AUTHORITY FOR ADVANCE RULINGS
Book Profits – Minimum Alternate Tax – Public Sector undertaking – Having Foreign Branches - Computation of Profits for MAT – Provision for Taxation made by Foreign Branches to be added back to arrive at Book Profits.
Bank of India, In re [2007] 295 ITR 529 :: 165 Taxman 627 :: 213 CTR 522 (AAR)
Expression ‘income-tax’ is used in section 115JA in a general sense and not with reference to the income- tax chargeable under the provisions of 1961 Act alone and ,therefore, provision made by the foreign branches of the assessee bank for payment of income tax in foreign countries is to be added to book profit in terms of s.115JA.
Facts:
The applicant, a public sector undertaking, filed a return in respect of the assessment year 1997-98 showing “nil” income. But in accordance with the provisions of Section 115 JA of the Act, it computed a book profit and paid applicable taxes on that amount.
Department disallowed a number of claims made by the applicant, namely, provision for leave encashment, fee paid to Master Card, broken period interest, exchange loss, exclusion of profit of foreign branches, etc., and also added provision for taxes made by foreign branches of the applicant-bank, for arriving at book profit under the provision of section 115 JA. The Assessing Officer treated the amount set aside for paying taxes in foreign countries as provision for unascertained liabilities.
CIT (A) confirmed the disallowance and the applicant preferred a second appeal before the ITAT on disallowances of fee paid to Master Card and exchange loss.
With the permission of the Committee on Disputes the applicant, applied to the Authority seeking a ruling on the question whether, for the assessment year 1997-98, the sum of Rs.4,57,57,000, being provision for taxation made by its foreign branches had to be added back to the book profits taxable under section 115JA of the Income- tax Act, 1961.
Ruling:
The Authority ruled:
That as far as determination of book profit and liability to pay minimum tax based on the book profits was concerned, section 115JA was a self contained code. Therefore, in determining the book profits and deemed income, section 115JA prevailed over the other provision of the Act.
That the net profit was arrived at as per the profit and loss account by taking into account the profit made by the foreign branches as well. The profit earned by the foreign branches was an integral part of the net profit.
That in the context in which clause (a) of the Explanation to section 115JA occurred; the expression “income-tax” was referable to profits reflected in the profit and loss account. The expression “income-tax” was used in section 115JA in a general sense and not with reference to the income chargeable under the provision of the Income-Tax, 1961.
No distinction could be drawn between India and foreign income-tax by reference to section 2(43) which defined “tax”. There was no justification to restrict the scope of the expression “income-tax” to Indian income-tax only.
Therefore, the provision of Rs. 4,57,57,000 made by the foreign branches of the applicant for payment of income-tax in those countries was required to be added to the book profit in terms of Section 115JA of the Act.
Cases Referred to:
Apollo Tyres Ltd. vs. CIT [2002] 255 ITR 273 (SC).
CIT vs. Indira Balkrishna [1960] 39 ITR 546 (SC).
Dy. Chief Controller of I. & E. vs. K.T.Kosalram [1999] 110 ELT 366 (SC).
Union of India vs. Azadi Bachao Andolan [2003] 263 ITR 706 (SC).
HIGH COURT
Non-resident – Business of exploration etc. of mineral oil – Computation – Aggregate amount received by non-resident is chargeable to tax under s. 44BB @ 10 per cent without any deductions like freight and transportation charges – Amount received by the assessee is chargeable as per s. 44BB(2) regardless of income as per ss. 2(24), 5 or 9.
CIT & Anr. vs. Halliburton Offshore Services Inc. (2007) 213 CTR (Uttarakhand) 547
Aggregate amount received by non-resident assessee is chargeable to tax under s. 44BB @ 10 per cent without any deductions like freight and transportation charges.
Facts:
Assessee was a non-resident company and is engaged in the business of exploration etc. of mineral oil. The assessee received reimbursement of freight and transportation charges actually incurred in respect of transportation of equipment to ONGC. The AO added the said reimbursements to the amount received for rendering services as per provisions of s. 44BB to the ONGC and imposed tax thereon @ 10%.
