Judiciary updates (Income tax)- 09th Dec 2021

HC deletes disallowance on Account of Slump Sale following its decision for earlier year

PCIT Vs Akzo Noble India Limited (Calcutta High Court) dated 24/11/2021

ITAT deletes addition for cash deposit bank as same were duly explained by Assessee

Sunil Mathur Vs ITO (ITAT Jaipur) dated 01/11/2021

Adjudication of correctness of CA’s report by Disciplinary committee of ICAI, no need once the report passed judicial scrutiny

Wholesale Trading Services P Ltd Vs The Institute of Chartered Accountants of India (Delhi High Court) dated 11/11/2021

Disallowance of expenditure sustainable when assessee unable to prove non-applicability of provisions of section 40(a)(ia)

Ilahia Trust Vs CIT (Kerala High Court) dated 15/11/2021

Penalty not leviable when serious financial constraint prohibited assessee from discharging self-assessment tax

DCIT Vs Karanja Terminal and Logistic Pvt. Ltd (ITAT Mumbai) dated 21/10/2021

No addition under Section 68 for loan received in earlier years

Sanjay Mehta Vs ACIT (ITAT Kolkata) dated 17/09/2021

Minimum Area of one acre of land for Section 80IB (10)- HC explains

PCIT Vs Karavali Housing (Karnataka High Court) dated 04/10/2021

No section 68 addition for trade creditors settled in succeeding year through banking channels

Madhu Solanki Vs ITO (ITAT Bangalore) dated 09/08/2021

Directors/ managers can’t be prosecuted and punished merely because the Company violated the law (SC)

Dayle De’souza Vs Government of India (Supreme Court of India) dated 29/10/2021

Facts- M/s. Writer Safeguard Pvt. Ltd. (Company) has entered into an agreement titled ‘Agreement for Servicing and Replenishment of ATM’ with M/s. NCR Corporation, the latter having earlier entered into an agreement with the SBI for maintenance and upkeep of SBI’s ATM.

A notice was issued by Labour Enforcement Officer to the appellant and one Vinod Singh, head of the company alleging non-compliance with the provisions of Minimum Wages Act, 1948 and Minimum Wages (Central) Rules, 1950 at the ATM.

Labour Enforcement Officer, on non-appearing, filed a criminal complain before the court of Chief Judicial Magistrate, under section 22A of the Act. Notably, the company is not enlisted as an accused in the complaint and has not been summoned to stand trial.

Conclusion- In absence of any specific averment, the prosecution in the present case doesn’t and cannot reply on section 22C(2) of the Act. Unless the company as a principal accused has committed the offence, the persons mentioned in sub-section (1) would not be liable and cannot be prosecuted. Section 141(1) of the Negotiable Instruments Act, extends vicarious criminal liability to the officers of a company by deeming fiction, which arises only when the offence is committed by the company itself and not otherwise.

DRAFT NOTARIES (AMENDMENT) BILL ISSUED FOR STAKEHOLDERS’ CONSULTATION (Press release 07 Dec 2021)

To give opportunity to young eligible legal practitioners aspiring to serve as Notary Public, the draft Bill proposes to restrict the renewal of certificates of practice of Notaries up to two terms.

नोटरी (संशोधन) विधेयक का मसौदा हितधारकों की सलाह के लिये जारी किया गया


नोटरी पब्लिक के रूप में काम करने के आकांक्षी युवा पात्र वकीलों को अवसर; विधेयक के मसौदे में नोटरियों के प्रमाणपत्र का नवीनीकरण दो कार्यकाल तक सीमित करने का प्रस्ताव

The Notaries Act, 1952 was enacted by the Parliament to regulate the profession of Notaries. The provisions of the Notaries Act, 1952 and Rules framed thereunder empower the Central Government as well as State Governments to appoint Notaries who possess the prescribed qualifications.

In terms of existing provisions of the Notaries Act, 1952 and Rules framed thereunder, the number of terms of renewal of certificates of practice of a Notary is unrestricted after the initial appointment. There are fixed number of Notaries who are appointed by the Central as well as State Governments as reflected in the Schedule to the Notaries Rules, 1956. Further, these Notaries are appointed in a particular area, keeping in view the commercial importance and requirement of Notaries in that particular area, to avoid flooding of Notaries.

It is felt that an opportunity needs to be given to young eligible legal practitioners who are aspiring to serve as Notary Public which may help them to build up their professional excellence by which they can provide legal services in a more effective manner.

In view of the above, it is proposed to restrict the overall term of Notaries for a period upto fifteen years (initial term of five years and two renewal terms of five years each) by curtailing renewals of unlimited terms, thus providing an opportunity for young legal professionals to serve as a Notary. The same would also lead to better development and regulation of notarial work undertaken by Notaries Public and facilitate needs of the profession.

