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Archive: 10 December 2009

Posts in 10 December 2009

Company Dispute Resolution Mechanism in India – A brief

December 10, 2009 2693 Views 0 comment Print

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 majority, I would like to express my views on the dispute resolution mechanism under the provisions of Companies Act, 1956.

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

December 10, 2009 1113 Views 0 comment Print

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 397/398 of the Act. What amounts to “oppression” and is oppression completely different from “mismanagement” as dealwith under section 398; is another interesting issue to look into.

KYC Norms, AML Standards and Combating of Financing of Terrorism

December 10, 2009 487 Views 0 comment Print

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.

Expenditure on replacement of machinery is capital expenditure

December 10, 2009 6055 Views 0 comment Print

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 expenditure on the basis that such expenditure was merely incurred on replacement of spare parts in the spinning mill system.

DTC 2009 – Focus on Outbound investments from India

December 10, 2009 393 Views 0 comment Print

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.

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

December 10, 2009 2283 Views 0 comment Print

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 companies were liable to pay some tax. As per the existing provisions of the Income tax Act, 1961, certain companies are liable to pay a fixed percentage of book profit as MAT.

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

December 10, 2009 1743 Views 0 comment Print

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 business purposes was taxed as capital gain. DTC proposes to tax income from transfer of business capital assets as “business income” and the scope of definition of transfer is expanded to include business assets also.

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

December 10, 2009 746 Views 0 comment Print

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

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

December 10, 2009 5716 Views 0 comment Print

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 of the Income-tax Act, 1961 (“the Act”), only so much of the profit which can be reasonably attributed to the operations of the business carried out in India could be subject to tax in India. Circular 23 also provided clarifications on the taxability of non-residents in specific situations.

Profession tax rate hiked in Delhi

December 10, 2009 1129 Views 0 comment Print

A person earning over Rs 30,000 per month may have to pay a ‘professional tax’ of Rs 100-200 under new tax proposals unveiled by the MCD in its 2010-11 budget, which also envisaged a hike of five per cent in property tax rates. The civic agency will focus on Commonwealth Games 2010 related infrastructure and parking projects in the coming year, for which an additional Rs 1,005 crore has been allocated, Municipal Commissioner K S Mehra said.

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