All About GSTR-2A: Frequently Asked questions 👇🏻👇🏻
https://acasouravbagaria.wordpress.com/2018/07/13/all-about-gstr-2a-frequently-asked-questions/
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Fair valuation - requirements under the Companies Act, 2013:
*Issuance of Sweat Equity Shares:* The sweat equity shares to be issued shall be valued at a price determined by a registered valuer as the fair price giving justification for such valuation - S. 54
*Preferential Offer:* When a company proposes to issue new shares, the price of such shares should be determined by the valuation report of a Registered Valuer - S. 62(1)(c)
*Compromises, Arrangements and Amalgamations:* In case of compromise or arrangement between members or with creditors or any class of them, a valuation report in respect of shares, property or assets, tangible and intangible, movable and immovable of the company is required by a Registered Valuer - S. 230 and S. 232
*Purchase of minority share holding:* Where an acquirer or person acting in concert with the acquirer acquires 90% or more of the equity capital in a company, then they can offer to the minority shareholder or the minority shareholder can offer to the acquirer, to acquire the minority shareholding at a valuation determined by the Registered Valuer - S. 236
*Winding up of a company:* In case of winding up, the valuation of assets of the company prepared by the Registered Valuer is required - S. 281 and S. 305
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Amounts paid as part of the lease premium or biannual or annual payments for a limited/specific period towards acquisition of lease hold rights are not subject to TDS, being capital payments. New Okhla Industrial Development Authority (NOIDA) vs. ACIT (Supreme Court) (S. 194-I).
Multi Vehicle Option for e-Way bill: The new option has been introduced wherein the consignment of one e-way bill has to be moved in multiple vehicles, after moving to transshipment place.
RBI has mandated for Incorporation of Name of the Purchaser on the Face of the Demand Draft and its possible misuse for money laundering.
DIR-3 KYC will be available on MCA21 Company Forms Download page w.e.f. 14th July 2018 for filing purposes.
SEBI has issued circular w.r.t. Discontinuation of acceptance of cash by Stock Brokers from their clients either directly or by way of cash deposit to the bank account of stock broker.
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GST: Madhya Pradesh HC directs State Tax Dept to Remove Check posts [Read Order]
Read more at: http://www.taxscan.in/gst-madhya-pradesh-hc-directs-state-tax-dept-remove-check-posts/25909/
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IT Defaulter need not apprehend Immediate Arrest: Karnataka HC denies Anticipatory Bail [Read Order]
Read more at: http://www.taxscan.in/it-defaulter-need-not-apprehend-immediate-arrest-karnataka-hc-denies-anticipatory-bail/25905/
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E-Way Bill Discrepancies: GSTN to automate Distance Calculation Between PIN Codes
Read more at: http://www.taxscan.in/e-way-bill-discrepancies-gstn-pin-codes/25922/
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SEBI proposes Stringent Rules for Auditors and Valuers
Read more at: http://www.taxscan.in/sebi-rules-auditors-valuers/25926/
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Section 185 of Companies Act, 2013 corresponds to section 295 of the Companies Act, 1956, section 86D of the Indian Companies Act, 1913 and section 190 of the English Companies Act, 1948. It has been made effective from 12-9-2013
PROVISION AS PER COMPANIES AMENDMENT ACT, 2017:
Section 185 of Companies Act, 2013 has ben completely substituted by New Section 185 under Companies Amendment Act, 2017 (CA, 2017 got president assent on 3rd January, 2018. Due to Complete substitution there are many changes occurs in practical use of this Section.
A. WHAT IS TERM ‘LOAN’:
Section 2 of Companies Act, 2013, does not define “loan”. A loan is defined by the Oxford English Dictionary as " a thing lent; something the use of which is allowed for a time, on the understanding that it shall be returned or an equivalent given, a sum of money lent on these conditions and usually with interest.
The Supreme Court in the case of Shree Ram Mills Ltd v. Commissioner of Excess Profit Tax, MANU/SC/0054/1954 ;
B. PROVISION OF SECTION 185 AS PER COMPANIES ACT, 2013: Same can be read in depth on the below mentioned link:
http://www.csdiveshgoyal.info/2015/11/loan-to-director-185-b-ackround-this.html
C. PROVISION AS PER COMPANIES AMENDMENT ACT, 2017:
Section 185 of Companies Amendment Act, 185 Divided into 3 (three) Parts:
ü Subsection 1: This Subsection states about “Ristricted Entites” to give Loan, provide Security or Guarantee under Companies Act, 2013. This Subsection includes only “Individuals” and “Firms”.
ü Subsection 2: This Subsection states about “loan to Private Company / Body Corporate” by following compliances.
ü Subsection 3: This Subsection states about “entities Loan/ Guarantee/ Securities to whom allowed” without complying with the conditions of Subsection 2.