In order to protect the interests of Notaries and to avoid any vacuum, it is proposed that those applications received for successive renewal of certificates of practice for third or more terms and whose validity expires prior to coming into force of the Notaries (Amendment) Act, 2021 will be considered for another term. Further, the certificates of practice of Notaries already renewed and issued prior to coming into force of the Notaries (Amendment) Act, 2021 shall be valid till expiry of such renewal term.

Under Section 10 of the Notaries Act, 1952, the appropriate Government is empowered to remove the name of a Notary Public from the Register of Notaries maintained by it, if a Notary has been found upon inquiry in the prescribed manner, to be guilty of such professional or other misconduct as in the opinion of the Government renders him unfit to practice as Notary. However, there is no provision in the Notaries Act for suspending the certificate of practice of Notary against whom a complaint has been received or otherwise till completion of inquiry initiated against him. Consequently, in some cases, despite complaint of


prima facie gross misconduct, the notary continues to practice during pendency of inquiry proceedings.

It is therefore proposed to add provisions in the Notaries Act, 1952 empowering the appropriate Government for suspension of certificate of practice of Notary Public against whom a complaint has been received or otherwise, for professional misconduct for such period as deemed appropriate for conduct of inquiry.

It is felt that with the advent of Digitization, the records of Notary Public be also digitized and preserved in digital form, as may be prescribed under the Rules, in order to prevent misconduct in respect of notarization and safeguard the interests of general public. This will help to avoid any fraud, deceit, tampering of records and back-dating of notarization, etc. For the aforesaid purpose, provisions have also been proposed for digitization and automation of notarial work undertaken by the Notaries.

In order to achieve the said objective, it is proposed to amend the Notaries Act, 1952 The main features of the proposed Bill may be briefly summarized as under:

  • The draft Bill proposes to restrict the renewal of certificates of practice of Notaries up to two terms, i.e., original term of five years and two renewal terms of five years each;
  • Power to suspend the certificate of practice in cases of professional misconduct by the appropriate government for conduct of inquiry;
  • Digitization of notarial work undertaken by Notaries.

As a part of pre-legislative consultation process, a copy of the aforesaid Draft Bill has been uploaded on the website of the Department of Legal Affairs ( https://legalaffairs.gov.in/ ) for comments/views, latest by 15.12.2021.

नोटरियों के पेशे को नियमबद्ध करने के लिये संसद में नोटरी अधिनियम, 1952 को कानून का दर्जा दिया गया था। नोटरी अधिनियम, 1952 के प्रावधानों और नियमों के तहत केंद्र सरकार के साथ-साथ राज्य सरकारों को यह अधिकार है कि वे निर्धारित योग्यता रखने वाले व्यक्तियों को नोटरी के रूप में नियुक्त कर सकती हैं।

नोटरी अधिनियम, 1952 और नियमों के मौजूदा प्रावधानों के तहत, नोटरियों के काम करने के प्रमाणपत्र के नवीनीकरण की कोई बाध्यता नहीं थी। एक बार नोटरी नियुक्त हो जाने के बाद उनका नवीनीकरण असीमित बार किया जा सकता था। केंद्र सरकार और राज्य सरकारों द्वारा नियुक्त नोटरियों की संख्या तय होती है, जैसा कि नोटरी नियमावली, 1956 की अनुसूची में दिया गया है। इसके अलावा, इन नोटरियों को एक खास क्षेत्र में नियुक्त किया जाता है, जिसके तहत यह ध्यान में रखा जाता है कि उस विशेष स्थान पर नोटरियों की क्या व्यापारिक आवश्यकता और जरूरत है। ऐसा इसलिये किया जाता है, ताकि नोटरियों की भरमार न हो जाये।

ऐसा महसूस किया जा रहा था कि उन युवा वकीलों को भी यह अवसर दिया जाना चाहिये, जो नोटरी पब्लिक बनना चाहते हैं, ताकि उन्हें अपनी पेशेवराना कुशलता बढ़ाने में मदद मिले और वे ज्यादा कारगर तरीके से कानूनी सहायता दे सकें।

उपरोक्त को ध्यान में रखते हुये, यह प्रस्ताव किया गया है कि नोटरियों का कुल कार्यकाल पंद्रह वर्ष तक सीमित कर दिया जाये। पहली नियुक्ति पांच वर्षों के लिये और नवीनीकारण पांच-पांच वर्षों के लिये दो बार किया जाये। इस तरह असीमित नवीनीकरण को खत्म करने का प्रस्ताव किया गया है, ताकि युवा वकीलों को नोटरी के रूप में काम करने का मौका मिल सके। इस प्रस्ताव के जरिये नोटरी पब्लिक का काम करने वाले वकीलों का बेहतर विकास होगा और काम नियबद्ध तरीके से होगा। इसके जरिये वकालत के पेशे की जरूरतें भी पूरी होंगी।

