Highlights of the UNION Budget 2016

The thrust of tax proposals this year falls in nine categories:-

Relief to small tax payers.

Measures to boost growth and employment generation.

Incentivizing domestic value addition to help Make in India.

Measures for moving towards a pensioned society.

Measures for promoting affordable housing.

Additional resource mobilization for agriculture, rural economy and clean environment.

Reducing litigation and providing certainty in taxation.

Simplification and rationalization of taxation.

Use of Technology for creating accountability.

Relief to small tax payers.

Section87A

  • In order to lessen tax burden on individuals with income not exceeding `5 lakhs, it has been proposed to raise the ceiling of tax rebate under section87A from `2,000 to `5,000. There are 2 crore tax payers in this category who will get a relief of `3,000 in their tax liability.

Section 80GG

  • The people who do not have any house of their own and also do not get any house rent allowance from any employer today get a deduction of `24,000 per annum from their income to compensate them for the rent they pay. It has been proposed to increase the limit of deduction in respect of rent paid under section 80GG from `24,000 per annum to `60,000 per annum, which should provide relief to those who live in rented houses.

Section 44AD

  • Presumptive taxation scheme under section 44AD of the Income Tax Act is available for small and medium enterprises i.e non corporate businesses with turnover or gross receipts not exceeding one crore rupees. At present about 33 lakh small business people avail of this benefit, which frees them from the burden of maintaining detailed books of account and getting audit done.  It has been proposed to increase the turnover limit under this scheme to Rupees two crores which will bring big relief to a large number of assesses in the MSME category.

Section 44AD

  • It has also been propsed to extend the presumptive taxation scheme to professionals with gross receipts up to `50 lakh with the presumption of profit being 50% of the gross receipts.

Measures to boost growth and employment generation

The highlights on phasing out exemptions are as follows:-

The accelerated depreciation provided under IT Act will be limited to maximum 40% from 1.4.2017.

The benefit of deductions for Research would be limited to 150% from 1.4.2017 and 100% from 1.4.2020.

The benefit of section 10AA to new SEZ units will be available to those units which commence activity before 31.3.2020.

The weighted deduction under section 35CCD for skill development will continue up to 1.4.2020.

 

2.  The reduction in corporate tax rate has to be calibrated with
additional revenue expected from the incentives being phased out. The

 

benefits from phasing out of exemptions are available to Government only gradually. In the first phase, therefore, It has been proposed the following two changes in corporate income-tax rates:-

 

  • The new manufacturing companies which are incorporated on or after 1.3.2016 are proposed to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.

 

  • It has also been propses to lower the corporate income tax rate for the next financial year of relatively small enterprises i.e companies with turnover not exceeding 5 crore (in the financial year ending March 2015), to 29% plus surcharge and cess.

Startups generate employment, bring innovation and are expected to be key partners in Make in India programme. It has been proposed to assist their propagation through 100% deduction of profits for 3 out of 5 years for startups set up during April 2016 to March 2019. MAT will apply in such cases. Capital gains will not be taxed if invested in regulated/notified Fund of Funds and by individuals in notified startups, in which they hold majority shares.

  1. Research is the driver of innovation and innovation provides a thrust to economic growth. It has been proposed a special patent regime with 10% rate of tax on income from worldwide exploitation of patents developed and registered in India.
  1. In order to get more investment in Asset Reconstruction Companies (ARCs) which play a very important role in resolution of bad debts, It has been proposed to provide complete pass through of income-tax to securitization trusts including trusts of ARCs. The income will be taxed in the hands of the investors instead of the trust. However, the trust will be liable to deduct tax at source.
  1. The period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from three to two years.
  1. Non-banking financial companies shall be eligible for deduction to the extent of 5% of its income in respect of provision for bad and doubtful debts.
  1. The determination of residency of foreign company on the basis of Place of Effective Management (POEM) is proposed to be deferred by one year.
  1. It has been to reiterated with commitment to implement General Anti Avoidance Rules (GAAR) from 1.4.2017.
  1. n order to meet with our commitment to BEPS initiative of OECD and G-20, the Finance Bill, 2016 includes provision for requirement of country by country reporting for companies with a consolidated revenue of more than Euro 750 million.
  1. It has been proposed to exempt service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by Ministry of Skill Development & Entrepreneurship.

It has been proposed to exempt service tax on general insurance services provided under ‘Niramaya’ Health Insurance Scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability.

  1. To promote use of refrigerated containers, It has been proposed to reduce the basic custom and excise duty on them to 5% and 6% respectively.
  1. A number of assistive devices, rehabilitation aids and other goods for differently abled (Divyang) persons attract Nil basic customs duty. It has been proposed to extend this exemption to Braille paper.

Incentivising domestic value addition to help Make in India.

Customs and excise duty structure plays an important role in incentivizing domestic value addition towards Make in India campaign of our Government. In line with that, It has been proposed to make suitable changes in customs and excise duty rates on certain inputs, raw materials, intermediaries and components

and certain other goods and simplify procedures, so as to reduce costs and improve competitiveness of domestic industry in sectors like Information technology hardware, capital goods, defence production, textiles, mineral fuels & mineral oils, chemicals & petrochemicals, paper, paperboard & newsprint, Maintenance repair and overhauling [MRO] of aircrafts and ship repair etc.

Measures for moving towards a pensioned society

Pension schemes offer financial protection to senior citizens.  It has been proposed to make withdrawal up to 40% of the corpus at the time of retirement tax exempt in the case of National Pension Scheme.

  1. In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made after 1.4.2016.
  1. Further, the annuity fund which goes to the legal heir after the death of pensioner will not be taxable in all three cases.  Also, It has been proposed a monetary limit for contribution of employer in recognized Provident and Superannuation Fund of 1.5 lakh per annum for taking tax benefit.

It has been proposed to exempt from service tax the Annuity services provided by the National Pension System (NPS) and Services provided by EPFO to employees.

It has also been proposed to reduce service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases.

Measures for promoting affordable housing

Pradhan Mantri Awas Yojna embodies the assurance of the Government to address the housing needs of all and more specifically the poor, in a time bound manner. Construction of houses creates considerable employment opportunities as well. In order to fuel activity in the housing sector, It has been proposed to give 100% deduction for profits to an undertaking from a housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019, and is completed within three years of the approval. Minimum Alternate Tax will, however, apply to these undertakings.

  1. For the ‘first – home buyers’, It has been proposed to give deduction for additional interest of 50,000 per annum for loans up to 35 lakh sanctioned during the next financial year, provided the value of the house does not exceed 50 lakh.
  1. Another proposal to stimulate housing activity is to facilitate investments in Real Estate Investment Trusts. Ii has been proposed that any distribution made out of income of SPV to the REITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax.
  1. It is proposed to exempt service tax on construction of affordable houses up to 60 square metres under any scheme of the Central or State Government  including PPP Schemes.
  1. It has also been proposed to extend excise duty exemption, presently available to Concrete Mix manufactured at site for use in construction work at such site to Ready Mix Concrete.

Additional resource mobilization for agriculture, rural economy and clean environment

Dividend Distribution Tax (DDT) uniformly applies to all investors irrespective of their income slabs. This is perceived to distort the fairness and progressive nature of taxes. Persons with relatively higher income can bear a higher tax cost. It,is therefore, proposed that in addition to DDT paid by the companies, tax at the rate of 10% of gross amount of dividend will be payable by the recipients, that is, individuals, HUFs and firms receiving dividend in excess of 10 lakh per annum.

It has also been proposed to raise the surcharge from 12% to 15% on persons, other than companies, firms and cooperative societies having income above 1 crore.

