Filing Income tax returns for DECEASED INDIVIDUAL, 44AD and DSC

For an Individual applicant who has passed off and the return needs to be filed under the auditable category.


" This is regarding cases where the assesse has died and digital signature is mandatory u/s 44AB. In such cases, the legal representatives (LR) has to get a non-PAN-digital-signature in his own name.

After getting the non-PAN-DSC in his own name, the LR will have to send an e-mail to efiling.administrator@incometaxindia.gov.in/efiling@incometaxindia.gov.in mentioning the name,PAN,DOB of deceased and LR with scanned attachment of the death certificate of the deceased. IT Dept. will verify the PAN details and make an entry in EF. A confirmation to this effect will be sent to the originating e-mail-id.

The LR will now be able to login to the user id of the deceased and update the digital-signature with his own non-PAN-DSC. While preparing the e-Return, the LR has to enter his own-PAN in the verification-part of the e-return."

DSC - Common Issues - " Unable to access " error

Error :

"Unable to access some of the fields of the
HTML form. Please check the applet parameters."

Possible Solution :

In Internet Explorer, click on Tools > Internet Options > Security.
                Click “Internet” and “Default Level” button and change the Security Settings to “Medium”.
                Click “Custom Level” Button.
                Enable the “Download Signed ActiveX controls” option.
                Enable the “Run ActiveX controls and Plugins” option.
                Enable the “Script ActiveX controls marked safe for scriptting” option.

DSC - Common Issues - Fakepath Error

For “C:/Fakepath” error eg. C:/Fakepath/filename.txt when trying to upload the IT Return.

SOLUTION is as follows:
The error is usually faced by people using Internet Explorer 8 (IE8).
You can resolve this through any one of the following 3 ways:

1. In IE8, Change Security Settings:
Internet Explorer>Tools>Internet Option>Security>Custom
Find and Enable the "Include local directory path when uploading files to a server"
(it is quite a ways down)

2. In IE8, Add the site to your Trusted Sites:
Tools>Internet Options>Security>Trusted Sites>Sites

3. Create a folder named "Fakepath" in C: & copy your xml file, in that folder.

According to the HTML5 specifications, a file upload control should not reveal the real local path to the file you have selected, unless it is a trusted site.

This is already implemented in IE 8 and since the site is not added to your "trusted sites", it gives the error.

Note : Option 3 is working fine when tested.

Easy Exit Scheme - January 2011

Ministry of Corporate Affairs has decided to introduce a Scheme namely, "Easy Exit Scheme, 2011" under Section 560 of the Companies Act, 1956 to give an opportunity to the defunct companies, for getting their names struck off from the Register of Companies again.

The scheme will be in operation from 1st January, 2011 to 31st January, 2011 with filing fees of Rs. 3000/-.

Link for all details of the scheme:
https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B-0hzoMM8_XZZjNlYjdiOTYtZmZjMS00YzQ3LWJkYmQtZjQ2ODRjYTljY2Yz&hl=en

Life goes on... (Dec 2010)

The teacher asked little student if he knows his numbers.

"Yes," he said. "I do. My father taught me."
"Good. What comes after three."
"Four," answers the boy.
"What comes after six?"
"Seven."
"Very good," says the teacher.
"Your dad did a good job. What comes after ten?"
"A Jack."

DOs and DONTs of Credit Cards

Click Picture to Enlarge it so that the contents are readable...



Tax Return Preparer (First Amendment) Scheme, 2010 - Amendment in paragraphs 2 and 11

Tax Return Preparer (First Amendment) Scheme, 2010 - Amendment in paragraphs 2 and 11

NOTIFICATION NO. 84/2010 [F. NO. 142/16/2010-SO (TPL)] DATED 22-11-2010

In exercise of the powers conferred by sub-section (1) of section 139B of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby amends the Tax Return Preparer Scheme, 2006, published vide notification number S.O. 2039(E) dated the 28th November, 2006 namely :—

1. (1) This Scheme may be called the Tax Return Preparer (First Amendment) Scheme, 2010.
(2) It shall come into force from the date of its publication in the Official Gazette.

