F Act technically legal and correct can be demonstrated to be oppressive to shareholders u/ss. 397 and 398 of 1956 Act : HB Stockholding Ltd. v. DCM Shriram Industries Ltd. p. 271
Can Any body supply me Full Text Of Judgment as mentioned above?
C A Shah D J
USA
Income Tax
Whether if service provider fails to collect service tax from its
clients but once pointed out by Audit, deposits same with interest
from own account, such expenses can be claimed as eligible deduction
u/s 37(1) - YES: HC
THE assessee company had not collected service tax on mechanical
erection and installation of plant and machinery, structure work,
piping work and works contract works for a period of time. During the
audit, the assessing authorities raised certain objections and asked
the assessee to furnish the reasons on why he failed to do so. The
assessee failed to furnish any answers to the objection, as a result
the assessee deposited service tax as specified by the authorities,
with interest. When the return was filed, the assessee claimed
deduction on the service tax and interest paid, as expenditure
incurred for business. During the assessment, the AO concluded that
the amount paid as service tax and the interest thereon, cannot be
claimed for deduction as it was the outcome of infringing a provision
of law.
The issue before the Bench is - Whether if a service provider fails to
collect service tax from its clients but once pointed out by Audit,
deposits the same with interest from own account, such expenses can be
claimed as eligible deduction u/s 37(1). And the verdict goes in
favour of the assessee. 
Section 68 of the companies act 2013 and Companies (Share capital and Debentures) Rules,2014 deals with the power of company to purchase its own securities.
IT: Second proviso to sec. 40(a)(ia) is effective retrospectively even
if it was inserted by Finance Act, 2012 prospectively from April 1,
2013
■■■
[2014] 45 taxmann.com 555 (Agra - Trib.)
IN THE ITAT AGRA BENCH
Rajeev Kumar Agarwal
v.
Additional Commissioner of Income-tax, Range -3, Mathura
BHAVNESH SAINI, JUDICIAL MEMBER
AND PRAMOD KUMAR, ACCOUNTANT MEMBER
IT APPEAL NO. 337 (AGRA) OF 2013
[ASSESSMENT YEAR 2006-07]
MAY 29, 2014
Dr. Rakesh Gupta for the Appellant. Radha Sharma for the Respondent.
ORDER
Pramod Kumar, Accountant Member - This appeal, filed by the assessee,
calls into question correctness of learned Commissioner (Appeals)
order dated 2nd September, 2013, in the matter of assessment under
section 143(3) of the Income Tax Act, 1961(hereinafter to as 'the
Act'), for the assessment year 2006-07, upholding the disallowance of
Rs 5,01,872 under section 40(a)(ia) of the Act.
2. The issue in appeal lies in a rather narrow compass of undisputed
material facts. During the course of the scrutiny assessment
proceedings, the Assessing Officer noticed that the assessee has made
interest payments, aggregating to Rs 5,01,872, without discharging his
tax withholding obligations under section 194A. It was in this
backdrop that the Assessing Officer, having noted the undisputed
position regarding applicability of section 194 A on the facts of this
case, and having noted that the scope of section 40(a)(ia) restricting
deduction in respect of sums in respect of which tax withholding
liability is not discharged, disallowed Rs 5,01,872 under section
40(a)(ia) r.w.s. 194 A of the Act. Aggrieved, assessee carried the
matter in appeal before the CIT(A). It was, inter alia, contended by
the assessee that in view of the insertion of second proviso to
Section 40(a)(ia) by the Finance Act 2012, and in view of the fact
that the recipients of the interest have already included the income
embedded in these payments in their tax returns filed under section
139, disallowance under section 40(a)(ia) could not be invoked in this
case. It was also contended that even though this proviso is stated to
be effective 1st April 2013, since the amendment in "declaratory and
curative in nature, and, therefore, it should be given retrospective
effect from 1st April, 2005, being the date from which sub clause (ia)
of section 40(a) was inserted by the Finance (No. 2) Act, 2004". None
of these submissions, however, impressed the learned CIT(A). Relying
upon a Special Bench decision in the case of Bharati Shipyard Ltd. v.
DCIT (141 TTJ 129), herejected this plea and concluded that insertion
of second proviso to Section 40(a)(ia) cannot be held to have
retrospective effect. The disallowance was thus confirmed by the
learned CIT(A). The assessee is aggrieved and is in appeal before us.
3. We have heard the rival contentions, perused the material on record
and duly considered factual matrix of the case as also the applicable
legal position.
4. Let us first take a look at the legislative amendment of section
40(a)(ia), vide Finance Act 2012, and try to appreciate the scheme of
things as evident in the amended section. Second proviso to Section
40(a)(ia), introduced with effect from 1st April 2013, provides, that
"where an assessee fails to deduct the whole or any part of the tax in
accordance with the provisions of Chapter XVII-B on any such sum but
is not deemed to be an assessee in default under the first proviso to
sub-section (1) of section 201, then, for the purpose of this
sub-clause, it shall be deemed that the assessee has deducted and paid
the tax on such sum on the date of furnishing of return of income by
the resident payee referred to in the said proviso". In other words,
as long as the assessee cannot be treated as an assessee in default,
the disallowance under section 40(a)(ia) cannot come into play either.
To understand the effect of this proviso, it is useful to refer to
first proviso to section 201(1), which is also introduced by the
Finance Act 2012and effective1st July 2012, and which provides that
"any person, including the principal officer of a company, who fails
to deduct the whole or any part of the tax in accordance with the
provisions of this Chapter on the sum paid to a resident or on the sum
credited to the account of a resident shall not be deemed to be an
assessee in default in respect of such tax if such resident-(i) has
furnished his return of income under section 139; (ii) has taken into
account such sum for computing income in such return of income;
and(iii) has paid the tax due on the income declared by him in such
return of income, and the person furnishes a certificate to this
effect from an accountant in such form as may be prescribed." The
unambiguous underlying principle seems to be that in the situations in
which the assessee's tax withholding lapse have not resulted in any
loss to the exchequer, and this fact can be reasonably demonstrated,
the assessee cannot be treated as an assessee in default. The net
effect of these amendments is that the disallowance under section
40(a)(ia) shall not be attracted in the situations in which even if
the assessee has not deducted tax at source from the related payments
for expenditure but the recipient of the monies has taken into account
these receipts in computation of his income, paid due taxes, if any,
on the income so computed and has filed his income tax return under
section 139(1). There is also a procedural requirement of issuance of
a certificate, in the prescribed format, evidencing compliance of
these conditions by the recipients of income, but that is essentially
a procedural aspect of the matter. The legislative amendment so
brought about by the Finance Act, 2012, so far as the scheme of
disallowance under section 40(a)(ia) is concerned, substantially
mitigates the rigour of, what otherwise seemed to be, a rather harsh
disallowance provision.
