Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Tuesday, August 26, 2014

DUE DATE OF FILING THE RETURN IS 30TH SEP, 2014


Central Board of Direct Taxes has extended the due date for Furnishing and uploading of Tax Audit Report to 30.11.2014 for Asst year 2014-15. ( Order dated 20.08.14)  The due date for filing of ITR are been kept same as CBDT has nowhere mentioned in order about the due date for e-filing of Income tax Return (ITR) is extended.

Now the Assessees who are covered under Section 44AB ( tax audit provisions )  but are not liable under section 92E ( for audit provisions of transfer pricing ) if do not file the ITR on or before 30th September 2014, will be liable :

1.      To Pay Interest U/s. 234A of the Income Tax Act,1961 on taxes payable
2.     No carry forward of business losses other than depreciation loss under the provisions of section 80 Read with section 139(3) of the Income tax Act,
3.     To pay Statutory expenses falling under section 43B, by 30.09.2014 to claim deduction. (Being Due Date of Return of Income is 30th September, 2014).
4.     May not be able to revise their Return of Income.

Tax audit Report has to be prepared before 30th September , 14 as the date of tax audit report has to be  mentioned in ITR 6. The due date for furnishing and uploading of TAX AUDIT REPRT is extended only and in real terms there is no extension of date. Income Tax return is prepared only after completion of Tax Audit as a few deductions or dis-allowance can be reckoned from there only.
Contibuted By : Pooja Aggarwal ( Article Assistant at Sandeep Ahuja & Co.)



Thursday, August 21, 2014

TDS Settlement Scheme and extension of due date for filing of Income tax Return for Asst Year 14-15

CBDT vide its order dated 20.08.2014 has extended the due date for obtaining and furnishing of the report of audit under section 44AB of the Act for Assessment Year 2014-15 but date of filing Income Tax Returns is the same i.e. 30th sep, 2014. It is very strange that in absence of finalization of tax audit report, how anybody can file Income Tax Return before 30/09/2014, as calculating disallowances under different sections and particularly TDS defaults.

Such an order for extension of Furnishing of Tax Audit Report is no relief but only the way out of Government delays in providing utility for New Tax Audit report. If Government delays in providing Utility for Uploading TAR then extension is declared but if any assessee due to genuine reason fails to furnish any info in time then laws are made very strict and assessee is subject to penalities.


CBDT had extended the date for OBTAINING & FURNISHING which means that date has been extended only for uploading the tax audit report by November 30th 2014.

But every assessee and Chartered Accountant is facing problem in TDS rectification for which CBDT should bring TDS Settlement or Correction Scheme to avoid litigation and before the last date of filing Income Tax return for Assessment Year 14-15.

TDS CPC is not helping in any manner and even a small clerical mistake by an accountant of Small organization is fatal for such organization and there is no remedy provided by TDS CPC or Jurisdictional TDS Officer.

Even TDS Facilitation Centres are instead facilitating only helping in uploading and working so negligently that huge demands are appearing on account of TDS Defaults.


Income Tax department should bring some scheme for rectification of errors in TDS Statements before bring into so strict and stringent law.  Excise and Service Tax Department declared Service Tax VCES scheme, MCA declared CLSS-14 after 3 earlier schemes. Now the need of the day is Income Tax Department / CBDT should declare some scheme for rectification of errors in TDS Statements.

Pooja Aggarwal

Wednesday, August 20, 2014

Extension of Due date from 30-09-2014 to 30-11-2014 for e-furnishing of tax audit report

LAST DATE EXTENDED TO 30.11.2014 for tax audit under Section 44AB for AY 2014-15 
CBDT has extended  the due date for obtaining and furnishing of the report of audit under section 44AB of the Act for Assessment Year 2014-15 in case of assessees who are not required to furnish report under section 92E of the Act from 30th day of September, 2014 to 30th November, 2014.
CBDT has  further clarified that the tax audit report under section 44AB of the Act filed during the period from 1st April, 2014 to 24th July, 2014 in the pre-revised Forms shall be treated as valid tax audit report furnished under section 44AB of the Act.