2. In the Tax Return Preparer Scheme, 2006,—
(a) for the proviso to sub-paragraph (f) of paragraph 2, the following proviso shall be substituted, namely :—
“Provided that a person being a person referred to in clause (ii) or clause (iii) or clause (iv) of sub-section (2) of section 288 shall not be entitled to act as Tax Return Preparer;”;

(b) for clause (xii) of sub-paragraph (1) of paragraph 11, the following shall be substituted, namely :—
“(xii) if he, after issue of Tax Return Preparer Certificate to him under clause (viii) of paragraph 4 of the Scheme, becomes a person referred to in clause (ii) or clause (iii) or clause (iv) of sub-section (2) of section 288 of the Act.”

[F. No. 142/16/2010-SO (TPL)]

Capital Markets Update

Not to mix too many things...
All Capital markets updates will be available at
http://dungarchand.blogspot.com/search/label/Capital%20Markets
unless the same is relevant to CA Profession.

Yours truly,
Dungar Chand U Jain
Madurai

Amendment in Forms DIN-1 and DIN-3

Companies Act
Rules/Amendment Rules

Companies (Director Identification Number) Rules, 2006 (Amend­ment) 2010 -
Amendment in Forms DIN-1 and DIN-3

NOTIFICATION NO. GSR 849(E), DATED 15-10-2010

In exercise of the powers conferred by clauses (a) and (b) of sub-section (1) of section 642 read with sections 266A, 266B and 266E of the Companies Act, 1956 (1 of 1956) the Central Government hereby makes the following rules further to amend the Companies (Director Identification Number) Rules 2006, namely :—

1. (1) These rules may be called the Companies (Director Identi­fication Number) Rules 2006, (Amendment), 2010.
(2) These rules shall come into force on the 5th day of December, 2010.

2. In the Companies (Director Identification Number) Rules 2006 :—

(i) in Form DIN-1, in the declaration, at the bottom of serial number 14, the following declarations shall be inserted namely :—
“I also confirm that I am not restrained/disqualified/removed of, for being appointed as Director of a company under the provisions of the Companies Act. 1956 including sections 203, 274 and 388E of the said Act.

I further confirm that I have not been declared as proclaimed offender by any Economic Offence Court or Judicial Magistrate Court or High Court or any other Court.”

(ii) in Form DIN-3, under Verification, the following Veri­fications shall be added namely :—
“It is hereby confirmed that the appointed Director(s) whose particulars are given above, has given declaration to the company that he/she is not restrained/disqualified/removed of, for being appointed as Director of a company under the provisions of the Companies Act, 1956 including sections 203, 274 and 388E of the said Act.

It is also confirmed that the appointed Director(s) whose partic­ulars are given above. has given a declaration to the company that he/she has not been declared as proclaimed offender by any Economic Offence Court or Judicial Magistrate Court or High Court or any other Court.”

MCA Additional filing fees - INCREASE

It has been decided to revise the additional fees payable as per Section 611(2) of the Companies Act, 1956 (except for Form 5) as per below details with effect from 5th December 2010 :-

Period of Delay	Fixed rate of additional fee
Upto 30 days	Two times of normal filing fee
More than 30 days and upto 60 days	Four times of normal filing fee
More than 60 days and upto 90 days	Six times of normal filing fee
More than 90 days	Nine times of normal filing fee

Amendment to Form No. 1

COMPANIES ACT
RULES/AMENDMENT RULES

Companies (Central Government’s) General Rules and Forms (Third Amendment), 2010 - Amendment in Annexure ‘A’

Notification No. G.S.R. 848(E), dated 15-10-2010 issued by Ministry of Corporate Affairs

In exercise of the powers conferred by sub-section (1) of section 642 read with section 61OB of the Companies Act, 1956, the Central Government hereby makes the following rules further to amend the Companies (Central Government's) General Rules and Forms, 1956, namely:—

1. (1) These rules may be called the Companies (Central Government's) General Rules and Forms (Third Amendment), 2010.

(2) These rules shall come into force on the 5th day of December, 2010.

2. In the Companies (Central Government's) General Rules and Forms; 1956, in Annexurer ‘A’,—

(i) in Form No. 1,—

(a) in serial number 8, under the heading, Particulars of Promoters (first subscribers to the MOA), at the bottom after the entry Name of the company, the following shall be inserted, namely:—

"Whether the subscriber has been convicted by any court for any offence involving moral turpitude or economic or criminal offences or for any offences in connection with the promotion, formation or management of a company Yes No If yes, provide details."

(b) in Declaration, after serial number (vi), the following Declarations as serial numbers (vii and viii) shall be inserted, namely:—

"(vii) That the subscribers have given declaration of details of his/her conviction by any court for any offences involving moral turpitude or economic or criminal offence or for any offences in connection with the promotion, formation or management of a company;

(viii) That the subscribers have given declaration that he/she has not been declared as proclaimed offender by any Economic Offence Court or Judicial Magistrate Court or High Court or any other Court."