5. As for the question as to whether this amendment can be treated as
retrospective in nature, even in the case of Bharti Shipyard (supra)–
a special bench decision vehemently relied upon in support of
revenue's case,the special bench, on principles, summed up the settled
legal position to the effect that "any amendment of the substantive
provision which is aimed at …… (inter alia) removing unintended
consequences to make the provisions workable has to be treated as
retrospective notwithstanding the fact that the amendment has been
given effect prospectively". It was held that if the consequences
sought to be remedied by the subsequent amendments were to be treated
as "intended consequences", the amendment could not be treated as
retrospective in effect. The special bench then proceeded to draw a
line of demarcation between intended consequences and unintended
consequences, and finally the retrospectivity of first proviso was
decided against the assessee on the ground that this special bench was
of the considered view that "the objective sought to be achieved by
bringing out section 40(a)(ia) is the augmentation of TDS provisions"
and went on to add that "If, in attaining this main objective of
augmentation of such provisions, the assessee suffers disallowance of
any amount in the year of default, which is otherwise deductible, the
legislature allowed it to continue". It was further observed that
"this is the cost which parliament has awarded to those assessees who
fail to comply with the relevant provisions by considering overall
objective of boosting TDS compliance"(Emphasis by underlining supplied
by us). In other words, the amendment was held to be prospective
because, in the wisdom of the special bench, the 2010 amendment to
Section 40(a)(ia) by inserting first proviso thereto, which is what
the special bench was dealing with, was an "intended consequence" of
the provision of Section 40(a)(ia).
6. However, the stand so taken by the special bench was disapproved by
Hon'ble Delhi High Court in the case of CIT v. Rajinder Kumar (362 ITR
241). While doing so, Their Lordships observed that, "The object of
introduction of Section 40(a)(ia) is to ensure that TDS provisions are
scrupulously implemented without default in order to augment
recoveries……..Failure to deduct TDS or deposit TDS results in loss of
revenue and may deprive the Government of the tax due and payable"
(Emphasis by underlining supplied by us)". Having noted the underlying
objectives, Their Lordships also put in a word of caution by observing
that, "the provision should be interpreted in a fair, just and
equitable manner". Their Lordships thus recognized the bigger picture
of realization of legitimate tax dues, as object of Section 40(a)(ia),
and the need of its fair, just and equitable interpretation. This
approach is qualitatively different from perceiving the object of
Section 40(a)(ia) as awarding of costs on the "assessees who fail to
comply with the relevant provisions by considering overall objective
of boosting TDS compliance". Not only the conclusions arrived at by
the special bench were disapproved but the very fundamental assumption
underlying its approach, i.e. on the issue of the object of Section
40(a)(ia), was rejected too. In any event, even going by Bharti
Shipyard decision (supra), what we have to really examine is whether
2012 amendment, inserting second proviso to Section 40(a)(ia), deals
with an "intended consequence" or with an "unintended consequence".
7. When we look at the overall scheme of the section as it exists now
and the bigger picture as it emerges after insertion of second proviso
to section 40(a)(ia), it is beyond doubt that the underlying objective
of section 40(a)(ia) was to disallow deduction in respect of
expenditure in a situation in which the income embedded in related
payments remains untaxed due to non deduction of tax at source by the
assessee. In other words, deductibility of expenditure is made
contingent upon the income, if any, embedded in such expenditure being
brought to tax, if applicable. In effect, thus, a deduction for
expenditure is not allowed to the assessees, in cases where assessees
had tax withholding obligations from the related payments, without
corresponding income inclusion by the recipient.That is the clearly
discernable bigger picture, and, unmistakably, a very pragmatic and
fair policy approach to the issue - howsoever belated the realization
of unintended and undue hardships to the taxpayers may have been. It
seems to proceed on the basis, and rightly so, that seeking tax
deduction at source compliance is not an end in itself, so far as the
scheme of this legal provision is concerned, but is only a mean of
recovering due taxes on income embedded in the payments made by the
assessee. That's how, as we have seen a short while ago, Hon'ble Delhi
High Court has visualized the scheme of things - as evident from Their
Lordships' reference to augmentation of recoveries in the context of
"loss of revenue" and "depriving the Government of the tax due and
payable".
8. With the benefit of this guidance from Hon'ble Delhi High Court, in
view of legislative amendments made from time to time, which throw
light on what was actually sought to be achieved by this legal
provision, and in the light of the above analysis of the scheme of the
law, we are of the considered view that section 40(a)(ia) cannot be
seen as intended to be a penal provision to punish the lapses of non
deduction of tax at source from payments for expenditure- particularly
when the recipients have taken into account income embedded in these
payments, paid due taxes thereon and filed income tax returns in
accordance with the law. As a corollary to this proposition, in our
considered view, declining deduction in respect of expenditure
relating to the payments of this nature cannot be treated as an
"intended consequence" of Section 40(a)(ia). If it is not an intended
consequence i.e. if it is an unintended consequence, even going by
Bharti Shipyard decision (supra), "removing unintended consequences to
make the provisions workable has to be treated as retrospective
notwithstanding the fact that the amendment has been given effect
prospectively". Revenue, thus, does not derive any advantage from
special bench decision in the case Bharti Shipyard (supra).