NOTE: It can be opine that entities which are not covered under above 3 situations are free to Give Loan/ Guarantee / Securities without any default / compliance of Section 185.
Language of Section 185:
(1) No Company ( Private & Public)
· Directly or Indirectly
· Advanced any loan, including Bood Debt
· Or any Guarantee or provide any security in connection with any loan taken by
Following Persons
i. Any director of Company, or
ii. Any director of a Company which is its Holding Company, or
iii. Any partner of Director of lender company, or
iv. Any relative of Directors of Lender Company, or
v. Any firm in which any of Director of Lending Company is Director, or
vi. Any firm in which any relative of Director of lending Company is Director.
Points to be Kept in Mind while Complying according to this Section
a) This Subsection applicable on Public Limited as well as Private Limited Company (whether small, OPC, Start ups etc.)
b) Guarantee or Security in respect of only ‘Loan’ is covered.
c) Only individuals/ firms are covered in sub section 1.
d) Companies / body corporates are not covered in above sub section
(2) Following loan can be given by company to Any Person in whom directors are interested after fulfilling the Conditions mentioned below:
· Advance any loan, including loan represented by a book debt
· Give any guarantee in connection with any loan taken
· Provide any security in connection with any loan taken
Any Person:
i. Any Private Company of which any such Director is a Director or member;
ii. Body Corporate in which 25% or more voting power rests with one or more directors;
iii. Body Corporate whose Board accustomed to act on directions of BOD or Directors of lending company
Conditions:
i. Special Resolution passed by the Company in General Meeting.
ii. The loans are utilized by the borrowing company for its principal business activities.
Points to be Kept in Mind while Complying according to this Section
a) If borrower is Private Limited Company having common directors/ members then by using this sub section loan can be given.
b) Body Corporate includes LLPs, threfore as per, point (ii) of any person L/G/S can be given to LLP also. [Condition 25% or more voting power vested with one or more director of lender Company together].
3) Restrictions of Sub Section (1) and (2) shall not be applicable on following transactions:
i. Clause (a): Loan to Managing Director & Whole Time Director:
There are two ways to give Loan to Managing and Whole Time Director only.
a) Loan can be given to a Managing or Whole-Time Director as a part of the condition of their service.
Conditions: Conditions should be available for all the employees of the Company.
b) Loan can be given to a Managing or Whole-Time Director pursuant to any Scheme.
Conditions: Scheme should be approved by Shareholders by passing of Special
Resolution.
ii. Ordinary Course of Business: a company which in the ordinary course of its business provides loans or gives guarantees or securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate not less than the rate of prevailing yield of one year, three year, five year or ten year Government security closest to the tenor of the loan; or
iii. Wholly owned Subsidiary: Any loan made by a Holding Company to its Wholly own Subsidiary Company or any guarantee given or security provided by a Holding Company in respect of any loan made to its wholly own subsidiary Company Give any guarantee in connection with any loan taken
iv. Subsidiary: Any guarantee given or security provided by a Holding Company in respect of Loan made by any Bank or financial institution to its subsidiary Company.
Conditions:
In case of Guarantee on behalf of Subsidiary loan made under this clause utilized by the subsidiary company for its principal business activity only.
Food for Thought:
i. Clause (a) : Whether loan to “Manager” whether condition to its services or scheme shall be exempt from the restriction / compliances u/s 185.
ii. Clause (b): Whether all the Loan/ Guarantee /Security given under ordinary course of business are exempted u/s 185.
LIST OF PERMISSIBLE LOAN/ GUARANTEE/ SECURITIES UNDER SECTION 185
As per provisions of Section 185 a Company can give Loan / Guarantee / Security to following below mentioned Persons/ Entities after complying with provisiosn of Section 186.
Note:
All Companies have to keep in mind i.e. “No Company can give Loan/ Guarantee / Security without complying with the provision of Section 186 of CA, 2013”. In other words ‘It is mandatory for each and every company to comply with the provision of Section 186 while giving any L/G/S.
A. List of Restricted Person:
A Company can’t give Loan/ Guarantee/ Security to following below mentioned person:
I. Not Allowed
i. Any director of Company, or
ii. Any director of a Company which is its Holding Company, or
iii. Any partner of Director of lender company, or
iv. Any relative of Directors of Lender Company, or
v. Any firm in which any of Director of Lending Company is Director, or
vi. Any firm in which any relative of Director of lending Company is Director
II. Not Allowed if fails to pass special resolution:
i. Any Private Company of which any such Director is a Director or member;
ii. Body Corporate in which 25% or more voting power rests with one or more directors;
iii. Body Corporate whose Board accustomed to act on directions of BOD or Directors of lending company
B. List of Permissible Person:
III. Allowed if, Special Resolution Passed:
i. Any Private Company of which any such Director is a Director or member;
ii. Body Corporate in which 25% or more voting power rests with one or more directors;
iii. Body Corporate whose Board accustomed to act on directions of BOD or Directors of lending company
Note:
Loan to above mentioned entities are allowed after fulfilling below mentioned both conditions:
i. Special Resolution passed by the Company in General Meeting.
ii. The loans are utilized by the borrowing company for its principal business activities.
