Income earned by an investment co. from premature redemption of an investment is a business profit
June 21, 2014[2014] 45 taxmann.com 298 (Punjab & Haryana)
IT : Where assessee, engaged in business of dealing in shares, debentures, mutual funds etc., earned income from premature redemption of a dividend plan, said income was liable to be taxed as business income
No business income if shares held as investment were sold at a few occasions in short span for better returns
June 21, 2014[2014] 45 taxmann.com 342 (Mumbai - Trib.)
IT: Merely because assessee liquidates its investment within a short span of time, which had given better overall earning to assessee, it would not lead to conclusion that assessee had no intention to keep on funds as investor in equity shares, but was actually intended to trade in shares
Regards
File Return of Deposits in Form DPT-4 before 30th June 2014
CA Sandeep Kanoi
As per Section 74(1) of Companies Act, 2013 every Company is required to file Return of Deposits in Form DPT -4 along with Auditor's Certificate thereon within three months from the commencement of Companies Act, 2013 i.e. on or before 30th June 2014.
Form DPT -4 Shall be filed with E-Form GNL-2 which shall also contain List of Depositors and Auditors Certificate.
The Form DPT-4, List of Depositors and Auditors Certificate shall be scanned and attached to e-Form GNL-2 (Circular No. 09/2014 dated 25.04.2014) which shall be filed on MCA-21 site. The Due date for filing the same is 30th June -2014.
We are Attached herewith the format of following :
Further, company is required to ensure repayment of such deposit on or before 31.03.2015 or date of repayment, whichever is earlier.
—
Extract of Section 74 of the Companies Act, 2013
74. Repayment of deposits, etc., accepted before commencement of this Act.
(1) Where in respect of any deposit accepted by a company before the commencement of this Act, the amount of such deposit or part thereof or any interest due thereon remains unpaid on such commencement or becomes due at any time thereafter, the company shall—
(a) file, within a period of three months from such commencement or from the date on which such payments, are due, with the Registrar a statement of all the deposits accepted by the company and sums remaining unpaid on such amount with the interest payable thereon along with the arrangements made for such repayment, notwithstanding anything contained in any other law for the time being in force or under the terms and conditions subject to which the deposit was accepted or any scheme framed under any law; and
(b) repay within one year from such commencement or from the date on which such payments are due, whichever is earlier.
(2) The Tribunal may on an application made by the company, after considering the financial condition of the company, the amount of deposit or part thereof and the interest payable thereon and such other matters, allow further time as considered reasonable to the company to repay the deposit.
(3) If a company fails to repay the deposit or part thereof or any interest thereon within the time specified in sub-section (1) or such further time as may be allowed by the Tribunal under sub-section (2), the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees and every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both.
Income Tax Appeal Filing Procedure in Brief
CA Abhijit Sawarkar
APPEALS PROCEDURES OF INCOME TAX:This article has been is to focus on the provision and procedures relating to Filing the Appeals. One Law Dictionary defines 'appeal' as a proceeding taken to rectify an erroneous decision of a court by submitting the question to a higher court, or court of appeal. Right to appeal under income tax law is a creation of statute and not an inherent right. Appeal can be filed only against orders listed in the Income
Income tax liability is determined at the level of Assessing Officer first. A tax payer aggrieved by various actions of Assessing Officer can appeal before Commissioner of Income Tax (Appeals). Further appeal can be preferred before the Income Tax Appellate Tribunal. On substantial question of law, further appeal can be filed before the High Court and even to the Supreme Court. With the ladder up approach appeal procedures are explained below:
- Appeal Before Commissioner (Appeals)
- Appeal Before Income Tax Appellate Tribunal
- Appeal Before High Court
- Appeal Before Supreme Court
APPEAL BEFORE COMMISSIONER (APPEALS):
| Heading | Particulars |
| When appeal can be filed before Commissioner (appeals) | When a tax payer is adversely affected by Orders as under passed by various Income tax authorities:
|
| Form of appeal | Form No. 35 – Containing details of "Relief claimed in appeal" , "Statement of Facts", "Grounds of appeal" Signed and verified by the individual tax payer himself or by a person duly authorised by him holding valid power of attorney |
| Payment of accepted tax liability must before filing appeal | An appeal will be admitted by Commissioner (Appeals) only if tax as per the returned income has been paid prior to filing of appeal |
