CS A RENGARAJAN: Oct 6, 2012

Saturday, October 6, 2012

ITR updates

INCOME TAX REPORTS (ITR)INCOME TAX REPORTS

Volume 348 Part 2 (Issue dated 8-10-2012)SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTSAppeal to Appellate Tribunal --Powers--Rectification of mistakes--Disallowance of short-term and long-term capital loss--Tribunal deciding issue on merits--While allowing appeal by Revenue Tribunal referring to another decision of Tribunal--Not a mistake apparent from record--Income-tax Act, 1961, s. 254(2)-- Geofin Investment (P.) Ltd. v. CIT (Delhi) . . . 118

Appeal to Commissioner (Appeals) --Power of enhancement of assessment--Items considered by Assessing Officer but no additions made--Commissioner (Appeals) has power to consider such items and enhance assessment--Income-tax Act, 1961, s. 251(1)(a)-- Gurinder Mohan Singh Nindrajog v . CIT (Delhi) . . . 170

Business loss --Advance in the course of business--Advance becoming irrecoverable--Claim as bad debt--Not relevant--Amount deductible as business loss--Income-tax Act, 1961, s. 37-- Mohan Meakin Ltd . v. CIT(Delhi) . . . 109

Capital gains --Rate of tax--Transfer of shares--Conversion of private company to public limited company--Transfer of shares to registrar to issue and subsequent sale through stock exchange--Shares not listed on date of transfer by assessee--Assessee not entitled to lower rate of 10 per cent.--Income-tax Act, 1961, s. 45--Uday Punj v . CIT (Delhi) . . . 98

Depreciation --Actual cost--Loans from Government for acquisition of assets--Waiver of loan--Amount waived to be reduced from cost of assets for calculating depreciation--Income-tax Act, 1961, ss. 32, 43(1)--Steel Authority of India Ltd. v. CIT

(Delhi) . . . 150

Exemption --Capital gains--Effect of section 10(38)--Sale of equity shares through recognised stock exchange--Conversion of private company to public limited company--Transfer of shares in private company to registrar to issue on 29-12-2005--Listing approved by stock exchanges on 4-1-2006 and trading in stock exchange commencing on 6-1-2006--Transfer from assessee to registrar to issue not through stock exchange--Assessee not entitled to exemption under section 10(38)--Income-tax Act, 1961, s. 10(38)-- Uday Punj v . CIT(Delhi) . . . 98

Income-tax --General principles--Entries in books of account relevant while considering nature of transaction-- Steel Authority of India Ltd. v . CIT (Delhi) . . . 150

----General principles--Right of assessee not restricted to plea raised-- Mohan Meakin Ltd . v . CIT (Delhi) . . . 109

Rectification of mistakes --Condition precedent--Mistake must be apparent--Section 154 not applicable where issue is debatable--Adjustment of prior period expenses in computation of profits of company under section 115JB--Debatable question--Disallowance of prior period expenses under section 154--Not valid--Income-tax Act, 1961, ss. 115JB, 154-- CIT v. R. T. C. L. Ltd . (Delhi) . . . 120

Settlement of cases --Powers of Settlement Commission--Effect of section 245-I--Application for settlement of case--Order of Settlement Commission substantially accepting undisclosed income and granting applicant immunity from prosecution and penalty--Applicant cannot thereafter plead that application should be rejected--Observation by Settlement Commission that immunity was not available to third persons whose incomes had been discovered--Applicant cannot ask that those observations be expunged--Income-tax Act, 1961, s. 245-I-- Gupta Perfumers P. Ltd . v. Income-tax Settlement Commission (Delhi) . . . 86

Unexplained investment --Valuation of property--Burden of proof on Department to show assessee received higher amount than that declared--Memoranda of understanding admitted by assessee mentioning value of asset--Onus of proof discharged by Department--Finding of Tribunal to contrary--Not sustainable-- CIT v .Karan Khandelwal (Delhi) . . . 126

AUTHORITY FOR ADVANCE RULINGSAdvance ruling --Application--Maintainability--Operations of group in India taken over by applicant from another non-resident entity--Transactions between that non-resident entity and Indian subsidiary subject-matter of assessment--Does not preclude application for ruling on transactions of Indian subsidiary with applicant--Order under section 195 not to affect maintainability of application--Income-tax Act, 1961, ss. 195, 245(2)-- Aramex International Logistics Private Limited, In re . . . 159