IV. Allowed without falling u/s 185(1) and (2):
i. Loan to Managing Director or Whole Time Director.
ii. L/G/S under ordinary course of business.
iii. L/G/ S to wholly owned subsidiary Company
iv. Loan to Subsidiary Company.
Note:
Loan to above mentioned entities are allowed after fulfilling condition mentioned above on page No. 4 and 5.
V. Allowed without falling u/s 185:
i. Loan to any Public Company (having common Director/ Shareholder or not).
ii. Private Company fulfilling all 3 conditions mentioned in Exemption Notification dated: 05th June, 2015.
iii. Guarantee / Security provided for the purpose other than loan taken by other entity.
iv. Loan to Holding Company (subject to condition that holding Company doesn’t have common directors)
v. Loan to Subsidiary Companies (subject to condition that subsidiary Company doesn’t have common directors)
Note:
Above mentioend entities are not fall u/s 185, therefore Company can give Loan/ Guarantee/ Securities to above mentioned entities freely without any restriction / compliance of Section 185
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Finance Minister Piyush Goyal said that the Centre is looking at simplify the companies law to provide relief to businesses. At a meeting with businessmen here, he said the government is of the view that they should not face legal problems and prosecution except for matters of serious nature.
Goyal, who is also the corporate affairs minister, said that the former Congress-led government had imposed many such provisions and now the government wants to amend the law. Terming the Goods and Services Tax (GST) an “honest system”, Goyal said that businesses will feel in the time to come that they have become a part of an honest system for taxation.
The minister also assured them that ease of filing tax returns, ease of assessment and other such issues will be discussed in the next GST council meeting.
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ICAI election process started. Election 2018 ICON created on www.icai.org. And first notification to opt for polling booth change in the same city for the Members of Delhi, Bengaluru , Chennai, Kolkatta and Mumbai posted. 8th August, 2018 is last date to exercise the option.
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Corp Talks -
⚜ Mercedez Benz (India) reported a 12% sales growth in the last six months. Force Motors, which makes engines for Benz, is a big beneficiary. Buy.
⚜ Tata Steel reported a 7.8% jump in Q1 sales. The next few quarters are expected to be equally good. A good buy.
⚜ Indiabulls Real Estate has entered into an agreement with Blackstone to sell its commercial assets in Chennai for Rs.850 crore totalling Rs.6200 crore in this calendar year so far. A positive for the
company.
⚜ Aurobindo Pharmaplans to acquire Millinckrods’s speciality generic business including its pain-killer portfolio for about $900 mn. Buy.
⚜ CARE has upgraded the credit rating of Yes Bank’s Bonds from AA+ to AAA. The bank has also received SEBI’s license to launch its custodian of securities business. A positive for the company.
⚜ Tata Motors plans to incur capex of ~$1000 mn and launch about a dozen new models in the next few years. Its current beaten down share price merits a buy.
⚜ KEC International has obtained new orders worth Rs.1357 crore in the transmission and distribution (T&D) segment. A big positive for the company.
⚜ Companies engaged in the shrimp feed business are expected to report bumper profits for Q1. Buy Avanti Feeds, Apex Frozen Foods and Waterbase.
⚜ Based on excellent Q1 results, Prakash Industries is expected to post an EPS of ~Rs.43 in FY19. The stock is likely to come out from the ASM category in a few days. An excellent buy.
⚜ China has decided to reduce import tariffs on cancer drugs from India. Natco Pharma and Biocon must be bought.
⚜ Sterlite Technologies will buy 100% stake in Italy’s Metallurgica for $54.3 mn through debt financing and internal accruals. A big positive for the company.
⚜ Lupin has received USFDA’s approval for its malaria drug Hydroxychloroquine sulphate tablets. Buy.
⚜ Dish TV India reported a major turnaround in Q1. The management expects the rest of the year to be equally good. Buy.
⚜ ICRA expects the auto-component industry to show CAGR growth of 10-12% over the next few years. Buy Minda Industries.
⚜ The replacement demand for tyres is picking up. It may be prudent to accumulate JK Tyre Industries.
⚜ India’s largest software exporter TCS reported a 23% jump in PAT to Rs.7340 crore. Better times ahead. Buy.