| Appeal fees: | If Total Income determined: Less than Rs. 1,00,000/- – Rs. 250 More than Rs.1,00,000/- but less than Rs.2,00,000/ – Rs 500 More than Rs. 2,00,000/ – Rs. 1000 |
| Time for filing appeal | Within 30 days from the date of service of notice of demand relating to assessment or penalty order. The Commissioner (Appeals) may admit an appeal after the expiration of period of 30 days, if he is satisfied that there was sufficient cause for not presenting the appeal within the period of 30 days. |
| Appeal procedure | On receipt of Form no. 35, Commissioner of Income-tax (Appeals) fixes date and place for hearing the appeal by issuing notice to the tax payer and the Assessing Officer, against whose order appeal is preferred. The tax payer has a right to be heard either personally or through an Authorized Representative. |
| Filing of additional evidence | During appeal proceedings, the tax payer is not entitled to produce any evidence, whether oral or documentary other than what was already produced before the Assessing Officer. Unless: 1) Where the Assessing Officer has refused to admit evidence which ought to have been admitted; or 2) Where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to be produced by the Assessing Officer; or 3) Where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal; or 4) Where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. Normally, additional evidences are to be accompanied with an application stating the reasons for their admission, after which the Commissioner (Appeals) may admit the same after recording reasons in writing for its admission. Before taking into account the additional evidence filed, Commissioner (Appeals) is to provide reasonable opportunity to the Assessing Officer. For examining the additional evidence or the witness as well as to produce evidences to rebut additional evidences filed by the tax payer. |
| Appeal decision | After the hearing is concluded, Commissioner (Appeals) passes order in writing, disposing of the appeal and stating the decision on each ground of appeal with reasons. In case of assessment and penalty, Commissioner (Appeals) may confirm, reduce or enhance it. |
APPEAL BEFORE INCOME TAX APPELLATE TRIBUNAL (ITAT)
| Heading | Particulars |
| When appeal can be filed before ITAT | Tax payer can file appeal before the Income Tax Appellate Tribunal against the following orders: 1) Order by Commissioner(Appeals) u/s 250/154/271/ 271A/272A; 2) Order by Commissioner u/s 12AA on registration application by a charitable or religious trust 3) Order by Commissioner u/s 263 revising Assessing Officer's order considered prejudicial to the interest of revenue; 4) Order by Commissioner u/s 154 to rectify an order u/s 263 5) Penalty order passed by Commissioners u/s 271 or section 272A; 6) Penalty order passed by Chief Commissioner u/s 272A; 7) Order passed by Assessing Officer u/s 143(3)/147 in pursuance of direction of Dispute; |
| Form of appeal | Form No. 36 – To be filed in triplicate and is to be accompanied by two copies of order appealed against |
| Appeal fees: | Total Income as computed by Assessing Officer: Less than Rs.1 lakh – Rs. 500 More than Rs. 1 lakh but less than Rs. 2 lakh – Rs. 1,500 More than Rs. 2 lakh – 1% of assessed income, subject to maximum of Rs.10,000 Where the subject matter of appeal relates to any other matter, fee of Rs 500/- is to be paid. An application for stay of demand is to be accompanied by fee of Rs. 500 |
| Time for filing appeal | Within 60 days of the date on which order appealed against is communicated to the taxpayer or the Commissioner |
| Memorandum of cross objections | The tax payer or the Assessing Officer on receipt of notice that an appeal has been filed before the Appellate Tribunal against order of Commissioner (Appeals) by the other party can, within 30 days of receipt of notice, file a memorandum of cross objections in Form No. 36A. Such memorandum of cross objections can be filed even if no appeal is filed by the tax payer or the Assessing Officer himself. |
| Appeal procedure | The appellant or the respondent, as the case may be, may submit a paper book in duplicate containing documents or statements or other papers referred to in the assessment or appellate order, which it may wish to rely upon. The paper book duly indexed and page numbered is to be filed at least a day before the hearing of the appeal along-with proof of service of copy of the same on the other side at least a week before. The Appellate Tribunal fixes the date for hearing the appeal and notifies the parties specifying date and place of hearing of the appeal. A copy of memorandum of appeal is sent to the respondent either before or along with such notice. The appeal is heard on the date fixed and on other dates to which it may be adjourned. If the appellant does not appear in person or through an authorized representative when appeal is called on for hearing, the ITAT may dispose of the appeal on merits after hearing the respondent. |
| Filing of additional evidence | The parties to the appeal are not entitled to produce additional evidence of any kind, either oral or documentary before the Tribunal. |