9. On a conceptual note, primary justification for such a disallowance
is that such a denial of deduction is to compensate for the loss of
revenue by corresponding income not being taken into account in
computation of taxable income in the hands of the recipients of the
payments. Such a policy motivated deduction restrictions should,
therefore, not come into play when an assessee is able to establish
that there is no actual loss of revenue. This disallowance does
deincentivize not deducting tax at source, when such tax deductions
are due, but, so far as the legal framework is concerned, this
provision is not for the purpose of penalizing for the tax deduction
at source lapses. There are separate penal provisions to that effect.
Deincentivizing a lapse and punishing a lapse are two different things
and have distinctly different, and sometimes mutually exclusive,
connotations. When we appreciate the object of scheme of section
40(a)(ia), as on the statute, and to examine whether or not, on a
"fair, just and equitable" interpretation of law- as is the guidance
from Hon'ble Delhi High Court on interpretation of this legal
provision, in our humble understanding, it could not be an "intended
consequence" to disallow the expenditure, due to non deduction of tax
at source, even in a situation in which corresponding income is
brought to tax in the hands of the recipient. The scheme of Section
40(a)(ia), as we see it, is aimed at ensuring that an expenditure
should not be allowed as deduction in the hands of an assessee in a
situation in which income embedded in such expenditure has remained
untaxed due to tax withholding lapses by the assessee. It is not, in
our considered view, a penalty for tax withholding lapse but it is a
sort of compensatory deduction restriction for an income going untaxed
due to tax withholding lapse. The penalty for tax withholding lapse
per se is separately provided for in Section 271 C, and, section
40(a)(ia) does not add to the same. The provisions of Section
40(a)(ia), as they existed prior to insertion of second proviso
thereto, went much beyond the obvious intentions of the lawmakers and
created undue hardships even in cases in which the assessee's tax
withholding lapses did not result in any loss to the exchequer. Now
that the legislature has been compassionate enough to cure these
shortcomings of provision, and thus obviate the unintended hardships,
such an amendment in law, in view of the well settled legal position
to the effect that a curative amendment to avoid unintended
consequences is to be treated as retrospective in nature even though
it may not state so specifically, the insertion of second proviso must
be given retrospective effect from the point of time when the related
legal provision was introduced. In view of these discussions, as also
for the detailed reasons set out earlier, we cannot subscribe to the
view that it could have been an "intended consequence" to punish the
assessees for non deduction of tax at source by declining the
deduction in respect of related payments, even when the corresponding
income is duly brought to tax. That will be going much beyond the
obvious intention of the section. Accordingly, we hold that the
insertion of second proviso to Section 40(a)(ia) is declaratory and
curative in nature and it has retrospective effect from 1st April,
2005, being the date from which sub clause (ia) of section 40(a) was
inserted by the Finance (No. 2) Act, 2004.
10. In view of the above discussions, we deem it fit and proper to
remit the matter to the file of the Assessing Officer for fresh
adjudication in the light of our above observations and after carrying
out necessary verifications regarding related payments having been
taken into account by the recipients in computation of their income,
regarding payment of taxes in respect of such income and regarding
filing of the related income tax returns by the recipients. While
giving effect to these directions, the Assessing Officer shall give
due and fair opportunity of hearing to the assessee, decide the matter
in accordance with the law and by way of a speaking order. We order
so.
11. In the result, the appeal is allowed for statistical purposes in
the terms indicated above.
--
Regards,
*Pawan Singla ,** LLB*
*M. No. 9825829075*
Can Any body supply me Full Text Of Judgment as mentioned above?
C A Shah D J
USA
Payments of commission for services rendered in relation to securities are out of ambit of sec. 194H; no TDS
IT: Services rendered in relation to securities get excluded from express definition of 'brokerage or commission' and thus, excluded from purview of section 194H
Income Tax
Whether if service provider fails to collect service tax from its
clients but once pointed out by Audit, deposits same with interest
from own account, such expenses can be claimed as eligible deduction
u/s 37(1) - YES: HC
THE assessee company had not collected service tax on mechanical
erection and installation of plant and machinery, structure work,
piping work and works contract works for a period of time. During the
audit, the assessing authorities raised certain objections and asked
the assessee to furnish the reasons on why he failed to do so. The
assessee failed to furnish any answers to the objection, as a result
the assessee deposited service tax as specified by the authorities,
with interest. When the return was filed, the assessee claimed
deduction on the service tax and interest paid, as expenditure
incurred for business. During the assessment, the AO concluded that
the amount paid as service tax and the interest thereon, cannot be
claimed for deduction as it was the outcome of infringing a provision
of law.
The issue before the Bench is - Whether if a service provider fails to
collect service tax from its clients but once pointed out by Audit,
deposits the same with interest from own account, such expenses can be
claimed as eligible deduction u/s 37(1). And the verdict goes in
favour of the assessee.
Power of company to Purchase its own securities Under companies Act,2013
CS M. Kurthalanathan
Section 68 of the companies act 2013 and Companies (Share capital and Debentures) Rules,2014 deals with the power of company to purchase its own securities.Sources of Buy Back:
A company may purchase its own shares or other specified securities out of;
- its free reserves;
- the securities premium account; or
- the proceeds of the issue of any shares or other specified securities
No buy-back of any kind of shares or other specified securities shall be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities.
| "specified securities" includes employees' stock option or other securities as may be notified by the Central Government from time to time. "free reserves" includes securities premium account. |
Conditions:
- the buy-back is authorised by its articles;
- a special resolution has been passed at a general meeting of the company authorising the buy-back:
Special Resolution is not required- if;
(i) the buy-back is, ten per cent. or less of the total paid-up equity capital and free reserves of the company; and
(ii) such buy-back has been authorised by the Board by means of a resolution passed at its meeting;
- the buy-back is twenty-five per cent. or less of the aggregate of paid-up capital and free reserves of the company
In respect of the buy-back of equity shares in any financial year, the reference to twenty-five per cent. in this clause shall be construed with respect to its total paid-up equity capital in that financial year
- the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back is not more than twice the paid-up capital and its free reserves
The Central Government may, by order, notify a higher ratio of the debt to capital and free reserves for a class or classes of companies
- all the shares or other specified securities for buy-back are fully paid-up;
- the buy-back of the shares or other specified securities listed on any recognised stock exchange is in accordance with the regulations made by the Securities and Exchange Board in this behalf; and
- the buy-back in respect of shares or other specified securities other than those specified in clause (f) is in accordance with such rules as may be prescribed:
No offer of buy-back under this sub-section shall be made within a period of one year reckoned from the date of the closure of the preceding offer of buy-back, if any.
