VKR & Associates

11/04/2020

25/03/2020

Hope this message find you and your family in good health.

We have prepared a note on the press release on 24th March, 2020 by the Hon’ble Finance Minister.

Stay Home. Stay Safe.

23/03/2020

MCA Clarifies that any spendingof CSR Funds by Companies towards COVID-19 will be eligible CSR Expense.

A welcome clarification is this dire situation.

Stay Safe. Stay Indoors.

10/03/2020

Wishing You a Very Happy and Colourful Holi 🎉

01/03/2020

Reminder

4th installment of Advance Tax for FY 2019-20 is due on 15th March, 2020. Plan accordingly.

26/02/2020

Analysis of CARO, 2020 by VKR & Associates

View link

Download link https://buff.ly/2w2urzj

The Ministry of Corporate Affairs has on 25th February, 2020 notified the Companies (Auditors Report) Order, 2020, and applies for the financial years commencing on or after the 1st April,2019.

26/02/2020

The Ministry of Corporate Affairs has on 25.02.2020 notified the Companies (Auditors Report) Order (CARO), 2020.

https://buff.ly/391PgJI

Home Page of MCA V2

30/03/2019

MCA Update.

The Ministry of Corporate Affairs with a notification dated 29.03.2019 has introduced e-form AGILE (INC-35) which can be filled along with SPICe form for Incorporation of Company.

The form provides for application of GST, ESIC and EPFO registrations at the time of Incorporation of the company itself.

It's a welcome effort towards "Easy of Doing Business" by reducing the time required to get registrations with the various authorities to start operations after incorporation.

The link to the notification is as under.

http://www.mca.gov.in/Ministry/pdf/companiesINC3rdAmendmentRules_30032019.pdf

25/03/2019

We Care to Share

Borrowings in form of Loans is one of the major source of Debt but there has been some confusion regarding the Source of such Borrowings allowed to Private and Public Companies.

To bridge this gap and to help you understand from Where and How can a Company Borrow Loans a summary of the same is provided here.

For a detailed note please DM us.

24/03/2019

We care to Share

Whether Writing off of Advance against rent/ Deposit to Landlord is to be treated as revenue expenditure or capital expenditure?

· For an expenditure to be permissible as a deduction, it is required to be determined that it is in nature of revenue expenditure and incidental to business. On the other hand, if is capital expenditure, it is not allowable.



· True test of an expenditure laid out wholly or exclusively for the purposes of business is that it is incurred by the assessee as incidental to his business for the purpose of keeping the business going.

In case of advance rent/ security deposit, the rent agreement is entered into for the purpose of occupying the premises at rent and it does not create any capital asset as the agreement contains conditions and does not provide any ownership right to the lessee other than occupancy/tenancy right. The deposit or advance is given in the accepted commercial practice only for securing the premises on rent. While some broad principles have been indicated in various judicial pronouncements in regard to this, yet it is primarily a question of fact.

Since the rentals paid are on revenue account therefore on the same analogy advance rent given as rent deposit and the forfeiture of the deposits being irrecoverable ought to have been allowed as business expenses. Refer case of M/s. Social Media India Ltd. Hyd (ITA.No.390/Hyd/2013)

By making the interest free deposits for the purpose of obtaining the permissive use or license to use the premises, assessee did not obtain any enduring advantage or capital asset and hence the amounts were written off in the course of assessee's business, the same are to be considered as incidental to business. Refer case of United Motors India Ltd. vs. ITO (I.T.A. No.6291/Mum/2008)

Amounts advanced by the assessee for the purpose of acquiring the factory on lease-Amount is advanced for the purpose of the assessee's business- When such advances were lost, the loss would be a business loss and not a capital loss Refer case of I.B.M. World Trade Corporation v CIT (1990) 1861TR 412 (BOM)

Loss of security deposit is business loss because the said security deposit was given in the ordinary course of business of the assessee. Refer case of M/s. Outworks Solutions (P) Ltd. Vs. CIT ITA No. 4234/DEL/2015.

Considering the above, we are of the opinion that the write off of deposits is to be allowed as loss to assessee in the course of its business if the same is proved to be given in the ordinary course of business of the assessee.

22/03/2019

We Care to Share

Whether the dividend received from Mutual Funds would be taxable?

As per section 10(34) of Income Tax Act, any income received as dividend from a domestic company is exempt from tax as the company declaring such dividend has already deducted dividend distribution tax before paying the dividend u/s 115-O of the Act.

However, under Section 115BBDA (as introduced in the Finance Act, 2016), if aggregate dividend received by an individual/HUF/Firm exceeds Rs. 10,00,000, it is liable to pay tax at the rate of 10% on dividend income received in excess of Rs. 10 lakhs under the head “Income from other sources”. Section 115BBDA applies only on dividend income received from domestic companies under Section 10(34) and excludes dividend income received from mutual funds under Section 10(35).

Again, with the Finance Act 2018, section 115R has been introduced which specifies different rates of dividend distribution tax on income distributed by the specified company or a Mutual Fund to its unit holders.

Now the question which generally arises is whether income distributed by Mutual funds would come under the purview of Section 115BBDA or not ?

In our opinion the thin line of difference is drawn between the two sections i.e., 10(34) & 10(35) as the section 10(34) contains reference of Sec 115BBDA whereas section 10(35) does not refer section 115BBDA anywhere.

Thus, we are of the opinion that any income distributed in form of dividends would be exempted u/s 10(35) of the Act and the only change which has been brought by the section 115R is that from April, 2018 onwards, the unit holders would receive the net dividend from Mutual funds after DDT has already been reduced from it.

Disclaimer: This opinion is personal and for the use of the person to whom it is issued and no responsibility or liability is accepted for any direct, indirect or consequential loss or damages suffered by any person arising there from and the same is expressly disclaimed.

21/03/2019