Both CIT(A) as well as the Tribunal held that these charges were freight and transportation charges incurred in respect of transportation of equipment by the assessee to ONGC and did not constitute an income and cannot be added as total income of assessee and on account of liquidated damages from the contract bills raised by the assessee could not be said to have accrued as income to the assessee so as to fall within the ambit of charging provisions of s. 5 of the IT Act.
The revenue filed appeal on the facts as to whether only the income or accrued income is liable to be taken into account for arriving at profits and gains @ 10 per cent under s. 44BB or all the amounts received or deemed to be received are to be taken into account?
Held:
It is clear from the perusal of s. 44BB that all the amounts either paid or payable (whether in India or outside India) or received or deemed to be received (whether in India or outside India) are mutually inclusive. This amount is the basis of determination of deemed profits and gains of the assessee @ 10 per cent. Therefore, the Tribunal fell into error in not appreciating the difference between the amount and the income.
Amount paid or received refers to the total payment to the assessee or payable to the assessee or deemed to be received by the assessee, whereas income has been defined under s. 2(24) and s. 5 and s. 9 deal with the income and accrued income and deemed income. Sec. 4 is the charging section of the IT Act and definition as well as the incomes referred in ss. 5 and 9 are for the purpose of imposing the income-tax under s. 143(3).
S. 44BB is a complete code in itself. It provides by a legal fiction the profits and gains of the non-resident assessee engaged in the business of oil exploration @ 10 per cent of the aggregate amount specified in sub-s. (2). It is not in dispute that the amount has been received by the assessee company. Therefore, the AO rightly added the said amount which was received by the non-resident company rendering services as per provisions of s. 44BB to the ONGC and imposed the income-tax thereon.
Cases referred to:
No cases were referred to.
Non-resident – Business of exploration etc. of mineral oil – Computation – Assessee non-resident received a sum from ONGC for supply of spare parts – Entire amount being cost of spare parts supplied by assessee non-resident to ONGC being receipt during the course of business was chargeable to tax under s. 44BB – it was not reimbursement since the assessee himself has claimed 5 per cent handling charges on the original cost of material i.e. spare parts.
CIT vs. B.J. Services Co. Middle East [2007] 213 CTR (Uttarakhand) 545
The entire amount being cost of spare parts supplied by assessee non-resident to ONGC being receipt during the course of business was chargeable to tax under s. 44BB without deduction of so called reimbursement of actual cost of spare parts.
Facts:
Return of income was filed by the non-resident assessee disclosing Rs. 3,27,770 for computing the amount referred under sub-s. (2) of s. 44BB of the Act, which was 5 per cent of the total receipts towards handling charges on the original cost.
AO found that total amount received by the assessee for supply of spare parts to ONGC was Rs. 69,45,264. Therefore, he took into account the total amount received by the non-resident assessee for supply of spare parts to ONGC under sub-s. (2) of s. 44BB for determining the profits and gains and imposed the tax @ 10 per cent under sub-s. (1) of s. 44BB of the Act.
The CIT(A) held that the assessee was entitled for deduction of Rs. 66,17,495 out of Rs. 69,45,264 as Rs. 66,17,495 was received as cost of materials etc. as the actual reimbursement of expenses of such materials incurred by the assessee in execution of the contract with the ONGC and these reimbursements were on actual basis and were not in any way on a fixed percentage basis. The Tribunal rejected the contentions of the Revenue.
Revenue preferred appeal on the ground as to whether the Tribunal was legally correct in holding the amount received by the non-resident company as reimbursement on account of supply of spare parts cannot be included in the contract receipts for computing taxable profit under s. 44BB?
