Transfer of goodwill to partners - reconstruction of firm - transfer - extinguishment of right - AO noticed that assessee firm had created and self-generated assets in the form of goodwill and transferred it to the current accounts of the four partners proportionately consequent to reconstitution of assessee firm - Whether there was transfer or not and in view of the circular of CBDT notional transfer cannot be subject to taxation – Held that:- The assets of the partnership was revalued and for the first time they valued the goodwill at ₹ 7,59,28,000 - No portion of the goodwill is transferred to the retiring partners, there is no transfer of the capital asset – Tribunal rightly was of the view that if there is no transfer of capital asset, Section 45(4) is not attracted - the partnership firm did not cease to hold the property - its right to the property is not extinguished - the retiring partners did not acquire any right in the property as no property was transferred in their favour – thus, the order of the Tribunal is upheld – Decided against Revenue.
Empanelment with UCO Bank for Empanelment of Concurrent Auditors
UCO BANK, AUDIT & INSPECTION DEPARTMENT, HEAD OFFICE, KOLKATA
NOTIFICATION
[FOR EXPRESSION OF INTEREST FOR EMPANELMENT OF CONCURRENT AUDITORS]
9th August, 2014
UCO Bank invites applications from practicing firms of Chartered Accountants within India, in the prescribed format, who are willing to have their firms empanelled as Concurrent Auditors of the Bank.
The CA firms already on the job of doing concurrent audit of branch (es) allotted to them are also requested to apply afresh for getting renewal of existing assignment of concurrent audit for the audit year 2014-15. It is made very clear that the existing assignment to concurrent auditors, based on the application submitted in response to notifications published during the previous years will not be automatically renewed and they will have to apply afresh for renewal of existing assignment of concurrent audit for the year 2014-15 i.e. from 01.10.2014 to 30.09.2015.
However, there is a major change in the concurrent audit policy of the Bank for the year 2014-15. Now onwards, there will be only one type of audit i.e. Monthly Concurrent Audit of the Branches. Bank has decided to discontinue the earlier system of quarterly concurrent Audit of branches with effect from 01.10.2014.
I. ELIGIBILITY CRITERIA FOR EMPANELMENT:
a) CA firm should preferably be a partnership concern having experience in the field. The Bank may also consider the sole proprietorship concerns and in that case they would be required to submit a declaration that they are full time practicing Chartered Accountants and are not employed elsewhere and do not have any other business interest.
b) Audit firms should preferably have qualified Information System Auditor (CISA/DISA) with necessary exposure of system audit. Since all the branches of the Bank are fully computerized, system audit shall form an integral part of audit of the bank.
c) Audit firm should not have been disqualified by any Bank IBA/RBI/ICAI, while taking-up audit work on earlier occasions.
d) Weightage would be given to the CA firms where the partners themselves are ex-bankers or the firm(s) has got tie-up with ex-bankers with requisite experience and exposure.
e) It is to be ensured that the audit firm or any sister / associate concern / network firm is not conducting the statutory audit of the Bank or any of its branches.
f) Weightage will be given to a firm having exposure in conducting concurrent audit of the Bank branches for public sector / major private sector banks.
g) The firm should have necessary office set up and adequate personnel to ensure proper deployment and timely completion of the assignments. The Headquarter or branch of the CA firm should be located at the place for which they wish to take up audit work. Preference would be given to CA firms which are located at the places of our Bank's Branches.
h) The assignment should be carried out in a professional manner and in case of any misconduct or negligence; the Bank is free to report the matter at any time to ICAI / IBA/RBI. This will be in addition to the disengagement from the Concurrent Audit assignment.
i) The firm will not be allowed to sub-contract the audit work assigned to any outside firm or other persons even though such persons are qualified chartered accountants.
j) A declaration to be furnished by the firm that credit facilities availed by the firm or partners of firm in which they are partners or directors, including any facility availed by a third party for which the firm or its partners are guarantor/s, have not turned non performing asset or are existing non- performing assets, as per the prudential norms of RBI. In case the declaration is found incorrect, the assignment would be immediately terminated, besides the firm being liable for any action under ICAI/ RBI/IBA guidelines.
k) The firm should execute undertaking of fidelity and secrecy on its letter head in the format prescribed by the Bank.
l) Concurrent Auditors would have to sign Do's & Don'ts statement in order to have proper arms length relationship with the Branch/ Department of which they are conducting Concurrent Audit. Such undertaking would be submitted annually.
m) Any other terms and conditions of the assignment as decided by the Bank from time to time.