Non-resident --Permanent establishment--Wholly owned Indian subsidiary formed to look after Indian operations of group--Is permanent establishment--Receipts attributable to permanent establishment taxable in India and payments liable to deduction of tax at source--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Agreement between India and Singapore, art. 5(2), (8), (10)-- Aramex International Logistics Private Limited , In re . . . 159

ITR’S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 19 : Part 2 (Issue dated : 8-10-2012)SUBJECT INDEX TO CASES REPORTED IN THIS PART

Accounting --Rejection of accounts--Assessee failing to give proper explanation for discrepancies--Rejection justified--Income-tax Act, 1961, s. 145(3)-- Pawan Kumar v. ITO (Chandigarh) . . . 185

Accounting--Rejection of accounts--Estimation of profits--Assessee applying low gross profit rate--Direction to make addition justified--Income-tax Act, 1961-- Pawan Kumar v. ITO (Chandigarh) . . . 185

Agricultural income --Land taken on lease--Evidence of purchase of materials for green house, agricultural equipment, seeds, wages and evidence of sale of agricultural produce to various entities--Assessee established for carrying out agricultural activities--Entire income is agricultural--Income-tax Act, 1961--ITO v. Pods Biotech P. Ltd. (Bangalore) . . . 194

Appeal to Appellate Tribunal --Special Bench--Scope of powers--Power to reframe question to bring out point requiring determination more clearly--Within parameters of reference made by President--No mistake requiring rectification--Tribunal after deciding question examining issue from another angle--Exercise not beyond question before Special Bench--Not a case of Special Bench going beyond subject matter of reference--Objections that Tribunal did not consider arguments of Department, or case law cited by Department or that finding contrary to settled position of law--Overruled--Income-tax Act, 1961, ss. 41(1), 43B, 254(2), 255(3)--Circular No. 496 dated 25-9-1987-- Deputy CIT v. Sulzer India Ltd. [SB] (Mumbai) . . . 268

Assessing Officer --Powers of Assessing Officer--Remand by Tribunal--Free food allowances--Assessing Officer not entitled to enhance disallowance beyond that in original assessment--Income-tax Act, 1961--Kellogg India P. Ltd. v. Assistant CIT (Mumbai) . . . 220

Business expenditure --Assessee following mercantile system of accounting--Advertisement expenses relating to prior periods--Assessee not given sufficient opportunity by Assessing Officer and Commissioner (Appeals)--Matter remanded--Income-tax Act, 1961-- Kellogg India P. Ltd. v. Assistant CIT (Mumbai) . . . 220

----Deduction only on actual payment--Assessee making payment before extended time of filing return--Deduction allowable--Income-tax Act, 1961, s. 43B-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246

----Disallowance--Agentsâ€™ commission for sale of space for advertisement in newspapers and time slots for television broadcasting--Assessee not required to deduct tax at source--Payments cannot be disallowed--Income-tax Act, 1961, s. 40(a)(ia)-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199

----Disallowance--Excessive or unreasonable payments--Can be made only on part of payment which is excessive or unreasonable--Income-tax Act, 1961, s. 40A(2)(b)-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246

----Disallowance--Payment of data circuit rentals--Assessee not required to deduct tax at source--Payments cannot be disallowed--Income-tax Act, 1961, s. 40(a)(ia)-- Assistant CIT v. Ushodaya Enterprises Ltd.(Hyderabad) . . . 199

----Expenditure on foreign travel of employees to countries where assessee had no transactions--Expenditure genuine and for business purposes--Allowable--Income-tax Act, 1961, s. 37-- Kellogg India P. Ltd. v.Assistant CIT (Mumbai) . . . 220

----Provision for foreign exchange--Assessee to be provided with reasonable opportunity of being heard--Matter remanded-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246

----Telephone expenses--Direction to disallow one-tenth of expenses--Income-tax Act, 1961-- Vinod Kumar v.Joint CIT (Chandigarh) . . . 246

----Travelling expenses of employees--Travelling by employees undertaken in earlier years and bills submitted in present year--Finding that expenditure genuine and involving petty sums compared to assesseeâ€™s turnover--To be allowed--Income-tax Act, 1961, s. 37-- Kellogg India P. Ltd. v. Assistant CIT(Mumbai) . . . 220

----Vehicle expenses--One tenth of car expenses and depreciation included in computation of income--No addition required--Income-tax Act, 1961-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246

