Friday, August 1, 2014

Results for Budget Contest :Congratulations to winners

A contest (Budget 2014) was held last Month and results for the contest is out now. Many entries received in the contest. Date was also extended up to 31.07.2014.First prize goes to Bimal jain. Second and Third prize goes to Munish Gupta. CS divesh gupta has won 8 prizes. Congratulation to winners.

Winners may please mail us with payment /bank details.

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Ca Munish Gupta
Ca Munish gupta
Archi Singh
CA Sumit Grover
CA. Vineeta Chhatwani
CA Srikant Agarwal
ACS Divesh Goyal
CA Prabhat Chopra
Chirag Agarwal
CA. Vineeta Chhatwani

Thursday, July 31, 2014

Deputation of employees on cost-sharing basis does not fall under Supply of Manpower Services

We are sharing with you an important judgment of the Hon’ble High Court of Gujarat in the case of Commissioner of Service Tax Vs. Arvind Mills Ltd. [(2014) 45 376 (Gujarat)] on the following issue:


Whether the deputation of employees to subsidiary companies for limited period on cost-sharing basis covered under Manpower Recruitment or Supply Agency’s Services?

Facts & background:

Arvind Mills Ltd. (“the Respondent”) was engaged in manufacturing of fabrics and ready-made garments. The Respondent deputed some of its employees to its subsidiaries which were engaged in similar businesses for a limited period. The Revenue contended that the Respondent was a Manpower Recruitment & Supply agency rendering manpower supply services. 

The Hon’ble Tribunal rejected the contention of the Revenue on the premise that the Respondent deputed its employees to its subsidiaries only. Further, the employees of the Respondent worked under the direction and supervision of the Respondent only. Furthermore, the deputed employees were repatriated to the Respondent upon completion of their work. Therefore, the Hon’ble Tribunal concluded that the Respondent cannot be covered under Manpower Recruitment or supply agency Services.

The Revenue filed an appeal before the Hon’ble Gujarat High Court (“the HC”).


The HC upheld the view taken by the Hon’ble Tribunal. The HC observed that in terms of Section 65(68) of the Finance Act, 1994 (“the Finance Act”), the definition of Manpower Recruitment or Supply agency at the relevant time (prior to April 18, 2006) means as under:

"Manpower recruitment or supply agency means any commercial concern engaged in providing any service directly or indirectly, in any manner for recruitment or supply of manpower, temporary or otherwise to a client".
In the instant case, it was held that the Respondent deputed its employees to the group companies/ subsidiaries. Therefore, the Respondent cannot be said to be a commercial concern which is providing services to its client. 

Further, the Respondent was not engaged in the business of providing recruitment or supply of manpower. The Respondent deputed its employees to the subsidiaries for limited period and they worked under the control and supervision of the Respondent only. 

Furthermore, the cost incurred by the Respondent in terms of salary, remuneration, perquisites, etc., was reimbursed by the group companies. Accordingly, there was no financial benefit to the Respondent. 

Therefore, the HC held that the Respondent cannot be said to be a Manpower Recruitment or Supply agency rendering manpower supply services. The appeal filed by the Revenue was dismissed.

Important to Note:

Subsequent amendments in the definition of Manpower Recruitment or Supply Agency: 

Post April 18, 2006, the definition of Manpower Recruitment or Supply agency was amended further and reads as under:

"Manpower recruitment or supply agency means any person engaged in providing any service directly or indirectly, in any manner for recruitment or supply of manpower, temporary or otherwise to a client".
Further, the this definition was again amended w.e.f. May 16, 2008:

"Manpower recruitment or supply agency means any person engaged in providing any service directly or indirectly, in any manner for recruitment or supply of manpower, temporary or otherwise to any other person".
Provisions with respect to supply of manpower Service after 1st July, 2012:

It is important to note that old definition of Manpower Recruitment or Supply Agency was rescinded w.e.f. July 1, 2012, and new definition of “Supply of Manpower” provided under Rule 2(1)(g) of the Service Tax Rules, 1994, which reads as under:

Supply of manpower, temporarily or otherwise, to another person to work under his superintendence or control.
Conclusion: There was change in the definition of Manpower Recruitment or Supply Agency at several occasions and considering recent change in the definition of Supply of manpower effective from July 1 2012, essence of the said judgment still holds good on principle and should not be chargeable to Service tax on deputation of employees to subsidiary companies for limited period on cost-sharing basis under Supply of Manpower services. 

It is advisable to have proper agreement to substantiate that deputed employees sent for limited period on actual cost sharing basis and do not work under the supervision and control of the service recipient so as to be out of the ambit of supply of manpower service. 