(ii) In Form No. 32, —

(a) in Verification I, after serial number 3, the following Verification as serial number 4, shall be inserted namely:—

"4. It is also confirmed that the appointed director (s) whose particulars are given above, has given a declaration to the company that he/she has not been declared as proclaimed offender by any Economic Offence Court or Judicial Magistrate Court or High Court or any other Court."

Period of validity of approvals issued under Section 10 (23C) (iv), (v), (vi) or (via) and Section 80G (5) of the IT Act-clarification reg.

CBDT issues circular no 7/2010 dt 27-10-10:
Certificate us 10(23C)(iv)(v) issued on or after 13/07/2006, certificate us 10(23C)(vi)(via) issued on or after 01/12/2006, and 80G certificate valid on 01/10/2009 or issued after 01/10/2009
SHALL BE VALID till not withdrawn.

CIRCULAR NO 7/2010, Dated: October 27, 2010

Subject:- Period of validity of approvals issued under Section 10 (23C) (iv), (v), (vi) or (via) and Section 80G (5) of the IT Act-clarification reg.

The Board has received various references from the field formations as well as members of public about the period of validity of approvals granted by the Chief Commissioners of Income Tax or Directors General of Income Tax under sub-clauses (iv), (v), (vi) and (via) of Section 10(23C) and by the Commissioners of Income Tax or Directors of Income Tax under Section 80G (5) of the Income Tax Act, 1961.

2. It has also been noticed by the Board that different field authorities are interpreting the provisions relating to the period of validity of the above approvals in a different manner. The following instructions are accordingly issued for the removal of doubts about the period of validity of various approvals referred to above.

3. Sub-Clause (iv) and (v) of Section 10 (23C) were amended by Taxation Laws (Amendment) Act, 2006 by insertion of the following proviso to that clause:-

“Provided also that any (notification issued by the Central Government under sub-clause (iv) or sub-clause (v), before the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President”, shall at any one time, have effect for such assessment year or years, not exceeding three assessment years) (including an assessment year or years commencing before the date on which such notification is issued) as may be specified in the notification.)”

The intention behind the insertion of the above proviso was laid out in the relevant portion of the explanatory notes to the Taxation Laws Amendment Act, 2006 which reads as under:

“A need has been felt to dispense with the requirement of periodic renewal of notifications. The requirement of periodic renewal of notifications has been resulting in delays in their renewal.

5.2 In order to overcome delays, the eighth proviso to section 10(23C) has been amended so as to provide that the above mentioned limit of effectivity for three assessment years shall be applicable in respect of notifications issued by the Central Government under sub-clause (iv) or sub-clause (v) before the date on which Taxation Laws (Amendment) Bill, 2006 receives the assent of the President.

5.3 The Taxation Laws (Amendment) Bill, 2006 received the assent of the President on 13.07.2006. Therefore, on account of the above amendment any notification issued by the Central Government under the said subclause (iv) or sub-clause (v), on or after 13.07.2006 will be valid until withdrawn and there will be no requirement on the part of the assessee to seek renewal of the same after three years.

The intention of legislature that the approvals under Section 10 (23C) (iv) & (v) after the cut off date mentioned above would be a one time approval which would be valid until withdrawn, is thus sufficiently clear.

4. Approvals under Sub-Clause (vi) and (via) of Section 10 (23C) are governed by the procedure contained in Rule 2CA. Rule 2CA was amended w.e.f. 1.12.2006, inter alia by substitution of the existing sub-rule 3 by a new provision which is reproduced below:-

“(3) The approval of the Central Board of Direct Taxes or Chief Commissioner or Director General, as the case may be, granted before the 1st day of December, 2006 shall at any one time have effect for a period of exceeding three assessment years.”

Read in isolation, without any further guidance as was given by way of explanatory notes to Finance Act, 2006 in respect of amendment of sub-clause (iv) & (v) of Section 10 (23C), the above amendment leaves some scope for doubt about the period of validity of the approval under Section 10 (23C) (vi) and (via) on or after 1.12.2006. For the removal of doubts if any in this regard, it is clarified that as in the case of approvals under sub-clause (iv) & (v) of Section 10 (23C), any approval issued on or after 1.12.2006 under sub-clause (vi) or (via) of that sub-section would also be a one time approval which would be valid till it is withdrawn.


