Appointing directors at private companies becoming difficult
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With the new Companies Act, the law has become more stringent for private companies than for public companies, especially while appointing directors
Moving from the Companies Act 1956 to the Companies Act 2013 is like shifting from your old house to a new one. In the old house, where you have stayed for years, everything would have found its own place – the shoes, the clothes, umbrella, first aid, brooms, and whatever else you need in your household. Your legs can find their own way, even in pitch dark of night – they know the way to the bathroom, to the stairs, they even know where the stairs end.
As you move into the new house, first, there is a huge process of "getting used to" – which is anyway usual for any such shifting. But the biggest issue is – we get to realise several shortcomings that we did not realise until we shifted. This might include silly things such as an electric point that we missed, or a water outlet that is not working, and so on. In case of the new house, all these are our own follies, or those of the architect – so we go ahead and get them fixed. In case of the new Act – the fixing process is the long trail of amending the law, and in the meantime, you have the 6-months-in-jail staring at you all the time!
One such folly is the provisions of the new law relating to the appointment of directors in case of private companies. Notably, about 90% of all incorporated companies are private companies, and these companies, being incorporated proprietorships or small businesses in essence, may not be well served by competent professionals. Hence, the chances of errors and omissions are substantially high, exposing the companies to the spectre of hefty prosecutions.
Appointment of directors in case of private companies: Old law
English law, based on which the 1956 Act was drafted, was quite reasoned and seasoned, and had stood the test of over six decades. Lately, UK has gone for substantial de-regulation of private companies, realising that these companies are de facto partnerships, and there is no reason for these companies to suffer regulation at par with larger companies where public interest is significant.
The rules about appointment of directors, under the 1956 Act, were as follows:
- In case of private companies, there was absolute liberty as to the manner of appointment of directors. The articles could have named all directors, or the articles could have laid the manner of appointment of directors.
- In case of public companies, at least two third of the total number had to be those appointed by general meetings. That is, public companies had the right to self-regulate appointment of one third of the total board strength.
- The board could, subject to articles, appoint additional directors. These were pro-tem directors – they will lay down their office at the AGM and may be regularised there.
- The board could also fill up casual vacancies.
- The board could also appoint alternate directors.
In essence, in case of private companies, there was absolute liberty as to the appointment of directors. Private companies could self-regulate the process by their articles.
Appointment of directors in private companies as per new law:
The liberty given to private companies to self-regulate the appointment process has, surprisingly, been completely taken away in the new Act. This sounds completely paradoxical, in view of the fact that in case of public companies, they still have the liberty to self-regulate to the extent of one third of the board strength.
This highly anomalous and surprising implication is coming due to a combined reading of sec 152 (2) and sec 152 (6) (b).
Section 152 (2) casts a generic, unexceptional principle, stating that except where the Act provides a carve-out, all director of all companies will be appointed by the general meeting. This provision is applicable to private companies too.
Sec 152 (6) (b) provides liberty, but only to public companies, to appoint one third of the total board by a self-regulated process. While there was an exception to private companies in Sec. 255 (2) of the 1956 Act, that exception has been dropped while transporting the provisions into the new Act.
It could not be the case that such was the intent of the lawmaker – there is absolutely no case for imposing more stringent regulations in case of private companies, than in case of public companies.
Even casual vacancies cannot be filled by the board:
Now, as if the anomaly above was not enough, sec 161 (4) empowering the board to fill a casual vacancy is also not applicable to a private company. This means, the board of a private company cannot act to fill up a casual vacancy even – it will have to move to call a general meeting, and get he vacancy filled up only in general meetings.
What if the section is violated?
Since the 8-lakh odd companies, sitting with more than 16-lakh directors, may not even be aware of this change of law, what is the provision gets violated? There you have section 159 to take care of – which provides for a jail up to six months, of course with/without a fine too!
