WRIT PETITIONS UNDER CONSTITUTION OF INDIA

WRIT PETITIONS UNDER CONSTITUTION OF INDIA

Untitled95AWrit Petitions under Articles 32 and 226 of the Constitution of India

The Writ Jurisdiction of Supreme Court can be invoked under Article 32 of the Constitution for the violation of fundamental rights guaranteed under Part – III of the Constitution. Any provision in any Constitution for Fundamental Rights is meaningless unless there are adequate safeguards to ensure enforcement of such provisions. Since the reality of such rights is tested only through the judiciary, the safeguards assume even more importance. In addition, enforcement also depends upon the degree of independence of the Judiciary and the availability of relevant instruments with the executive authority. Indian Constitution, like most of Western Constitutions, lays down certain provisions to ensure the enforcement of Fundamental Rights. These are as under:

(a) The Fundamental Rights provided in the Indian Constitution are guaranteed against any executive and legislative actions. Any executive or legislative action, which infringes upon the Fundamental Rights of any person or any group of persons, can be declared as void by the Courts under Article 13 of the Constitution.

(b) In addition, the Judiciary has the power to issue the prerogative writs. These are the extra-ordinary remedies provided to the citizens to get their rights enforced against any authority in the State. These writs are – Habeas corpus, Mandamus, Prohibition, Certiorari and Quo-warrantor. Both, High Courts as well as the Supreme Court may issue the writs.

(c) The Fundamental Rights provided to the citizens by the Constitution cannot be suspended by the State, except during the period of emergency, as laid down in Article 359 of the Constitution. A Fundamental Right may also be enforced by way of normal legal procedures including a declaratory suit or by way of defiance to legal proceedings.

However, Article 32 is referred to as the “Constitutional Remedy” for enforcement of Fundamental Rights. This provision itself has been included in the Fundamental Rights and hence it cannot be denied to any person. Dr. B.R.Ambedkar described Article 32 as the most important one, without which the Constitution would be reduced to nullity. It is also referred to as the heart and soul of the Constitution. By including Article 32 in the Fundamental Rights, the Supreme Court has been made the protector and guarantor of these Rights. An application made under Article 32 of the Constitution before the Supreme Court, cannot be refused on technical grounds. In addition to the prescribed five types of writs, the Supreme Court may pass any other appropriate order. Moreover, only the questions pertaining to the Fundamental Rights can be determined in proceedings against Article 32. Under Article 32, the Supreme Court may issue a Writ against any person or government within the territory of India. Where the infringement of a Fundamental Right has been established, the Supreme Court cannot refuse relief on the ground that the aggrieved person may have remedy before some other court or under the ordinary law.

The relief can also not be denied on the ground that the disputed facts have to be investigated or some evidence has to be collected. Even if an aggrieved person has not asked for a particular Writ, the Supreme Court, after considering the facts and circumstances, may grant the appropriate Writ and may even modify it to suit the exigencies of the case. Normally, only the aggrieved person is allowed to move the Court. But it has been held by the Supreme Court that in social or public interest matters, any one may move the Court. A Public Interest Litigation can be filed before the Supreme Court under Article 32 of the Constitution or before the High Court of a State under Article 226 of the Constitution under their respective Writ Jurisdictions. There are mainly five types of Writs –
(i) Writ of Habeaus Corpus,

(ii) Writ of Mandamus,

(iii)Writ of Quo-Warranto,

(iv) Writ of Prohibition, and

(v) Writ of Certiorari.

(I) Writ of Habeas Corpus:
It is the most valuable writ for personal liberty. Habeas Corpus means, “Let us have the body.” A person, when arrested, can move the Court for the issue of Habeas Corpus. It is an order by a Court to the detaining authority to produce the arrested person before it so that it may examine whether the person has been detained lawfully or otherwise. If the Court is convinced that the person is illegally detained, it can issue orders for his release.

(II) The Writ of Mandamus: 

Mandamus is a Latin word, which means “We Command”. Mandamus is an order from a superior court to a lower court or tribunal or public authority to perform an act, which falls within its duty. It is issued to secure the performance of public duties and to enforce private rights withheld by the public authorities. Simply, it is a writ issued to a public official to do a thing which is a part of his official duty, but, which, he has failed to do, so far. This writ cannot be claimed as a matter of right. It is the discretionary power of a court to issue such writs.