Monday, August 18, 2014

WORKS CONTRACT TAX

 Effective from 1st April 2013.
·         Applicability on dealers ENGAGED EXCLUSIVELY in carrying out works contracts  in Delhi
  • Composition dealers under this notification SHALL NOT BE ELIGIBLE for the general composition scheme provided by Section 16(1) to 16(10) of the Act.
Different rates under different schemes for different type/nature of Works contract has been suggested under this Model.
ELIGIBILITY FOR SCHEMES:
SCHEME A:
A registered dealer opting to pay composition tax under this Scheme shall:
(i)                 not purchase/sell or procure/supply goods from/to any place outside Delhi at any time during the period for which he opts to avail this Scheme
* He may procure his own Plant & Machinery and Equipments from outside Delhi, MEANT EXCLUSIVELY FOR USE IN EXECUTION OF THE WORKS CONTRACT BY HIM.

SCHEME B:
A registered dealer opting to pay composition tax under this Scheme shall
(i)                 Be entitled to make purchases of goods required for the execution of the contract under this Scheme in the course of inter-State trade or commerce on the basis of his certificate of registration against declaration in Form-C.
OR
(ii)               By way of inward transfer of stocks from other States against Form-F
OR
(iii)             By way of imports from other countries solely for the purposes of utilizing the same in the execution of works contract in Delhi only. The dealer shall use the material/ goods imported or procured from outside Delhi strictly for use in execution of the works contract transactions.

General Conditions for both the schemes:-
The composition dealer opting for composition under this notification shall:
a)      NOT purchase or procure goods, other than those specified in the First Schedule appended to the Act, within Delhi, from a person who is not registered under the Act, except to the extent of 2% of his total purchase turnover during the year or Rs. 25 lakhs, whichever is lower;
b)      NOT be ELIGIBLE to CLAIM TAX CREDIT under section 9 and/ or section 15 of the Act;
c)      NOT compute his net tax under section 11 of the Act;
d)      NOT collect any amount by way of tax under the Act;
e)      NOT be entitled to issue ‘Tax Invoices’;
f)       continue to retain the originals of all tax invoices and all the retail invoices for all his purchases and copies of all retail invoices issued by him as required under section 48 of the Act;
g)      Maintain separate records of all the purchases made within Delhi, or in the course of inter-State trade or commerce and by way of transfer of stock or from outside India;
h)      issue only Retail Invoices, as per provisions of the Act and the Delhi Value Added Tax Rules, 2005 (hereinafter called ‘the Rules’);
i)        BE ELIGIBLE to CLAIM SET OFF OF TDS only if on the date of filing of return, he is in possession of original TDS Certificate issued to him by the person making the deductions; and
j)        NOT ENTITLED for refund before his assessment is made under section 32 of the Act.
FEW RELEVANT POINTS
  • A dealer, who opts to pay composition tax under the notification and are liable to tax at different rates under this notification, shall pay tax according to the rate applicable to each of such contracts.
·        The TAX PERIOD for the composition dealer shall be a QUARTER, unless otherwise prescribed by the Commissioner for a dealer or class of dealers. However, the tax due shall be paid by the composition dealer ON MONTHLY BASIS, WITHIN 21 DAYS OF THE END OF THE MONTH.
  • In case of Failure to comply, provisions of DVAT shall apply as if no composition scheme applicable and Input tax credit on Opening Stock shall be available.

INTIMATION TO CONTRACTEE & TDS (WCT)
Dealer who opts to pay Tax under Composition Scheme shall make an application to the contractee/ awarder, not being an individual or a Hindu Undivided Family, in which he authorizing it to deduct tax at source at the rate which may be applicable to the contracts for which composition is opted by the dealer. The contractor shall not be able to claim benefit of the TDS in his return unless the contractee/ awarder has deposited the amount in the appropriate Government Treasury. The Contractor would be able to claim the benefit of TDS on the basis of the TDS Certificate issued by the Contractor in a prescribed form in which the details of challan deposited is also mentioned.

FORM C BENEFIT NOT AVAILABLE ON SALE OF PLANT & MACHINERY
A composition dealer SHALL NOT make any SALE OF CAPITAL ASSET including Plant & Machinery and Equipments, scrap, surplus, waste or discarded material OUTSIDE DELHI AGAINST CENTRAL STATUTORY FORMS  & shall pay Tax at the rates specified in section 4of the Act, as if he has not opted for any scheme. 

