Demand U/s 143(1) by Income Tax Department & Rectification Thereof U/s 154
CA. Brijesh Baranwal
Income Tax Return filing season for certain class of assessees including individuals not falling under tax audit provisions has just been over and by now the Income Tax Department (the Department) has already started processing of these returns. In fact, return filing and processing thereof are an ongoing process for different class of assessees.At times, income tax payers get intimation of demand from the Department u/s 143(1).
Following is the text of section 143(1) of the Income Tax Act, 1961;
"Where a return has been made u/s 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:—
(a) the total income or loss shall be computed after making the following adjustments, namely:—
(i) any arithmetical error in the return; or
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return;
(b) the tax and interest, if any, shall be computed on the basis of the total income computed under clause (a);
(c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax and interest, if any, computed under clause (b) by any tax deducted at source, any tax collected at source, any advance tax paid, any relief allowable under an agreement u/s 90 or section 90A, or any relief allowable u/s 91, any rebate allowable under Part A of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest;
(d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and
(e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee:
Provided that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax or interest is payable by, or no refund is due to, him:
Provided further that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made.
Explanation — For the purposes of this sub-section,—
(a) "an incorrect claim apparent from any information in the return" shall mean a claim, on the basis of an entry, in the return,—
(i) of an item, which is inconsistent with another entry of the same or some other item in such return;
(ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or
(iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;
(b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a)."
Most of such cases are generated due to discrepancy in income tax return and the documents on the basis of which such return is prepared including TDS certificates, Form 16/Form 16A or Form 26AS etc.
RECTIFICATION U/S 154
Taxpayers need not worry if they get such intimation u/s 143(1). Instead, they should try to understand the reason for the demand and act accordingly.
Income Tax Act provides for the rectification u/s 154 for the cases where demand has been intimated under above said section 143(1).
The text of section 154 is as under;
Rectification of mistake.
"154. [(1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may,—
(a) amend any order passed by it under the provisions of this Act ;
[(b) amend any intimation or deemed intimation under sub-section (1) of section 143;]]
[(c) amend any intimation under sub-section (1) of section 200A.]
[(1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided.]
(2) Subject to the other provisions of this section, the authority concerned—
(a) may make an amendment under sub-section (1) of its own motion, and
(b) shall make such amendment for rectifying any such mistake which has been brought to its notice by the assessee [or by the deductor], and where the authority concerned is the [Commissioner (Appeals)], by the [Assessing] Officer also.
(3) An amendment, which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee [or the deductor], shall not be made under this section unless the authority concerned has given notice to the assessee [or the deductor] of its intention so to do and has allowed the assessee [or the deductor] a reasonable opportunity of being heard.
(4) Where an amendment is made under this section, an order shall be passed in writing by the income-tax authority concerned.
[(5) Where any such amendment has the effect of reducing the assessment or otherwise reducing the liability of the assessee or the deductor, the Assessing Officer shall make any refund which may be due to such assessee or the deductor.]
(6) Where any such amendment has the effect of enhancing the assessment or reducing a refund [already made or otherwise increasing the liability of the assessee or the deductor, the Assessing Officer shall serve on the assessee or the deductor, as the case may be] a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be issued u/s 156 and the provisions of this Act shall apply accordingly.
(7) Save as otherwise provided in section 155 or sub-section (4) of section 186 no amendment under this section shall be made after the expiry of four years [from the end of the financial year in which the order sought to be amended was passed.]
[(8) Without prejudice to the provisions of sub-section (7), where an application for amendment under this section is made by the assessee [or by the deductor] on or after the 1st day of June, 2001 to an income-tax authority referred to in sub-section (1), the authority shall pass an order, within a period of six months from the end of the month in which the application is received by it,—
(a) making the amendment; or
(b) refusing to allow the claim.]"
Therefore, the taxpayer should collect all relevant documents including Form 16 (in case of salaried employees), Form 16A, TDS Certificates, Form 26AS and Computation of total income etc.
On the basis of the above documents, a proper rectification request should be prepared and submitted to the income tax department.
PROVISION OF THE ACT WHERE TDS IS NOT DEPOSITED/WRONGLY DEPOSITED
It is emphasized that if the Tax Deducted at Source (TDS) credit is available in Form 26AS and the same has not been considered in the intimation letter u/s 143(1), the same shall be provided while processing the rectification request u/s 154.
However, The Income Tax Department may deny credit of TDS in cases where TDS is available in Form 16/Form 16A/TDS Certificates but not available in Form 26AS. Also in some cases employer/deductor may not have deposited the said TDS or deposited in wrong PAN number. In such cases, following provision of the Act shall be helpful to the taxpayer/professional;
Section 205 of the Act in clear terms, provides that the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income.
