NEW DIRECTOR'S RELATIVE (OFFICE OR PLACE OF PROFIT) RULES, 2011

Director's Relative (Office or Place of Profit) Rules, 2011

NOTIFICATION NO. G.S.R. 357(E), DATED 2-5-2011

In exercise of the powers conferred by clause (b) of sub-section (1) of section 642, read with sub-section (1B) of section 314 of the Companies Act, 1956, the Central Government hereby makes the following Rules in supersession of the earlier Notification No. GS.R. 89(E), dated 5-2-2003, namely:—

1. (1) Short Title and Commencement: (1) These rules may be called Director's Relative (Office or Place of Profit) Rules, 2011.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Applicability : These rules shall apply to all companies registered under the Companies Act, 1956 except as provided in these rules.

3. Approval of the Central Government in case of Appointment of Relatives, etc. of Directors : No appointment for an office, or place of profit in a company shall take effect unless approved by the Central Government on an application, in respect of:—

 (a)  Partner of film or relative of a Director or Manager; or

 (b)  Firm in which such Director, or Manager of relative of either is a partner; or

  (c) Private Company of which such Director or Manager or relative of either is a Director, or member, which carries a monthly remuneration exceeding, Rs. 2,50,000 p.m.

 (d)  An individual who is a relative of a Director, or Manager and is appointed as an Advisor or Consultant and paid remuneration including commission on periodical basis.

4. Selection of Relatives of Directors and Directors to Hold a Place of Office/Profit:—

 (a)  The selection and appointment of a relative of a Director for holding office or place of profit in the company with a salary exceeding Rs. 2,50,000 per month shall be approved by adopting the same procedure applicable to non-relatives and approved by a Selection Committee.

Explanation : For the purpose of the sub-rule, in the case of listed public companies, the expression "Selection Committee" means a committee, consisting at least three members, the majority of which shall be independent Directors and an outside Expert:

Provided that in case of unlisted companies, independent Directors are not necessary but outside experts should be there in the Selection Committee:

Provided further that in the case of private companies, Selection Committee is not necessary.

5. Procedure for Examination of Application : The application under rule 3 shall be examined with respect to the following, in addition to all other requirements under the Companies Act, 1956:—

 (a)  In the case of individual appointee, an undertaking from him that he/she will be in the exclusive employment of the company and will hold a place of profit in any other company.

 (b)  The monetary value of all allowances and perquisites and of total remuneration package (monthly/annually proposed to be paid to the appointee and details of the services that will be rendered by him to the company.

  (c) Details of shareholding pattern particularly the shareholding of the directors along with his/her/their relatives, the public holding, institutional holding (each institution separately) and the quantum of dividend paid by the company during the last three preceding financial years.

 (d)  Details of the educational qualification/experience, pay scale, allowances and other benefits of similarly placed executives.

  (e) In case of the appointment of a relative, an undertaking from the Director/Company Secretary of the company that the similarly placed employees are getting the comparable salary.

  (f)  List and particulars of the employees who are in receipt of remuneration of Rs. 2,50,000 or more per month.

 (g)  The total number of relatives of all the Directors either appointed as Manager/Whole time Director, Manager or in any other position in the company, the total remuneration paid to all of them altogether as a percentage of profit as calculated for the purpose of section 198 of the Companies Act, 1956.

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Supreme Court stays Delhi High Court's service tax order on rent

January, 13th 2011

The Supreme Court has stayed an order of the Delhi High Court, which stopped the Centre from recovering service tax on renting of immovable property for commercial use, including shops and malls, from some firms.

A Supreme Court bench comprising Justices Mukundakam Sharma and A R Dave stayed the interim order passed by the Delhi High Court on May 18, 2010. The Centre has challenged the order.

"There shall be an interim stay of the operation of the impugned judgement till the next date," said the apex court, directing that the matter be listed for next hearing on January 20.

The High court, allowing the appeal of around 20 firms including Home Solutions Retail, had stayed the amendments made by the government in the Budget, 2010-11.

In the Finance Act, 2010, the government had amended taxing entry of "Renting of Immovable Property service", with retrospective effect, from June 1, 2007

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UPLOADED NEW 5 DIGIT ACTIVITY CODES FOR VAT AUDIT PURPOSE.

MVAT AUDIT 2009-10-ACTIVITY CODES

AS WE FOUND THAT MANY OF OUR CA FRIENDS AND STP'S ARE NOT HAVING THE NEWLY REQUIRED ACTIVITY CODE 5 DIGIT FILES.

HERE BY WE ARE UPLOADING IT FOR OUR COMMUNITY.

