Tuesday, February 24, 2015

[aaykarbhavan] Judgments and Informaion [2 Attachments]





 

RBI's prior approval for change in shareholding by Securitisation/ Reconstruction Companies

RBI/2014-2015/476
DNBR(PD)CC.No. 01/SCRC/26.03.001/2014-2015
February 24, 2015
The Chairman / Managing Director /
Chief Executive Officer
All Registered Securitisation Companies /
Reconstruction Companies
Dear Sir,
Bank's prior approval for change in shareholding
In terms of Section 3(6) of the SARFAESI Act, 2002, every Securitisation Company / Reconstruction Company (SC / RC) is required to obtain prior approval of the Reserve Bank for any substantial change in its management. For the purpose of this section, the expression "substantial change in management" means the change in the management by way of transfer of shares or amalgamation or transfer of the business of the company. Hence, one of the terms and conditions stipulated to the SC/RCs, while granting them the Certificate of Registration, states that prior approval of Reserve Bank will have to be taken by the SC/RCs for any change in their shareholding pattern.
2. In order to smoothen the functioning of SC/RC companies, it has been decided that, henceforth only the following changes in the share holding pattern of the SC/RC will require Reserve Bank's prior approval:
  1. any transfer of shares by which the transferee becomes a sponsor.
  2. any transfer of shares by which the transferor ceases to be a sponsor.
  3. an aggregate transfer of ten percent or more of the total paid up share capital of the SC/RC by a sponsor during the period of five years commencing from the date of certificate of registration.
3. All other terms and conditions as stipulated to the SC/RC, while granting them the Certificate of Registration, will continue to apply.
4. SCs/RCs may note the above instructions for meticulous compliance.
5. A notification DNBR(PD-SC/RC).No.01/CGM(CDS)/2014-2015 dated February 24, 2015, amending 'The Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003' is enclosed.
Yours sincerely,
(C D Srinivasan)
Chief General Manager
Reserve Bank of India
Department of Non-Banking Regulation
Central Office
World Trade Centre
Mumbai 400 005
Notification DNBR(PD-SC/RC) No. 01/CGM (CDS)/ 2014-2015 dated February 24, 2015
The Reserve Bank of India, having considered it necessary in the public interest, and being satisfied that, for the purpose of enabling the Reserve Bank to regulate the financial system to the advantage of the country and to prevent the affairs of any Securitisation Company or Reconstruction Company from being conducted in a manner detrimental to the interest of investors or in any manner prejudicial to the interest of such Securitisation Company or Reconstruction Company, in exercise of the powers conferred under Section 3, 9, 12 and 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, hereby directs that 'The Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003′ contained in Notification No.DNBS.2/CGM(CSM)-2003 dated April 23, 2003 (hereinafter called directions) shall stand amended with immediate effect, as follows :-
2. Insertion of new paragraph 24
After paragraph 23, the following paragraph 24 shall be inserted
"24. Bank's prior approval for any substantial change in management by way of transfer of shares"
Notwithstanding anything to the contrary contained in the terms and conditions stipulated in the certificate of registration issued under section 3 of the Act, SC/RCs shall obtain prior approval of Reserve Bank for transfers that result in substantial change in management in the following cases only-
  1. any transfer of shares by which the transferee becomes a sponsor.
  2. any transfer of shares by which the transferor ceases to be a sponsor.
  3. an aggregate transfer of ten percent or more of the total paid up share capital of the SC/RC by a sponsor during the period of five years commencing from the date of certificate of registration.
Explanation:- For the purposes of this clause, a transfer shall be deemed to be a transfer of more than ten percent of the total paid up share capital of the SC/RC if the aggregate of all the transfer of shares made by the sponsor prior to that transfer, and including that transfer, is 10% or more of the total paid up share capital of the SC/RC.
(C D Srinivasan)
Chief General Manager
 