Text of section 205 is as follows;
"Where tax is deductible at the source under [the foregoing provisions of this Chapter], the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income."
SOME IMPORTANT CASE LAWS WHERE TDS IS NOT DEPOSITED/WRONGLY DEPOSITED
There are various judgments of the different Hon'ble High Courts where it has been decided that if the TDS is reflecting in Form 16/Form 16A or TDS certificates or the fact of TDS deduction is established, then the Department must provide the credit of the same to the concerned assessee and he/she shall not be called upon to pay the tax again to the extent to which tax has been deducted.
Taxpayers/Professionals may take help of following case laws in above mentioned situations;
In this recently decided case, Sumit Devendra Rajani Versus Assistant Commissioner of Income Tax, the Hon'ble High Court of Gujarat has decided as under;
"It is held that the petitioner assessee deductee is entitled to credit of the tax deducted at source with respect to amount of TDS for which Form No.16A issued by the employer deductor – M/s. Amar Remedies Limited has been produced and consequently department is directed to give credit of tax deducted at source to the petitioner assessee – deductee to the extent form no.16 A issued by the deductor have been issued. Consequently, the impugned demand notice dated 6.1.2012 (Annexure D) is quashed and set aside. However, it is clarified and observed that if the department is of the opinion deductor has not deposited the said amount of tax deducted at source, it will always been open for the department to recover the same from the deductor…."
In this case, the Hon'ble Gauhati High has decided as under;
"It would not be possible to proceed to recover the amount of tax from the assessee. The assessee cannot be doubly saddled with the tax liability. Deduction of tax at source is only one of the modes. Once this mode is adopted and by virtue of the statutory provisions the person responsible to deduct the tax at source deducts the amount, only that mode should be pursued for the purpose of recovery of tax liability and the assessee should not be subjected to other modes of recovery of tax by recovering the amount once again to satisfy the tax liability. It is, therefore, provided u/s 201 of the Income-tax Act that the person responsible to deduct the tax at source would be deemed to be an assessee in default in case he deducts the amount and fails to deposit it in the Government treasury. As observed earlier, the assessee has no control over such person who is responsible to deduct the income-tax at source, but fails to deposit the same in the Government treasury. In this light of the matter, in our view, the notices issued under Section 226(3) of the Income-tax Act to the bankers of the petitioner-respondent to satisfy the tax liability from the bank account of the petitioner-respondent are illegal. It is not that the Income-tax Department was helpless in the matter. The person responsible to deduct the tax at source would move into the shoes of the assessee and he would be deemed to be an assessee in default. Whatever process or coercive measures are permissible under the law would only be taken against such person and not the assessee."
Hon'ble Bombay High Court in this has observed as under;
"Although it is obligatory on the part of the person collecting tax at source to pay the said TDS amount to the credit of the Central Government within the stipulated time, if such person fails to pay the TDS amount within the stipulated time, then, Section 201 of the Act provides that such person shall be deemed to be an assessee in default and the revenue will be entitled to recover the TDS amount with interest at 12% p.a. and till the said TDS amount with interest is recovered there shall be a charge on all the assets of such person or the company. Penalty u/s 221 of the Act and rigorous imprisonment u/s 276B of the Act can also be imposed upon such defaulting person or the company. Thus, complete machinery is provided under the Act for recovery of tax deducted at source from the person who has deducted such tax at source and the revenue is barred from recovering the TDS amount from the person from whose income, tax has been deducted at source. Therefore, the fact that the revenue is unable to recover the tax deducted at source from the person who has deducted such tax would not entitle the revenue to recover the said amount once again from the employee-assessee, in view of the specific bar contained in Section 205 of the Act."
In this case Hon'ble Karnataka High Court has decided as follows;
"In the circumstances, I am of the view that the Revenue is to be definitely restrained in terms of Section 205 of the Act from enforcing any demand on the assessee-petitioner insofar as the demand with reference to the amount of tax which had been deducted by the tenant of the assessee in the present case, and assuming that the tenant had not remitted the amount to the Central Government. The only course open to the Revenue is to recover the amount from the very person who has deducted and not from the petitioner."
The Hon'ble High Court of Gujarat in this case has decided as follows;
"As provided by s. 205 of the Act, where tax is deductible at source, the assessee shall not be called upon to pay the tax himself to the extent to which it has been deducted from the relevant income. Thus, from the aforesaid provisions it emerges that as soon as the tax is actually deducted at source by the person responsible to make payment, the liability of the assessee to pay that tax gets discharged and it is for the person who has deducted the tax at source to deposit the same with the Government."
