[aaykarbhavan] source Business standard and Times of India

Source  Business standard State mulls purchase tax to replace local body levy

SANJAY JOG Mumbai, 29 June The beleaguered Congress- Nationalist Congress Party ( NCP) government in Maharashtra, which faced a strong opposition from traders during general elections, has proposed to introduce a new tax to abolish the controversial local body tax ( LBT) in 26 municipal corporations, excluding Brihan Mumbai Municipal Corporation. According to the proposal drafted by the finance and sales tax departments, the tax will be part of the VAT ( value- added tax) Act after some modification. The new tax, which will be aform of purchase tax, will be linked to the five VAT schedules, namely zeo per cent, one per cent, five per cent, 12.5 per cent and 25 per cent and will be in small percentage. The government proposed to keep auniform rate as demanded by traders. The tax, which was discussed with the traders just four days ago, will likely be imposed from November 1. Chief Minister Prithviraj Chavan last week announced that the government was in the process of bringing out an alternate tax to repeal LBT. NCP has been quite aggressive in pressing for abolition of LBT in the run- up to the assembly election, while the Bharatiya Janata Party had threatened to launch agitations opposing the same. LBT was introduced in Maharashtra in 2010 in a phased manner beginning with tier- III cities by scrapping the octroi duty ( tax levied on the entry of goods into municipal limits of Maharashtra by the municipal corporations of the state since 1965). In 2013, LBT was also applied to tier- I and tierII cities, except Mumbai. The government had proposed returning to octroi or introducing a three per cent surcharge on VAT. These proposals, however, were opposed by the traders. A senior official told Business Standard: " Under the new tax regime a separate challan will have to be paid for its payment in VAT department. The same tax will be transferred to the respective municipal corporation automatically. Hence, the autonomy of the municipal corporation is here to stay as is their revenues. The exempted categories in VAT such as sugar, textiles and food grains will not attract the new tax." Only companies in the municipal corporation area and those registered with VAT department would pay the new tax, added the official. "The exemption will be according to VAT rules, where the turnover is up to ₹ 10 lakh. Besides, penalty and interest will be also be according to VAT Act. Separate annexure for purchase returns will be filed with VAT returns," the official said. However, various bodies representing the trading community have opposed the new tax proposal. They said the government was again getting into one more format for assessment that was not acceptable. [1]According to the proposal drafted by the finance and sales tax departments, the tax will be part of the VAT Act after some modification [1]Chief Minister Prithviraj Chavan last week announced that the government was in the process of bringing out an alternate tax to repeal LBT [1]LBT was introduced in Maharashtra in 2010 in a phased manner TAX TALES

 