Bimal Jain
FCA, FCS, LLB, B.Com (Hons)
Flat No. 34B, Ground Floor, Pocket-1, Mayur Vihar, Phase–I,Delhi – 110091
Desktel: +91-11-22757595/42427056 Mobile: +91 9810604563
Email: Website:

Agenda For First Board Meeting Of Private Limited Company


As per New Company Law, gap between two board meetings can’t exceed 120 Days. If last board meeting of company was held on 31st March 2014 then next board meeting can be held upto 28th July, 2014 (April 30 days + May 31 Days + June 30 days +July 29 days = 120 Days).

As all of us aware that there are some Resolutions {Mention under Section 179(3)} which company required to file with ROC in form MGT-14 within 30 days of passing of resolution. {In my earlier Article mentioned list of Resolution which we require to file with ROC). 

If you required that list mail me on

Companies, who still not held First Board Meeting, require holding meeting in coming month. So in this article am trying to help you by providing the following:

1. Draft Detailed Agenda for Private Companies under Companies Act- 2013, by covering maximum resolution (which will help Companies to *save cost of Filling of e-form MGT-14 on different-2 time in future).

2. Draft Minutes for According to given Agenda.

3. Draft CTC of Resolutions.

4. Draft Notice Calling Meeting.

5. Draft Attendance Sheet of meeting.

6. Draft MBP-1 (Disclosure of Interest of Director).

7. Consent of Director who is in default.

Now the question is! How This Agenda will help to save the Cost:

1. Company has to file More than 50 resolutions with ROC in e-form MGT-14 (As per my earlier article).

2. If company pass resolutions mention in Section 179(3) in different Board Meetings then company has to file separate MGT-14, this will incurred cost every time on filling of e-form. Example:

What to do in case of TDS mismatch?

Even if the credit for TDS as claimed in the return matches with the balance as appearing in the Form 26AS, Assessing Officer may still raise a demand for payment of differential amount due to TDS mismatch. The reason for such differences could be as under: 
  • (1) TAN of deductor was wrongly mentioned 
  • (2) Name of deductor was not spelt correctly
  • (3) Tax deducted by one deductor wrongly included in the amount of tax deducted by another deductor 
In case of such TDS mismatch, an assessee can file a rectification request. 

Steps to file the rectification request: 
  1. (a) Login to your account in
  2. (b) Go to My Account > Rectification request 
  3. (c) You need the following to fill in the required details: 
    1. (i) PAN 
    2. (ii) Assessment Year 
    3. (iii) Latest Communication Reference Number (it starts with CPC/Assessment Year/)
    4. (iv) Latest CPC Order date 
    5. (d) Click on Validate to go to next step
    6. (e) On the next screen, choose 'Taxpayer is correcting data for Tax Credit Mismatch Only' from the drop-down box of 'Rectification Request Type' 
    7. (f) Check from the following relevant boxes for which taxpayer is seeking rectification: 
      1. (i) TDS on salary details
      2. (ii) TDS on other than salary details 
    8. (g) Fill in all the relevant details including details of tax deducted and reported in the return of income filed earlier 
    9. (h) Click on the button of 'Submit' to submit the rectification request. 
The TDS mismatch may also be due to error in TDS return filed by deductor. In such a situation, you should intimate the deductor about such error and require him to rectify the TDS return. 

In a press note no. 402/92/2006 dated April 17, 2014 CBDT had noted that many taxpayers commit mistakes while furnishing details of tax credit in the return of income. Such mistakes include: 

  • (a) Invalid/incorrect TAN of deductor; 
  • (b) Furnishing same TAN for more than one deductor; 
  • (c) Filing information in wrong TDS Schedules in the Return Form; 
  • (d) Furnishing wrong challan particulars in respect of Advance tax, Self-assessment tax etc. 
Consequently, the tax credit could not be allowed to the taxpayers while processing returns despite the tax credit being available in 26AS statement. The CBDT, therefore, directs the taxpayers to verify if the demand raised on them is due to tax credit mismatch on account of such incorrect particulars and submit rectification requests with correct particulars of TDS/tax claims for correction of these demands. The rectification requests have to be submitted to the jurisdictional Assessing Officer in case the return was processed by such officer, or the taxpayer is informed by CPC, Bangalore that such rectification is to be carried out by Jurisdictional Assessing Officer. In all other cases of processing by CPC, Bangalore, an online rectification request can be made (as defined above). 

CA Amresh Vashisht


Appointment of Managing Director, Whole- Time Director OR Manager (Section: 196):
This Section is applicable on Both Private as well as Public companies. Only this section of Chapter-XIII applicable on Private Companies. At the time of practical working on this section, some points create difficultiesm, because for appointment of Managerial Personnel company have to comply with provisions of Section- 196 and have to leave all other sections of this chapter.