(The Author is a Practicing Chartered Accountant and based in Dwarka, New Delhi, The write up is only for awareness purpose and should not be considered as expert opinion, In case of queries and suggestions, please contact: cabrijesh@yahoo.co.in)
Criminalisation of politics is an anathema to the sacredness of democracy : SC
CRIMINALISATION OF POLITICS
Criminalisation of politics is an anathema to the sacredness of democracy. Commenting on criminalization of politics, the Court, in Dinesh Trivedi, M.P. and others v. Union of India and others (1997) 4 SCC 306, lamented the faults and imperfections which have impeded the country in reaching the expectations which heralded its conception. While identifying one of the primary causes, the Court referred to the report of N.N. Vohra Committee that was submitted on 5.10.1993. The Court noted that the growth and spread of crime syndicates in Indian society has been pervasive and the criminal elements have developed an extensive network of contacts at many a sphere. The Court, further referring to the report, found that the Report reveals several alarming and deeply disturbing trends that are prevalent in our present society. The Court further noticed that the nexus between politicians, bureaucrats and criminal elements in our society has been on the rise, the adverse effects of which are increasingly being felt on various aspects of social life in India. Indeed, the situation has worsened to such an extent that the President of our country felt constrained to make references to the phenomenon in his addresses to the Nation on the eve of the Republic Day in 1996 as well as in 1997 and hence, it required to be handled with extreme care and circumspection.
In Anukul Chandra Pradhan, Advocate Supreme Court v. Union of India and others (1997) 6 SCC 1, the Court, in the context of the provisions made in the election law, observed that they have been made to exclude persons with criminal background of the kind specified therein from the election scene as candidates and voters with the object to prevent criminalization of politics and maintain propriety in elections. Thereafter, the three-Judge Bench opined that any provision enacted with a view to promote the said object must be welcomed and upheld as subserving the constitutional purpose. In K. Prabhakaran v. P. Jayarajan AIR 2005 SC 688, in the context of enacting disqualification under Section 8(3) of the Representation of the People Act, 1951 (for brevity "the 1951 Act"), it has been reiterated that persons with criminal background pollute the process of election as they have no reservation from indulging in criminality to gain success at an election.
It is worth saying that systemic corruption and sponsored criminalization can corrode the fundamental core of elective democracy and, consequently, the constitutional governance. The agonized concern expressed by this Court on being moved by the conscious citizens, as is perceptible from the authorities referred to hereinabove, clearly shows that a democratic republic polity hopes and aspires to be governed by a Government which is run by the elected representatives who do not have any involvement in serious criminal offences or offences relating to corruption, casteism, societal problems, affecting the sovereignty of the nation and many other offences. There are recommendations given by different committees constituted by various Governments for electoral reforms. Some of the reports that have been highlighted at the bar are (i) Goswami Committee on Electoral Reforms (1990), (ii) Vohra Committee Report (1993), (iii) Indrajit Gupta Committee on State Funding of Elections (1998), (iv) Law Commission Report on Reforms of the Electoral Laws (1999), (v) National Commission to Review the Working of the Constitution (2001), (vi) Election Commission of India – Proposed Electoral Reforms (2004), (vii) The Second Administrative Reforms Commission (2008), (vii) Justice J.S. Verma Committee Report on Amendments to Criminal Law (2013), and (ix) Law Commission Report (2014).
Vohra Committee Report and other Reports have been taken note of on various occasions by this Court. Justice J.S. Verma Committee Report on Amendments to Criminal Law has proposed insertion of Schedule 1 to the 1951 Act enumerating offences under IPC befitting the category of 'heinous' offences. It recommended that Section 8(1) of the 1951 Act should be amended to cover, inter alia, the offences listed in the proposed Schedule 1 and a provision should be engrafted that a person in respect of whose acts or omissions a court of competent jurisdiction has taken cognizance under Section 190(1)(a), (b) or (c) of the Code of Criminal Procedure or who has been convicted by a court of competent jurisdiction with respect to the offences specified in the proposed expanded list of offences under Section 8(1) shall be disqualified from the date of taking cognizance or conviction, as the case may be. It further proposed that disqualification in case of conviction shall continue for a further period of six years from the date of release upon conviction and in case of acquittal, the disqualification shall operate from the date of taking cognizance till the date of acquittal.