Held:
Sub-s. (1) of s. 44BB specifically provides that aggregate of amounts specified in sub-s. (2) shall be taken into account, 10 per cent of which shall be deemed to be profits and gains. Sub-s. (2) provides that amounts referred shall be amount paid or payable to the assessee (whether in or out of India) and the amount received or deemed to be received in India on account of the provision of services and facilities in connection with, or supply of plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India.
Explanation appended to s. 44BB provides that for the purpose of this section, plant includes ships, aircrafts, apparatus and equipments used for the purpose of said business and mineral oils include petroleum and natural gas. Thus, the amount received by the assessee on account of supply of spare parts is squarely covered under s. 44BB. Therefore, the AO was right in calculating the 10 per cent of total amount of Rs. 69,45,264, which was received by the assessee non-resident company from the ONGC.
The claim of the assessee that the amount of Rs. 66,17,495 could not be included for the purpose of calculating the amount referred to in sub-s. (2) of s. 44BB as it was reimbursement while the assessee himself has claimed 5 per cent handling charges on the original cost of material i.e. spare parts. Therefore, Rs. 69,45,264 was the cost of spare parts and was duly received by the assessee non-resident company and hence was an amount referred to under sub-s. (2) of s. 44BB as it was a receipt during the course of business.
Cases referred to:
No cases were referred to.
Tribunal Decisions
Residential status of an Individual – Not Ordinarily Resident – Conditions to be satisfied – Amendment in section 6(6) of the Income-tax Act, 1961 by the Finance Act, 2003 not clarificatory or retrospective in nature
DCIT vs. Kapila Singla [2007] 15 SOT 166 (Delhi) Assessment Year 2001-02
An individual can be said to be ‘resident and ordinarily resident’ only when two conditions, viz., (a) he has been resident in India in nine out of ten years preceding relevant previous year, and (b) he has during seven years preceding that year been in India for a period of, or for periods aggregating to at least 730 days, are fulfilled and if either of these two conditions is not fulfilled, individual is said to be ‘not ordinarily resident’. CBDT Circular dated 5-12-1962
Facts
The assessee, an individual, filed the return of income claiming the status to be resident in India. He also claimed exemption under section 10(15)(fa) in respect of interest arising from a fixed deposit in foreign currency.
The A.O. rejected the claim for exemption holding that the assessee had claimed the status of resident, whereas the exemption was available only to an assessee who was a non-resident or not ordinarily resident; and that the fixed deposit in the bank was in Indian rupees and not in foreign currency.
On appeal, the Commissioner (Appeals) held that since the deposits were not in foreign currency, the exemption was not available. As regards the status claimed, the Commissioner (Appeals) agreed with the assessee that he was ‘not ordinarily resident’. In coming to the conclusion that the assessee was not ordinarily resident, the Commissioner (Appeals) examined the assessee’s stay in India for the financial years 1990-91 to 1999-2000 and held that as per section 6(1)(a), the assessee would not be a resident in India for the two financial years, namely, 1995-96 and 1996-97. He, therefore, held that the assessee was not a resident in India in 9 out of the 10 previous years preceding the previous year relevant to the assessment year in appeal and, therefore, according to section 6(6)(a), he would be ‘not ordinarily resident’.
Decision
On revenue’s appeal, the Tribunal held in favour of the assessee as follows:
The word ‘resident’ in the first part of clause (a) of sub-section (6) of section 6 means resident within the meaning of section 6(1); while in the second part of this clause, the words ‘has not during the seven previous years preceding that year been in India’ refer to physical presence of the assessee in India. In order to claim the status of being ‘not ordinarily resident’ under the first part of clause (a), resident in India for less than nine years out of the preceding ten years is sufficient. In order to claim that status under the second part of the clause, the requisite condition is that the aggregate period of the assessee’s physical presence in India during the seven years preceding the relevant accounting year should not have exceeded 729 days. The effect of the two parts of the clause read together is that an individual is said to be ‘resident and ordinarily resident’ only when both the following conditions are fulfilled:
He has been resident in India in nine out of the ten years preceding the relevant previous year; and
He has during the seven years preceding that year been in India for a period of, or for periods aggregating to at least 730 days.