(III) The Writ of Quo-Warranto:

The word Quo-Warranto literally means “by what warrants?” It is a writ issued with a view to restraining a person from acting in a public office to which he is not entitled. The Writ of quo-warranto is used to prevent illegal assumption of any public office or usurpation of any public office by anybody. For example, a person of 62 years has been appointed to fill a public office whereas the retirement age is 60 years. Now, the appropriate High Court has a right to issue a Writ of quo-warranto against the person and declare the office vacant.

(IV) The Writ of Prohibition:

Writ of prohibition means to forbid or to stop and it is popularly known as ‘Stay Order’. This Writ is issued when a lower court or a body tries to transgress the limits or powers vested in it. It is a Writ issued by a superior court to lower court or a tribunal forbidding it to perform an act outside its jurisdiction. After the issue of this Writ proceedings in the lower court etc. come to a stop. The Writ of prohibition is issued by any High Court or the Supreme Court to any inferior court, prohibiting the latter to continue proceedings in a particular case, where it has no legal jurisdiction of trial. While the Writ of mandamus commands doing of particular thing, the Writ of prohibition is essentially addressed to a subordinate court commanding inactivity. Writ of prohibition is, thus, not available against a public officer not vested with judicial or quasi-judicial powers. The Supreme Court can issue this Writ only where a fundamental right is affected.

(V) The Writ of Certiorari:
Literally, Certiorari means to be certified. The Writ of Certiorari is issued by the Supreme Court to some inferior court or tribunal to transfer the matter to it or to some other superior authority for proper consideration. The Writ of Certiorari can be issued by the Supreme Court or any High Court for quashing the order already passed by an inferior court. In other words, while the prohibition is available at the earlier stage, Certiorari is available on similar grounds at a later stage. It can also be said that the Writ of prohibition is available during the tendency of proceedings before a sub-ordinate court, Certiorari can be resorted to only after the order or decision has been announced. There are several conditions necessary for the issue of Writ of Certiorari, which are as under:

(a) There should be court, tribunal or an officer having legal authority to determine the question of deciding fundamental rights with a duty to act judicially.
(b) Such a court, tribunal or officer must have passed an order acting without jurisdiction or in excess of the judicial authority vested by law in such court, tribunal or law. The order could also be against the principle of natural justice or it could contain an error of judgment in appreciating the facts of the case.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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CHECKLIST FOR INCORPORATING WHOLLY OWNED SUBSIDIARY COMPANY

CHECKLIST FOR INCORPORATING WHOLLY OWNED SUBSIDIARY COMPANY

Formation of A Wholly Owned Subsidiary Company In IndiaUntitled55Company Registration in India

This Article is provides information about the stages and documents required for incorporation of a private limited company in India which is subsidiary of a foreign company in India. The procedure for registering a subsidiary company in India is very simple and will take around a maximum of 15 days to complete. The followings are the detailed requirements, procedure and system for subsidiary formation in India

A private company is defined under Section 3(1)(iii) of the CA Act  as a company which

  • Has a minimum paid up share capital of INR 100,000 or a higher paid-up capital as may be prescribed by its articles of association
  • Restricts the right to transfer shares by its articles of association.
  • Prohibits any invitation to the public to subscribe for any shares in, or debentures of, the company.
  • Prohibits any acceptance of deposits from persons other than members, directors or their relatives.
  • Can be formed with a minimum of two members and two directors.
  • Limits the number of its members (shareholders) to fifty not including (i) persons who are in the employment of the Company and (ii) persons who, having been formerly in the employment of the Company, were members of the Company while in that employment and have continued to be members after the employment ceased.

Therefore, minimum capital required for incorporation of a private company is Indian Rupees 1(one) lakh and there should be at least one two members (shareholders) and two directors)

Incorporation of a private limited company in India broadly involves the following stages:

STAGE – I

Obtaining Directors Identification Number (Din) & Digital Signatures

Directors Identification Number (DIN)

Prior to incorporation of a company, the proposed directors of the company are required to obtain Directors Identification Number (“DIN”) from the Ministry of Company Affairs by making an online DIN application in Form DIN 1. Form DIN 1 is approved by the DIN Cell of the Ministry of Corporate affairs.

