ST - Petitioner was sleeping over issue - Once statutory period to file appeal is over, party cannot be permitted to resurrect cause by invoking discretionary remedy under Article 226 of Constitution - Petition dismissed: High Court
By TIOL News Service
ERNAKULAM, MAY 27, 2014: KOTHAMANGALAM is situated in the eastern part ofErnakulam district, Kerala State. It is known as a trading center for spices and forest products. It is also famous for its ancient Syrian Christian churches. KothamangalamMunicipality had approached the Kerala High Court with a Writ Petition against the actions initiated by the Additional Commissioner of CE & ST and also the Superintendent of CE & Service Tax.
The short point is that the Municipality was adjudged to have provided the following Services but not paid Service Tax during the period 2007-08 under the category of Renting of Immovable Property Services and during the period 2007-08 to 2010-11 under the categories of "Business Support Services" viz. collection of bus stand fee & "Sale of Space or Time for Advertisement Services" respectively. Later, upon noticing that there is a mistake apparent from the record, by exercising the power contained in s. 74(1) of the FA, 1994, the adjudicating authority enhanced the liability by including 'interest' payable under Section 75 of the FA, 1994 in respect of the amount confirmed. It needs mention that the petitioner is a registered service provider under the category of "Renting of Immovable Property Service" from 03.11.2008.
Incidentally, no appeal has been filed by the petitioner against these orders within the prescribed time and the present petition has been filed after more than a year.
Nonetheless, in the Petition filed, the petitioner contends that they are actually not supposed to bear any liability for the reason that they are discharging statutory functions under the Municipality Act, 1994 and hence outside the purview of the Service Tax net. Reference is also made to the Circular No.89/7/2006- ST dated 18.12.2006 in the proceedings.
The Revenue authorities have filed a counter affidavit raising a question of maintainability of the writ. The specific case of the respondents is that the petitioner was having an effective alternate remedy by way of appeal as provided under Section 85 of the FA, 1994 before the Commissioner of Central Excise (Appeals) but the petitioner admittedly did not avail any such statutory remedy within the specified time, or even within the extended time, offering any satisfactory explanation for the delay. Inasmuch as by virtue of the law declared by the Apex Court in Singh Enterprises v. Commissioner of Central Excise, Jamshedpur - 2007-TIOL-231-SC-CX and reiterated in Amchong Tea Estate v. Union of India - 2010-TIOL-63-SC-CX and also several other decisions rendered, it is contended that, once the statutory period to file appeal is over, the party cannot be permitted to resurrect the cause by invoking the discretionary remedy under Article 226 of the Constitution of India.
The petitioner relies on the decision in M/s. Panopharam v. Union of India [ILR 2010 (2) Kerala 909] to contend that the writ petition is maintainable despite the fact that the statutory period for filing appeal is over.
It is also submitted that the petitioner is not in a position to demand or realise the differential tax from the parties to whom the service was rendered, as the right to collect the Bus stand fee Advertisement tax etc. was being allotted to the successful bidder/concerned parties on yearly basis, by way of public auction. It is also pointed out that the liability to satisfy Service Tax was not incorporated in the tender conditions/contract earlier and as such, there is much hardship (technical and legal) in recovering the arrears from the parties concerned.
The High Court observed that the petitioner did not choose to contest the matter by filing any appeal, but has made a belated attempt by way of this writ petition filed after more than one year. The High Court also agreed with the reliance placed on the case laws cited by the Revenue.
In the matter of the decision relied by the petitioner, the High court extracted the observation made in paragraph 19 of the judgment and observed -
"From the above, it is clear that the Bench specifically observed that the case of a person who did not choose to avail the statutory remedy within the specified time, is never seated on a better position than a person who approached this Court directly by filing a writ petition instead of availing a statutory remedy before expiry of the time and driven out relegating to avail the statutory remedy declining interference under Article 226. Undisputedly, the petitioner was simply sleeping over the issue."
And further noted -
++ The only observation made by the Division Bench of this Court in M/s. Panopharam v. Union of India [ILR 2010 (2) Kerala 909] is that, writ petition can be entertained even if the alternate statutory remedy had become time barred, provided the petitioner is able to establish a justifiable right. If the writ petition raises issues on which ordinary relief could not be given by the statutory authority, then, the fact that writ petition has been filed beyond the period prescribed under the Statute, cannot be a ground for dismissal of the writ petition. Referring to the facts of the case, as disclosed from paragraph 3 of the judgment (non-filing of the statutory appeal under Section 85 of the Finance Act, 1994 within the prescribed time), the Bench observed in paragraph 24 of the above verdict, that the reliefs sought for in the said writ petition were reliefs which ordinarily could be granted by the appellate authority and therefore, there was no extraordinary situation for invoking the power under Article 226 of the Constitution of India, even if the writ petition was filed within the period of limitation. It was accordingly, that interference was declined and the writ petition was dismissed. This Court finds that the above decision cited on behalf of the petitioner does not come to the rescue of the petitioner at all.
Referring to Circular No. 89/7/2006-S.T. dated 18.12.2006 relied by the petitioner, the High Court said it had doubts as to whether the petitioner's activity does come within the purview of the Circular. Inasmuch as there is specific observation in the said Circular that the fee being charged is ultimately deposited in the Government treasury whereas in the case of petitioner, being an institution of Local Self Government, it is not deposited in the Government Treasury, but goes to the funds of the petitioner Municipality.
On the aspect as to whether the petitioner had approached the High Court at least within 'reasonable time', after expiry of the statutory period for filing the appeal, the High Court observed that the orders are dated 24.05.2012 and 23.08.2012 respectively, whereas the writ petition has been filed only about 1+ years after passing the said orders. And, therefore, it cannot but be held, that the petitioner has not approached the Court within a reasonable time, so as to call for interference by this Court in exercise of the discretionary jurisdiction under Article 226 of the Constitution of India.
Holding that there is absolutely no merit or bonafides in the writ petition, the same was dismissed.
IT : Where Tribunal allowed assessee's claim for deduction under section 80-IA relying upon order passed in assessee's own case relating to earlier assessment year, in view of fact that appeal filed against said order had been dismissed, impugned order allowing assessee's claim in assessment year in question also deserved to be upheld
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[2014] 45 taxmann.com 184 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner of Income-tax -III
v.
Reclamation Welding (P.) Ltd.*
AKIL KURESHI AND MS. HARSHA DEVANI, JJ.
TAX APPEAL NO. 825 OF 2011†
SEPTEMBER 20, 2012
Section 80-IA, read with section 37(1), of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertaking (Computation of deduction) - In appellate proceedings Tribunal allowed assessee's claim for deduction under section 80-IA - Tribunal also deleted disallowance of freight and octroi expenses - It was noted that while passing impugned order, Tribunal had relied on order passed in assessee's own case relating to earlier assessment year - It was undisputed that earlier decision of Tribunal was challenged in High Court but revenue's appeal had been dismissed - Whether in view of above, impugned order passed by Tribunal in relevant year also was to be upheld - Held, yes [Para 3] [In favour of assessee]
Ms. Paurami B. Sheth for the Appellant.
ORDER
Akil Kureshi, J. - The Revenue has challenged the judgment of the Income Tax Appellate Tribunal (hereinafter to be referred to as "the Tribunal") dated 19.11.2010 raising following questions for our consideration:—
| "(A) | Whether the Appellate Tribunal is right in law and on facts in allowing deduction of Rs.78,03,398/- u/s. 80IA? | |
| (B) | Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs.20,84,412/- on account of disallowance of freight and octroi expenses?" |
2. Having heard learned counsel for the Revenue and having perused the judgments on record, we noticed that the Tribunal relied on earlier orders in case of this very assessee pertaining to previous assessment years to decide both these questions against the Revenue.
3. Counsel for the Revenue candidly pointed out that such decision of the Tribunal was carried in appeal before this Court in Tax Appeal No.1171 of 2010. The Court rejected the appeal on both questions, making following observations:-
'2. With respect to question A, we may notice that the Assessing Officer denied the benefit of deduction under Section 80IA of the Act on the ground that the assessee did not fulfill the requirements of sub-Section (7) of Section 80IA inasmuch as did not produce audit report accompanied by Form No.10CCB along with return. We may record that it does not appear to be the revenue's case that audit report was not filed along with return nor does revenue dispute that the declaration in Form No.10CCB was eventually filed by the assessee during the course of assessment proceedings though, of course, not along with the return filed.
3. The Tribunal in the impugned judgment, while confirming CIT Appeal's order on this issue, held that the assessee's case was covered by the decisions of this Court in case of CIT v. Gujarat Oil & Allied Industries [1993] 201 ITR 325 and in case of CIT v. Mayur Foundation [2005] 274 ITR 562.
4. From the record, we find that the CIT (Appeals) as well as the Tribunal both came to the conclusion that in view of the above decisions of this Court, there was substantial compliance by the assessee to the requirements of sub-Section 7 of Section 80IA of the Act.
5. Learned counsel for the revenue submitted that sub-Section 7 of Section 80IA required the assessee to furnish not only the audit report but also necessary declaration in prescribed format and that the same was required to be done along with return of income. She submitted that the requirement was mandatory in nature. The decisions of this Court were rendered in background of different statutory provisions.