Capital gains --Purchase and sale of shares--Finding that assessee made investment from year to year--Investment in shares made with own funds--Income to be treated as â€œincome from capital gainsâ€--Income-tax Act, 1961-- Ramesh Gupta v. Assistant CIT (Chandigarh) . . . 228

Charitable trust --Exemption--Rental income from hotel business--Finding that assessee not running hotel itself but only collecting a fixed sum as compensation--Income not to be taxed as business income--Income-tax Act, 1961, s. 11-- Deputy Director of Income-tax v. Habib Ismail Hospital and Medical Trust (Mumbai) . . . 233

----Trifurcation of main trust resulting in creation and establishment of three new trusts--New trust to be treated as part of old trust--Trust not working for benefit of single community in terms of section 13(1)(b)--Income-tax Act, 1961, ss. 11, 13(1)(b)-- Deputy Director of Income-tax v. Habib Ismail Hospital and Medical Trust (Mumbai) . . . 233

Depreciation --Rate of depreciation--Computer accessories--Entitled to rate of sixty per cent. as applicable to computers--Income-tax Act, 1961, s. 32-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199

Income --Accounting--Application of gross profit ratio--Addition on account of decline in gross profit ratio--Failure to give explanation regarding decline in gross profit ratio--Direction to estimate gross profit ratio at 13 per cent.--Income-tax Act, 1961, s. 145(3)-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246

Industrial undertaking --Special deduction--Computation--Assessee having three units--Losses suffered in two eligible units not to be reduced from income of eligible unit before granting deduction--Income-tax Act, 1961, s. 80-IA-- Jindal Aluminium Ltd. v. Assistant CIT (Bangalore) . . . 255

Interest on borrowed capital --Funds utilised for purchase of printing machinery--No evidence that assets purchased out of borrowed funds not put to use in concerned financial year--Deduction allowable--Income-tax Act, 1961-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199

----Interest-free advances--Direction to verify interest paid on unsecured loans and apply same rate for purpose of disallowing of interest--Justified--Income-tax Act, 1961-- Pawan Kumar v. ITO (Chandigarh) . . . 185

Precedent --Appellate Tribunal--Is authority higher than Commissioner (Appeals)--Commissioner (Appeals) bound by orders of Tribunal-- Jindal Aluminium Ltd. v. Assistant CIT (Bangalore) . . . 255

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :S. 11 --Charitable trust--Exemption--Rental income from hotel business--Finding that assessee not running hotel itself but only collecting a fixed sum as compensation--Income not to be taxed as business income--Deputy Director of Income-tax v. Habib Ismail Hospital and Medical Trust (Mumbai) . . . 233

----Charitable trust--Trifurcation of main trust resulting in creation and establishment of three new trusts--New trust to be treated as part of old trust--Trust not working for benefit of single community in terms of section 13(1)(b)-- Deputy Director of Income-tax v. Habib Ismail Hospital and Medical Trust (Mumbai) . . . 233

S. 13(1)(b) --Charitable trust--Trifurcation of main trust resulting in creation and establishment of three new trusts--New trust to be treated as part of old trust--Trust not working for benefit of single community in terms of section 13(1)(b)-- Deputy Director of Income-tax v. Habib Ismail Hospital and Medical Trust(Mumbai) . . . 233

S. 32 --Depreciation--Rate of depreciation--Computer accessories--Entitled to rate of sixty per cent. as applicable to computers-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199

S. 37 --Business expenditure--Expenditure on foreign travel of employees to countries where assessee had no transactions--Expenditure genuine and for business purposes--Allowable-- Kellogg India P. Ltd. v. Assistant CIT (Mumbai) . . . 220

----Business expenditure--Travelling expenses of employees--Travelling by employees undertaken in earlier years and bills submitted in present year--Finding that expenditure genuine and involving petty sums compared to assesseeâ€™s turnover--To be allowed-- Kellogg India P. Ltd. v. Assistant CIT (Mumbai) . . . 220

S. 40(a)(ia) --Business expenditure--Disallowance--Agents' commission for sale of space for advertisement in newspapers and time slots for television broadcasting--Assessee not required to deduct tax at source--Payments cannot be disallowed-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199

----Business expenditure--Disallowance--Payment of data circuit rentals--Assessee not required to deduct tax at source--Payments cannot be disallowed-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199

S. 40A(2)(b) --Business expenditure--Disallowance--Excessive or unreasonable payments--Can be made only on part of payment which is excessive or unreasonable-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246