The said Form DIN 1 is to be filed with the scan copies of the applicant’s photograph, identity proof, a valid residential proof and a verification/ declaration in the prescribed format to be given by the applicant (who is applying for the DIN). Upon online submission of the Form DIN 1 and online payment of the fee, a permanent DIN to the director will be allotted immediately.

The following documents are required to make a DIN application for each of the proposed director(s):

(i) Identity proof

For identity proof, a copy of passport or copy of permanent account number card (PAN card) is required to be provided. Please note that in case of a foreign national only passport is acceptable as identity proof and in case of an Indian national copy of PAN card is must.

(ii)Residence proof

For residence proof, a copy of voter’s identity card or valid driving licence or latest bank statement duly certified by the respective bank or utility bill (not older than two months) is required to be provided.

(iii) One passport size color photograph in jpeg format. In addition one more photograph is required which should be separately pasted on a plane paper.

(iv) Verification/ Declaration in the prescribed format on a 10 Rupees stamp paper, duly notrized by a notary public.

All the aforementioned documents should be attested by a notary public in the country of residence of the applicant.

Digital Signature Certificate (“DSC”)

Any one of the proposed directors is required to obtain digital signature certificate (“DSC”) in India for online filing of e-Forms with the concerned Registrar of Companies (“ROC”). For obtaining DSC an application is made under the signatures of the director who intends to obtain DSC along with the copy of his identity proof and a copy of his residence proof.  The following documents are required to make a DSC application for each of the proposed director(s):

(i) Identity proof

For identity proof, a copy of passport or copy of permanent account number card (PAN card) is required to be provided. Please note that in case of a foreign national only passport is acceptable as identity proof and in case of an Indian national copy of PAN card is must.

(ii) Residence proof

For residence proof, a copy of voter’s identity card or valid driving license or latest bank statement duly certified by the respective bank or utility bill (not older than two months) is required to be provided.

(iii) One passport size color photograph. Please note that the photograph should be pasted on the application form and cross signed by the director (applicant).

(iv) DSC application form duly signed by the director (applicant)

The identity and residence proof of the applicant as aforesaid should be attested by a notary public in the country of residence of the applicant.

STAGE – III

Application for Name Approval of the Proposed Company With The ROC

After obtaining the DIN and DSC as aforesaid, an online application for availability of the proposed name (in the prescribed Form 1A), along with six proposed names in order of preference (may be less than six), each one indicating, as far as possible, the main objects (principal activities) of the company, shall be submitted to the ROC. The name of a private company should end with the words “Private Limited”.

If the proposed company is a subsidiary of body corporate incorporated outside India, Form 1A is required to be e-filed along with the following attachment at the website of Ministry of Company Affairs, India:

(a) Board Resolutions by the parent company (separately from each subscriber to the proposed entity) indicating its intention to incorporate a subsidiary in India and authorizing a director to issue specific power of attorney.

(b) Power of Attorney (s) (separately from each subscriber to the proposed entity) authorizing someone to represent the subscribers before the concerned ROC to liaise with  all concerned authorities and officials in the matter of incorporation.

(c)    No Objection Letter from the parent company (separately from each of such   entity whose name or part thereof will be used in the name of the proposed entity) for use of the name of the parent company or part thereof in the name of the proposed company.

(d) Charter Documents of the parent company i.e. Certificate of Incorporation of the  parent company.

Please note that all of the aforementioned documents should be notarized by a Notary Public in the country where the registered office of the entity (which has issued the said document), is situated and further Apostilled/ endorsed at the Indian Consulate in the country where the registered office of the entity (which has issued the said document) is situated.

(e) A brief writ-up on the main objects proposed to be carried out by the Company.

(f) Proof of ownership of the registered office of the company. In case the property is not taken on lease by the Company himself, a no objcetion certificate would be required

STAGE IV

Drafting And Stamping of Memorandum & Articles of Association (“MOA and AOA”)

MOA and AOA are to be drafted in compliance with the provisions of the Act. Adequate stamp duty would be required to be paid thereupon based on the authorised capital of the company. The stamp duty on MOA and AOA shall be paid along with the filing fee payable at the time of filing of incorporation related documents

STAGE V

INCORPORATION DOCUMENTS TO BE FILED WITH THE ROC

After the name approval, the following forms have to be e-filed with the ROC after having been digitally signed by any of the proposed directors. The lists of documents are as follows:

(i)    Form 1 -   Declaration of compliance of all the requirements of the Act along with the memorandum of association of the company;

(ii)   Form 18 – Situation of the registered office of the Company; and

(iii) Form 32 – Particulars of Directors of the Company along with the consent of directors.