| Appeal decision | Normally appeals are heard by a Bench comprising one judicial member and one accountant member. Appeals where total income computed by the Assessing Officer does not exceed Rs. 5 lakh may be disposed of by single member Bench. The President of ITAT is empowered to constitute Special Bench consisting of three or more than three members for disposal of any particular case, one of whom would necessarily be a judicial member and one an accountant member The Bench normally pronounces its orders in Court. |
APPEAL BEFORE HIGH COURT
Appeal against Appellate Tribunal's order lies with the High Court, Where the High Court is satisfied that the case involves a substantial question of law. Appeal to the High Court against Appellate Tribunal's order can be filed by the tax payer or the Chief Commissioner/Commissioner within 120 days of receipt of the order and in the form of memorandum of appeal, precisely stating the substantial question of law involved. If the High Court is satisfied that a substantial question is involved, it would formulate that question. High Court hears the appeal only on the question of law so formulated; however, the respondents can argue at the time of hearing that case does not involve such question of law. Appeal filed before High Court is heard by bench of not less than two Judges and decision is by majority.
APPEAL BEFORE SUPREME COURT
Appeal against High Court's order in respect of Appellate Tribunal's order lies with the Supreme Court in those cases, which are certified to be fit one for appeal to the Supreme Court. Special leave can also be granted by the Supreme Court under Article 136 of the constitution of India against the order of the High Court.
Allahabad Bank wasn't at fault for TDS default on interest payments if depositors had paid taxes thereon
IT: Recovery provisions under Section 201(1) can be invoked only when loss to revenue is established; that can only be established when it is demonstrated that the recipient of income had not paid due taxes thereon and the recipient of the accounts had the liability to tax
Facts:
• The Income-tax authorities surveyed the assessee, a nationalized bank. During survey it was noticed that assessee had not complied with TDS obligations in respect of interest on certain deposits placed by the customers. In this backdrop, the demand was raised against it under Section 201(1).
The Tribunal held as under:
| (1) | The Onus is on revenue to demonstrate that the taxes have not been recovered from the person who had the primary liability to pay taxes, and it was only when the primary liability was not discharged that vicarious recovery liability could be invoked. | |
| (2) | Once all the details of the persons to whom payments could had been made were on record, it was for the AO, who had all the powers to requisition the information from such payers and from the income-tax authorities, to ascertain whether or not taxes had been paid by the person in receipt of the amounts from which taxes had not been withheld. | |
| (3) | Recovery provisions under Section 201(1) can be invoked only when loss to revenue is established; that can only be established when it is demonstrated that the recipient of income has not paid due taxes thereon and the recipient of the accounts had the liability to tax. | |
| (4) | Thus, the matter was restored to file of AO for fresh adjudication in accordance with the law and in the light of aforementioned observations. |
Prior to amendment by Finance Act 2013, losses from trading in derivatives were speculative losses
IT : Prior to 1-4-2014, loss incurred in respect of trading in commodity derivatives was to be treated as speculation loss
IT : Prior to insertion of clause (e) of proviso to section 43(5) which was inserted by Finance Act, 2013 w.e.f. 1-4-2014, loss incurred in respect of trading in commodity derivatites was to be treated as speculation loss
Sec. 40(a)(ia) applies to sum paid during the year as well; ITAT rejects ratio of Merilyn Shipping
IT : Provision of section 40(a)(ia) would cover not only amounts which are payable as on 31st March of a particular year but also which are payable at any time during relevant year
Question of fact could not be replied by ITAT applying ratio of some another case without examining case on merit
IT: Question of agency being a question of fact could not be resolved by merely applying reasoning adopted by Tribunal in some other case, thus, where Tribunal on basis of its own previous order, and without any material available before it held that relationship between parties was of principal and agent and that section 40A(3) was inapplicable, matter was to be remanded back for fresh adjudication
Disallowance U/s. 40A(2)(b) on account of Interest @ 18% – Held not excessive
Issue - The assessee claimed that the assessee borrowed unsecured loan @ 18% from related as well as unrelated parties. Therefore, the rate of 18% cannot be said to be excessive. Reliance was placed upon the decision in the case of Balkrishna Goyal vs. DCIT, I.T.A.No. 590/Ind/2009, wherein it was held that 18 % interest from the related party is not excessive or unreasonable. On the other hand, the ld. Sr. DR defended the addition by contending that from the bank loan is available at the lesser rate.
