Sd/- J.Syamala Rao Commissioner BRANCH OF SIRC OF ICAI News Letter@September 2015 3Email:[email protected] M: 08500084499 [2015] 60 taxmann.com 360 (Guwahati - Trib.) IN THE ITAT GUWAHATI

Sd/- J.Syamala RaoCommissioner

NELLORE BRANCH OF SIRC OF ICAI News Letter@September 2015

Email:[email protected] M: 085000844991

INCOME TAXGuidelines and Criterion for Compulsory Manual Selection of Cases for Scrutiny

during the Financial Year 2015-2016 Instruction No. 08/2015

Government of India Ministry of Finance

Department of Revenue (CBDT)

North-Block, IT (A-II) Division New Delhi the 31st of August, 2015

To

All Pr. Chief-Commissioners of Income-tax/Chief-Commissioners of Income-tax

All Pr. Directors-General of Income-tax/Directors-General of Income-tax

Sir/Madam

Subject: Compulsory manual selection of cases for scrutiny during the Financial Year 2015-2016-regd:-

1. In supersession of earlier Instructions on the above subject, the Board hereby lays down the following procedure and criteria for manual selection of returns/cases for scrutiny during the financial-year 2015-2016:-

(a) Cases involving addition in an earlier assessment year in excess of Rs. 10 lakhs on a substantial and recurring question of law or fact which is either confirmed in appeal or is pending before an appellate authority.

(b) Cases involving addition in an earlier assessment year on the issue of transfer pricing in excess of Rs. 10 crore or more on a substantial and recurring question of law or fact which is either confirmed in appeal or is pending before an appellate authority.

(c) All assessments pertaining to Survey under section 133A of the Income-tax Act, 1961 ('Act') excluding those cases where books of accounts, documents etc. were not impounded and returned income (excluding any disclosure made during the Survey) is not less than returned income of preceding assessment year. However, where assessee retracts the disclosure made during the Survey, such cases will not be covered by this exclusion.

(d) Assessments in search and seizure cases to be made under section(s) 158B, 158BC, 158BD, 153A & 153C read with section 143(3) of the Act and also for the returns filed for the assessment year relevant to the previous year in which authorization for search and seizure was executed u/s 132 or 132A of the Act.

(e) Returns filed in response to notice under section 148 of the Act.

(f) Cases where registration u/s 12AA of the IT Act has not been granted or has been cancelled by the CIT/DIT concerned, yet the assessee has been found to be claiming tax-exemption under section 11 of the Act. However, where such orders of the CIT/DIT have been reversed/set-aside in appellate proceedings, those cases will not be selected under this clause.



(g) Cases where the approval already granted u/s 10(23C)/35(1)(ii)/35(1)(iii)/10(46) of the Act has been withdrawn by the Competent Authority, yet the assessee has been found claiming tax-exemption/benefit under the aforesaid provisions.

(h) Cases in respect of which specific and verifiable information pointing out tax-evasion is given by Government Departments/Authorities. The Assessing Officer shall record reasons and take prior approval from jurisdictional Pr. CCIT/CCIT/Pr. DGIT/DGIT concerned before selecting such a case for scrutiny.

2. Computer Aided Scrutiny Selection (CASS): Cases are also being selected under CASS on the basis of broad based selection filters. List of such cases shall be separately intimated in due course by the Pr.DGIT(Systems) to the jurisdictional authorities concerned.

3. It is reiterated that the targets for completion of scrutiny assessments and strategy of framing quality assessments as contained in Central Action Plan document for Financial-Year 2015-2016 have to be complied with and it must be ensured that all scrutiny assessment orders including the cases selected under the manual criterion are completed through the AST system software only. Further, in order to ensure the quality of assessments being framed, Pr. CCsiT/CCsiT/Pr. DsGIT/DsGIT should evolve a suitable monitoring mechanism and by 30th April, 2016, such authorities shall send a report to the respective Zonal Member with a copy to Member (IT) containing details of at least 50 quality assessment orders from their respective charges. In this regard, IT Authorities concerned must ensure that cases selected for publication in 'Let us Share' are picked up only from the quality assessments as reported.

4. These instructions may be brought to the notice of all concerned.

5. Hindi version to follow.

F. No. 225/201/2015/ITA.II

Where assesses total income is exempt under section 10(26), for assessee's lapse of not complying with his tax withholding obligations, there cannot be any occasion to invoke section 40(a)(ia) to treat relevant amount disallowable as an income of assessee on standalone basis

• Disallowance under section 40(a)(ia) does make good of lapses in deduction of tax at source, when such tax deductions are due; this provision is not for purpose of penalizing assessee for failure to deduct tax at source



[2015] 60 taxmann.com 360 (Guwahati - Trib.) IN THE ITAT GUWAHATI BENCH

Tamchikusukv.

