| QUERY: | Can the assessee call for information under R.T.I. Act for his case selected on manual basis i.e. the reason for selection of his case for detailed scrutiny? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | RTI Act |
| GENRE: | RTI Act |
| CATCH WORDS: | Right of Information Act, scrutiny |
No, as per the Guidelines for Income tax scrutiny for financial year 2010/11 i.e. assessment year 2011/12 published on September 27, 2010, it has been clarified that:
| QUERY: | What is the Law laid down by Hon. Supreme Court in respect of impartible estate of HUF property? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 6 of Hindu Succession Act |
| GENRE: | Hindu Law |
| CATCH WORDS: | Hindu Succession Act, HUF, impartible estate |
Section 6 of the Hindu Succession Act, 1956 as it stood before its substitution by the Hindu Succession (Amendment) Act, 2005 w. e. f. September 9, 2005 is reproduced as under:
| QUERY: | My wife expired in 2006, left certain gold ornaments & jewellery for my son, who is Indian Origin, U. S. Citizen. Please inform how much worth ornaments can be taken outside India? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 6 of Hindu Succession Act |
| GENRE: | Hindu Law |
| CATCH WORDS: | HUF, impartible estate |
From the fact, it is clear that querist’s son is Indian origin, U. S. Citizen, who has inherited certain gold ornaments and jewellery from his mother.
As per sub-regulation (2) of regulation 4 of Foreign Exchange Management (Remittance of Assets) Regulations, 2000, a Non-Resident Indian (NRI) / Person of Indian Origin (PIO), may remit an amount,
| QUERY: | An Indian Company X which is situated in the Special Economic Zone, has entered into transactions during the financial year 2013-14 with a foreign Company Y in relation to the purchase and sale of goods or services. Co. X wishes to set off (or netting off) the export receipts against the amounts payable for imports. Whether the setting off (or netting off) of export receipts against amounts payable for imports by Co. X is permissible as per the Indian Exchange Control Regulations? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 7 of FEMA |
| GENRE: | FEMA |
| CATCH WORDS: | FEMA |
As per section 7 of FEMA 1999, exporters have to receive full value of export of goods or services:
Any arrangement involving adjustment of value of goods imported into India against value of goods exported from India, shall require prior approval of the Reserve Bank of India
| QUERY: | Can a charitable trust registered under the Income-tax, 1961 having exemption under section 11 of the Act; receive donation from NRI staying outside India; without being getting registered or prior permission under Foreign Contribution Regulation Act, (FCRA)? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 3 of FCR Act |
| GENRE: | Foreign Contribution (Regulation) Act |
| CATCH WORDS: | charitable trust, FCR Act |
The main object of FCRA, 2010 is to consolidate the law to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto.
| QUERY: | Whether it is necessary to provide (Corporate Social Responsibility) CSR expenses in the books of account on accrual basis, considering AS–29 “Provisions, Contingent Liabilities and Contingent Assets”? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 128 of Companies Act |
| GENRE: | Company Law |
| CATCH WORDS: | Companies Act, contingent assets, contingent liabilities, Corporate Social Responsibility |
Section 128 of the Companies Act, 2013 mandates every company to maintain its books of account on accrual basis. As per AS-1 “Disclosure of Accounting Policies” on accrual basis, cost and revenue are accrued that is recognised as they are incurred or earned and recorded in the financial statements of the periods to which they relate:
| QUERY: | As per Schedule II of the Companies Act, 2013 the useful life of Plant and Machinery and in generation of power is 40 years, but as per the company, useful life is much less. What the company should do? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | Schedule II |
| GENRE: | Company Law |
| CATCH WORDS: | Companies Act, depreciation |
Note no. 3(i) of Part ‘A’ of Schedule II of the Act, provides as under:
“The useful life of an asset shall not be longer than the useful life specified in Part ‘C’ and the residual value of an asset shall not be more than five per cent of the original cost of the asset.
| QUERY: | What is the reporting responsibility of the auditor if company is not complying the law of deposit under new Companies Act, 2013? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | - |
| GENRE: | Company Law |
| CATCH WORDS: | Auditor Report, CARO, Companies Act |
The MCA has issued Companies (Auditor’s Report) Order, 2015 and notified on April 10, 2015 and it is applicable since then.