6. We are however, of the opinion that the CIT as well as the Tribunal have committed no error. It may be mentioned that what sub-Section 7 of Section 80IA required for claiming deduction under Section 80IA was to file audit report and also furnish along with the return of income, declaration in the prescribed form duly signed and verified by the accountant. It is not in dispute that the assessee did submit the audit report along with the return of income. Declaration however, was filed subsequently but before completion of assessment proceedings.
7. In the case of Gujarat Oil & Allied Industries (supra), the Division Bench of this Court while examining the requirements for claiming deduction under Section 80J of the Act, held that requirement that audit report should be filed along with return is not a mandatory condition. The assessee having filed the audit report after return was submitted but before final assessment was framed, the Court held that there was substantial compliance with the requirement of Section 80J.
8. The case of Mayur Foundation (supra) however, focuses more on the proceedings before the Tribunal and the Tribunal's power to admit additional grounds. Such decision in the present case, we need not fall back upon.
9. In view of the decision of this Court in case of Gujarat Oil and Allied Industries (supra) and the factual matrix arising from the record of the present case, we are of the opinion that the Tribunal committed no error in confirming the order of CIT (Appeals) granting benefit to the assessee under Section 80IA of the Act. Whether the requirement of filing a declaration under sub-Section 7 of Section 80IA of the Act is mandatory or not is a question we need not go into in this appeal since we find that such declaration was eventually filed before completion of the assessment though not along with the return of income. We may also recollect that audit report was filed at the outset.
10. Coming to question B, we may notice that though the Assessing Officer added a sum of Rs.19,45,000/- treating the claim of the assessee as one for freight and octroi expenses, CIT (Appeals) deleted such disallowance making following observations:—
"3.2.1. It is seen that the A.O. has relied upon the agreement entered between the appellant and AIAE which is the principals party. As per the agreement, the freight inward for raw material and freight outward in respect of finished castings was to be borned by the principals. Therefore, the A.O. has disallowed freight inward and Octroi of Rs.12,46,681/-, Freight Outward Rs.1,49,066/- and Cartage Outward Rs.5,49,500/- totaling to Rs.19,45,247/-.
3.2.2. As it is seen from the written submission reproduced as above, the pleading of the appellant is that the appellant has neither claimed any freight on raw materials brought into the factory nor on finished cartings for sending outward. The expenditure involved is with regard to stores materials and consumables while manufacturing cartings. It appears for the assessment year under consideration the appellant had purchased stores and consumables at Rs.59,46,629/- which includes certain materials like refectories, ramming mass etc., which involved higher freight is incidence thereon. The appellant is also required to pay octroi on such purchases.
3.2.3. Further it is seen that the appellant also has to bear the expenditure in respect of movements of castings weighment of castings, weighment of scrap and alloys before changing them to furnace.
3.2.4. It is also seen that the freight outward is towards moving the used moulding send and other scrap materials out of factory premises which are to be taken to remote places for disposal. The principal would not be bearing these expenses.
3.2.5. It is also noticed from the submissions of the A.R. that cartage outward expenses is incurred for moving castings outside the premises as the appellant sometimes gets certain works done from outside, therefore, these expenses are claimed.
3.2.6. After verifying the submissions filed by the appellant and after verifying the details furnished by the A.R. which are also stated to have been filed before the A.O. I find that the A.O. was not pointed out specifically that the particular claim of the appellant has been incurred for bringing raw materials into the factory and expenses towards finished castings for sending to the principal. Therefore, it appears to me that claim made by the appellant cannot be disallowed without pointing out a specific incidence of expenses allegedly said to have been incurred towards bringing raw materials and sending finished castings."
11. This review of the CIT (Appeals) was confirmed by the Tribunal. The CIT (Appeals) had given sufficient reasons which were in the nature of appreciation of evidence. Such conclusions were approved by the Tribunal. Such concurrent findings, in our opinion, do not give rise to any question of law.'
4. In the result, tax appeal is dismissed.
SUNIL*In favour of assessee.
†Arising out of order of Tribunal dated 19-11-2010.
IT : Interest paid on money borrowed for investment even in shares which had not yet yielded any dividend, was admissible under section 57(iii)
IT : Where director had no opportunity to use car that was hired out, depreciation on account of director's personal use could not be disallowed
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[2014] 45 taxmann.com 120 (Calcutta)
HIGH COURT OF CALCUTTA
Sri Saytasai Properties & Investment (P.) Ltd.
v.
Commissioner of Income-tax, Central-II, Kolkata*
GIRISH CHANDRA GUPTA AND TAPASH MOOKHERJEE, JJ.
IT APPEAL NO. 257 OF 2003†
FEBRUARY 10, 2014
Section 57 of the Income-tax Act, 1961 - Income from other sources - Deductions (Disallowance of interest claimed) - Whether interest paid on money borrowed for investment in shares, which had not yet yielded any dividend, is also admissible under section 57(iii) - Held, yes [Para 9] [In favour of assessee]
Section 38 of the Income-tax Act, 1961 - Building, etc., partly used for business (Depreciation on vehicle) - Assessing Officer disallowed 1/5th of depreciation on motor car that was hired out by assessee company on account of personal use of Director - It was found that vehicle had not been used for business of assessee at all and it had only been hired out - Whether since car was in use of hirer and director had no opportunity to use car, Tribunal was not justified in disallowing any part of depreciation - Held, yes [Para 11] [In favour of assessee]
FACTS-I
| ■ | The assessee claimed certain expenditure on account of interest which it borrowed for purpose of making investment in shares. | |
| ■ | The Assessing Officer disallowed the same on ground that investment, for which money was borrowed, was not for purpose of earning dividend. | |
| ■ | On appeal, the Tribunal upheld the decision of Assessing Officer. | |
| ■ | On appeal to the High Court: |
HELD -I
| ■ | The expenditure on account of interest was a proper expenditure allowable under section 57. The reason which found favour both with the Assessing Officer and the Tribunal was that the investment was not for the purpose of earning dividend. It could not be followed as to how can it be said that earning of dividend can be the sole motive or the sole source for the purpose of making income from other sources. What is an income from other sources has not been put into any straight jacket formula. Even the legislature has not attempted to define the words expressly. Income from other sources is a very wide term. The legislature has advisedly expressed 'without prejudice to the generality of the provision'. Therefore, there was no reason why a proper expenditure should have been disallowed only because the investment was not made for the purpose of earning dividend. There is no finding that the investment was made otherwise than for the purpose of making an income. Therefore, both the Tribunal and the Assessing Officer were wrong in disallowing the expenditure. Accordingly, the question is answered in the negative and in favour of the assessee. [Para 11] |
CASES REFERRED TO
CIT v. Rajendra Prasad Moody [1978] 115 ITR 519 (SC) (para 3) and CIT v. Model Mfg. Co. (P.) Ltd.[1980] 122 ITR 767 (Cal.) (para 5).
J.P. Khaitan and Ms. A. Banerjee for the Appellant. Nizamuddin for the Respondent.
ORDER
1. The Court : This appeal is directed against a judgment and order dated 31st March, 2003 passed by the learned Income Tax Appellate Tribunal. Aggrieved by the order, the assessee has come up in appeal.
2. The first question formulated at the time of admission of the appeal is as follows:
"(1) Whether the Tribunal was justified in law in holding that the appellant was not entitled to deduction under Section 57(iii) of the Income Tax Act, 1961 in respect of the interest of Rs.13,49,356/- incurred on borrowed funds utilized for making investment in shares on which no dividend was received and the purported findings of the Tribunal in that behalf are arbitrary, unreasonable and perverse?"
3. Mr. Khaitan, learned senior advocate appearing for the appellant assessee submitted that the question is covered by a judgment of the Apex Court in the case of CIT v. Rajendra Prasad Moody [1978] 115 ITR 519. He added that the Tribunal did, in fact, notice the judgment, but erred in understanding the true nature and purport thereof. In the aforesaid judgment, the Apex Court held as follows:
"We fail to appreciate how expenditure which is otherwise a proper expenditure can cease to be such merely because there is no receipt of income. Whatever is a proper outgoing by way of expenditure must be debited irrespective of whether there is receipt of income or not. That is the plain requirement of proper accounting and the interpretation of s.57(iii) cannot be different. The deduction of the expenditure cannot, in the circumstances, be held to be conditional upon the making or earning of the income.
It is true that the language of s.37(1) is a little wider than that of s.57(iii), but we do not see how that can make any difference in the true interpretation of s.57(iii). The language of s.57(iii) is clear and unambiguous and it has to be construed according to its plain natural meaning and merely because a slightly wider phraseology is employed in another section which may take in something more, it does not mean that s.57(iii) should be given a narrow and constricted meaning not warranted by the language of the section and, in fact, contrary to such language.
This view which we are taking is clearly supported by the observations of Lord Thankerton in Hughesv. Bank of New Zealand [1938] 6 ITR 636 (HL), where the learned Law Lord said:
'Expenditure in course of the trade which is unremunerative is none the less a proper deduction, if wholly and exclusively made for the purposes of the trade. It does not require the presence of a receipt on the credit side to justify the deduction of an expense'."