नोटरियों के हितों की रक्षा करने और नोटरियों कीकिसी भी प्रकार कीकमी से बचने के लिये, प्रस्ताव किया गया है कि तीसरे या उससे अधिक कार्यकाल के प्रमाणपत्र के नवीनीकारण के जो आवेदन मिले हों तथा जिनकी वैधानिकता नोटरी (संशोधन) अधिनियम, 2021 के लागू होने के पहले समाप्त हो रही हो, उन आवेदनों पर विचार किया जायेगा। इसके अलावा, नोटरी (संशोधन) अधिनियम, 2021 के लागू होने के पहले जिन नोटरियों के प्रमाणपत्रों का नवीनीकरण होकर उन्हें जारी किया जा चुका है, वे भी उस नवीनीकरण के समाप्त होने की तारीख तक वैध माने जायेंगे।

नोटरी अधिनियम, 1952 की धारा 10 के तहत सक्षमसरकार को यह अधिकार है कि वह नोटरी रजिस्टर से नोटरी पब्लिक का नाम हटा सकती है। यह कदम उस समय उठाया जा सकता है, जब नोटरी के ऊपर निर्धारित मानकों के तहत जांच चल रही हो, उसे अपने पेशे के साथ कदाचार का दोषी पाया गया हो या सरकार की दृष्टि में वह गलत आचरण का दोषी हो। इन मामलों में सरकार अगर उसे नोटरी के रूप में काम करने के अयोग्य मान लेगी, तो उसे हटाया जा सकता है। बहरहाल, नोटरी अधिनियम में ऐसा कोई प्रावधान नहीं है, जिसके तहत उस नोटरी का प्रमाणपत्र निलंबित किया जा सके, जिसके खिलाफ शिकायत मिली हो या जांच अधूरी हो। परिणामस्वरूप, कुछ मामलों में, प्रथम दृष्टया कदाचार का मामला बनने पर भी, नोटरी जांच चलने के दौरान अपने काम पर बना रहता है।

इसलिये नोटरी अधिनियम, 1952 में यह प्रावधान करने का प्रस्ताव है, जिसके तहत सक्षम सरकार उस नोटरी पब्लिक का प्रमाणपत्र निलंबित कर सकती है, जिसके खिलाफ कदाचार की शिकायत मिली हो। सरकार जांच चलने की अवधि तक कार्रवाई कर सकती है।

यह जरूरत भी महसूस की गई कि डिजिटलीकरण की शुरुआत हो जाने पर नोटरी पब्लिक के दस्तावेजों का भी डिजिटलीकरण किया जाये और उन्हें डिजिटल स्वरूप में सुरक्षित किया जाये, जैसा कि नियमों में दिया गया हो। इसका मकसद यही है कि नोटरी कार्रवाई के दौरान कदाचार को रोका जा सके और आम जनता के हितों की रक्षा हो सके। उपरोक्त उद्देश्य के लिये, नोटरियों के कार्यों के डिजिटलीकरण का प्रस्ताव किया गया है।

उपरोक्त लक्ष्य को प्राप्त करने के लिये, नोटरी अधिनियम, 1952 के संशोधन का प्रस्ताव किया गया है। प्रस्तावित विधेयक की मुख्य विशेषतायें संक्षेप में इस प्रकार हैं:-

  • विधेयक के मसौदे में नोटरी के कामकाज सम्बंधी प्रमाणपत्रों के नवीनीकरण को सीमित करने का प्रस्ताव है, यानी पांच वर्ष की मूल नियुक्ति के बाद पांच-पांच वर्ष के दो नवीनीकरण होंगे।
  • काम करने का प्रमाणपत्र निलंबित करने का प्रस्ताव, बशर्ते कि कदाचार का मामला बनता हो। यह जांच सक्षम सरकार करेगी।
  • नोटरियों के कामकाज का डिजिटलीकरण।

विधायी-पूर्व परामर्श प्रक्रिया के सिलसिले में उपरोक्त विधेयक के मसौदे की प्रति को विधि कार्य विभाग की वेबसाइट ( https://legalaffairs.gov.in/ ) पर अपलोड किया गया है। इस पर टिप्पणियां/विचार 15 दिसंबर, 2021 तक दिये जा सकते हैं।

ऑनलाइन विवाद समाधान (ओडीआर) एक प्रभावी, सुविधाजनक और कुशल प्रक्रिया है (Press Release 03 Dec 2021)

भारत में न्याय प्रशासन में देरी का इतिहास रहा है और कोविड-19 महामारी ने स्थिति को और भी खराब कर दिया है। सुप्रीम कोर्ट ने मामलों को ऑनलाइन दर्ज करने और सुनवाई की अनुमति दी है। लेकिन कोई भी इस तथ्य को अनदेखा नहीं कर सकता है कि न्यायपालिका पहले से ही बहुत अधिक मामलों से भरी हुई है। अदालतों पर दबाव कम करने के लिए एक तात्कालिक और कुशल समाधान की आवश्यकता है और इसका हल ऑनलाइन विवाद समाधान या ओडीआर के माध्यम से हो सकता है।