All the aforesaid incorporation documents (scanned copies of the executed version) have to be submitted with the ROC as attachments to the E form 1 alongwith:

(i) The original copies of MOA and AOA with the subscriber pages duly executed by or on behalf of the subscribers and witnessed.

(ii) Power of Attorneys from the subscribers to the MOA and AOA appointing representatives to incorporate the company and to make corrections in the MOA and AOA. The said powers of attorneys are required to be notarized and attested by Indian embassy abroad.

The ROC then scrutinizes the above-mentioned documents and if necessary, directs the authorized person to make necessary corrections therein. The ROC after being satisfied that all the documents are complete, issues the certificate of incorporation of the Company, which is the conclusive proof of registration of the company in India.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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PROFESSIONAL UPDATE ON MCA, RBI, CBDT, DVAT

Professional update on MCA, RBI, CBDT, DVAT

12MCA

MCA has exempted the Government Companies producing Defense Equipment including the Space Research subject to fulfillment of conditions prescribed relating to Additional information of the General Instruction for preparation of Statement of Profit and Loss in Schedule III of the Companies Act, 2013. The Board of Directors of such Company must give their consent with regard to non-disclosure of information relating to para 5(ii)(a)(1), 5(ii)(a)(2), 5(il)(e), 5(iii), s(viii)(a), 5(viii)(b), 5(viii)(c) and s(viii)(e), as may be applicable and the Company shall disclose in the Notes forming part of the balance sheet and profit and loss account, the fact of grant of exemption under this notification. Further, all such companies shall comply with the prescribed Accounting Standards and shall ensure that its financial statements represent a true and fair state of affairs of its finances. This notification shall be applicable in respect of financial statement prepared in respect of the financial years ending on or after the 31’t March, 20-t6.

MCA has released the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015, which shall come into force from the date of their publication in the Official Gazette. Through these Rules, applicability of Extensible Business Reporting Language (XBRL) and its Taxonomy has been prescribed. Accordingly, all listed companies and their lndian subsidiaries, Companies having paid up capital of rupees five crore or above or turnover of rupees hundred crore or above shall file their financial statement and other documents under section 137 of the Act, with the Registrar in e-form AOC-4 XBRL for the financial years commencing on or after 1st April 2014. Further,  all companies which were hitherto covered under the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2011 shall continue to file their financials in XBRL mode and exemptions have been provided for Banking, lnsurance, Power Sector and Non-Banking Financial companies are exempted from XBRL filing.

MCA has released the Form CRA-4 (Form for filing Cost Audit Report with the Central Government) is available for filing w.e.f11th Sep 2015. A company required to furnish cost audit report and other documents to the Central Government under sub-section (6) of section 148 of the Act and rules made thereunder, shall file such report and other documents using the XBRL taxonomy for the financial years commencing on or after 1st April, 2014 in e-Form CRA-4 specified under the Companies (Cost Records and Audit) Rules, 2014.

CBDT

A Committee on Direct Tax matters chaired by Justice A. P. Shah was constituted with the initial mandate to examine the matter relating to levy of MAT on FIIs/FPIs for the period prior to 01.04.2015. The Committee has submitted its final report on applicability of MAT on FIIs/FPIs for the period prior to 01.04.2015 to the Government on 25.08.2015. The Committee has recommended that section 115JB of the Income-tax Act may be amended to clarify the in-applicability of MAT provisions to FIIs/FPIs. The Government has accepted the recommendation of the Committee to clarify the in-applicability of MAT to FIIs/FPIs and has decided that an appropriate amendment to the Income-tax Act will be carried out. Pending such amendment, CBDT will convey to the field formations the decision of the Government to accept the recommendation.

