FAQs on Investor Education and Protection Fund

Who can apply for financial sanctions?
Any organization/Association/Society which fulfills the criteria/ guidelines for financial assistance under the IEPF can apply.

How to apply?The organizations are required to submit their applications in Form 3 and Form 4.

What is IEPF?
Investor Education and Protection Fund (IEPF) has been established under Section 205C of the Companies Act, 1956 by way Companies (Amendment) Act, 1999 for promotion of investors’ awareness and protection of the interests of investors.

What activities are being undertaken by IEPF?Investor Education and Protection Fund (awareness and protection of investors) Rules, 2001 stipulate the activities related to investors’ education, awareness and protection for which the financial sanction can be provided under IEPF.

1. Activities stipulated under Rules
• Education programme through Media
• Organizing Seminars and Symposia
• Proposals for registration of Voluntary Associations or Institution or other organizations engaged in Investor Education and Protection activities
• Proposals for projects for Investors’ Education and Protection including research activities and proposals for financing such projects
• Coordinating with institutions engaged in Investor Education, awareness and protection activities
    
2. Activities undertaken by IEPF till date
• Educating and creating awareness among investors through Voluntary associations or organizations registered under IEPF. – 65 associations have been registered so far.
• Educating investors through Media, Conducted panel discussions on DD (Delhi, Mumbai, Kolkata, Chennai and Ahmedabad), Telecast of TV Video spots on DD & private channels, print advertisement in national as well as regional newspapers. All these programmes have been undertaken in Hindi, English and regional languages.
• Organizing seminars and workshops through associations registered under IEPF;
• Financing research projects pertaining to investor education, awareness;
• Coordinating with institutions engaged in investor education, awareness – Indian Institute of Capital Markets (IICM) has been engaged for conducting research/study on unclaimed dividend, interest etc. and also conducting “Training of Trainers” programme.
   

What is the procedure for Registration?
Any association or institutions or organizations, engaged in the activities relating to investors awareness, education and protection and proposing for investors programmes; organizing seminar; symposia and undertake projects for investor protection including research activities may register itself under Investor Education and Protection Fund. Such NGOs/Voluntary agencies which fulfill the criteria/guidelines for the purpose of financial assistance from the Investor Education and Protection Fund may apply to the IEPF for such assistance in Form 3 and Form 4.

What is procedure for crediting to IEPF?

1. Any amount required to be credited by the companies to the Fund, as provided in the Act shall be remitted into the concerned specified branches of Punjab National Bank, within a period of thirty days of such amounts becoming due to be credited to the Fund.
    
2. (a) The amount shall be tendered by the companies on behalf of the Central Government in authorized branches of Punjab National Bank along with challan (in triplicate) and the Bank will return two copies duly stamped to the Company as token of having received the amount.
    
   (b) Every Company shall file with the concerned Registrar of Companies one copy of the challan referred to in (a) evidencing deposit of the amount to the Fund. The Company shall fill in the full description and nature of the amount tendered and its Head of Account.
    
   (c) Every Company shall, when effecting a credit to the account of the Fund, will separately furnish to the concerned Registrar of Companies a statement in Form 1 duly certified by a Chartered Accountant or a Company Secretary or a Cost Accountant practicing in India or by the statutory auditors of the company. However, it is mandatory that each Company keep a record relating to folio number, Certificate Number etc. in respect of persons to whom the amount of unpaid or unclaimed dividend, application money, matured deposit or debentures, interest accrued or was payable, for a period of three years and the Committee or Sub-Committee shall have powers to inspect such records of that period.
    

Which amounts are to be credited to IEPF?
The following amounts that remained unpaid and unclaimed for a period of seven years from the date they became due for payment is credited to the fund:

1. amounts in the unpaid dividend accounts of the companies;
    
2. the application moneys received by companies for allotment of any securities and due for refund;
    
3. matured deposits with companies;
    
4. matured debentures with companies;
    
5. the interest accrued on the amounts referred to in clauses (i) to (iv);
    
6. grants and donations given to the fund by the Central Government, State Governments, companies or any other institutions for the purposes of the fund; and
    
7. the interest or other income received out of the investments made from the fund.
    