The facts in brief are that the assessee declared income of Rs. 48,13,806/- on 30.09.2008. The assessee obtained total loan funds amounting to Rs. 5,63,54,055/- as on 31.3.2008 consisting of secured loan of Rs. 1,72,72,838/- and unsecured loan of Rs. 3,87,81,217/-.
The secured loan mainly consisted of Bank O.D. Limit availed from State Bank of India. Against mortgage of immovable properties of the firm where as unsecured loan are mainly taken from friends and relatives without any security and on fixed repayment terms.
The assessee firm was also having funds amounting to Rs. 2,47,81,199/- in the form of partners' capital.
The Assessing Officer asked the assessee to furnish interest details on unsecured loans. The ld. Assessing Officer compared the rate of interest with rate of 15% collected by the assessee on loan given by it and, therefore, he disallowed interest of Rs. 7,92,321/-.
Keeping in view the totality of facts and the decision of the Tribunal in the case of M/s. Balkrishna vs. DCITY ( I.T.A.No. 590/Ind/2009) on identical facts, wherein the effective rate of bank interest has also been discussed and was held that burden is on the revenue to show that whatever an assessee paid to the persons specified u/s 40A(2) is more than the prevailing market rates.
We note that whatever funds the assessee have arranged from the Bank, it had already arranged and the remaining funds required for business were arranged from other sources. Bank loans are for the year just on asking or personal guarantee and other collateral securities, but the loans from friends and relatives are available on personal relations. In view of these facts, we find no justification to make the addition. Thus, this ground of the assessee is allowed, more specifically when it is the businessman, who has to consider other attendant circumstances and business exigencies.
Source- M/s. Shivam Cotton Corporation Vs. Addl. CIT (ITAT Indore), I.T.A. No. 29/Ind/2014, Date of pronouncement : 13.06.2014
Provisions related to filing DPT-3 & DPT-4 – Return of Deposits
DPT -3 - Return of deposits to be filed with the Registrar.- Every company to which Companies (Acceptance of Deposits) Rules, 2014 apply, shall on or before the 30th day of June, of every year, file with the Registrar, a return in Form DPT-3 along with the fee as provided in Companies (Registration Offices and Fees) Rules, 2014 and furnish the information contained therein as on the 31st day of March of that year duly audited by the auditor of the company.
DPT-4 - Statement regarding deposits existing as on the date of commencement of the Act.- For the purposes of clause (a) of sub-section (1) of section 74, the statement shall be in Form DPT-4 and needs to be filed within three months from the commencement of Companies Act, 2013 i.e. on or before 30th June 2014.
