MCA filings - Penalties for late filings.

Section 403 of the Companies Act, 2013 is a wake up call for companies in India. Not any more they can afford to relax and file documents months and years after they are supposed to do so.

Section 403(1) provides that documents should be submitted, filed, registered or recorded within the time specified in the relevant section for the same. For eg. most of the forms require to be filed within 30 days of the event, save for a few provisions such as Auditors appointment within 15 days, annual return within 60 days and charge registration/ modification within 300 days of the event.

The first proviso to section 403(1) provides for additional time within which the documents can be filed by paying additional filing fees. This additional period is 270 days beyond the original period of filing. Therefore in most cases a 300 days period is given for filing the document by paying the normal fees and additional filing fees.

The second proviso to section 403(1) provides that such documents can be filed beyond the said 300 days but it says "without prejudice to any other legal action or liability under the Act"

Section 403(2) provides that where the company fails to submit/ deliver the documents within the time specified including the additional time given, the company and every officers of the company shall be liable for penalty or punishment provided under the Act. This is apart from the fees and additional filing fees payable by the company for filing the document.

The various sections give different penalties for delayed filing beyond the normal period and additional period given thereunder, for eg.

1) delayed filing of annual return under section 92 is liable for a penalty of minimum Rs.50,000 but which may extend to Rs.5 lakhs and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than Rs.50,000/- but which may extend to Rs.5 lakhs or with both;
2) for failure to file documents required under section - minimum penalty is Rs.5 lakhs but which may extend to Rs.25 lakhs for the company and every officer of the company who is in default shall be punishable with fine which shall be minimum Rs.1 lakh but which may extend to Rs.5 lakhs;
3) Audited financial statements under section 137 - Fine of Rs.1000/- per day during which the failure continues but which shall not be more than Rs.10 lakhs and MD and CFO (or in the absence of MD/ CFO, any director who is charged by the Board of complying with this section, or in the absence of any such director, all directors of the company) shall be punishable with imprisonment for a term which may extend to six months or with fine, which shall not be less than Rs.1 lakh but which may extend to Rs.5 lakhs or both;

Apparently the system will not allow filings to take place after the period stipulated in section 403 unless the company applies for a an application for condonation of delay with the prescribed authorities which in this case is the REgistar of Companies of the respective jurisdiction.

Therefore Compliance is the Need of the Hour for every company in India. Gone are the days when the companies can sleep for years on end without doing any filings whatever.

Documents reqd for import/ export

The Director General of Foreign Trade in the Ministry of Commerce & Industry has specified the followed documents as mandatory requirement for export and import of goods into India. From a huge list of documents they have specified only three documents for import and export.

The Govt. has issued notification dated 12th March, 2015 in this regard. Gist of the notification reads as under:

2. Para2.53: The following mandatory documents are prescribed for exports and imports of goods
from/into India:

(a) Mandatory documents required for export of goods from India:
1. Bill of Lading/Airway Bill
2. Commercial Invoice cum Packing List*
3. Shipping Bill/Bill of Export

(b) Mandatory documents required for import of goods into India
1. Bill of Lading/Airway Bill
2. Commercial Invoice cum Packing List*
3. Bill of Entry

[Note: *(i) As per CBEC Circular No. 01/15-Customs dated 12/01/2015.
(ii) Separate Commercial Invoice and Packing List would also be accepted.]

(c) For export or import of specific goods or category of goods, which are subject to any
restrictions/policy conditions or require NOC or product specific compliances under any
statute, the regulatory authority concerned may notify additional documents for purposes of
export or import.

(d) In specific cases of export or import, the regulatory authority concerned may
electronically or in writing seek additional documents or information, as deemed necessary to ensure legal compliance.

This notification will come into effect from 1st April, 2015. 

Badlapur -

Sriram Raghavan made two excellent movies in Ek Haseena Thi and Johnny Gaddar, both of them taut with good scripts, fast paced, never a dull moment. But he slips in Badlapur which has a weak script, confused ending, weak acting, all in all a big let down from the man.

Raghu's wife and kid are unfortunately got caught in a bank robbery escape attempt and both of them get killed but the distraught man plots revenge. The real killer is caught but he keeps playing the cops around like one of Robert de Niro characters. Jump forward 15 years, revenge still simmers on his mind but here the plot then starts getting wayward without any real meaning. There are more killings, threats galore but it ends up on a totally confused note. The Dhawan guy goes through the entire movie with a single expression and overall acting is tepid to say the least. The plot does'nt rise above a certain level but people like Sriram Raghavan should not accept such hackneyed scripts for direction. 

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