Clause (v) of the said report requires an auditor to report:
| QUERY: | A member has sent a special notice under section 190(I) of the Companies Act, 1956 well within clear 14 days proposing a name of Auditor to be appointed for the current year in place of retiring auditor with a draft resolution. The company has not taken any action on the notice and filed it intimating that no action can be taken on the notice and referred to section 188 of the Act not been complied with. Whether retiring auditor can accept the appointment as auditor of the company and that the retiring auditor was well aware of the stand of the company not taking any action on the special notice served by a member of the company. |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 190(I) of Companies Act |
| GENRE: | Company Law |
| CATCH WORDS: | Companies Act, Reappointment of Auditor |
First of all, a notice sent by a member under section. 190 of the Companies Act was not proper. A special notice under section 225 of the Companies Act ought to have been served for a resolution that an ensuing general meeting a person other than retiring auditor should be appointed.
| QUERY: | M/s. ABC Ltd. is engaged in the business of cement manufacturing and power generation. Existing depreciation policy of M/s. ABC Ltd. is as follows: “Depreciation is provided on written down value method at the rates specified in schedule XIV of the Companies Act, 1956 or the rates prescribed in the Income-tax Act, 1961 whichever is higher. However in case of those assets whose WDV as per Income-tax Act,1961 is lower than the WDV as per books, additional depreciation is provided to align the book WDV as per Income-tax Act, 1961.” The Companies Act, 2013 provides that depreciation is required to be charged as per useful life prescribed in Schedule-II as per provision of section 123 of the Act. Provision of Schedule-II of Companies Act, 2013 “Part ‘A’ 1…….. 3. Without prejudice to the foregoing provisions of paragraph 1, (i) In case of such class of companies, as may be prescribed and whose financial statements comply with the accounting standards prescribed for such class of companies under section 133, the useful life of an asset shall not normally be different from the useful life and the residual value shall not be different from that as indicated in Part C, provided that if such a company uses a useful life or residual value which is different from the useful life or residual value indicated therein, it shall disclose the justification for the same. (ii) In respect of other companies the useful life of an asset shall not be longer than the useful life and the residual value shall not be higher than that prescribed in Part C.” Queries (a) Whether company can continue its existing depreciation policy i.e., charging depreciation at higher rate from Companies Act (by deriving rates as per useful life as specified under Schedule-II and Income -tax Act, with WDV alignment, even after applicability of Companies Act, 2013. If yes, please specify justification/disclosure (if any) required to be given. (b) Whether company can consider different useful life (higher or lower) from the useful life specified in Schedule-II. If yes, please specify justification/disclosure (if any) required to be given. (c) Is there any retrospective impact if – • Company shift from existing policy (WDV method with alignment) to SLM method under new Companies Act, 2013 and charge depreciation as per useful life prescribed under Schedule-II. • Company shift from existing policy (WDV method with alignment) to WDV method (without alignment) under new Companies Act, 2013 and charge depreciation as per useful life prescribed under Schedule-II. (d) How the rates of depreciation would be arrived for each asset under WDV method as per Schedule-II, where each asset is capitalised at different dates in a year |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 123 of Companies Act |
| GENRE: | Company Law |
| CATCH WORDS: | Companies Act, depreciation |
(i) As per schedule II of Companies Act, 2013, in case of prescribed class of companies, whose financial statements comply with Accounting Standards prescribed for such class of companies under section 133 of the Act, can have different useful life and residual value other than indicated in Part C of Schedule II of the Act, on disclosure of justification for the same i.e.
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