Additional Commissioner of Income-tax, Range, Tezpur, AssamPRAMOD KUMAR, ACCOUNTANT MEMBER

AND A.D. JAIN, JUDICIAL MEMBERIT APPEAL NO. 76 (GAU.) OF 2010

[ASSESSMENT YEAR 2006-07] MAY 15, 2015 A. Sangma for the Respondent. ORDER

Pramod Kumar, Accountant Member - The short issue that we are required to adjudicate in this appeal is whether or not artificial disallowances in computation of income, such as disallowance under section 40(a)(ia),will end up affecting taxable income of the assessee when the same is exempt under section 10(26) of the Income Tax Act, 1961. The appeal is filed by the assessee and it calls into question correctness of the CIT(A)'s order dated 16th February 2010 for the assessment year 2006-07.2. The material facts of the case, giving rise to this appeal before us, are as follows. The assessee before us is an individual, belonging to a scheduled tribe in the Arunachal Pradesh, engaged in the business of carrying out contract works for construction of fencing and roads along Indo-Bangladesh Border in the State of Meghalaya and Tripura. The assessee filed its return of income on 28th March, 2008 disclosing total income of Rs. 21,42,865, including an amount of Rs.3,35,840 claimed as income exempt u/s 10(26) being the income accrued and arisen in the state of Arunachal Pradesh. In effect thus, the total income disclosed by the assessee was Rs.18,07,025 which was earned in the State of Tripura. Later on, in the course of the assessment proceedings, the assessee claimed that even the income earned outside Arunachal Pradesh, i.e. in Tripura, is also exempt under section 10(26).This claim was rejected by the Assessing Officer on the ground that while the tribe to which assessee belongs, i.e. nishidufla, is recognized as a scheduled tribe in the Arunachal Pradesh, this tribe is not recognized as a scheduled tribe in the State of Tripura. That aspect of the matter, however, not really relevant because, despite initial rejection of this claim by the Assessing Officer, the CIT(A), following the decision of Hon'ble jurisdictional High Court's full bench decision in the case of Pradip Kr Taye v Union of India [(2010) 320 ITR 29 (Guwahati FB)], accepted the said claim and the matter rests there. Coming back to the proceedings before the Assessing Officer, it was noted that the assessee has not deducted tax at source from the payments on account of carriage inward (Rs 81,707), transportation charges (Rs 9,19,950), legal and professional fees (Rs 2,74,854) and contracts for work and labour on which provisions of Section 194C are applicable (Rs 1,31,28,038). These amounts were disallowed under section 40(a)(ia) of the Act. When the matter was carried in appeal before the CIT(A), learned CIT(A) upheld the disallowance on the ground that "in the instant case, the addition has been made under section 40(a)(ia) of the Income Tax Act, which is penal in nature and is attracted when the assessee fails to discharge certain statutory obligations which he is required to do". He proceeded to observe that "even if the income, computed in the normal course of accounting, is exempt, the appellant was required to deduct tax on payments which attracted TDS provisions", and, on that basis, held that "the aforesaid addition made under section 40(a)(ia) is, therefore, confirmed". The assessee is aggrieved and is in appeal before us on the following grounds:



1. For that the order passed by the Commissioner of Income Tax (Appeals) is bad in law as well as facts.

2. For that the learned Commissioner of Income Tax (Appeals) is wrong in holding that Section 40(a)(ia) of Income Tax Act, 1961 is penal in nature and that even though the income of the assessee is exempt u/s 10(26) of Income Tax Act, 1961, additions made u/s. 40(a)(ia) are valid.

3. For that the learned Commissioner of Income Tax (Appeals) is wrong in upholding the addition of Rs. 1,31,28,038/- and Rs.16,76,111/- u/s. 40(a)(ia).

3. None appeared for the assessee but having regard to the fact that the issue in appeal lies is a simple legal issue, within a narrow compass of relevant facts, we consider it appropriate to proceed ex parte qua the assessee and decide the matter on the basis of material on record and pleadings of the learned Departmental Representative. We have heard Shri Sangma, learned Departmental Representative, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

4. We consider it appropriate to begin with a quick look at Section 10(26) of the Act which, as on the material point of time as indeed now, provides as follows:

Section 10- Incomes not included in total income.