BDT – Income Tax

Ministry of Finance has clarified through a press release that No Extension of Date for Filing of Returns due by 30th September for Assessment Year 2015-16 for Certain Categories of Assessees including Companies, and Firms and, Individuals Engaged in Proprietary Business/Profession etcwhose Accounts are required to be Audited shall be granted. The audit report is also required to be filed by the said date. The Government has received representations from various stakeholders seeking extension of date for filing of returns and tax audit reports beyond 30th September 2015. The reasons cited are delay in notifying the returns and related delay in availability of forms on the e-filing website. After consideration of all facts, it has been decided that the last date for filing of returns due by 30th September 2015 will not be extended. Taxpayers are advised to file their returns well in time to avoid last minute rush.

DVAT

DVAT Authorities have designed and developed a new simplified online form namely Form Delhi Sugam-2 (in short ‘DS2,) in place of Form T-2 for providing information to the Department in respect of goods purchased or received as stock transfer or received on consignment agreement from outside by the registered dealers of Delhi. All dealers are now instructed that the details of Invoices and Goods Receipt (GR) Notes in respect of all goods purchased or received as stock transfer or received on consignment agreement basis from outside Delhi shall be submitted online, in Form Delhi Sugam-2 (DS2), before physical entry of the goods in Delhi. This Notification shall come into force with effect from the 15th September, 2015 in supersession of all previous notifications on this subject.

NCLT / NCLAT

In continuation of the Ministry’s circular dated 10-08-2015, the MCA has extended the last date of receipt of applications for the post of Technical Member (2 Post) in NCLATJudicial Member (18 Post) in NCLT and Technical Member (10 Post) in NCLT from 01-09-2015 to 28-09-2015. Those who have already applied earlier are need not required to apply again and other terms and conditions will remain the same.

RBI

RBI has decided to grant “in-principle” approval to the 10 applicants to set up small finance banks under the “Guidelines for Licensing of Small Finance Banks in the private sector” (Guidelines) issued on November 27, 2014. The “in-principle” approval granted will be valid for 18 months to enable the applicants to comply with the requirements under the Guidelines and fulfill other conditions as may be stipulated by the RBI. On being satisfied that the applicants have complied with the requisite conditions laid down by it as part of “in-principle” approval, the RBI would consider granting them a license for commencement of banking business under Section 22(1) of the Banking Regulation Act, 1949. Until a regular license is issued, the applicants cannot undertake any banking business.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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VAT & SERVICE TAXLIABLEON SOFTWARE ETC

VAT & SERVICE TAX LIABLE ON SOFTWARE ETC

Untitled29

  1. Onsite Development of Software – Liable to Service Tax.
  2. Advice, consultancy and assistance on matters relating to information technology software – Liable to Service tax.
  3. Where client specific software is developed for the client in such a way that the intellectual property developed belongs to the client/customer (just like a job-work) from the very beginning without the creator retaining any ownership rights over the same, the arrangement would be one of service and not sale of goods. The same has been confirmed under Sasken Communication Technologies Ltd Vs Joint Commissioner of Commercial Taxes,Bangalore (2011 (4) TMI 566 – Karnataka High Court).
  4. AMC Contract – Discussed separately under clause ‘H’.
  5. Sale of License– Liable to Service tax if no transfer of right to use while liable for sales tax if transfer for right to use under deemed sale concept. Largely would depend on case to case basis.
  6. Customised (Bespoke) Software Developed and Implemented:- Liable to both Sales tax and Service tax.  In this context, one important ruling can be discussed here. The ruling is by foreign court i.e. in case of LevobVerzekeringen BV and OV Bank NV v. Secretary of State for Finance, Netherlands [2012] 22 taxmann.com 174 (ECJ)  wherein it was held that Supply of basic software along with subsequent customisation thereof to meet requirements of customer and training to his employees under a single contract is a single indivisible supply of service and whole of the receipts are liable to service tax on Dominant nature test.
  7. Manpower Supply :- Liable to Service tax.

Software– To be treated status quo with implications in case of software.

  1. Cloud Sharing:- Liable to Service tax.
  2. Online database Sharing:- Liable to Service tax.
  3. Value added services: – Liable to Service tax like subscription for pro-chat, premium services etc. If charges for transfer the same shall be liable to VAT.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480.

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NO EXTENSION OF DATE FOR FILING OF RETURNS DUE BY 30TH SEPTEMBER FOR ASSESSMENT YEAR 2015-16

No Extension of Date For Filing of Returns Due By 30th September For Assessment Year 2015-16

Untitled20The CBDT has issued a press release stating that there will be no extention of due date for filling Tax Audit and Income Tax Returns for the AY 2015-16.