The Law Commission, in its 2 44th Report, 2014, has suggested amendment to the 1951 Act by insertion of Section 8B after Section 8A, after having numerous consultations and discussions, with the avowed purpose to prevent criminalization of politics. It proposes to provide for electoral reforms. Though it is a recommendation by the Law Commission, yet to understand the existing scenario in which the criminalization of politics has the effect potentiality to create a concavity in the highly treasured values of democracy, we think it apt to reproduce the relevant part of the proposed amendment. It reads as follows: -
"8B. Disqualification on framing of charge for certain offences. – (1) A person against whom a charge has been framed by a competent court for an offence punishable by at least five years imprisonment shall be disqualified from the date of framing the charge for a period of six years, or till the date of quashing of charge or acquittal, whichever is earlier.
(2) Notwithstanding anything contained in this Act, nothing in sub-section (1) shall apply to a person:
(i) Who holds office as a Member of Parliament, State Legislative Assembly or Legislative Council at the date of enactment of this provision, or
(ii) Against whom a charge has been framed for an offence punishable by at least five years imprisonment;
(a) Less than one year before the date of scrutiny of nominations for an election under Section 36, in relation to that election;
(b) At a time when such person holds office as a Member of Parliament, State Legislative Assembly or Legislative Council, and has been elected to such office after the enactment of these provisions;
(3) For Members of Parliament, State Legislative Assembly or Legislative Council covered by clause (ii) of sub-section (2), they shall be disqualified at the expiry of one year from the date of framing of charge or date of election, whichever is later, unless they have been acquitted in the said period or the relevant charge against them has been quashed."
The aforesaid vividly exposits concern at all quarters about the criminalisation of politics. Criminalisation of politics, it can be said with certitude, creates a dent in the marrows of the nation.
Source- Manoj Narula Vs. Union of India (Supreme Court of India), Writ Petition (Civil) No. 289 Of 2005, Date of Pronouncement – August 27, 2014.
Purchase and sale of securities other than shares or convertible debentures of an Indian company by a person resident outside India
RBI/2014-15/197
A.P. (DIR Series) Circular No.22
A.P. (DIR Series) Circular No.22
August 28, 2014
To
All Category – I Authorised Dealer Banks
Madam/ Sir,
Purchase and sale of securities other than shares or convertible debentures of an Indian company by a person resident outside India
Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to Schedule 5 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (the Principal Regulations) notified vide Notification No. FEMA.20/2000-RB dated May 3, 2000, as amended from time to time, in terms of which, eligible investors, viz., SEBI registered Foreign Institutional Investors (FIIs), Qualified Foreign Investors (QFIs), registered Foreign Portfolio Investors (RFPIs) and long term investors registered with SEBI, may purchase eligible government securities directly from the issuer of such securities or through registered stock broker on a recognised Stock Exchange in India, subject to such terms and conditions as mentioned therein and limits as prescribed for the same by RBI and SEBI from time to time.
2. With a view to providing flexibility in regard to the manner in which government securities can be acquired by eligible investors, it has now been decided to remove any stipulation as to the manner of acquisition from the said Regulations. Consequently, the eligible investors can acquire such securities in any manner as per the prevalent/approved market practice.
3. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers.
4. Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Eleventh Amendment) Regulations, 2014 notified vide Notification No. FEMA. 313/2014-RB dated July 2, 2014 c.f. G.S.R. No.487 (E) dated July 11, 2014.
5. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(B.P. Kanungo)
Principal Chief General Manager
Principal Chief General Manager
A Financial Conditions Index for India
The Reserve Bank of India today placed on its website a Working Paper titled "A Financial Conditions Index for India" under the Reserve Bank of India Working Paper Series*. This paper is authored by Anand Shankar.
Financial market variables contain information about the future state of the economy. Changes in financial variables often translate into changes in the real economy. Very often financial variables send contradictory signals to economic agents. Further, acute information asymmetry exists in financial markets especially around trigger events during times of crises. Breaking information asymmetry assumes importance since lack of timely and correct information further perpetuates uncertainty and deepens the crisis. To overcome the problem of information asymmetry, financial condition indices (FCI) are constructed.
Even though financial market stress in not directly observable, it often manifests itself in movement of financial market variables. This paper attempts to capture the state of financial conditions by constructing an ordinal and contemporaneous financial conditions index for India. This index is the synthesis of information content in the money, bond, foreign exchange and stock markets. The index shows that tight financial conditions in one market can offset accommodative conditions in some other market thereby making the aggregate conditions tight. Therefore, it is necessary to account for financial conditions in all markets simultaneously in the conduct of policy. The paper also poses some interesting research questions in context of interaction of financial conditions and real variables like GDP growth.
