Dear Friend,

Vinod Gupta

New Return Forms for Assessment Year 2010-11 has been notified for all assessees.

The Finance Bill, 2010 was earlier passed by the Lok Sabha followed by its passage by the Rajya Sabha. The Finance Bill, 2010 has been assented to by the Hon’ble President on 8-5-2010 as Act No. 14 of 2010. With this, the Budgetary exercise is over for the F.Y. 2010-2011

RBI  has issued RBI Circular No.  “ DPSS.CO.CHD. No. 1832/01.07.05/ 2009-10 dated 22nd February 2010 by virtue of which Banks are supposed to prohibit alterations / corrections on the cheque leaf. Circular summary is as follows:-

Prohibiting alterations / corrections on cheques : No changes / corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee’s name, courtesy amount (amount in figures) or legal amount (amount in words), etc., fresh cheque forms should be used by customers. This would help banks to identify and control fraudulent alterations.

Provisions of section 194C are not attracted to finance agreements entered into between a financing company and producers/directors of films/TV serials.

No relationship of a ‘Principal’ and a ‘contractor’ is created for purpose of section 194C when a contract of finance or outright finance for films/TV serials are entered into between a financer and producers/directors of films/TV serials.

Benefit of lower tax rate under Proviso to s. 112 available to bonus shares despite no indexation. Bombay High Court

Central Governemnt has notified Rural Electrification Corporation Liited (REC) for issue of zero coupon bond for the purpose of clause (48) of section 2 of the Income Tax Act.

Securities and Exchange Board of India [SEBI] has, on 5 April 2010, directed Stock Exchanges [SE] to amend the Equity Listing Agreement [LA]. The amendments to LA puts in place of earlier decisions of SEBI Board meetings held on 22 September 2009 and 9 November 2009 and are applicable to companies listed on SE in India.

The Company Secretaries (Amendment) Bill, 2010 has been introduced in Rajya Sabha on 28.4.2010.

CBDT notifies New Income Tax Return Form SARAL II (ITR 1) for Assessment Year 2010-11 for Individuals having income from Salary/Pension/ Income from One House Property (Excluding loss brought forward from previous years) / Income from Other Sources (Excluding winning from Lottery and Income from Race Horses). CBDT also notifies Income Tax Return Verification Form ITR-V for Assessment Year 2010-11 for SARAL II (ITR-1) ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-8 transmitted electronically without digital signature.

ESIC has increased the limit from Rs. 10,000 to Rs. 15,000 w.e.f. 1st May, 2010.

Finance Minister announces fresh additional relief package in his reply to the debate on Finance Bill, 2010.

Lok Sabha has passed the Finance Bill, 2010 on 29.4.2010 after certain changes.

As promised Revisionary Test Paper is hosted on time for your self testing and revision. It is ready for download. In case you do not have login ID, then, please register yourself under the Alumni section. Even those students who never atended any class can also register themselves under the alumni setion.

Students who attended the class in Nov. 2009 session can take the printed copy of the same on or after 17th April, 2010 from Ghalib Auditorium in exchange of their Identity Card between 3:00 P.M. to 7:30 P.M.

Printed copy is also available for sale at Pooja Law House from 17th April, 2010 for Rs. 20 only.

Applicable case laws for May 2010 C.A. (Final) Exams.

Union Budget 2010 announced on 26th February, 2010. Read Memorandum explaining the proviosin of Finance Bill, 2010.

Solved Question Paper of November 2009 C.A. Final Examination (New Course) 

Solved Question Paper of November 2009 C.A. Final Examination (Old Course) 

Gist of Amendments made by Finance Act, 2009 applicable for C.A. (Final) exams

Development Commissioner of Central Government SEZ shall
ensure that preference is given to “Small Scale Units” as defined
under Micro, Small and Medium Enterprise Development Act,
2006, while allotting space in the SEZ.

Development Commissioner of IT/ITES SEZs to ensure that
IT/ITES SEZs are advised to set up incubators of size of
minimum 200 seats and the minimum 10% of the space in the
SEZ may be reserved for SSI IT/ITES units.

