provisions of the Companies Act, 2013, (2013 Act),
continue on the premise of similar conditional voting to the
preference shareholders, it is now applicable to all companies
including private companies as against the 1956 Act wherein such
conditional voting rights were not applicable to private companies.
It could well be agame changer for the private companies, since they
were earlier allowed to issue preference shares with any possible
covenants as to voting rights or otherwise, subject to the articles of
association. Moreover, a few grey areas persist with respect to the
applicability of new provisions under the 2013 Act.
The 2013 Act has not found aplace for grandfathering provisions, which
could possibly mean that the new provisions shall also apply to
preference shares already issued under the 1956 Act. In case the new
provisions of 2013 Act apply to preference shares issued before its
commencement, it may lead to companies having unintended controlling
structures and consequently forced to reorganise the controlling
structures in compliance with the 2013 Act.
While the overall changes made by the 2013 Act vis- a- vis 1956 Act
are a welcome one, companies are required to be careful in the
transition phase where the 2013 Act will overwrite the 1956 Act in
phases. It may well cast challenges for companies, which could require
timely consultations.
(Hemal Uchat is an executive director. Abhijeet Shah Associate, PwC
India – M& A Tax practice, co- authored this article)
Fine print of the Companies Act 2013 strengthens the voting rights of
preference shareholders of private companies
For the promoters, issue of preference shares to investors ensures
access to capital
--
CS A Rengarajan
9381011200
CS Benevolent Fund is a collective effort towards extending the much
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times of distress Let us lend support and join for noble cause.
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