Anomalies in income-tax laws NEHA PANDEY DEORAS "I fyour employer's private provident fund ( PF) trust hasn't yet secured an exemption certificate from the labour ministry or the Employees' Provident Fund Organisation ( EPFO), you might not get income tax exemption for contribution towards the fund, under Section 80C," says Kuldip Kumar, executive director and partner, PricewaterhouseCoopers. Withdrawals from such trusts, too, will be taxable; withdrawals from exempted trusts are fully exempt. Similarly, those retiring from a company whose PF trust does not have tax exemption might have to pay tax on the corpus. In August 2013, the EPFO had asked about 300 private PF trusts to send their pending tax exemption proposals by November. However, many of these haven't yet secured exemption. As the Finance Act wasn't amended in February this year, the extension expired on March 31. Suresh Surana, founder of tax advisory firm RSM Astute Consulting, says tax exemption for leave travel allowance ( LTA) should be provided for a block of four years. Currently, tax exemption for LTA is allowed for two years, in a block of four calendar years. " This is at a time when the Income Tax ( I- T) Act follows the concept of ' financial year'. Now, even the Companies Act considers financial years, not calendar years. It will help stick to one standard definition of a year," says Surana. The current block of four years is January 1, 2014, to December 31, 2017. The concept of a ' calendar year' was used in Section 10( 5), at a time when there was no uniform definition of ' previous year'. It has been more than two decades since the uniform ' previous year' was introduced as April to March. However, there has been no amendment in this regard, Surana adds. This isn't the only anomaly in income tax laws. Gautam Nayak, partner of CNK & Associates, says, " A house buyer gets exemption of up to ₹ 1.5 lakh for interest repayment towards a home loan for his first house. However, he gets unlimited exemption from interest repayment for a loan for a second house ( or beyond). This, in away, disincentivises the first purchase. Not every one can afford a second house." But if a house property ( first or second) is let out, the unlimited tax exemption is available for interest repayment towards a home loan for the house. Redevelopment of properties is common, at least in metros. Sometimes the I- T department says redeveloped properties are akin to new properties, as you surrender a property and get a new one, with extra FSI ( floor space index). While the property owner might say he has reinvested in an existing property, I- T official may consider redevelopment to be a deemed sale and purchase of property. At the same time, there is extra income by way of rentals till the time one's property is redeveloped. Section 50( C) might only add to woes. According to this section, if a house is sold at a price lower than the stamp duty in the state, the minimum valuation of a property will be considered to be at least the same as the stamp duty value. Under the I- Tax Act, e- filing of tax returns is compulsory in the case of certain taxpayers, like those whose total annual income exceeds ₹ 5 lakh. " Though there are a lot of benefits associated with filing returns online, the biggest disadvantage is taxpayers have to follow a set pattern in the online returns form. Thus, they are unable to put forth their view or position ( by way of a note) for seeking exemption on a certain income or transaction. This could result in severe penalties —three times the tax involved," says Surana. For instance, one could seek tax exemption on proceeds from the sale of a house by investing in capital gains bonds, qualified under Section 54( EC). Now, the law seeks investment of up to ₹ 50 lakh in these bonds each financial year. So, if one sells a house in January 2015, he/ she can invest ₹ 50 lakh by March 2015 and another ₹ 50 lakh in April 2015. Many judgments have interpreted the law in a similar way, though many assessing officers tend to disagree. But the e- filing form does not provide taxpayers any space to explain this stand and avoid a penalty. Nayak says in the US, mutual fund schemes clearly state the instruments they invest in. And, tax on the returns from these products are aligned. But that is not the case in India. " For instance, debt mutual fund schemes invest in interest- bearing at the hands of employees —only up to ₹ 1 lakh. Any was taxed for contributions of more than ₹ 1 lakh. He adds there are two types of tax treatments meted to employees when one owns a car and when one is provided a car. "Irrespective of the amount a company spends on the maintenance of a car provided to its employee, the employee is taxed at ₹ 1,800 or ₹ 2,400 per cubic cc amonth when he uses employer provided car. But when an employee seeks reimbursement for a car he owns and uses for professional and personal reasons, the value of perquisite is the amount spent by the employee on maintenance, less ₹ 2,400 or ₹ 1,800 ( as applicable)," says Kumar. Recurring alimony ( paid every month) is taxed twice. If a person pays alimony, it is from his/ her income/ salary, which is anyway taxed at the hands of the earner. But the spouse who receives the alimony also has to pay tax on it, as it is considered to be income at the hands of the receiver, says Nayak. However, a lump- sum alimony is not taxable at the hands of the receiver. Under I- T tax laws, gifts received from relatives are taxexempt. But are gifts received by an HUF ( Hindu Undivided Family) from the relatives of its members or those of the karta considered gifts received from relatives? " There are two views: First, an HUF is an abstract entity and it cannot have any relatives; therefore, gifts received from the relatives of the karta/ members will be taxable at the hands of an HUF. Second, an HUF is only a group of family members and their relatives can be considered relatives of the HUF. Therefore, gifts received from the relatives of the karta/ members should be exempt from tax," says Vaibhav Sankla, director at tax consultancy H& R Block. It is not just about archaic limits, there are a number holes which, if COMPLICATED TAX NORMS |The I- T Act follows the concept of financial year for exemptions but for LTA, it follows calendar year |Exemption for interest repayment for the first