EFFECTIVE PROVISIONS OF COMPANIES ACT, 2013 with Sections headings from 12th September, 2013

Dear Professional friends & colleagues

Thanks for your generous response to this blog and I apologies for not updating for sometime due to my exams.

List of 98 sections coming into effect from 12/9/2013

2    - Definitions – Certain parts

19  - Subsidiary Company not to hold shares in Holding Company

21  - Authentication of documents, proceedings and contracts

22  - Execution of bills of exchange, etc.

23  - Public offer and private placement. (Partly effective)

24  - Power of Securities and Exchange Board to regulate issue and transfer of securities, etc. 

25  - Document containing offer of securities for sale to be deemed prospectus (Partly effective) 

29  - Public offer of securities to be in dematerialised form. 

30  - Advertisement of  Prospectus 

31  - Shelf Prospectus

32  - Red herring prospectus

33  - Issue of Application form for Securities  (Partly effective)

34  - Criminal liability for misstatements in prospectus

35  - Civil liability for misstatements in prospectus (Partly effective)

36  - Punishment for fraudulently inducing persons to invest money.

37  - Action by affected persons

38  - Punishment for personation for acquisition,  etc., of securities.

39  - Allotment of securities by Company (Partly effective)

40  - Securities to be dealt with in stock exchanges. (Partly effective)

44  - Nature of shares or debentures.

45  - Numbering of shares

49  - Calls on shares of same class to be made on uniform basis.

50  - Company to accept unpaid  share capital, although not called up.

51  - Payment of dividend in proportion to amount paid up

57  - Punishment for personation of shareholder.

58  - Refusal of registration and appeal against refusal.

59  - Rectification of register of members.

60  - Publication of authorised, subscribed and paid-up capital.

65  - Unlimited company to provide for reserve share capital on  conversion into limited company.

69  - Transfer of certain sums to capital redemption reserve account.

70  - Prohibition for buyback (Partly effective)

86  - Punishment for contravention

91  - Power to close register of members or debentureholders or other security holders.

100- Calling of EGM (Part)

102- Statement to be annexed to notice

103- Quorum for meetings

104- Chairman for meetings (Partly effective)

105- Proxies (Partly effective)

106- Restriction on voting rights.

107- Voting by show of hands

111- Circulation of members’ resolution.

112- Representation of President and Governor in meetings

113-Representation of corporations at meeting of companies and of creditors. (Partly effective)

114- Ordinary & Special resolutions

116- Resolutions passed at adjourned meeting

127-Punishment for failure to distribute dividends.

133-Central Government to prescribe accounting standards.

161-Appointment of additional director, alternate director and nominee director. (Partly effective)

162-Appointment of directors  to be voted individually.

163-Option to adopt principle of proportional representation for appointment of directors. 

176–Defects in appointment of directors not to invalidate actions taken.

180- Restrictions on powers of Board

181–Company to contribute to bona fide and charitable funds, etc.

182-Prohibitions and  restrictions regarding political contributions.

183-Power of Board and other persons to make contributions to national defence fund, etc. 

185- Loans to Directors, etc 

192-Restriction on non-cash transactions involving directors.

194-Prohibition on forward dealings in securities of company by director or key managerial personnel.

195-Prohibition on insider trading of securities.

202-Compensation for loss of office of managing or whole-time director or manager.

379-Application of Act to foreign companies.

382-Display of name, etc., of foreign company.

383-Service on Foreign Company

386-Debentures, annual return, registration of charges, books of account and their inspection. (Partly 

       effective)

394-Annual reports on Government companies.

405-Power of Central Government to direct companies to furnish information or statistics.

407 to 414 – NCLT – Constitution, etc

439- Offences to be non cognizable

443- Power of Central Government to appoint company prosecutors.

444- Appeal against acquittal

445-Compensation for accusation without reasonable cause.

446- Application of fines

447- Punishment for fraud

448- Punishment for false statement

449-Punishment for false evidence

450- Punishment where no specific penalty or punishment is provided.

451-Punishment in case of repeated default. 

452-Punishment for wrongful withholding of property.

453-Punishment for improper use of “Limited” or “Private Limited”.

456-Protection of action taken in good faith.

457-Nondisclosure of information in certain cases.

458-Delegation by Central Governemnt of its powers and functions.

459-Powers of Central Government or Tribunal to accord approval, etc., subject to conditions and to 

       prescribe fees on applications.

460-Condonation of delay in certain cases.