ऑनलाइन विवाद समाधान या ओडीआर तकनीकी और वैकल्पिक विवाद समाधान (एडीआर) तरीकों को मिलाकर अदालतों के बाहर विवादों को निपटाने की एक प्रक्रिया है। ओडीआर उन विवादों को कवर करता है जो इंटरनेट पर साइबरस्पेस में शुरू किए गए हैं, लेकिन इसके स्रोत बाहर के हैं यानी ऑफ़लाइन। मूलतः विभिन्न प्रकार के विवादों के लिए अदालत में जाने के विकल्प के रूप में मध्यस्थता का इरादा था, लेकिन समय के साथ यह विधि स्वयं जटिल और महंगी हो गई।

ओडीआर कई कंपनियों के लिए विवादों को ऑनलाइन हल करने के लिए तेज़, पारदर्शी और सुलभ विकल्प देता है। विशेष रूप से जिनके पास उच्च मात्रा और कम मूल्य के मामले हैं। पिछले आधे दशक में भारत में ऑनलाइन लेनदेन काफी बढ़ा है, ऐसे में इन विवादों को हल करने के लिए ओडीआर को स्वीकार करने के अलावा और कोई अन्य स्थिति अधिक सुविधाजनक नहीं होगी। ऐसे में एक तेज और निष्पक्ष विवाद समाधान प्रणाली को लागू करना होगा।

भारत में ओडीआर की परिकल्पना अपनी प्रारंभिक अवस्था में है। नीति आयोग ने इसे आगे बढ़ाने के लिए एक उच्च स्तरीय समिति का गठन किया था और कमिटी ने 29 नवंबर 2021 को जारी रिपोर्ट में अन्य बातों के साथ साथ भारत में ओडीआर को मुख्यधारा में लाने के लिए ठीक माना है क्योंकि प्रभावी लागत, सुविधाजनक, कुशल प्रक्रिया के रूप में इसे पार्टियों की विशिष्ट आवश्यकताओं के लिए अनुकूल माना गया है। कानून और न्याय मंत्रालय यह सुनिश्चित करने के लिए सक्रिय कदम उठा रहा है कि नीति आयोग द्वारा राज्य स्तरीय पहलों को उचित समर्थन दिया जाए। इस संबंध में सरकार ऑनलाइन विवाद प्रबंधन प्लेटफॉर्मों को उचित समर्थन दे रहा है।

Judiciary updates-03rd Dec 2021 (Income tax, GST & Corporate Laws)

Income Tax

Supreme Court dismisses Transfer Petition as withdrawn

 Rajinder Kumar Vs Central Board of Direct Tax & Anr. (Supreme Court of India) dated 15/11/2021

No addition of unaccounted investment if transactions were via Banking Channels

 ITO Vs Vaneet Mittal (ITAT Chandigarh) dated 22/10/2021

Petitioner entitled to avail NIL rate of withholding tax on aircrafts leased to AIL – Delhi HC

Celestial Aviation Trading 64 Limited Vs ITO (Delhi High Court) dated 12/11/2021

No deemed dividend on loan given on interest to Sister Concern for business

TCI Exim Pvt. Ltd. Vs ACIT (ITAT Delhi) dated 02/11/2021

GST

HC directs GST dept to reconsider registration of petitioner as composite dealer instead of regular dealer

Varsha Ritu Vs Union of India (Rajasthan High Court, Jodhpur Bench) dated 08/11/2021

HC Quashed order Cancelling GST Registration without Opportunity of Hearing

 S.S. Traders Vs State of U.P And 3 Others (Allahabad High Court) dated 02/11/2021

IGST Payable on supply of Import services under RCM

 In re GSPC(JPDA)LTD (GST AAR Gujarat) dated 06/09/2021

GST Evasion accused released on regular bail after 2½ years

Manish Vs State of Haryana (Punjab and Haryana High Court) dated 29/10/2021

Corporate Laws

Accident claim benefit available only when accident took place after reviving of policy

Life Insurance Corporation of India Vs Sunita (Supreme Court of India) dated 29/10/2021

HC expunges adverse remarks made by Customs Commissioner against an Advocate

 M. S. Srinivasa Vs Union of India (Karnataka High Court) dated 10/11/2021

Minority Act ( Ministry of Minority Affairs Press Release dated 02 Dec 2021)

With the notification of the Jammu & Kashmir Reorganization Act, 2019 No.34 of 2019 (Sr, No.63), the National Commission for Minorities Act, 1992 as applicable in other parts of the country has also been extended to the UTs of Jammu & Kashmir and Ladakh.   The abolition  of Article 370 has removed  the obstacles in the path of progress and prosperity in Jammu & Kashmir and Leh-Ladakh. 170 Central laws , which were not applicable earlier, have now been made applicable in this region. Out of the 334 State laws, 164 laws have been repealed and 167 laws have been adapted, according to the Indian Constitution.