  1. It has also been proposed to collect tax at source at the rate of 1% on purchase of luxury cars exceeding value of Rs.ten lakh and purchase of goods and services in cash exceeding Rs.two lakh. For compliant tax payers with resources, this levy not only advances collection of tax when the expenditure is incurred, but it provides data to the tax authorities to identify the persons who incur such expenditure, but may be missing from the tax base. Farmers and notified class of persons will have an option of giving a form by which TCS will not be charged.
  1. Rate of Securities Transaction tax in case of ‘Options’ is proposed to be increased from .017% to .05%.
  1. In order to tap tax on income accruing to foreign e-commerce companies from India, it is proposed that a person making payment to a non-resident, who does not have a permanent establishment, exceeding in aggregate 1 lakh in a year, as consideration for online advertisement, will withhold tax at 6% of gross amount paid, as Equalization levy. The levy will only apply to B2B transactions.
  1. It has also been proposed to impose a Cess, called the Krishi Kalyan Cess, @ 0.5% on all taxable services, proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The Cess will come into force with effect from 1st June 2016. Input Tax credit of this cess will be available for payment of this cess.
  1. The pollution and traffic situation in Indian cities is a matter of concern. I propose to levy an infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs.
  1. It has also been proposed to impose an excise duty of ‘1% without input tax credit or 12.5% with input tax credit’ on articles of jewellery [excluding silver jewellery, other than studded with diamonds and some other preciousstones], with a higher exemption and eligibility limits of 6 crores and 12 crores respectively. Necessary steps will also be taken to enable the new taxpayers to comply with this levy without any difficulty.

 

  1. It has been proposed to change the excise duty on branded readymade garments and made up articles of textiles with a retail sale price of 1,000 and above from ‘Nil without input tax credit or 6%/12.5% with input tax credit’ to ‘2% without input tax credit or 12.5% with input tax credit’.

It has been proposed to rename the ‘Clean Energy Cess’ levied on coal, lignite and peat as ‘Clean Environment Cess’ and simultaneously increase its rate from 200 per tonne to 400 per tonne.

  1. To discourage consumption of tobacco and tobacco products, It has been proposed to increase the excise duties on various tobacco products other than beedi by about 10 to 15%.
  1. It has been proposed to amend the Finance Act, 1994 so as to declare assignment by the Government of the right to use the radio-frequency spectrum and its subsequent transfers a service, to make it clear that assignment of right to use the spectrum is a service leviable to service tax and not sale of intangible goods.

Reducing litigation and providing certainty in taxation

Moving towards a lower tax regime with non-litigious approach. Thus, while compliant taxpayers can expect a supportive interface with the department, tax evasion will be countered strongly. Capability of the tax department to detect tax evasion has improved because of enhanced access to information and availability of technology driven analytical tools to process such information. I want to give an opportunity to the earlier non-compliant to move to the category of compliant.

It has been proposed a limited period Compliance Window for domestic taxpayers to declare undisclosed income or income represented in the form of any asset and clear up their past tax transgressions by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. There will be no scrutiny or enquiry regarding income declared in these declarations under the Income Tax Act or the Wealth Tax Act and the declarants will have immunity from prosecution. Immunity from Benami Transaction (Prohibition) Act, 1988 is also proposed subject to certain conditions. The surcharge levied at 7.5% of undisclosed income will be called Krishi Kalyan surcharge to be used for agriculture and rural economy. We plan to open the window under this Income Disclosure Scheme from 1st June to 30th September, 2016 with an option to pay amount due within two months of declaration.

Litigation is a scourge for a tax friendly regime and creates an environment of distrust in addition to increasing the compliance cost of the

tax payers and administrative cost for the Government. There are about 3 lakh tax cases pending with the 1st Appellate Authority with disputed amount being 5.5 lakh crores. In order to reduce this number, It has been proposed a new Dispute Resolution Scheme (DRS).

 

  1. A taxpayer who has an appeal pending as of today before the

Commissioner (Appeals) can settle his case by paying the disputed tax and interest up to the date of assessment. No penalty in respect of Income-tax cases with disputed tax up to 10 lakh will be levied. Cases with disputed tax exceeding 10 lakh will be subjected to only 25% of the minimum of the imposable penalty for both direct and indirect taxes. Any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty. Certain categories of persons including those who are charged with criminal offences under specific Acts are proposed to be barred from availing this scheme.

In order to give an opportunity to the past cases which are ongoing under the retrospective amendment, It has been proposed a one-time scheme of Dispute Resolution for them, in which, subject to their agreeing to withdraw any pending case lying in any Court or Tribunal or any proceeding for arbitration, mediation etc. under BIPA, they can settle the case by paying only the tax arrears in which case liability of the interest and penalty shall be waived.

Levy of heavy penalty for concealment of income has over the years resulted in large number of disputes despite a number of decisions of the Apex court on interpretation of statutory provisions and principles guiding imposition of penalty. At present the Income-tax Officer has discretion to levy penalty at the rate of 100% to 300% of tax sought to be evaded. It has been proposed to modify the entire scheme of penalty by providing different categories of misdemeanor with graded penalty and thereby substantially reducing the discretionary power of the tax officers. The penalty rates will now be 50% of tax in case of underreporting of income and 200% of tax where there is misreporting of facts. Remission of penalty is also proposed in certain circumstances where taxes are paid and appeal is not filed.

Another issue which has led to considerable number of disputes is quantification of disallowance of expenditure relatable to exempt income in terms of Section 14A of the Income Tax Act. It has been proposed to rationalize the formula in Rule 8D governing such quantification. The said Rule is being amended to provide that disallowance will be limited to 1% of the average monthly value of investments yielding exempt income, but not exceeding the actual expenditure claimed.

As another tax payer friendly measure, It has been proposed to provide a time limit of one year for disposing petitions of the tax payers seeking waiver of interest and penalty.

The Income-tax Department is also issuing instruction making it mandatory for the assessing officer to grant stay of demand once the assesse pays 15% of the disputed demand, while the appeal is pending before Commissioner of Income-tax (Appeals). In case of deviation, assessing officer has to get orders of his superiors. The tax payer also has an option to go to superior officer in case he does not agree with conditions of stay order passed by the subordinate officer.

In order to remove backlog of cases it has been proposed to creat 11 new benches of Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

The monetary limit for deciding an appeal by a single member Bench of ITAT is proposed to be enhanced from 15 lakhs to 50 lakhs.

It has also been proposed to amend the CENVAT Credit Rules, 2004, so as to improve credit flow, reduce the compliance burden and associated litigation, particularly those relating to apportionment of credit between exempted and non exempted final products/services. The amendments in these rules will also enable manufacturers with multiple manufacturing units to maintain a common warehouse for inputs and distribute inputs with credits to the individual manufacturing units.

Simplification and rationalization of taxation

The Government has already accepted many recommendations of Tax Administration Reform Committee and It has been proposed to accept a number of recommendations of Justice Easwar Committee in this Budget.

To reduce multiplicity of taxes, associated cascading and to reduce cost of collection, It is proposed to abolish 13 cesses, levied by various Ministries in which revenue collection is less than 50 crore in a year.

To improve the cash flow position of small tax payers who get their funds blocked due to current TDS provision, It has been proposed to rationalize TDS provisions for Income Tax as Given hereunder.