MY OPINION: As per Law, there is no compulsion for private company to appoint MD, WTD and Manager. As per Act Private Company can be in continue working without MD, WTD and manager throughout the life of company. 

But problems arise when Private company appoint any Managerial Personnel willingly. Then company requires following Section: 196 of CA-2013.


  1. A company can appoint either Managing Director or Manager not both {Sub – section (1)}. 
  2. MD, WTD and Manager can be appoint for maximum tenure of 5 years. But company may reappoint them for next term of 5 Years or lesser period, before expiry of existing term.
  3. But re-appointment cannot be done earlier than one year before expiry of the term. This means, company may re-appoint them for next term in last one year of current term.
  4. The minimum age for appointment for these positions is twenty – one years and normal retirement age is seventy years. (So the person who does not attain age of 21 year can’t appoint as Managerial Personnel).
  5. But a person who has attained age of 70 year can be appoint as Managerial Personnel, by passing of Special Resolution in General Meeting, Condition: Explanatory Statement justifying such appointment shall be annexed to the notice of General Meeting for motion of appointment.
  6. For appointment of a person who has attained age of 70 year following procedure:
    1. · Call a Board Meeting
    2. · Issue notice of General Meeting
    3. · Pass Special Resolution In General Meeting.
    4. · File MGT-14 with ROC within 30 days of passing of Resolution.
    5.  File form DIR-12 and MR-1 with ROC with in 30 days of passing of resolution of appointment.
  7. To appoint a person as Managerial personnel:
    1. · Appointee should not be an un-discharged insolvent nor has any time been adjudged as an insolvent.
    2. · Appointee has not any time suspended payment to his creditors or has made a composition with them. 
    3. · Appointee should not be a convict of an offence and sentenced for a period of more than six months. {Sub – section (3)



CIT Vs Vikas International
Income Tax - Sections 28(iiib), 80HHC - export - gem stones - polished diamonds - Whether premium on the licences purchased by assessee from outside parties for sale or import, would be liable to be treated as cash assistance taxable u/s. 28(iiib) as against its export eligible to deduction us. 80HHC - Whether the said assistance would be taxable as income from other sources - Whether deduction u/s 80HHC could be claimed on export of cut and polished diamonds and gem stones. - Revenue's appeal dismissed : GUJARAT HIGH COURT

Tuesday, July 29, 2014

Major changes in new Form 3CD (Tax Audit report Format )

The CBDT has notified Income-tax (7th amendment) Rules, 2014 which substitutes the existing Form No. 3CD with a new form. The new Form 3CD prescribes certain new reporting clauses and substitutes some existing clauses with new ones. The new form requires tax auditor to furnish more and detailed information in the new form for tax audit report.

Unlike old form 3CD which required auditor to report only those inadmissible payments which were debited to Profit and loss account, the new Form 3CD requires reporting of all disallowable payments even if they are not debited to profit and loss account.

With the substitution of Form No. 3CD, reporting in the new form would be a time taking job for the Chartered Accountants. Here is the list of additional reporting requirements as prescribed in the new Form No. 3CD:

CBDT withdraw Form 3CD-3CB-3CA (audit report) Old Utility with Immediate effect

As Informed you earlier that CBDT has released New formats for Audit Report (Form No. 3CA, Form No. 3CB and Form No. 3CD) vide notification 33/2014 dated 25.07.2014.In response to this notification CBDT has withdrawn old efiling utility for Form No. 3CA, Form No. 3CB and Form No. 3CD from Income Tax India e filing site and released a notice (reproduce here under) on website. 

As per Notice shown on website ,CA has been advised not to upload Audit report based on old form.The restriction has been placed not only for current assessment year(2014-15) but also for previous assessment years. 

In our view if audit has been already been conducted on earlier date then it must be allowed to be uploaded on website in old format .ICAI should take up this matter with concerned authorities.Notice shown on the Income Tax website reproduced below.

The existing Form No. 3CA, Form No. 3CB and Form No. 3CD have been substituted vide notification no. 33/2014 dated 25.07.2014 with immediate effect. Taxpayers and CAs are advised to await the release of the new schema and utility to submit in the newly notified aforementioned Forms. Taxpayers and CAs are advised that any upload using the old Forms will not be valid even for previous AYs in view of the notification of CBDT. The new schema and updated utility for e-Filing of the same will be deployed shortly. CBDT has withdrawn old utility of form No. 3CD. CBDT is expected to release new utility soon.
Read Major Changes in Form 3CD  


Now A days all tax consultant ,business man,specially persons who have earned salary income ,are in rush to file their income tax return for financial year 2013-14 by due date i.e 31st July 2014.we are also one of them.

