Wednesday, 17 December 2014

गुंतवणूक नियोजन आणि धन संपन्न निवृत्ती

गुंतवणूक नियोजन आणि धन संपन्न निवृत्ती

मित्रानो
श्रीमंत आणि धनसंपन्न होणे हे कोणाही संसारी मनुष्याचे स्वप्न असते.  पण की श्रीमंत होणे हे स्वतःच्याच हातात असते हे खूप कमी लोकांना माहित असते.

मी जर तुम्हाला सांगितले कि एक लहान आणि काळजीपूर्वक केलेली गुंतवणूक तुमचा  दरवर्षी Rs.60,000 पेक्षा अधिक  कर वाचवु  शकते  तर ….

काळजीपूर्वक केलेली गुंतवणूक नियोजन सुमारे 6,50 लाख अधिक कर मुक्त उत्पन्न देऊ शकते.


तुम्हाला गुंतवणूक नियोजन करण्याची गरज आहे कि नाही त्याचा अंदाज खालील चेकलिस्ट वरून तुम्ही काढू शकता.


१) आपण पगारदार आहात आणि  वरील कर पात्र  पगार उत्पन्न रुपये 250,000 येत असल्यास.  किंवा

२) आपण पगारदार आहात आणि  तुमच्या एम्प्लोयर ने तुमचा टीडीएस कापला असेल किंवा

३) आपण व्यवसाय करता आणि तुमचा करपात्र नफा रुपये 250,000 किंवा अधिक असल्यास किंवा

४) आपणास  चालू वर्षात  मालमत्ता / जमीन / विक्री करून मोठा भांडवली नफा झालेला आहे.

  जर आपण वरील पैकी कुठलीही एक अट लागू होत असल्यास आर्थिक वर्ष २०१४ - २०१५ (एप्रिल-मार्च)  तर तुम्ही
१)  आपल्या संपूर्ण आर्थिक वर्षाचे  कर मूल्यांकन करणे आणि
२) आपल्या कर बचत गुंतवणुकीचे नियोजन करून  जास्तीत जास्त कर बचत करणे
३) लागू असेल तेथे आगाऊ कर भरून व्याज वाचवणे.

सद्ध्या तुमच्या विविध  ध्येय आणि उदीष्ठांची (उदा. शिक्षण, लग्न, नियोजित विशेष कार्यक्रम, निवृत्ती) पूर्ती करण्यासाठी विविध गुंतवणूक पर्याय उपलब्ध आहेत. जसे सोने, चांदी, जमीन अशा जुन्या पर्यायान्सोबतच म्युच्युअल फंड, ETF, सरकारी रोखे सारखे नवीन पर्याय नक्कीच तुमचे श्रीमंत होण्याचे मार्ग सुकर करतील.

अधिक माहिती
anandmutha@armutha.in  




Friday, 19 September 2014

COMPANY LAW SETTLEMENT SCHEME 2014, Your last stand


 As per the circular issued by Ministry of Corporate Affairs (MCA) i.e. “General Circular No. 34/2014” dated August 12, 2014 have announced its new scheme called “COMPANY LAW SETTLEMENT SCHEME 2014”.
 
It covers all the companies who have failed to file their annual reports, financial statements and related documents due on or before June 30, 2014 can file these documents before October 15, 2014.
 

Highlights of the Scheme:
1.    Scheme is valid from 15th August 2014 to 15th October 2014
2.    Only 25% of the additional fees is payable.
3.    Scheme applicable for forms 23AC, 23ACA, 23AC-XBRL, 23ACA- XBRL, 20B, 66, 23B, 21A
4.    Immunity from prosecution.
5.    Directors will not be disqualified u/s 164(2) of the companies act.
6.    Company can have simultaneous benefit of either going for  "Dormant" status or go for striking off. Both at 25% of actual fees.
 

Below mentioned are the consequences which arise if you did not file your ROC annual returns, the consequences are as follows:


Consequences of Non-Compliances
Penal and Prosecution
Section 92 read with 137 of the Companies Act 2013 provides for penalty at Rs  1000 per day extending up to Rs  10 Lacs and also Imprisonment of directors up-to a term of 6 months.
 
Disqualification of Directors
Also Section 164(2) provides for Disqualification of Director if the company has not filed annual returns for 3 or more consecutive years. The disqualification which was earlier only restricted to public companies is now also extended to Private limited Companies.
We would request you to kindly avail the benefit of this scheme at the earliest to avoid any show cause notice from Ministry of Corporate Affairs (MCA).3


This is an opportunity to ratify the defaults in ROC Annual fillings. 