It is no one's case that the move from the 1956 Act to the 2013 Act was to scare people away from corporatisation. In fact, the much hyped concept of one person company (OPC) was explicitly for encouraging small businesses to move to the corporate form. However, what has clearly and undenyingly happened, not due to the intent of the lawmaker, but the myriad follies of the lawmaker, is that the corporate form has become strangulatingly difficult for small companies.
It is certainly necessary to revisit these provisions and exempt private companies where exemptions are logically necessary. Private companies must be regulated with a reason, and not exempted for a reason.
(Vinod Kothari is a chartered accountant, trainer and author. He is an expert in such specialised areas of finance as securitisation, asset-based finance, credit derivatives, accounting for derivatives and financial instruments and microfinance. He has written a book titled "Securitisation, Asset Reconstruction and Enforcement of Security Interests", published by Butterworths Lexis-Nexis Wadhwa.)
ITAT DELHI - Income Tax
Income from unexplained sources - Creditworthiness and genuineness of the transaction - Share application money received – Commission paid – Held that:- The case was reopened u/s 148 of the Act on the basis of information from Investigation Wing that assessee is a beneficiary of accommodation entry providers - The assessee submitted the documents in respect of each of the share applicants like share application form, confirmation of share application, bank statement showing relevant transaction, copy of cheques/drafts of which payment was received, copy of income-tax return of the share applicant, PAN of each applicant and also affidavits and Board resolution – AO has not done any verification with regard to the documents to know veracity of the documents - AO has also not issued summons u/s 131 of the Act to the share applicants for their personal presence - Delhi High Court in the case of CIT vs. Gangeshwari Metal P. Ltd.( DELHI HIGH COURT] has held that there are two types of cases, one in which the AO carries out the exercise which is required in law and the other in which the AO 'sits back with folded hands' till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions.
The assessee's case falls in the second category as the AO has not made any investigation with regard to the verification of the documents submitted by the assessee before him - there was a clear lack of enquiry on the part of the AO - no addition can be sustained u/s 68 of the Act - the assessee has adduced adequate evidence/material which are sufficient to discharge the prima facie burden casted upon it by section 68 of the Act – thus, the CIT (A) was not justified to sustain the addition – Decided in favour of assessee.
The assessee's case falls in the second category as the AO has not made any investigation with regard to the verification of the documents submitted by the assessee before him - there was a clear lack of enquiry on the part of the AO - no addition can be sustained u/s 68 of the Act - the assessee has adduced adequate evidence/material which are sufficient to discharge the prima facie burden casted upon it by section 68 of the Act – thus, the CIT (A) was not justified to sustain the addition – Decided in favour of assessee.
One Person Company Under New Companies Act,2013
ONE PERSON COMPANY (OPC)
COMPANIES ACT, 2013 Passed in Lok Sabha on 18th December, 2012 Passed in Rajya Sabha on 8th August, 2013 Received Ascent of President 29th August, 2013. The act has 470 clauses and 7 schedules as against 658 Sections and 15 schedules in the existing Companies Act, 1956. The entire act has been divided into 29 chapters .
INTRODUCTION
The introduction of OPC in the legal system is a move that would encourage corporatization of micro businesses and entrepreneurship with a simpler legal regime so that the small entrepreneur is not compelled to devote considerable time, energy and resources on complex legal compliances. This will not only enable individual capabilities to contribute economic growth, but also generate employment opportunity. One Person Company of sole-proprietor and company form of business has been provided with concessional /relaxed requirements under the Companies Act, 2013.With the implementation of the Companies Act, 2013, a single national person can constitute a Company, under the One Person Company (OPC)concept.
DEFINITION
As per provision of section 2(62) of the Companies Act, 2013 defined (62) "one person company" means a company which has only one person as member.
FORMATION OF OPC [Rule 3]
- Only a natural person who is an Indian citizen and resident in India-
- shall be eligible to incorporate a One Person Company;
- shall be a nominee for the sole member of a One Person Company.
The term "resident in India" means a person who has stayed in India for a period of not less 182 days immediately preceding one calendar year.