4. Mr. Khaitan submitted that the fact that the assessee borrowed money for the purpose of making investment in shares is not in dispute. The interest paid or incurred by the assessee is also not in dispute. The expenditure on account of interest was a proper expenditure under section 57 of the Income Tax Act, but the same has been disallowed by the Assessing Officer on the ground that investment cannot be said to have been made for earning dividend. The learned Tribunal endorsed that view of the Assessing Officer and reversed the views expressed by the CIT (Appeal). The case of the assessee has always been that :
"The assessee tried to explain out that it purchased the share of M/s. Pushpak Commercial Co. Ltd. at Rs.312 per share against NAV of Rs.8.63 as the said company owned an immovable property at 7, Loudon Street, Kolkata the value of which was much higher than the book value."
5. Mr. Khaitan also drew our attention to a judgment of this Court in the case of CIT v. Model Mfg. Co. (P) Ltd. [1980] 122 ITR 767 wherein the following view was taken.
"We add that even if the motive of the assessee might have been to obtain control of another company, the consequent purchase of shares may still be treated as investment and the concurrent purpose of the assessee could well have been that of earning further income by acquiring the control of the other company".
6. Mr. Khaitan, therefore, contended that the views of the learned Tribunal are clearly erroneous and should be set aside.
7. Mr. Nizamuddin, learned Advocate appearing for the Revenue submitted that the judgment in the case ofRajendra Prasad Moody (supra) is with regard to the expenditure incurred for the purpose of earning dividend. It is not a case where any investment was made for the purpose of earning dividend. Therefore, the judgment of the Supreme Court can have no manner of application. He added that the judgment in the case of Model Mfg. Co. (P) Ltd. (supra) does not apply to this case because admittedly the assessee purchased the shares at the rate of Rs.312 each when the net asset value of each share was Rs.8.63p. He, therefore, contended that in a case like this, there is no reason why this Court should interfere with the views expressed by the Tribunal.
8. We have considered the rival submissions advanced by the learned Advocates appearing for the parties. The provisions contained in sections 56 and 57 of the Income Tax Act are to be read together. Section 56 provides for income from other sources, and section 57 provides for allowable deduction.
9. Mr. Khaitan rightly contended that the expenditure on account of interest was a proper expenditure allowable under section 57. The reason which found favour both with the Assessing Officer and the Tribunal was that the investment was not for the purpose of earning dividend. It could not be followed as to how can it be said that earning of dividend can be the sole motive or the sole source for the purpose of making income from other sources. What is an income from other sources has not been put into any straight jacket formula. Even the legislature has not attempted to define the words expressly. Income from other sources is a very wide term. The legislature has advisedly expressed "without prejudice to the generality of the provision". Therefore, there was no reason why a proper expenditure should have been disallowed only because the investment was not made for the purpose of earning dividend. There is no finding that the investment was made otherwise than for the purpose of making an income. We are, as such, of the opinion that both the Tribunal and the Assessing Officer were wrong in disallowing the expenditure. Accordingly, the question is answered in the negative and in favour of the assessee.
10. The second question formulated at the time of admission of the appeal is as follows:
"(2) Whether the Tribunal was justified in law in upholding the disallowance of 1/5th depreciation on motor cars hired out by the appellant by invoking Section 38(2) and its purported findings in that behalf are arbitrary, unreasonable and perverse?"
11. From the assessment order, it appears that the vehicle has been hired out. In other words, the vehicle is not used for the business of the company. The vehicle has been used for the purpose of earning money by way of hiring charges. In such a case, the order disallowing any part of the depreciation on account of personal use of the directors, under section 38(2), does not appear to have been passed upon application of mind. The question of personal use might have arisen if the vehicle had been used for the business of the assessee. The vehicle has not been used for the business of the assessee at all. On the contrary, the vehicle has been hired out. The assessee, in return, is making profit. Therefore, the directors or any director of the assessee company is not likely to get any opportunity to use the car. The car was in the use of the hirer. When the director had no opportunity to use the car, the question of disallowing any part of depreciation on account of directors' personal use appears to be altogether misconceived. Therefore, the second question is also answered in the negative and in favour of the assessee.
12. The appeal is thus disposed of.
SONAM*In favour of assessee.
†Arising out of order of Tribunal dated 31-3-2003.
Types of Companies formed under Companies Act, 2013
CS M. Kurthalanathan
There are totally 15 types of companies can be formed under the Companies Act, 2013.Public Limited Companies
- Public Company limited by shares
- Public Company limited by Guarantee having share capital
- Public Company limited by Guarantee and having no share capital
- Public unlimited Company having share capital
- Public unlimited Company not having share capital
Private Limited Companies
- Private Company limited by shares
Private Company limited by Guarantee having share capital
Private Company limited by Guarantee and having no share capital
Private unlimited Company having share capital
Private unlimited Company not having share capital
One Person Company (OPC)
- OPC Company limited by shares
OPC Company limited by Guarantee having share capital
OPC Company limited by Guarantee and having no share capital
OPC unlimited Company having share capital
OPC unlimited Company not having share capital.
Under Companies Act, 1956, only 10 types of companies can be formed.
| S.No | Type of Companies | Liability | Guarantee | Share Capital |
| 1 | Company Limited by shares | The liability of the members is limited and this liability is limited to the amount unpaid, if any, on the shares held by them. | Not Applicable | The share capital of the company is divided into number of shares. |
| 2 | Company limited by Guarantee having share capital | The liability of the members is limited. | Every member of the company undertakes to contribute: (i) to the assets of the company in the event of its being wound up while he is a member, or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member; and (ii) to the costs, charges and expenses of winding up | The share capital of the company is divided into number of shares. |
| 3 | Company limited by Guarantee and having no share capital | The liability of the members is limited. | Every member of the company undertakes to contribute: (i) to the assets of the company in the event of its being wound up while he is a member, or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member; and (ii) to the costs, charges and expenses of winding up | Not Applicable |
| 4 | Unlimited Company having share capital | The liability of the members is Unlimited. | Not Applicable | The share capital of the company is divided into number of shares. |
| 5 | Unlimited Company not having share capital | The liability of the members is Unlimited | Not Applicable | Not Applica |
FAQs on e-voting under Companies Act, 2013 & Rules
CS M. KurthalanathanFAQs on e-voting under Companies Act, 2013 & Companies (Management and Administration) Rules, 2014
FAQs on e-voting:
Q1. What is e-voting?
As per rule 20 of Companies (Management and Administration) Rules, 2014, ''voting by electronic means'' or ''electronic voting system'' means a 'secured system' based process of display of electronic ballots, recording of votes of the members and the number of votes polled in favour or against, such that the entire voting exercised by way of electronic means gets registered and counted in an electronic registry in a centralized server with adequate 'cyber security';
Q2.To whom e-voting is applicable?
- Every listed company or
- a company having not less than one thousand shareholders,
shall provide to its members facility to exercise their right to vote at general meetings by electronic means.
Q3.What is the procedure to be followed by the company?
Dispatch the notice:
The notices of the meeting shall be sent to all the members, auditors of the company, or directors either –
(a) by registered post or speed post ; or
(b) through electronic means like registered e-mail id;
(c) through courier service
The company shall mention the internet link of e-voting platform in the notice.
Place the notice on the website of the company:
The notice shall also be placed on the website of the company, if any and of the agency forthwith after it is sent to the members.
Mention the business to be transacted:
The notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the company is providing facility for voting by electronic means.
Indicate the process and manner of voting:
The notice shall clearly indicate the process and manner for voting by electronic means and the time schedule including the time period during which the votes may be cast and shall also provide the login ID and create a facility for generating password and for keeping security and casting of vote in a secure manner
Publish an advertisement:
The company shall publish an advertisement, not less than five days before the date of beginning of the voting period, at least;
once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and
once in English language in an English newspaper having a wide circulation in that district, about having sent the notice of the meeting and specifying therein, inter alia, with the following particulars;
Particulars of advertisement:
- statement that the business may be transacted by e- voting;
- the date of completion of sending of notices;
- the date and time of commencement of voting through electronic means;
- the date and time of end of voting through electronic means;
- the statement that voting shall not be allowed beyond the said date and time;
- website address of the company and agency, if any, where notice of the meeting is displayed
- contact details of the person responsible to address the grievances connected with the e-voting.
Q4. What is the duration of e-voting period?
The e-voting shall remain open for not less than one day and not more than three days.
In all such cases, such voting period shall be completed three days prior to the date of the general meeting.
Q5. Whether shareholders holding shares in dematerialized form only eligible to caste vote electronically?
During the e-voting period, shareholders of the company, holding shares either in physical form or in dematerialized form, as on the record date, may cast their vote electronically.
Q6. Whether change is allowed after casting vote electronically?
No,once the vote on a resolution is cast by the shareholder, he/she shall not be allowed to change it subsequently.
Q7. When the portal will be blocked?
At the end of the voting period, the portal where votes are cast shall forthwith be blocked.
At the end of the voting period, the portal where votes are cast shall forthwith be blocked.
Q8.Who can be appointed as a Scrutinizer?
The Board of directors shall appoint one scrutinizer, who may be;
- Chartered Accountant in practice,
- Cost Accountant in practice, or
- Company Secretary in practice or
- an advocate,
but not in employment of the company and is a person of repute who, in the opinion of the Board can scrutinize the e-voting process in a fair and transparent manner.
Q9. What are the duties of Scrutinizer?
The Scrutinizer shall;
- Take assistance of a person who is not in employment of the company and who is well-versed with the e-voting system.
