allowance of balance 50% additional depreciation

Salient features of Union Budget 2015 

To encourage investment in plant or machinery by the manufacturing and power sector, additional depreciation of 20% of the cost of new plant or machinery acquired and installed is allowed under the existing provisions of section 32(1)(iia) of the Act over and above the general depreciation allowance. On the lines of allowability of general depreciation allowance, the second proviso to section 32(1) inter alia provides that the additional depreciation would be restricted to 50% when the new plant or machinery acquired and installed by the assessee, is put to use for the purposes of business or profession for a period of less than one hundred and eighty days in the previous year.

Non-availability of full 100% of additional depreciation for acquisition and installation of new plant or machinery in the second half of the year may motivate the assessee to defer such investment to the
next year for availing full 100% of additional depreciation in the next year. To remove the discrimination in the matter of allowing additional depreciation on plant or machinery used for less than 180 days and used for 180 days or more, it is proposed to provide that the balance 50% of the additional depreciation on new plant or machinery acquired and used for less than 180 days which
has not been allowed in the year of acquisition and installation of such plant or machinery, shall be allowed in the immediately succeeding previous year.

This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year
2016-17 and subsequent assessment years.

Deduction for employment of new workmen in factory

The existing provisions contained in section 80JJAA of the Income-Tax Act 1961, inter alia, provide for deduction to an Indian company, deriving profits from manufacture of goods in a factory. The quantum of deduction allowed is equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided.

Clause (a) of sub-section (2), inter alia, provides that no deduction under sub-section (1) shall be available if the factory is hived off or transferred from another existing entity or acquired by the assessee company as a result of amalgamation with another company. Explanation to the section defines “Additional wages” to mean the wages paid to the new regular workmen in excess of hundred workmen employed during the previous year.

With a view to encourage generation of employment, it is proposed to amend the section so as to extend the benefit to all assessees having manufacturing units rather than restricting it to corporate assessees only. Further, in order to enable the smaller units to claim this incentive, it is proposed to extend the benefit under the section to units employing even 50 instead of 100 regular workmen.
Accordingly, it is proposed to amend sub-section (1) of the aforesaid section. It is also proposed to amend clause (i) of the Explanation so as to provide “additional wages” to mean the wages paid to the new regular workmen in excess of fifty workmen employed during the previous year.

These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.

Section 269SS of Income Tax Act - no cash transactions above Rs.20,000/-

1) section 269SS of the Income-Tax Act is being amended to provide that no cash transactions in the purchase of immoveable property is allowed. In case anybody violates this provision then penalties as provided in sections 271D and 271E will be attracted.

The amendment to section 269SS provides that no person shall accept any advance or repayment of an advance in cash exceeding Rs.20,000/-. So the onus on complying with this provision is on the person accepting the cash which is usually the builder or developer or seller of the flat in the case of immovable property.

This is a welcome move to curb black money in the real estate sector and one hopes that persons duly comply with the new rules.

SEBI (Investment Advisers) Regulations

SEBI has published its FAQs on the SEBI (Investment Advisers) Regulations. Any person who is providing investment advisory services will need to get himself registered with SEBI under these regulations.

“Investment advice” is an advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on investment portfolio containing securities or investment products, whether written, oral or through any other means of communication for the benefit of the client and shall include financial planning.

Provided that the investment advice given through newspaper, magazines, any electronic or broadcasting or telecommunications medium, which is widely available to the public shall not be considered as investment advice for the purpose of IA regulations. However, investment advisers who make public appearance or make recommendations or offer an opinion concerning securities
or public offers through public media while making recommendations through public media, are required to comply with the relevant provisions of these regulations.

Members of the Institute of Company Secretaries of India, Institute of Chartered Accountants of India, Institute of Cost and Works Accountants of India who provide investment advice to their clients incidental to their professional services are exempted from obtaining registration under IA Regulations.

For example :- An advice by a professional CA as a tax consultant to his tax client for investing in ELSS in the course of tax planning will be treated as incidental to his profession as a tax consultant.

However, if they are engaged in providing investment advisory services in securities as an activity or business to clients or investors which is not incidental to their main activity then they are required to get registration as an investment adviser.

The FAQs can be found at this link, here

Form GNL-4 introduced by MCA

Ministry of Corporate Affairs has introduced form GNL-4 to replace form erstwhile form 67. The form GNL-4 is to be used as an addendum for filing documents to complete the defect/ rectification in the original forms filed by the stakeholders.

MCA notification for introducing the form can be seen here

Full Mobile Number Portability - TRAI

TRAI has allowed full mobile number portability with effect from 3rd May, 2015. Hitherto only intra circle mobile number portability was allowed from 2009. Now both inter and intra licensed area mobile number portability is to be introduced from 3rd May, 2015. TRAI has issued notification dated 25th February, 2015 in this regard.

The explanatory memorandum to the notification states as follows:

The Telecom Regulatory Authority of India issued the Telecommunication Mobile Number Portability Regulations, 2009 (8 of 2009) dated 23rd September, 2009 laying down the basic business process framework for implementation of intra-circle mobile number portability in the country. The regulation 6,7,8,9,10,11,12 and 13 of the Regulations came into effect in all telecom service areas in the country from 20th January 2011 through the Authority’s direction dated 18th January, 2011.