S. 147: S. 143(3) assessment order is not a scrap of paper & AO is expected to have applied his mind. Reopening on ground of "oversight, inadvertence or mistake" is not permissible
The assessee made a claim for deduction for bad debts which was allowed by the AO u/s 143(3). Subsequently, within four years from the end of the assessment year, the AO reopened the assessment u/s 148 on the ground that the amount written off as bad debts was a capital loss and could not allowed as a deduction. The Tribunal allowed the assessee's appeal and quashed the reassessment proceedings. Before the High Court, the department urged that the reopening was valid because (a) the AO acted on an audit objection which constitutes "tangible material" and (b) as the AO had not dealt with the issue in the original assessment order, he had jurisdiction as held in Kalyanji Mavji & Co 102 ITR 287 (SC), New Light Trading Co 256 ITR 391 (Del) and Dr. Amin's Pathology Laboratory 252 ITR 673 (Bom). HELD by the High Court dismissing the appeal:
(i) The Tribunal has rendered a finding of fact that the AO raised a query with regard to the issue which was responded to by the assessee and on satisfaction of the same the AO passed the assessment order. Therefore, reopening of assessment on an issue in respect of which a query was raised and responded to by the assessee would amount to a change of opinion;
(ii) The argument that the tangible material is the audit objections received by the AO is not acceptable because there is no mention of any tangible material in the reasons recorded. A reopening notice can be sustained only on the basis of grounds mentioned in the reasons recorded. It is not open to the Revenue to add and/or supplement later the reasons recorded at the time of issuing reopening notice;
(iii) The argument that the AO has been careless in bringing to tax a particular amount which is chargeable to tax and that the Revenue should not be precluded from issuing notice u/s 148 overlooks the fact that power to reopen is not a power to review an assessment order. At the time of passing assessment order, it expected of the AO that he will apply mind and pass an order. An assessment order is not a mere scrap of paper. To accept the submission of the department would mean to negate the well settled position in law as stated by the Supreme Court in CIT Vs. Kelvinator of India Ltd 256 ITR 1 (Delhi)(FB) that the concept of 'change of opinion' brought in so as to have in built test to check abuse of power;
(iv) Kalyanji Mavji & Co 102 ITR 287 (SC), where it was held that "oversight, inadvertence or mistake" in passing assessment order will give the AO jurisdiction to reopen the assessment, is not good law in view of the subsequent decision in Indian and Eastern Newspaper Society Vs. CIT 119 ITR 996. An error discovered on a reconsideration of the same material (and no more) does not give him that power. The aforesaid view on the above proportion has been reiterated by the Apex Court in A.L.A.Firm vs. CIT 183 ITR 285. New Light Trading Co 256 ITR 391 (Del) andDr. Amin's Pathology Laboratory 252 ITR 673 (Bom) are also distinguishable on facts.
pFA


CIT vs. Chemosyn Ltd (Bombay High Court)

(i) Even if gains have accrued on execution of the development agreement as per Chaturbhuj Dwarkadas, the subsequent modification/ supercession of the agreement means that gains are not taxable as per real income theory, (ii) expenditure on buy-back of shares of warring shareholders is business expenditure
The High Court had to consider two issues:
(a) The assessee entered into a development agreement with Dipti Builders to develop a plot owned by the assessee for a consideration of Rs.16.11 crores and construction of 18,000 sq.ft of built up area free of cost. This was rescinded by a tripartite agreement dated was entered into between Dipti Builders, a new buyer and the assessee under which the plots were transferred to the new buyer For a total consideration of Rs.29.11 crores. The assessee offered only Rs.16.11 crore to tax as capital gains. It contended that the consideration in the form of constructed area of 18000 sq.feet was neither received nor had accrued and no occasion to bring it to tax could arise. However, the AO & CIT(A) rejected the contention by relying on Chatrubhuj Dwarkadas Kapadia vs. CIT260 ITR 491 (Bom) and held that capital gains accrued on the execution of the development agreement. This was reversed by the Tribunal by relying on Kalpataru Construction Overseas 13 SOT 194 (Mum) and CIT vs. Shivsagar Estates 204 ITR 1 (Bom);
(b) There was a dispute between brothers who together owned the assessee company. As a consequence of differences between the two groups, the dispute reached the Company Law Board as well as the Supreme Court. Thereafter, a settlement was arrived at between the two warring groups of shareholders and as per directions of the Company Law Board the assessee was directed to buy 34% shareholding of one of the warring group and cancel the same. The assessee claimed the amount of Rs.6.81 crores (being the difference between consideration paid and face value of the shares acquired for cancellation) as revenue expenditure. This on the basis that in view of the dispute between its shareholders, the business was adversely affected and therefore, the payment was expected to be incurred for purposes of business. However, the AO & CIT(A) did not accept the same and held the expenditure to be of capital nature. However, the Tribunal allowed the claim by relying on Echjay Industries Ltd vs. DCIT 88 TTJ (Mumbai) 1089.
HELD by the High Court dismissing the appeal
(i) In Chaturbhuj Dwarkadas Kapadia, the issue was to determine the year in which the property was transferred for the purpose of capital gains. In this case the issue is what is the consideration received for the transfer of an asset. No income is accrued or received of the value of 18000 sq.feet of constructed area under the development agreement because the said agreement was not acted upon as it came to be uperseded/modified by the Tripartite agreement. This was the position when the return of income was filed. On the application of the real income theory, there would be neither accrual nor receipt of income to warrant bringing to tax to the constructed area of 18,000 sq.ft which has not been received by the assessee (CIT vs. Shoorji Vallabhdas 46 ITR 144 (SC) followed);
(ii) The Tribunal has recorded the finding of fact that in view of the dispute between the two warring groups of shareholders the business of the assessee had suffered. After the settlement of the dispute there was a substantial increase in the sales. After settlement of the dispute new products were launched by the assessee-company. All this was evidence of the fact that the dispute between two groups of shareholders had affected the business of the company. The amount paid by the assessee for the purchase of its shares for subsequent cancellation was an expenditure incurred only to enable smooth running of the business. Thus, the expenditure was incurred for carrying on its business smoothly and was a deductible expenditure. 
PFA