461-Annual report by Central Government.

462-Power to exempt class or classes of companies from provisions of this Act.

463-Power of court to grant relief in certain cases.

467-Power of Central Government to amend Schedules.

468-Power of Central Government to amend Schedules.

469-Power of Central Government to make rules.

470- Power to remove difficulties.


For complete Companies Act, 2013 follow this click here

Best regards

SEC 50C NOT APPLICABLE ON LEASEHOLD LAND & BUILDING

SEC 50C NOT APPLICABLE ON LEASEHOLD LAND & BUILDING

One of the relevant ingredients for invoking S.50 C is that there is a payment of stamp duty in respect of transfer of capital assets being land or building or both.


Payment of stamp duty is required only when transfer of capital asset is registered under theRegistration Act. If payment of stamp duty for the purpose of the transfer is not required, then there is no occasion to look into other conditions as mentioned in S.50 C . Therefore, in those cases of transfer where agreement or sale deed is not registered and stamp duty is not paid, or capital gain is simply charged by deeming certain transactions as transfer as per other provisions of the act or some transactions of transfer are not registered or are not legally required to be registered under the Registration Act, S.50′C’ cannot be put into operation.

The above view has been adopted in following judgments :  

1. ACIT Vs. Shrikishan Dass, ITA No. 915/ Del/ 2012, Date of pronouncement: 07.06.2013, ITAT – Delhi Bench 
   
   
2. Carlton Hotels (P) Ltd. Vs ACIT, 35 SOT 26(lucknow) ,122 TTJ 515

Disclaimer: The above post is only for sharing information between friends & professional colleagues. Professional consultancy must be sought before entering into any transaction related with above post.

SERVICE TAX ON CHARITABLE TRUST

Applicability of Service tax is described as answers to questions as follows:

1) Whether CHARITABLE TRUST (CT) are liable to pay ST?

     Yes. Refer to charging section i.e. Section 66B which reads as follow:

     ’66B. There shall be levied a tax …. provided ….. by one person to another…….

 What is a “person”?

‘Person’ has been defined in Section 65 B. It includes following entities:

  ♦  an individual

  ♦  a Hindu undivided family

  ♦  a company

  ♦  a society

  ♦  a limited liability partnership

  ♦  a firm

  ♦  an association or body of individuals, whether incorporated or not

  ♦  Government

  ♦  a local authority, or

As can be seen, the term “person” is wide and includes Association of Persons whether incorporated or not.

2) Does it mean that CT will have to pay ST on services provided by it?

Yes. Since section 66D containing Negative List (NL) is not having any specific reference to services provided by CT. Hence, services provided by CT are taxable.

3) Whether CT will have to pay ST on all the types of services provided by it?

No. For the purpose of determining tax liability, one will have to refer to Notification No. 25/2012 where under various types of services have been declared exempt.

Clause No. 4 of Notification No. 25/2012 provides as follow:

Services by an entity registered under section 12AA of the Income tax Act, 1961(43 of 1961) by way of charitable activities;

As can be seen from above, exemption granted has two important conditions to be complied with viz. (i) CT should have been registered under section 12AA of Income Tax Act (AGA Khan Fondation is registered u/s 12AA of IT Act)  and (ii) the activities carried on should be charitable activities. Thus, all the activities carried on by the CT per se are not exempt. Exemption granted is restrictive.

4) What are “charitable activities”?

Clause 2(k) of Notification No. 25 / 2012 defines it as follow:

(k)  “charitable activities” means activities relating to -

 (i)  public health by way of -

(a)  care or counseling of (i) terminally ill persons or persons with severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or

(b)  public awareness of preventive health, family planning or prevention of HIV infection;

(ii) advancement of religion or spirituality;

(iii)  advancement of educational programmes or skill development relating to,-

(a)  abandoned, orphaned or homeless children;

(b)  physically or mentally abused and traumatized persons;

(c)  prisoners; or

(d)  persons over the age of 65 years residing in a rural area;

(iv)  preservation of environment including watershed, forests and wildlife; or

(v)  advancement of any other object of general public utility up to a value of,-

(a)  eighteen lakh and seventy five thousand rupees for the year 2012-13 subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during 2011-12;

(b) twenty five lakh rupees in any other financial year subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during the preceding financial year;

Disclaimer: The above discussion is made for services excluding services which were not falling under Sec.66D (Negative list) & services which were not exempt under Mega exemption no. 25/2012.