CA Anand Mutha
anandmutha@armutha.in 

Friday, 12 September 2014

इन्शुरन्स मध्ये गुंतवणूक खरच फायदेमंद असते का?

इन्शुरन्स मध्ये गुंतवणूक खरच फायदेमंद असते का?

बचत करणे हा माणसाचा स्वभाव आहे. भारतीय बचतीसाठी विशेषकरून ओळखले जातात.  परंतु या बचत केलेल्या रकमेची योग्य प्रकारे गुंतवणूक करणे  जास्त महत्वाचे आहे.  
माणसाचे आयुष्य ही एक अनिश्‍चित अशी गोष्ट असल्याने आपल्या प्रियजनांना आर्थिक सुरक्षितता मिळावी या हेतूने विमा उतरविला जातो. अनेकदा विमा योजनांमधले खाचखळगे न तपासले जात नाहीत. विम्याच्या गुंतवणूकीकडे डोळसपणाने बघण्याची गरज आहे.
आयुष्याच्या विम्याबद्दल - कालच्यापेक्षा आज असलेली सजगता काकणभर अधिक असली, तरी आयुर्विमा उतरवताना आपण अनेक घोडचुका करत असतो. त्या कदाचित आपल्यालाही नकळत घडत असल्या, तरी त्यांचा परिणाम दीर्घकालीन आणि थेट तुमच्या प्रियजनांच्या राहणीमानाशी खेळ करणारा असू शकतो.

विमा पॉलिसी दोन प्रकारच्या असतात. एक - गुंतवणूक आणि विमा यांचे मिश्रण असलेली पॉलिसी. दोन : शुद्ध विम्याचे संरक्षण देणारी टर्म पॉलिसी. आपण विम्याला अजूनही गुंतवणुकीचे साधन मानण्याची घोडचूक करतो. विमा हा गुंतवणूकांहून खूप वेगळा आणि त्याहूनही अत्यंत महत्त्वाचा असा प्रांत आहे. आपण बव्हंशी वेळा "सर्व्हायव्हल बेनिफिट (जर पॉलिसीधारकाचा पॉलिसीच्या मुदतकाळात मृत्यू झाला नाही, तर त्याला मुदतपूर्तीच्या वेळी मिळणारी रक्कम)' देणाऱ्या विमा योजनेत गुंततो. अशा विम्याच्या योजनांमध्ये गुंतवणूक आणि विमा यांचे घातक मिश्रण असते. यामुळे तुमचा विम्याचा हप्ता प्रचंड रकमेचा आणि त्या मानाने विमा संरक्षण मात्र किरकोळ रकमेचे, अशी स्थिती निर्माण होते. आयुर्विम्याला विम्याच्याच चष्म्यातून पाहायला हवे, हे आपण विसरतो; आणि एका मोठ्या तोट्याच्या व्यवहारात उडी घेतो. आयुर्विमा द्यायचा, तर तो "टर्म' स्वरूपाचाच असला पाहिजे. आपण आपल्या गाडीचा विमा उतरवतो आणि विमा-काळात काही विपरीत घडले नाही, तर विम्याची रक्कम परत मिळत नाही. याच तत्त्वावर माणसाच्या आयुष्याला विमा संरक्षण देणाऱ्या "टर्म इन्शुरन्स' या विम्याच्या प्रॉडक्‍टची मांडणी आहे. हा शुद्ध आणि निखळ स्वरूपाचा विमा असल्याने, टर्म इन्शुरन्समध्ये हप्ता कमी रकमेचा आणि त्या मानाने विमा संरक्षण भरभक्कम रकमेचे असते. उदाहरणार्थ : 25 वर्षे वयाच्या व्यक्तीचा 35 वर्षांच्या कालावधीचा एक कोटी रुपयांचा टर्म इन्शुरन्स उतरवला, तर त्याला वर्षाला केवळ 19000  ते 25000 रुपये हप्ता बसतो. हेच जर त्याने "एंडोवमेंट' प्रकारचा (म्हणजे सरव्हायवल बेनिफिट असलेला) प्रचंड वार्षिक हफ्ता असलेला  इन्शुरन्स काढला तर वार्षिक हफ्ता साधारण 3 ते 4 लाख येऊ शकतो. तसेच टर्म इन्शुरन्स व्यतिरिक्त दुसर्‍या विमा योजना कितीही फायदेमंद वाटत असल्या तरी माझ्या पाहण्यात कुठलीच योजना वाषिर्क 3.5% पेक्षा जास्त परतावा देत नाही.  तात्पर्य  टर्म इन्शुरन्स उतरवून आपल्या आयुष्यातील आयुर्विमा हे प्रकरण हाताळणे आणि उर्वरित रक्कम शुद्ध गुंतवणूक योजनेत गुंतवून जास्तीत जास्त नफा मिळवणे, असे आपले धोरण असायला हवे.