- available for the purpose of ascertaining the requisite majority
- within a period of not exceeding three working days from the date of conclusion of e-voting period, unblock the votes in the presence of at least two witnesses not in the employment of the company.
- make a scrutinizer's report of the votes cast in favour or against, if any, forthwith to the Chairman.
- maintain a register either manually or electronically to record the assent or dissent, received, mentioning the particulars of name, address, folio number or client ID of the shareholders, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights.
- Keep the register and all other papers relating to electronic voting shall remain in the safe custody of the scrutinizer until the chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall return the register and other related papers to the company.
Q10. What are the details to be placed on the website of the company after e-voting?
The results declared along with the scrutinizer's report shall be placed on the website of the company and on the website of the agency within two days of passing of the resolution at the relevant general meeting of members.
Q11. Who are providing e-voting services ?
| Particulars | Agency-1 | Agency-2 |
| Name of the agency | NSDL | CDSL ventures ltd (CVL) |
| Website Id | evoting.nsdl.com | http://www.evotingindia.com/ |
| E-mail Id | Helpdesk@nsdl.co.in ; evoting@nsdl.co.in | helpdesk.evoting@cdslindia.com. |
Q12. What are the steps to be taken by the company for e-voting ?
- The company through its Register and Transfer Agent (RTA) will set up the e-voting schedule on the website and upload the resolutions on which voting is required and generate the Electronic Voting Sequence Number (EVSN) / Electronic Voting Even Number.(EVEN)
- The Company will then upload the Register of Members in the specified file format.
- CDSL/NSDL will generate the password for each shareholder and print the same in a secured manner, which is to be sent to all the shareholders.
- The company will then communicate the password, EVSN /EVEN and the procedure for e-voting along with the notice of resolution to all the shareholders.
- After the voting period is over, the e-voting system will provide to the scrutinizer, a report containing the shareholder wise details of vote done, for the records of the company.
Q13. What are the steps to be taken by the shareholders for e-voting?
- The shareholders can login to the e-voting system using their user –id (i.e,demat account number/folio number),PAN and password.
- After logging in, demat shareholders will have to confirm their personal details and compulsorily change their password. This password can be used by demat shareholders for voting on resolutions of any other company in which they are eligible to vote.
- During the voting period, the shareholders can visit the e-voting website and select the relevant EVSN/EVEN/company for voting.
- Shareholders can view the detailed resolutions on the website and cast their vote available for voting
Q14. What are the advantages of e-voting to the company/RTA?
- Reduction in cost and paperwork.
- No need to store physical ballot papers.
- Accurate counting of votes.
- Declaration of results in a very short time.
- No need to verify the signatures.
Q15. What are the advantages of e-voting to the shareholders?
- Voting can be done from anywhere.
- Sufficient time will be available for voting as it can be casted even on the last day.
- Voting can be done for different companies at the same time.
- Increase of transparency
- Increase of participation in the decision making process
Q16. What are the disadvantages of e-voting?
- There may be a chance of misuse of user Id and Password of the shareholders, if it is fallen into wrong hands.
- Lack of awareness among the shareholders about the new process of e-voting
- It has to be ensured that the entire process of e-voting is not subject to any kind of manipulation.
- Correct Data of Shareholders will have to be provided by the Registrar and Share Transfer Agents or the Company to the agency providing e-voting platform otherwise a shareholder may not get his user Id and password and thus may not be able to cast his vote.
- No option is available to the shareholders to modify the casted vote.
Q17. When the provision of e-voting will be applicable to the company?
As section 108 of the Companies Act, 2013 and the corresponding rules are made effective from 1st April 2014, e-voting facility should be provided by the companies from the current Annual General Meeting. (i.e., AGM for FY 2013-14).
As per SEBI's recent circular dated April 17,2014, e-voting will be applicable to the listed companies with effect of 1st October 2014.(Clause 35 B of Listing Agreement).
Q18. Whether Postal ballot option is also to be provided in addition to e-voting?
The company has to provide e-voting facility to its shareholders, in respect of all shareholders' resolutions, to be passed at General Meetings or through postal ballot.
The company shall continue to enable those shareholders, who do not have access to e-voting facility, to send their assent or dissent in writing on a postal ballot as per the provisions of the Companies (Management and Administration) Rules, 2014 or amendments made thereto.
Q19. Whether e-voting is mandatory for Private companies?
No, for private companies e-voting is not mandatory.
Q20. What are the changes in the provisions of e-voting?
| Companies Act,1956/ SEBI circular | Companies Act,2013 & Rules 2014 |
| There is no provision for e-voting under Companies Act,1956. | Sec.108 of the Companies Act,2013 and the corresponding rules deals with the voting through electronic means . |
| As per SEBI's recent circular dated April 17,2014, The issuer agrees to provide e-voting facility to its shareholders, in respect of all shareholders' resolutions, to be passed at General Meetings or through postal ballot. Issuer shall continue to enable those shareholders, who do not have access to e-voting facility, to send their assent or dissent in writing on a postal ballot as per the provisions of the Companies (Management and Administration) Rules, 2014 or amendments made thereto | As per Companies (Management and Administration) Rules, 2014,Every listed company or a company having not less than one thousand shareholders, shall provide to its members facility to exercise their right to vote at general meetings by electronic means. |
| As per the amended Clause 35B of the listing agreement, such e-voting facility shall be kept open for not less than one day and not more than three days for shareholders to send their assent or dissent. | As per the Rules, the e-voting shall remain open for not less than one day and not more than three days. In all such cases, such voting period shall be completed three days prior to the date of the general meeting. |
| There is no provision for publishing an advertisement in the newspaper for e-voting under Companies Act,1956. | The company shall publish an advertisement , not less than five days before the date of beginning of the voting period, at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district, about having sent the notice of the meeting and specifying therein related matters |
| The Company shall mention the Internet link of such e-voting platform in the noticeto their shareholders. | The Company shall place the notice on the website of the company, if any and of the agency forthwith after it is sent to the members. |
| The revised Clause 35B would be applicable to all listed companies, w.e.f October 1, 2014 and the modalities would be governed by the provisions of Companies (Management and Administration) Rules, 2014 | The relevant Section 108, voting by electronic means and corresponding rules are notified and effective from April 01,2014. |
| The Company shall utilize the service of any one of the agencies providinge-voting platform, which is in compliance with conditions specified by the Ministry of Corporate Affairs, Government of India, from time to time | There is no such provision |
FAQ on One Person Company (OPC)
1. How to incorporate an OPC?
Name reservation: Form INC-1 shall be filed for name availability.
Incorporate OPC: After name approval, form INC-2 shall be filed for incorporation of the OPC within 60 days of filing form INC-1.
Form DIR-12 shall be filed along with (linked) form INC-2 except when promoter is the sole director of the OPC.
The company shall file form INC-22 within 30 days once form INC-2 is registered in case the address of correspondence and registered office address are not same.
2. How to inform RoC about change in membership of OPC?
The company shall file form INC-4 in case of cessation of member of OPC on account of death, incapacity to contract or change in ownership. In the same form, user needs to provide details of the new member of the OPC.
3. Is there any threshold limits for an OPC to mandatorily get converted into either private or public company?
In case the paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover exceeds during the relevant period exceeds two crore rupees, then the OPC has to mandatorily convert into private or public company.
4. How to intimate RoC that the OPC has exceeded the threshold limits and require conversion into private or public company?
The OPC shall inform RoC in form INC-5, if the threshold limits is exceeded and is required to be converted into private or public company.
5. What is the time limit for filing form INC-5?
Form INC-5 shall be filed within sixty days of exceeding threshold limits.
6. Is there any form that is to be filed for conversion of an OPC into private or public company? Is there any other purpose for filing this form?
Form INC-6 shall be filed by an OPC for conversion of an OPC into private or public company.
Yes, the private company will also file form INC-6 for converting itself into an OPC. The paid up share capital of private company should not be exceeding fifty lakh rupees and should not have average annual turnover more than two crore rupees at the time of such conversion into OPC. The company shall be having one member and shall appoint one nominee to act as member in case of death or incapacity of the member at the time of conversion into OPC.
7. What is the time limit for filing form INC-6?
Form INC-6 shall be filed within 30 days in case of voluntary conversion and within six months of mandatory conversion.
8. Who is eligible to act as a member of an OPC?
Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.
For the above purpose, the term "resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one financial year.
9. A person can be a member in how many OPCs?
A person can be member in only one OPC.
10. What if a member of an OPC becomes a member in another OPC by virtue of being a nominee in that other OPC?
Where a natural person, being member in One Person Company becomes a member in another OPC by virtue of his being a nominee in that OPC, then such person shall meet the eligibility criteria of being a member in only one OPC within a period of one hundred and eighty days, i.e., he/she shall withdraw his membership from either of the OPCs within one hundred and eighty days.
11. Which form is to be filed in case of withdrawal of consent by the nominee of an OPC or in case of intimation of change in nominee by the member?
Form INC-4 shall be filed in case of withdrawal of consent by the nominee or in case of intimation of change in nominee by the member.
The Depositor Education and Awareness Fund Scheme, 2014
RBI/2013-14/614
DBOD.No.DEAF Cell.BC.114/30.01.002/2013-14
DBOD.No.DEAF Cell.BC.114/30.01.002/2013-14
May 27, 2014
The Chairman and Managing Director /
Chief Executive Officers
All Scheduled Commercial Banks including RRBs and LABs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks.