List of companies investigated by govt. in last 3 Years

by CA Sandeep Kanoi
The details of companies investigated by the Ministry during the last three years and current year (till date) are enclosed as Annexure-I. Chit Funds are registered by State Governments under the Chit Funds Act, 1982 - an Act administered by the Ministry of Finance but with responsibilities of implementation resting with the States. Cheating by […]

The Purpose and Ultimate result?
NIL

List of companies investigated by govt. in last 3 Years

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The details of companies investigated by the Ministry during the last three years and current year (till date) are enclosed as Annexure-I.
Chit Funds are registered by State Governments under the Chit Funds Act, 1982 – an Act administered by the Ministry of Finance but with responsibilities of implementation resting with the States. Cheating by Chit Fund company through fraudulent schemes is an offence under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. The power to investigate and prosecute lies with the State Governments. However for better identification of Chit Fund Companies, Rule 8(2)(b)(iii) of Companies (Incorporation) Rules, 2014 framed under the Companies Act, 2013, provides that if the company's main business is financing, leasing, chit fund, investments, securities or combination thereof, its incorporation shall not be allowed unless its name is indicative of such related financial activities, viz., Chit Fund or Investment or Loan, etc.
Insofar as Companies Act is concerned, cases of violations of the provisions of the Act by Chit Fund companies are dealt with in accordance with the Act. So far the Ministry has ordered investigations against 96 such companies by Serious Fraud Investigation Office (SFIO) of this Ministry under the provisions of Section 235 of the Companies Act, 1956. These investigations are in addition to action initiated by State police authorities under the laws referred above.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Rajya Sabha today.
Annexure – I
 ANNEXURE REFERRED TO IN ANSWER TO PART (a) OF RAJYA SABHA UNSTARRED QUESTION NO. 39 FOR 24TH FEBRUARY, 2015 REGARDING CHIT FUND COMPANIES
 Details of companies investigated by the Ministry during the last three years and current year (till date)
 2011-12
 Sl. No.Name of the Company
Date of Submission of Investigation report to MCA
1
Sesa Goa Ltd.
29/04/2011
2
Sesa Industries Ltd.
29/04/2011
3
Systems America (India) Ltd.
16/05/2011
4
Ambuja Cements Ltd.
26/07/2011
5
ACC Ltd.
26/07/2011
6.
Ultratech Cement Ltd.
27/07/2011
7
Megacity (Bangalore) Developers & Builders Ltd.
02/08/2011
8
Rishi Oil & Fats Ltd. (in Liqn)
22/11/2011
9
AVI Shoes Ltd. (in Liqn)
22/11/2011
10
AVI Industries Ltd. (in Liqn)
22/11/2011
11
Austral Coke & Projects Ltd.
29/12/2011
12
Metlex Ceramic Ltd. (under Liquidation)
11/01/2012
13
City Limouzines (India) Ltd.
30/01/2012
14
H. M. Dyeing Ltd. (under Liquidation)
21/02/2012
15
Palamoor Agro Complex Ltd.
29/02/2012
16
Goldquest International Pvt. Ltd.
05/03/2012
17
Questnet Enterprises India Pvt. Ltd.
05/03/2012
18
Dimensions Investment & Securities Ltd. (under Liquidation)
07/03/2012
19
Global Trust Bank
09/03/2012
20
Ganga Yamuna Finvest Pvt. Ltd. (in Liquidation)
30/03/2012
 2012-13
 1
Jayant Vitamins Ltd.
29/05/2012
2