Disclosures:
The explanatory statement to be annexed to the notice of the general meeting pursuant to section 102 shall contain the following disclosures, namely:-
- the date of the board meeting at which the proposal for buy-back was approved by the board of directors of the company;
- the objective of the buy-back;
- the class of shares or other securities intended to be purchased under the buy-back;
- the number of securities that the company proposes to buy-back;
- the method to be adopted for the buy-back;
- the price at which the buy-back of shares or other securities shall be made;
- the basis of arriving at the buy-back price;
- the maximum amount to be paid for the buy-back and the sources of funds from which the buy-back would be financed;
- the time-limit for the completion of buy-back;
- the aggregate shareholding of the promoters and of the directors of the promoter, where the promoter is a company and of the directors and key managerial personnel as on the date of the notice convening the general meeting;
- the aggregate number of equity shares purchased or sold by persons during a period of twelve months preceding the date of the board meeting at which the buy-back was approved and from that date till the date of notice convening the general meeting;
- the maximum and minimum price at which purchases and sales were made along with the relevant date;
- the quantum of shares proposed to be tendered and the details of their transactions and their holdings for the last twelve months prior to the date of the board meeting at which the buy-back was approved including information of number of shares acquired, the price and the date of acquisition;
- a confirmation that there are no defaults subsisting in repayment of deposits, interest payment thereon, redemption of debentures or payment of interest thereon or redemption of preference shares or payment of dividend due to any shareholder, or repayment of any term loans or interest payable thereon to any financial institution or banking company;
- a confirmation that the Board of directors have made a full enquiry into the affairs and prospects of the company and that they have formed the opinion-
(i) that immediately following the date on which the general meeting is convened there shall be no grounds on which the company could be found unable to pay its debts;
(ii) as regards its prospects for the year immediately following that date, that, having regard to their intentions with respect to the management of the company's business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company shall be able to meet its liabilities as and when they fall due and shall not be rendered insolvent within a period of one year from that date; and
(iii) the directors have taken into account the liabilities(including prospective and contingent liabilities), as if the company were being wound up under the provisions of the Companies Act, 2013
- a report addressed to the Board of directors by the company's auditors stating that-
(i) they have inquired into the company's state of affairs;
(ii) the amount of the permissible capital payment for the securities in question is in their view properly determined
iii) that the audited accounts on the basis of which calculation with reference to buy back is done is not more than six months old from the date of offer document and
iv) the Board of directors have formed the opinion as on reasonable grounds and that the company, having regard to its state of affairs, shall not be rendered insolvent within a period of one year from that date.
Time Limit:
Every buy-back shall be completed within a period of one year from the date of passing of the special resolution, or as the case may be, the resolution passed by the Board.
Modes of Buy-Back:
The buy-back may be—
- from the existing shareholders or security holders on a proportionate basis;
- from the open market;
- by purchasing the securities issued to employees of the company pursuant to a scheme of stock option or sweat equity.
Letter of offer (LO):
The company which has been authorized by a special resolution shall, before the buy-back of shares, file with the Registrar of Companies a letter of offer in Form No. SH.8, along with the fee.
The letter of offer shall be dated and signed on behalf of the Board of directors of the company by not less than two directors of the company, one of whom shall be the managing director, where there is one.
Declaration of Solvency:
The company shall file with the Registrar, along with the letter of offer, and in case of a listed company with the Registrar and the Securities and Exchange Board, a declaration of solvency in Form No. SH.9 along with the fee and signed by at least two directors of the company, one of whom shall be the managing director, if any, and verified by an affidavit to the effect that the Board of Directors of the company has made a full inquiry into the affairs of the company as a result of which they have formed an opinion that it is capable of meeting its liabilities and will not be rendered insolvent within a period of one year from the date of declaration adopted by the Board.
No declaration of solvency shall be filed with the Securities and Exchange Board by a company whose shares are not listed on any recognised stock exchange
Dispatch of LO to shareholders:
The letter of offer shall be dispatched to the shareholders or security holders immediately after filing the same with the Registrar of Companies but not later than twenty days from its filing with the Registrar of Companies.
Period of Buy- back:
The offer for buy-back shall remain open for a period of not less than fifteen days and not exceeding thirty days from the date of dispatch of the letter of offer.
In case the number of shares or other specified securities offered by the shareholders or security holders is more than the total number of shares or securities to be bought back by the company, the acceptance per shareholder shall be on proportionate basis out of the total shares offered for being bought back.
Verification of offer:
The company shall complete the verifications of the offers received within fifteen days from the date of closure of the offer and the shares or other securities lodged shall be deemed to be accepted unless a communication of rejection is made within twenty one days from the date of closure of the offer.
Open a Bank Account:
The company shall immediately after the date of closure of the offer, open a separate bank account and deposit therein, such sum, as would make up the entire sum due and payable as consideration for the shares tendered for buy-back in terms of these rules.
Payment to security holders:
The company shall-
(a) make payment of consideration in cash to those shareholders or security holders whose securities have been accepted; or
(b) return the share certificates to the shareholders or security holders whose securities have not been accepted at all or the balance of securities in case of part acceptance
Obligations of the Company:
The company shall ensure that—
- the letter of offer shall contain true, factual and material information and shall not contain any misleading information and must state that the directors of the company accept the responsibility for the information contained in such document;
- the company shall not issue any new shares including by way of bonus shares from the date of passing of special resolution authorizing the buy-back till the date of the closure of the offer under these rules, except those arising out of any outstanding convertible instruments;
- the company shall confirm in its offer the opening of a separate bank account adequately funded for this purpose and to pay the consideration only by way of cash;
- the company shall not withdraw the offer once it has announced the offer to the shareholders;
- the company shall not utilize any money borrowed from banks or financial institutions for the purpose of buying back its shares; and
- the company shall not utilize the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities for the buy-back.