If either of these two conditions is not fulfilled, the individual is said to be not ordinarily resident.
In the instant case, the assessee was physically present in India for the entire 365 days during the previous year, namely, 1-4-2000 to 31-3-2001, having returned to India on 20-2-2000. So, he was a ‘resident’ in India for that year. The enquiry would then have to be made whether he was a ‘resident and ordinarily resident’ or a ‘resident but not ordinarily resident’ in India. Then, the question that arose for consideration was as to whether he was a resident in India in nine out of the ten previous years preceding the relevant previous year. As per the findings given by the Commissioner (Appeals), the assessee was not a resident for the previous years 1995-96 and 1996-97 and for the other eight years he would be resident. He, therefore, did not fulfil the condition that he should be a resident in nine out of ten previous years, falling short by one year. Thus, the first condition for being ‘resident and ordinarily resident’ was not satisfied. As per the legal position, non-fulfilment of one of the two conditions of section 6(6)(a) was sufficient to bring the assessee under the category of ‘not ordinarily resident’. Therefore, the Commissioner (Appeals) was right in his view.
The other condition, namely, that the assessee should have been physically present in India for 730 days or more during the seven years preceding the relevant previous year, was satisfied in the instant case. As per the findings given by the Commissioner (Appeals), the seven years’ period would be the financial years 1993-94 to 1999-2000 and during these years, the assessee was physically present in India for a period aggregating to 1,486 days. Since the assessee had fulfilled only one of the two conditions for being ‘resident and ordinarily resident’, he became ‘resident but not ordinarily resident’ within the meaning of section 6(6)(a).
Section 6(6) had been amended by the Finance Act, 2003, with effect from 1-4-2004 on the lines of the view expressed by the Gujarat High Court in Pradip J. Mehta vs. CIT [2002] 256 ITR 647/123 Taxman 1118. The department’s Circular No. 7 of 2003 which explains the new section says that the amendment was made in order to remove doubts about the interpretation of the section and that it was clarificatory in nature. Nevertheless, it had been made applicable only from 1-4-2004. The amendment could not be held to be clarificatory when the Authority for Advance Ruling AAR No. P5 of 1995, In re [1997] 223 ITR 379/90 Taxman 467 interpreting the provisions of section 6(6)(a) had held the field right from its inception. In fact, even under section 4B(a) of the Indian Income-tax Act, 1922, the same interpretation was accepted by the Courts. Such an interpretation of the provision was in accordance with the speech of the Finance Member in the Central Legislative Assembly while introducing the relevant Amendment Bill and had been adopted in the circular dated 5-12-1962 issued by the CBDT. Therefore, the amendment made in section 6(6) could not be given effect retrospectively.
Cases referred
S. Marimuthu Pillai vs. CIT [1945] 13 ITR 186 (Mad.)
K.M.N.N. Swaminathan Chettiar vs. CIT [1947] 15 ITR 418 (Mad.)
P.B.I. Bava vs. CIT [1955] 27 ITR 463 (Travancore - Cochin)
Authority for Advance Ruling AAR No. P5 of 1995, In re [1997] 223 ITR 379/90 Taxman 467 (AAR) and
v. Pradip J. Mehta vs. CIT [2002] 256 ITR 647/123 Taxman 1118 (Guj.)