Measures for TDS / TCS Rationalisation

Present Heads Existing Proposed
Section Threshold Threshold
Limit (`) Limit (`)
192A Paymentof accumulated 30,000 50,000
balance due to an employee
in EPF
194BB Winnings from Horse 5,000 10,000
Race
194C Payments to Contractors Aggregate Aggregate
annual limit annual limit
of 75,000 of 1,00,000
194LA Payment of Compensation on 2,00,000 2,50,000
acquisition of certain
Immovable Property
194D Insurance commission 20,000 15,000
194G Commission on sale of lottery 1,000 15,000
tickets
194H Commission or brokerage 5,000 15,000
Present Heads Existing Proposed
Section Rate of Rate of
TDS (%) TDS (%)
194DA Payment in respect of Life 2% 1%
Insurance
Policy
194EE Payments in respect of NSS 20% 10%
Deposits
194D Insurance commission 10% 5%
194G Commission on sale of lottery 10% 5%
tickets
194H Commission or brokerage 10% 5%
194K Income in respect of Units To be
omitted w.e.f
01.06.2016
194L Payment of Compensation on To be
acquisition of Capital Asset omitted w.e.f
01.06.2016

 

 

  1. Non-residents without PAN are currently subjected to a higher rate of TDS. It is proposed to amend the relevant provision to provide that on furnishing of alternative documents, the higher rate will not apply.

 

  1. The facility for revision of return, hitherto available to a service tax assessee only, is being extended to Central Excise assessees also.

 

  1. It has been proposed to provide additional options to banking companies and financial institutions, including non-banking financial companies, for reversal of input tax credits with respect to non-taxable services provided by them by way of extending deposits, loans and advances.

 

  1. It has been proposed to amend the Customs Act to provide for deferred payment of customs duties for importers and exporters with proven track record.

The customs Baggage Rules for international passengers are being simplified so as to increase the free baggage allowance. The filing of baggage declaration will be required only for those passengers who carry dutiable goods.

Use of Technology for creating accountability

Technology is a boon for mankind.  We plan to use technology in taxation Department in a big way to make life simpler for a law abiding citizen, and also for data mining to track tax evaders.

A pilot was run in 2015-16 for e-assessment to obviate the requirement for tax payers to visit the Income-tax offices. It has been proposed to expand the scope of e-assessments to all assesses in 7 mega cities in the coming years.

Mandatory Compliances for a Private Limited Company in India as per companies Act 2013:

Although Private Limited Company is the most popular form of starting a business, there are various compliances which are required to be followed once your business is incorporated. Adidas Yeezy Boost 750 Managing the day to day operations of your business along with complying the corporate laws can be little taxing for any entrepreneur. Hence, it is essential to take help of a professional and also understand such legal requirements to ensure timely fulfilment of compliances, without any levy of interest or penalty.

We have elaborated below some of the common compliances which a private limited company has to mandatorily ensure:

Compliance Requirement Description and Timeline
Appointment of Auditor Auditor will be appointed for the 5 (Five) years and form ADT-1 will be filed for 5-year appointment.The first Auditor will be appointed within one month from the date of incorporation of the Company.
Statutory Audit of Accounts Every Company shall prepare its Accounts and get the same audited by a Chartered Accountant at the end of the Financial Year compulsorily. The Auditor shall provide an Audit Report and the Audited Financial Statements for the purpose of filing it with the Registrar.
Filing of Annual Return (Form MGT-7) Every Private Limited Company is required to file its Annual Return within 60 days of holding of Annual General Meeting. Annual Return will be for the period 1st April to 31st March.
Filing of Financial Statements (Form AOC-4) Every Private Limited Company is required to file its Balance Sheet along with statement of Profit and Loss Account and Director Report in this form within 30 days of holding of Annual General Meeting.
Holding Annual General Meeting It is mandatory for every Private Limited Company Company to hold an AGM in every Calendar Year. Companies are required to hold their AGM within a period of six months, from the date of closing of the Financial Year.
Preparation of Directors’ Report Directors’ Report will be prepared with a mention of all acheterdufrance.com the information required under Section 134.

Statutory Audit

The purpose of a statutory audit is the same as the purpose of any other audit – to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions.

  • Appointment of the Statutory Auditors of the Company.
  • Finalise Annual Accounts with the Auditors of the Company

Annual RoC Filings

  • Private Limited Companies are required to file its Annual Accounts and Returns disclosing details of its shareholders, directors etc to the Registrar of Companies. Ropa Interior Calvin Klein Hombre Such compliances are required to be made once in a year.
  • As a part of Annual Filing, the following forms are to be filed with the ROC:
    • Form MGT-7 (Annual Return) : Every Private Limited Company is required to file its Annual Return within 60 days of holding of Annual General Meeting. Calzoncillos Calvin Klein Baratos Annual Return will be for the period 1st April to 31st March.
    • Form AOC-4 (Financial Statements) : Every Private Limited Company is required to file its Balance Sheet along with statement of Profit and Loss Account and Director Report in this form within 30 days of holding of Annual General Meeting.

Annual General Meeting

  • Every Private Limited Company is required to hold a meeting of its shareholders once in every year within a period of six months from the date of closing of the financial year.
  • The primary agenda of an AGM includes approval of financial statements, declaration of dividends, appointment or re-appointment of auditors, appointment and remuneration of directors etc.
  • The Annual General Meeting shall be held during business hours on a day which is not a public holiday and shall take place at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated.

Board Meetings

  • The First meeting of the Board of Directors of a Private Limited Company shall be conducted within 30 days from the date of Incorporation of company.
  • Further, minimum Four Board Meetings shall be held in a calendar year (one meeting in every 3 months).
    In case of a Private Limited Company which is classified as a “Small Company”, atleast two Board Meetings shall be held in a calendar year (one meeting in every half year)
  • Most of the startups fall within the category of “Small Company”.
  • Minimum 2 directors or 1/3rd of the total number of directors, whichever is greater, are required to be present in meeting of the Board of Directors. The discussions of the meeting need to be drafted and recorded in the form of “Minutes of the Meeting” and maintained at the Registered Office of the Company.
  • Directors should be intimated about the date and purpose of the meeting by giving a notice atleast 7 days in advance from the date of the meeting.

Directors’ Report

Every director has to disclose about his directorship in other companies every year. This shall be done by giving a declaration in writing to the company every year in a specified Directors’ Report format.

Income Tax Compliances

  • Calculation and Quarterly Payment of Advance Tax
  • Filing of Income Tax Returns (Tax will be payable at a flat rate of 30% plus Education Cess)
  • Tax Audit – Mandatory in case sales, turnover or gross receipts of a business exceed Rs. One Crore in the previous year relevant to the assessment year.
  • Filing of Tax Audit Report

Maintenance of Statutory Registers and Records

A Private Limited Company has to maintain various statutory registers and records as required by the Company law such as Register of shares, Register of Members, Register of Directors etc. Besides, Incorporation documents of the company, Resolutions of the meetings of the Board of Directors, Minutes of the Board Meetings and Annual General Meeting etc are also required to be preserved by the Company.

Such records are to be kept at the registered office of the company and shall be open for inspection to its members during business hours. Also, the books of account of every company relating to a period of atleast eight financial years should be preserved and kept in good order.

Other Event Based Filings

Besides Annual Filings, there are various other compliances which need to be done as and when any event takes place in the Company. Yeezy Boost 350 Vente Instances of such events are:

  • Change in Authorised or Paid up Capital of the Company.
  • Allotment of new shares or transfer of shares
  • Giving Loans to other Companies.
  • Giving Loans to Directors
  • Appointment of Managing or whole time Director and payment of remuneration.
  • Loans to Directors
  • Opening or closing of bank accounts or change in signatories of Bank account.
  • Appointment or change of the Statutory Auditors of the Company.

Different forms are required to be filed with the Registrar for all such events within specified time periods. In case, the same is not done, additional fees or penalty might be levied. Hence, it is necessary that such compliances are met on time.