In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—

** ** **

(26) in the case of a member of a Scheduled Tribe, as defined in clause (25) of article 366 of the Constitution, residing in any area specified in Part I or Part II of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution or in the States of Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Tripura or in the areas covered by notification No. TAD/R/35/50/109, dated the 23rd February, 1951, issued by the Governor of Assam under the proviso to sub-paragraph (3) of the said paragraph 20 [as it stood immediately before the commencement of the North-Eastern Area (Reorganisation) Act, 1971 (18 of 1971),] or in the Ladakh region of the State of Jammu and Kashmir] any income which accrues or arises to him,-

(a) from any source in the areas, or States aforesaid, or

(b) by way of dividend or interest on securities;

["Scheduled Tribes", as defined in Article 366(25) of the Constitution of India, "means such tribes or tribal communities or parts of or groups within such tribes or tribal communities as are deemed under Article 342 to be Scheduled Tribes for the purposes of this Constitution"!

5. A plain look at the above provision clearly shows that what is exempt from tax under section 10(26) is, inter alia, income of the eligible assessee from any source in the areas or states as specified in Section 10(26). Once an income satisfies these conditions, it is outside the scope of income which can be included in the income taxable under the Income Tax Act. As long as an income is earned by a member of the scheduled tribe resident in the specified areas or states, and such an income earned by the member of the scheduled tribe accrues or arises to him from any source within that area or state, or is by way of dividend or interest on securities, such an income is exempt from tax under section 10(26). In respect of business income, therefore,



all that is to be seen is whether the income is earned by a member of the scheduled tribe resident in a specified area and whether the income is from any source within such specified area. In the present case, these conditions are admittedly fulfilled as the relief granted by the CIT(A), in respect of income sourced from Tripura, is not challenged in appeal.

6. It is in this backdrop that we need to examine the scope of disallowance under section 40(a)(ia). Section 40 which is titled as 'Amounts not deductible' starts with a non obstinate clause which states, "notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession"" and then sets out the amounts which are not deductible as such. Clearly, therefore, all that Section 40 does is to restrict the scope of deductions under sections 30 to 38, which, in turn, may result in determining higher income chargeable under the head business income. However, in a situation in which the business income, so determined, itself is not includible in the income chargeable to tax, such disallowances do not really matter at all. Whether business income is the same as computed on the basis of accounting principles or the artificial disallowances plus such income, it does not make any difference to the taxability in the hands of the assessee. Such disallowances are thus completely tax neutral inasmuch as whatever is the income arrived at after making these disallowances is exempt under section 10(26). The disallowances are made at the stage of the computation of business income whereas the amount eligible for exemption is computed at a much later stage of computing the total income.

7. Shri Sangma has two quick points to make in defense of the impugned disallowance. His first point is that there is nothing to show that the disallowance pertained to the income which has accrued and arisen in the State of Arunachal Pradesh. His second point is reliance on the stand of the CIT(A) which holds that the section 40(a)(ia) is penal in nature, is a result of the lapses committed by the assessee in complying with his tax deduction at source obligations, and is, therefore, to be invoked in this case whether or not the ultimate amount of income is exempt from tax under section 10(26).

8. As for the first point made by the learned Departmental Representative, it proceeds on the fallacious assumption that income earned outside the State of Arunachal Pradesh, i.e. in the State of Tripura, is taxable in nature. That is factually incorrect. Learned CIT(A) has given a categorical finding that the assessee is also eligible for exemption under section 10(26) in respect of the income which is earned in the State of Tripura, and learned Departmental Representative has not brought on record any material to show that this finding has even been challenged in appeal by the Assessing Officer. Therefore, as the things stand on the facts of this case, whether the disallowance is in respect of the computation of business income which has accrued or arisen in the State of Arunachal Pradesh or in the State of Tripura, the disallowance under section 40(a)(ia) in respect of either of these computations of business income, even if done separately, is completely tax neutral. Of course, there is a bigger question, i.e. whether the expression "from any source in the areas, or States aforesaid" appearing in Section 10(26)(a) should be construed to mean the location of the business itself or whether it must be construed in the sense that all the activities of business must also be restricted to the specified areas of States, but then, given the CIT(A)'s unchallenged and uncontroverted findings on the facts of this case, that aspect of the matter is purely academic on the facts of this case. We need not, therefore, venture into that aspect of the matter. Suffice to say that so far as the first



objection of the learned Departmental Representative is concerned, we are of the considered view that it is, on the peculiar facts of this case, untenable.