Due date of filing of income tax return for Assessment Year 2014-15 Financial year 2013-14 is as under(read link for more details)
  1. In case of person who are not liable to get their accounts audited is 31st July 2014 
  2. In case of person who's accounts are liable to be audited under any law  and partner of such firms and all companies is 30.09.2014
Person earning income from following heads is covered under due date 31st July 2014 .
  1. Salary ,Pension, 
  2. Income from other source like interest income ,
  3. Income from capital gain , 
  4. Income from house property and 
  5. Income from person owning small business and not liable to get their accounts audited are covered.
In brief all person other than those for which accounts are required to be audited is liable to file return on or before 31st July 2014 for Ay 2014-15

So in nutshell every body is trying to meet the deadline i.e.31st July 2014. we and you are also doing efforts in this direction ,but do you know

what is the penalty if some one failed to filed his return by due date.................i.e 31st July 2014?

any guesses..........

no guess ,we will tell you ,In fact there is no penalty as such for this fault ,absolutely no penalty ,do you believe ,we have said that there is no penalty on late filing of return as such.But this is the fact .

Specific penalty for late filing of return is prescribed u/s 271F which is briefed here under

If a person who is required to furnish a return of his income, as required under sub-section (1) of section 139 or by the provisos to that sub-section, fails to furnish such return before the end of the relevant assessment year, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of five thousand rupees
so this section says end of relevant assessment year ,for previous year 2013-14, assessment year is 2014-15 and it will ends on 31.03.2015 ,means there is no penalty for late filing of income tax return up to 31.03.2015 and after that assessing officer(AO) can impose a penalty of 5000,and that is also his (AO) power which he may or may not exercise after giving due hearing to the assessee.

Now you would like to know why people are so much worried about the due date ,the reason is that as due date has been linked with various other section of the income tax act ,so it is significant in that manner .

so we have listed few impacts of late filing of the Income tax return and issues related to due date of income tax.

Impact of late filing of Income tax return and issue related to due date(The List is not exhaustive/complete)

  1. Interest u/s 234A:If there is tax due after deducting advance tax ,TDS and self assessment tax than interest will be applicable @1% per month and part thereof up to the date of filing of the return besides interest applicable u/s 234B or 234C. Means this interest is applicable only if there is any tax payable in your return .(INTEREST calculator 234BC online is available here)
  2. Loss of Interest on refund:You may loose interest on refund u/s 244A as delay in filing is attributable to assessee for the period by which you have filed late return.
  3. Audit Report:Person who are liable to get their accounts audited should get the audit report on or before the due date of filing return i.e 30.09.2014.E filing of audit report s mandatory from ay 2013-14
  4. Revised return :Late /belated return can not be revised .This is major draw back .if you failed to file return in time then you can not revise your income tax return. Though you may apply revision u/s 154 but it has few limitation and very lengthy process.
  5. Some of deduction under sub sections of Section 80 are not available for late return.
  6. Due date of income tax return is related to TDS deposit and dis allowance u/s 40a(ia).
  7. Due date of Income Tax return is related to tax saving u/s 54,54B,54F and some other issues in capital gain saving account deposit scheme.
  8. Not able to carry forward the losses under various heads:you are not able to carry forward following type of losses if file return after due date
    1. Speculation loss
    2. business loss excluding loss due to un absorbed depreciation and capital exp on scientific research
    3. short term capital loss
    4. long term capital loss
    5. loss due to owning and maint. of horse races
  9. However there is no impact on following type of losses even if return is furnished after the due date
    1. loss from house property
    2. business loss on account of un absorbed depreciation and capital expenditure on scientific research.
  10. Though delay can be condoned as per circular 8/2001 DT 16.5.2001 on fulfilling of certain condition)
so if you are falls under the ambit of the above points then you should furnish your return up to 31st July 2014 .

Person who can afford to file late return 

If you have
  • already deposited due tax or due taxes has been deducted by your employer and nothing is due or
  • you are not claiming a Major amount as refund or
  • you have no losses to be carried forward
then you can fill return up to the end of the assessment year i.e 31.03.2015 without any penalty.

Person who should file return on time.

If you have
  • balance tax to be deposited or short fall of tax or
  • huge amount of refund due to you or
  • you have losses to be carried forwarded as explained above
then rush to Income Tax department website to file Your Income Tax Return in Time.

NOTE: all things as explained above is to not encourage people to file voluntarily late return but only to inform taxpayers their liability so that they can take informed decision.