सी.ऐ. आनंद मुथा
anandmutha@armutha.in

Monday, 1 September 2014

कर वाचविण्यासाठी हिंदू अविभक्त कुटुंब


प्रत्येक व्यक्तीला  त्याच्या टॅक्स वाचविण्यामध्ये  स्वारस्य आहे. इन्कम टॅक्स कायद्याच्या  विविध तरतुदींच्या फायदा घेऊन कर बचत शक्य आहे.


अनेक करदाते  इन्कम टॅक्स वाचविण्यासाठी बेकायदेशीर मार्गाचा अवलंब करतांना आढळतात. तथापि, इन्कम टॅक्स बचत कायदेशीर मार्गाने शक्य आहे.


इन्कम टॅक्स बचतीच्या अशा अनेक मार्गांमध्ये एक महत्वाचा मार्ग आहे हिंदू अविभक्त कुटुंब (Hindu Undivided Family/ HUF). इथे  याची नोंद करावी कि हिंदू अविभक्त कुटुंब हि इन्कम टॅक्स कायद्याच्या दृष्टीने संपूर्णतः वेगळी व्यक्ती आहे. समजा तुमच्या कुटुंबात पती आणि पत्नी आणि दोन सज्ञान किंवा अज्ञान मुले असतील तर ज्या प्रमाणे त्या प्रत्येकाचे वेगळे PAN असेल त्याचप्रमाणे तुमच्या हिंदू अविभक्त कुटुंबाचे सुद्धा वेगळे PAN काढावे लागेल.

बर्याच वेळेस कलम 80 सी ने दिलेल्या वजावाटीचा पूर्णतः उपयोग केला जातो. अशावेळी हिंदू अविभक्त कुटुंब  80 सी चा लाभ घेण्यासाठी एक अनोखा आणि नवीन पर्याय उपलब्ध करून देतो.  हिंदू अविभक्त कुटुंबाला स्वताचे स्वतंत्र अस्तित्व असल्याने इन्कम टॅक्स कायद्याच्या इतर तरतुदी सुद्धा लागू पडतात. या तरतुदी त्याला एका व्यक्ती ला असल्याप्रमाणे लागू पडत असल्याने हिंदू अविभक्त कुटुंबाला  ०%, १०%, २०% आणि ३०% या प्रमाणे कर लागू होतो. म्हणजेच तुम्ही जर कर ३०% दराने भरत असाल तर तुम्ही हिंदू अविभक्त कुटुंबाचा  उपयोग करून कायदेशीर रित्या मुबलक कर वाचवू शकता.

CA Anand Mutha
anandmutha@armutha.in

Tuesday, 12 August 2014

Limited liability partnership Vs Private Limited Company

Limited Liability Partnership Vs Private limited Company

Limited Liability Partnership (LLP) is a corporate business vehicle that provides both the benefits of a company and flexibility of a partnership firm i.e. limited liability and allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement.
Considering the compliances required to be made by the Private Limited Companies as laid down in The companies Act, 2013, the LLP form of organization is now a very convenient form for starting of any business.
Benefits of LLP over limited company:

1.   No limit on owners of business
LLP requires minimum 2 partners. There is no limit on maximum partners unlike a private limited company wherein there is a restriction of not having more than 200 members.

2.   No requirement of minimum contribution
       As against company there is no minimum capital requirement in LLP. An LLP can be formed with least possible capital.
Particulars
Company
LLP
Minimum Capital contribution

Private Company - 1,00,000
Public Company -5,00,000
No such mandatory requirement

Moreover, the contribution of a partner may consist of tangible, movable or immovable or intangible property or other benefit to the LLP.