What are the criteria for the purpose of financial assistance from the IEPF?
Criteria/guidelines for the purpose of financial assistance from the Investor Education and Protection Fund are as follows:

1. Any organization/entity who has a viable project proposal on investors education and protection should be eligible for assistance from the Fund
    
2. The limit for each person/organization for assistance from the Fund should be subject to 5% of the budget of IEPF during that financial year and not exceeding 80% of the amount to be spent on the proposed programme/activity.
    
3. The associations or institutions or organizations already engaged in activities relating to investor awareness, education and protection and proposing to take up investors programmes, organizing seminars, symposia etc. shall undertake projects for investor protection including research activities.
    
4. The associations or institutions or organizations shall be registered under the Societies Registration Act or formed as Trusts or incorporated companies.
    
5. Associations or institutions or organizations, shall unless specific exemption has been made in this regard by the Committee on IEPF, be in existence for a minimum period of 2 years prior to its date of application for registration.
    
6. Associations or institutions or organizations shall have a minimum of 20 Members and a proven record of 2 years.
    
7. The association or institution or organization shall have rules, regulations and or by-laws for the governance and management of the association or institution or organization. These rules, regulations and or by-laws shall be in conformity with the conditions of registration. The association or institution or organization shall be managed by a governing Board/management committee.
    
8. No profit making association or institution or organization shall be eligible for registration for the purposes of financial assistance from the fund.
    
9. Notwithstanding the above the Committee on IEPF can give a project to any organization.
    
10. The amount of grant assistance given from the Fund shall be subject to an audit by the Department of Company Affairs to ensure its proper utilization.
     

While considering the proposals the Committee will take into account the audited accounts and the annual reports of the last three years of the organization seeking assistance from the Fund.

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Tried and True Money Advice From Warren Buffett

When it comes to financial wisdom, few people merit as much attention as Warren Buffett. The man renowned as the “Sage of Omaha” built a billion-dollar empire from scratch, all the while maintaining modest spending habits that are the envy of every frugal people everywhere. :

1. When you’re looking to buy a stock, never EVER overpay for it no matter how much you want it. Look at the price-to-earnings ratio, how solid the management is, how much cash the company brings in from its operations and then make sure the price isn’t elevated beyond what’s reasonable. This takes discipline, but you’ll find that Buffett is the most disciplined investor on the planet. He sticks to his rules and never strays. And one of his favorite rules is, “Buy good stuff at cheap prices!”

2. Look for the ugly ducklings that you know will eventually turn into beautiful stock swans. He once said to me, “Liz, you never want to buy the quarterback who just won the Superbowl. He’s too expensive. You want to buy the guy in the hospital bed with his leg in a sling because you know he’s cheaper, and the odds are, he’ll get better and blossom.”

3. Be fearful when others are greedy, and greedy when others are fearful.  It’s his way of saying, “Do not follow the herd. Be the contrarian. It’ll serve you well.”  When the herd was running toward dot-com stocks in 1999 and paying ridiculous prices for companies that showed no profit, he remained disciplined (see #1) and stayed away. That way when the herd shifted direction, he didn’t get trampled.  It works in the reverse as well.  When everyone was running away from stocks during the financial crisis, he was elbow deep, buying up the names he’d wanted for so long but were too expensive.  Suddenly they were ‘on sale’ and he had lots of dry powder to dive in.  

4. Learn how to communicate.  It shocks a lot of people to know that Buffett was incredibly shy and lacked all confidence even through his twenties.  He finally forced himself to take the Dale Carnegie course, “How to Win Friends and Influence People”, because he realized the only way he’d be truly successful in life— even with his natural ability to allocate financial assets— was if he could communicate to potential investors.  It took him quite some time to get up the courage to finally enroll in the course but it’s the only document he has framed and up on the wall in his inner office. Not his diplomas, not any awards, just the “Warren Buffett successfully completed Dale Carnegie’s course.”  There’s something very poignant to me about that.