Now people of Jammu & Kashmir and Leh- Ladakh are also able to take the benefits of many important Acts like The Right of Children to Free and Compulsory Education Act,2009, The Representation of People Act,1951, The National Commission of Women Act,1990, The Protection of Human Rights Act,1994, The Protection of Women from Domestic Violence Act,2005, The Delimitation Act,2002, The Code of Civil Procedure, 1908, The Code of Criminal Procedure, 1973, The Scheduled Caste and the Scheduled Tribes ( Prevention of Attrocities ) Act,1989, The Right to Information Act, 2005, The Aadhar ( Targeted Delivery of Financial and other subsidies, benefits and services ) Act 2016, The Muslim Personal Law, The Muslim Women ( Protection of Rights on Divorce ) Act,1986 etc. In so far as the Acts which were implemented to protect the interests of every section of the society including Minorities which are also now applicable to Jammu & Kashmir are, National Commission for Minorities Act 1992, The Waqf Act 1995 and The National Commission for Minority Educational Institutes Act, 2005, etc. Besides, other socio-economic reforms are also now implemented after abolition of Article 370.

After abolition of Article 370, the people of Jammu-Kashmir have also become an equal partner of development process. The people of Jammu-Kashmir have also been immensely benefitted from various welfare schemes of the Central Government, some of the prominent benefits accrued to the people are listed below:

  • Prime Minister’s Development Package of Rs 80,000 Crore, to strengthen the Socio-economic infrastructure and for the development of Jammu & Kashmir. After the reorganization of the erstwhile State, 53 projects of Rs 58,477 Crores in Jammu & Kashmir are under progress.
  • As per the recommendations of the 15th Finance Commission, the UT of Jammu & Kashmir has been sanctioned a grant of Rs. 30,757 Crores during 2020-21.
  • For the people living in areas adjoining the international border, a provision of 3% reservation in jobs and educational institutions has been effected.
  • After the reorganization of UT of Jammu & Kashmir, elections of Gram Panchayats and Zila Panchayats were conducted successfully. Block Development Council elections were held for the first time with a voter turnout of 98.3 %. There were record participation in the recently held District level elections as well. The above successful conduct of elections symbolizes the strengthening of democratic institutions and the peoples participation in democratic process.
  • About 1.77 lakh people from poor classes have been given free medical treatment in Jammu & Kashmir under “Ayushman Bharat Pradhan Mantri Jan Arogya Scheme”. “PM Kisan Scheme” has benefitted more than 12 lakh farmers of Jammu-Kashmir. “Saubhagya Scheme” has benefitted 3,87,501 people, “Ujjwala Scheme” 12,60,685 people, “Ujala Scheme” 15,90,873 people. A total of 8,88,359 people have benefitted from various social security schemes. 1.34 lakh houses have been constructed under PM Awas Yojana (rural).
  • Out of 50 newly sanctioned colleges, 48 colleges have been made operational with around 6,700 students.
  • 7 new medical colleges were operated/approved; also, 5 new Nursing colleges were approved.
  • IIT Jammu got its own campus and the work of AIIMS, Jammu has also started.
  • The protection of rights of the women marrying outside Jammu & Kashmir, as well as their children, has been ensured.

This information was given by the Union Minister for Minority Affairs Shri Mukhtar Abbas Naqvi in a written reply in the Lok Sabha today.

17,130 Implementing Agencies are registered with MCA21 registry (MCA Press Release dated 29th Nov 2021)

The Government provides the broad framework for Corporate Social Responsibility (CSR) through Section 135 of the Companies Act, 2013 (‘Act’), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. This was stated by the Union Minister of State for Corporate Affairs Shri Rao Inderjit Singh in reply to a question in Lok Sabha today.

The Minister stated that in the CSR Legal framework, the word ‘Non-governmental Organisations (NGO)’ has nowhere been defined, however, Section 135 of the Act read with Rule 4 of the Companies (CSR Policy) Rules, 2014 prescribes that the Board of the company is empowered to undertake its CSR activities either by itself or through Implementing Agencies as mentioned in the said rule. The Companies (CSR Policy) Rules, 2014 was amended on 22nd January, 2021 and registration of Implementing Agencies with the Central Government is mandatory with effect from 1st April, 2021, the Minister added.

Giving more details, the Minister stated that till 31.10.2021, total 17,130 Implementing Agencies are registered with MCA21 registry.

The Minister further stated that the CSR architecture is disclosure based and only CSR mandated companies are required to file details of CSR spent annually in the MCA21 registry. On the basis of filings made by the companies in the MCA21 registry, companies have spent a cumulative amount of Rs 20,150.27 Crore in FY 2018-19, Rs 24,688.66 Crore in FY 2019-20 and Rs 8828.11 Crore in FY 2020-21 respectively. An analysis of CSR filings made by the companies reveals that of the total annual CSR spent, approximately 60% of the CSR expenditure has been done through implementing agencies, the Minister added.