STAGES OF INCORPORATION OF OPC
- Name reservation: Form INC-1 shall be filed for name availability.
- Incorporate OPC: After name approval, form INC-2 shall be filed for incorporation of the OPC within 60 days of filing form INC-1.
- Form DIR-12 shall be filed along with (linked) form INC-2 except when promoter is the sole director of the OPC.
- The company shall file form INC-22 within 30 days once form INC-2 is registered in case the address of correspondence and registered office address are not same.
SALIENT FEATURES OF OPC
- One person cannot incorporate more than one OPC or become nominee in more than one OPC.
- No minor shall become member or nominee of the One Person Company or hold share with beneficial interest.
- No such company can convert voluntarily into any kind of company unless 2 years have expired from the date of incorporation, except in cases where capital or turnover threshold limits are reached.
- It must have only one member at any point of time and may have only one director.
PRIVILEGES AVAILABLE TO OPC
- The most significant reason for shareholders to incorporate the 'single-person company' is certainly the desire for the limited liability.
- Businesses currently run under the proprietorship model could get converted into OPCs without any difficulty.
- Mandatory rotation of auditor after expiry of maximum term is not applicable.
- One Person Company needs to have minimum of one director. It can have directors up to a maximum of 15 which can also be increased by passing a special resolution as in case of any other company.
- The provisions of Section 98 and Sections 100 to 111 (both inclusive), relating to holding of general meetings, shall not apply to a One Person Company.
- Minimum authorized share capital required for One Person Company having share capital is Rs. 1,00,000/-.
- Minimum and maximum number of members for One Person Company is one only.
PROHIBITED ACTIVITIES
- Such Company cannot be incorporate or converted into a company under section 8 of the Act.
- Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate.
ONE PERSON COMPANY TO CONVERT ITSELF INTO A PUBLIC COMPANY OR A PRIVATE COMPANY IN CERTAIN CASES (RULE 6)
1. Compulsory conversion of OPC
- Where the paid up share capital of an One Person Company exceeds Rs. 50 lacs or its average annual turnover exceeds Rs. 2 crores immediately preceding three consecutive financial year;
- Such OPC shall required to convert itself, into either private company or public company in accordance with the provision of section 18 of the Act within 6 month of the date as mention above.
- The OPC shall alter its memorandum and articles by passing a resolution in accordance with section 122(3) of the Act to give effect to the conversion and to make necessary changes incidental thereto;
- The OPC shall within period of sixty days from the date of applicability of above provisions, give a notice to the Registrar in Form No. INC. 5informing that it has ceased to be a OPC and that it is now required to convert itself into a private company by virtue of its paid up share capital or average annual turnover, having exceeded the threshold limit laid down above.
2. Voluntary conversion of OPC
- A One Person Company can get itself converted into a Private or Public company after increasing the minimum number of members and directors to two or minimum of seven members and two or three directors as the case may be, and by maintaining the minimum paid up capital as per requirements of the Act for such class of company and by making due compliance of section 18 of the Act for conversion.
CONVERSION OF PRIVATE COMPANY INTO ONE PERSON COMPANY [RULE 7]
- A Private company other than a company registered under section 8 of the Act having paid up share capital upto Rs. 50 lacs or average annual turnover during the relevant period upto Rs. 2 crore may convert itself into One Person Company by passing a special resolution in general meeting.
- Before passing such resolution the company shall obtain No Objection in writing from members and creditors.
- The one person company shall file copy of the special resolution with the Registrar of companies (ROC) within 30 days from the date of passing such resolution in Form No. MGT 14.
- The Company shall file an application in Form No. INC. 6 for its conversion into One Person Company along with fees specified, by attaching following documents, namely:-
- the directors of the company shall give a declaration by way of affidavit duly sworn in confirming that all members and creditors of the company have given their consent for conversion, the paid up share capital of the company is Rs. 50 lacs or less or average annual turnover is less than Rs. 2 crore or less, as the case may be;
- the list of members and list of creditors;
- the latest Audited Balance Sheet and the Profit and Loss Account; and
- the copy of No Objection letter of secured creditors.