Extinguishment of certificate:
Where a company buys back its own shares or other specified securities, it shall extinguish and physically destroy the shares or securities so bought back within seven days of the last date of completion of buy-back.
Restriction:
Where a company completes a buy-back of its shares or other specified securities under this section, it shall not make a further issue of the same kind of shares or other securities including allotment of new shares or other specified securities within a period of six months.
Exceptions:
- by way of a bonus issue or
- conversion of warrants, stock option schemes, sweat equity or
- conversion of preference shares or debentures into equity shares.
Register of shares or securities bought back:
The company, shall maintain a register of shares or other securities which have been bought-back in Form No. SH.10.
The register of shares or securities bought-back shall be maintained at the registered office of the company and shall be kept in the custody of the secretary of the company or any other person authorized by the board in this behalf.
The entries in the register shall be authenticated by the secretary of the company or by any other person authorized by the Board for the purpose
Particulars:
- the consideration paid for the shares or securities bought back,
- the date of cancellation of shares or securities,
- date of passing of special resolution at the meeting of the members authorizing buy-back of securities
- date of approval by the board
- number, price and amount of shares or other specified securities authorized to buy back
- date of opening and closing of buy-back offer
- date by which buy-back was completed
- description of shares or other specified securities bought back by the company:
v Folio No/DP Id/client ID number or certificate number of securities bought back
v Name of last holder of securities
v Category to which they belong
v Date of Buy-back
v Number of securities bought back
v Mode of buy-back
v Nominal value of securities
v Price at which securities are bought back
v Date of payment
v Amount paid for bought back of securities
v Cumulative total of securities bought back
v Date of cancellation/extinguishment and physical destruction of securities bought back
v Reference to entry in ROM
v Remarks, if any
Filing of Return:
The company, after the completion of the buy-back , shall file with the Registrar, and in case of a listed company with the Registrar and the Securities and Exchange Board of India, a return in the Form No. SH.11 within 30 days of such completion along with the fee.
There shall be annexed to the return filed with the Registrar in Form No. SH.11, a certificate in Form No. SH.15 signed by two directors of the company including the managing director, if any, certifying that the buy-back of securities has been made in compliance with the provisions of the Act and the rules made there under.
No return shall be filed with the Securities and Exchange Board by a company whose shares are not listed on any recognised stock exchange.
Penalty:
| Company | Fine which shall not be less than Rs.1,00,000/- but which may extend to Rs3,00,000/- |
| Officer |
|
Buy back – Companies Act,1956 Vs Companies Act,2013
| S.No | CA,1956 | CA,2013 |
| 1 | The expression offer of buy back was defined as buyback by resolution of board of directors within the 10% limit. | It omits the definition of the expression offer of buy-back |
| 2 | Every buy-back to be completed within 12 months from the date of passing the special resolution or the Board resolution as the case may be. | It replaces the 12 months time limit with 1 year. |
| 3 | No offer of buy-back shall be made within a period of 365 days reckoned from the date of the preceding offer of buy-back. | It has changed the 365 days period to 1 year period .The period of 1 year under the 2013 act has to be reckoned from the date of the closure of the preceding offer of buy-back |
| 4 | Section 77A(5)(c) of the 1956 Act provides that the buy back may be from holders of odd lots of shares. | Section 68(5) of the 2013 Act omits this provision. |
Disclaimer:
The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts has made to provide authentic information, it is suggested that to have better understanding kindly cross-check the relevant sections, rules under the Companies Act,2013
Psychology Behind Google Success Story – "Freechology"
CA Rajesh Pabari
Why this Article? To explain a simple idea of freedom psychology which can take your organization from Good to Great. Success of your organization does not need radical changes in the entire system, success can be created out of simple things and ideas implemented in organized and phased manner. In this article, we will try to look at a simple psychological aspect of human beings and we can definitely create wonders.
Try to remember an office picnic or office party or get together. Do you remember the people who were super active, roaring, chilling out, shouting, dancing and talking to as many people as possible. When you see someone at picnic or party, the person becomes altogether different sometimes. That's the precise time to know the nature of your employees. You can watch and observe the amount of enthusiasm your colleagues and team Members shows.
It's not necessary to be psychologist in order to study psychology everyday.
Many a times, I went to picnic with friends, with office colleagues and I could observe change ofbehavior in them and myself also. They become open, they speak much, they crack jokes more, they laugh more, they open up, they show tremendous amount of zeal and enthusiasm. Only when the circumstances became suitable for the burst out, they became open and shown what they are and what is their potential.
The simple things disclose very important aspects of human psychology and human behavior. Did you observe that the change in circumstances and the cohesive environment made them become superactive, super performer like never before?
Similarly, if an organization provides culture of openness and frankness and liveliness then the employees will show their true potential, full productivity, full enthusiasm about everything that comes along.
Now, you will say, this person is insane. How such a simple thing can give morale booster and productivity enhancing?
After all, how it will add to the profits of the organization.
Let me give u the live example of Google, Google is able to give the picnic environment to their employees all the time all days.
They have rest rooms,they have game rooms, and they are free to seat anywhere in office and work. They can seat in garden and work. When the circumstances are right, productivity goes up, ideas comes, innovations happens, solutions pops up, client satisfaction goes up, profits goes up.
You may have heard a sentence that a problem cannot be solved by the same frame of mind with which it was created.
Let's analyze this, if the persons seat in same place same computer same environment same colleagues around how you expect new ideas to pop up, productivity to go up, innovations to happen?
How can you reap mangoes if you have been sowing tomato and potatoes?
This is the same case here. What we do is keep on sowing tomatoes and we expect to reap mangoes 20 years later. That will not happen ever. Write it down. (Likh Ke le lo)
Indian (typical Indian) businesses have been working for soooooo many years in the same fashion and in same way for very long time (except few). They have been reaping the rewards in the same way as they were reaping. Now, it's the time to challenge ourselves and evaluate where we are going wrong? What Next? Are we ready to ride the wave of change and development? Are we ready to dream more? Are we ready to bring about change in culture in our organization, our nation and the whole world?
