Civil Procedure Code (CPC)

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Week 10th to 15th May 2010 Highlights

  

ICAI

 

ICAI’s suggestion on LLP considered while passing Finance Bill, 2010

   
  The ICAI is pleased to note that its suggestion relating to exemption of capital gains in the hands of shareholders consequent to conversion of a company into a LLP, has found favour with the Government. It is also heartening to note that one out of the three amendments made while passing the Finance Bill, 2010 was in accordance with the suggestion given in the Post-Budget Memorandum, 2010 submitted by the Direct Taxes Committee of ICAI.
   

Income Tax

 

MNCs take cross-border tax issues to new panel 

   
  A host of companies from Mumbai, said to be 367 in number and mostly multinational in nature, have moved the recently set up dispute resolution panel (DRP) to resolve issues related to cross-border taxation. An official in the I-T department said except two, all of the companies have chosen DRP instead of the conventional channel of appeal — that of approaching the commissioner (appeal).
   
 

Tax treatment of Derivatives transactions 

   
  The income-tax law is not very clear on the tax treatment of derivatives except that clause (d) of sub-section (5) to Section 43 says transactions in the derivatives segment in the recognised stock exchanges in India will not be treated as speculative transactions. The upshot is losses incurred in this segment will not be condemned to a shorter carry forward period of four years against the norm of eight years for set off in future nor would they have to be set off only against speculative…
   
 

Depreciation on Stock Exchange Card 

   
  Stock exchange membership is always considered a proud privilege entitling the cardholder to trade in the stock exchange for gain. In popular parlance, it is an asset of value. Is it entitled to depreciation as a capital asset? The Finance (No.2) Act, 1998 amended Section 32 of the Income-Tax Act, 1961 so as to enlarge the scope for claiming depreciation on trading assets. Prior to this amendment, depreciation was allowed only on buildings, plant and machinery and furniture being tangible…
   
 

Sec 194J: CBDT Circular on TPA liability is valid except for view on penalty 

   
  S. 194J applies to payments made to non-professionals such as hospitals. CBDT Circular on TPA liability is valid except for view on penalty The assessee, a TPA, provided services such as hospitalization services, cashless access services and services in connection with the processing & settlement of claims and making payment to hospitals to holders of health insurance policies issued by insurance companies.
   
 

DTC final draft expected by June 15 may tweak I-T slabs

   
  People with more than Rs 10 lakh annual income may not get the tax relief originally proposed in the Direct Taxes Code, as the Finance Ministry is for tweaking slabs across the board to offset concessions elsewhere. Under the first draft of DTC — which when implemented will replace the archaic Income Tax Act, 1961 — income of Rs 10 lakh to Rs 25 lakh was to attract tax at the rate of 20 per cent, but the final draft expected by June 15 may propose slapping 30 per cent tax on any income…
   
 

CBDT plans to set up two more central processing centres 

   
  The CBDT plans to set up two more central processing centres (CPC) — one each in Ahmedabad and Faridabad to improve taxpayer service. The Income-Tax Department has already set up a CPC in Bangalore. This CPC is being used to process all electronic returns filed from across the country and all those paper returns filed throughout Karnataka.
   

RBI

 

RBI Notification on ECB Policy 

   
  To permit the IFCs to avail of ECBs, including the outstanding ECBs, up to 50 per cent of their owned funds under the automatic route, subject to their compliance with the prudential guidelines already in place. ECBs by IFCs above 50 per cent of their owned funds would require the approval of the Reserve Bank. 
   
 

RBI eases overseas borrowing rules for infra Co’s 

   
  The Reserve Bank of India on Tuesday eased overseas borrowing rules for Infrastructure Finance Companies (IFC). The IFC’s will not need the central bank’s nod to raise overseas funds equivalent to or less than half of their own funds, the Reserve Bank of India (RBI) said in a statement. 
   
 

Know Your Customer (KYC) guidelines – accounts of proprietary concerns 

   
  For accounts of proprietorship concerns, it has been decided to lay down criteria for the customer identification procedure for account opening by proprietary concerns. Accordingly, apart from following the extant guidelines on customer identification procedure as applicable to the proprietor, banks should call for the following documents before opening of accounts in the name of a proprietary concern.
   

SEBI

 

SEBI’s advisory body rules out Uniform face value scrip’s 

   
  A key advisory body of the market regulator Sebi has dropped a proposal mandating uniform Rupee One face value of shares as it no longer sees merit in the proposal, but stock markets say the proposal should have been implemented. “There is no need for having a Rupee one face value as now dividend is distributed on per share basis,” a member of Sebi’s Primary Markets Advisory Committee told.
   
 

SEBI to allow currency derivatives soon 

   
  SEBI Market regulator the Securities and Exchange Board of India (SEBI) said it would allow more currency derivatives products beginning with options soon. “It is almost near final stages of deliberation (on currency options introduction). So it can come at any time,” SEBI whole-time member K M Abraham said on the sidelines of an event organised by industry body Assocham.
   

Company Law

 

The constitution of the National Company Law Appellate Tribunal 

   
  Parliament is competent to constitute Tribunals for special Acts. However, the failure to ensure independence of judiciary and separation of judicial and executive power renders the Company Law Tribunal unconstitutional. The Companies (Second Amendment) Act 2002 provides for the constitution of the NCLT & NCLAT to take-over the functions which are being performed by the CLB, BIFR, AAIFR and the High Court.
   
 

Companies may have to pay Stamp Duty on Mergers & Acquisitions 

   
  Companies may have to pay stamp duty on mergers and acquisitions in states like West Bengal, which do not have their own Act in this regard. This will happen if the Finance Ministry’’s suggestions on amendments to the over-a-century-old Indian Stamp Act are implemented without any change. The ministry today floated its suggestion for public comments on modification of the Act enacted in 1899. The proposals have already been sent to the states for their views.
   
 

Conditional Nod for National Company Law Tribunal

   
  A five-judge Supreme Court (SC) constitution bench cleared the decks for the establishment of a National Company Law Tribunal (NCLT) on the basis of new guidelines on the composition and functioning of these tribunals. By eliminating several intermediate steps, NCLT will expedite the disposal of corporate disputes and winding up petitions.At present, disputes are first raised at the level of the Company Law Board and then the high courts.
   

Audit

 

Fixed Assets valuation:- Cost Model or Revaluation model 

   
  When cost model is used, items of fixed assets are valued at the acquisition cost adjusted for accumulated depreciation and accumulated impairment loss. When the revaluation model is used, items of fixed assets are valued at the fair value at the balance sheet date. 
   

General

 

Draft of UIDAI Act in next four weeks: Nilekani 

   
—– A draft bill on the Unique Identity Project would be made public within the next one month said Chairman of UIDAI Nandan Nilekani. “We need an Act to govern a regulatory body like UIDAI. The draft of the Act will be put for public discussion in the next four weeks,” he told reporters on the sidelines of a Confederation of Indian Industries (CII) function. 


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