S. 41(1) --Appeal to Appellate Tribunal--Special Bench--Scope of powers--Power to reframe question to bring out point requiring determination more clearly--Within parameters of reference made by President--No mistake requiring rectification--Tribunal after deciding question examining issue from another angle--Exercise not beyond question before Special Bench--Not a case of Special Bench going beyond subject matter of reference--Objections that Tribunal did not consider arguments of Department, or case law cited by Department or that finding contrary to settled position of law--Overruled-- Deputy CIT v. Sulzer India Ltd.[SB] (Mumbai) . . . 268

S. 43B --Appeal to Appellate Tribunal--Special Bench--Scope of powers--Power to reframe question to bring out point requiring determination more clearly--Within parameters of reference made by President--No mistake requiring rectification--Tribunal after deciding question examining issue from another angle--Exercise not beyond question before Special Bench--Not a case of Special Bench going beyond subject matter of reference--Objections that Tribunal did not consider arguments of Department, or case law cited by Department or that finding contrary to settled position of law--Overruled-- Deputy CIT v. Sulzer India Ltd.[SB] (Mumbai) . . . 268

----Business expenditure--Deduction only on actual payment--Assessee making payment before extended time of filing return--Deduction allowable-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246

S. 80-IA --Industrial undertaking--Special deduction--Computation--Assessee having three units--Losses suffered in two eligible units not to be reduced from income of eligible unit before granting deduction--Jindal Aluminium Ltd. v. Assistant CIT (Bangalore) . . . 255

S. 145(3) --Accounting--Rejection of accounts--Assessee failing to give proper explanation for discrepancies--Rejection justified-- Pawan Kumar v. ITO (Chandigarh) . . . 185

S. 145(3) --Income--Accounting--Application of gross profit ratio--Addition on account of decline in gross profit ratio--Failure to give explanation regarding decline in gross profit ratio--Direction to estimate gross profit ratio at 13 per cent.-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246

S. 254(2) --Appeal to Appellate Tribunal--Special Bench--Scope of powers--Power to reframe question to bring out point requiring determination more clearly--Within parameters of reference made by President--No mistake requiring rectification--Tribunal after deciding question examining issue from another angle--Exercise not beyond question before Special Bench--Not a case of Special Bench going beyond subject matter of reference--Objections that Tribunal did not consider arguments of Department, or case law cited by Department or that finding contrary to settled position of law--Overruled-- Deputy CIT v. Sulzer India Ltd.[SB] (Mumbai) . . . 268

S. 255(3) --Appeal to Appellate Tribunal--Special Bench--Scope of powers--Power to reframe question to bring out point requiring determination more clearly--Within parameters of reference made by President--No mistake requiring rectification--Tribunal after deciding question examining issue from another angle--Exercise not beyond question before Special Bench--Not a case of Special Bench going beyond subject matter of reference--Objections that Tribunal did not consider arguments of Department, or case law cited by Department or that finding contrary to settled position of law--Overruled-- Deputy CIT v. Sulzer India Ltd.[SB] (Mumbai) . . . 268

Master circular 1/2011

Master Circular No. 1/2011

No.3/57/2011/CL- II

Government of India

Ministry of Corporate Affairs

5th Floor, Shastri Bhavan,

Dr. Rajendra Prasad Road,

New Delhi-110001,

Dated the 29th July, 2011

To,

All Regional Directors,

All Registrars of Companies,

All Official Liquidators.

Sub: Master Circular on Prosecution of Directors – Regarding

Sir,

The question of treating a person as an officer in default by ROCs when

prosecutions are launched against a company and its directors for violations

under Companies Act, 1956 has come up for examination time and again. The

Department has issued various circulars in this regard so far. It may be

recollected that the Department vide circular No.42/7/73-CL.II dated 20.9.1973

had clarified that a person appointed as a nominee director, whatever interest he

represents or protects is responsible for the proper discharge of his obligations

and fiduciary responsibilities under the statute in the similar manner as an

ordinary directors. However, in the same circular, it was further clarified that

nominees of institutions set up under Acts having non-obstante clauses can

enjoy immunity from prosecutions.

2. In Departmental circular No.6/98 dated 12.11.1998, it was clarified that

where penal provisions provide for “punishment of officers in default”,

prosecutions should be filed primarily against managing director(s)/ whole time

director(s)/manager(s) and the company secretary, if any. It was also clarified

that only in those cases where the above mentioned managerial personnel are

not available in any company; prosecutions should be against ordinary directors.

