MCA changes CIN of Companies Located in Telangana State
State Code in the CIN of the Companies which are located in Telangana based on the address available in the database has been changed from "AP" to "TG". Complete list of such companies may be viewed at following link :
http://mca.gov.in/Ministry/pdf/AP_to_TG.pdf
(Companies should use the new CIN while communicating with the ministry or filing any e-forms)
Deletion made u/s 68 of the Act – Unexplained creditors – Held that:- The assessee produced duly sworn in affidavits of 6 creditors - For the remaining, the assessee produced confirmation through affidavits etc. before the CIT(A) - the creditors have admitted their respective credits and have also explained their source(s) - unless the AO controverts the averments of the affidavits, the version given therein cannot be rejected - the evidence produced by the assessee in respect of the creditors were also considered – thus, the order of the CIT(A) is setting aside the addition is upheld – Decided against Revenue.
Power of revision u/s 263 of the Act - Prejudicial to the interest of revenue – Proper enquiry made by AO – Reply with documentary evidences furnished by assessee – Held that:- An order can be revised only and only if twin conditions of 'error in the order' and 'prejudice caused to the Revenue' co-exist - the CIT does not have unfettered and unchequred discretion to revise an order - The CIT is required to exercise revisional power within the bounds of the law and has to satisfy the need of fairness in administrative action and fair play with due respect to the principle of audi alteram partem as envisaged in the Constitution of India as well as in section 263 - an order can be treated as 'erroneous' if it was passed in utter ignorance or in violation of any law, or passed without taking into consideration all the relevant facts or by taking into consideration irrelevant facts - The 'prejudice' that is contemplated u/s 263 is the prejudice to the Income Tax administration as a whole.
Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when an order is erroneous, that the section will be attracted - Every loss of revenue cannot be treated as prejudicial to the interest of the revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view under with which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under the law – thus, there is no error in the order which can be said to be prejudicial to the interest of the revenue – Decided in favour of Assessee.
Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when an order is erroneous, that the section will be attracted - Every loss of revenue cannot be treated as prejudicial to the interest of the revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view under with which the CIT does not agree, it cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under the law – thus, there is no error in the order which can be said to be prejudicial to the interest of the revenue – Decided in favour of Assessee.
Critical Analysis of Internal Audit Provisions in Companies Act 2013
CS Bilu Balakrishnan
This write-up is all about the Internal Audit provisions of Companies Act 2013, read with relevant rules notified by the Govt. of India (erstwhile Ministry of Corporate Affairs). An attempt to critically interpret the provisions in the Rules Vs. Act is made. At the conclusion, few suggestions to improve the effectiveness of the provisions are also added.Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
The scope of internal auditing within an organization is broad and may involve topics such as an organization's governance, risk management and management controls over: efficiency/effectiveness of operations (including safeguarding of assets), the reliability of financial and management reporting, and compliance with laws and regulations.
Internal auditing may also involve conducting proactive fraud audits to identify potentially fraudulent acts; participating in fraud investigations under the direction of fraud investigation professionals, and conducting post investigation fraud audits to identify control breakdowns and establish financial loss.
The concept of internal audit was not expressly provided in the 1956 Act, but, was parked in Companies (Auditor's Report) Order, 2003 (CARO). But the 2013 Act has an express provision about internal audit recognizing the utility of such an audit in terms of better internal control and corporate governance.
Internal Audit provisions in Companies Act 2013 – Section 138:
As per Section 138 of the 2013 Act, such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company.
Further, it is also stated that the Central Government may, by rules, prescribe the manner and the intervals in which the internal audit shall be conducted and reported to the Board.
Thus, we were keenly waiting for the details of "such class or classes of companies as may be prescribed"; and "manner and the intervals" of the internal audit, in the Rules.
Internal Audit provisions in Companies (Accounts) Rules 2014 – Rule 13:
Applicability (Rule 13(1)):
The following class of companies shall be required to appoint an internal auditor or a firm of internal auditors, namely:-
(a) every listed company;
(b) every unlisted public company having-
(i) paid up share capital of fifty crore rupees or more during the preceding financial year; or
(ii) turnover of two hundred crore rupees or more during the preceding financial year; or
(iii) outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year; or
(iv) outstanding deposits of twenty five crore rupees or more at any point of time during the preceding financial year; and
(c) every private company having-
(i) turnover of two hundred crore rupees or more during the preceding financial year; or
(ii) outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year.
For an existing company covered under any of the above criteria shall, it shall then comply with the requirements of section 138 and this rule within six months of 1st April, 2014.