2. Now the Government has decided to implement inter-service area mobile number portability (Full Mobile Number Portability). Accordingly, necessary amendments to the MNP service license were issued by the Department of Telecommunications (DoT) through letter No. 800-22/2013-AS-II dated 3rd November, 2014 wherein it is stated that Full MNP would be implemented in the country within six months from the said amendment. In this context the Authority issued a draft The Telecommunication Mobile Number Portability (Sixth Amendment), 2015 on 23rd January, 2015 seeking comments of stakeholders for facilitating Full MNP. In addition, the draft amendments also proposed some changes to the existing porting process viz. reduction in timelines for number return process, refining non-payment disconnection issues etc.

3. In response to the draft Amendment, fifteen stakeholders submitted their comments. These comments have been examined by the Authority and, after deliberations, this Sixth Amendment to the MNP Regulations is being issued. The explanation for the amendments made in the Regulations is provided in the following paragraphs.

Time period for implementation
4. As per the DoT’s amendment to the MNP service licence, full MNP (inter and intra Licensed Service Area MNP) is to be implemented within six months from the date of the said amendment to the Licenses. Accordingly, the Authority has made the Sixth Amendment to the MNP Regulations effective from 3rd May 2015.

Forwarding of porting request by the Recipient Operator
5. On a request by a subscriber for porting of his number, the Recipient Operator (RO) will forward the porting requests to the MNP Service provider (MNPSP) to which the number range holder (service provider who originally allocated the mobile number) belongs. Even if a subscriber ports his mobile number from one MNP Zone to another, the same MNPSP will continue to handle his porting requests for all subsequent portings. This is required as the porting history of the subscriber is maintained by the MNPSP of the MNP zone to which his number range holder belongs.
Time period for Donor Operator to raise non-payment disconnections:

6. The MNP Regulations provide that in case a post paid subscriber defaults in the payment which was due to the Donor Operator (DO), the DO may request the RO for disconnection of the ported mobile number. It is noticed that in many cases, the DO raises disconnection requests (due to non-payment of outstanding bill) long after the subscriber has ported his number. Therefore, there is a need to bring order in this matter so that non-payment disconnection cases are settled in a timely manner by the Donor as well as the RO to avoid any inconvenience to the subscriber at a later date. Accordingly, in the Amendment, time period of ‘thirty days’ from the due date of the outstanding bill has been specified for a DO to raise the non-payment notice to the subscriber who has defaulted in the payment. It is also stipulated that after completion of ‘sixty days’ from the due date of payment of the outstanding bill, the DO will not be entitled to raise non-payment disconnection requests to the RO through the MNP service provider.

Increase in Notice period for disconnection by the RO

7. In response to the draft Amendment, most stakeholders have requested for increase in the notice period given by the RO to the subscriber who has defaulted in the payment to the DO from the existing fifteen days period to thirty days. After examination, the Authority has agreed to increase the time period. However, provision has been made for barring outgoing services of such defaulting subscriber for fifteen days, so as to prompt the subscriber to pay the outstanding amount due to the DO. Further, the extended period will also help inter-service area porting subscribers who may have to settle outstanding payments of a different service area from where the subscriber ported his mobile number. In case the subscriber fails to make payment within fifteen days, his mobile number will be disconnected permanently by the RO and number will be returned to the number range holder after sixty days.

Reduction in timelines for Number return process

8. In the existing MNP Regulations, in case of disconnection of a mobile number in the network of RO, it is mandated that such mobile number will be returned to the number range holder after the expiry of ninety days. This implies that once a mobile number is disconnected, it remains unutilized for as long as ninety days. For effective utilization of such a mobile number, the Authority has reduced this time period to sixty days.

Online filing of petitions - CERC

The Central Electricity Regulatory Commission has vide its circular dated 22nd January, 2015 provided for online filing of the petitions and pleadings by the parties before the Commission. The gist of their circular is given below:

The Central Electricity Regulatory Commission determines the tariff of the generating
companies and transmission licensees covered under the jurisdiction of the Commission and
regulate inter-State transmission of electricity and adjudicates the disputes relating thereto apart
from other functions based on the petitions filed before the Commission. Presently, all petitions
and pleadings are filed by the parties before the Commission in accordance with Regulation 27
of Central Electricity Regulatory Commission (Conduct of Business) Regulations, 1999. The
Regulation provides for filing of petitions and pleadings through CD/electronic media on such
terms and conditions as may be decided by the Commission.
2. In order to improve and expedite the process of disposal of petitions, the Commission has
decided to introduce electronic filing of all petitions, applications, replies, rejoinders, etc with
effect from 1st February, 2015. As a first step in this direction, all the petitions, replies and
rejoinders, etc filed by the parties are being digitized for creating data base to facilitate e-filing.
3. The generating companies, licensees, system operators, and any other person who has
filed or is intending to file a petition before the Commission are requested to henceforth file soft
copy of all the pleadings like petitions, replies, rejoinders, written submissions, documents,
affidavits, etc in pdf and word format in a CD along with the usual hard copies. All
pleadings/filings/submissions made after 1st March, 2015 shall be accepted only if accompanied
by soft copy, as stated above. The parties are also requested to mail the petition, replies,
rejoinder, written submissions, etc. to registry@cercind.gov.in