In the same circular, it was also clarified that there are provisions in the Act

which though do not use the expression “officers who are in default” for fastening

liabilities in case of their contraventions, yet the persons against whom the

proceedings can be initiated is specified. In such cases, the persons expressly

specified in the relevant provisions of the Act should alone be prosecuted.

3. It has come to the notice of the Department that in spite of various rulings

available on the question of “officers in default” who can be held liable for

violations of a particular provision under the Companies Act, the ROCs are

arraying all the directors of the company for the violations without differentiating

between officer in default and or others.

4. It is noticed that penal actions are also initiated against certain Directors

who are not charge with the responsibility, particularly in following cases: --

(a) For listed companies Securities and Exchange Board of India (SEBI) requires

nomination of certain Directors designated as Independent Directors.

(b) For public sector undertakings, respective Government nominates Directors

on behalf of the respective Government.

(c) Various Public Sector Financial Institutions, Financial Institutions and Banks

having participation in equity of a Company also nominate Directors to the Board

of such companies.

(d) Directors nominated by the Government u/s 408 of the Companies Act, 1956.

In super session of all earlier circulars, it is clarified that Registrar of Companies

should take extra care in examining the cases where above Directors are also

identified as Officer in default. No such Director as indicated above shall be held

liable for any act of omission or commission by the company or by any officer of

the company which constitute a breach or violation of any provision of the

Companies Act, 1956, and which occurred without his knowledge attributable

through Board process and without his consent or connivance or where he has

acted diligently in the Board process. The Board process includes meeting of any

committee of the Board and any information which the Director was authorized to

receive as Director of the Board as per the decision of the Board. All the

Regional Directors are advised to direct Inspecting Officers also to examine the

Board’s minutes of the company to arrive at a conclusion if Independent director

is also responsible for any violation of the provisions of Companies Act, 1956.

5. It is further clarified that before taking penal action under the Companies Act,

1956 against the Directors the following compliances should be verified by

Registrar of Companies: -

(a) A director resigns and the company does not file Form 32 as required in

terms of Section 302(2) of the Act. In case, the director concerned has

informed/endorsed a copy of his resignation to the Registrar of Companies, the

Registrar should enquire into such cases and try to find out whether such director

has actually resigned or not.

(b) In case the status of a director, i.e. whether he is a nominee director or not, is

not reflected in the Annual Return or other documents of the company, available

with Registrar, the same should be cross checked with the Annual Report filed by

the company;

(c) The timing of the commission of offence is also material to identify the

director’s responsibility; and Form 1AB should also be checked in case any

person has been charged by the Board under Section 5(f) with the responsibility

of complying with some particular provision or in case any director has been

specified by the Board under Section 5(g) of the Act.

(d) Special Directors appointed by BIFR under section 16 (6)(b) of SICA 1985,

shall not incur any obligation or liability for anything done or omitted to be done in

good faith and in discharge of duties. Hence they shall be excluded in the list of

officers in default

6. For default u/s 209(5), 209(6), 211 and 212 of the Act, the following persons

shall be the ‘officers in default for the purpose of prosecution under these

provisions:-

(a) Where there is a Managing Director or Manager, the Managing Director or the

Manager as the case may be and in addition, the Company Secretary appointed

u/s 383A or the person who has been charged with work of maintenance and

preparation of Annual Accounts in compliance with aforesaid provisions.

(b) Where there is no Managing Director or Manager, every director and the

Company Secretary appointed u/s 383A of the Act.

(c) Any persons amongst officers and employees other than Managing

Director/Manager/Directors who has been charged by the Managing

Director/Manger or Board of Directors with specific responsibility of complying

with aforesaid provisions, in addition to Managing Director/Manager/Board of

Directors as the case may be.

(d) Directors including Non-Executive Directors, officers and employees not

connected with responsibility with the above provisions should not be arrayed as

delinquent directors.

(e) While considering the non-executive directors for including in the list of

officers in default for a particular violation of the Companies Act, it should be

examined whether the violation has taken place with his knowledge attributable

through board process, with his consent or connivance and whether he acted

diligently or not.