Interesting Explanation in the Rule 13 of Companies (Accounts) Rules, 2014:
We can notice few interesting explanation under the Rule 13, which are detailed below:
Internal auditor can even be an Employee of the company:
The Rule states that "the internal auditor may or may not be an employee of the company". Thus, w.e.f 1st April, 2014 / FY 2014-15, companies which have to conduct internal audit, as per the provisions of Companies Act 2013, can do it even through an employee of the company. One side the new law speaks about the "independency" of auditors, and as the readers may know that internal audit is a more important tool, than statutory audit, can the Internal Auditor be an employee of the company ?, then what is the relevance of "concept of independency" ?. The internal auditor has to look into the internal control aspects and of course detection of fraud. Does the "Employee Internal Auditor" will be empowered to look into such aspects ?.
This new provision may provoke companies to appoint their own employees as Internal Auditors, even though they are professionals.
the term "Chartered Accountant" shall mean a Chartered Accountant whether engaged in practice or not:
Another explanation given under Rule 13 is about the term "Chartered Accountant". But, I am doubted as how such an explanation came into picture in Rule 13, because, there is no mentioning about the term "Chartered Accountant" anywhere in Rule 13. I feel there is some drafting error.
Any way, we may proceed to interpret. For the purpose of internal auditing, a CA need not be a PCA (Practicing Chartered Accountant). Thus, even a CA who is in service / employment can hereafter be appointed as the Internal Auditor of the company. The question is whether a CA in employment & CA in practice can be treated as equally as far as the audit experience gained is considered.
I invite readers' attention to Section 138 (1) which states that the internal audit can be conducted by a chartered accountant or a cost accountant, or such other professional as may be decided by the Board. Thus if the internal auditor is a CA, then he/she can be either a CA in employment & CA in practice, but, if the internal auditor is a Cost Accountant, then he/she shall be Cost Accountant in practice, and not in employment. Thus there is lack of co-ordination between Section 138 and Rule 13.
Further the expression "such other professional as may be decided by the Board", used in Section 138 is very open. Even though other professionals like Company Secretaries can utilize the internal audit as a professional opportunity as an area of practice, the Companies Act 2013 lacks the definition of the term "professional". Thus, if the Board of a company feels that the company's internal audit is to be done by a Doctor / Engineer, will it satisfy the law ?.
The Audit Committee of the company or the Board shall, in consultation with the Internal Auditor, formulate the scope, functioning, periodicity and methodology for conducting the internal audit:
Section 138 states that "the Central Government may, by rules, prescribe the manner and the intervals in which the internal audit shall be conducted and reported to the Board." When it came to the rule, explanation to Rule 13 runs as "the Audit Committee of the company or the Board shall, in consultation with the Internal Auditor, formulate the scope, functioning, periodicity and methodology for conducting the internal audit." Thus, neither the Act nor the Rules is specifically saying about the manner or periodicity of internal audit.
Let me conclude, by placing few suggestions, in order to make the internal audit function more effective:
- The applicability limit set is very high, and it should be brought down;
- The Internal Auditor (who is not in the employment of the company) shall be a Practising Chartered Accountant or a Practising Cost Accountant or Practising Company Secretary (Provided that in the case of a Cost Accountant or Company Secretary, they should have been in three years of practice).
- The periodicity of audit shall be on a quarterly basis (The Board may prescribe for a lesser period).
- The Internal Auditor shall submit his report to the Chairman of Audit Committee, and when there is no such committee to the Board of Directors. The copy of the report shall also be provided to the Statutory Auditor of the company.
- The Internal Auditor or a senior representative of the firm of Internal Auditor shall attend the Audit Committee meetings, and if invited to the AGM also.
- The Board shall on the recommendation of the audit committee give written terms of reference to the Internal Auditor.
- The Internal Auditors shall comply with the auditing standards of the respective Professional Institute they belong to and adhere to their code of conduct.
Maintenance & Inspection of documents in electronic form under Companies Act, 2013
CS M. Kurthalanathan
Section 120 of the Companies Act,2013 and Companies (Management and Administration)Rules,2014 deals with the Maintenance and Inspection of documents in electronic form.Any document, record, register, minutes, etc are -
(a) required to be kept by a company; or
(b) allowed to be inspected or copies to be given to any person by a company under this Act, may be kept or inspected or copies given, as the case may be, in electronic form.
Applicability:
- Every listed company or
- a company having not less than one thousand shareholders, debenture holders and other security holders, shall maintain its records, as required to be maintained under the Act or rules made there under, in electronic form.
In case of existing companies, data shall be converted from physical mode to electronic mode within six months from the date of notification of provisions of section 120 of the Act.(i.e., on or before 1st October 2014)
Maintenance of records in electronic form:
The records in electronic form shall be maintained in such manner as the Board of directors of the company may think fit,
- the records are maintained in the same formats and in accordance with all other requirements as provided in the Act or the rules made there under;
- the information as required under the provisions of the Act or the rules made there under should be adequately recorded for future reference;
- the records must be capable of being readable, retrievable and reproducible in printed form;
- the records are capable of being dated and signed digitally wherever it is required under the provisions of the Act or the rules made there under;
- the records, once dated and signed digitally, shall not be capable of being edited or altered;
- the records shall be capable of being updated, according to the provisions of the Act or the rules made there under, and the date of updating shall be capable of being recorded on every updating.