5. As regards approvals granted upto 1.10.2009 under Section 80G by the Commissioners of Income Tax/ Directors of Income Tax, proviso to Section 80G (5) (vi) clarified that any approval shall have effect for such assessment year or years not exceeding five assessment years as may be specified in the approval. The above proviso was deleted by the Finance (No. 2) Act 2009. The intent behind the deletion of above proviso as explained in the explanatory memorandum to Finance (No.2) Bill, 2009 was as under:

“Further as per clause (vi) of sub-section (5) of section 80G of the Income-tax Act, 1961, the institutions or funds to which the donations are made have to be approved by the Commissioner of Income-tax in accordance with the rules prescribed in rule 11AA of the Income-tax Rule, 1962. The proviso to this clause provides that any approval granted under this clause shall have effect for such assessment year or years, not exceeding five assessment years, as may be specified in the approval.

Due to this limitation imposed on the validity of such approvals, the approved institutions or funds have to bear the hardship of getting their approvals renewed from time to time. This is unduly burdensome for the bona fide institutions or funds and also leads to wastage of time and resources of the tax administration in renewing such approvals in a routine manner.

Therefore, it is proposed to omit the proviso to clause (vi) of sub-section (5) of section 80G to provide that the approval once granted shall continue to be valid in perpetuity. Further, the Commissioner will also have the power of withdraw the approval if the Commissioner is satisfied that the activities of such institution or fund are not genuine or are not being carried out in accordance with the objects of the institution or fund. This amendment will take effect from 1st day of October, 2009. Accordingly, existing approvals expiring on or after 1st October, 2009 shall be deemed to have been extended in perpetuity unless specifically withdrawn.”

It appears that some doubts still prevail about the period of validity of approval under Section 80G subsequent to 1.10.2009, especially in view of the fact that no corresponding change has been made in Rule 11A (4). To remove any doubts in this regard, it is reiterated that any approval under Section 80G (5) on or after 1.10.2009 would be a one time approval which would be valid till it is withdrawn.

F.No.197/21/2010-ITA-I
(Raman Chopra)
Director (ITA-I)

I-T dept raises 11,000cr tax demand on Vodafone

23-Oct-2010

TOUGH CALL: CASE TO SET PRECEDENT FOR M&As
Supreme Court to take final call on dispute; ruling to influence pricing & structure of all future cross-border deals

THE battle between tax authorities and telecom major Vodafone is nearing its climax. The income tax (I-T)department on Friday raised a demand of over 11,000 crore on Vodafone International Holdings BV, on account of its $11-billion deal to acquire Indian telecom firm Hutchison Essar in 2007.

Vodafone has 30 days to comply with the demand. Whether Vodafone will have to eventually cough up the tax will be decided by the Supreme Court after it resumes hearing on the case on October 25. The final outcome of the tax dispute will influence the pricing and structure of all future cross-border M&;A deals.

Strongly disagreeing with the tax calculation, Vodafone said, “In this ‘test case’, the tax authority is attempting to interpret Indian law as it has never been interpreted for the past 50 years, and this interpretation also goes against internationally recognised tax norms.”

“Vodafone,” said a company release, “continues to believe that it is not liable for any tax on this transaction involving the transfer of a company outside of India.”

The I-T demand follows the apex court’s direction last month to quantify the tax demand on Vodafone. The Supreme Court gave its order while hearing Vodafone’s appeal against the Bombay High Court ruling that upheld the I-T department’s position that it has jurisdiction to tax the cross-border acquisition.

“We are waiting to see whether the Supreme Court will acknowledge the substance of the transaction or the law binding to these transactions,” said Vispi T Patel of chartered accountancy firm Vispi T Patel & Associates.

The tax department claims it has the jurisdiction on the M&A deal because the company and the business that was sold was based in India, even though the transaction happened offshore between two nonresidents. The high court had turned down Vodafone’s argument that no tax was payable locally as the transaction had no “territorial nexus” with India.

The tax demand was made on Vodafone, the buyer, instead of Hong Kong-based Hutchison International that sold the shares of Hutch Essar to Vodafone. ‘Vodafone informed in advance’

ACCORDING to the income-tax department, since Vodafone did not deduct tax while making payment to Hutchison, the liability to pay the tax falls on Vodafone. The I-T department also claimed that Vodafone was informed in advance about the tax liability arising in India on account of its acquisition of Hutch Essar, even while the government was processing its foreign investment application.

