corporate & other laws update december 3, 2015

CORPORATE AND PROFESSIONAL UPDATE DECEMBER 3, 2015

FAQ on Company Law:

Query: One of my client owns a Hospital and he is a practicing Surgeon and has been appointed by the company as its director and now it wants to pay him fee, on case to case basis, for surgery performed on the patients at the hospital.

Our query is whether payment of such fee to him would amount to payment of managerial remuneration to director under the Companies Act, 2013.

Please advise to ensure that the same does not contravene any provision of the Companies Act, 2013.

Answer: In the given case, a practicing Surgeon has been appointed as a director. He has to be paid fee for surgeries performed by him; it shall be fully possible under section 197(4) which states that the remuneration payable to the directors including MD or WTD or manager shall be inclusive of the remuneration payable for the services rendered by him in any other capacity except the following:

(a) the services rendered are of a professional nature; and

(b) in the opinion of the Nomination and Remuneration Committee (if applicable) or the Board of Directors in other cases, the director possesses the requisite qualification for the practice of the profession.

The company can therefore, pay a remuneration as fee for surgeries performed by him as professional fee which shall not be construed as a Managerial Remuneration under the Act.

MCA Update:

Versions of Form DIR-3, DIR-6, FC-4, MGT-14, INC-7, INC-22, SH-7, INC-29, DIR-12, CHG-1 u[dated w.e.f 02/12/2015. Stakeholders are requested to plan accordingly.

Direct taxes:

To exclude the work of fabrication from the works contract as per the work order would render it (works contract) truncated to a form not intended by the customer.

This would strike as well at the root of the mandate of correlation of a works contract and the corresponding composition rate of tax as envisaged by Section 55A of the Act and the Notification issued thereunder- (Voltas Ltd. Vs. State of Gujarat, Supreme Court).

ITAT is right in holding that the unabsorbed depreciation should be allowed before the allowance of the unabsorbed investment allowance in computing income of the appellant/assessee for the Assessment Year 1991-1992, when the assessee had not claimed the unabsorbed depreciation in its income-tax return though it had claimed depreciation for the current year- (Seshasayee Paper & Boards Ltd. Vs. DCIT, Supreme Court).

Indirect Taxes:

Refund claim – CENVAT Credit – denial of Cenvat credit refund on the ground that supply of goods from one 100% EOU to another 100% EOU will not be considered as ‘physical export’ is not proper – refund allowed- (M/s Apotex Pharmachem India Pvt. Ltd., Bangalore Versus Commissioner of Central Excise, Bangalore Central Excise, Commissionerate, Bangalore,CESTAT BANGALORE).

Hope the information will assist you in your Professional endeavors. For query or help, contact: singh@carajput.com  or call at 9555555480