This reminds me a great quote "If you will keep doing what you were doing, you will keep getting what you were getting"
Profound idea, isn't it?
So, let's work on it. What can we do?
Service professional, service industry people, IT Industry Bosses, please take note of this.
1. It's incredibly important to allow the employees to seat anywhere they want on any day. Portability is important. If majority of staff uses laptop then nothing better than that. (Remember, the picnic, you are free to roam around)
2. Don't let them seat at same place for whole day (if we can't be like Google, we can at least adopt some features)
3. Those who are intellectual people working for you are incredibly important for your organization, to take care of them is your duty. Give then freedom to take breaks whenever they want. Just ask for final results. (This precisely is applicable for Silicon Valley corporates)
4. If your organization and office space is big enough, make sure to keep a quiet place or rest room where people can take nap. (Yes, am not insane, it's incredibly important for brain's optimum functioning and brilliant ideas to pop up)(WatchTED talk by RussellFoster for knowing about importance of sleep.)
http://www.ted.com/talks/russell_foster_why_do_we_sleep
5. An environment of security (mental peace) and family like environment is of prime importance. (Remember the picnic, people shows their talents when they see familiar people around them). That's the environment where productivity sores and client satisfaction touches highest possible level. Profits will become imperative. Then, it's just the bi-product of all the above things taken together.
http://www.ted.com/talks/simon_sinek_why_good_leaders_make_you_feel_safe
If your company is in service industry, and you are making your ideas generators in front of computers for eight hours, just understand, you are putting your business at risk, the boredom will take over and you are riding the wave of crash. Be alert in advance. Do a little research and save your organization from impending crisis.
Jain Hind.
A similar article on organization's greatness has already been posted. You may also like to read that. 'Journey of Your Organization from Good to Great' (http://taxguru.in/chartered-accountant/journey-organisation-good-great.html)
(In case any feedback, please feel free to contact on carajeshpabari@gmail.com or +919022780919)
IT: Second proviso to sec. 40(a)(ia) is effective retrospectively even
if it was inserted by Finance Act, 2012 prospectively from April 1,
2013
■■■
[2014] 45 taxmann.com 555 (Agra - Trib.)
IN THE ITAT AGRA BENCH
Rajeev Kumar Agarwal
v.
Additional Commissioner of Income-tax, Range -3, Mathura
BHAVNESH SAINI, JUDICIAL MEMBER
AND PRAMOD KUMAR, ACCOUNTANT MEMBER
IT APPEAL NO. 337 (AGRA) OF 2013
[ASSESSMENT YEAR 2006-07]
MAY 29, 2014
Dr. Rakesh Gupta for the Appellant. Radha Sharma for the Respondent.
ORDER
Pramod Kumar, Accountant Member - This appeal, filed by the assessee,
calls into question correctness of learned Commissioner (Appeals)
order dated 2nd September, 2013, in the matter of assessment under
section 143(3) of the Income Tax Act, 1961(hereinafter to as 'the
Act'), for the assessment year 2006-07, upholding the disallowance of
Rs 5,01,872 under section 40(a)(ia) of the Act.
2. The issue in appeal lies in a rather narrow compass of undisputed
material facts. During the course of the scrutiny assessment
proceedings, the Assessing Officer noticed that the assessee has made
interest payments, aggregating to Rs 5,01,872, without discharging his
tax withholding obligations under section 194A. It was in this
backdrop that the Assessing Officer, having noted the undisputed
position regarding applicability of section 194 A on the facts of this
case, and having noted that the scope of section 40(a)(ia) restricting
deduction in respect of sums in respect of which tax withholding
liability is not discharged, disallowed Rs 5,01,872 under section
40(a)(ia) r.w.s. 194 A of the Act. Aggrieved, assessee carried the
matter in appeal before the CIT(A). It was, inter alia, contended by
the assessee that in view of the insertion of second proviso to
Section 40(a)(ia) by the Finance Act 2012, and in view of the fact
that the recipients of the interest have already included the income
embedded in these payments in their tax returns filed under section
139, disallowance under section 40(a)(ia) could not be invoked in this
case. It was also contended that even though this proviso is stated to
be effective 1st April 2013, since the amendment in "declaratory and
curative in nature, and, therefore, it should be given retrospective
effect from 1st April, 2005, being the date from which sub clause (ia)
of section 40(a) was inserted by the Finance (No. 2) Act, 2004". None
of these submissions, however, impressed the learned CIT(A). Relying
upon a Special Bench decision in the case of Bharati Shipyard Ltd. v.
DCIT (141 TTJ 129), herejected this plea and concluded that insertion
of second proviso to Section 40(a)(ia) cannot be held to have
retrospective effect. The disallowance was thus confirmed by the
learned CIT(A). The assessee is aggrieved and is in appeal before us.
3. We have heard the rival contentions, perused the material on record
and duly considered factual matrix of the case as also the applicable
legal position.
4. Let us first take a look at the legislative amendment of section
40(a)(ia), vide Finance Act 2012, and try to appreciate the scheme of
things as evident in the amended section. Second proviso to Section
40(a)(ia), introduced with effect from 1st April 2013, provides, that
"where an assessee fails to deduct the whole or any part of the tax in
accordance with the provisions of Chapter XVII-B on any such sum but
is not deemed to be an assessee in default under the first proviso to
sub-section (1) of section 201, then, for the purpose of this
sub-clause, it shall be deemed that the assessee has deducted and paid
the tax on such sum on the date of furnishing of return of income by
the resident payee referred to in the said proviso". In other words,
as long as the assessee cannot be treated as an assessee in default,
the disallowance under section 40(a)(ia) cannot come into play either.