* The Reserve Bank of India introduced the RBI Working Papers series in March 2011. These papers present research in progress of the staff members of the Reserve Bank and are disseminated to elicit comments and further debate. The views expressed in these papers are those of authors and not of the Reserve Bank of India. Comments and observations may kindly be forwarded to authors. Citation and use of such papers should take into account its provisional character.
Sangeeta Das
Director
Director
Press Release : 2014-2015/434
CBDT Forms Committee to approve any action proposed by AO to tax indirect transfer due to retrospective-amendment
F. No. 149/141/2014-TPL
Government of India
Department of Revenue
Central Board of Direct Taxes
(Tax Policy & Legislation Division)
New Delhi dated 28th August, 2014
Order under section 119 of the Income-tax Act
Vide the Finance Act, 2012, certain clarificatory amendments were introduced in clauses (14) and (47) of section 2, in clause (i) of sub-section (1) of section 9 and in section 195 of the Income-tax Act ("the Act"), with retrospective effect from 01.04.1962 in relation to transfer of assets. For the proper administration of these provisions of the Act, the Central Board of Direct Taxes (CBDT), in exercise of its power u/s 119 of the Act, hereby directs the following:-
1. A Committee consisting of following officers of the CBDT as Members is hereby constituted: -
(i) Joint Secretary (FT&TR-I)
(ii) Joint Secretary (TPL-I)
(iii) Commissioner of Income-tax (ITA)
The Director (FT&TR-I) shall be the Secretary of the Committee.
2. Where any Assessing officer considers that any income is deemed to accrue or arise in India before 1st April, 2012 through transfer of a capital asset situate in India in consequence of the amendments introduced with retrospective effect, and as on the date of this order,-
(i) no proceeding of assessment or reassessment in relation to the said income is pending; or
(ii) no notice for proposed assessment or re-assessment in relation to the said income has been issued; or
(iii) no proceeding under section 201 of the Act is pending, or no notice for initiation of such proceeding has been issued in relation to the said income,
then, before proceeding with any action in relation to the said income, the Assessing Officer shall seek prior approval of the Committee for the proposed action by making a reference to the Committee through the Principal Commissioner or the Commissioner concerned. The Assessing Officer shall forward a copy of the reference to the assessee.
3. All such references shall be addressed to the Secretary of the Committee, and it shall be the responsibility of the Secretary that the meetings of the committee are convened at appropriate time and intervals so as to effectively and expeditiously dispose of the references received by it.
4. The Committee, on receipt of the reference from the Assessing Officer, shall examine the proposed action of the Assessing Officer and, after providing an opportunity to the assessee, take a decision on the proposed action. The committee shall convey its decision in writing to the Assessing Officer with copy to the Principal Commissioner or the Commissioner concerned and the assessee. The Committee shall endeavor to decide the reference within 60 days of its receipt by the Secretary of the Committee. However, the Committee shall have due regard to any limitation period involved in the proposed action.
5. The Assessing Officer shall thereafter proceed in accordance with the directions of the Committee.
6. The Committee shall submit its report in respect of references decided by it in the relevant period to the CBDT through Member (IT) in the Proforma annexed as Annexure `A' to this order. The CBDT may intervene in the working/deliberations of the Committee, as and when required. The first report shall be submitted in respect of period ending on 31/12/2014, and subsequent reports shall be submitted on half yearly basis (30th June and 31st December every year).
(Ashish Kumar)
Director (Tax Policy & Legislation)
Non Resident Indian- How to incorporate a company in India?
Paras Mehra
With over 20 million in population and with investment size of over US$4000 million in last 10 years, NRI plays an important role in Indian Growth history. NRI are those individuals who are the citizen of India but are resident outside India. We often overlook the term NR with NRI. However, both the terms are very much different and Indian legal system has different set of laws for both of them. NRI are citizen of India, i.e. they hold the valid Indian passport but are residing outside India, and however, if the NRI gets the citizenship of other country, then he will have to surrender his Indian passport and then he will be treated as foreign national i.e. Non-resident (NR).
Laws are always complex and in India laws are very complex. Though, it's not possible to get into the details through articles but we can have a broader idea about how it is different for NRI to run business in India.
Investments in India are governed by the Foreign Direct Investment (FDI) policy and FEMA Regulations. FDI policy contains set of rules which are to be followed while investing in India and it is sector specific, i.e. there are different rules for different sector. It provides two entry routes to invest in India.
- Automatic Route: It means that a person can invest in India, without taking any approval subject to the limit specified.
- Approval Route: It means investment can be made only with the prior approval from the Reserve Bank of India (RBI).