9. That takes us to the second objection, raised by the learned Departmental Representative, to the effect that section 40(a)(ia] being penal in nature and since it is triggered by the assessee's lapse of not complying with his tax withholding obligations, taxability or no taxability, the assesse must be penalized for his lapses. This is precisely what the CIT(A) has also held in the impugned order. We are unable to uphold this objection either. On a conceptual note, justification for such a disallowance is that such a denial of deduction is to compensate for the loss of revenue by corresponding income not being taken into account in computation of taxable income in the hands of the recipients of the payments. This disallowance does deincentivize lapses in deduction of tax at source, when such tax deductions are due, but, so far as the legal framework is concerned, this provision is not for the purpose of penalizing for the tax deduction at source lapses. Deincentivizing a lapse and punishing a lapse are two different things and have distinctly different, and mutually exclusive, connotations and repurcussions. There are separate specific penal provisions to that effect, such as contained in Section 271 C read with 273 B of the Income Tax Act, and there cannot even be multiple penalties for the same lapse. When there is a specific penal provisions for a lapse, which have not been invoked on the facts of this case, there cannot be any occasion to invoke section 40(a)(ia] on this case and treat the amount disallowable under that section as income of the assessee on standalone basis. Such a course of action is wholly devoid of any legal, or even rational, basis.

10. Before parting with the matter, we must express our deep anguish at the approach adopted by the learned CIT(A) in treating the disallowance under section 40(a)(ia) as a standalone income in the hands of the assesse. All the noble work done by the Government comes to a naught when this kind of hyper technical approach, devoid of any merits, is adopted by the officers assigned with implementing the mandate of law, We leave it at that for the time being, and conclude by saying that, in view of the preceding discussions, we uphold the grievances of the assessee and direct the Assessing Officer to delete the impugned disallowances, or rather additions, under section 40(a)(ia) of the Act. The assessee gets the relief accordingly.

11. In the result, the appeal is allowed.



CENTRAL EXCISE

EASE OF DOING BUSINESS

In line with the objectives to facilitate trade and improve ease of doing business, the following measures have been taken by CBEC during last one year:

CENTRAL EXCISE

• Reduction in number of levies: Education Cess and Secondary & Higher Education Cess on excisable goods have been subsumed in Basic Excise duty. [Notifications No.14/2015-Central Excise and No.15/2015-Central Excise, both dated 01.03.2015 refer].

• Registration in two days: Registration in Central Excise is to be granted within two working days. Verification of documents and premises to be carried out after the grant of the registration. [Notification No.7/2015-Central Excise (N.T.), dated 01.03.2015 and Circular No.997/04/2015-CX dated 28.02.2015 refer].

• Digital signature and preserving records in electronic form: Legal provisions have been amended to prescribe that a manufacturer may use digital signature on invoices and may preserve records in electronic format. Further, a notification and an instruction has been issued to prescribe procedure, safeguards and conditions for using digital signature on invoice and preserving documents in electronic format. [Notification No.8/2015-Central Excise (N.T.), dated 01.03.2015, notification No.18/2015-Central Excise (N.T.) dated 06.07.2015 and instruction dated 06.07.2015 refer].

• Electronic payment of duty: The facility of electronic payment of duty has been extended to all the Central Excise assessees. [Notification No.19/2014-Central Excise (N.T.), dated 11.07.2014 refers].

• Time limit for taking CENVAT: Time limit for taking CENVAT Credit of duty/tax paid on inputs and input services has been increased from six months to one year. [Notification No.6/2015-Central Excise (N.T.), dated 01.03.2015 refers].

• Direct despatch of goods: Facility of direct dispatch of goods by registered dealer from seller to customer’s premises has been provided. Similar facility has also been allowed in respect of job-workers. Registered importer can also send goods directly to customer from the port of importation. [Notification No.10/2015-Central Excise (N.T.), dated 01.03.2015 refers]. To add clarity to the issue - whether a dealer who is not issuing CENVATable invoice needs to take registration and bring goods to his godown, a Circular was issued to clarify that such dealers need not take registration or bring goods to the godown. [Circular No.1003/10/2015-CX, dated 05.05.2015 refers].

• Rationalisation of penal provisions: Penalty provisions in Central Excise have been rationalised to encourage compliance and early dispute resolution. [Sections 93, 94, of the Finance Act, 2015 refer].