Please plan your work accordingly.

EXACT TEXT is given below:-

No Extension of Date for Filing of Returns due by 30th September for Assessment Year 2015-16 for Certain Categories of Assessees Including Companies, and Firms and, Individuals Engaged in Proprietary Business/Profession etcwhose Accounts are required to be Audited; Taxpayers are Advised to file their Returns Well in Time to Avoid Last Minute Rush 

Income-tax returns for Assessment Year 2015-16 for certain categories of assesseesviz companies, firms and individuals engaged in proprietary business/profession etc whose accounts are required to be audited, are to be filed by 30th September, 2015. The audit report is also required to be filed by the said date.

The Government has received representations from various stakeholders seeking extension of date for filing of returns and tax audit reports beyond 30th September 2015. The reasons cited are delay in notifying the returns and related delay in availability of forms on the e-filing website.

The matter has been considered. Income-Tax Returns Forms 3,4,5,6 and 7 which are used by the above mentioned categories of assessees were notified for Assessment Year 2015-16 on 29.07.2015. The forms were e-enabled and were available on the e-filing website of the Department from 7th August 2015 giving enough time for compliance. The changes made to these forms are not extensive as compared to the earlier years. Further taxpayers entering into either international transactions or specified domestic transactions are required to file their returns by 30th November 2015 only.

After consideration of all facts, it has been decided that the last date for filing of returns due by 30th September 2015 will not be extended. Taxpayers are advised to file their returns well in time to avoid last minute rush.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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SUMMARY ABOUT THE SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 (LISTING REGULATIONS):

SUMMARY ABOUT THE SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 (LISTING REGULATIONS)

Untitled94AApplicability of SEBI (listing obligations and disclosure requirements) Regulations, 2015:

SEBI Listing Regulations are apply to the listed entity who has listed any the following designated securities on recognised stock exchange(s):

  1. Indian depository receipts;
  2. Securitized debt instruments and
  3. Units issued by mutual fund
  4. Specified securities listed on the main board or SME Exchange or Institutional Trading Platform;
  5. Non-Convertible Debt Securities, NonConvertible Redeemable Preference Shares, perpetual debt instrument, perpetual non-cumulative preference shares;

Effective Date from : SEBI Listing Regulations shall come into force on the ninetieth day from date of publication in the official gazette i.e. 1 December 2015.

However, the following two provisions shall be applicable with immediate effect i.e. 2 September 2015:

  • Passing of ordinary resolution instead of special resolution in case of all material related party transactions subject to related parties abstaining from voting on such resolutions
  • Re-classification of promoters as public shareholders under various circumstances

THE MAIN FEATURES OF THESE REGULATIONS ARE AS FOLLOWS:

Time Limit : Time Limit to comply & implementing the SEBE Regulations – Ninety days

Common obligations applicable to all listed entities: Obligations which are common to all listed entities have been enumerated.  These include general obligation of compliance of listed entity, appointment of common compliance officer, filings on electronic platform, mandatory registration on SCORES, etc.

In order to ensure that there is no overlapping or confusion on the applicability of these regulations, pre-listing requirements have been incorporated in respective regulations and post-listing requirements have been incorporated in Listing Regulations.

Obligations which are applicable to specific types of securities: Obligations which are applicable to specific types of securities have been incorporated in separate chapters.

Single Document: The Regulations have been structured to provide ease of reference by consolidating into one single document across various types of securities listed on the Stock exchanges. The related provisions have been aligned and provided at a common place for ease of reference.

Obligations of stock exchanges and provisions in case of default: Stock Exchanges have been given responsibility to monitor compliance or adequacy / accuracy of compliance with provisions of these regulations and to take action for non-compliance.

Ease of Reference:: The related provisions have been aligned and provided at a common place for ease of reference. For  example, all clauses dealing with disclosure of events or information which may be material or price sensitive spread across the Listing Agreement have been provided as a schedule to the regulations. All disclosures required to be made on the website of the listed entity have been enumerated at a single place for ease of reference and all requirements pertaining to disclosures in annual report have been combined.