- On being satisfied and compiled with requirements stated herein the Registrar shall issue the Certificate.
(Submitted by – Rahul Kumar – Registration No. NRO0352093
Analysis of Company Law Circulars of MCA From 01st April 2014 to Till Date
CS Divesh Goyal
Please find below the Circulars issued by the Ministry of Corporate Affairs till-date, since the commencement of Companies Act, 2013.1. *General Circular No. 27/2014* dated June 30, 2014. (DPT-4)
Extension of 2 month upto 31-08-2014 without any additional fee for filling statement under form DPT-4 with the Registrar in terms of Section-403. (Form- DPT-4 is relating to Deposits). (Article relating to DPT-4 filling is already issued by me)
2. *General Circular No. 26/2014* dated June 27, 2014 (Commodity Exchange)
2. *General Circular No. 26/2014* dated June 27, 2014 (Commodity Exchange)
Clarifies that the use of the word "Commodity Exchange"
- The Word may be allowed only where a "No Objection Certificate" from the Forward Markets Commission (FMC) is furnished by the applicant.
- The certificate from Forward Markets Commission will also be required in cases of companies registered with the words "Commodity Exchange' before the issue of this circular.
3. *General Circular No. 25/2014* dated June 26, 2014 (Residence Requirement)-
Clarifies that the 'RESIDENCY REQUIREMENT' This would be reckoned from the date of commencement of section 14 of the Act i.e. 1st April, 2014.
The first previous calendar year, for compliance with these provisions would, therefore, be Calendar year 2014. Therefore, on a proportionate basis, the number of days for which the director(s) would need to be resident in India, during Calendar year 2014, shall exceed 136 days. (Because Act is effective from 1st April, 2014 so we counted 136 from 1st April 2014 to 31st December, 2014)
Regarding Newly Incorporated Companies it is clarified that companies incorporated between 1.4.2014 to 30.09.2014 should have a resident director either at the incorporation stage itself or within six months of their incorporation.
Companies incorporated after 30.9.2014 need to have the resident director from the date of incorporation itself.
4. *General Circular No. 24/2014* dated June 25, 2014: (Holding of shares in fiduciary Capicity)-
Clarifies that the shares held by a company in another company in a 'fiduciary capacity' shall not be counted for the purpose of determining the relationship of 'associate company' under section 2(6) of the Companies Act, 2013.
Clarifies that the shares held by a company in another company in a 'fiduciary capacity' shall not be counted for the purpose of determining the relationship of 'associate company' under section 2(6) of the Companies Act, 2013.
5. *General Circular No. 23/2014* dated June 25, 2014: (Status of Company Incorporated outside India)
- Clarifies that there is no bar in the new Act for a company incorporated outside India to incorporate a subsidiary either as a public company or a private company.
- An existing company, being a subsidiary of a company incorporated outside India, registered under the Companies Act, 1956, either as private company or a public company by virtue of section 4(7) of that Act, will continue as a private company or public company as the case may be, without any change in the incorporation status of such company.
6. *General Circular No. 22/2014* dated June 25, 2014: (Annual Return)-
Clarifies that Form MGT-7 shall not apply to annual returns in respect of companies whose financial year ended on or before 1st April, 2014 and for annual returns pertaining to earlier years. These companies may file their returns in the relevant Form (Schedule –V) applicable under the Companies Act, 1956.
In relation to Clarifications with regard to provisions of Corporate Social Responsibility under section 135 of the Companies Act, 2013″ clarifies that the entries in the said Schedule VII must be interpreted liberally so as to capture the essence of the subjects enumerated in the said Schedule.
1. The items enlisted in the amended Schedule VII of the Act, are broad-based and are intended to cover a wide range of activities.