Submission of application:
The completed application (Hard copy only), in the prescribed format, along with documents as specified in para (f) above, should be sent at the address given below in a properly sealed cover so as to reach us on or before 28.08.2014. The envelope must be superscribed with "APPLICATION FOR EMPANELMENT OF
CONCURRENT AUDITORSยต & be sent by Registered Post/Speed Post. It should be carefully noted that only hard copy of the applications will be accepted. Applications/scanned copies of the applications sent through e-mail or otherwise will not be considered.
Hard copies of the applications reaching us after 28.08.2014 will not be considered for empanelment/selection. The Bank shall send engagement letters to all selected chartered accountant firms through respective Field Inspectorates having jurisdiction over the concerned branches. However, CA firms which do not get our letter of engagement are to be treated as 'not selected' and no further correspondence shall be entertained in respect of fate of their application.
The Dy. General Manager UCO Bank,
Inspection Department, Head Office, (1st floor)
10 B,T.M. Sarani Kolkata – 700 001
Notification – Trade Marks (Amendment) Rules, 2014
Government of India
Ministry of Commerce and Industry
(Department of industrial Policy and Promotion)
Ministry of Commerce and Industry
(Department of industrial Policy and Promotion)
Notification
New Delhi, 1st August 2014
G.S.R. ………… Whereas certain draft rules further to amend the Trade Marks Rules, 2002,were published, as required under sub-section (1) of section 157 of the Trade Marks Act, 1999 (47 of 1999), vide notification of the Government of India in the Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) number G.S.R. 523 (E),dated the 1st August, 2013, in the Gazette of India ,Extraordinary, Part II, Section 3, Sub-section(i), dated the 1s` August, 2013, inviting objections and suggestions from all persons likely to be affected thereby, before the expiry of forty – five days from the date on which copies of the Gazette containing notification were made available to the public;
And whereas, the copies of the said notification were made available to the public on the 26th August, 2013;
And whereas, no objections and suggestions were received from the public;
Now, therefore, in exercise of the powers conferred by sub-sections (1) and (2) of the section 157 of the Trade Marks Act, 1999 (47 of 1999), the Central Government hereby makes the following rules further to amend the Trade Marks Rules, 2002, namely:-
- (1) These rules may be called the Trade Marks (Amendment) Rules, 2014. ( 2) They shall come into force on the date of their publication in the Official Gazette.
- In the Trade Marks Rules,2002 (hereinafter referred to as the said rules), in the First Schedule, in column (3),‑
(a) against serial numbers 1,3,4,5,6 and 7, for the entries "3500.00″, the entry "4000″ shall respectively be substituted;
(b) against serial number 71, for the entry "12,500.00 ", the entry "20000″ shall be substituted.
- In the said rules, (a) in the Second Schedule, in FORM TM-1, FORM TM-51 and FORM -TM 52, for the entries "3500″, the entry "4000″ shall respectively be substituted.
(b) in FORM TM-63, for the entry "12500″, the entry "20000″ shall be substituted.
(F.NO. 8/26/2013-1PR-1V)
(D.V P asad)
Joint Secretary to the Government of India
Note:- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification number G.S.R 114 (E), dated the 26th February 2002, and subsequently amended as follows:‑
(i) G.S.R.428 (E), dated the 20th May, 2010;
ii) G.S.R.1024 (E), dated the 29th December, 2010 ; and
(iii) G.S.R.21 (E), dated the 14th January, 2013.