The Minister stated that as per the Act, companies are required to hold Annual General Meeting (AGM) within six months from the end of financial year. Thereafter, financial statements and board report containing disclosure about CSR, are to be filed in MCA21 within 30 days of the AGM. Ministry vide General Circular No. 17/2021 dated 29.10.2021 relaxed the levying of additional fees till 31.12.2021 for the filing of financial statement in respect of the financial year 2020-21. Further, filings for financial year 2021-22 are required to be made only after the end of current financial year.

Measures taken by MCA to ameliorate difficulties faced due to COVID-19 pandemic (MCA Press Release dated 29 Nov 2021)

The Ministry of Corporate Affairs (MCA) administers the provisions of the Companies Act, 2013 (the Act), The Limited Liability Partnership Act, 2008 and The Insolvency and Bankruptcy Code, 2016. MCA does not maintain data on event base. This was stated by the Union Minister of State for Corporate Affairs Shri Rao Inderjit Singh in reply to a question in Lok Sabha today.

However, the Minister stated, the total number of new companies registered from 1.04.2016 to 31.3.2021 and till date is as per Annexure A.

Giving more details, the Minister stated that the term “closed company” is also not defined under the Act. However, pursuant to the provisions of section 248 (1)  of the Act where the Registrar has reasonable cause to believe that companies that are not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455, shall after following the due process of law, struck off those companies from the Register of Companies.

The Minister further stated that companies are also dissolved through amalgamation or otherwise with the approval of the Hon’ble courts.  Accordingly, the details of number of such companiesfrom 1.04.2016 to 31.3.2021 and till date are as per Annexure B.

The Minister further stated the measures taken by MCA to address the ameliorate difficulties faced due to COVID-19 pandemic:

  1. The Companies Fresh Start Scheme, 2020 was launched to make a fresh start for companies to be a fully compliant company by allowing them to file belated documents in MCA 21 registry without any additional fees from 1st April to 31st December 2020. The said scheme has also given immunity from prosecutions and proceedings for imposition of penalty which might arise on account of such delayed filing of documents. As per records, 473131 number of Indian Companies and 1065 number of Foreign Companies have been benefited by availing the CFSS, 2020 scheme for filing their pending documents.
  2. The MCA introduced an LLP Settlement Scheme, 2020 to provide one-time relaxation in additional fees to the defaulting Limited Liability Partnerships (‘LLPs’) to make good their defaults by filing pending documents with the Registrar of Companies (‘ROC’ or ‘Registrar’) to ease the hassle of business enterprises.  The said scheme was initially rolled out from 16.03.2020 to 31.03.2020 for certain filings by LLPs. However, due to the COVID 19 pandemic the modified scheme to cover all e forms was rolled out from 01.04.2020 to 31.12.2020. Under the said scheme, the defaulting LLPs were permitted to file belated documents and the LLPs shall not be subjected to prosecution for such defaults.  As per records 105643 LLPs have been benefited by availing the LLP settlement scheme 2020 for filing their pending documents.
  3. Keeping in view the second COVID wave and considering the difficulties arisen due to resurgence of COVID-19 pandemic, the Ministry has granted relaxation on levy of additional fees for companies / LLPs in filing certain forms (other than a CHG-1 Form, CHG-4 Form, and CHG-9 Form). Accordingly, no additional fees shall be levied up to 31st July 2021 for the delayed filing of forms (other than charge related forms referred above) which were / would be due for filing during 1st April, 2021 to 31st May, 2021. For such delayed filings up to 31st July 2021 only normal fees shall be payable. The said time limit has been further extended to 31st August 2021 vide General Circular No.11/2021 dated 30.06.2021.
  4. In the wake of COVID 19 and to provide relief to law abiding companies a scheme was launched for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013 during the period from 01st March to 31st December, 2020. 
  5. Considering the difficulties arisen due to resurgence of COVID-19 pandemic, the Ministry vide General Circular no. 7/2021 dated 03.05.2021 has granted relaxation of timelines and condoned the delay in filing forms that are related to creation / modification of charges (CHG-1 Form and CHG-9 Form) by a company or charge holder and where the date of creation / modification of charge is (i) before 1.4.2021, but the time line for filing such form had not expired under section 77 of the Act as on 1.4.2021; or (ii) falls on any date between 1.4.2021 to 31.5.2021 (both dates inclusive). In the said circular, the detail of relaxation of time and applicable fees for filing the aforesaid forms was prescribed.  The Ministry further extended the aforesaid relaxation in the time for filing forms related to creation or modification of charges under the Companies Act, 2013 by substituting the figures “31.05.2021” and “01.06.2021” wherever they appear in the General Circular No. 07/2021 dated 03.05.2021 with the figures “31.07.2021” and “01.08.2021” respectively.
  6. MCA has announced a Condonation of Delay Scheme for Companies restored by NCLT between 1st December, 2020 to 31st December, 2020 under section 252 of the Companies Act, 2013. The Scheme provides to condone delay in filing forms with the Registrar, and spares payment of additional fees. This Scheme was in operation from 01st February 2021 and was available for filing of any overdue e-forms by such companies till 31st March 2021.
  7. In order to provide relief to the companies in view of COVID-19 pandemic, the companies have been allowed to conduct Board Meetings through Video Conference (VC) or other audio-visual means for passing resolutions in respect of matters which were earlier required to be passed in meetings which required physical presence of directors by amending the Companies (Meetings of Board and its Powers) Rules 2014 from time to time during COVID-19 pandemic.  Such facility to the companies was allowed till 30th June, 2021. (Initially it was till 30.06.2020, then extended to 30.09.2020 and 31.12.2020).  Thereafter, considering the second COVID wave, Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 has been omitted vide notification dated 15.06.2021 to provide that all the matters can be deliberated & resolutions passed by Board of Directors through video conferencing or other audio visual means. The measure will provide increased flexibility to Boards of companies for conducting Business and further the Ease of Doing Business objective of the Government.
  8. The companies have been allowed to hold Extraordinary General Meetings (EGMs) through Video Conferencing (VC) or other audio-visual means (OAVM) complemented with e-Voting facility/simplified voting through registered emails till 30th June, 2021.  Considering the second wave of COVID-19, the Ministry has extended the aforesaid time limit to 31st Dec 2021.
  9. The companies have been allowed to conduct their Annual General Meetings (AGMs) by Video Conferencing (VC) or other audio-visual means (OAVM) whose AGMs were due to be held in the year 2020 or become due in the year 2021 to conduct their AGMs on or before 31.12.2021.  Owing to the difficulties in sending physical copies of the financial statements, the companies are also allowed to send the financial statements, along with Board’s reports, Auditor’s reports and other documents required to be attached therewith, only through email.
  10. The Registrar of Companies on the advice of Ministry had given extension of time in holding of Annual General Meeting for the financial year ended on 31 March, 2020 till 31st December, 2020 (The maximum period which can be extended by the Registrar of Companies under section 96 of the Act).
  11. Quality of disclosures strengthened through amendments made in the formats of financial statements, Companies (Accounts) Rules, Companies (Audit and Auditor’s) Rules and the Companies (Auditor’s Report) Order, 2020. The Companies (Auditor’s Report) Order, 2020 has now been made applicable from the audit of financial statements for the financial year 2021-22 to ease the compliance requirement by auditors and the companies.
  12. The Companies (Indian Accounting Standards) Rules, 2015 have been amended vide notification dated 18.06.2021 inter-alia to extend the benefits of COVID-19 related rent concession, that were introduced last year, from 30th June, 2021 to 30th June, 2022.
  13. The mandatory requirement of holding meetings of the Board of the companies within the intervals provided in section 173 of the Companies Act, 2013 (CA-13) (120 days) were extended by a period of 60 days till next two quarters i.e., till 30th September, 2020.  Considering the second COVID wave, the Ministry further extended the aforesaid relaxation for the year 2021-22 and accordingly the time gap between two consecutive meetings of the Board may extend to 180 days during the Quarter – April to June 2021 and Quarter – July to September, 2021, instead of 120 days as required in the Companies Act, 2013.
  14. Independent Directors (IDs) of a company have been given relaxation from holding atleast one mandatory meeting and accordingly for the financial year 2019-20, if the lDs of a company have not been able to hold such a meeting, the same has not been viewed as a violation.
  15. The Ministry enhanced the period to thirteen months from 1st December, 2019 within which existing Independent directors may apply online for inclusion of their names in the databank for Independent Directors vide amendments in the Companies (Appointment & Qualification of Directors) Rules, 2014 from time to time.  Further, the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 have been amended vide notification dated 18.06.2021 to provide that in case an individual has delayed in applying to the Institute for inclusion of his name in the data bank of Independent Directors or in case of delay in renewal thereof, the Institute shall allow such inclusion or renewal, as the case may be, after charging a further fees of one thousand rupees on account of such delay. Through this amendment requests made by a large number of stakeholders to grant additional time for delayed applications in view of Covid-19 pandemic have been addressed. 
  16. Timeline for creation of deposit repayment reserve of 20% under section 73(2)(c) of CA-13 and to invest or deposit 15% of amount of debentures under rule 18 of Companies (Share Capital and Debentures) Rules, 2014 was extended till 31st December, 2020.
  17. An additional period of 180 more days has been allowed to comply with the requirement of filing a declaration for Commencement of Business by newly incorporated companies.
  18. Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the CA-13 shall not be treated as a non-compliance for the financial year 2019-20 and 2020-21.
  19. Till 31st December, 2020, the inability to dispatch the notice for Rights Issues by listed companies to their shareholders through registered post or speed post or courier would not be viewed as violation of section 62(2) of the Act provided these companies comply with the SEBI Circulars dated 6th May, 2020 and 24th July, 2020 which inter-alia provide the mode/manner of issuance of notice by electronic transmission by listed companies.
  20. Requirement for investing 15% of amount of debentures maturing in a particular year in specified instruments has been done away with for Listed companies & NBFCs when such debentures are issued on a private placement basis.
  21. Time allowed to Auditors and Audit Firms for filing NFRA-2 form with the NFRA has been extended till a total period of 270 days in view of the difficulties faced during COVID-19 related disruption.
  22. The expenditure incurred by companies on activities relating to Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) Veterans, and their dependents including widows has been considered as CSR expenditure.
  23. Last date of submission of Cost Audit Report by the Cost Auditor to the management of the company has been extended till 31st December 2020 and additional fee has been relaxed for filing of CRA-4 (form for filing of cost audit report) for financial year 2019-2020. MCA vide circular no. 15/2021 dated 27.09.2021 has extended last date of filing of submission of Cost Audit Report for the financial year 2020-21 by 31st October, 2021 and further extended upto 30th November, 2021 vide circular no. 18/2021 dated 29.10.2021.
  24. MCA vide General Circular No.17/2021 dated 29.10.2021 has provided relaxation on levy of additional fees in filing of e-forms AOC-4, AOC-4 (CFS), AOC-4, AOC-4 XBRL AOC-4 Non-XBRL and MGT-7/MGT-7A for the financial year ended on 31.03.2021 under the Companies Act, 2013.