Non-Compliance

If a Company fails to comply with the rules and regulations of the Companies Act, then the Company and every officer who is in default shall be punishable with fine for the period for which default continues.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of XYZ Limited (“the Company”) as of 31 March 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). T Shirt Ralph Lauren Pas Cher Ropa Interior Calvin Klein Mujer These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. Short de Bain Philipp Plein Calvin Klein Tanga We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. T Shirt Versace Homme Pas Cher Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Ropa Interior Masculina Calvin Klein Baratos The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including https://www.viagrapascherfr.com/viagra-femme-prix-pfizer/ the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected.

Rules regarding quoting of PAN for specified transactions amended

The Government is committed to curbing the circulation of black money and widening of tax base. To collect information of certain types acheter viagra of transactions from third parties in a non-intrusive manner, the Income-tax Rules require quoting of Permanent Account Number (PAN) where the transactions exceed a specified limit. Persons who do not hold PAN are required to fill a form and furnish any one of the specified documents to establish their identity.

One of the recommendations of the Special Investigation Team (SIT) on Black Money was that quoting of PAN should be made mandatory for all sales and purchases of goods and services where the payment exceeds Rs.1 lakh. Accepting http://www.cialispharmaciefr24.com/vente-cialis-generique/ this recommendation, the Finance Minister made an announcement to this effect in his Budget Speech. The Government has since received numerous representations from various quarters regarding the burden of compliance this proposal would entail. Considering the representations, it has been decided that quoting of PAN will be required for transactions of an amount exceeding Rs.2 lakh regardless of the mode of payment.

To bring a balance between burden of compliance on legitimate transactions and the need to capture information relating to transactions of higher value, the Government has also enhanced the monetary limits of certain transactions which require quoting of PAN. Adidas Yeezy Pas Cher Homme The monetary limits have now been raised to Rs. Chaussure Adidas Ultra Boost 10 lakh from Rs. 5 lakh for sale or purchase of immovable property, to Rs.50,000 from Rs. Boxer Calvin Klein Al Mayor 25,000 in the case of hotel or restaurant bills paid at any one time, and to Rs. 1 lakh from Rs. 50,000 for purchase or sale of shares of an unlisted company. In keeping with the Government’s thrust on financial inclusion, opening of a no-frills bank account such as a Jan Dhan Account will not require PAN. Other than that, the requirement of PAN applies to opening of all bank accounts including in co-operative banks.

The changes to the Rules will take effect from 1st January, 2016.

The above changes in the rules are expected to be useful in widening the tax net by non-intrusive methods. They are also expected to help in curbing black money and move towards a cashless economy.

A chart highlighting the key changes to Rule 114B of the Income-tax Act is attached.


Sl.
NATURE OF TRANSACTION MANDATORY QUOTING OF PAN (RULE 114B)
Existing requirement New requirement
1. Immovable property Sale/ purchase valued at Rs.5 lakh or more i. Sale/ purchase exceeding Rs.10 lakh; 

ii. T Shirt Kenzo Homme Properties valued by Stamp Valuation authority at amount exceeding Rs.10 lakh will also need PAN.

2 Motor

vehicle (other than two wheeler)

All sales/purchases No change
3. Time deposit Time deposit exceeding Rs.50,000/- with a banking company i. Deposits with Co-op banks, Post Office, Nidhi, NBFC companies will also need PAN; 

ii. Adidas Ultra Boost Femme Pas Cher Ropa Interior Calvin Klein Deposits aggregating to more than Rs.5 lakh during the year will also need PAN

4. Deposit with Post Office Savings Bank Exceeding Rs.50,000/- Discontinued
5. Sale or purchase of securities Contract for sale/purchase of a value exceeding Rs.1 lakh No change
6. Opening an account (other than time deposit) with a banking company. All new accounts. i. Basic Savings Bank Deposit Account excluded (no PAN requirement for opening these accounts); 

ii. T Shirt Versace Homme Pas Cher Ropa Interior Calvin Klein Hombre Co-operative banks also to comply

7. Installation of telephone/ cellphone connections All instances Discontinued
8. Hotel/restaurant bill(s) Exceeding Rs.25,000/- at any one time (by any mode of payment) Cash payment exceeding Rs.50,000/-.
9. Cash purchase of bank drafts/ pay orders/ banker’s cheques Amount aggregating to Rs.50,000/- or more during any one day Exceeding Rs.50,000/- on any one day.
10. Cash deposit with banking company Cash aggregating to Rs.50,000/- or more during any one day Cash deposit exceeding Rs.50,000/- in a day.
11. Foreign travel Cash payment in connection with foreign travel of an amount exceeding Rs.25,000/- at any one time (including fare, payment to travel agent, purchase of forex) Cash payment in connection with foreign travel or purchase of foreign currency of an amount exceeding Rs.50,000/- at any one time (including fare, payment to travel agent)
12. Credit card Application to banking company/ any other company/institution for credit card No change. 

Co-operative banks also to comply.

13. Mutual fund units Payment of Rs.50,000/- or more for

purchase

Payment exceeding Rs.50,000/- for purchase.
14. Shares of company Payment of Rs.50,000/- or more to a company for acquiring its shares i. Opening a demat account; 

ii.

Government takes various steps in last two years to curb the menace of Black Money both within and outside the country.

The present Government has taken various decisions and steps to curb the menace of black money both within and outside the country in last two years. Tangas Calvin Klein Baratos Some of the major decisions and actions taken in this regard are given below:

1. Calvin Klein Bañadores Hombre Calvin Klein Underwear Outlet Sustained steps taken for curbing black money:-

(a) A new Black Money Act has been enacted with strict penalty provisions.

(b) Special Investigation Team has been constituted which is chaired by ex-Supreme Court Judge Justice M.B.

Shah vide notification dated 29thMay, 2014.. Boxer Calvin Klein Mujer Many recommendations of SIT have been implemented since then.

(c) A new Income Disclosure Scheme is formulated for domestic black money.

(d) Enhanced enforcement measures have resulted in un-earthing of tax evasion of approximately Rs 50,000 Crore of indirect taxes andundisclosed income of Rs 21,000 Crore (Prov.). Comprar Calzoncillos Calvin Klein Baratos The value of goods seized on account of smuggling activities has increased to Rs 3,963 Crore in the last two years (32% increase over corresponding two previous years).

(e) Prosecution has been launched in 1466 cases as against 1169 cases in the previous two years (25% increase).

2. Calvin Klein Ropa Interior Hombre Boxer Calvin Klein Amendments made in Prevention of Money-laundering Act, 2002, vide Finance Act, 2015 :

  • The definition of proceeds of crime under PMLA has been amended to enable attachment and confiscation of equivalent asset in India where the asset located abroad cannot be forfeited.
  • Section 8(8) has been inserted in PMLA providing for restoring confiscated property or part thereof, on the directions of Special Court to claimants with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offences of money laundering.
  • Section 132 of Customs Act which deals with offence relating to false declaration / documents in the transaction of any business relating to Customs has been made predicate offence under PMLA to curb trade based money laundering.
  • The

    offence of willful attempt to evade any tax, penalty or interest referred to in section 51 of the

    Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 has been made a scheduled offence under PMLA.

3. Recent Notification under PMLA

In connection with risk mitigation in DNFBP Sector, Revenue Department has taken some steps, which are described as below:

  • Insurance Broker has been notified on 15.4.2015 under Section 2(1)(sa)(vi) of PMLA as person carrying on designated business or profession.
  • Registrar or Sub-registrar has been notified on 17.4.2015 under Section 2(1)(sa)(ii) of PMLA as person carrying on designated business or profession.