Streamlining and segregation of initial issuance/listing obligations: In order to ensure that there is no overlapping or confusion on the applicability of these regulations, pre-listing requirements have been incorporated in respective regulations viz. ICDR Regulations, ILDS Regulations, etc  These provisions pertain to allotment of securities, refund and payment of interest, 1% Security Deposit (in case of public issuance), etc. Post-listing requirements have been incorporated in Listing Regulations.

Changes from M&A with regard to Related Party transactions :  Wherever necessary, the provisions in Listing Regulations have been aligned with those of the Companies Act, 2013. As per the SEBI Listing Regulations, ordinary resolution shall suffice and the related party shall abstain from voting on such resolution, irrespective of the related party being a party to the transaction. It is pertinent to note that under the Companies Act, 20131, related party who is related to the transaction are required to abstain from voting

  • Definition of ‘related party’ and ‘related party transaction’ have been amended to provide an exception for units issued by mutual funds which are listed on a recognised stock exchange(s)
  • Previously, all material related party transactions required shareholders’ approval through special resolution and the related parties shall abstain from voting on such resolutions.

Listing Agreement-: A shortened version of the Listing Agreement (2 page approximately)will be prescribed which will be required to be signed by a company getting its securities listed on Stock Exchanges. Existing listed entities will be required to sign the shortened version within six months of the notification of the regulations,

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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CHANGES IN FDI POLICY

Significant Changes Introduced In Foreign Director Investment Policy 

31The consolidated FDI policy document is a single reference point for investors and regulators. The first such consolidation was released in March, 2010 after which it has been updated every six months. This’ Circular 2 of 2011’-is the fourth edition of the consolidated policy document.

The significant changes introduced in FDI Policy edition of the Circular are:

Exemption of construction-development activities in the education sector and in old-age homes, from the general conditionality’s in the construction-development sector:

FDI into construction development activities in the education sector and in respect of old-age homes has been exempted from the conditionality imposed on FDI in the construction development sector in general i.e. minimum area and built-up area requirement; minimum capitalization requirement; and lock-in period. This conditionality’s perhaps posed a constraint to FDI coming into these areas since educational institutions like schools, colleges, universities etc. as well as old-age homes have their own special requirements which do not necessarily fit these conditionality’s. This step should augment the educational infrastructure in the country and bring it up to global standards. Similarly, with growing urbanization, there is an increasing demand for old-age homes to cater to the needs of senior citizens. The physical infrastructure in this area also is short of the requirements. Hence, it has also been decided to exempt old-age homes also from the general conditionality’s applicable to the construction development sector.

Inclusion of ‘apiculture’, under controlled conditions, under the agricultural activities permitted for FDI:

FDI has been allowed up to 100% under the automatic route in apiculture under controlled conditions. Apiculture is an important agro-based industry and has the potential of bringing in high economic returns with comparatively low levels of investment. Being a decentralized activity, it does not bring pressure on land and can flourish as a household activity in villages. The activity has the potential of large scale income generation with some infusion of capital and technology. This liberalization would not only provide the desired thrust to the sector but would also bring in international best practices to upgrade the product and the methods of production.

Inclusion of ‘basic and applied R&D on bio-technology pharmaceutical sciences/life sciences’, as an ‘industrial activity’, under industrial parks:

FDI up to 100%, under the automatic route, is permitted in existing and new industrial parks. Under the existing regime, industrial parks cover specified sectors. The coverage has been expanded to specifically include research and development in bio-technology, pharmaceutical and life sciences, given the urgent need to augment research and development infrastructure in these areas as also expand the production facilities.

Notification of the revised limit of 26% for foreign investment in Terrestrial Broadcasting/ FM radio:

The Foreign Investment limit for FM radio has been enhanced to 26% from the earlier 20%. This change ensures conformity of the foreign investment limit in this sector with other similar activities in the Information & Broadcasting sector.