Chief Executive Officers
All Scheduled Commercial Banks including RRBs and LABs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks.
Dear Sir/Madam,
The Depositor Education and Awareness Fund Scheme, 2014 –Section 26A of Banking Regulation Act, 1949- Operational Guidelines
Please refer to circular DBOD.No.DEAF Cell.BC.101/30.01.002/2013-14 dated March 21, 2014 and Depositor Education and Awareness Fund Scheme, 2014 (Scheme) enclosed therewith. In this connection it is advised that the Scheme has been notified in the Official Gazette on May 24, 2014 and a copy thereof is attached. As per paragraph 3(vi) of the Scheme, banks shall calculate the cumulative balances in all accounts along with interest accrued, as on the day prior to the effective date, i.e May 23, 2014 and such amounts due should be transferred to the Depositor Education and Awareness Fund (Fund) on June 30, 2014 (before the close of banking hours). Subsequently, as mentioned in paragraph 3(vii) of the Scheme, banks shall transfer to the Fund the amounts becoming due in each calendar month (i.e. proceeds of the inoperative accounts and balances remaining unclaimed for ten years or more) as specified in the Scheme and the interest accrued thereon on the last working day of the subsequent month.
Crediting the Fund in Electronic form only
2. We advise that banks shall remit the amounts due (as defined in the Scheme), in electronic form through portal facility of the E-Kuber (Core Banking Solution) of Reserve Bank of India (RBI), to a designated account created for the Scheme, viz. "DEAF Account 161001006009". All banks are advised to generate a single entry for remitting the amounts to the Fund. Accordingly, the amount required to be transferred to the Fund in terms of paragraphs 3(vi) and 3(vii) of the Scheme, can be credited to the Depositor Education and Awareness Fund (DEAF) Account, specified above, maintained with RBI (within banking hours) on the last working day of the month. Further each bank has been allotted a unique "Bank DEAF Code" by the RBI, for operating the Fund which is given in Annex I. Every bank remitting amount to the DEAF Acccount should indicate its unique "Bank DEAF Code".
Procedure to be followed by banks for crediting the Fund
3. (i) Own Account – This facility is available under the service "DEAF Service" of the E-Kuber portal. When a bank is crediting its own amount due to the Fund it should furnish its DEAF code (bank specific DEAF code is given in Annex I) in the "Bank DEAF Code" field and the detailed breakup (number of accounts and amount) of the deposits viz. interest bearing, non-interest bearing deposits and other credits (i.e., any amount other than deposits remaining unclaimed as defined in paragraph 3(iii) of the Scheme), in the fields provided for the same, of the aforementioned service in the portal. Other credits would be non-interest bearing.
(ii) Members' Account – In case of a bank remitting amounts due of member/ other banks (banks not having current account with RBI) who approach the bank for remitting such amounts to the Fund, the bank should not consolidate the amounts of all banks, instead they should separately remit the amount due bank-wise, for the amount to be credited to the Fund. In the Bank DEAF Code field available in the DEAF Service of E-Kuber, bank should provide appropriate Bank DEAF Code of the member/other bank, whose funds are being transferred. Also, the detailed breakup (number of accounts and amount) of the deposits viz. interest bearing deposits, non-interest bearing deposits and other credits should be provided in the fields designated for the same. Other credits would be non-interest bearing. Further, it is advised that while making payment towards claims/refunds from the Fund of members / other banks, RBI would credit the account of the sponsor bank from where the credits would flow to the member / other banks.
Returns prescribed
4. In terms of paragraph 5 of the Scheme, banks shall, furnish returns duly audited to RBI in the form and manner prescribed. In this regard, all banks are advised to furnish returns duly audited as per details given below:-
Form I- Banks shall submit a consolidated return on the date of transferring the amount to the Fund furnishing the total amount credited (indicating separately the amount of interest bearing deposits, non-interest bearing deposits and other credits transferred). For each tranche transferred to the Fund, banks shall maintain complete details viz., name of customer, account number, amount, including interest accrued, transferred to the Fund, date of transfer to the Fund and other related documents, etc. These details/documents shall be maintained by the banks tranche-wise.
Form II- A monthly return to be submitted by the bank for the total amount of funds transferred to the Fund (indicating interest bearing deposits, non-interest bearing deposits and other credits). The return shall be forwarded by 15th of the succeeding month.
Form III- In terms of paragraph 4 (i) of the Scheme, in case of demand from a customer/ depositor whose unclaimed amount/deposit had been transferred to Fund, banks shall repay the customer/depositor, along with interest, if applicable, and lodge a claim for refund from the Fund for an equivalent amount paid to the customer/depositor. In case of any claim for refund of the part amount by the depositor, whose unclaimed amount/inoperative deposit had been transferred to the Fund, the bank shall claim the entire amount transferred to the Fund in respect of such depositor along with interest payable, if any, from the Fund. The details of the refund made by a bank in each calendar month should be furnished in Form III by 15th of the subsequent month. Form III should give details i.e., the name of the customer/ depositor, date of transfer of the amount to the Fund, date of payment of the amount to the customer, rate of interest claimed from the Fund etc. The return may be forwarded by 15th of the succeeding month to which the claim pertains so as to enable the Reserve Bank to process the same and refund the amount on the last working day of the month. Any return received after 15th of the succeeding month to which the claim pertains, would be processed in the subsequent month.
Form IV– A monthly consolidated return for claims made by the bank from the Fund may be forwarded by 15th of the succeeding month.
Form V- A yearly return indicating item-wise details of amount due outstanding at the year end may be submitted within thirty days after the close of each calendar year.
5. We advise that banks may necessarily furnish the above returns, even if it is a nil return, to the RBI at the periodicity indicated above. The formats of the above returns are enclosed.
Audit
6. On the date of transferring the amount to the Fund, the bank should maintain customer-wise details verified by the concurrent auditors, including payment of up-to-date interest accrued, that has been credited to the deposit account till the date of transfer to the Fund, with respect to interest bearing deposits. With respect to non-interest bearing deposits and other credits transferred to the Fund, customer-wise details, duly audited, should be maintained with the bank. The concurrent auditors should also verify and certify that, as per the banks' books, the returns have been correctly compiled by the bank in the monthly and yearly returns submitted to RBI. The above returns shall also be verified by the statutory auditors at the time of annual audit and an Annual Certificate shall be obtained from statutory auditors and forwarded to RBI, certifying that the returns have been correctly compiled by the bank.
Authorized Signatories
7. The banks are advised to furnish true copy of the Resolution of the Board of Directors authorising two officials designated as authorized signatories, who would operate the account jointly, for the claims/refund on behalf of the bank from the Fund. The specimen signatures of the authorised signatories may be duly attested by the Chairman, Executive Director or Chief Executive Officer. The specimen signature of the authorized signatories along with Board Resolution may be forwarded as per the Annex II.
Disclosure in Notes to Accounts
8. All such unclaimed liabilities (where amount due has been transferred to DEAF) may be reflected as "Contingent Liability – Others, items for which the bank is contingently liable" under Schedule 12 of the annual financial statements. Banks are also advised to disclose the amounts transferred to DEAF under the notes to accounts as per the format given below.
| (Amounts in Rs. crore) | ||
| Current year | Previous year | |
| Opening balance of amounts transferred to DEAF | ||
| Add: Amounts transferred to DEAF during the year | ||
| Less: Amounts reimbursed by DEAF towards claims | ||
| Closing balance of amounts transferred to DEAF | ||
9. The above returns duly certified by the auditors may be forwarded in original, to Chief General Manager, Reserve Bank of India, Department of Banking Operations & Development, Central Office, DEAF Cell, 12th Floor, Shahid Bhagat Singh Road, Fort, Mumbai – 400001, as also scanned copy in pdf format by email. The statutory auditors' Annual Certificate as mentioned in paragraph 6 above may also be forwarded at the above address along with a scanned copy in pdf format by e-mail.
Yours faithfully,
(Rajesh Verma)
Chief General Manager
Chief General Manager
Encl: As above
Importers can now book forward contracts, under past performance route, up to 50% of eligible limit
RBI/2013-14/613
A.P.(DIR Series) Circular No.135
A.P.(DIR Series) Circular No.135
May 27, 2014
To
All Category – I Authorised Dealer Banks
All Category – I Authorised Dealer Banks
Madam / Sir,
Risk Management and Inter Bank Dealings
Attention of Authorised Dealers Category-I (AD Category-I) banks is invited to the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 dated May 3, 2000 (Notification No. FEMA/25/RB-2000 dated May 3, 2000) as amended from time to time and A.P. (DIR Series) circular no. 32 dated December 28, 2010, as amended from time to time, and A.P. (DIR Series) circular no. 114 dated March 27, 2014.
2. Under the extant guidelines relating to hedging of currency risk of probable exposures based on past performance, resident importers are allowed to book contracts up to 25 per cent of the eligible limit. The eligible limit is computed as the average of the previous three financial years' import turnover or the previous year's actual import turnover, whichever is higher.
3. On a review of the evolving market conditions and with a view to providing importers with greater flexibility in hedging facility, it has been decided to allow importers to book forward contracts, under the past performance route, up to 50 per cent of the eligible limit. Importers who have already booked contracts up to previous limit of 25 per cent in the current financial year, shall be eligible for difference arising out of the enhanced limits. All other operational guidelines, terms and conditions shall apply mutatis mutandis.
4. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers.
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
Rudra Narayan Kar
Chief General Manager-in-Charge
Chief General Manager-in-Charge
IT: In view of retrospective amendment brought by Finance (No.2) Act, 2009 in section 115JB, Assessing Officer was justified in initiating reassessment proceedings taking a view that assessee was required to add 'provision for bad and doubtful debts' to net profit while computing book profits under section 115JB
IT: Since accounting principles on basis of which accounts are prepared under Companies Act, terms 'bad debts' and 'provision for bad and doubtful debts' have distinct meaning, Assessing Officer was justified in making addition of said provision in computing 'book profit' under section 115JB
■■■
[2014] 45 taxmann.com 31 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'E'
Shakti Insulated Wires (P.) Ltd.
v.
Income-tax Officer, Ward 9(3), Mumbai*
B.R. BASKARAN, ACCOUNTANT MEMBER
AND AMIT SHUKLA, JUDICIAL MEMBER
AND AMIT SHUKLA, JUDICIAL MEMBER
IT APPEAL NO. 5814 (MUM.) OF 2011
[ASSESSMENT YEAR 2005-06]
[ASSESSMENT YEAR 2005-06]
FEBRUARY 14, 2014
Section 115JB, read with section 147, of the Income-tax Act, 1961 - Minimum alternate tax (Provision for bad and doubtful debts) - Assessment year 2005-06 - In return of income, assessee did not add 'provision for bad and doubtful debts' to net profit while computing book profit under section 115JB - Assessee's return was processed under section 143(1) - Subsequently, Assessing Officer re-opened assessment by virtue of retrospective amendment brought into Act by Finance (No.2) Act, 2009 in section 115JB, whereby provision made for diminution in value of assets was also required to be added to net profit while computing 'book profit' under section 115JB - Commissioner (Appeals) upheld validity of reassessment proceedings - Whether since reassessment was warranted due to retrospective amendment brought in Act, there was no infirmity in decision of Commissioner (Appeals) in upholding reopening of assessment - Held, yes [Para 4.3] [In favour of revenue]
Section 115JB of the Income-tax Act, 1961 - Minimum alternate tax (Provision for bad and doubtful debts) - Assessment year 2005-06 - In assessment proceedings, Assessing Officer made addition of 'provision for bad and doubtful debts' in computing 'book profit' - Assessee relying upon decision rendered by Supreme Court in case of Vijaya Bank v. CIT [2010] 323 ITR 166/190 Taxman 257, submitted that 'provision for bad and doubtful debts' should be considered as equivalent to actual write off of bad debts - Accordingly, assessee contended that there was no necessity to add same to net profit while computing book profit under section 115JB - Whether since accounting principles on basis of which accounts are prepared under Companies Act, terms 'bad debts' and 'provision of or bad and doubtful debts' have distinct meaning, decision rendered by Supreme Court in case of Vijaya Bank (supra) could not be applied to assessee case - Held, yes - Whether, therefore, impugned addition was to be confirmed - Held, yes [Para 5.1] [In favour of revenue]
CASES REFERRED TO
Vodafone West Ltd. v. Asstt. CIT [2013] 33 taxmann.com 67 (para 4), Denish Industries Ltd. v. ITO[2004] 271 ITR 340/140 Taxman 456 (Guj.) (para 4), Asstt. CIT v. Rajesh Jhaveri Stock Brokers[2007] 291 ITR 500/161 Taxman 316 (SC) (para 4.2), Indian & Eastern Newspaper Society v. CIT[1979] 119 ITR 996/2 Taxman 197 (SC) (para 4.2), Vijaya Bank v. CIT [2010] 323 ITR 166/190 Taxman 257 (SC) (para 5), Tainwala Chemicals & Plastics India Ltd. v. Asstt. CIT [2011] 13 taxmann.com 211/47 SOT 169 (Mum.) (URO) (para 5), Garware Polyester Ltd. v. CIT [2013] 33 taxmann.com 164 (Mum.) (para 6) and Dy. CIT v. Uttam Sugar Mills Ltd. [2012] 20 taxmann.com 223 (Delhi) (para 6).
Divyesh I. Shah for the Appellant. Ashok Suri for the Respondent.
ORDER
B.R. Baskaran, Accountant Member. - The appeal filed by the assessee is directed against the order dated 20.6.2011 passed by the Ld CIT(A)-20, Mumbai and it relates to the AY 2005-06.
2. At the time of hearing, the ld counsel for the assessee did not press ground no.3 and in that regard be has also made necessary endorsement in the grounds of appeal by affixing his signature. Accordingly, the said ground is dismissed as not pressed. Ground no.5 is general in nature and does not require any adjudication. The remaining grounds relate to the following three issues:
| (i) | Validity of reopening of assessment u/s 147 of the Act | |
| (ii) | Validity of adding the "provision for doubtful debts" to the book profit computed u/s 115JB of the Act, and | |
| (iii) | Correctness of the computation of interest u/s 234B and 234C of the Act. |
3. The facts relating to the case are stated in brief: The assessee filed its original return of income on 31.10.2005 declaring nil income. The return was processed u/s 143(1) of the Act on 14.3.2006. Subsequently, the AO has noticed that the assessee has claimed deduction of Rs.86,70,954/- under the head "Provision for bad and doubtful debts" and did not disallow the same. The assessee also did not add the same to the net profit, while computing the book profit u/s 115JB of the Act. Hence, the AO reopened the assessment by issuing notice u/s 148 of the Act on 23.3.2010. In the reopened assessment, the AO added the amount of Rs.86,70,954/- claimed under the head "Provision for bad and doubtful debts" to the total income as well as to the book profit computed u/s 115JB of the Act. The assessee was aggrieved by the decision of the AO in increasing the Book Profit u/s 115 JB of the Act by the amount claimed as "Provision for bad and doubtful debts". Hence, it filed appeal before Ld CIT(A) challenging the said decision of the AO, besides challenging the validity of reopening and also computation of interest u/s 234B and 234C of the Act. However, the assessee did not get any relief from ld CIT(A) and hence, the assessee has filed the present appeal before us.
4. The first issue relates to the validity of reopening of the assessment. According to Ld A.R, the AO has re-opened the assessment only by virtue of a retrospective amendment brought into the Act by Finance (No.2) Act, 2009 in section 115JB of the Act, where by the provision made for diminution in the value of assets is also required to be added to the net profit while computing "Book Profit" u/s 115JB of the Act. The Ld A.R submitted that the assessee did not add the "Provision made for bad and doubtful debts" while computing the book profit, since the provision for diminution in the value of assets was not required to be added to the Book Profit at the time, when it filed the return of income. However, the assessee has duly disclosed the details about the "Provision for bad and doubtful debts" in the return of income and hence there is no failure on the part of the assessee. Accordingly, by placing reliance on the decision of the Hon'ble Gujarat High Court in the case of Vodafone West Ltd. v. Asstt. CIT [2013] 33 taxmann.com. 67 and also in the case ofDenish Industries Ltd. v. ITO [2004] 271 ITR 340/140 Taxman 456 (Guj.), the Ld A.R contended that the reopening cannot be done on the basis of retrospective amendment brought in to the Act subsequent to the completion of the original assessment.
4.1 We heard Ld D.R also on this issue. It is an undisputed fact that the return of income originally filed by the assessee was processed u/s 143(1) of the Act. The facts prevailing in both the cases relied upon by the assessee clearly show that the original assessments of those assessees were completed u/s 143(3) of the Act and hence, in our view, the assessee cannot derive support of the above cited two decisions.
4.2 On the contrary, We notice that the ld CIT(A) has placed reliance on the decision of the Hon'ble Supreme Court in the case of Asstt. CIT v. Rajesh Jhaveri Stock brokers [2007] 291 ITR 500/161 Taxman 316 and also in the case of Indian & Eastern Newspaper Society v. CIT [1979] 119 ITR 996/2 Taxman 197 (SC) to come to the conclusion that the reopening of assessment was valid in the instant case; since the original return of income was processed only u/s 143(1) of the Act. We also notice that the ld CIT(A) also placed reliance on the decision of the Hon'ble Bombay High Court in the case of Rallies India Ltd (citation not given).
4.3 In the instant case, we have already noticed that the return of income has been processed only u/s 143(1) of the Act. Hence, in our view, the decision rendered by Hon'ble Supreme Court in the case ofRajesh Jhaveri Stock Brokers (supra) squarely applies in the instant case. The Ld A.R placed reliance on the decision of Co-ordinate Mumbai bench in the case of Aipitia Marketing (P.) Ltd. to contend that the re-opening of assessment is not valid, even if the return had been processed u/s 143(1) of the Ace, if there is no fresh material before the AO. In our view, the said decision is not applicable in the instant case, since the reassessment is warranted due to the retrospective amendment brought in the Act. Hence, we do not find any infirmity in the decision of the ld CIT(A) in upholding the reopening of the assessment. Accordingly, we uphold his order on this issue.