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TP adjustment for controlling premium upheld; transfer of shares as per SEBI Regulation can’t be deemed to be at ALP

TP adjustment for control premium upheld as it is only the seller who can demand control premium in case he is selling the controlling stake. Even price charged for transfer of shares is as per SEBI Regulations, it can't be deemed to be at ALP

In the instant case the assessee belonged to Lanxess (‘L’) Group which was engaged in the chemical business globally. It held 50.97% shares of L in which RA Group also held 18.33%. The assessee sold its entire shareholding in L group to the INEOS ABS at a negotiated price of Rs. 196.36 per share, whereas the RA group had been paid at Rs. 201 per share. The INEOS ABS was a joint venture of L group and INEOS group in which the holding company of the assessee had 49% share shareholding. Since assessee had not been paid anything towards control premium though it had sold the controlling stake in the company, the TPO proposed adjustment on account of control premium at 25% of share value. The AO made adjustment consequent to order passed by TPO.

The Tribunal held as under:

1) The TPO referred to the report of Phillip Sounders Jr. PHD ('Phillip') (who gave a finding that control premium varied from 30% to 50% of the public unquoted price) to estimate the control premium;

2) The TPO/AO had compared price paid to the assessee with the price paid to RA Group who held only 18.83% share which was not a controlling stake. The RA Group was a good internal CUP as both the assessee and RA Group had sold the shares of the same company and buyer was also the same. Therefore, the transaction was identical except the fact that the assessee had sold the controlling stake;

3) Thus, only what was required to be considered was adjustment on account of controlling stake transferred by the assessee by estimating the price for the controlling stake. The report by Phillip which was based on research undertaken in respect of several public quoted companies could be used as reliable material. Considering this the adjustment of 25% of the share value made by AO/TPO on account of controlling premium was justified;

4) The argument of the learned AR that the assessee was selling the business and, therefore, could not expect control premium, had no merit. In fact, it was only the seller who could demand control premium in case he or she was selling the control stake;

5) The ld. AR for the assessee had also argued that the general public shareholders had also been paid at the rate of Rs. 201 per share as per SEBI Regulation no. 20(4). But the SEBI regulations does not in any way state that price negotiated by the assessee with the buyer is at arm's length price. Thus, order of AO was to be upheld - LANXESS INDIA (P.) LTD. V. ACIT (2013) 36 taxmann.com 350 (Mumbai - Trib.)

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RISKS AND BENEFITS OF INVSTING IN REAL ESTATE..

If you plan to allocate some of your investment dollars to real estate, you’ll find several options in the marketplace.
Each type of investment has its own benefits and risks, and you should fully educate yourself on those before you write the check.
Below are details on a few of the more common real estate investment types.

Individual direct ownership

This category of real estate ownership covers buying properties on your own (maybe with a spouse) and handling everything related to operation — such as maintenance, leasing and management of the property — yourself or hiring a property manager to do the job.
Benefits: You would make all decisions, earn all profits (if any) and directly control the asset.
Risks: You could face the possibility of bad tenants and other management hassles, making a poor financial choice, losing money on the sale of the property and assuming full liability past insurance coverage.

Partnerships with close or well-known associates

You could also partner with a friend, a small group of like-minded investors or family members.
Hopefully you know your co-investors well and their financial position, motivation, work ethic and desire to share in the management of the property.
Two big suggestions here: Have a written agreement between the parties, and one party should be responsible for management of the property (or managing a property manager) and be paid for handling the management.
This eliminates disputes over who handles the problem if a major issue arises during a holiday or the Super Bowl.
Benefits: You would share decision making and profits, and all partners directly control the asset. Having partners can be a plus as long as all partners are on the same page.
Risks: You might choose partners who don’t have the financial wherewithal needed to handle major issue, or partners whose strategies for renting, managing and/or improving the property are not aligned.
Plus all the risks in the individual direct ownership category above.