Judiciary updates-28th Nov 2021

Sale deed of immovable property Without Payment of Price Is Void: SC

Kewal Krishan Vs Rajesh Kumar And Ors. Etc. (Supreme Court) dated 22/11/2021

HC dismisses PIL against Organising Ranchi T-20 Match With Full Audience Capacity

Dheeraj Kumar Vs State of Jharkhand (Jharkhand High Court) dated 18/11/2021

Credit of story & screenplay, doesn’t acknowledge copyright of film to author

S.J.Suryah (a.k.a. S.Justin Selvaraj) Vs S. S. Chakravarthy (Madras High Court) dated 12/11/2021

No power under Employees’ State Insurance Act to waive statutory interest: SC

Transport Corpn. of India Ltd. Vs Employees State Insurance Corpn. (Supreme Court of India) dated 29/10/2021

Auction purchase- Stamp Duty/Registration not payable when filing copy of sale certificate

Tripower Enterprises (Private) Limited Vs Sub Registrar (Madras High Court)  dated 08/11/2021

Opportunity to file application for discharge granted to petitioner (A CA) in a criminal case

Thomas Cherian Vs CBI Thiruvananthapuram Unit (Kerala High Court) dated 03/11/2021

Regards

Bipul Kumar

‘Online Course on Indian Constitution’ (Press release 24 Nov 2021)

Shri Kiren Rijiju to launch the ‘Online Course on Indian Constitution’ on the eve of Constitution Day

Posted Date:- Nov 24, 2021

26th of November every year is declared as the ‘Constitution Day’.  On the eve of ‘Constitution Day’ celebration this year,  as a part of celebrations of ‘Azadi Ka Amrit Mahotsav’ for 75 years of India’s Independence, Department of Legal Affairs, Ministry of Law & Justice in collaboration with National Academy of Legal Studies & Research (NALSAR), University of Law is launching the ‘Online Course on Indian Constitution’ on 25th November, 2021. 

Union Minister for Law and Justice, Shri Kiren Rijiju will launch the ‘Online Course on Indian Constitution’ at Bhim Auditorium, Dr. Ambedkar International Centre (DAIC), 15, Janpath, New Delhi in the august presence of Prof. S.P.S. Baghel, Hon’ble Minister for State for Law and Justice.

The occasion will be graced by Shri Anoop Kumar Mendiratta, Secretary, Department of Legal Affairs and Secretaries of the Legislative Department,  Department of Justice along with other senior officers of the Ministry of Law & Justice and Prof. (Dr) Faizan Mustafa, Vice Chancellor, NALSAR University of Law.

Law is an instrument of social change and the objective of any State remains to promote and protect the rule of law. The same is only possible by empowering the citizens of this country with the knowledge of their rights and duties and the principles enshrined in the Constitution of India. The online course on Constitution aims to create awareness and strengthen the citizens of the country.  The course further seeks to familiarize with the text of the Constitution and leading cases, identify the fundamental policy choices incorporated in the Constitution, examine the historical evolution and understand the post-independence constitutional journey, through a series of 15 conceptual videos. The videos shall be available for viewing for a fixed period of six months after the date of registration by the applicants. A certificate of participation shall be automatically generated after any person registers and views the videos on the portal https://legalaffairs.nalsar.ac.in.

The registration for the course has been kept free for all the students, citizens and members of the society for viewing and participation.  However, any such person who wishes to obtain a Certificate of Appreciation or Certificate of Merit, is required to opt for online assessment on a token fee of Rs.100/- (Rupees One Hundred Only), which is purely optional.

Keeping in view the essence of the Online Course, the occasion shall also see widespread and enthusiastic participation of students, faculty and top functionaries of the leading Law universities of India.