2. CSR activities should be undertaken by the companies in project/ programme mode. One-off events shall not qualify.
3. Expenses incurred by companies for the fulfillment of any Act/ Statute of regulations (such as Labour Laws, Land Acquisition Act etc.) would not count as CSR expenditure
4. Salaries paid by the companies to regular CSR staff as well as to volunteers of the companies (in proportion to companies time/hours spent specifically on CSR) can be factored into CSR project cost as part of the CSR expenditure.
5. "Any financial year" referred under Sub-Section (1) of Section 135 of the Act read with Rule 3(2) of Companies CSR Rule, 2014, implies 'any of the three preceding financial years'.
Expenditure incurred by Foreign Holding Company for CSR activities in India will qualify as CSR spend of the Indian subsidiary if, the CSR expenditures are routed through Indian subsidiaries and if the Indian subsidiary is required to do so as per the Act.
6. Contribution to Corpus of a Trust/ society/ section 8 companies etc. will qualify as CSR expenditure as long as (a) the Trust/ society/ section 8 companies etc. is created exclusively for undertaking CSR activities or (b) where the corpus is created exclusively for a purpose directly relatable to a subject covered in Schedule VII of the Act.
8. *General Circular No. 20/2014* dated June 17, 2014: (Provision of E-Voting)-
Clarification on Rules prescribed under Companies Act, 2013 -Clarification with regard to Voting Rights through Electronic Means-reg.
Section 108 read with rule 20 of the Companies (Management and Administration) Rules, 2014: "Exercise of right to vote by members by electronic means (e-means)."
The provisions seek to ensure wider shareholder's participation in the decision making process in companies. It has been decided not to treat the relevant provisions mandatory till 31st December, 2014.
The relevant provisions pertains to compliance with procedural requirements, engagement of Depository Agencies and the need for clarity on matter like demand for poll/postal ballot etc will take some more time.
9. *General Circular No. 19/2014* dated June 12, 2014: Clarification on matters relating to share capital and debentures-
- Any share transfer forms executed before April 1, 2014 and submitted duly to the company within the prescribed time, under the relevant section of the Companies Act, 1956; needs to be accepted by the companies for registration of transfers.
- In case of delay in submission, the company needs to satisfy itself suitably with regard to justification in delay. In case a company decides not to accept the share transfer form, it shall convey the reasons for such non-acceptance within time provided under Section 56(4)(c) of the Act.
- Committee of Directors may exercise powers, subject to any regulations imposed by the Board in this regard with regard to issue of duplicate share certificates.
10. *General Circular No. 18/2014* dated June 11, 2014L(Conversion of Company from Public to Private)-
Clarifies that with respect to difficulties being faced in filing Form No. INC-27 for conversion of companies from public to private under the Companies Act, 2013 – the relevant provisions of Companies Act, 2013 have not yet been notified. The Companies Act, 1956 is in force for the said provisions/ purpose and powers stand delegated to Registrar of Companies, as before.
11. *General Circular No. 17/2014* dated June 11, 2014 (Form MGT-10)-
Clarifies that Form MGT-10 has to be filled physically and certified by a practicing professional thereon and thereafter filed as an attachment to eForm GNL-2 till the time eForm MGT-10 is made available.
12. *General Circular No. 16/2014* dated June 10, 2014: (Non Requirement of PAN by foreign director or subscriber)
- Clarifies that a Resident Director shall have to furnish PAN details at the time of incorporation of a company.
- A Foreign National who shall be a subscriber/promoter, and does not possess PAN shall submit a declaration in the said regard as an attachment to Form INC-7.
13. *General Circular No. 15/2014* dated June 09, 2014 (Register under MBP-2)
Clarifies that register maintained under section 372A(5) of the Companies Act, 1956 may continue as per requirements under these provisions and the new format prescribed vide Form MBP2 shall be used for particulars entered in such registers on and from April 01, 2014.
14. General Circular No. 14/2014 dated June 09, 2014: Clarifies that only Appointment of Independent Directors under the new Act would need to be finalized through a letter of appointment.-
- In view of the provisions of Section 188 which take away transactions in the ordinary course of business at arm's length price, from the purview of related party transactions, an "ID" will not be said to have a pecuniary relationship.