4. Foreign Exchange Management Act (FEMA), 1999 has been amended vide Finance Act, 2015.

Reporting On Internal Financial Controls System And Its Operating Effectiveness

Clause (e) of Section 134(5) of the Companies Act, 2013 requires that The Directors’ Responsibility Statement referred to in clause (c) of sub-section (3) shall state that—

(e) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

Section 143(3)(i) of the Act requires that auditor should state in his report that:

“Whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls”

Definition of Internal Control as defined in the Companies Act, 2013

The Companies Act, 2013 has defined internal control in two places. One definition is given under Section 134(5) (e). Another definition is given in Section 134(10) by way of inclusion of Standard on Auditing. Auditing Standards which are now part of the Companies Act, 2013, by virtue of Section 143(10) defines internal control as follows:

Definition as per Section 134(5) of the Companies Act, 2013 Definition as per SA 315
Explanation.–For the purposes of this clause, the term “internal financial controls” means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information; Internal control – The process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of an entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations, safeguarding of assets, and compliance with applicable laws and regulations. The term “controls” refers to any aspects of one or more of the components of internal control.

It may be noted that both the definition are not similar at

the same time they have vast coverage.

Further, it may be noted that both Management and the Auditor will need to follow both the definition as given in the charging Section 143 i.e. as per Standard on Auditing and also the definition given in Section 134(5). Standards on Auditing are applicable to all the companies and are mandatorily required to be followed.

Distinction between Internal Financial Control and Operating Control

It may be noted that Internal Controls and policies can be applied by the management for various operational activities of the Company.

A question arises whether auditor is required to comment on all the controls of the Company or only those which are related to Financial Controls. T Shirt Kenzo Homme Soldes A close review of above definitions suggests that only the Financial Controls as required to be reported in SA 315 is the auditor’s responsibility for reporting. This is also termed as ”Internal controls relating to financial reporting’.

Management on the other hand may have more controls relating to various operations of the Company viz. Shop Floor management etc. Unless they impact financial reporting they would not come under preview of above section.

Auditors Duty

Auditor while ascertaining the operating and effectiveness of control will have to comply with all the requirements enumerated in SA 315 and document his findings.

Documentation of Auditor should therefore needs to be robust enough to demonstrate that he has looked into the Internal Controls for each assertion and mapped them to various risks in respect of account balances and each class of transaction.

Management’s Responsibility

The approach of new Companies Act is of self-governance and in case of non-governance, stringent penalties are provided in the Act. Management should therefore, be cautious to take following steps to ensure that there exist a proper internal control system.

  1. Review existing process and map them with risks & controls and ensure that they are adequate.
  2. Improve the process and controls wherever it is observed that process is slack.
  3. Assess Fraud Risk and built processes around the same so that risk is minimised.
  4. Test Internal controls so formed on regular basis and ensure that processes are working effectively.
  5. In-house team may be assigned this task or a consultant may also be appointed in the first year of implementation.

What are https://www.acheterviagrafr24.com/achat-viagra-en-ligne-sans-ordonnance/ the consequences when auditor concludes that internal controls were not effective?

  1. The Auditor report will include a qualified opinion. Bragas de Calvin Klein Not only merely for internal control, but also under section 143(3)(f) of the Act as non-existence of appropriate internal control can also have adverse affect on the functioning of the Company.
  2. It can be safely concluded that non existence of internal control would imply that existence of Fraud cannot be effectively monitored and the financial statements would lack credibility.
  3. Credit rating agencies will take it negatively also it may affect negotiation power of the entity with borrowers.

Conclusion

The requirement of internal control is now legally mandated. Philipp Plein Soldes Homme Calzoncillos Calvin Klein Baratos In respect of the listed companies, it is by virtue of Section 134(5) of the Companies Act, 2013. Private limited companies are covered by inclusion of Standard on Auditing, in the Companies Act and reporting requirement by auditors. Calvin Klein Bragas It is therefore, suggested that all the companies should re-visit the existing internal controls and strengthens them to ensure that whenever they are tested will not fail.

Disclaimer

The content of this article is intended to provide a general guide to the subject matter.

 

Clarification regarding place of removal – reg.

Attention is invited to Circular No. Calvin Klein Boxer Hombre 988/12/2014-CX dated 20.10.2014 issued from F. No.
267/49/2013-CX.8 on the above subject wherein it was clarified that the place of removal needs
to be ascertained in terms of provisions of Central Excise Act, 1944 read with provisions of the
Sale of Goods Act, 1930 and that payment of transport, payment of insurance etc are not the
relevant considerations to ascertain the place of removal. The place where sale takes place or
when the property in goods passes from the seller to the buyer is the relevant consideration to
determine the place of removal.
2. In this regard, a demand has been raised by the trade that it may be clarified that in the
case of exports, for purposes of CENVAT credit of input services, the place of removal is the
port or the airport from where the goods are finally exported.
3. The matter has been examined. Ropa Interior Calvin Klein Mujer It is seen that section 23 of the Sale of Goods Act, 1930
provides that where, in pursuance of the contract, the seller delivers the goods to the buyer or to a
carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the
buyer, and does not reserve the right of disposal, he is deemed to have unconditionally
appropriated the goods to the contract, and therefore, in view of the provisions of the Section 23
(1) of the Sale of Goods Act, 1930, the property in the goods would thereupon pass to the buyer.
Similarly, section 39 of the Sale of Goods Act, 1930 provides that where, in pursuance of a
contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the
goods to a carrier, whether named by the buyer or not for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a
delivery of the goods to the buyer.

In most of the cases, therefore, it would appear that handing over of the goods to the
carrier/transporter for further delivery of the goods to the buyer, with the seller not reserving the
right of disposal of the goods, would lead to passing on of the property in goods from the seller
to the buyer and it is the factory gate or the warehouse or the depot of the manufacturer which
would be the place of removal since it is here that the goods are handed over to the transporter
for the purpose of transmission to the buyer. T Shirt Kenzo Homme It is in this backdrop that the eligibility to Cenvat
Credit on related input services has to determined.
5. Clearance of goods for exports from a factory can be of two types. The goods may be
exported by the manufacturer directly to his foreign buyer or the goods may be cleared from the
factory for export by a merchant exporter.
6. In the case of clearance of goods for export by manufacturer exporter, shipping bill is
filed by the manufacturer exporter and goods are handed over to the shipping line. Polo Philipp Plein After Let
Export Order is issued, it is the responsibility of the shipping line to ship the goods to the foreign
buyer with the exporter having no control over the goods. Calvin Klein Underwear Outlet In such a situation, transfer of property
can be said to have taken place at the port where the shipping bill is filed by the manufacturer
exporter and place of removal would be this Port/ICD/CFS. Needless to say, eligibility to
CENVAT Credit shall be determined accordingly.
7. In the case of export through merchant exporters, however, two transactions are involved.
First is the transaction between the manufacturer and the merchant exporter. The second
transaction is that between the merchant exporter and the foreign buyer. As far as Central Excise
provisions are concerned, the place of removal shall be the place where the property in the goods
passes from the manufacturer to the merchant exporter. As explained in paragraph 4 supra, in
most of the cases, this place would be the factory gate since it is here that the goods are
unconditionally appropriated to the contract in cases where the goods are sealed in the factory,
either by the Central Excise officer or by way of self-sealing with the manufacturer of export
goods taking the responsibility of sealing and certification, in terms of notification no. Boxer Calvin Klein Al Mayor 19/2004-
Central Excise (N.T.) dated 6.9.2004, etc.
8. Calvin Klein Bañadores However, in isolated cases, it may extend further also depending on the facts of the case,
but in no case, this

place can be beyond the Port/ ICD/CFS where shipping bill is filed by the
merchant exporter.