Taxability of a Non-Resident Technician employed in India by a Non-Resident Company – Company liable to tax u/s 44B – Whether conditions under Article 15 of the DTAA between India and Russia are satisfied – Matter remanded back to the CIT(A)
Zarubezhneft vs. ACIT [2007] 17 SOT 1 (Delhi) Assessment Years 2004-05 and 2005-06
‘Z’ was a joint stock company incorporated in Russia – Assessee, who was a non-resident, was appointed as technician in India by ‘Z’. Assessee claimed that remuneration received by him from employer for his work in India was not taxable in India in view of article 15 of DTAA between India and Russian Federation. Assessing Officer held that out of three conditions laid down in article 15(2) of DTAA, assessee did not fulfil condition laid down in clause (c) of article 15(2) inasmuch as employer ‘Z’ was assessed in India under provisions of section 44BB on basis that it had a permanent establishment (PE) in India. Assessing Officer further held that since ‘Z’ was assessed in India under provisions of section 44BB, remuneration paid to assessee had to be presumed to be borne by PE of ‘Z’ and, therefore, remuneration received by assessee from ‘Z’ was taxable in India. On appeal, Commissioner (Appeals) confirmed said order. Before Tribunal assessee pleaded that he was never asked to prove fulfilment of condition as laid down in article 15(2)(c) and if given a chance assessee could prove that remuneration paid to him was not borne by PE or fixed base of employer in India. In view of contention of assessee matter was restored back to file of Commissioner (Appeals) to enable assessee to prove fact that remuneration was not borne by PE of employer in India.
Decision
The Tribunal remanded the matter back to the CIT(A) as follows:
All the three conditions as laid down in article 15(2) of the DTAA had to be fulfilled to claim exemption in respect of remuneration received by the assessee, a non-resident in India. There was no dispute to the extent that conditions with regard to clauses (a) and (b) of article 15(2) were fulfilled. The dispute was only with respect to the condition laid down in clause (c) of article 15(2). According to clause (c) of article 15(2) of the DTAA, the employee to claim exemption from tax in India has to establish that his remuneration is not borne by the PE or fixed base which the employer has in India. Thus, it would be one of the three essential conditions for the assessee to show that the remuneration received by him in India was not borne by the PE or fixed base of the employer in India.
The A.O. as well as Commissioner (Appeals), both had presumed that as the employer on its PE in India had been assessed under the provisions of section 44BB, the assessee’s remuneration was borne by the PE of the employer. However, against this presumption it was the case of the assessee that it could be proved by him that remuneration was not borne by the PE of the employer in India.
Therefore, the instant issue required to be restored back to the file of the Commissioner (Appeals) to enable the assessee to prove the fact that remuneration was not borne by the PE of the employer in India.
Cases referred
Sedco Forex International Inc. vs. CIT [2005] 279 ITR 1/147 Taxman 382 (Uttaranchal) and
CIT vs. Sedco Forex International Drilling Co. Ltd. [2003] 264 ITR 320/[2004] 134 Taxman 109 (Uttaranchal).
Taxability of French technicians rendering services to a French company in India – Liability to deduct TDS u/s 192 – Whether Non-Resident Co. an "assessee in default"
Prid Foramer S.A. vs. ACIT [2007] 15 SOT 562 (Delhi) Assessment Year 1988-89
Assessee was a non-resident company incorporated in France. Assessee entered into manning and management contracts with ONGC and deputed expatriates for providing drilling services to ONGC. Assessee paid salary to expatriates but did not deduct tax at source on said payment – Assessing Officer therefore, treated assessee, as ‘assessee in default’, under section 201 for non-deduction of taxes on salaries of expatriates. Since all expatriates were in India in previous year for less than 183 days and salary was paid to them by non-resident company and not by a permanent establishment in India and assessee had not claimed deduction of salary in its income-tax return, the assessee satisfied all three conditions of exemption in terms of article XIV(2) of DTAA between India and France for earning exemption from levy of tax on salaries and wages of expatriates. Therefore, assessee-company could not be treated as ‘assessee in default’ u/s 201 in respect of remuneration of expatriates.
Facts
The assessee, a non-resident company, was incorporated in France. The assessee entered into manning and management contracts with ONGC and deputed expatriates for providing drilling services to ONGC. The assessee paid salary to expatriate but did not deduct tax at source on said payment.
The A.O. framed the assessment of the assessee for the relevant assessment year and applied provisions of section 44BB and took presumptive net profit of 10% on manning and management contracts. The A.O. also proposed to levy interest on assessee u/s 201 for non-deduction of tax on amount of salary paid to expatriates.