3.   Lower cost of Formation
The cost of registering LLP is low as compared to cost of incorporating a private limited or a public limited company. An illustration can show the approximate cost involved in formation of private limited company and an LLP.
Particulars
Company
LLP
Legal Cost to incorporate (having capital of Rs. 1 Lakh)

Rs. 10000/-
Rs. 2000/-
Legal Cost to incorporate (having capital of Rs. 5 Lakhs)

Rs. 26000/-
Rs. 4000/-

4.   No requirement of compulsory Audit
All the companies, whether private or public, irrespective of their share capital, are required to get their accounts audited. But in case of LLP, there is no such mandatory requirement. A Limited Liability Partnership is required to get the audit done only if:-
a.    If the contributions of the LLP exceeds Rs. 25 Lakhs, or
b.    If the annual turnover of the LLP exceeds Rs. 40 Lakhs


5.   Lower compliance burden resulting in savings
Approximately at least 8 to10 compliances per annum are required to be made by a private limited company whereas a Limited Liability Partnership is required to file only the Annual Return & a Statement of Accounts & Solvency

6.   Taxation Aspect on LLP
For income tax purpose, LLP is treated at par with partnership firms. Thus, LLP is liable for payment of income tax and share of its partners in LLP is not liable to tax. Thus no dividend distribution tax is payable. Provision of 'deemed dividend' under income tax law, is not applicable to LLP.
Section 40(b): Interest to partners, any payment of salary, bonus, commission or remuneration allowed as deduction in the hands of Limited Liability Partnership

7.   Dividend Distribution Tax (DDT) not applicable
In the case of a company, if the owners to withdraw profits from company, an additional tax liability in the form of DDT @ 15% (plus surcharge & education cess) is payable by company. However no such tax is payable in the case of LLP and profits of a LLP can be easily withdrawn by the partners.

8.               Converting from Partnership to LLP
LLP and general partnership is being treated as equivalent (except for recovery purpose) in the Act, the conversion from a general partnership firm to an LLP will have no tax implication, if the rights and obligation of the partners remain the same after conversion and if there is no transfer of any asset or liability after conversion. If there is a violation of these conditions , the provision of capital gain will apply.

9.               Converting from company to LLP
Conversion from company is possible. The capital gain on conversion of company in to LLP is exempt if the conditions of section 47(xiiib) are followed.

10.               Demerits of LLP
LLP as well have some limitations within. Some of them can be summarized as below.
a)   Any act of the partner without the other partner, may bind the LLP
b)   LLP Cannot raise money from public


Contributed by
CA Nidhi Chatwani 


Monday, 7 July 2014

VAT AND PROFESSION TAX CHANGES 2014 BUDGET

Dear All,

Maharashtra Act XXVII of 2014 has received assent of the Governor on 26th June, 2014 and highlights of the changes in respect of Maharashtra VAT and Profession Tax are as follows -

- VAT Registration limit increased to 10 lakhs
- Dealers other than importers, whose turnover during the FY 2013-14 not exceeded registration limit of Rs.10 lakhs, can apply for cancellation on or before 30-09-2014 and will be cancelled w.e.f. 1-10-2014.
- Late Fee reduced to Rs.2,000/- if filed within 30 days from due date.
- Provision giving power to Commisioner on application by dealer for giving directions in respect of assessment deleted.
- If order cancelling the Assessment on an application u/s 23(11) is not passed within 3 months from end of the month in which application is made, assessment will be deemed to be cancelled.
- No stay against the dues on account of non-production of certificates or declaration if two years has passed from the end of year for which claim relates, unless 100% tax in respect of such claim is paid.
- Penalty for concealment is restricted to 100% of tax evasion but will not be less than 25% of tax evasion u/s 29(3)
- If dealer has filed late return on or after 1-8-2012 and paid late fee also, penalty if levied will not be recovered.
- No 30(4) penal interest is payable on additional liability on account of non-production of certificates or declarations.
- No 30(4) penal interest if tax paid as per revised return is less than 10% of tax paid with original return.
- TDS by person who awards quarrying lease or quarrying permit in respect of minor minerals.
- Facility to apply for refund per return filed extended to units covered under Package Scheme of Incentives 2013.
- VAT Audit limt raised to 1 crore
- Turnover of Sales for VAT Audit to include value of goods transferred outside state not by reason of sale
- Dealers holding liquor licenses mentioned in clause (b) omitted form VAT Audit unless covered due to turnover limit
- Power of waiver of Audit penalty if filed within one month deleted.
- Profession Tax limit for salaried persons increased to Rs.7,500/-
- Power given to State Government to waive or reduce late fee
- Exemption extended to person who is suffering from mental retardation specified

アナンドヘビメタファン
For Act XXVII of 2014, visit website http://mahavat.gov.in or www.meraconsultant.com

Saturday, 26 April 2014

Do you want to get your Income Tax Refund? Use Right To Information Act 2005

The Right to Information Act, 2005(RTI) is a potent tool for tax payers to find solutions to their everyday problems. Unfortunately, most taxpayers & tax professionals have not understood the scope and potential of the Act. With this article I want to bring to notice use of Right to information Act,2005 for encashing your pending Income tax Refunds.