There are many forms of business like Private Company, Partnership etc. However, a NRI cannot freely invest in any form. Entry routes differ according to the form you take to invest. It works like a chain and it went like this
*Prohibited sector includes Lottery business, chit funds, Real estate business or construction of farm house, Manufactures of cigars, Tobacco etc., Railway, Atomic etc.
Now, after considering the above policy, an eligible NRI may seek to incorporate a company in India. There are three types of companies can be formed in India, however, OPC cannot be formed by NRI.
Now let us see the steps to incorporate a company in India by NRI's.
1. Apply for DSC: DSC is a basic requirement to start the registration process. To apply for DSC, NRI will have to submit application accompanied by income tax PAN (Permanent Account Number, e.g ANXPS****R), Address proof notarised by Indian embassy at the country where he resides. It generally take 1-3 days.
2. Apply for Director Identification number (DIN): After DSC is acquired; now applicant should apply for DIN number. DIN application in Form DIR 3 will be submitted along with declaration, PAN card and address proof in prescribed format. It shall be noted that one director should be a resident of India (as per new rules). It takes one day.
3. Name Approval: After allotment of approved DIN, the applicant shall apply for Name approval application in Form INC-1. Name should be unique and should not be prohibited (refer Name Availability Guidelines). Name approval may take 3-6 days.
4. Application for Incorporation: After Name approval the applicant shall apply for incorporation application. This shall be accompanied by prescribed documents such as residential proofs, identity proofs, and Address proofs for registered Office. Form shall also be accompanied by declaration and certificate by a professional. This can take 4-6 days. MOA and AOA are drafted at this stage only.
5. Appointment of Directors: This form shall be filed with the form of incorporation. Through this form, director gives their consent to act as a director of the proposed companies. This form shall also be accompanied by the declaration in prescribed formats.
6. Registered Office: After the incorporation, this form shall be filed within 30 days from the date of incorporation. This form shall be accompanied by address proof of registered office.
Though the MCA have tried to simplify the registration process, yet it is very complication and it is too much to expect from the common man to register a company by itself. Such a naive will always be at a mercy of professional.
(For any feedback, Comment or suggestion author may be reached at paras.mehra18@gmail.com or at +919654622792, Author is Co-founder of www.Quickcompany.in, which is engaged in smooth incorporation of companies in India)
It is submitted that the appellant had before the Tribunal challenged the order-in-original on three counts - First was with regard to revenue neutrality, second was with regard to the demand and which has been confirmed by the order-in-original but was barred by limitation and thirdly, there is no basis for calculation of overhead percentages alleged in the show cause notices. It is further submitted that in thecircumstances the minimum that was expected from the Tribunal was complete application of mind to the controversy, dealing with the submissions canvassed orally and in writing and by a reasoned order either uphold or reject them. Inasmuch as it is the submission of the appellant that in a five paragraph cryptic order, out of which paragraphs 1 to 4 contain the facts and referred to the oral submissions, the Tribunal has disposed of the entire appeal and against the Assessee; that this unsatisfactory and perfunctory manner of disposal of the Appeal by the Tribunal, which is the last fact finding authority, raises a substantial question of law.
The Revenue representative submitted that if one perused the order-in-original, then, the ultimate conclusion of the Tribunal cannot be faulted; that the grievance raised pertains to the form and not the substance and had the same conclusion been reached by an elaborate process of reasoning, then, theHigh court would not have interfered with the order under challenge as no substantial question of law arises for consideration. It is submitted that the Appeal be dismissed.
The High Court, at the outset, observed that the order-in-original was not passed on 25.06.2004, but on 29.01.2004 and this would demonstrate that the Tribunal was unaware of the date of the order-in-original and throughout.
Noting that the Assessee had raised several contentions before the Tribunal, the High Court observed –
"8. To our mind, the Tribunal was required to consider the issues raised in the Appeal in depth and render a complete finding. If a particular issue was pressed or was given up that should be indicated in the order of the Tribunal. We would expect the Tribunal, which is manned by both judicial and technical experts, to be aware of the seriousness of the adjudication and not take up the assignment lightly and casually. There is no specific target which has to be achieved nor could the Tribunal be expected to decide particular number of appeals during a calendar year. Therefore, undue haste is not at all called for. That results in miscarriage of justice and in a given case would result in vital issues of both sides being concluded in most unsatisfactory manner. We would expect the Tribunal to guide the Adjudicating Authorities so that they would properly adjudicate the cases with reasoned orders and after considering the evidence on record. It is this duty of the Tribunal which has been repeatedly emphasized and to be performed to the best of its ability."