General or limited partnerships

These investments — including tenant-in-common investments and private real estate investment trusts (REITs) — are pitched in newspapers, at real estate clubs, by some financial institutions and by investment groups.
In these investments you are totally trusting someone else, the “sponsor,” to handle a huge portion of your net wealth.
The biggest issue with these is that most investors don’t do even the most basic due diligence on the investment sponsor, and even if they want to it’s hard to do.
Few investors, for example, review a sponsor’s credit report, detailed investing history and tax returns on past deals.
Nor do most investors contact banks, check criminal or civil litigation histories or consult lawyers and others the sponsor has dealt with in past real estate deals.
Benefits: You could get a fair return on investment for the risk. You wouldn’t deal with management hassles, and the sponsor probably has more investment experience than you do.
Risks: You would have no control and potentially could face dealing with unscrupulous sponsors, personal guarantees and liability, low investment returns and loss of your investment.

Publicly traded real estate investment trusts

These are really investments in a big company that is involved in the business of buying and generally owning property.
A REIT buyer is investing in the ability of management to make good decisions on the shareholders’ behalf.
There are many well-known publicly traded REITs with long-term operating histories and audited financial statements.
So you’d want to look at a particular company’s results and dividends before making a decision on whether that company is a good investment for you.
Benefits: You’d have no management responsibility, no liability past your initial investment, experienced management investing your money and liquidity in selling the shares.
Risks: You could lose your total investment. Shares and company value are subject to regional, national and stock market influences and risks, which could diminish share value even if the company is relatively strong and well managed.

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Work carried out on lump sum basis as a contractor doesn’t mean rendition of Manpower Supply Services

Work carried out on lump sum basis as a contractor, does not, prima facie, amount to Manpower Supply Services and is not chargeable to service tax under that service

 

In the instant case the assessee, a sugar co-operative society of farmers, was buying sugarcane grown by farmers. It had appointed labour for cutting of sugarcane crops, then loading of same into the trailer, unloading and for putting them into its sugar factory. The assessee was paying price for purchase of sugarcane after deducting Rs. 300 per MT for work done by it .Department viewed that Rs. 300 per MT was sum towards manpower supply services provided by the assessee to farmers and demanded service tax thereon.

The Tribunal held as under:

1) Invoices raised by assessee showed that assessee was charging lump sum amount of Rs. 300/- per metric tonne for help provided by it for cutting, loading and unloading of sugarcane from fields of farmers;

 

2) In view of decision in K. Damodarareddy v. CCE (2010) 25 STT 69 (Bang.-Cestat) and in Ritesh Enterprises v. CCE (2010) 24 STT 283 (Bang-Cestat), prima facie, such work carried out on lump sum basis could not be categorized as ‘manpower supply services’ – SHRI BILESHWAR KHAND UDYOG SAHAKARI MANDALI LTD. V. COMMISSIONER OF CENTRAL EXCISE (2013) 36 taxmann.com 8 (Ahmedabad – CESTAT)

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What is Annual Information Return (AIR)???

What is Annual Information Return (AIR)?

As per Section 285BA of the Income Tax Act, 1961, specified entities are required to furnish an Annual Information Return (AIR) in respect of specified financial transactions registered/recorded by them during the financial year (beginning on or after April 1, 2004) to the income tax authority or such other prescribed authority.

Who are the persons required to file AIR?