NO IMPLICATIONS FOR GOODS SUPPLIED BY CONTRACTEE – SUBJECT TO CONDITIONS
The Composition dealer is not required to pay any tax on the VALUE OF GOODS SUPPLIED BY THE CONTRACTEE to the Contractor in the execution of Works Contract where the ownership of such goods remains with the Contractee. The amount representing the value of the goods supplied by the contractee to the contractor does not form part of the contract and is not deductible from the amount payable to the contractor by the contractee for the execution of the works contract.
NO TDS SHALL BE DEDUCTED BY THE CONTRACTEE ON THE VALUE OF GOODS SUPPLIED BY THE CONTRACTOR.

RATES APPLICABLE

Friday, August 15, 2014

COMPLIANCE OF APPOINTMENT OF COMPANY SECRETARY, SERETARIAL AUDIT & DUTIES OF COMPANY SECRETARY UNDER NEW COMPANIES ACT 2013


Ministry of Corporate Affairs has introduced Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Rule 8 of the said rules read with section 203 of Companies Act, 2013, regulates the appointment of Company Secretaries. Further MCA has introduced rule 8A  vide notification No. G.S.R. 390(E) dated 9th June 2014

Salient features of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are as follows :

Appointment of Key Managerial Personnel
Rule 8
-          Every listed company,  and
-          Every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel.
 Above rule 8 restricts the employment of Company Secretaries to every listed company and to every other public company having a paid-up share capital of Ten Crore rupees or more.
  Appointment of Company Secretaries in companies not covered under rule 8
Rule 8A . A company other than a company covered under rule 8 which has a paid up share capital of five crore rupees or more shall have a whole-time company secretary. 
Above Rule 8A makes the appointment of Company Secretary mandatory for a Private company having paid up share capital of five crores rupees or more.

Secretarial Audit Report
Rule 9. (1) For the purposes of sub-section (1) of section 204, the other class of companies shall be as under—
(a)

Every public company having a paid-up share capital of fifty crore rupees or more; or
(b)

Every public company having a turnover of two hundred fifty crore rupees or more.

Duties of Company Secretary
Rule 10. The duties of Company Secretary shall also discharge, the following duties, namely:—
(1)

to provide to the directors of the company, collectively and individually, such guidance as they may require, with regard to their duties, responsibilities and powers;
(2)

to facilitate the convening of meetings and attend Board, committee and general meetings and maintain the minutes of these meetings;
(3)

to obtain approvals from the Board, general meeting, the government and such other authorities as required under the provisions of the Act;
(4)

to represent before various regulators, and other authorities under the Act in connection with discharge of various duties under the Act;
(5)

to assist the Board in the conduct of the affairs of the company;
(6)

to assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices; and
(7)

to discharge such other duties as have been specified under the Act or rules; and
(8)

such other duties as may be assigned by the Board from time to time.

The Companies Act, 2013 has done away with the requirements of compliance certificate for small companies and pre certification of certain E-forms and Secretarial Audit is mandatory only for big Companies. 

Wednesday, August 13, 2014

COMPANY LAW SATTLEMENT SCHEME (CLSS), 2014



OPPORTUNITY FOR DEFAULTING COMPANIES AND ITS DIRECTORS

Due to stricter regime for defaulting companies with higher additional feeas per New Companies Act 2013 and on representation by defaulting companies MCA has given one time opportunity by declaring CLSS 14 (company law settlement scheme-2014).  In this Scheme MCA gives immunity for prosecution to directors of defaulting companies and gives an opportunity by condoning the delay in filing annual reports, financial statement and related documents due for filing on or before 30/06/2014 and charging reduced fee. Such defaulting companies can avail this one time opportunity to e- file these documents before15/10/2014.

SALIENT FEATURES
v  Scheme is valid for two months from 15th August 2014 to 15th October 2014
v  The defaulting Company shall for filing of belated documents by paying only normal fee plus 25% of additional fee payable.
v  Application for issue of Immunity Certificate after filing of belated documents and after they are approved by MCA has to be E-Filed and such application form will be available on MCA Portal from 1st September, 2014. Such Application may be filed without any fee but before 15.01.2015 ( not later than 3 months from the date of the closure of the scheme )
v  Immunity from prosecution of the directors of defaulting companies
v  Avoid disqualification under section 164(2) of the companies act, 2013 of all the directors.
v  Scheme applicable for all forms due to be filed till 30/06/2014 i.e 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL, 20B, 66, 23B, 21A due till 30/06/2014
v  The defaulting inactive companies 
a)    Can apply to get themselves as dormant Company by filing MSC -1 at 25% fee, OR
b)    Can apply for striking off the name by filing FTE at 25% of fee payable

Monday, August 11, 2014

Provisions relating to Notice of General Meetings as per New Companies Act, 2013

The provisions relating to notice of General meetings as per New Companies Act :

Ø  Every company except one Person Company shall hold Annual General meeting in each year in addition to any other meetings and notice calling the meeting shall mention the same.