Summary of filing DPT-3 & DPT-4 :
| S. No. | Situation | Filing |
| Where loan/deposits were falling in the definition of Deposits under Companies (Acceptance of Deposits) Rules, 1975 on 31.03.2014 and now the loan/deposits also falls in the definition of deposits under Companies (Acceptance of Deposits) Rules, 2014. | DPT-3 & DPT-4 (Loan/deposits which are in the Non-Exempted category of definition of deposits under Companies (Acceptance of Deposits) Rules, 2014 need to be repaid before31.03.2015). | |
| Where loan/deposits were not falling in the definition of Deposits under Companies (Acceptance of Deposits) Rules, 1975 on 31.03.2014 and now the loan/deposits falls in the definition of deposits under Companies (Acceptance of Deposits) Rules, 2014. | DPT-4 (Loan/deposits which are in the Non-Exempted category of definition of deposits under Companies (Acceptance of Deposits) Rules, 2014 need to be repaid before31.03.2015). (DPT-3 to be filed from 30.06.2015onwards). | |
| Where loan/deposits were not falling in the definition of Deposits under Companies (Acceptance of Deposits) Rules, 1975 on 31.03.2014 and now the loan/deposit also does not falls in the definition of deposits under Companies (Acceptance of Deposits) Rules, 2014. | DPT-3 & DPT-4 are Not applicable. | |
| Where loan/deposits were falling in the definition of Deposits under Companies (Acceptance of Deposits) Rules, 1975 on 31.03.2014 and now the loan/deposits does not falls in the definition of deposits under Companies (Acceptance of Deposits) Rules, 2014. | DPT-3 & DPT-4 are Not applicable. |
DPT-3 is not a new form, it is a substitute of form under Rule 10 of The Companies (Acceptance of Deposit) Rules, 1975. Earlier, the return was simultaneously furnished to RBI, but now that requirement has been dispensed with. The earlier form could be filed with non-audited data of 31st March of previous financial year, but now the form requires data of net-worth as per latest audited balance sheet preceding the date of return. However, the balance sheet of 31.03.2014 will be drawn as per provisions of Revised Schedule VI of Companies Act, 1956.
DPT-3 is applicable for companies who have deposits as on 31.03.2014 and now those deposits falls in the definition of deposit under Companies (Acceptance of Deposit) Rules, 2014.
However, DPT-4 is a one-time form, this being applicable for this year only (i.e 30.06.2014). In fact, the section 74 will lose its relevance after one year of the commencement of Act. It is through DPT-4, ROC will keep a track of those companies which need to repay loan/deposit before 31.03.2015.
Explanation to Rule 19 of The Companies (Acceptance of Deposit) Rules, 2014 can be referred for repayment of deposits accepted under Companies Act, 1956:
"It is hereby clarified that in case of a company which had accepted or invited public deposits under the relevant provisions of the Companies Act, 1956 and rules made under that Act (hereinafter known as "Earlier Deposits") and has been repaying such deposits and interest thereon in accordance with such provisions, the provisions of clause (b) of sub-section (1) of section 74 of the Act shall be deemed to have been complied with if the company complies with requirements under the Act and these rules and continues to repay such deposits and interest due thereon on due dates for the remaining period of such deposit in accordance with the terms and conditions and period of such Earlier Deposits and in compliance with the requirements under the Act and these rules."
DPT-3 & DPT-4 will be filed as an attachment to e-Form GNL-2 alongwith Auditor's certificate.
(CA Amit G. Chandani, ACA, ACMA, Lic. ICSI, B.Com- (@) amitgchandani@icai.org)
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COMPANY CASES (CC) HIGHLIGHTS
F Provisions for compulsory voting by postal ballot and by electronic voting to exclusion of actual meeting do not apply to meeting ordered by court : Godrej Industries Ltd., In re (Bom) p. 441
F Respondent before CLB not entitled to file reply to counter filed by co-respondent, CLB cannot exercise its inherent powers to permit filing of such pleading : P. S. Venkatachalam v. Samuthralakshmi Spinners P. Ltd. (Mad) p. 454
F Bar on execution against person or property outside jurisdiction of court : Examination of judgment-debtor as to his property, not execution : R. A. International v. Prateek Plasto Metal P. Ltd. (Cal) p. 460
F Circulars :
General Circulars :
Circular No. 14 of 2014, dated 9th June, 2014-Clarifications on Rules prescribed under the Companies Act, 2013-Matters relating to appointment and qualifications of directors and independent directors-regarding p. 323
Circular No. 15 of 2014, dated 9th June, 2014-Clarification regarding maintaining register in new format (sub-section (9) of section 186)-regarding p. 326
Circular No. 16 of 2014, dated 10th June, 2014-Applicability of PAN requirement for Foreign Nationals p. 326
Circular No. 17 of 2014, dated 11th June, 2014-Filling of MGT-10-Clarification-regarding p. 328
F Rules :
Companies (Management and Administration) Rules, 2014-Contd.
F Insight into CCI's approach on non-compete clauses-Shilpi Jain p. 63
F Non-performing assets : A study with special reference to the Securitisation Act-G. S. Dubey p. 57
F Securities and Exchange Board of India edicts on corporate governance-S. Balakrishnan p. 49
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