The assessee submitted that since in the earlier years the assessments were made under section 44D, wherein no expenses were allowed, the assessee was under the impression that in the instant year also the assessment would be made accordingly which in turn would help the assessee to satisfy all the conditions laid down under article XIV of the DTAA with France and the employees would, therefore, earn exemption.
The A.O. rejected the submissions of the assessee and levied interest u/s 201 by holding that because the assessment on the assessee having been made u/s 44BB, while computing business profits, the salary of the expatriates was deemed to have been deducted and, as such, the assessee was liable to deduct tax at source from the amount of salary paid to expatriates.
On appeal, the Commissioner (Appeals) confirmed the action of the A.O.
On appeal before the Tribunal, the assessee contended that section 44BB has a non obstante clause and has a limited application with one deemed fiction of presumptive net profit of 10 per cent of gross proceeds, and no further deeming fiction can be introduced for interpretation of article XIV(2) of DTAA with France. There cannot be fiction over fiction more so when there cannot be assumption of deeming salary as having been deducted with the language of article XIV(2)(c), which is very specific and provides for actual deduction of remuneration.
Decision
The Tribunal held in favour of the assessee as follows:
Under article XIV(2), three conditions are required to be satisfied and satisfied cumulatively for earning exemption from levy of tax on salaries and wages. Undisputedly, the duration of stay of expatriate employees in India was less than 183 days. The remuneration was also paid by or on behalf of employer, who was not a resident of other contracting State. The Assessing Officer had declined the assessee’s claim on the plea that condition (c) of article XIV(2) of the DTAA, with regard to remuneration having been deducted in computing the profit of permanent establishment (PE) chargeable to tax in that other contracting State, was not satisfied.
It is quite evident from the computation of total income that the assessee had not claimed any deduction of salary and remuneration of expatriate employees with respect to activities carried out at ONGC rigs. While framing the assessment, the Assessing Officer had applied provisions of section 44BB and taken presumptive net profit of 10% on manning and management contracts instead of as fee for technical services following the CBDT instructions. The claim for non-taxability of remuneration was made under section 201 proceedings with reference to article XIV(2) of DTAA with France.
Article XIV(2)(c) provides for twin conditions that there must be permanent establishment and the remuneration must not be deducted in computing the profit of PE in India. As the assessee had not claimed the remuneration in its audited profit and loss account nor in the return of income filed along with the income-tax returns, in such circumstances, sub-clause (c) was negatively fulfilled to enable the assessee to claim exemption from liability to tax in respect of salary of such expatriate employees. The remuneration having not been claimed by the assessee in its profit and loss account prepared with reference to its permanent establishment in India had not been disputed either by the Assessing Officer or by the Commissioner (Appeals). The only plea of lower authorities was that section 44BB assumed deducibility and liability of all the expenses including remuneration paid to expatriates.
Section 44BB has a non obstinate clause and has a limited application with one deemed fiction of presumptive net profit of 10% of gross proceeds; no further deeming fiction can be introduced for interpretation of article XIV(2) of DTAA with France. The expression ‘deducted’ as used in article XIV(2)(c), means ‘actually deducted’ and ‘ostensive deducted’ while computing the profit of permanent establishment. It cannot be equated to or extended by fiction ‘deeming to have been deducted’. As no salary was actually claimed in audited accounts in India while computing the chargeable profit, it could not be deemed to be deducted when no claim was made for such deduction.
Section 44BB provides for special provision for the taxation of foreign (employer) company with regard to mineral oil operations by introducing a non obstante clause that provisions for deduction of expenses as per sections 28 to 41, 43 and 43A are inapplicable and are overridden and by further providing a legal fiction by deeming 10% of proceeds as presumptive net profits in computing the income from business.