Ø  The gap between two Annual General Meetings should not be more than 15 months.

Ø  In the case of first Annual General meeting, it should be held within 9 months from the close of the financial year and in all other cases within 6 months from the close of the financial year.

Ø  Every AGM shall be called during business hours (between 9am to 6Pm) on any day which shall not be a National holiday

Ø  Every AGM shall be held at the registered office or at such other place but within the registered office location.

Purpose and importance of the Proper Notice

Ø  The purpose of the Notice with specified length is to enable a member of the company to read, understand the financial statements, performance and to raise any questions on the state of affairs and to enable members to issue special notice to the company for certain resolutions as per provisions of Section 115

Ø  Any improper notice invalidates proceedings of General meetings and puts the approvals at the General meetings to nullity for want of proper notice.

Ø  However any accidental omission to give notice or non receipt by any member or any other person entitled to receive notice shall not invalidate the proceedings – Sec.101 (4) or Section 111 for circulation of members’ resolutions.


Persons entitled to receive Notice

As per Section 101(3) provides that Notice of every meeting shall be given to:
Ø  Every member of the company
Ø  Legal representative of decease member & Assignee of insolvent member
Ø  Auditor of the company
Ø  Every director of the company.


The Length of notice and Shorter Notice

 A notice calling a General meeting has to be in writing and to be given at least 21 Clear Days before the meeting date. The new Act has added the expression “clear days”. It means day of giving of notice and day of the meeting are to be excluded.

The new Act permits issuance of notice by electronic mode. Sec.101 (1)

A shorter notice of less than 21 Clear Days is valid for calling a General Meeting if consent is given by not less than 95% of the members entitled to vote at such meeting and such consent can be either in writing or by electronic mode. Sec.101(1)


Contents of the notice and Statements to be annexed to the Notice:

Section 101(2) provides that every valid notice calling the meeting shall specify the place, date, day and time and it should contain a statement of the business to be transacted at such meeting.

Section 102 provides that a statement setting out material facts for each item of special business to be transacted at the General meeting shall be annexed and contain the following particular details:

Ø  Nature of concern or interest whether financial or other wise of every director, Manager, Key Managerial personnel(KMP) and their relatives

Ø  Any other information which facilitates better understanding of the businesses to be transacted

Ø  In the case of special business to be transacted relates to or affects any other company, then the extent of shareholding in that other company of the promoters, directors, Manager, KMP of the company, if the extent of such shareholding is not less than 2% (earlier it was 20% ).

In the case of AGM any business other than the Ordinary Business shall be Special Business Section 102(2). Ordinary Business is:-

Ø  Considering the financial statements with Auditors’ report & Directors’ report
Ø  Declaration of dividend
Ø  Appointment of directors retiring by rotation    
Ø  Appointment of Auditors and fixation of their remuneration


Consequences of non disclosure of material facts in Notice

Any benefits which accrued as a result of such non disclosure/insufficient disclosure to
Promoter, Director, Manager or any other KMP who are in fiduciary position will not only be liable to compensate the company for the loss but also be liable for the consequences under other acts.

A criminal/civil action can be launched for breach of trust/misappropriation/cheating etc.
  
Section 102(5) provides a fine up to Rs. 50,000/- or 5 times of the profit accruing to promoter, director, manager or an KMP whichever is more can be levied on the defaulting officer in case of failure to comply with the provisions of section 102(1),
  
Conclusion & Precaution:

Penal provisions in the New Companies Act 2013 provide for strict abeyance of provisions and ensure transparency from the promoters/directors/Mangers/ Key Managerial Personnel in drafting of notice and disclosure of material facts of any item of special business to be transacted. 