Income Tax Inspector sentenced in Disproportionate Assets case
Special Judge for CBI cases, Visakhaptnam has convicted Sri Lakimsetty Pulla Rao, the then Income Tax Inspector, Ward-1, Tanuku, West Godavari District (Andhra Pradesh) in a Disproportionate Assets case and sentenced him to undergo three years Simple Imprisonment with fine of Rs.20,000/-. The Special Judge further ordered to confiscate the property of the accused to the extent of disproportionate assets which have already been attached by the court, to the State, after appeal time is over.
The brief allegation of the case is that the accused Sri L. Pulla Rao, the then Income Tax Officer, Ward-1, Tanuku, West Godavari District during the period from 01.01.1995 to 31.10.2002, was in possession of movable & immovable properties in his name and in the names of his family members which were disproportionate to his known sources of income to the tune of Rs.7,05,119/-.
The Trial Court found the accused persons guilty and convicted them.
NEW DELHI, AUG 12, 2014: THE issue before the Bench is - Whether franchise fee remitted to non-resident for using trademark 'Dominos' is required to be partly treated as capital expenditure. And the HC says NO.
Facts of the case
The assessee is carrying on business of manufacturing and sale of pizza from its retail outlet. The assessee had entered into an agreement with M/s Dominos Pizza International, Inc. USA which was paid a lumpsum consideration of 0000, which was capitalised and was not treated as revenue expenditure. The AO treated 25% of the franchise fee as capital expenditure. On apperal, the Tribunal held that 25% of the payment made was capital in nature, while balance 75% was revenue expenditure in the hands of the Indian assessee.
On appeal before the HC, the Revenue contented that it was only concerned with the franchise fee fixed @ 3% of the entire sale, i.e., the turnover of the assessee in India. The said fee was payable in terms of franchise agreement as long as the assessee continued to utilise and use the trademark "Dominos". It was payable annually and was not a lumpsum payment, though the last factor alone may not be determinative whether the payment was revenue or capital in nature.
Held that,
++ the Assessing Officer had relied upon decision of the Madras High Court in Commissioner of Income Tax, Tamil Nadu-II versus Southern Switchgear Limited, which we feel is clearly distinguishable. In the said case, the assessee had entered into a collaboration agreement with a foreign company under which later had provided technical aid and information for manufacture of low tension and high tension switchgear etc. and the right to sell the said products. The foreign company had also agreed to post the Indian assessee with latest and modern developments in the said fields, including transformers. As per the agreement, the Indian assessee had agreed to pay lumpsum amount of 20000 Sterling in five equal instalments of 4000 Sterling each. In these circumstances, it was held that 25% of the payment made was capital in nature, while balance 75% was revenue expenditure in the hands of the Indian assessee. Aforesaid decision of the Madras High Court was affirmed by the Supreme Court in Southern Switchgear Limited versus Commissioner of Income Tax and Another;
++ the CIT(A) and the Tribunal have rightly come to the conclusion that; (i) no new asset came into existence on account of payment of franchise fee and (ii) the rights under the agreement were only for the tenure of the agreement and no enduring benefit was derived by the assessee. Further, it was not an expenditure incurred for acquisition of source of profit, but enabled the assessee to run the business profitably. The fixed assets of the assessee remained untouched and no enduring asset came into existence; Other than relying upon the decision of the Madras High Court in the case of Southern Switchgear Limited, there is no discussion relating to the factual matrix to justify his conclusion that 25% of the franchise fee should be treated as capital expenditure. No facts were highlighted and stated to justify the conclusion. In view of the aforesaid reasoning, we are not inclined to issue notice on the first question/issue raised by the Revenue;
++ the second issue is also covered against the appellant-Revenue by decision of the Delhi High Court in Commissioner of Income Tax Vs Salora International Limited, in which it was held that the expenditure on advertising was of revenue nature.
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