home loan is ₹ 1.5 lakh but it is unlimited for the second house |There is no limit for claiming tax benefits for interest repayment for a let- out property |Redeveloped properties can be considered a new property |No clarity on whether only up to ₹ 50 lakh can be invested in 54( EC) bonds or can one invest more |Returns from growth option of debt funds are considered to be capital gains when these invest in interest bearing instruments |Section 17( 2) exempts employer's contribution to super annuation fund only up to ₹ 1 lakh; contribution over ₹ 1 lakh is perquisite |Different tax treatment for employees who own and use their car and those who use employer provided car |Recurring alimony taxed both in the hands of payer and receiver, both as income; lump sum alimony not taxed twice   BRIEF CASEN [1] M J ANTONY SC asks CLB to fast- track old case Setting a record of sorts in litigation, two groups of shareholders in a tourism resort company have filed 80 cases against each other in the Company Law Board ( CLB), the Delhi High Court and the Supreme Court. It prompted the apex court to wax eloquent on the virtues of mediation. The Supreme Court stated in this case, Vikram Bakshi vs Sonia Khosla, that the sponsors of the company aimed at synergy to " make one plus one as 11 and not two, but ended up where one minus one is not only reduced to zero but became negative." The project has also become defunct. The CLB had passed a status quo order seven years ago, and the Supreme Court continued it and asked the CLB to end the dispute in six months. Meanwhile, the judgment observed that such differences in companies arise day in and day out, but in this case, one petition in the CLB assumed " unprecedented, monstrous proportions". The Court said that mediation is the best solution for all parties. "Via mediation the parties will become partners in the solution rather than partners in the problems," the Court stated. " While providing satisfaction to the litigants, it also solves the problem of delay in our system and further contributes towards economic, commercial and financial growth and development of the country," the judgment stated. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> IT dispute from princely era The Supreme Court has also settled 17 income tax appeals going back to 1970 and involving five trust deeds executed by the former ruler of Gondal, Gujarat — three in the US and two in the UK. The late ruler was including whole of his income from the trusts in his returns. However, his son took the stand that these incomes were not to be included either for income tax purposes or for wealth tax purposes. He maintained that the earlier assessments were wrong. He approached the settlement commission which ruled that these settlements ( deeds) were in the nature of ' specific trusts' and therefore, rightly included in the total income of the settler. The dispute travelled through several appellate forums, and ultimately the Supreme Court decided that the trusts were discretionary and not specific. The terms of the deeds left discretion to the trustees to disburse benefits to the beneficiaries. A ' discretionary trust' is one which gives beneficiary no right to any part of the income of the trust property, but vests it in the trustees. " The beneficiary has no more than a hope that the discretion will be exercised in his favour," the judgment said while dismissing the all appeals of the revenue authorities, titled Commissioner of wealth tax vs Estate of late HMM of Gondal. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Public sector firms must act fairly The Supreme Court has ticked off Bharat Petroleum Corporation Ltd ( BPCL) for acting unfairly in terminating the fuel dealership of a partnership firm. The partners had differences among themselves and the corporation did not approve of the reconstitution of the firm. The dispute was taken to the Allahabad high court, which made a financial arrangement. BPCL was not satisfied with it and appealed to the Supreme Court. The apex court upheld the high court arrangement and stated that the action of BPCL in terminating the dealership was not justifiable. The Supreme Court stated in its judgment in the case, BPCL vs B M Motors, that " the arrangement arrived at between the partners may not have been disclosed to the corporation, but such non- disclosure should not be allowed to result in termination of the agency... The corporation would in such a case be expected as a public sector entity, to act fairly and objectively to prevent one party taking undeserved advantage over the other on technical or procedural grounds. There is no gain saying that while considering reconstitution of the partnership the corporation shall be free to stipulate conditions that would protect its business interest, goodwill and reputation among its consumers." >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Order to release confiscated fertiliser The Bombay High Court last week ordered release of a consignment of fertiliser imported by Tata Chemicals Ltd but confiscated by the Collector of Raigad under the Essential Commodities Act. A preliminary analysis of the product found that it was not of standard quality. But when the company sought another test by the regional fertiliser control lab, it was found to be ' standard'. The authorities nevertheless proceeded to auction the stock. The company moved the high court and it quashed the order of the authorities. The high court stated that according to directions of the Ministry of Agriculture, the report received from the referee lab superseded the report of the first. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Lacuna in arbitration law The Delhi High Court has held that the relevant date for determination of the rate of exchange in executing an international arbitration award is the date on which the award becomes a final decree of the court, after determining all objections. The high court also pointed out that there is a lacuna in the Arbitration and Conciliation Act, 1996 regarding the interest due during the litigation. The Delhi High Court cited a Bombay High Court observation in a similar case, and pointed out that this lacuna operated to the disadvantage of the successful party in the claim. It would be put to great loss due to delay and " it would put a premium to dishonest objections to the award which are meant to delay execution without risk of incurring charges." In view of the legal position, the Delhi High Court did not order interest to the successful party in this case, Progetto Grano SA vs Shri Lal Mahal Ltd. The Italian firm was aggrieved by the alleged low quality of food grains exported by the Indian firm. The dispute was arbitrated by the Grain and Feed Trade Association in London. Two awards were passed against the Indian firm which challenged them in the high court without success. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Court can appoint arbitration panel When one of the parties to an arbitration agreement does not name its nominee for the arbitral tribunal, the Chief Justice of a high court or his nominee can appoint the nominee and even name the presiding arbitrator, the Calcutta high court stated in its judgment, Rashmi Metaliks vs West Bengal Minerals Development & Trading Corp Ltd. In this case, the government company opposed arbitration on several grounds, but the high court ruled that those issues shall be decided by the tribunal. The dispute was over a 2008 agreement to set up an integrated steel and power plant in the state. When disputes cropped up, the private company sought arbitration, but the government company was not agreeable. The former moved the high court which set up a three- member tribunal. A weekly selection of key court orders   Source  Times  of  India     A growing number of companies are allowing shareholders to cast their votes online. Here's how you stand to benefit from this new facility Reliance Industrial Infrastructure will have its annual general meeting on 2 July. If you don't want to travel to Mumbai, but still want to be heard, and rightfully so, you can exercise your rights even before the AGM gets underway. Between 26 and 29 June, RIIL shareholders will have the opportunity to cast their votes online on all proposed resolutions. More and more companies are tying up with online agencies to provide e-voting facility to their shareholders. Now, all you have to do is to point and click from within the comforts of your home to be a part of the decision making process. Power to minority shareholders Small shareholders allege that their concerns are never paid heed to and, instead, promoters take decisions to further their own interests. But now, as companies adopt the e-voting mechanism, investors can finally have a say in company matters. "For most small shareholders it is not possible to travel to another city where the meeting is being held to cast their vote," says Amit Tandon, managing director, Institutional Investor Advisory Services (IIAS). E-voting is an electronic system where shareholders can vote on resolutions in electronic form. You have to log on to a secure online platform by using a unique ID and cast your vote.     In June 2012, Sebi had made it mandatory for the top 500 listed companies to facilitate e-voting for all resolutions that demand postal ballots in accordance with the Companies Act or other relevant regulations. Come 1 October, all listed companies will be required to provide this facility. Experts say shareholders must make most of this opportunity. "The mechanism makes it so much easier for investors to cast their votes. There is no reason why shareholders should not exercise their rights now," adds Tandon. Shriram Subramaniam, founder, InGovern, feels this is a highly empowering system and insists retail investors should participate. "With this facility, the access available to the shareholder is very high." The facility is available to those holding shares in demat form as well as for those holding physical share certificates. How e-voting works Shareholders need not register for e-voting. If your email id is in the records of the issuer or agent, you will automatically receive an email from the depository. It will contain the user ID and password for logging into the online portal. If your email ID is not available with them, the login details will be dispatched to your address in a PIN mailer. All you have to do is to login to the portal using these details. At the first login attempt, you will be prompted to change the password. Then you will be asked to select the company you hold shares in. Once you enter the voting section, you will be able to cast your votes against each resolution, to the extent of the total voting rights (shares) you hold. Each resolution will be accompanied by a choice: 'for', 'against' and 'abstain'. You can vote on all or select topics. You can also split votes, 'for' or 'against', a resolution in any proportion within the total voting rights held by you. However, votes once cast cannot be modified and will be considered final. At the end of the voting period, the scrutinizer will collate the votes downloaded from the e-voting system and the votes received from other sources to declare the final results. The results of the voting will be declared within two days after the resolution is passed at the company's shareholder meeting.

 

--

A.Rengarajan

Company  Secretary

Chennai

93810  11200

"Positive belief in yourself will give you the energy needed to conquer the world and this belief is the power behind all creation." 
― Stephen Richards, Think Your way to Success: Let Your Dreams Run Free

CS Benevolent Fund is a collective effort towards extending the much needed financial support to the community of Company Secretaries in times of distress  Let us lend support and join for noble cause.

SHARING KNOWLEDGE SKY IS THE LIMIT

This mail and its attachments (if any) are confidential information intended for persons to whom the email is planned for delivery by the sender. If you have received this mail in error please notify the sender of the error by forwarding the email and its attachments (if any) and then deleting the mail received in error and the relevant email trail in this connection without making any copies or taking any prints.

__._,_.___

---

Posted by: CS A Rengarajan <csarengarajan@gmail.com>

---

receive alert on mobile, subscribe to SMS Channel named "aaykarbhavan"
[COST FREE]
SEND "on aaykarbhavan" TO 9870807070 FROM YOUR MOBILE.

To receive the mails from this group send message to aaykarbhavan-subscribe@yahoogroups.com

Visit Your Group

• New Members 1

• Privacy • Unsubscribe • Terms of Use