CORPORATE AND PROFESSIONAL UPDATE ON DECEMBER 5, 2015
CORPORATE AND PROFESSIONAL UPDATE ON DECEMBER 5, 2015
1. FAQ on Company Law:
Query | Answer |
Our Company wants to Guarantee Commission to the Directors of Company for having guaranteed the term loans obtained from financial institutions/ banks. Kindly advice whether the Company is allowed to pay the same according to the provisions of the Companies Act, 2013. |
The guarantee commission paid to directors for giving surety against loans or credit facilities taken by the company from financial institution is not a remuneration for within the meaning of section 309/197 of the Companies Act, 1956/2013 (Suessen Textile Bearings Ltd v. Union of India [(1984) 55 (Comp. Cases 492, 496, 497) and therefore, approval of the Central Government is not necessary. The director giving guarantee does not render manual, clerical, technical, supervisory or administrative service. He gets the commission for the risk which he bears and that has nothing to do with his directorship. Hence the payment of guarantee commission is in order. Considering the above, it may be concluded that the guarantee commission paid to the directors for guarantee provided on loan from a financial institution is valid. |
One of our companies wants to appoint a person as Managing Director but the only issue is that- he is 72 years old. Kindly advice whether the Company can appoint so or not, as per Companies Act 2013? |
As per Section 196 (3) of the Companies Act, 2013, a person who has attained the age of seventy years may be employed as managing director, whole-time director or manager by the approval of the members by a special resolution passed by the company in the general meeting and the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such person. |
- Condonation of delay–
It appears that the meritorious appeal may be converted into demeritorious one if delay is not condoned. When Tribunal had granted an opportunity earlier making certain observations it would be proper to condone the delay (M/s. Saj Holdings (P) Ltd. Versus Commissioner of Service Tax, Chennai, CESTAT CHENNAI).
- Relaxation of additional fees and extension of last date of filing of forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act, 2013.
2. DIRECT TAXES:
- The amount received by the assessee towards transfer of development rights could not be treated as sale consideration in the circumstances of the case. – the AO had erroneously added the amounts to the assessee’s income on account of sale of development rights (M/s. DLF Commercial Project Corporation Vs. CIT, New Delhi, High Court).
- High Court had committed an error by not framing substantial question of law as per the provisions of Section 27A(3) of The Wealth Tax Act, 1957 (P.A. Jose Etc. Vs. CWT, Kottayam, Supreme Court).
- Govt. notifies Rules to facilitate electronic communication with taxpayers vide Notification No. 89/2015 dated 02/12/2015.
- Accrual of income: Advances received from various producers – whether assessable as income for the respective assessment years or not? – When the assessee has returned these amounts in the subsequent years as the proposed assignment were not materialised then it would not be proper and appropriate to treat these amounts as income of the assessee- (R.S. SURIYA Versus ASSISTANT COMMISSIONER OF INCOME-TAX, ITAT CHENNAI).
- Now employees can file PF withdrawal without employers’ attestation.
- Where assessee had purchased new asset within two years from date of transfer of original asset section 54F(4) requiring assessee to deposit amount within prescribed time would not be attracted and assessee would be entitled to benefit under section 54F.
- Income-tax returns are personal informations, can’t be disclosed under RTI Act.
3. INDIRECT TAXES:
- Government introduces e-governance in Haryana VAT.
4. OTHERS:
- Auditing and Assurance Standards Board seeks Suggestions on the Proposed New CARO.
The Ministry of Corporate Affairs recently constituted a Committee to formulate the Companies (Auditor’s Report) Order (CARO) to be issued under section 143(11) of the Companies Act, 2013. This aforesaid Order is proposed to be made applicable for audit reports on the financial statements of the companies for the financial year 2015-16 and onwards. The undersigned, as Chairman, of the Auditing and Assurance Standards Board, is representing the Institute of Chartered Accountants of India (ICAI) on this Committee. The aforesaid Committee has requested the Auditing and Assurance Standards Board of ICAI to develop a draft of the proposed CARO for the consideration of the Committee. With a view to ensure that the proposed CARO is a value add report for the managements, stakeholders as well as the relevant Government agencies, and at the same time adequately balances public interest vis a v! is nature and scope of an audit of financial statements under the Standards on Auditing, we request you to kindly share with us your thoughts on what areas can be included for reporting under the CARO.
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