Friday, August 1, 2014

New Form No. 3CD - Important changes

The CBDT has notified new Form No. 3CD prescribing some new clauses and substituting some existing clauses  requiring the  tax auditors to furnish more and detailed information . The new Form 3CD requires reporting of all disallowable payments even if they are not debited to profit and loss account. The additional/amended reporting as prescribed in the new Form No. 3CD are as under:
 (1)

Registration number in case of indirect tax liability [clause 4]:

To  furnish the registration No(s). if Assessee is liable to pay indirect taxes (like excise duty, service tax, sales tax, customs duty, etc.) or any other identification number allotted .
(2)

Relevant clauses of section 44AB , under which audit has been conducted to be reported. [clause 8]
(3)

Address at which books of account are kept  to be reported. [clause 11(b)]
(4)

Nature of documents examined by the tax auditor,to be specified. [clause 11(c) ]
(5)

Change in method of accounting/stock valuation [clause 13 and  14]:

 The impact on financial statements to be reported for the changes in method of accounting and method of stock valuation.
(6)

Transfer of land/building for less than stamp duty value [clause 17]:

The details of land or building transferred by assessee for less than stamp duty value (under section 43CA or under section 50C) to be reported .
(7)

To Report deduction under Sections 32AC/35AD/35CCC/35D[clause 19].
(8)

Disallowances even if they are not debited to profit and loss account [clause 21 ] to be reported for  the following disallowable payments:

 (i)

Disallowance for TDS default under Section 40(a)


(ii)

Disallowance for cash payments above Rs. 20000 under section 40A(3)


(iii)

Disallowance for provision for gratuity under section 40A(7)


(iv)

Disallowance under Section 40A(9)


(v)

Particulars of any liability of a contingent nature


(vi)

Amount of deduction inadmissible under section 14A wrt expenses on exempt incomes.


(vii)

Interest inadmissible under the proviso to section 36(1)(iii)


(9)

Deemed income under Section 32AC Investment Allowance [clause 24 ]:

To report  deemed income which results from sale or transfer of new asset, (if asset was acquired and installed by the assessee for the purpose of claiming deductions under Section 32AC) within a period of five years from the date of its installation.
(10)

Receipt of unlisted shares [clause 28]:

To report all unlisted shares received by assessee either for inadequate consideration or without consideration in view of section 56(2)(viia).
(11)

Issue of shares above fair market value [clause 29]:

To report  all transactions of issue of shares where consideration received by assessee exceeds its fair market value in view of section 56(2)(viib).
(12)

Speculation business losses as referred to in Section 73 [clause 32(c)]
(13)

Losses incurred as referred to in Section 73A from business specified under section 35AD to be reported. [clause 32(d)]
(14)

To Reporting deductions claimed under Sections 10A/10AA [clause 33]:
(15)

Compliance with TCS (Tax collected at source) provisions in addition to TDS provisions. [clause 34(a)]
(16)

To report on the Timely Filing of TDS and TCS Returns. [clause 34(b)]
(17)

TAN no. of Assessee-in-default if  liable to pay interest, the interest payable and interest actually paid under Section 201(1A) or 206C(7) to be reported [clause 34(c) ].
(18)

Dividend Distribution Tax [clause 36 ]:

To report the following reductions as referred to in Section 115-O(1A):

i)

Dividend received by domestic company from its subsidiary, and
ii)

The amount of dividend paid to any person for or on behalf of the New Pension System Trust referred to in Section 10(44).

(19)

Cost Audits Service Tax Audit Qualification [clause 37,38 and 39]:

(i)

Cost audit:  The attachment of copy of cost audit report along with Form has been substituted with reporting only the qualifications in cost audit report BUT even when audit cost was carried out voluntarily..
(ii)

Cost Audit under Central Excise Act : The attachment of copy of cost audit report along with Form has been substituted with reporting of qualifications in cost audit report .
(iii)

Special Audit under Service Tax(If any service-tax audit is carried out in relation to valuation of taxable services): To report any qualifications made in relation to valuation of taxable services.


(20)

Comparative Ratios [clause 40].:

To report total turnover and ratios of preceding financial year as well in addition to  current year figures ,
 (21)

Demand raised or refund issued under any other tax laws (other than Income Tax Act, 1961 and Wealth Tax Act, 1957): [clause 41] to be reported along with details of relevant proceedings.

Contributed by CA Sarthak Ahuja