To understand the effect of this proviso, it is useful to refer to
first proviso to section 201(1), which is also introduced by the
Finance Act 2012and effective1st July 2012, and which provides that
"any person, including the principal officer of a company, who fails
to deduct the whole or any part of the tax in accordance with the
provisions of this Chapter on the sum paid to a resident or on the sum
credited to the account of a resident shall not be deemed to be an
assessee in default in respect of such tax if such resident-(i) has
furnished his return of income under section 139; (ii) has taken into
account such sum for computing income in such return of income;
and(iii) has paid the tax due on the income declared by him in such
return of income, and the person furnishes a certificate to this
effect from an accountant in such form as may be prescribed." The
unambiguous underlying principle seems to be that in the situations in
which the assessee's tax withholding lapse have not resulted in any
loss to the exchequer, and this fact can be reasonably demonstrated,
the assessee cannot be treated as an assessee in default. The net
effect of these amendments is that the disallowance under section
40(a)(ia) shall not be attracted in the situations in which even if
the assessee has not deducted tax at source from the related payments
for expenditure but the recipient of the monies has taken into account
these receipts in computation of his income, paid due taxes, if any,
on the income so computed and has filed his income tax return under
section 139(1). There is also a procedural requirement of issuance of
a certificate, in the prescribed format, evidencing compliance of
these conditions by the recipients of income, but that is essentially
a procedural aspect of the matter. The legislative amendment so
brought about by the Finance Act, 2012, so far as the scheme of
disallowance under section 40(a)(ia) is concerned, substantially
mitigates the rigour of, what otherwise seemed to be, a rather harsh
disallowance provision.
5. As for the question as to whether this amendment can be treated as
retrospective in nature, even in the case of Bharti Shipyard (supra)–
a special bench decision vehemently relied upon in support of
revenue's case,the special bench, on principles, summed up the settled
legal position to the effect that "any amendment of the substantive
provision which is aimed at …… (inter alia) removing unintended
consequences to make the provisions workable has to be treated as
retrospective notwithstanding the fact that the amendment has been
given effect prospectively". It was held that if the consequences
sought to be remedied by the subsequent amendments were to be treated
as "intended consequences", the amendment could not be treated as
retrospective in effect. The special bench then proceeded to draw a
line of demarcation between intended consequences and unintended
consequences, and finally the retrospectivity of first proviso was
decided against the assessee on the ground that this special bench was
of the considered view that "the objective sought to be achieved by
bringing out section 40(a)(ia) is the augmentation of TDS provisions"
and went on to add that "If, in attaining this main objective of
augmentation of such provisions, the assessee suffers disallowance of
any amount in the year of default, which is otherwise deductible, the
legislature allowed it to continue". It was further observed that
"this is the cost which parliament has awarded to those assessees who
fail to comply with the relevant provisions by considering overall
objective of boosting TDS compliance"(Emphasis by underlining supplied
by us). In other words, the amendment was held to be prospective
because, in the wisdom of the special bench, the 2010 amendment to
Section 40(a)(ia) by inserting first proviso thereto, which is what
the special bench was dealing with, was an "intended consequence" of
the provision of Section 40(a)(ia).
6. However, the stand so taken by the special bench was disapproved by
Hon'ble Delhi High Court in the case of CIT v. Rajinder Kumar (362 ITR
241). While doing so, Their Lordships observed that, "The object of
introduction of Section 40(a)(ia) is to ensure that TDS provisions are
scrupulously implemented without default in order to augment
recoveries……..Failure to deduct TDS or deposit TDS results in loss of
revenue and may deprive the Government of the tax due and payable"
(Emphasis by underlining supplied by us)". Having noted the underlying
objectives, Their Lordships also put in a word of caution by observing
that, "the provision should be interpreted in a fair, just and
equitable manner". Their Lordships thus recognized the bigger picture
of realization of legitimate tax dues, as object of Section 40(a)(ia),
and the need of its fair, just and equitable interpretation. This
approach is qualitatively different from perceiving the object of
Section 40(a)(ia) as awarding of costs on the "assessees who fail to
comply with the relevant provisions by considering overall objective
of boosting TDS compliance". Not only the conclusions arrived at by
the special bench were disapproved but the very fundamental assumption
underlying its approach, i.e. on the issue of the object of Section
40(a)(ia), was rejected too. In any event, even going by Bharti
Shipyard decision (supra), what we have to really examine is whether
2012 amendment, inserting second proviso to Section 40(a)(ia), deals
with an "intended consequence" or with an "unintended consequence".
7. When we look at the overall scheme of the section as it exists now
and the bigger picture as it emerges after insertion of second proviso
to section 40(a)(ia), it is beyond doubt that the underlying objective
of section 40(a)(ia) was to disallow deduction in respect of
expenditure in a situation in which the income embedded in related
payments remains untaxed due to non deduction of tax at source by the
assessee. In other words, deductibility of expenditure is made
contingent upon the income, if any, embedded in such expenditure being
brought to tax, if applicable. In effect, thus, a deduction for
expenditure is not allowed to the assessees, in cases where assessees
had tax withholding obligations from the related payments, without
corresponding income inclusion by the recipient.That is the clearly
discernable bigger picture, and, unmistakably, a very pragmatic and
fair policy approach to the issue - howsoever belated the realization
of unintended and undue hardships to the taxpayers may have been. It
seems to proceed on the basis, and rightly so, that seeking tax
deduction at source compliance is not an end in itself, so far as the
scheme of this legal provision is concerned, but is only a mean of
recovering due taxes on income embedded in the payments made by the
assessee. That's how, as we have seen a short while ago, Hon'ble Delhi
High Court has visualized the scheme of things - as evident from Their
Lordships' reference to augmentation of recoveries in the context of
"loss of revenue" and "depriving the Government of the tax due and
payable".
8. With the benefit of this guidance from Hon'ble Delhi High Court, in
view of legislative amendments made from time to time, which throw
light on what was actually sought to be achieved by this legal
provision, and in the light of the above analysis of the scheme of the
law, we are of the considered view that section 40(a)(ia) cannot be
seen as intended to be a penal provision to punish the lapses of non
deduction of tax at source from payments for expenditure- particularly
when the recipients have taken into account income embedded in these
payments, paid due taxes thereon and filed income tax returns in
accordance with the law. As a corollary to this proposition, in our
considered view, declining deduction in respect of expenditure
relating to the payments of this nature cannot be treated as an
"intended consequence" of Section 40(a)(ia). If it is not an intended
consequence i.e. if it is an unintended consequence, even going by
Bharti Shipyard decision (supra), "removing unintended consequences to
make the provisions workable has to be treated as retrospective
notwithstanding the fact that the amendment has been given effect
prospectively". Revenue, thus, does not derive any advantage from
special bench decision in the case Bharti Shipyard (supra).