- It also does not include receipt of remuneration, from one or more companies as sitting fees, reimbursement of expenses for participation in the Board and other meetings and profit related commission approved by the members, in accordance with the provisions of the Act. {Section 149(6)(c)}
- Terms:
Section 149(10) provides for a term of "upto five consecutive years" for an ID and any term of less than five years, shall constitute as one term under Section 149(10) of the Act.
- Further, under Section 149(11), no person can hold office of ID for more than "two consecutive terms", and shall have to demit office, even if the total number of years in the two consecutive terms is less than ten years. He shall be eligible for re-appointment only after the requisite cooling off period of three years.
15. *General Circular No. 13/2014* dated May 23, 2014L(Extension for reserve of Name)-
There is a further extension of validity period for names reserved as on March 31, 2014 by another 15 days from the date of the above-mentioned circular i.e. till June 5, 2014.
The same is in continuation with General Circular No 11/2014.
The same is in continuation with General Circular No 11/2014.
16. *General Circular No. 12/2014* dated May 22, 2014L(PAN requirement for foreigner)-
- Clarifies that PAN details are mandatory only for those foreign nationals who are required to possess "PAN" in terms of provisions of the Income Tax Act, 1961 on the date of application for incorporation.
- Where the intending Director who is a Foreign National is not required to compulsorily possess PAN, it will be sufficient for such a person to furnish his/her passport number, along with undertaking stating that provisions of mandatory applicability of PAN are not applicable to the person concerned.
17. *General Circular No. 11/2014* dated May 12, 2014 (Extention for reserve of name)
Mentioned a one time opportunity for extension of period of Reservation of names.
For those stakeholders, whose expiry of 60 days period of reservation of names for incorporation of companies, was falling in the period April 1, 2014 to April 28, 2014; the validity of such names have been extended till May 31, 2014. Those stakeholders, falling in this category, are advised by MCA, to file the relevant E-forms under Companies Act, 2013 before May 31, 2014.
18. *General Circular No. 10/2014* dated May 07, 2014: Certification of E-forms/non e-forms under Companies Act, 2013 by the Practicing Professionals.
*CAUTION : Further Stringency : Section 447, 448, 449 of Companies Act,2013*
"Where any instance of filing of documents, application or return or petition etc. containing false or misleading information or omission of material fact or incomplete information is observed, the Regional Director or the Registrar as the case may be, shall conduct a quick inquiry against the professionals who certified the form and signatory thereof including an officer in default who appears prima facie responsible for submitting false or misleading or incorrect information pursuant to requirement of above said Rules; 15 days notice may be given for the purpose.
*The Regional Director or the Registrar will submit his/her report in respect of the inquiry initiated, irrespective of the outcome, to the E-Governance cell of the Ministry within 15 days of the expiry of period given for submission of an explanation with recommendation in initiating action u/s 447 and.448 of the Companies Act, 2013 wherever applicable and also regarding referral of the matter to the concemed professional Institute for initiating disciplinary proceedings.*
*The E-Gov cell of the Ministry shall process each case so referred and issue necessary instructions to the Regional Director/ Registrar of Companies for initiating action u/s 448 and 449 of the Act wherever prima facie cases have been made out. The E-Gov cell will thereafter refer such cases to the concerned Institute for conducting disciplinary proceedings against the errant member as well as debar the concerned professional from filing any document on the MCA portal in future."*
19. *General Circular No. 09/2014* dated April 25, 2014 Availability of E-forms and non-e-forms under Companies Act, 2013:
In addition to the Public Notice issued in the newspapers on 25th April, 2014, the circular states that w.e.f. April 28, 2014,
In addition to the Public Notice issued in the newspapers on 25th April, 2014, the circular states that w.e.f. April 28, 2014,
- Stakeholders can also file application for seeking extension of date of AGM/ Accounting period by filing form GNL-l.