NON DEDUCTION OF TAX AT SOURCE

NON DEDUCTION OF TAX AT SOURCE

As an Accounts Manager are you worried about disallowance of expenses on account of Non-deduction of Tax at source??

Finance Act 2012 has provide some relief from penal consequences of non deduction of tax at source.

Prior to Finance Act, 2012

Any payment on which TDS is liable to deducted as per provisions section 192 to 196C of Income Tax Act,1961 and where TDS has not been deducted by assessee , will be disallowed under section 40(a)(ia) by Assessing officer at the time of assessment.

Further for non deduction of TDS assesse will be deemed to be assessee in default u/s 201(1) and will be liable for payment of interest u/s 201(1A) from the date on which tax was deductible to the date on which tax is actually paid and penalty as well u/s 221 of Income tax Act, 1961

After Finance Act, 2012

The above provisions have been amended vide Finance Act, 2012, amended provision(s) are as follows:

a) Sec 40(a)(ia) : Disallowance under section 40(a)(ia) will not be attracted if ;

b) Sec 201(1) :   Assessee will not be deemed as assessee-in-default and will  be liable for interest  from the date on which such tax was deductible to the date of furnishing of return of income by such payee if;

following conditions are satisfied:

i)    payment is made to resident only,

ii)   the resident recipient has furnished his return of income u/s 139,

iii)  the resident recipient has taken into account such payment as income in return of income,

iv)  the resident recipient has paid the tax due on the income declared in such return, and

v)   the payer furnishes a certificate to this effect from a chartered accountant in prescribed form.

TDS ON PURCHASE OF SOFTWARE

TDS ON PURCHASE OF SOFTWARE

Finance Act 2012 has amended the definition of “royalty”. The amendment in section section 9 (1) (vi) now defines ‘royalty’ as any ‘right for use’ or ‘right to use’, a computer software (including granting of a license), irrespective of the medium through which such right is transferred. Hence purchase of software though dealer also would comes under the ambit of above definition.

Since section 194J provides for deduction of tax at source on payment made for royalty payment the payments towards purchase of computer (technically right to use computer software) will be liable to tax deduction at source under section 194J @ 10%

However sale of computer software involves a channel i.e. from developer to distributor  to dealer to end-user. To avoid tax deduction at several levels, CBDT issued the Notification 21/2012 dated July 1, 2012

As per the said notification, the tax deduction at source (‘TDS’) will not apply on acquisition of software from another person, being a resident,

• if the software is acquired in a subsequent transfer and
• the transferor has transferred the software without modification and
• TDS has been deducted under section 194J or 195 of the Income tax Act, 1961 (‘the Act’) on payment of previous transfer of software

Amended  situation of TDS on Software purchase

Based on above description, the following check-list will be helpful in deciding about deductibility of tax on software purchase

Payments towards Standard Software i.e. without modification	Whether to deduct tax	Reason
Payment below  Rs. 30,000	No	Section 194J provides for no deduction in case payment is below Rs. 30,000
Payment to a non-resident Indian	Yes	Tax is deductible in all cases and no exemption under Notification 21/2012 is available
Payment above Rs. 30,000 to resident where no declaration under Notification 21/2012 is given by the transferor	Yes	Declaration is mandatory under Notification 21/2012
Payment above Rs. 30,000 to resident where declaration under Notification 21/2012 is given by the transferor	No	Declaration is mandatory under Notification 21/2012

TDS ON PARKING CHARGES

TDS ON CAR PARKING CHARGES:

Hi frnds,

From such a long period i was looking for clarification on the above mentioned issue " Whether TDS to be deducted for Car parking charges u/s 194C or 194I"

During statutory audit of various clients i have observed generally TDS is not deducted on  parking charges referring the case [DCIT vs JAPAN AIRLINES (2005)] but the facts of these case are not general parking charges and i have always doubted that CAR parking charges comes under the ambit of 194C because in some cases Parking owners commits to provide car parking space however the space is not fixed or definite, in such cases TDS is to be deducted u/s 194C using citation [M/S Mahendra Shipping ltd. vs ITO (HC)]

Hence according to me where there is definite and particular space for CAR parking TDS to be deducted u/s 194I referring case [DCIT vs JAPAN AIRLINES (2005)] and where there is no definite and particular space for car parking and parking owner only commits to provide space for car parking TDS to be deducted u/s 194C referring case [M/S Mahendra Shipping ltd. vs ITO (HC)]

Thanks for reading frnds..

Kindly update this blog with other useful information as well..