Not being satisfied with the cryptic order (in the words of the High Court) passed by the Tribunal, the High Court admitted the appeal on the substantial questions of law as framed.
Nonetheless, after finding that both sides deserve to be given an opportunity to argue their case completely before the Tribunal, the High Court opined that it is not required to decide the merits of this Appeal and answer the questions though they are substantial questions of law.
Taking a view that the requirement of the Court going into all these issues would be obviated if as requested by the parties, the Tribunal decides the matter afresh on merits and in accordance with law and uninfluenced by its earlier order and conclusions therein, the High Court remanded the case back to the Tribunal.
The High Court also observed - Ordinarily we would not have granted such request and passed a wholesale order of remand, but in the facts and circumstances where it is not possible to ascertain from the Tribunal's order as to which of the contentions have been dealt with and considered that this is a fit case for setting aside the impugned order and restoring the Appeal to the Tribunal's file in its entirety.
The order of the Tribunal was quashed and set aside and the appeal was restored to the file of the Tribunal for a decision afresh.
In passing : Incidentally, the ROM application filed by the appellant (against the final order dated 31.07.2013) on the ground that in the interest of justice on the issue of revenue neutrality the appeal should be re-heard was dismissed by the CESTAT by holding thus –
"3. We find that after hearing the ld. CA for the appellants, the order was dictated in the court in the presence of the ld. CA. All the issues raised during the arguments have been considered while passing the order. The appellants seek review of the order on the ground that they want to argue the issue which was not argued at the time of hearing of the appeal. This cannot be considered as a mistake apparent on recordTax Audit Report due date – Things to keep in mind
सी.ए. सुधीर हालाखंडी
प्रिय सी.ए. मित्रोनमस्कार ,
टैक्स ऑडिट की अंतिम तिथी 30/11/2014 कर दी गई है लेकिन आयकर रिटर्न की अंतिम तिथी अभी भी 30/09/2014 ही है एवं यह एक दुर्भाग्यपूर्ण स्तिथी है . दिनांक 25/07/2014 से 20/08/2014 के मध्य लगातार 25 दिन आयकर साईट पर सुविधा उपलब्ध नहीं होने के कारण एक भी रिटर्न पेश नहीं किया जा सका , एक यही कारण काफी है आयकर रिटर्न की तारीख बढाने के लिए ( अन्य कारण तो पहले ही बताये जा चुके है) लेकिन जो संकेत आ रहे है उनसे यह लगता है कि हमारे कानून निर्माता कोई भी तर्क मानने को तैयार नहीं है .
निश्चित रूप से यह एक अव्यवहारिक , अतार्किक एवं अनुचित फैसला है जिसका प्रारम्भ वर्ष के मध्य में टैक्स ऑडिट के प्रारूप को बदल कर किये गए एक गलत फैसले से हुआ एवं जिसका अंत आयकर रिटर्न की तारीख को टैक्स ऑडिट की तारीख से पूर्व रखने के रूप में हुआ है चाहे इसके लिए आयकर रिटर्न के प्रारूप को ही क्यों अव्यहारिक रूप से तोड़ना – मरोड़ना पड़े क्यों कि स्वयं आयकर रिटर्न का वर्तमान प्रारुप भी इस व्यवस्था की इजाजत नहीं देता है .
यदि निर्धारिती आयकर रिटर्न को टैक्स ऑडिट रिपार्ट के पूरा होने के पहले भर देते है एवं टैक्स ऑडिट में कोई परिवर्तन होता है तो आयकर रिटर्न को रिवाइज किया जा सकता है जैसा कि हमें समझाया जा रहा है लेकिन इस परिवर्तन (रिवाइज रिटर्न ) के कारणों के लिए विभाग कोई कार्यवाही या जांच नहीं करेगा इसका कोई आश्वासन भी नहीं दिया जा रहा है . व्यवहारिक रूप से यही उधित होता कि आयकर रिटर्न को टैक्स ऑडिट के पूरा होने के बाद ही भरा जाए.
आइये देखे आपको इस सम्बन्ध में क्या –क्या ध्यान में रखना है :-
1.यदि आपको "हानि" को आगे ले जाना है (carry forward of losses) तो आपको रिटर्न 30/09/2014 तक ही भरना होगा. लेकिन ध्यान रखे कि यह प्रावधान मकान सम्पति से होने वाली हानि (losses under the head Income frm House property) एवं मूल्य ह्रास (Depreciation) के आगे ले जाने पर लागू नहीं होते है .इस सम्बन्ध में निम्नलिखित ध्यान में रखे :-
(i). Losses under the head Business and Profession (including speculation Business) – To carry forward return must be filed on or before 30/09/2014.