Consequently, the I-T department issued the order treating Vodafone as an assessee in default. A press release issued by the department on Friday said, "The income-tax department today issued an order raising a tax demand of 11,217.95 crore on Vodafone International BV, treating it as an assessee in default under Section 201 (I) of the Income-Tax Act, 1961, for failure to deduct tax as required under Section 195 of the Act before making a payment of $11,076 million to Hutchison Telecommunications International."

"This is a very good order passed by the income-tax department. All aspects of the transaction were taken into consideration before making the order," said Girish Dave, counsel for the income-tax department.

But Vodafone feels since it was the acquirer, it has made no gain on the transaction. The company also believes the tax calculation does not follow the conclusions of the recent Bombay High Court judgement. "Vodafone will continue to take whatever actions are necessary to defend itself in this matter," said the company.

Changes In Q2 eTDS Statement Filing Requirements :

NSDL has notified changes in data structure and validations for filing eTDS statement for FY 2010-11. These changes are effective for the forthcoming second quarter statement filing due on Oct 15, 2010. The changes are primarily to give effect to Notification 41.

Changes

100% Valid PANs

Reporting of Transport Contract payments without deduction of TDS

Flagging penal rate deductions

Mandatory Contact details of Deductor

Reporting requirements for Govt Deductors

100% Valid PANs

Existing Rule

At present a minimum percentage of valid PAN is mandatory in any eTDS statement. This is 95% for Form 24Q and 85% for others

Changed Rule

Form 24Q/26Q/27Q

All deductee records must have valid PANs. Even deductee records where tax has been deducted at lower/NIL rate must have valid PAN,.

Only exception is deductee records where tax has been deducted at higher rate u/s 206AA

Form 27EQ

The existing rule of 85% continues

Reporting of Transport Contract payments without deduction of TDS

Finance Act 2009 had made an important change in respect of applicability of TDS on transport contractors. Section 194C was replaced and the following two sub sections provided for non deduction of TDS on transport contractors

(6) No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, on furnishing of his Permanent Account Number, to the person paying or crediting such sum.

(7) The person responsible for paying or crediting any sum to the person referred to in subsection (6) shall furnish, to the prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed.

In terms of sub section (7), now such transactions are to be reported in regular eTDS statement.

All such deductions to transport contractors where tax has not been deducted are to be marked “T” in the column Reason for Non-deduction / Lower Deduction, if any in the deductee details

Penal rate deductions :

All deductions where tax has been deducted at hiigher rate in terms of section 206AA are to be marked “C” in the column Reason for Nond eduction / Lower Deduction, if any in the deductee sheet .Such transactions need not have valid PAN.

For records marked with higher rate only below mentioned fields can be updated:

· PAN

· Amount of payment

· Date of payment

Mandatory Contact details of Deductor

In the deductor details , contact details of deductors are provided

Email-Id of deductor / responsible person is now mandatory

Field for mobile number of responsible person has been added.

Any one of the contact details of deductor is mandatory:

Deductor telephone no. along with STD code

Responsible person telephone no. along with STD code

Mobile no. responsible person

Reporting requirements for Govt Deductors

· For TDS deposited by book entry, 7 digit number generated by TIN for accepted Form 24G statement to be quoted in BSR code field. This value will be provided by the Accounts Officer to the deductor.

· For TDS deposited by book entry, 5 digit number generated by TIN for DDO record of accepted Form 24G statement will be quoted in Transfer voucher field. This value will be provided by the Accounts Officer to the deductor

Form No 27EQ

Form No 27EQ is to be filed for tax collection at source

Validation for no/lower/higher deduction will not be applicable for Form no. 27EQ

PAN compliance validation of 85% will be applicable for Form no. 27EQ

New File Validation Utility : FVU 3.0

Quarterly e-TDS statements (regular and correction) upto FY 2009-10 should be validated with FVU version 2.129. There is no change in the validations for statements upto F.Y. 2009-10

Quarterly e-TDS statements (regular and correction) for FY 2010-11 should be validated with FVU version 3.0.

Status of FY 2010-11 Q1 statements

If statement for Q1 FY 2010-11 is being filed late , does it need to be validated with FVU 3.0 ?

The answer is Yes. it needs to be validated with FVU version 3.0.

eTDS Statements are accepted at TIN-Centres by SAM software. Latest SAM will not accept any statement for FY 2010-11 , unless it is validated with FVU 3.0