The Right to Information (RTI) Act came into effect from 12th October, 2005 and is applicable on the whole of India, except Jammu and Kashmir. The Act helps many citizens to obtain information not disclosed publicly.
It must be noted that only assessee can apply under RTI to know the status of his/her income tax refund after one year from date of filing return. But he can be assisted and accompanied by a Chartered Accountant or a Lawyer. 

I do not prefer for making application under RTI immediately. The course of action to be followed is -
1) File a simple letter inquiring about status of your return and status of Refund
2) File first reminder letter  if you do not receive any communication for step 1. (Usually you don't get, do you?) after 15 days from step 1.
3) File second reminder  after 15 days from step 2.
4) File Third reminder letter after 15 days from step 3.

My usual experience is that AO never reply to such communications and not at all bothered by your reminders. 

Now your case becomes ripe enough to file an application under RTI seeking information about -
1)  Status of your return and status of Refund
2)  Information on how AO acted on our letter as filed in step 1 above. 
3)  Information on how AO acted on our reminders as filed in step 2, 3, and 4. 

So far in my cases, the success of RTI applications in the Income Tax department is unbelievably approximately 100 per cent. In each and every case, the RTI application gets attended to immediately and you get pending refunds within 30 days. In fact I got most of the refund on the same day without any need to submit the RTI application. Mere disclosure to AO the intention of filing RTI was enough. 


I advise all professionals as well as assessees to use encourage use of RTI Act, it is an opportunity to minimise corruption and improve accountability. Let professionals become catalysts for Better Bharat Bhavisya through the use of Right to Information.

For more information  you can contact me on anandmutha@armutha.in

By
CA Anand Mutha 

Saturday, 19 April 2014

Do you think you can escape from Arrest for Service Tax Dues Prior to 10th May 2013

Service tax law was amended with arrest provisions w.e.f. 10th May 2013. Section 89(1)(d) was amended to provide that non-payment of amount collected as service to government treasury will be liable for prosecution for period up to seven years. A question would come to mind that what would happen in cases where the amount as described in section 89(1)(d) is collected prior to the date when this section became effective i.e. 10th May 2013. 

High Court of Bombay has given its judgement on the same matter which is as below. 

Assessee-director was arrested on 22-1-2014 under section 89(1)(d)(ii), read with sections 90 and 91 for non-payment of service tax of Rs. 2.44 crores by his company despite having collected same from customers - Assessee argued that : (a) said offence had become cognizable vide Finance Act, 2013 only on 10-5-2013; (b) amended provisions could not be applied retrospectively for dues pertaining to prior period; and (c) dues for period on or after 10-5-2013 were only Rs. 5 lakhs i.e., not exceeding Rs. 50 lakhs, therefore, assessee was to be granted bail - Department argued that : (a) in balance sheet dated 31-3-2013, liability to pay tax was admitted; (b) non-payment of outstanding dues was a continuing offence; therefore, amended provisions were applicable - HELD : It being a continuing offence, entire outstanding/arrears as on 10-5-2013 was to be taken into consideration while calculating limit of Rs. 50 lakhs under section 89(1)(d)/(ii) - Since, as on 10-5-2013, there was huge outstanding beyond Rs. 50 Lakhs and said amount continued to be outstanding even at time of arrest, assessee could not be granted bail, more so, when investigation was still ongoing and assessee's payment plan was not agreed to by department [Paras 13 to 15] [In favour of revenue]

Case : Kandrarameshbabu Naidu vs. Superintendent (AE) Service Tax, Mumbai-II


Wednesday, 2 April 2014

Now cost accountant, company secretary will also able to do tax audit under proposed Direct Tax Code

Tax Audit under the Income Tax Act is currently allowed to be conducted only by the Chartered Accountant but Proposed Direct Tax Code 2013 allows Tax Audit not only by Chartered Accountant but also by Company Secretaries and Cost Accountants. 
Clause 88 of the Proposed Direct Tax code prescribes who needs to get the book audited under the direct tax code 2013 and it further says that the same needs to be audited by an accountant. 