(ii). Losses under the head capital gain- To carry forward return must be filed on or before 30/09/2014.
(iii). Losses under the Head House property – Even if return is filed after 30/09/2014 Losses under this Head "can be" carried forward. See this is very important provion.
(iv). Owning and maintaining Race Hources(Income from other sources) – To carry forward return muse be filed on or before 30/09/2014.
Losses under any other head are not allowed to be carried forward in any case.
2.यदि किसी केस में स्वत: निर्धारण कर (Self assessment tax) का भुगतान करना है तो यदि रिटर्न 30/09/2014 नहीं भरा है तो इस पर ब्याज का भुगतान आपको रिटर्न भरने तक की अवधि तक करना पडेगा इससे कोई फर्क नहीं पड़ता है कि आपने स्वत; निर्धारण कर का भुगतान 30/09/2014 से पूर्व ही कर दिया है .
यहां यह ध्यान रखे कि इस व्यवस्था के विरुद्ध भी माननीय उच्चत्तम न्यायालय ने CIT Vs. Dr. Pranay Raoy (2009) 179 Taxmann 53 (SC) में यह निर्णय दिया है कि यदि कर आयकर रिटर्न भरने की अंतिम तिथी के पहले ही कर चुका दिया है तो आयकर अधिकारी को ब्याज लगाने का आदेश नहीं दे सकते है .
3. एक बात और ध्यान में रखे कि यदि आपने आयकर रिटर्न समय पर नहीं भरा है तो आप जब भी जरुरत हो इसे रिवाइज नहीं कर पायेंगे. इसलिए ध्यान रखे ऐसे केस जहाँ रिटर्न रिवाइज करने की थोड़ी भी संभावना आपको नजर आती है उन रिटर्न्स को आपको 30/09/2014 के पहले ही भरना होगा. यह मालुम करना आसान नहीं है लेकिन केस की पूर्व हिस्ट्री या आय का स्वरुप देखते हुए इस सम्बन्ध में आप निर्णय ले सकते है वैसे व्यवहारिक रूप से देखे तो ऐसे केस बहुत ही कम होते है .
4. धारा 43B के तहत आने वाले वैधानिक खर्च को 30/09/2014 तक भुगतान करवा दे .
जो संभावनाए ऊपर व्यक्त की गई है उनको ध्यान में रखते हुए आप अपनी कार्य योजना बनाए ताकि इस अव्यवाहारिक निर्णय के बाद भी अपना कार्य कर सके.
इसके अतिरिक्त भी कोई और प्रावधान ध्यान में रखना हो तो कृपया यहाँ शेयर करे ताकि सभी सदस्य अपनी कार्य योजना बना सके.
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-CA Sudhir Halakhandi, -CA Abhas Halakhandi
Halakhandi And Company, Chartered Accountants
"Halakhandi", Laxmi Market, Beawar-305901(Raj)
Cell- 9828067256, MAIL –sudhirhalakhandi@gmail.com
Only deductible expenditure could be subjected to sec. 40(a)(ia) disallowance for TDS default, says ITAT
August 29, 2014[2014] 48 taxmann.com 19 (Delhi - Trib.)
IT : In order to fall within ambit of section 40(a)(ia), it is sine qua non that assessee should have been otherwise eligible for deduction of sum which is sought to be disallowed by invoking provisions of section 40
IT : Where assessee, a custom clearing agent, received certain amount from its clients as reimbursement of expenses which did not contain any profit element, Assessing Officer was not justified in applying gross profit rate at 8 per cent on estimate basis on amount so reimbursed in order to make addition to assessee's taxable income
Online Updation of details of Peer Reviewers Empaneled with ICAI
The Peer Review Board (PRB) with an aim to improving the quality of review has designed a web – format to simplify the system of uploading and updating the details of reviewers online and the same has already been uploaded on the Institute's website. Data fed in that form will help the Peer Review Board Secretariat instant categorization of Reviewers, according to their level of expertise, into Level – I,II, III and facilitate to maintain and retain level -wise panels also ensuring compliance of terms of listing agreement mandated by SEBI.
The Peer Reviewers who have already undergone the requisite training programme are hereby requested to update their latest details in the online form (Link: http://www.icai.org/prb/existingreviewer.html)
For further queries, you may contact the Peer Review Board's Secretariat, The Institute of Chartered Accountants of India, ICAI Bhawan, A-29, Sector – 62, Noida, UP – 201 309, Tel 01203045941/970 or email at peerreviewboard@icai.in.
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