• Payment of arrears in instalments: Instructions have been issued to allow Chief Commissioners, Commissioners to allow payment of arrears in instalments. [Circular No.996/03/2015-CX dated 28.02.2015 refers].

• Withdrawal of Prosecution in certain circumstances: Instructions have been issued providing for withdrawal of prosecution with approval of the Chief Commissioner in cases where the



adjudication proceeding as well as prosecution were launched on identical grounds and the person concerned has been exonerated in the adjudication proceeding on merits. [Circular No.998/05/2015-CX dated 28.02.2015 refers].

B. Industry specific measures:

• Trade and Industry Associations had represented that the field formations have issued show cause notices to the fertilizer companies seeking to levy excise duty on the subsidy component of price-controlled fertilizers in the light of the judgment of the Supreme Court in the case of CCE, Mumbai v/s/ M/s Fiat India Pvt. Limited [2012-TIOL-58-SC-CX]. It was clarified that in respect of fertilizers for which subsidy is provided by the Government, the excise duty will be chargeable on the MRP and not on the subsidy component provided by the Government. [Circular No.983/7/2014-CX dated 10.07.2014 refers].

• Plants & Equipment supplied / imported prior to 2008 for use in projects financed by the UN or an international organization could not be transferred / sold out /re- exported from the project site. Amendments to the notification concerned were made which allowed such goods to be transferred / sold / re-exported from the project site subject to certain conditions. [Notification No.84/97-Customs, dated 11.11.97 as amended vide notification No.22/2014-Customs, dated 11.07.2014 and notification No.108/95-Central Excise, dated 28.08.95 as amended vide notification No.11/2014-Central Excise, dated the 11.07.2014 refers].

• All goods falling under any Chapter supplied against International Competitive Bidding (ICB) are fully exempt from excise duty, subject to the condition that such goods when imported are fully exempt from basic customs duty and additional duty of customs. Doubts were raised whether this excise duty exemption is available to sub-contractors who supply goods to the main contractor who has won the contract under ICB. It was clarified that the said exemption is also available to sub-contractors for manufacture and supply of goods to the main contractor who has won the contract for the project under ICB, subject to compliance of relevant conditions. [J.S. (TRU-I) letter D.O.F.No.334/15/2014-TRU dated 10.07.2014 refers].

• Goods manufactured domestically and supplied against International Competitive

Bidding are exempt from excise duty, if such goods when imported attract Nil customs duties. To ensure uniformity in assessment and avoid disputes, it was provided that if imported goods are eligible for Nil customs duites, subject to certain conditions, then the same conditions should also apply, mutatis mutandis, to such goods manufactured domestically and supplied against International Competitive Bidding for excise duty exemption. [Condition No.41 of notification No.12/2012- Central Excise, dated 17.03.2012 as amended by notification No.12/2015-Central Excise, dated 01.03.2015refers].

• Goods for setting up of specified Mega or Ultra Mega Power Projects (MPPS or UMPP) are fully exempt from excise subject to the condition that in case of goods for a Project for which certificate regarding Ultra Mega Power Project status is provisional, the Chief Executive Officer of the Project furnishes a bank guarantee or fixed deposit receipt for a term of 36 months or more. This condition was amended to prescribe furnishing of bank guarantee or fixed deposit receipts for a period of 42 months or 66 months in respect of MPPS or UMPPs respectively. [Condition No.42(b) and 43(b) of Notification No.12/2012- Central Excise, dated 17.03.2012 as amended by notification No.12/2015-Central Excise, dated 01.03.2015 refers].



• Henna powder or paste, not mixed with any other ingredient is fully exempt from central excise duty. Doubts were raised regarding the scope of the phrase “not mixed with any other ingredient”. It was clarified that the exemption is available to henna powder mixed with a liquid, so far that the liquid is a medium to change the form of henna powder into paste but excludes products like henna dye and such other products which are cosmetics. [J.S. (TRU-I) letter D.O.F.No.334/15/2014-TRU dated 10.07.2014 refers].

SERVICE TAX

Ease of Doing Business

In line with the objectives to facilitate trade and improve ease of doing business, the following measures have been taken by CBEC during last one year:

SERVICE TAX

• Reduction in number of levies: Education Cess and Secondary & Higher Education Cess on taxable services have been subsumed in Service Tax with effect from 01.06.2015. [Sections 153, 159 of the Finance Act, 2015 read with notification No.14/2015-Service Tax, dated 19.05.2015 refers].