9. On a conceptual note, primary justification for such a disallowance
is that such a denial of deduction is to compensate for the loss of
revenue by corresponding income not being taken into account in
computation of taxable income in the hands of the recipients of the
payments. Such a policy motivated deduction restrictions should,
therefore, not come into play when an assessee is able to establish
that there is no actual loss of revenue. This disallowance does
deincentivize not deducting tax at source, when such tax deductions
are due, but, so far as the legal framework is concerned, this
provision is not for the purpose of penalizing for the tax deduction
at source lapses. There are separate penal provisions to that effect.
Deincentivizing a lapse and punishing a lapse are two different things
and have distinctly different, and sometimes mutually exclusive,
connotations. When we appreciate the object of scheme of section
40(a)(ia), as on the statute, and to examine whether or not, on a
"fair, just and equitable" interpretation of law- as is the guidance
from Hon'ble Delhi High Court on interpretation of this legal
provision, in our humble understanding, it could not be an "intended
consequence" to disallow the expenditure, due to non deduction of tax
at source, even in a situation in which corresponding income is
brought to tax in the hands of the recipient. The scheme of Section
40(a)(ia), as we see it, is aimed at ensuring that an expenditure
should not be allowed as deduction in the hands of an assessee in a
situation in which income embedded in such expenditure has remained
untaxed due to tax withholding lapses by the assessee. It is not, in
our considered view, a penalty for tax withholding lapse but it is a
sort of compensatory deduction restriction for an income going untaxed
due to tax withholding lapse. The penalty for tax withholding lapse
per se is separately provided for in Section 271 C, and, section
40(a)(ia) does not add to the same. The provisions of Section
40(a)(ia), as they existed prior to insertion of second proviso
thereto, went much beyond the obvious intentions of the lawmakers and
created undue hardships even in cases in which the assessee's tax
withholding lapses did not result in any loss to the exchequer. Now
that the legislature has been compassionate enough to cure these
shortcomings of provision, and thus obviate the unintended hardships,
such an amendment in law, in view of the well settled legal position
to the effect that a curative amendment to avoid unintended
consequences is to be treated as retrospective in nature even though
it may not state so specifically, the insertion of second proviso must
be given retrospective effect from the point of time when the related
legal provision was introduced. In view of these discussions, as also
for the detailed reasons set out earlier, we cannot subscribe to the
view that it could have been an "intended consequence" to punish the
assessees for non deduction of tax at source by declining the
deduction in respect of related payments, even when the corresponding
income is duly brought to tax. That will be going much beyond the
obvious intention of the section. Accordingly, we hold that the
insertion of second proviso to Section 40(a)(ia) is declaratory and
curative in nature and it has retrospective effect from 1st April,
2005, being the date from which sub clause (ia) of section 40(a) was
inserted by the Finance (No. 2) Act, 2004.
10. In view of the above discussions, we deem it fit and proper to
remit the matter to the file of the Assessing Officer for fresh
adjudication in the light of our above observations and after carrying
out necessary verifications regarding related payments having been
taken into account by the recipients in computation of their income,
regarding payment of taxes in respect of such income and regarding
filing of the related income tax returns by the recipients. While
giving effect to these directions, the Assessing Officer shall give
due and fair opportunity of hearing to the assessee, decide the matter
in accordance with the law and by way of a speaking order. We order
so.
11. In the result, the appeal is allowed for statistical purposes in
the terms indicated above.
--
Regards,
*Pawan Singla ,** LLB*
*M. No. 9825829075*
On Friday, 30 May 2014 3:09 AM, "info@cliofindia.com" <info@cliofindia.com> wrote:
www.cliofindia.com info@cliofindia.com
COMPANY CASES (CC) HIGHLIGHTS
F Failure by public sector undertaking to file authorisation from board of directors with complaint is curable procedural defect : Haryana State Co-operative Supply and Marketing Federation Ltd. v. Jayam Textiles p. 266
F Remedies before SEBI and CLB not mutually exclusive but cumulative : DCM Shriram Industries Ltd. v. HB Stockholdings Ltd. (Delhi) p. 275
F Order of CLB dismissing petition on issue of locus standi of petitioner, appealable : R. P. Khosla v. Connaught Plaza Restaurant P. Ltd. (Delhi) p. 305
F Where petitioners not qualified under any of clauses of section 237(b) of 1956 Act to seek opinion of CLB, dismissal of petition proper : R. P. Khosla v. Connaught Plaza Restaurant P. Ltd. (Delhi) p. 305
F Where articles of association amended in accordance with law, procedure adopted to take over fractional share under articles of association, legal : Vijay Kumar D. Shah v. Hewlett-Packard Global Soft Ltd. (Karn) p. 314
F Act technically legal and correct can be demonstrated to be oppressive to shareholders u/ss. 397 and 398 of 1956 Act : HB Stockholding Ltd. v. DCM Shriram Industries Ltd. p. 271
F Circulars :
General Circulars :
Circular No. 10 of 2014, dated 7th May, 2014-Certification of E-forms/non-e-forms under the Companies Act, 2013 by the practicing professionals-regarding p. 143
F Regulations :
Foreign Exchange Management (Manner of Receipt and Payment) (Amendment) Regulations, 2014 p. 141
Foreign Exchange Management (Transfer or Issue of any Foreign Security) (Amendment) Regulations, 2014 p. 142
F Rules :
Companies (Acceptance of Deposits) Rules, 2014 p. 118
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 p. 98
F Indian class actions under the new Companies Act-Vishal Mishra p. 45
F The company secretary in employment-Section 205 of the Companies Act, 2013-T. Ramappa p. 41
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