Liberalizations of conversion of imported capital goods/machinery and pre-operative/pre-incorporation expenses to equity instruments:

Conversion of imported capital goods/machinery and pre-operative/pre-incorporation expenses to equity instruments had been permitted in the last Circular on FDI Policy, effective 1 April, 2011. It was stipulated that such conversions must be made within a period of 180 days of the date of shipment of capital goods/machinery or retention of advance against equity and that payments made through third parties would not be allowed. This conveyed the sense that the onus of conversion is on the investor with no allowance for the FIPB process involved. This has been clarified through the present amendment, under which the time limit for making applications for such conversions will be 180 days. Further, payments for pre-operative/incorporation expenses can now be made directly by the foreign investor to the company or through a bank account, opened by the Foreign Investors, as provided under the FEMA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific

circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 95555554890

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ADVANTAGE OF FOREIGN INWARD REMITTANCE CERTIFICATION (FIRC)

ADVANTAGE OF FOREIGN INWARD REMITTANCE CERTIFICATION (FIRC)

18FOREIGN INWARD REMITTANCE CERTIFICATE (FIRC)

1. Introduction

 Foreign Inward Remittance Certificate (FIRC) is a document that provides proof of inward remittance to India. Such remittance could be either on account of Foreign Direct Investment (FDI) or towards export receivables or towards sale of securities by resident to a non resident. It is treated as documentary evidence by most of the statutory authorities for confirming the validity of the convertible foreign exchange received by the beneficiary.

2. Purpose

When a beneficiary receives fund from outside India, it will be credited to his account only through an Authorized Dealer (normally a Bank). (Authorized dealer means an authorized person by the Reserve Bank of India to deal in foreign exchange or in foreign securities under the Foreign Exchange Management Act). If the bank, in which the beneficiary has an account, is not an Authorized Dealer, then the remittance needs to be received by the beneficiary through an Authorized Dealer. Based on the information provided by the beneficiary upon receipt of foreign remittance, the banker issues FIRC stating the purpose of receipt i.e. towards equity investment, advance against export of services / goods, capital expenditure etc.

3. Relevance

 A few cases where FIRC assumes importance

  1. In case of Issue of Shares to a Foreign Entity/person, FIRC is a proof for receipt of share application money.
  2. Similarly it is also proof that share purchase consideration has been received by a resident seller, in case of transfer of shares by a resident Indian to a non-resident buyer.
  3. In case of export of services there is no Service tax to be paid, subject to Export of Services Rules. Here again FIRC becomes a documentary proof for exports made and remittances received thereof in freely convertible foreign exchange.
  4. In case of export promotion schemes like Advance Licensed, EPCG (Export Promotion Capital Goods) etc., FIRC is one of the important documents to be submitted to DGFT as a proof of export made.   

4. Contents and issue procedure 

FIRC normally contains the following details:

  • Name of the beneficiary
  • Whether the amount is paid by cash or by crediting the beneficiary’s a/c
  • Name and address of the remitted
  • Name and address of the remitting bank
  • DD/TT No/Cheque No
  • Foreign Direct Investment amount in Foreign currency
  • Equivalent rupee amount (in figures as well as words)
  • In favour of whom the amount has come
  • Exchange rate applied
  • Purpose of the remittance as stated by beneficiary

It is signed by the Authorized signatory of the AD bank and countersigned by one more person.  As a procedure, this Certificate is issued to the address of the account holder, normally within a period of 15 days from the date of credit of funds to beneficiary’s account. FIRC must be kept in safe custody since issue of duplicate involves certain complicated procedure which is time consuming.

Generally there is confusion about which bank should issue FIRC in case the inward remittance has come into the beneficiary’s account through more than one bank.  In our practical experience and as per clarifications received from RBI as well as provisions under FEMA, the first bank that receives the inward remittance in convertible foreign exchange must issue the FIRC since it would have the details of the overseas remitting bank.

5. Conclusion

As explained above, FIRC assumes great importance in respect of remittances received from outside India.  Therefore, it is critical that beneficiaries follow up with the banks and obtain the FIRC immediately after credit of inward remittance.  Particular attention needs to be paid to “purpose of Foreign Direct Investment” because any wrong mention of this has serious implications in terms of remittance, usage and accounting of the same.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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MANUAL SELECTION OF CASES FOR SCRUTINY

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

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  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:-
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. e) Returns filed in response to notice under section 148 of the Act.
  7. f) Cases where registration u/s 12M 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.
  8. g) Cases where the approval already granted u/s 1O(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.
  9. 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 Pro CCIT/CCIT/Pr. DGIT/DGIT concerned before selecting such a case for scrutiny.
  10. 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.
  11. 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, Pro 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.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

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