"records" means any register, index, agreement, memorandum, minutes or any other document required by the Act or the rules made there under to be kept by a company
Person responsible for maintenance and security of electronic records:
- The Managing Director,
- Company Secretary or
- any other director or
- officer of the company
as the Board may decide shall be responsible for the maintenance and security of electronic records.
Responsibility:
The person who is responsible for the maintenance and security of electronic records shall-
- provide adequate protection against unauthorized access, alteration or tampering of records;
- ensure against loss of the records as a result of damage to, or failure of the media on which the records are maintained;
- ensure that the signatory of electronic records does not repudiate the signed record as not genuine;
- ensure that computer systems, software and hardware are adequately secured and validated to ensure their accuracy, reliability and consistent intended performance;
- ensure that the computer systems can discern invalid and altered records;
- ensure that records are accurate, accessible, and capable of being reproduced for reference later;
- ensure that the records are at all times capable of being retrieved to a readable and printable form;
- ensure that records are kept in a non-rewriteable and non-erasable format like pdf. version or some other version which cannot be altered or tampered;
- ensure that at least one backup, taken at a periodicity of not exceeding one day, are kept of the updated records kept in electronic form, every backup is authenticated and dated and such backups shall be securely kept at such places as may be decided by the Board;
- limit the access to the records to the managing director, company secretary or any other director or officer or persons performing work of the company as may be authorized by the Board in this behalf;
- ensure that any reproduction of non-electronic original records in electronic form is complete, authentic, true and legible when retrieved;
- arrange and index the records in a way that permits easy location, access and retrieval of any particular record; and
- take necessary steps to ensure security, integrity and confidentiality of records.
Inspection and copies of records maintained in electronic form:
Where a company maintains its records in electronic form, any duty imposed by the Act or rules made there under –
- to make those records available for inspection or
- to provide copies of the whole or a part of those records, shall be construed as a duty to make the records available for inspection in electronic form or
- to provide copies of those records containing a clear reproduction of the whole or part thereof, as the case may be on payment of not exceeding ten rupees per page.
Penalty :
| Company & Officer or such person | Fine which may extend to Rs.5,000/- |
| Continuing contravention | Fine which may extend to Rs.500/- for every day |
Comments:
- Every listed company and other prescribed companies has to convert their records from Physical mode to electronic mode on or before 1st October 2014.
- E-governance has been introduced in the Companies Act,2013 for maintenance and inspection of company's statutory records.
- We need a proper software to sign the records digitally, which should be safe and secure to use.
- The company has to find the reliable software tool from the market and invest on it, which will increase the maintenance cost.
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
How to Raise Complain with MCA
46 new e-forms had been made available for filing w.e.f. 28.04.2014. In case there is any issue faced by stakeholders in filling up or filing any of these 46 e-forms, they are requested to raise ticket with MCA helpdesk by using link www.mca.gov.in/MinistryV2/complaints.html. In addition to describing the problem in the ticket they should also attach the filled form along with error screen shot for speedy redressal of the issues. The stakeholders should quote the ticket number while making correspondence with MCA offices.
Link to Raise or track complaint or concerns with respect to MCA services
http://mca.gov.in/MinistryV2/complaints.html
ICAI recommends increase in Wealth Tax exemption limit to One Crore
CA Sandeep Kanoi
It its pre-budget memorandum ICAI has submitted following recommendations related to wealth tax :-
Taxable Wealth – to exempt motor cars -
The amendment in the definition of "assets" was made by the Finance Act, 1992 with a view to promote investment in productive assets. In line with intention of the lawmakers, motor cars used for all commercial purposes i.e. whether in business or profession should be excluded from the definition of "assets" since they are productive assets.
Increment in Cash Limit
Cash in hand limit should be increased from Rs. 50,000 to Rs. 2, 50,000.
Enhancement of the Basic Exemption limit
The basic exemption limit under the Wealth tax is Rs. 30,00,000. There has been a tremendous rise in the value of properties in last few years, it is therefore, suggested that the basic exemption limit, beyond which wealth tax is charged be enhanced to Rs. one crore.
CBDT notifies U/s. 80G(2)(b) 'Sivasuriyaperuman Temple, Tamil Nadu'
NOTIFICATION NO. 29/2014
Dated -03rd day of June, 2014
In exercise of the powers conferred by clause (b) of sub-section (2) of section 80G of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies "Sivasuriyaperuman Temple, Suriyanarkoil, Thiruvaidaimarudur Taluk, Thanjavur District, Tamil Nadu", to be a place of public worship of renown throughout the State of Tamil Nadu for the purposes of the said section.
[F.NO.176/05/2011-ITA-I]
__._,_.___
No comments:
Post a Comment