• Registration in two days: Registration in Service Tax to be granted within two working days. [ORDER No. 1/2015-SERVICE TAX dated 28.02.2015 refers].

• Time limit for taking CENVAT: Time limit for taking CENVAT Credit of duty/tax paid on inputs and input services has been extended from six months to one year. [Notification No.6/2015-Central Excise (N.T.), dated 01.03.2015 refers].

• Simplification in procedure for availment of Cenvat Credit in certain cases: For availment of CENVAT credit of service tax paid under reverse charge mechanism, the condition of having made the payment of consideration to the service provider has been done away with. [Notification No.6/2015-Central Excise (N.T.), dated 01.03.2015 refers].

• Rationalisation of penal provisions: Penalty provisions in Service Tax have been rationalized to encourage compliance and early dispute resolution. [Sections 113, 114, 115 of the Finance Act, 2015 refer].

• Digital signature and preserving records in electronic form: Service Tax assessees have been allowed to issue digitally signed invoices and maintain other records electronically. [Notification No.18/2015-Central Excise (N.T.), dated 06.07.2015 refers].

• Withdrawal of Prosecution in certain circumstances: Instructions have been issued providing for withdrawal of prosecution where a noticee has been exonerated in the quasi-judicial proceedings and such order has attained finality. [Circular No.998/05/2015-CX dated 28.02.2015 refers].

• If the export proceeds are not received within the prescribed time period, the exporter has to reverse the Cenvat Credit. Re-credit of such reversed Cenvat credit has been allowed, if such export proceeds are received within one year from the specified period. [Notification No.6/2015-Central Excise (N.T.), dated 01.03.2015 refers].



• To bring certainty in the determination of point of taxation in case of reverse charge mechanism, it has been provided that point of taxation will be the payment date or three months from the date of invoice, whichever is earlier. [Notification No.13/2014-Service Tax, dated 11.07.2014 refers].

B. Industry specific measures:

• Uniform abatement of 70% from gross value prescribed for transport by rail, road and vessel. Service Tax in all these cases will now be charged on 30% of the gross value of such service subject to non-availment of Cenvat Credit on inputs, capital goods and input services. [Notification No.26/2012-Service Tax dated 20.06.2012, as amended by the notification No.8/2015-Service Tax dated 01.03.2015 refers].

• To avoid disputes, exemption in respect of services provided to Government or local authority or governmental authority, by way of water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation has been made more specific. [Notification No.25/2012-Service Tax dated 20.06.2012, as amended by the notification No.6/2014-Service Tax dated 11.07.2014 refers].

• Categories of works contracts have been rationalized to reduce litigation and improve compliance with a uniform service tax of 14% on 70% of the gross value of service.

[Notification No.11/2014-Service Tax dated 11.07.2014 refers].

*****

COMPANIES ACT,2013

MCA Notifies new form for Annual Return

MCA vide notification dated 28th August has amended the Companies (Management & Administration) Rules 2014.

The details of the amendment is outlined below:

In rule 23, for the words ‘not more than five lakhs’, the words ‘not less than five lakhs’ shall be substituted.

Relevant text of existing rule 23 is reproduced below

“23. Special Notice.-

(1) A special notice required to be given to the company shall be signed, either individually or collectively by such number of members holding not less than one percent of total voting power or holding shares on which an aggregate sum of not more than five lakh rupees has been paid up on the date of the notice.

It is important to note the following points in connection with the aforesaid amendment:

• Earlier MCA by notification dated 24th April 2014 has substituted the words ‘not less than five lakhs’ by ‘not more than five lakhs’. Now it has again reversed the position.

• Rule 23 is prescribed under section 115 , which provides that in case special notice is required for any matter , then such special notice shall be given by shareholders holding not less than



one per cent of the total voting power or holding shares on which such aggregate sum not exceeding five lakhs rupees as may be prescribed has been paid. Though there seems to be a mistake in section itself which instead of providing five lakhs rupees as a minimum limit has provided it as maximum limit. The rule seems to rectify the aforesaid mistake but in that would contradict the position provided in the section itself.

• MGT-7 i.e. the form for annual return has been substituted with a new form. The e form for MGT-7 is still not available.

Sd/- J.Syamala RaoCommissioner

Documents

Sd/- J.Syamala Rao Commissioner BRANCH OF SIRC OF ICAI News Letter@September 2015 3Email:[email protected] M: 08500084499 [2015] 60 taxmann.com 360 (Guwahati - Trib.) IN THE ITAT GUWAHATI