5. The next issue relates to the addition of "Provision for bad and doubtful debts" in computing the "Book Profit". The Ld Counsel placed reliance on the decision rendered by Hon'ble Supreme Court in the case ofVijaya Bank v. CIT [2010] 323 ITR 166/190 Taxman 257 and submitted that the "Provision for bad and doubtful debts" should be considered as equivalent to actual write off of bad debts. Accordingly he contended that there is no necessity to add the same to the net profit while computing book profit u/s 115JB of the Act. The Ld A.R also placed reliance on the decision of Co-ordinate bench of Mumbai Tribunal in the case of Tainwala Chemicals & Plastics India Ltd. v. Asstt. CIT [2011] 13 taxmann.com 211/47 SOT 169 (Mum)(URO).
5.1 We heard Ld D.R on this issue who contended that the Provision for bad and doubtful is necessarily to be added in view of the statutory provision contained in sec. 115JB of the Act. On consideration of rival submissions, we are unable to agree with the contentions of Ld A.R. The decision in the case of Vijaya Bank (supra) has been rendered in the context of sec. 36(1)(iii) of the Act, which is required to be considered while computing total income under normal provisions of the Act. In the instant case, we are concerned with the provisions of sec. 115JB, wherein the book profit is required to be computed from the audited accounts prepared under the provisions of the Companies Act. Under the accounting principles, on the basis of which the accounts are prepared under the Companies Act, the terms "Bad debts" and the "Provision for bad and doubtful debts" have distinct meaning and has got different accounting treatment. Hence, in our view, the decision rendered by Hon'ble Supreme Court in the case of Vijaya Bank (supra) under the normal provisions of Income tax Act, cannot be applied to the provisions of sec. 115JB of the Act. We notice that the Co-ordinate bench in the case of Tainwala Chemicals & Plastics India Ltd., did not consider the applicability of the Companies Act to the book profit computed under sec. 115JB Act. In view of the foregoing, in our view, the Ld CIT was justified in upholding the addition of "Provision for bad and doubtful debts" to the book profit. Accordingly, we uphold his order on this issue.
6. The next issue relates to the computation of interest u/s 234B and 234C of the Act. The ld AR submitted that clause (i) to Explanation 1 to sec. 115JB was inserted by Finance (No.2) Act 2009 were retrospective effect from 1.4.2001. The Ld A.R further submitted that the assessee, while computing the "current income" for the purpose of computing the advance tax to be paid, could not have foreseen the amendment that will be made in future with retrospective effect. Hence, the advance tax paid by the assessee fell short. Accordingly he submitted that the interest u/s 234B and 234C could not be levied on the tax component attributable to the addition of "Provision for bad and doubtful debts". In this regard, he placed reliance on the decision of Co-ordinate bench of Tribunal, wherein one of us was the party, in the case of Garware Polyester Ltd. v.CIT [2013] 33 taxmann.com 164 (Mum). The assessee also placed reliance on the decision of Delhi bench of Tribunal in the case of Dy. CIT v. Uttam Sugar Mills Ltd. [2012] 20 taxmann.com 223.
6.1 We heard Ld D.R and also have gone through the decision relied upon by the Ld A.R. We notice the Co-ordinate benches have taken the view that the interest u/s 234B and 234C cannot be charged for default in payment of advance tax and for deferment of advance tax where payment of tax became due only because of retrospective amendment. The following observations made by the Delhi bench of Tribunal in the case ofUttam Sugar Mills Ltd. (supra) are extracted, for the sake of convenience:—
"7. The question is as to whether interest u/s 234B and 234C of the Act can be charged for default in payment of advance tax and for deferment of advance tax, respectively, where the payment of tax became due only because of the amendment by way of insertion of Explanation 1(h) to sec. 115JB(2) of the Act, the amendment having been made operative retrospectively. It was due t the filing of revised statement of assessable income, that the book profit was increased by the amount of the deferred tax. But for the retrospective amendment, the assessee was not liable to be taxed on account of adjustment of deferred tax. Undeniable, this is the obtaining legal position as per Apollo Tyres Ltd. v. CIT [2002] 174 CTR (SC) 521; (2002) (255 ITR 273) (SC) and Asstt. CIT v. Balarampur Chini Mills Ltd.[2007] 111 TTJ (Kol) 230. Now, the amendment having come about only by virtue of Finance Act, 2008, obviously there was no malafide intention on the part of the assessee, as has been recognized inPriyanka Overseas Ltd. v. Dy. CIT (2002) (75 TTJ (Delhi) 783) : (2001) (79 ITD 353) (Delhi), in a similar fact situation. It was noted therein that from CBDT Order No. F 400/234/95-IT (B) dt. 21st May, 1996, it was clear that the intention of the tax authorities was not to levy interest where any amendment came with retrospective effect. .."
In our view, the ratio of the above said decision shall squarely apply to the facts of the instant case. Accordingly, we set aside the order of Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to compute the interest u/s 234B and 234C of the Act by excluding the addition relating to "Provision for bad and doubtful debts" from the amount of book profit.
7. In the result, the appeal of the assessee is partly allowed.
SUNIL*In favour of revenue.
How to avoid penalty u/s. 271B for failure to file audit report within 30th Sept., 2013?
By Subash Agarwal, Advocate
For a variety of reasons and mainly for the following reasons, a number of CAs could not upload / file ROI and / or TAR within 30.09.2013 –
(i) Online filling of report is a new system implemented by the department this year. Notifications for the same had been issued too late, i.e. in the month of May & June (Notification no. 36 dated 23rd May, 2013 & Notification no. 44 dated 19th June, 2013)
(ii) Lot of time was wasted in understanding the system as it was a new system.
(iii) Initially, there was a faulty system of uploading the Tax Audit Report.
(iv) There was a constant change in the utility by the department (12 times). Actually, the department had changed utility every week and sometimes two or three times in a week.
(v) The CAs were under tremendous mental pressure due to the uncertainty arising out of the above reasons.
2. In exercise of power u/s. 119(2)(a) r.w. sec. 139 and Rule 12, CBDT relaxed the requirement of furnishing the Audit Report u/s. 44AB as prescribed under Rule 12(2) for the A.Y.: 2013 – 2014. As per the said order u/s. 119, following requirements were stated –
(a) The assessee who were finding it difficult to upload the prescribed Reports of Audit in the system electronically may also furnish the same manually before the jurisdictional Assessing Officer within the prescribed due date.
(b) The said Report of Audit should however be furnished electronically on or before 31.10.2013.
The professionals reasonably instructed / aware of the rules of statutory interpretation interpreted the CBDT circular / order as under –
(i) There was extension of time for furnishing of the audit report electronically till 31.10.2013.
(ii) The requirement of furnishing of TAR manually to the A.O. was optional since the word "may" was used in clause (a) of the circular.
On the same date, CBDT issued a Press Release.
The Press Release dated 26.09.2013 has imposed the following two conditions for availing the benefit of the circular which were not present in the circular issued –
(i) Mandatory requirement to file audit report manually with the A.O. by 30.09.2013.
(ii) Mandatory requirement to file ROI electronically by 30.09.2013.
3. Because of the above-mentioned circular r.w., Press Release, there is a likelihood of initiation of penalty u/s. 271B for the violation of sec. 271B in a case where TAR could not be uploaded / filed manually by 30.09.2013 and the ROI also could not be uploaded by that time.
4. It must be clearly understood that penalty u/s. 271B is not mandatory in nature. As per sec. 273B, penalty shall not be imposable u/s. 271B, amongst others, if a reasonable cause is shown by the assessee for his failure.
5. To take advantage of the provisions of sec. 273B, the professionals should ensure that there is no further delay in submission of the TAR, online or manually, if the same could not be submitted / uploaded by 12 o'clock night of 30th September, 2013. If TAR is submitted / uploaded on the very next day or next few days, penalty is not leviable since it will show the bonafide conduct of the assessee. In the case of Stay well Hotels (P) Ltd. vs. CIT 283 ITR 92 (MP), Hon'ble High Court held that where there was a short delay and the assessee offered explanation for the delay, penalty u/s. 271B cannot be levied. Hon'ble Calcutta High Court in the case of CIT vs. Ramakrishna Stores 253 ITR 175 (Cal.) held that where there is a marginal delay in filing TAR (in this case, a delay of 1½ months was held to be marginal) and some reasonable cause was shown (in this case, the reasonable cause was shown to be the illness of the accountant), no penalty u/s. 271B can be imposed.
6. Thus, on receipt of the show-cause notice from the A.O., the assessee should submit a proper reply to the show-cause notice and annex evidence in support of the plea taken.
Thus, where due to slowing down of the departmental software, the TAR was uploaded next day, this fact should be stated in the reply and a certificate / affidavit from the CA should be annexed in support of the stated fact.
7. In the reply, the assessee should also state that the delay in completion of audit was due to a variety of reasons stated above in para 1 above, which should also find reflection in certificate of CA concerned.
8. The assessee should also take a legal plea before the A.O. in his reply to the show-cause that he was under the "bonafide belief" that CBDT circular dated 26.09.2013 has extended the date of furnishing of TAR electronically till 31.10.2013 and the requirement to file the TAR manually by 30.09.2013 was optional.
It may also be stated that the contents of the Press Release asking for mandatorily filing of TAR manually by 30.09.2013 came to the knowledge of the assessee subsequently and by that time the said date had expired and in any case, the assessee had made substantial compliance of circular dated 26.09.2013 r.w. the Press Release by submitting TAR electronically much before the extended date 31.10.2013.