Vijay Associates
26/07/2012
3
Mauve Farms Pvt. Ltd.
03/08/2012
4
Lakshish Habitats Ltd. (under Liquidation)
13/08/2012
5
Savitri Finlease Securities Ltd.
14/08/2012
6
Jenson & Nicholson Financial Services Ltd.
17/08/2012
7
Yusuf Properties Pvt. Ltd.
30/08/2012
8
Pushkar Trading Co. Ltd. (under Liquidation)
31/08/2012
9
Triveni Infrastructure development Co. Ltd. (under Liquidation)
06/09/2012
10
Ayushi Buildestates Pvt. Ltd.
18/09/2012
11
Singh Contractors (I) Pvt. Ltd. (under Liquidation)
26/09/2012
12
Independent Mobile Infrastructure (P) Ltd. (in Liquidation)
19/10/2012
13
Omway Build Estate Pvt. Ltd.
02/11/2012
14
Casion Finance & Investment (India) Ltd. (under Liquidation)
23/11/2012
15
Kush Print (P) Ltd. (in Lquidation)
05/12/2012
16
Abcindya Networks Pvt. Ltd.
12/12/2012
17
Gennext Promoters Pvt. Ltd.
13/12/2012
18
Sajjad Properties Pvt. Ltd.
31/12/2012
19
Timber World Resorts and Plantation Pvt. Ltd. (in Liquidation)
27/02/2013
20
Life Business Project Pvt. Ltd (Mr. Bhuvnesh Chaturvedi & Ors.)
01/03/2013
21
DSS Mobile Communications Ltd. (under Liquidation)
18/03/2013
22
Mehak Vyapaar Pvt. Ltd.
21/03/2013
2013-14
1
Kinematics Marketing (P) Ltd.
01/04/2013
2
Reebok India Co. (Unlimited Liability Co.)
07/05/2013
3
Devred (I) Ltd. (in Liquidation)
09/10/2013
4
Vaishnavi Corporate Communications Pvt. Ltd.
22/01/2014
5
Vaishnavi Advisory Services Pvt. Ltd.
6
Leisure Clubs India Pvt. Ltd.
7
Claro Consultancy Pvt. Ltd.
8
Magic Airlines Pvt. Ltd.
9
Maansi Agro Pvt. Ltd.
10
Crownmart International India Pvt. Ltd.
11
Vitcom Consulting Private Ltd.
12
Neucom Consulting Pvt. Ltd.
13
D. R. Gaur Projects Pvt. Ltd.
19/03/2014
14
Unigateway 2U Trading Pvt. Ltd.
31/03/2014
15
Unipay 2U Marketing Pvt. Ltd.
16
Unipay Creative Business Pvt. Ltd.
17
Unipay 2U Production Pvt. Ltd.
18
Basil International Ltd.
19
Vamshi Chemicals Ltd.
20
Nixil Pharmaceuticals Specialities Ltd.
21
Appeline Cosmetics & Toiletries Ltd.
22
Basil Express Ltd.
2014-15 (till date)
1
Saradha Realty India Ltd.
04/07/2014
2
Saradha Agro Development Ltd.
3
Saradha Exports Ltd.
4
Saradha Shopping Mall Pvt. Ltd.
5
Saradha Printing & Publication Pvt. Ltd.
6
Saradha Tours & Travels Pvt. Ltd.
7
Saradha Education Enterprise Ltd.
8
Saradha Construction Company Pvt. Ltd.
9
Saradha Garden Resorts & Hotel Pvt. Ltd.
10
Saradha Landmark Cement Pvt. Ltd.
11
Rose Capital Ltd.
12
Bengal Media Pvt. Ltd.
13
Bhasank Food Pvt. Ltd.
14
Global Automobiles Ltd.
15
Speakasiaonline
15/09/2014
16
Tulsiyat Tek Pvt. Ltd.
17
Seamless Outsourcing LLP
18
Rose Valley Real Estate & Construction Ltd.
03/12/2014
19
Rose Valley Industries Ltd.
20
Silver Valley Communications Ltd.
21
Rose Valley Food Beverages Ltd.
22
Rose Valley Marketing India Ltd.
23
Rose Valley Infotech Pvt. Ltd.
24
Rose Valley Hotels & Entertainment Ltd.
25
Rose Valley Projects Ltd.
26
Rose Valley Patrika Ltd.
27
Rose Valley Films Ltd.
28
Modern Investment Traders Pvt. Ltd.
29
Rose Valley Travels Pvt. Ltd.
30
Brand Value Communications Ltd.
31
Rose Valley Housing Development Finance Corporation Ltd.
32
Rose Valley Airlines Ltd.
33
Rose Valley Fashions Pvt. Ltd.
34
Rupasi Bangla Projects India Ltd.
35
Rupasi Bangla Media & Entertainment Ltd.
36
Rose Valley Realcom Ltd.
37
KNS Infracon Private Ltd.
09/01/2015
38
ABW Infrastructure Ltd.
11/02/2015
Source- PIB



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