All other SEZs will allocate 10% space to SSI units.

The present Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head "Salaries" during the financial year 2009-2010 and explains certain related provisions of the Income-tax Act.

The Board vide circular dated 26.09.07 issued from F.No.93/1/2005-CX3, had clarified that if the process does not amount to manufacture, duty is not required to be paid and hence no Cenvat credit of duty paid on inputs is admissible.

A citizen of a foreign state, resident in India, being an employee of a foreign company or a citizen of India, employed by a foreign company outside India and in either case on deputation to the office /branch /subsidiary /joint venture in India of such foreign company may open, hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office/branch/subsidiary/joint venture in India of such foreign company, by credit to such account, provided that income-tax chargeable under the Income-tax Act,1961 is paid on the entire salary as accrued in India.

Application for allotment of Designated Partner Identification Number (DPIN) and related formalities.

Format for the quarterly report on venture capital activity to be submitted by Foreign Venture Capital Investors has been revised.

Online applications are invited from the firms of Chartered Accountants who intend to be empanelled with the office of C&AG.

All authorized persons have to furnish Suspicious Transaction Report (STR) to FIU- IND in respiect of their money changing activities within 7 days of arriving at a conclusion that a transaction, including attempted transaction.

In all public issues and rights issues, where not more than one payment option is given, the issuer shall provide the facility of ASBA in accordance with the procedure and eligibility criteria specified by the Board.

In continuation to circular SEBI/IMD/DOF-1/BOND/Cir-5/2009 dated November 26, 2009 the Simplified Listing Agreement for Debt Securities is ammended as follows:

'Person of Indian Origin' means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who (i) at any time, held an Indian Passport or (ii) who or either of whose father or whose grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).

 “employee” means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.

The Central Board of Direct Taxes has made the following rules to regulate the procedure of the Dispute Resolution Panel.

A daily cap  of Rs 50,000/- per customer is set on mobile banking transactions. Transactions up to Rs 1000/- can be facilitated by banks without end-to-end encryption. Further details enclosed.

The Central Board of Direct Taxes (CBDT) has set up a committee to formulate rules for the safe harbour provisions—a set of rules that would enable the income tax (I-T) authorities to accept the transfer pricing returns without scrutiny.

 Credit for tax deducted shall be given to the person to whom payment has been made or credited, on the basis of information relating to deduction of tax furnished by the deductor. If the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for tax deducted at source shall be given to the other person.

The Central Information Commission has ruled that seeking information on income tax is not invasion of privacy.

Supressing all Circulars and Instructions issued by CBDT on the above subject , the CBDT prescribed the following procedures to be followed before BIFR and AAIFR for granting Income Tax reliefs/concessions to be given to sick companies under the SICA Act, 1985. 

THE government will allow companies to adjust the fringe benefit tax (FBT) paid by them against the advance tax due in the March quarter.

There is no provision in Service Tax for adjustment of short payment of tax in earlier period against excess payment of tax in the subsequent period.

It is “necessary and essential for the Income Tax Officers to take into custody only such books as are considered relevant to or useful for the proceedings in question. It is not open to them to indiscriminately, arbitrarily and without any regard for relevancy or usefulness, seize all the books and documents which are lying in the premises, and, if they did so, the seizure would be beyond the scope of the authorization”.

14A disallows expenditure “in relation to income which does not form part of total income” and in order for the expenditure to be disallowed, actual income need not be earned.

Income charged in the hands of partnership firm can not be treated as being a non-exempt income in the hands of a partner of such firm and, therefore, provisions of section 14-A would be applicable in computing the total income of such partner in respect of his share in the profits of such firm.

Note:

A contrary view has earlier been taken by the Bombay Bench

Delhi VAT Amendment Act, 2009 has been made effective from 13.01.2010. 

Consequently VAT rate of 4% has been changed to 5% w.e.f. 13.01.2010 

TPAs are liable to deduct tax at source under section 194J, on making payment on behalf of insurance companies to hospitals for settlement of medical/ insurance claims etc under various schemes.