The government has notified amendments to the Companies Act, Comprar Bikini Calvin Klein which makes it easier to do business and provides for stricter penalties for fraud cases.

The amendments, which were passed by Parliament earlier this month, have been made to the Companies Act, 2013, mainly to deal with board resolutions, Calvin Klein Boxer Baratos utilisation of unclaimed dividends and setting-up of a firm among others as well as to bring the law in tune with the global standards.

– The Act has removed threshold limit for minimum capital required for formation of private or public sector firm.

For setting-up a private company, Calvin Klein Ropa Interior Hombre Comprar Calzoncillos Calvin Klein new Act has done away with the norms of Rs 1 lakh minimum capital requirement and Rs 5 lakh in case of a public sector unit and various other amendments.

Besides, Calzoncillos Boxer Calvin Klein the concept of company seal has also been done away with.

“Provided that in case a company does not have a common seal, the authorisation…shall be made by two directors or by a director and the company Secretary, wherever the company has appointed a company Secretary,” the notification said.

With regard to acceptance of deposits by the companies, in contravention with regulations, the new law said that if a firm fails to repay the deposit or any interest due thereon within the time specified, it will be “punishable with fine which shall not be less than Rs 1 crore but which may extend to Rs 10 crore” in addition to payment of deposits.

“…every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than Rs 25 lakh but which may extend to Rs 2 crore, Calvin Klein Bañadores or with both,” said the notification.

In case of dividend, the amended Act said that no company will declare dividend unless “carried over previous losses and depreciation not provided in previous year or years are set off against profit of the company for the current year.”

The unclaimed dividend will not be transferred to Investor Education and Protection Fund.

With regard to trying fraud cases, the new norms said that all cases under the Companies Act cannot be tried by a special court and that only serious offences will go to such courts, while the others would be tried by normal magisterial court.

The Act has set a threshold limit for auditors to report frauds to central government with rider.

“…if an auditor of a company in course of performance of his duties as auditor, Ropa Interior Calvin Klein Mujer Barata has reason to believe that an offence of fraud involving such amount as may be prescribed, is being or has been committed in the company by its officers or employees, the auditor shall report the matter to the Central Government,” as per notified Act.

“In case of a fraud involving lesser than the specified amount, the auditor shall report the matter to the audit committee, Slip Calvin Klein Calvin Klein Boxer ” it added.

Besides,

Accounting Standard (AS) 16 Borrowing Costs

Objective

The objective of this Standard is to prescribe the accounting treatment for borrowing costs.

Scope

This Standard should be applied in accounting for borrowing costs.

This Standard does not deal with the actual or imputed cost of owners’ equity, including preference share capital not classified as a liability.

Definitions

  1. The following terms are used in this Standard with the meanings specified:

  • Borrowing costs are interest and other costs incurred by an enterprise in connection with the borrowing of funds.

  • A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.

Explanation:

What constitutes a substantial period of time primarily depends on the facts and circumstances of each case. Adidas Yeezy Boost 750 Pas Cher However, ordinarily, a period of twelve months is considered as substantial period of time unless a shorter or longer period can be justified on the basis of facts and circumstances of the case. In estimating the period, time which an asset takes, technologically and commercially, to get it ready for its intended use or sale is considered.

  1. Borrowing costs may include:

1) Interest and commitment charges on bank borrowings and other short-term and long-term borrowings;

2) Amortisation of discounts or premiums relating to borrowings;

3) Amortisation of ancillary costs incurred in connection with the arrangement of borrowings;

4) Finance charges in respect of assets acquired under finance leases or under other similar arrangements; and

exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

Explanation:

Exchange differences arising from foreign currency borrowing and considered as borrowing costs are those exchange differences which arise on the amount of principal of the foreign currency borrowings to the extent of the difference between interest on local currency borrowings and interest on foreign currency borrowings. T Shirt Philipp Plein Pas Cher Thus, the amount of exchange difference not exceeding the difference between interest on local currency borrowings and interest on foreign currency borrowings is considered as borrowings cost to be accounted for under this Standard and the remaining exchange difference, if any, is accounted for under AS 11, The Effect of Changes in Foreign Exchange Rates. For this purpose, the interest rate for the local currency borrowings is considered as that rate at which the enterprise would have raised the borrowings locally had the enterprise not decided to raise the foreign currency borrowings.

Examples of qualifying https://www.acheterviagrafr24.com/achat-viagra-en-ligne-suisse/ assets are manufacturing plants, power generation facilities, inventories that require a substantial period of time to bring them to a saleable condition, and investment properties. Other investments, and those inventories that are routinely manufactured or otherwise produced in large quantities on a repetitive basis over a short period of time, are not qualifying assets. T Shirt Versace Assets that are ready for their intended use or sale when acquired also are not qualifying assets.

Recognition

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset should be capitalised as part of the cost of that asset. T Shirt Balmain The amount of borrowing costs eligible for capitalisation should be determined in accordance with this Standard. Other borrowing costs should be recognised as an expense in the period in which they are incurred.

  1. Borrowing costs are capitalised as part of the cost of a qualifying asset when it is

    probable that they will result in future economic benefits to the enterprise and the costs can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

Borrowing Costs Eligible for Capitalisation

The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are those borrowing costs that would have been avoided if the expenditure on the qualifying asset had not been made. When an enterprise borrows funds specifically for the purpose of obtaining a particular qualifying asset, the borrowing costs that directly relate to that qualifying asset can be readily identified.

  1. It may be difficult to identify a direct relationship between particular borrowings and a qualifying asset and to determine the borrowings that could otherwise have been avoided. Such a difficulty occurs, for example, when the financing activity of an enterprise is co-ordinated centrally or when a range of debt instruments are used to borrow funds at varying rates of interest and such borrowings are not readily identifiable with a specific qualifying asset. As a result, the determination of the amount of borrowing costs that are directly attributable to the acquisition, construction or production of tadalafil nicaragua a qualifying asset is often difficult and the exercise of judgement is required.

  1. To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation on that asset should be determined as the actual borrowing costs incurred on that borrowing during the period less any income on the temporary investment of those borrowings.

  1. The financing arrangements for a qualifying asset may result in an enterprise obtaining borrowed funds and incurring associated borrowing costs before some or all of the funds are used for expenditure on the qualifying asset. In such circumstances, the funds are often temporarily invested pending their expenditure on the qualifying asset. In determining the amount of borrowing costs eligible for capitalisation during nombres de viagras a period, any income earned on the temporary investment of those borrowings is deducted from the borrowing costs incurred.

  1. To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation should be determined by applying a capitalisation rate to the expenditure on that asset. The capitalisation rate should be the weighted average of the borrowing costs applicable to the borrowings of the enterprise that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalised during a period should not exceed the amount of borrowing costs incurred during that period.

Excess of the Carrying Amount of the Qualifying Asset over Recoverable Amount

When the carrying amount or the expected ultimate cost of the qualifying asset exceeds its recoverable amount or net realisable value, the carrying amount is written down or written off in accordance with the requirements of other Accounting Standards. In certain circumstances, the amount of the write-down or write-off is written back in accordance with those other Accounting Standards.

Commencement of Capitalisation

The capitalisation of borrowing costs as part of the cost of a qualifying asset should commence when all the following conditions are satisfied:

1) Expenditure for the acquisition, construction or production of a qualifying asset is being incurred;

2) Borrowing costs are being incurred; and

3) Activities that are necessary to prepare the asset for its intended use or sale are in progress.