The Term accountant is been defined in Clause 320(2) which says that accountant means Chartered Accountants , Company Secretaries , Cost Accountants any person having such qualifications as the Board may prescribe, for the purposes specified in this behalf.

Saturday, 29 March 2014

Local Body Tax Nashik Municipal corporation

Local Body Tax, popularly known by its abbreviation as LBT, is the tax imposed by the Municipal corporation in Maharashtra on the entry of goods into a local area for consumption, use or sale there on.

The tax supersedes the "octroi" system of taxing.

The powers to levy LBT are derived from section 127(2) (aaa) of the Bombay Provincial Municipal Corporation Act, 1949. In exercise of the powers conferred by sub section (1) of Section 152T and of all other powers enabling it in that behalf, the Government of Maharashtra, made rules vide Noti. No. LBT-0209/CR-65/09/UD-34, dt. 25th March 2010 namely “Bombay Provincial Municipal Corporations (local body tax) Rules, 2010” (Now The Maharashtra Municipal Corporation (Local body Tax) Rules, 2010) and levied LBT in all Corporations of Maharashtra from 21.08.2012. The name of the Act is changed as The Maharashtra Municipal Corporations Act (Act No. LIX of 1949). The concerned sections are sec. 152B to sec. 152 O except 152C in chapter XI–A and sec 152 P to sec 152 T in chapter XI-B. The Act is governed by Urban Development Department. It extends to the areas of Municipal Corporation. Hence if any trader is carrying on business in more than one Municipal Corporations, he has to obtain registration certificate in each such Corporation separately.

Out of 26 Municipal Corporations in Maharashtra, 25 Municipal Corporations have implemented LBT

Following is list of cities:-
Thane
Bhiwandi-Nijampur
Kalyan Dombivali
Mira Bhayander
Navi Mumbai
Ullhasnagar
Nashik
Kolhapur
Pune
PCMC
Solapur
Nagpur
Aurangabad
Nanded
Akola
Sangli-Miraj-Kupwad
Malegaon
Dhule
Parbhani
Latur
Ahmadnagar
Vasai Virar
Chandrapur
Jalgaon
Amravati

By CA Anand Mutha
anandmutha@armutha.in





Personal Penalties on Manager, Directors of company in Service Tax Law

Section 78A of Finance Act 2013 prescribes for personal penalty on employees, Directors, managers or secretary of company. The penalty provided under section 78A is in addition topenalties prescribed for the company. As per section 78A :

"Where a company has committed any of the following contraventions, namely:—

(a) evasion of service tax, or

(b) issuance of invoice, bill or, as the case may be, a challan without provision of taxable service in violation of the rules made under the provisions of this Chapter, or
Section 78A : Personal penalty in service tax law
(c) availment and utilisation of credit of taxes or duty without actual receipts of taxable service or excisable goods either fully or partially in violation of the rules made under the provisions of this Chapter, or

(d) failure to pay any amount collected as service tax to the credit of the Central Government beyond a period of six months from the date on which such payment becomes due, then any director, manager, secretary or other officer of such company, who at the time of such contravention was in-charge of and was responsible to the company for the conduct of business of such company and was knowingly concerned with such contravention shall be liable to penalty which may extend to one lakh rupees."

It must be noted that a similar section 81 which was omitted by finance Act 2004 explained company to include partnership firm and association of persons. The said section 81 also explained Director to include partners of the firm. A similar kind of explanation is missing in the presently active section 78A. Which means that the words used in the section78A viz. "company" & "Director" should strictly be understood in its literal sense.

From the reading of the section it is clear that in order to attract penalty the person in charge who may be director, employee, manager or secretary should have knowledge of the contraventions mentioned in sub-sections (a) to (d) done by the company. Hence the duty is cast of Directors, employees, managers or secretary to prove that either he was not in charge of or was not responsible for the conduct of the company or the contravention was performed without his knowledge.

It was held that No personal penalty can be imposed on the employee, if the employee acted as per the directions of the director or employer. [Commissioner of Customs, LCD, TDK v. Cyber Express (P.) Ltd. 2004 (172) ELT 388 (Delhi)

A very dangerous part of this section is that the provisions are applicable even if the specified persons disconnects himself from the company. This is the worst part that if such a situation arises then he has to fight his legal battle himself and with his own cost. This demands that the specified persons must discharge their functions with attest care in order to avoid contraventions specified in section 78A. 

Regards
CA A. R. Mutha

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