"10 December 2009" Archive

Company Dispute Resolution Mechanism in India – A brief

With the experience of looking at the litigation before the Company Law Board and the Company Court, with the privilege of looking at various judgments under the provisions of Companies Act, 1956 while writing a commentary on Company Law and with what I have heard from few shareholders when they have grievance against the Company or the m...

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Posted Under: Company Law |

Is Redressal Under Section 397/398 of Companies Act, 1956 Effective?

Section 397 and 398 of the Companies Act, 1956 deals with “oppression” and “mismanagement” by the majority in a Company against the Minority Shareholders. How to construe “minority” for the purpose of section 397/398 is dealtwith under section 399 which prescribes qualification to approach the Company Law Board under section 3...

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Posted Under: Company Law |

KYC Norms, AML Standards and Combating of Financing of Terrorism

RBI/2009-10/253, RPCD.CO RRB.No 6557/03.05.28-A/2009-10 (10/12/2009)

Know Your Customer (KYC) Norms/Anti-Money Laundering (AML) Standards/Combating of Financing of Terrorism (CFT). Please refer to our letter RPCD.CO.RRB.No.5451/03.05.28-A/2009-10 dated November 16, 2009 on risks arising from the deficiencies in AML/CFT regime of Iran,Uzbekistan, Pakistan, Turkmenistan, Sao Tome and Principe....

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Expenditure on replacement of machinery is capital expenditure

CIT Vs. M/s. Sri Mangayarkarasi Mills (P) Ltd. (Supreme Court of India)

M/s. Sri Mangayarkarasi Mills (P) Ltd. (“assessee/SMMP Ltd.”), engaged in the manufacture and sale of cotton yarn, incurred expenditure on replacement of machinery. While on one hand, SMMP Ltd. capitalized the said expenditure in its books of account and in its return of income, on the other, the same was claimed as revenue expenditur...

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Payment for non-compete right is not an intangible asset eligible for depreciation

M/s Srivatsan Surveyors P. Ltd. Vs. Income Tax Officer (ITAT Chennai)

Srivatsan Surveyors Pvt. Ltd. ('Appellant') is engaged in the business of licensed surveyors and loss assessors under the Insurance Act, 1938. The Appellant entered into a non-compete covenant with its director, Mr. Srivatsan and paid a sum of Rs.10 million, on which depreciation was claimed, treating it as an intangible asset. As per the...

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DTC 2009 – Focus on Outbound investments from India

As a first step towards simplifying and bringing about structural changes in direct taxes, the new Direct Taxes Code („Code?) Bill 2009 has been released for public debate. This is expected to be presented in the winter session 2009 of the Parliament. The Code, once enacted, is proposed to be effective from 1st of April 2011....

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Posted Under: Company Law |

The Direct Taxes Code Bill, 2009 – Minimum Alternate Tax on Companies

The concept of Minimum Alternate Tax (“MAT”) was introduced in the Indian tax regime to widen the tax net. Often there were situations where companies declared both profits and dividends but were not liable to taxation on account of various incentives and exemptions provided under the income tax legislation. MAT ensured that such comp...

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Posted Under: Company Law |

The Direct Taxes Code (DTC) Bill 2009 – Capital Gains Tax

The definition of Capital asset continues in DTC. However the DTC classifies assets into two broad categories i.e. investment assets, and business assets. DTC envisages taxing income from transfer of investment assets as capital gains. Under the Income Tax Act 1961 (“Act”), income from transfer of capital assets even if used for busin...

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Posted Under: Company Law |

Outright purchase of plant know-how in the form of technical / engineering data, design, drawings is not royalty subject to withholding taxes

CIT Vs. M/s Maggronic Devices Pvt Ltd. (Himachal Pradesh High Court)

Himachal Pradesh High Court holds that Outright purchase of plant knowhow in the form of technical / engineering data, design, drawings etc. is not royalty / fee for technical service, subject to withholding taxes ...

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Analysis of Circular no. 7/2009 issued to withdraw earlier circular pertaining to non-resident taxation

The Central Board of Direct Taxes (CBDT) had earlier issued a circular (Circular No. 23 dated July 23, 1969) clarifying the India tax liability of non-residents in respect of income accruing or arising through or from, a business connection in India. As per the aforesaid Circular 23, even if a business connection existed under section 9 o...

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Posted Under: Company Law |