Organizations are advised to compute the correct tax liability of every employee on second installment of arrears drawn by him and immediately recover the full tax liability along with education cess thereon at the rates in force.

Withdrawl of the Circulars No.23 dated 23rd July, 1969, no. 163 dated 29th May, 1975 and No. 786 dated 7th February, 2000 as the interpretation of the Circularby some of the taxpayers to claim relief is not in accordance with the provisions of Section 9 of the Income Tax Act, 1961or the intention behind the issuance of the Circular.

Person making remittance should Furnish an undertaking (addressed to the Assessing Officer) (form 15CA) accompanied by a certificate from an Accountant (form 15CB) in a specified format, instead of a no objection Certificate, whose purpose is to collect taxes at the stage when the remittance is made as it may not be possible to recover the tax at a later stage from non-residents.

Amendment in the Investment Pattern.

Qualifications of an e-return Intermediary

In consultation with Stock Exchanges, it has been decided to standardize the lot size for derivative contracts on individual securities

Mutual funds shall have a systems audit conducted by an independent CISA/CISM qualified or equivalent auditor.

The Organising Committee of Commonwealth Games, 2010 Delhi , India is notified as the person and the income arising to  Organising Committee Commonwealth Games, 2010 Delhi, India from organising Commonwealth Games, 2010 Delhi, India is notified as the specified income.

The 1st day of April, 2010, shall be the effective date, for a company to compulsorily make payment electronically for stamp duty in respect of all the States which have authorized to the Central Government to collect stamp duty on their behalf. In respect of the States from whom the authorization is yet to be received, the company shall continue to pay stamp duty outside the MCA portal”.

The receipts, by way of Duty Drawback and sale of Duty Entitlement Pass Book (DEPB) license by the Taxpayer, do not form part of the profits ‘derived from’ the industrial undertaking (IU), eligible for tax holiday.

The Council of the ICWAI made mandatory the Cost Accounting Standards w.e.f. 1^st April 2010.

CBDT has notified MCX Stock Exchange as ''Recognised Stock Exchange'' under rule 6DDB w.e.f. 22nd May 2009. This would result in trading in derivatives not be to treated as speculative transactions within the meaning of  section 43(5)(d) of the Income Tax Act, 1961 w.e.f. 22nd May 2009

Circular 2/2009 has been issued to clarify the new TDS/ TCS provisions

The Rule 37BB has been inserted by Income tax (seventh Amendment) Rules, 2009 vide Notification No. 30/2009 [F. No. 142/19/2007-TPL]/S.O. 857(E), dated 25-3-2009 for furnishing of information under seb-section (6) of section 195.

The Income Tax department has issued Notification No. 1/2009 dated 5/1/2009 for usage of food card.

The Supreme Court of India dismissed the appeal filed by the Vodafone against the order of the Bombay High Court.

You must be aware that the definition of the term 'Charitable Purpose' was amended by Finance Act, 2008, whereby business/commercial activities of charitable entities were brought to tax. CBDT has recently clarified regarding the amended definition of 'Charitable purpose' under section 2(15) of the Income-tax Act, 1961.

LLP Bill, 2008 was introduced. Our model of Limited Liability Partnership is based on UK/ Singapore. 

Where very purpose of entering into agreements between the two foreign companies is to acquire the controlling interest which one foreign company held in the Indian company, by other foreign company, transaction would certainly be subject to tax.

The Provision for Bad and doubtful debt cannot be added back to net profit for the purpose of computation of Book Profits under section 115JB.

New Company's Bill Introduced in Lok Sabha on 23rd October, 2008. Certain new concepts has been introduced. No. of sections reduced from 658 to 426 in the new Bill.

Department of Income tax had notified certain Scutiny Norms for Financial Year 2007-08 for the non-corporate assessee.

CBDT vide circular 4/2008 dated 28-4-2008 clarified that no TDS is required to be deducted on the sservice tax component on rental income under section 194-I of Income tax Act.