(f) Where prosecution is required to be filed against any Government

company, its directors/officers and Member of Parliament and Member of

Legislator under the Companies Act, 1956, Registrar of Companies should seek

prior authorization of Central Government in terms of Section 621 of the Act

7. There should be proper application of mind on the part of Registrar of

Companies in deciding whether a person to be implicated is an ‘officer in default’

by examining the Annual Return, Form 32(s) and DIN-3 database available in the

Registry. The guidelines issued herein above should be applied and wrongful

prosecution should be avoided. Wherever the Registrar of Companies has doubt

as to whether director/officer can be held liable after applying the above

parameters, they should refer to Regional Director, who shall guide Registrar of

Companies in the matter.

8. All the Regional Directors are required to ensure that such cases are

reviewed, based on these parameters and a report must be sent by each

Regional Director with specific recommendation in case the proceedings are

proposed to be discontinued.

This master circular consolidates circular No.2/2003 dated 7.7.2003,

No.08/2011 dated 25.3.2011, No.1/88/2010-CL.II dated 18.4.2011 and 47/2011

dated 14.7.2011 respectively.

Yours faithfully

Sd/-

(R K Bakshi)

Deputy Director

Tel. No. 23073230

Copy to:

1. PS to CAM

2. PS to MOS

3. PS to Secy. MCA

4. PS to AS, MCA

5. PS to Joint Secy. (A) & Joint Secy. (R)

6. PS to DII (DR)

7. PS to DII (Policy)

8. PS to Economic Advisor

9. Spare Copies

RBI Fema updates

RESERVE BANK OF INDIA

Foreign Exchange Department

Central Office

Mumbai - 400 001

RBI/2012-13/203

A.P. (DIR Series) Circular No. 29 September 12, 2012

To,

All Category - I Authorised Dealer Banks

Madam / Sir,

Overseas Direct Investments by Indian Party – Rationalisation

Attention of the Authorised Dealer (AD - Category I) banks is invited to the Notification No. FEMA 120/RB-2004 dated July 7, 2004 [Foreign Exchange Management (Transfer or Issue of any Foreign Security) (Amendment) Regulations, 2004] (the Notification), as amended from time to time. It has been decided to amend the guidelines relating to submission of Annual Performance Report (APR) as under:

2. An Indian party, which has set up / acquired a Joint Venture (JV) or Wholly Owned Subsidiary (WOS) overseas in terms of the Regulations of the Notification ibid, shall submit, to the designated Authorised Dealer every year, an Annual Performance Report (APR) in Form ODI Part III in respect of each JV or WOS outside India and other reports or documents as may be specified by the Reserve Bank from time to time, on or before the 30th of June each year. The APR, so required to be submitted, has to be based on the latest audited annual accounts of the JV / WOS, unless specifically exempted by the Reserve Bank.

3. The exemption granted for submission of APR based on the un-audited accounts of the JV / WOS subject to the terms and conditions as specified in the A.P (DIR Series) Circular No. 96 dated March 28, 2012 shall continue.

4. Necessary amendments to the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 are being issued separately.

5. AD - Category I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

6. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Dr. Sujatha Elizabeth Prasad)

Chief General Manager-In-Charge

SEBI updates

Sebi unveils IPO safety draft norms

Looking to protect the interests of retail investors, market regulator Sebi today issued draft norms for mandatory safety net mechanism in IPOs.

The market regulator has sought comments from the public on the draft norms till October 31.

According to Sebi, the safety net mechanism would be available for all securities allotted to original resident retail individual allottees, who had made an application for up to Rs 50,000.

"The total obligation on safety net provider will be capped at five per cent of the issue size," the market regulator said.

Noting that it would be mandatory for all IPOs, Sebi said the safety net provision would be triggered in cases where the price of the shares have depreciated by more than 20 per cent from the issue price.

"The price for this provision shall be calculated as the volume-weighted average market price of such shares for a period of three months from the date of listing," it said.

Further, the 20 per cent depreciation in share price would be considered over and above the general fall, if any, in market index.

The market index for this purpose may be BSE-500 or S&P CNX 500 and the index to be considered for this purpose should be disclosed in the offer document.

The proposal for such a mechanism, discussed at Sebi's board meeting held on September 16, is aimed at protecting the interest of retail investors.

According to the board, besides disclosures, other measures are needed to bring in self-discipline in IPO pricing and one of the steps to protect the interests of small investors is a safety net mechanism.

http://www.indianexpress.com/news/sebi-unveils-ipo-safety-draft-norms/1009347/

CS A RENGARAJAN

Saturday, October 6, 2012

ITR updates

Master circular 1/2011

RBI Fema updates

SEBI updates

ITR Reports

Admissibility of entries in the books of account