- Documents in respect of Companies under liquidation will
also be allowed to be filed along with form GNL-2. - Documents in respect of particulars of person(s) or Directors charged or specified for the purpose of section 2(60) of the Companies Act, 2013 will be allowed to be filed along with form GLN-3, Documents/ forms for filing petitions to Central Government will be allowed to file with form RD-2.
The Circular also mentions that the physically attached forms will be scrutinized to check all fields before accordingly approval to the respective forms.
20. *General Circular No. 08/2014* dated April 04, 2014: *Commencement of provisions of the Companies Act, 2013 with regard to maintenance of books of accounts and preparations/adoption/filing of financial statements, auditors report, board's report and attachments touch statements and reports- Applicability with regard to relevant financial*.
It was notified that the financial statements (and documents required to be attached thereto), auditor's report and Board's report in respect of financial years that commenced earlier than 1st April, 2014 shall be governed by the relevant provisions/Schedules/rules of the Companies Act. 1956. Reference in the Circular via example has been drawn to Schedule II & Schedule III.
21. *General Circular No. 06/2014* dated March 28, 2014: Phased roll-out plan of new forms has been released. Some key points from the same are :
It has been decided to waive fees for all event based filing whose due date falls between 01/04/2014 to 30/04/2014.
From 01/04/2014 to 14/04/2014 except existing e-forms (some of the said Form are Form 66, 14LLP, 20B, 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL to name a few) no other e-forms will be available for filing. From 01/04/2014 to 13/04/2014 the period will be used for clearing pending e-forms already filed under the provisions of Companies Act, 1956.
From 14/04/2014, 39 new e-forms will be available on MCA portal for upload. Test version of these forms will be available from 28/03/2014 onwards. Final forms will be available from 14/04/2014.
There are 5 general e-forms and 2 e-forms which will be available for filing w.e.f. 28/04/2014 will be available for filing 24 notified forms/events which will be made available for individual e-filing at a later date, can be attached with these 7 e-forms and filed.
22. General Circular No. 05/2014 dated March 28, 2014: Online Payment of stamp duty and court fee stamp for issue of certified copies.
The Ministry has enabled payment of Stamp Duty as well as Court Fee online through MCA Portal to avoid the delay in sending certified copies of documents applied for. Court Fee would be added per SRN irrespective of number of documents applied for.
The Ministry has enabled payment of Stamp Duty as well as Court Fee online through MCA Portal to avoid the delay in sending certified copies of documents applied for. Court Fee would be added per SRN irrespective of number of documents applied for.
DELEGATION OF SOME POWERS:
- 21.05.2014 *- DELEGATION OF POWERS TO REGISTRAR OF COMPANIES
| a. Section 4(2) - | Name Undesirability |
| b. Section 8(1) - | Issue of License for Charitable Companies |
| c. Section 8(4)(i) - | Alteration of Provisions of Memorandum or Articles of Charitable companies, except for conversion into another kind of company |
| d. Section 8(5) - | Conversion of 'Limited' or 'Private Limited' Company into a Charitable Company |
| e. Section 13(2) - | Change of name of Company |
- 21.05.2014* – DELEGATION OF POWERS UNDER SECTION 458 OF CA 2013 TO RDS :
Delegation of powers to the Regional Directors at Mumbai, Kolkata, Chennai, Noida, Ahmedabad, Hyderabad and Shillong:
| a. Section 8(4)(i) - | Alteration of Provisions of Memorandum or Articles of Charitable Companies in case of conversion into another kind of company. |
| b. Section 8(6) - | Revocation of license of company registered under Section 8. |
| c. Section 13(4) & 13(5) - | Alteration of Registered Office Clause – Change from one state to another. |
| d. Section 16 - | Rectification of name of company. |
| e. Section 87 - | Rectification by Central Government in Register of Charges. |
| f. Section 111(3) - | To order non-circulation of any statement related to proposed resolution or business to be dealt with at members' meeting, which renders abuse of law and is for securing needless publicity for defamatory matter. |
| g. Section 140(1) - | Removal of auditor from his office, before expiry of his term. |
| h. Proviso (i) to Section 399(1) - | Powers of Central Government in relation to Inspection, production and evidence of documents kept by Registrar |
- THE USEFUL LIFE OF AN ASSET shall not be longer than the useful life specified in 'Part C' and the residual value shall not be more than five percent of the total cost of the asset. However, a different useful life or residual value may be used, provided the justification for the same is disclosed in the financial statements.