9. In the case of Wadiwala & Co. vs. ACIT 72 TTJ (Ahd.) it has been held in the context of sec. 271B r.w. sec. 44AB that "bonafide belief" is a reasonable cause for avoiding penalty.
In this case, the assessee who was a sub-broker, had taken the plea that the turnover of dealings in shares on behalf of various buyers and sellers of shares was not included for determining the applicability of sec. 44AB.
10. Where the assessee is unfortunate to have sustained the penalty u/s. 271B, a further legal plea, apart from the ground relating to the merit, based on my article titled "Failure to file audit report manually and ROI within Sept., 30 – Any penalty u/s. 271B would be illegal
According to the ld. Advocates present in the court room no 6 of the Calcutta high court on 24 th june ,the present tax bench comprising of the hon'ble justice Indira banerjee and the hon'ble justice A. R Saraswati was not convinced with the reasoning of the earlier division bench's view in the case of CIT vs. Crescent Export Syndicate, Order dated 03.04.2013 and also in the case of CIT vs. Md. Jakir Hossain Mondal, Order dated 4.4.2013 . In these two cases, the same High Court had taken a view contrary to the view taken by ITAT , Spl. Bench in Merilyn Shipping & Transports 146 TTJ 1 (Viz) (SB), where the Spl. Bench ITAT held that the disallowance u/s 40(a)(ia) could be made only for the expenditure that is "payable" as on 31st March and not for the amounts that have already been "paid" during the year.
In keeping with the judicial discipline, the bench has referred the matter at hand, being ITAT 101/2013 in the case of CIT vs. Sk. Mahasin Ali to the hon'ble chief justice to constitute a larger bench for reconsidering the judgement rendered in the aforesaid two cases.
ST - Works Contract Composition Scheme - There is no explanation in Rule 3 to clarify that payment of ST shall also mean situation where ST was payable but not paid by assessee: CESTAT
-- By TIOL News Service
AHMEDABAD, MAY 28, 2014: THE issue to be decided in the present proceedings is whether appellant is entitled to Composition Scheme under the provisions of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 (effective from 01.6.2007) when the contracts for rendering services was entered before 01.6.2007 and part of the services were also rendered before 01.6.2007. Further, the Advance payment for the service to be provided was received before 01.6.2007 and duly reflected in the returns filed with the Revenue but no service tax was paid before 01.6.2007.
The appellant entered into an agreement dated 14.02.2007 with M/s. Essar Oil Limited for the expansion of an oil refinery set up by the latter. The execution of the contract began in July 2007 and even some advances were received by the appellant from M/s. Essar Oil Limited prior to 01.6.2007 but no service tax was paid prior to 01.6.2007. It is the case of the appellant that the condition of Rule 3(3) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, as explained by CBEC in their Circular dated 24.08.2010, was entirely fulfilled and service tax @ 2% (later enhanced to 4% with effect from 01.3.2008) was correctly paid under Works Contract Services.
As the Commissioner, Central Excise, Rajkot vide his order dated 18.10.2012 denied the benefit of the Composition Scheme and confirmed service tax demands for the extended period, the appellant is before the CESTAT.
The relevant provisions of Rule 3(3) of the Works Contract Rules, 2007 reads:-
"Option to avail Composition Scheme;3 (1) ..................(2) .................(2A) ................(3) The provider of taxable service who opts to pay service tax under these rules shall exercise such option in respect of a works contract prior to payment of service tax in respect of the said works contract and the option so exercised shall be applicable for the entire works contract and shall not be withdrawn until the completion of the said works contract."
The provisions of the above Rule 3(3) have been further clarified by CBEC under Circular No. 128/10/2010-ST dated 24.8.2010 in the following words:-
"3. As regards applicability of composition scheme, the material fact would be whether such a contract satisfies rule 3(3) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. This provision casts an obligation for exercising an option to choose the scheme prior to payment of service tax in respect of a particular works contract. Once such an option is made, it is applicable for the entire contract and cannot be altered. Therefore, in case a contract where the provision of service commenced prior to 1-6-2007 and any payment of service tax was made under the respective taxable service before 1-6-2007, the said condition under rule 3(3) was not satisfied and thus no portion of that contract would be eligible for composition scheme. On the other hand, even if the provision of service commenced before 1-6-2007 but no payment of service tax was made till the taxpayer opted for the composition scheme after its coming into effect from 1-6-2007, such contracts would be eligible for opting of the composition scheme.4. The Boards previous Circular No. 98/1/2008-S.T., dated 4-1-2008 and the ratio of judgment of the High Court of Andhra Pradesh in the matter of M/s. Nagarjuna Construction Company Limited v. Government of India [2010 (19) S.T.R. 321 (A.P.) - 2010-TIOL-403-HC-AP-ST are in line with the above interpretation."
The Bench after hearing extensive arguments from both sides observed -
++ The crucial element for eligibility to Composition Scheme under the Works Contract Rules, 2007 is the event of payment of Service Tax and the exercising of option, whether the same has been done before 01.6.2007 or after 01.6.2007.++ The words used in Rule 3(3) of these Rules are regarding exercising of option to pay service tax under Composition Scheme before payment of service tax in respect of a Works Contract.++ There is no explanation in the said Rule to clarify that payment of service tax shall also mean the situation where service tax was payable but not paid by the assessee. In the absence of any such provision in the Composition Scheme introduced under Works Contract Rules, 2007, it will not be correct to hold that intention behind the scheme should be seen when no such intention is coming out of the legal provisions of Rule 3(3).++ Appellant has, therefore, correctly availed the Composition Scheme for the Works Contracts for which the option and payment of service tax was exercised after 01.6.2007 and no service tax was paid before 01.6.2007.
The Bench also held that the value of Supply Contract cannot be clubbed to the Service Contract in view of its order No. A/10908-10909/WZB/HAD/2013 dated 11.7.2013 in the case of Essar Projects (India) Limited vs. CCE & ST, Rajkot.
There is another argument made by the Revenue representative that the CBEC Circular No. 98/1/2008-ST, dt.04.01.2008 bars an assessee from claiming the benefit of Composition Rules, 2007 for the works contract services provided after 01.06.2007, if tax at the full standard rate (and not the composition rate) had become payable on a part of the contract value prior to 01.06.2007.
The contention of the Revenue is that a single contract cannot be vivisected and classified into two, for the purposes of Composition Rules, 2007 and as in the present case an advance had been received prior to 01.06.2007 and liability to pay Service Tax thereon had arisen at the full standard rate on this part of the contract value, albeit under a different classification, i.e. Commercial & Industrial Construction Services, consequently the remainder of the contract value could not be granted the benefit of Composition Scheme in view of the bar contained in Rule 3(3) of the Composition Rules 2007.
The Bench relied upon the decision in Nagarjuna Construction Company Ltd Vs GoI - 2010-TIOL-403-HC-AP-ST and held -
+ The CBEC Circular dt.04.01.2008 only prohibits vivisection of a single composite service into two taxable categories merely by virtue of the fact that a part of the consideration was received after 01.06.2007. Significantly, this circular does not prohibit vivisection of a composite contract under two classifications.+ In respect of the task/service completed prior to 01.06.2007, if part of the consideration was received before 01.06.2007 and part thereafter, whether for that part of the consideration received after 01.06.2007, the composition scheme could be claimed was the only question considered by the CBEC in Circular dt.04.01.2008. It is in this context that CBEC Circular clarified that a single composite service covered by the first task/service could not be vivisected, so that a part of its value is classified as Works Contract Service merely by reason of the consideration being received after 01.06.2007.+ Thus, as long as the assessee is clear in choosing the Composition option in respect of services provided after 01.06.2007 and does not vacillate on his choice, he is entitled to avail of the Composition rate under Rule 3(1) for the value of Works Contract Service which, as discussed above, refers to services provided after 01.06.2007. The classification of services rendered prior to 01.06.2007 cannot affect the assessees' entitlement to the Composition Scheme in respect of services rendered after 01.06.2007.+ In the present case, it is not in dispute that in respect of the services provided after 01.06.2007, which alone are regarded as Works Contract Service, the appellant had opted to pay tax at the Composition rate and not at the standard rate and was thus eligible for the composition benefit in respect of services provided after 01.06.2007.+ However, in respect of advance received prior to 01.06.2007 which tantamount to provision of service prior to 01.06.2007, the benefit of composition rate could not have been claimed, on the said advance and Service Tax on the same was payable under the head of Commercial or Industrial Construction Services, as has been held by the respondent.+ As such, the appellants contention that they were entitled to pay tax at the composition rate on advances received prior to 01.06.2007 cannot be accepted.
Nonetheless, it was observed that since the appellant had clearly stated in the ST-3 return that Service Tax was not discharged in view of the fact that the service in the contract was an indivisible Works Contract and which view was holding the field in view of the decision inDaelim case coupled with the fact that there was no deliberate suppression of facts, the bench held that extended period cannot be invoked and, therefore, the alternative question whether the appellant would have been eligible for abatement while computing the tax liability on advance payments is not being analysed.
The appeal was allowed.
(See 2014-TIOL-880-CESTAT-AHM)
No withholding taxes from commission paid to NR agents for their services rendered outside India
IT/ILT: Payments of commission made by assessee to its foreign agents for rendering services abroad was not taxable in India and, thus, assessee was not required to deduct tax at source while making said payments
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