⚜ IndusInd Bank reported a 24% jump in PAT to Rs.1035.72 crore driven by higher NIM (net interest margin) and other income. Accumulate.
⚜ An announcement about LIC making an open offer to the shareholders of IDBI Bank is boosting its share price. A fairly good buy at the current level.
⚜ FPIs are dumping their holdings in Manpasand Beverages. Once this ends, the stock will resume its northward journey. Hold on to your investments.
⚜ Phillips Carbon Black is scheduled to commence its 50,000 TPA plant at Mudra in Gujarat in the next few months. Another 30,000 TPA plant at Palej in Gujarat will be ready by Q1FY20. This ~Rs.4000 crore capex augurs well for the company. Buy immediately.
⚜ Can Fin Homes, a subsidiary of Canara Bank, plans to raise up to Rs.6000 crore via NCDs (non-convertible debentures) on private placement basis to expand its home loan business. Buy.
⚜ Realty major Sobha Ltd has sought shareholders’ approval to raise up to Rs.700 crore via NCDs on private placement basis to execute its real estate projects. A big positive. Buy.
⚜ Punjab National Bank (PNB) and Carlyle together intend to sell 51% stake in PNB Housing Finance. This will help PNB to combat NPA casualties caused by the Nirav Modi group. Buy.
⚜ An Ahmedabad based analyst recommends Ashok Leyland, Adani Green Energy, BhagyanagarIndia, IOL Chemicals & Pharmaceuticals, NRB Bearings and Talwalkars Liftstyles.
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Cleaning of agricultural produce away from agricultural farm not entitled to GST* exemption: AAR
July 13, 2018[2018] 95 taxmann.com 118 (AAR- RAJASTHAN)
CGST : Whether as per Entry No. 24(i)(i) of the Notification No. 11 of 2017, Central tax (Rate) dated 28-6-2017 and Entry No. 54(c) or Entry No. 55 of the Notification No. 12 of 2017 Central Tax(Rate) dated 28-6-2017, NIL rate of GST is applicable on given processes only if undertaken at an agriculture farm and not otherwise.
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ICAI: Result of the CA Final Examination, Information Systems Audit [ISA] Assessment Test, Foundation Examination and CPT held in May/June, 2018 are likely to be declared on Friday, the 20th July 2018 around 6.00 P.M.
MCA: Complete your Director’s KYC before 31st August, 2018 to save penalty of Rs.5,000/-
Case Study: When sales are not doubted 100% disallowance for bogus purchase can’t be made - Sanjay Kailash Gupta Vs The Income Tax Officer (ITAT Mumbai)
Sukanya Samriddhi A/c can be opened with initial deposit of Rs. 250 now.
IBC: Appointment of Authorised Representative for Classes of Creditors under IBC - Circular No. IBBI/CIRP/015/2018.
The Ministry of Corporate Affairs #MCA has constituted a 10 Member Committee, headed by the Secretary of Ministry of Corporate Affairs, for review of the penal provisions in the Companies Act, 2013 may be setup to examine ‘de-criminalisation’ of certain offences. (PIB)
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MCA is conducting KYC of all Directors of all companies annually through a new form viz. DIR-3 KYC
*Every Director who has been allotted DIN on or before 31st march, 2018 and whose DIN status is ‘Approved’.
*Due date of filing of DIR-3KYC is on or before 31st August, 2018.
*Mandatory Information DIR-3 - Unique Personal Mobile Number, Personal Email ID, OTP on Email ID and Mobile No.
*Certification of DIR-3 KYC - DSC of Director & DSC of practicing professional (CA/CS/CMA)
*Filing of DIR-3 KYC would be mandatory for Disqualified Directors
*If director fails to file DIR-3 KYC the MCA21 system will mark all approved DINs (allotted on or before 31st March 2018) against which DIR-3 KYC form has not been filed as ‘Deactivated’ with reason as ‘Non-filing of DIR-3 KYC’
*There will be following Consequences of filing of DIR-3 KYC after due date, After the due date filing of DIR-3 KYC in respect of such deactivated DINs shall be allowed upon payment of a specified fee only, without prejudice to any other action that may be taken.
*MCA notifies 'Nil Fee' and 'Delayed Fee of Rs. 5,000' for Filing e-Form DIR-3 KYC under rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014, applicable w.e.f. 10 July 2018
*MCA notifies format of e-form DIR-3 KYC under new Rule 12A (Directors KYC) along with procedure for restoration of deactivated DINs of Directors, applicable w.e.f. 14 July, 2018
ICAI Election 2018 ICON created on www.icai.org. And first notification to opt for polling booth change in the same city for the Members of Delhi, Bengaluru, Chennai, Kolkatta and Mumbai posted. 8th August, 2018 is last date to exercise the option.