CS Divesh Goyal
ACS- 35817
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Double Benefit on Taxes on Housing Loan
The Government is encouraging Individuals to invest in House Property and providing greater benefits to them by giving tax relaxation. If you are planning to buy a new house then it would be wise to go for housing loan even as it helps you to save tax on income. Payment of housing loan gives you an opportunity to save taxes by claiming benefit of both Interest as well as Principal repayment of the Housing Loan when you go for e-filing of tax returns. The Income Tax Act provides deduction under section 80C against Principal Repayment and exemption under Section 24(b) on Interest payment of Housing Loan.
There are 2 possible situations which would determine how you can claim the tax benefits. A Housing loan can be obtained against a property whose possession is received or is yet to be received as it is being constructed.
Housing Loan taken and possession received in the same year.
Housing Loan can be taken for purchasing or constructing a new house property. When a loan is taken in the same year in which the house property is purchased or constructed, one can enjoy the tax benefits on payment of both principal and interest component of the housing loan.
Principal: The repayment of principal component of housing loan is entitled for exemption under 80C up to Rs. 150,000 along with all other permissible instruments like, life insurance premium, PPF, ELSS, NSC etc. 80C deduction for principal repayment of housing loan is allowed as soon as you start repaying the loan. This tax benefit can be claimed irrespective of the fact that the property is being self occupied or let out.
For claiming such deduction there are certain requirements to be fulfilled i.e. principal repayment will be considered for deduction only if the loan is not taken for improvement, extension, renovation or alteration of an existing house. Further, it cannot be claimed if an individual has taken home loan from relatives or friends or from any other source, which is not mentioned as Specified Institution/Department.
Interest: Section 24(b) of Income Tax Act entitles you to claim exemption on interest payment of housing loan against the property purchased or constructed. The benefit can only be taken from the year in which the possession has been received. The actual interest payable is allowed as deduction subject to maximum of Rs. 200,000 for a Self-Occupied property. In the case of Let-Out property, there is no maximum limit and the entire amount of interest payment can be taken for tax benefit.
If the fresh loan has been raised to repay the original loan and the new loan has been used only for the purpose of repaying the original loan then the interest paid on such fresh loan is also allowed as deduction. Penal interest on housing loan shall not be allowed as deduction. If the purchase price of the property is paid in installments with interest, the interest portion of the installment is an allowable deduction under Section 24.
Housing Loan taken but possession received next year or later.
Often it is seen that housing loan is taken but the possession of the property is received in the next or later financial year. It may be because the property is not completed or constructed. Tax benefits of housing loan can still be enjoyed but there are certain restrictions to it.
Principal: Till the house is not constructed and the possession is not taken over, deduction on house loan principal repayment is not allowable. You need to have possession and certificate of ownership to claim tax under section 80C. In simple words it is said that you should be the owner of the house property. After the possession is received, the deduction can be claimed normally up to a maximum of Rs. 1.5 Lakhs under section 80C.
Interest: The interest deduction u/s 24(b) can be claimed after the possession of the house property is taken over. However, the total amount of interest paid on home loan prior to possession of house property as can be claimed as pre-construction interest in 5 equal installments for next 5 years from the financial year in which possession is received. The pre-construction interest is allowed upto a limit of Rs 2 Lakhs including the current year interest payment on home loan. This can be claimed only after the house is ready and possession is taken over. If the house has been let out, the taxpayer can claim the entire interest component as deduction from the rental income without any restriction.
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