The Annual Information Return shall be furnished by every person mentioned in column(2) of the table below in respect of all the transactions of the nature and value specified in the corresponding entry in column(3) of the said table, which are registered by him during a financial year:

S.No.(1)	Class of Person (2)	Nature and Value of Transaction (3)
1.	Banking Company	Cash deposits aggregating to ten lakh rupees or more in a year in any savings account of a person maintained in that bank.
2.	An Institution issuing credit card	Payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to two lakh rupees or more in the year.
3.	Mutual Fund	Receipt from any person of an amount of two lakh rupees or more for acquiring units of that Fund.
4.	A company or institution issuing bonds or debentures	Receipt from any person of an amount of five lakh rupees or more for acquiring bonds or debentures issued by the company or institution.
5.	A company issuing shares through a public or rights issue	Receipt from any person of an amount of one lakh rupees or more for acquiring shares issued by the company.
6.	Registrar or Sub-Registrar	Purchase or sale by any person of immovable property valued at thirty lakh rupees or more.
7.	An Officer of Reserve Bank of India	Receipt from any person of an amount or amounts aggregating to five lakh rupees or more in a year for bonds issued by the Reserve Bank of India.

Who is Authorised to Receive AIR?

CBDT has authorized National Securities Depository Limited (NSDL) to receive AIR. NSDL receives the AIRs through its country-wide network of front offices called TIN Facilitation Centres (TIN-FCs) and on-line through web-based facility. The data received by TIN-FCs and data received on-line is collated by NSDL and disseminated to the Income Tax Department.

What is the manner in which AIR is to be furnished?

AIR should be furnished in electronic form by all categories of entities required to furnish AIR. Furnishing of AIR in physical form is not permitted.

What is the Due Date of furnishing AIR?

Annual Information Return(AIR) is to be furnished by 31^st August immediately following the financial year in which above transactions are recorded or registered

Penalty for failure to funish AIR?

If a person who is required to furnish Annual Information Return fails to furnish such return within the time prescribed, such person shall pay penalty of Rs. 100 for every day during which the failure continues.

This Article has been Shared by Student of ICAI Palak Aggarwal. She can be reached at aggarwal.palak2809@gmail.com

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ALLOWABILITY OF ESOP EXPENDITURE: BY CA NITIN NANDA

A scheme of Employee Stock Option (‘ESOP’) is one such process where employers reward employees by making them partners/ rightful owners in wealth which they have build together by issuing shares in the entity at a discounted price which otherwise is available at higher price in the market due to various reasons such as market expecting to reap the reserves sitting in the books of accounts, goodwill generated by the Company in the market, expected discounted cash flow forecasts of the Company etc .

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10 common legal myths busted

Did you check your friend's repayment history when you agreed to be a guarantorfor his home loan? You should have, because according to a Supreme Court ruling, the lender can recover his dues from the guarantor if the borrower is unable to repay the loan. Your friend's liabilities could become yours if he defaults. Yet, very few people know this or check it when they blindly sign up as guarantors for loans taken by friends and relatives.


There are several such misconceptions that are harboured by the smartest of us. In our cover story this week, we have picked 10 such misconstrued notions about the legal position on financial matters and clear the air on what is correct under the law. This is important because if you believe in something that is not legally tenable, it could have an adverse impact on your finances. Of course, ignorance about the law should never be an excuse for making a mistake.

1) I need to submit the originals in court

Certified photocopies are perfectly fine and acceptable.

Don't submit the original documents when you file a plea in court because you could easily lose them. As per the Civil Procedure Code, 1908, when you file a petition in court, it needs to be accompanied with affidavits and certified copies of the original documents that you want to present as evidence. "It would be a mistake to submit the originals along with the complaint as you run the risk of losing them.

Besides, they are not required as per the procedure," says Aakanksha Joshi, senior associate, Economic Law Practices. However, you will be required to present the originals at the time of hearing. At that time, too, you can present photocopies if it is not possible to produce the originals. However, these photocopies will have to be certified and attested by a gazetted officer to ensure the stamp of authenticity.

In fact, you should not give the original documents to anyone, including your lawyer, in some instances. Make sure he is efficient in handling the paperwork if you are entrusting key documents to him. As an alternative, you could hand over the certified copy for his reference and retain the original. Take the orginal to court only at the time of hearing.