Expenditure on a qualifying asset includes only such expenditure that has resulted in payments of cash, transfers of other assets or the assumption of interest-bearing liabilities. Expenditure is reduced by any progress payments received and grants received in connection with the asset (see Accounting Standard 12, Accounting for Government Grants). The average carrying amount of the asset during a period, including borrowing costs previously capitalised, is normally a reasonable approximation of the expenditure to which the capitalisation rate is applied in that period.

  1. The activities necessary to prepare the asset for its intended use or sale encompass more than the physical construction of the asset. Slip Calvin Klein Outlet They include technical and administrative work prior to the commencement of physical construction, such as the activities associated with obtaining permits prior to the commencement of the physical construction. However, such activities exclude the holding of an asset when no production or development that changes the asset’s condition is taking place. Adidas Yeezy 350 Pas Cher For example, borrowing costs incurred while land is under development are capitalised during the period in which activities related to the development are being undertaken. However, borrowing costs incurred while land acquired for building purposes is held without any associated development activity do not qualify for capitalisation.

Suspension of Capitalisation

Capitalisation of borrowing costs should be suspended during extended periods in which active development is interrupted.

Borrowing costs may be incurred during an extended period in which the activities necessary to prepare an asset for its intended use or sale are interrupted. Such costs are costs of holding partially completed assets and do not qualify for capitalisation. However, capitalisation of borrowing costs is not normally suspended during a period when substantial technical and administrative work is being carried out. Capitalisation of borrowing costs is also not suspended when a temporary delay is a necessary part of the process of getting an asset ready for its intended use or sale. For example, capitalisation continues during the extended period needed for inventories to mature or the extended period during which high water levels delay construction of a bridge, if such high water levels are common during the construction period in the geographic region involved.

Cessation of Capitalisation

Capitalisation of borrowing costs should cease when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

  1. An asset is normally ready for its intended use or sale when its physical construction or production is complete even though routine administrative work might still continue. If minor modifications, such as the decoration of a property to the user’s specification, are all that are outstanding, this indicates that substantially all the activities are complete.

When the construction of a qualifying asset is completed in parts and a completed part is capable of being used while construction continues for the other parts, capitalisation of borrowing costs in relation to a part should cease when substantially all the activities necessary to prepare that part for its intended use or sale are complete.

A business park comprising several buildings, each of which can be used individually, is an example of a qualifying asset for which each part is capable of being used while construction continues for the other parts. An example of a qualifying asset that needs to be complete before any part can be used is an industrial plant involving several processes which are carried out in sequence at different parts of the plant within the same site, such as a steel mill.

Disclosure

The financial statements should disclose:

1) the accounting policy adopted for borrowing costs; and

2) the amount of borrowing costs capitalised during the period.

Illustration

Note: This illustration does not form part of the Accounting Standard. Its purpose is to assist in clarifying the meaning of paragraph 4(e) of the Standard.

Facts:

XYZ Ltd. has taken a loan of USD 10,000 on April 1, 20X3, for a specific project at an interest rate of 5% p.a., payable annually. On April 1, 20X3, the exchange rate between the currencies was Rs. 45 per USD. The exchange rate, as at March 31, 20X4, is Rs. 48 per USD. The corresponding amount could have been borrowed by XYZ Ltd. in local currency at an interest rate of 11 per cent annum as on April 1, 20X3.

The following computation would be made to determine the amount of borrowing costs for the purposes of paragraph 4(e) of AS 16:

Interest for the period = USD 10,000 × 5% × Rs. 48/USD = Rs. 24,000.

Increase in the liability towards the principal amount = USD 10,000 × (48–45) = Rs. 30,000.

Interest that would have resulted if the loan was taken in Indian currency = USD 10,000 × 45 × 11% = Rs. 49,500.

Difference between interest on local currency borrowing and foreign currency borrowing = Rs. Moda 49,500 – Rs. 24,000 = Rs. 25,500.

Therefore, out of Rs. 30,000 increase in the liability towards principal amount, only Rs. 25,500 will be considered as the borrowing cost. Thus,total borrowing cost would be Rs. Ropa Interior Calvin Klein Barata 49,500 being the aggregate of interest of Rs. 24,000 on foreign currency borrowings [covered by paragraph 4(a) of AS 16] plus the exchange difference to the extent of difference between interest on local currency borrowing and interest on foreign currency borrowing of Rs. 25,500. Thus, Rs. 49,500 would be considered as the borrowing cost to be accounted for as per AS 16 and the remaining Rs. 4,500 would be considered as the exchange difference to be accounted for as per Accounting Standard (AS) 11, The Effects of Changes in Foreign Exchange Rates.

In the above example, if the interest rate on local currency borrowings is assumed to be 13% instead of 11%, the entire exchange difference of Rs. 30,000 would be considered as borrowing costs, since in that case the difference between the interest on local currency borrowings and foreign currency borrowings [i.e. Rs. 34,500 (Rs. 58,500 – Rs. 24,000)] is more than the exchange difference of Rs. 30,000. Therefore, in such a case, the total borrowing cost would be Rs. 54,000 (Rs. 24,000 + Rs.

Supreme Court / High Courts

Ss. Tangas Calvin Klein Baratos 22, 28 Business income from letting of premises to be taxed as business income

The appellant-assessee is a company incorporated under the Indian Companies Act with its main objective, as stated in the Memorandum of Association, is to acquire the properties in the city of Chennai and to let out those properties. The assessee had rented out such properties and the rental income received therefrom was shown as income from business in the return filed by the assessee. It was held that letting of the properties is in fact is the business of the assessee and hence income therefrom rightly disclosed the income under the Head Income from Business and not as ‘income from the house property’ – Chennai Properties & Investments Ltd. vs. CIT [2015] 56 taxmann.com 456 (SC)

Ss. 28, 145A(a) write off in value of stores and spares

The assessee claimed write-off was on account of deterioration in the condition of the non-moving stores since the assessee’s plants were located in remote places and near the sea. The non-moving stores and spares were corroded over a period of time due to wear and tear. This method of accounting having been adopted in the earlier years, there was no reason for the Assessing Officer to disallow the same on the ground that the accounting method had changed. Accordingly it was held that value of the closing stock so adopted is not in violation of Section 145A(a) – CIT vs. Indian Rare Earths Ltd. [2015] 57 taxmann.com 393 (Bombay)

S. 43B Meaning of expression ‘whatever name called’

The State compulsorily takes from the three mills, a vend fee for the purpose of conferring a special benefit on the said three mills, viz., the repair and replacement of existing machinery and equipment. Adidas Yeezy Boost 350 Acheter Even if the vend fee that is paid by the assessee – Sugar Mill to the State does not directly fall within the expression ‘fee’ contained in Section 43B(a), it would be a ‘fee’ by ‘whatever name called’, that is even if the vend fee is called ‘privilege’ – CIT vs. Travancore Sugars & Chemicals Ltd. Civil Appeal No. 2558 of 2005 Order dated 7/5/2015 (Supreme Court)

S43B is attracted to a case where payment is to be made to the State Government in the capacity of the State as a sovereign and not to a case where payment is to be made to the State Government in its capacity as a principal by an agent. In the instant case, the relationship between the State and the licensee is of a principal and agent/fiduciary and not that of a sovereign and a subject. The licensee does not collect the electricity duty for its own consumption or utilization. If the licensee collects the duty but does not pay the same to the Government, the statute provides mechanism for the Government to recover the same from the licensee. ITA Nos. 82 to 84 of 2004, 110 of 2005 CESC LTD. vs. CIT (Calcutta High Court) Order dated 18/12/2014

S. 45 apportionment of lump sum share purchase consideration towards negative covenants in agreement

Considering various clauses in the Share Purchase Agreement it was held that the lump sum consideration specified in the agreement can be bifurcated and a part thereof i.e. 25% to be apportioned towards the restrictive covenants – ITA No. 557 of 2006 (P & H) Date of Order 15/5/2015