CLICK HERE TO DOWNLOAD (2 LINKS)-- DOWNLOADING TAKES TIME (FILE SIZE 1.31 MB)

http://dhavaldesaisays.files.wordpress.com/2010/12/activitycode1-2-1.pdf

OR

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0Bz0INWeiJAEQNDFiOTQyODItNmQ2MS00ZDgxLWJjNzctYWRlNzRkYTZjMDM3&hl=en

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Case law-Ability to pay demand is no bar for grant of stay on recovery

KEC International Limited vs. ACIT (ITAT Mumbai)

The assessee filed a stay application before the Tribunal. The Department opposed by relying on the observations of the Supreme Court in CCE vs. Dunlop India 154 ITR 172 (SC) and contended that as paucity of funds had not been sufficiently demonstrated, for this reason alone stay should not be granted. HELD rejecting the Department’s contention and granting stay while following B. N. Nobis & Co vs. JCIT 71 TTJ 153 (Kol):

(i) While the Supreme Court has decried ‘the practice of granting interim orders merely because assessee is able to show a good prima facie case’, the observations have to be understood in the context of the case which was one of indirect taxation where the burden had already been passed on to the consumer. Also it was a case of a Writ Petition under Article 226 & not that of an appellate jurisdiction. The observations of the Supreme Court in the context of grant of stay in writ proceedings does not have binding force on, or even direct relevance to, the principles governing grant of stay during appellate proceedings though it does provide guidance on principles governing the decision to grant stay;

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Cash Flow v/s Profit & loss A/c

In case of entities like companies which present its financial statements on accrual basis, Cash flow Statements fulfills vital information needs of users?

The Supreme Court in Reliance Energy Ltd Vs. Maharashtra State Road Development Corporation Ltd.

When P&L accounts and balance sheets are prepared on accrual basis, revenues and expenses are recognized on accrual basis

i.e. when events or transaction occurs. However, timing of cash flow is not reckoned in such system of accounting.

Similarly, in cases where accounts are based on accrual system of accounting, recognition of assets & liabilities is not dependent on the actual timing of cash spent on capital Expenditure & Cash inflow on Capital receipts.

Thus, financial statements prepared on accrual basis don not reflect the timing of Cash flow & amount of Cash flow.

The object of the cash flow statement is to assess the company ability to generate the cash flow in future and to assess reason for difference between “NET PROFIT” and “NET CASH FLOW” from operations.

In Fact Cash flow from operations is the regular sources of cash for any enterprise that determines whether or not an enterprise will continue to exist in the long run.

Accrual basis of accounting requires that revenues be recorded when earned and the expenses be recorded when incurred. Earned revenues more often include credit sales that have not been collected in cash & expense incurred that may not have been paid in cash during the accounting period.

Thus, Net Income will not indicate the net cash provided by operating activities or net loss will not indicate the net cash used in operating activities.

 In order to calculate the net cash provided by (or used in) operating activities, it is necessary to replace revenues and expenses on accrual basis with actual receipts and actual payments in cash. This is done by eliminating non- cash revenues and non-cash expenses from the given earned revenues & incurred expenses in the profit & loss account.

Profit & Loss account is also debited with purely non-cash items which reduces and increase the profits respectively but do not affect the cash at all. Eg: Depreciation, P/L on sale of fixed assets, amortization of deferred revenue expenses and so on.

Since Cash provide by operations is to be calculated, certain Non-operation item like rent income, interest income, dividend income, refund of tax etc should be adjusted although these items may have recorded on cash basis. Such items are analysed separately in the cash flow statement as operating, financing & investing activities.

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CA IPCC Group 1 papers with sugested answers.

Frnds,

Just click here to download the IPCC grp1 papers with sugested answers.

Click here: http://taxpertindia.blogspot.com/2010/05/ca-ipcc-group-1-papers-with-sugested.html

I am thankful to Pavan kumar & Sayad vakeel (both are CA Students) who have contributed to our blog and this file is shared by them.

Dhaval Desai


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Company Audit Important Sections,AS and SA's and revised text of Companies Act 227 (1A)

Friends,

I know that at the end time i m publishing this article but i believe that this file will surely help you to score well in exams and will help you to score well.

Best wishes
Dhaval Desai & this document is verified by Pappu Mishra.

Click here to download the files
1.Company Audit (Sections,AS and SA.s) & Companies Act 227 (1A): http://taxpertindia.blogspot.com/2010/05/company-audit-important-sectionsas-and.html


This file is Shared by and his message is given below.

Friends here is some important sections of company audit.You are advised to verify the same from module/compilations.This is exclusively for Taxpertindia members and welwishers. Have a good luck!!!!

Vakeel Ali
Dhule, Maharashtra.

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