As a safety measure, always keep two sets of certified photocopies, in case you misplace the original. A good idea is to scan the documents and store them on your computer or on the cloud. You can use online services like Google Docs (Docs. google.com) and Windows Live Sky-Drive (Explore.live.com/skydrive) to store your documents.

(ET)

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Income tax department goes slow on refunds over Rs 1 lakh

NEW DELHI: The income tax department is going slow on several refunds of over Rs 1 lakh for 2011-12, amid slowing revenue growth due to the faltering economy. While the government has not issued any directives to the revenue officers to go slow on tax refunds, the indications are strong enough to ensure that refunds above Rs 1 lakh are not issued in a hurry, several tax officials TOI spoke to said on condition of anonymity. 

At least three top officials in the income tax department's field offices confirmed the go slow on refunds, the revenue department and CBDT did not respond to questionnaires sent three weeks ago. A slowing economy and decline in business confidence has hurt revenue receipts. While the government is confident of meeting the tax targets set for the current financial year, revenue officials say the initial months have been tough. 

Latest data released by the finance ministry showed that gross direct tax collections rose over 13.3% to Rs 1.57 lakh crore during April-July 2013, compared to Rs 1.39 lakh crore a year ago. From a 21% increase in gross collections during April-May, the growth rate moderated to 11.5% during the April-June quarter. The officials said the informal advisory to suspend refunds of over Rs 1 lakh was effective from June. 

As a result, the growth in net tax collections, which was estimated at 6.4% in during April-May and April-June, shot up to 10.4% at the end of July. The government did not release the data for April and the revenue department did not share the data on refunds. 

In the budget the finance minister has budgeted for over 18% growth in gross collections of corporation tax, personal income tax and wealth tax. 

Growth has slowed to a decade low of 5% in 2012- 13 and the economy is expected to remain sluggish in the current financial year too, raising fears over the government's ability to meet the fiscal deficit target of 4.8% of GDP. Corporate profitability has also taken a hit due to the slowing economy, which could hurt government's revenue collection drive. finance Minister P Chidambaram has said that government will meet the fiscal deficit target of 4.8% and will not breach the "red line."NEW DELHI: The income tax department is going slow on several refunds of over Rs 1 lakh for 2011-12, amid slowing revenue growth due to the faltering economy. While the government has not issued any directives to the revenue officers to go slow on tax refunds, the indications are strong enough to ensure that refunds above Rs 1 lakh are not issued in a hurry, several tax officials TOI spoke to said on condition of anonymity. 

At least three top officials in the income tax department's field offices confirmed the go slow on refunds, the revenue department and CBDT did not respond to questionnaires sent three weeks ago. A slowing economy and decline in business confidence has hurt revenue receipts. While the government is confident of meeting the tax targets set for the current financial year, revenue officials say the initial months have been tough. 

Latest data released by the finance ministry showed that gross direct tax collections rose over 13.3% to Rs 1.57 lakh crore during April-July 2013, compared to Rs 1.39 lakh crore a year ago. From a 21% increase in gross collections during April-May, the growth rate moderated to 11.5% during the April-June quarter. The officials said the informal advisory to suspend refunds of over Rs 1 lakh was effective from June. 

As a result, the growth in net tax collections, which was estimated at 6.4% in during April-May and April-June, shot up to 10.4% at the end of July. The government did not release the data for April and the revenue department did not share the data on refunds. 

In the budget the finance minister has budgeted for over 18% growth in gross collections of corporation tax, personal income tax and wealth tax. 

Growth has slowed to a decade low of 5% in 2012- 13 and the economy is expected to remain sluggish in the current financial year too, raising fears over the government's ability to meet the fiscal deficit target of 4.8% of GDP. Corporate profitability has also taken a hit due to the slowing economy, which could hurt government's revenue collection drive. finance Minister P Chidambaram has said that government will meet the fiscal deficit target of 4.8% and will not breach the "red line."

ET

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