S. 80-IB(10)(d) – Builtup area in housing projects for commercial use not applicable for the projects approved before 1/4/20015

The Assessee claims a deduction under section 80-IB(10), the assessee is required to comply with such a condition only if it is on the statute-book on the date of the approval of the housing project and it has nothing to do with the year in which the profits are brought to tax by the assessee. Calvin Klein Boxer It was also observed that clause (d) of section 80-IB(10) is inextricably linked to the date of the approval of the housing project and the subsequent development/construction of the same, and has nothing to do with the profits derived therefrom – CIT vs. Sarkar Builders [2015] 57 taxmann.com 313 (SC)

S. 132 Assessee can peruse reasons recorded for conducting search only during the course of assessment proceedings after completion of search

Supreme Court reiterated following principles –

(i) The authority must have information in its possession on the basis of which a reasonable belief can be founded that –(a) The concerned person has omitted or failed to produce books of account or other documents for production of which summons or notice had been issued

OR
Such person will not produce such books of account or other documents even if summons or notice is issued to him.

OR
(b) Such person is in possession of any money, bullion, jewellery or other valuable article which represents either wholly or partly income or property which has not been or would not be disclosed.

(ii) Such information must be in possession of the authorised official before the opinion is formed.

(iii) There must be application of mind to the material and the formation https://www.acheterviagrafr24.com/acheter-du-viagra-en-france-sans-ordonnance/ of opinion must be honest and bona fide. Consideration of any extraneous or irrelevant material will vitiate the belief/satisfaction.

(iv) Though Rule 112(2) of the Income Tax Rules which specifically prescribed the necessity of recording of reasons before issuing a warrant of authorisation had been repealed on and from 1st October, 1975 the reasons for the belief found should be recorded.

 

(v) The reasons, however, need not be communicated to the person against whom the warrant is issued at that stage. Adidas Ultra Boost Femme Pas Cher (vi) Such reasons, however, may have to be placed before the Court in the event of a challenge to formation of the belief of the authorised official in which event the court (exercising jurisdiction under Article 226) would be entitled to examine the relevance of the reasons for the formation of the belief though not the sufficiency or adequacy thereof.

Supreme Court also disagreed with the High Court’s observations about possibility of manipulation of records and concluded that suspicion cannot be the basis of any judicial order.

The Supreme Court also observed that the remaining findings of the High Court with regard to the satisfaction recorded by the authorities appear to be in the nature of an appellate exercise touching upon the sufficiency and adequacy of the reasons and the authenticity and acceptability of the information on which satisfaction had been reached by the authorities. Such an exercise is alien to the jurisdiction under Article 226 of the Constitution – DG(Inv) vs. Spacewood Furnishers (P.)

Ltd. [2015] 57 taxmann.com 292 (SC)

S. 254(2A) ITAT’s power to extend stay beyond 365 days

The expression ‘even if the delay in disposing of the appeal is not attributable to the assessee’ introduced by the Finance Act, 2008 is struck down as being violative of Article 14 of the Constitution of India. Where the delay in disposing of the appeal is not attributable to the assessee, the Tribunal has the power to grant extension of stay beyond 365 days in deserving cases – Pepsi Foods (P.) Ltd. Adidas Yeezy Boost 350 Homme vs. ACIT [2015] 57 taxmann.com 337 (Delhi)

ITAT

S. 2(15) Proviso to section is meant to curb exempt earning from trade and commerce and not to deny exemption to institutions carrying charitable object

The primary object of insertion of proviso to section 2(15) was to curb the practice of earning income by way of carrying on of trade or commerce and claiming the same as exempt in the garb of pursuing the alleged charitable object of general public utility. This proviso never meant to deny the exemption to those institutions, where the predominant object is undeniably a charitable object and in order to achieve the same incidental activities, essential in the given circumstances, are carried on.

The predominant activities of the Centre was not to earn income but to provide facilities for disseminating or exchanging knowledge as per the object of the society. Acheter Adidas Yeezy Boost 550 There is no gainsaying that without creating a proper platform the primary object of dissemination and exchanging of knowledge could not be achieved. Therefore, merely because incidental income was earned by assessee society for achieving its dominant object from providing hostel and catering activities, it cannot be said that the assessee was doing trade or business as contemplated under proviso to section 2(15). The Centre had to necessarily charge for the hostel, catering and use of such facilities from members/ participants since it had to recover cost and at the same time have enough funds to carry out the charitable activities – India International Centre vs. ADIT(E) [2015] 57 taxmann.com 265 (Delhi – Trib.)

Ss. 40(a)(ia), 201(1) Assessee in default

The disallowability u/ss. 40(a)(i) & 40(a)(ia), and the liability and sec. 201(1) cannot be different and they arise out of the same default. Once there is a disallowance u/ss. 40(a)(i) & 40(a)(ia), it is not possible to argue that there was no liability under Chapter XVII-B of the Act and therefore the provisions of sec. 201(1) will not be attracted. Assessee followed practice of creating provision of expenses on quarterly basis global group reporting purposes. It was also held that assessee is liable to deduct tax on such provision and assessee cannot take a plea that the payments in question are not chargeable to tax and therefore there was no obligation on its part to deduct tax at source stand – IBM India Private Ltd vs. Boxer Calvin Klein Outlet ITO(TDS) ITA Nos. 749 to 752/Bang/2012 & 1588 to 1591/Bang/2012 (Bang-ITAT) Date of order 14/5/2015

S. 54F Entitlement of exemption for purchase absolute tenancy rights

The assessee earned long term capital gains of on sale of shares. The assessee then has acquired absolute tenancy rights in respect of the flat. These rights includes rights to transfer tenancy to any person, to charge such consideration/premium for such transfer/assignment. The tenant assessee not be required to obtain any permission from the owner and also not required to pay any premium for consideration to the owner for such transfer/assignment of the tenancy rights. On these facts it was held that the assessee is entitled to claim benefit under section 54F of the Act on capital gains earned – Archana Parasrampuria vs. ITO -[2015] 57 taxmann.com 23 (Mumbai – Trib.)

S. 54F Gifting of property to spouse before claiming deduction in respect of purchase of another house

Assessee earned long term capital gains on transfer of capital assets. Bañadores Calvin Klein Hombre Baratos Calvin Klein Underwear España Against such capital gains assessee claimed deduction u/ss. 54E & 54F. However before acquiring new residential premises assessee being co-owner of the flat gift it to her spouse. Calvin Klein Bañadores Hombre Revenue challenged such gift and denied deduction u/s 54F. It was held that such gifting cannot be regarded as sham and provision of sections 27(ii) and 64(1)(iv) has no effect. It was also held that exemption u/s. 54F cannot be denied by disregarding the gift of a house property by the assessee to her spouse prior to the transfer date (of the original asset) – Smt. Maya A. Ajwani vs. ITO [2015] 56 taxmann.com 255 (Mumbai – Trib.)

S. 254 ITAT order pronounced after 90 days from hearing is not barred by limitation

The objection that order pronounced beyond the period of 60 days from the date of hearing and hence, the same was barred by limitation is not tenable. It was also observed that the function of ‘pronouncement or orders’ is not like of a nature such as an ‘actionable legal claim’ which if not claimed within the period of 60 days or 90 days, can be said to have been barred by limitation. Calvin Klein Bañadores A contention that the order was pronounced beyond the period of 60 days cannot validly be raised in a petition u/s. 254 of the Act, as the same cannot be said to be an error apparent on record – Times Guaranty Ltd. vs.