The cumulative effect of non obstante clause and legal fiction is that no expenses incurred in the business of earning the income shall be allowed for deduction in computing the business profits and 10% of proceeds irrespective of actual results shall be deemed to be presumptive 10% profits of business chargeable to tax. Where an assessment is made on an estimated basis or on the basis of rate applied as per legal fiction, there is no assumption that the expenses for each head had been considered and allowed much less said to be deducted.
7) Moreover, the provisions of section 44BB are applicable to the computation of profits of the (employer) foreign company and the fiction contained in the said section cannot be applied for interpreting the provisions of article XIV(2), which are applicable to the personnel. It is quite clear that the provisions of the DTAA override the provisions of the Act and even if there is a legal fiction provided in section 44BB, it cannot restrict the meaning and ambit of exemption provisions of article XIV(2) of DTAA with France. Moreover, it is well-settled that if the language of the statute is clear and unambiguous, words must be understood in their plain meaning. The wordings of the DTAA must be construed according to its literal and grammatical meaning, whatever the result may be. The word ‘deducted’ cannot be equated with the word ‘deductible’ or interpreted as deemed to be deducted or borne by Permanent Establishment.
In view of the above discussion, the assessee-company could not be treated as ‘assessee in default’ under section 201 in respect of remuneration of the expatriates, who fulfilled all the conditions of exemption in terms
of article XIV(2) of DTAA with France.
Hence, the appeal was allowed.
Cases referred
i. CIT vs. Mahendra Mills [2000] 243 ITR 56/109 Taxman 225 (SC)
ii. Mancheri Puthusseri Ahmed vs. Kuthiravattam Estate Receiver [1996] 6 SCC 185 and
iii. CIT vs. Moon Mills Ltd. [1966] 59 ITR 574 (SC).
Tuesday, July 29, 2008
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STEPS TO CREATE A COMPANY
Steps to be taken to get incorporate a new company:-
Steps to be taken to get a new company incorporated:
Select, in order of preference, at least one suitable name upto a maximum of six names, indicative of the main objects of the company.
Ensure that the name does not resemble the name of any other already registered company and also does not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950) by availing the services of checking name availability on the portal.
Apply to the concerned RoC to ascertain the availability of name in eForm1 A by logging in to the portal. A fee of Rs. 500/- has to be paid alongside and the digital signature of the applicant proposing the company has to be attached in the form. If proposed name is not available, the user has apply for a fresh name on the same application.
After the name approval the applicant can apply for registration of the new company by filing the required forms (that is Form 1, 18 and 32) within six months of name approval
Arrange for the drafting of the memorandum and articles of association by the solicitors, vetting of the same by RoC and printing of the same.
Arrange for stamping of the memorandum and aticles with the appropriate stamp duty.
Get the Memorandum and the Articles signed by at least two subscribers in his/her own hand, his/her father's name, occupation, address and the number of shares subscribed for and witnessed by at least one person.
Ensure that the Memorandum and Article is dated on a date after the date of stamping.
Login to the portal and fill the following forms and attach the mandatory documents listed in the eForm
Declaration of compliance - Form-1
Notice of situation of registered office of the company - Form-18.
Particulars of the Director's, Manager or Secretary - Form-32.
Submit the following eForms after attaching the digital signature, pay the requisite filing and registration fees and send the physical copy of Memorandum and Article of Association to the RoC
After processing of the Form is complete and Corporate Identity is generated obtain Certificate of Incorporation from RoC.
Additional steps to be taken for formation of a Public Limited Company:
To obtain Commencement of Business Certificate after incorporation of the company the public company has to make following compliance
File a declaration in eForm 20 and attach the statement in lieu of the prospectus(schedule III) OR
File a declaration in eForm 19 and attach the prospectus (Schedule II) to it.
Obtain the Certificate of Commencement of Business.
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The Part IX Company is required to file eForm 37 and eForm 39 apart from filing eForm 1, 18 and 32.
The company is required to file eForm 1 first and then the company can file all the other eForms (18, 32, 37 and 39) simultaneously or separately
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CA. VIKAS KAPAHI
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