Stamp Duty on sale registration (SC)

The Supreme Court has held that the stamp duty on property has to be paid according to its market value on the date of registration of the sale deed.

In a ruling with wide ramifications for property buyers, a bench comprising Justices A K Mathur and Markandey Katju held that if a property is in litigation for a long time and during the pendency, if prices of the property have shot up, the buyer shall have to pay stamp duty at the enhanced market value of the property.

The bench, in its judgement dated November 16, while setting aside the judgement of the Rajasthan High Court noted, '' it is true that no one should suffer on account of the pendency of the matter, but this consideration does not affect the principles of interpretation of a taxing statute. A taxing statute has to be construed as it is in all these contingencies that the matter was under litigation and the value of the property which by that time shot up cannot be taken into account for interpreting the provisions of a taxing statute. If a taxing statute has to be construed strictly, then the plea that the incumbent took a long time to get a decree for execution against the vendor cannot weigh with the court for interpreting the provisions of taxing statutes. In this case, Khandaka Jain, jewellers in Jaipur, had purchased a property from a seller and paid an advance of Rs 20,000. The total value of the property was Rs 1,40,000. The property vendor did not execute the documents including the sale deed which prompted the buyers to file a suit for specific performance of the contract. In 1991, the suit was filed by the buyer and decreed in his favour ]on February 2, 1994. The buyer also deposited Rs 40,000 as per the directions of the court but even then, the seller did not execute the sale deed. Later, the collector issued orders making demand of additional stamp duty in view of the increased market value of the property. Jain Jewellers moved the High Court against the order of the district collector and their petition was allowed by the court holding that stamp duty was liable to be paid on the date of agreement to sale and the buyer could not be penalised for the time taken in the litigation.

The apex court, however, has taken a different view and directed the respondents, namely Jain jewellers, to pay stamp duty and surcharge as per the market value of the property determined by the collector as per the provisions of the Stamp Duty Act and allowed the appeal of the State of Rajasthan.

Competition Act with Amendments

Yes, This is inspired from the Article by my Guru Shri. V.S. Datey.

Yes, it gives an idea about the new Competition Act & Yes, its made very interesting with various charts.

Please read in http://thisisvj.googlepages.com/Competition.pdf & do comment your experiences.

Thank you,

Form1A(60d) & Form1AR(30d)

MCA Update !

Please be informed that wef 18th November, 2007, validity period of name approval (through Form 1A) and renewal of name (through Form 1AR) will stand reduced to 60 days and 30 days respectively, as against 6 months earlier.

Fee for name renewal will also get reduced to Rs. 250 only.

However, Names approved/ renewed prior to 18th November, 07 will remain valid for 6 months, as earlier.

Find relevant notification in http://www.mca.gov.in/MinistryWebsite/dca/latestnews/Rule_4A_Amendment.pdf

Thanks & Regards,
R.Satheeshkumar, Manager,
MCA21- PFONo.79,
Second Floor of Axis Bank (UTI Bank) Building,
G.N.Chetty Road, (Near VANI MAGAL) T.Nagar,
Chennai-600 017.
Ph.No.044-2815 2455, 6450 6000, 098843 21960

New ESOP Valuation Opinion

ESOP Valuation Query by Mr. Alagar:

Everyone is aware of that the Income Tax Department has Implemented ESOP Valaution rules for FBT on ESOP. This rules is applicable for vesting of options on or after 1st April 2007. My query is 4500 options were granted in year 2002 and all those options are vested by the employees before April 2007, but those options not yet exercised, it may be exercised now ( I e after implementing valuation rules). So, if options are exercised now, then it is subject to the FBT as FBT on ESOP has been implemented w.e.f 1st April 2007 vide Finance Act, 2007 and tax liability is at the time of exercise of options. Now, my question is that how to arrive value of those 4500 options for purpose of FBT.
My understanding
Valuation rules for FBT on ESOP has been implemented w.e.f 1st April 2007 vide Notification dated 23-10-2007. According to this valuation rules, the category I Merchant Banker has to give valuation certificate as on date of vesting or any date earlier than the date of the vesting of the option, not being a date which is more than 180 days earlier than the date of the vesting. But, in this particular case the vesting is already taken place, so that I understand that this valuation rules shall not be applicable for those 4500 options. If this valaution rules is not applicable, How can we arrive value for those 4500 options.
please guide me.
Relevant rules can be found in http://yehseeyes.blogspot.com/2007/10/guideline-for-fair-valuation-of-shares.html

Mr. Sukamal & his Expert Opinion

Vesing date is relevant only for valuation of shares allotted under ESOP and not for deciding from when the rule 40C of Income Tax Rules will become applicable


With regard to the query regarding ESOP I like to share with you some points which I have learnt from this issue:

1. In case of ESOP, FBT comes into the picture only when the employee exercised the option vested since the employee derived the benefits from ESOP only when he exercised such option.

2.Clause (ba) of the Section 115WC(1) of the Income Tax Act (the Act) which provides for the value of fringe benefits in respect of equity shares allotted under any ESOP, is applicable w.e.f. 1-4-2008 i.e. from the assesment year 2008-09. Accordingly Rule 40C (which provides for guidelines for computing fair market value of the shares allotted under ESOP.....) is also applicable from the same assessment year.

3. Rule 40C is applicable in case the options (already vested) exercised from and after the year 07/08 in relation to the assessment year 08/09 and subsequent years. Hence, the option exercised in the year 07/08 is subjected to FBT in the assessment year 08/09.

4. For computation of FBT, one need to know the fair market value of the equity shares allotted under ESOP and there the vesting date becomes relevant which may be a day before 1st April, 2007.

5.Hence, the applicability of the Rules does not depend upon the vesting date whereas it depends upon the exercise date which should be in the year 07/08 and thereafter.

6. Further for listed company the rule clearly guides the valuation method where the merchant bankers certificate may not be required.

7. However for unlisted company the said valuation shall be done by a merchant banker in terms of rule 40C(1),(3) AND (4)(e).

8. In terms of Section 115WB(1)(d) and 115WC(1)(ba) the value of fringe benefits for shareallotted under ESOP is the fair market value of the shares allotted under ESOP as reduced by the price paid by the concerned employee.

9. Rule 40C provides for guidilenes for computing the fair market value of shares allotted under ESOP or sweat equity for listed company as well as unlisted company.

10. In your case it is not clear whether it is a listed company or unlisted company.

11. For listed company the guidelines for computing fair market value as provided in the above rules are very specific i.e. the average of the opening price and the closing price of the shares on the vesting date............................................ (please refer rule 40C(2)

12. For unlisted company, the valuation has to be done by a merchant banker applying any recognised valuation method as on specified date which may the vesting date or any day not later than 180 days prior to the vesting date (please refer rule 40C(3).

-- Regards
Sukamal Datta
Deputy Manager - Secretarial
Bombay Stock Exchange Limited
Mobile 9920018714

RBI launches Financial Education Site

Reserve Bank of India (RBI) & its initiative on Financial Education
Press Release : 2007-2008/663
To commemorate Children's day, the Reserve Bank of India today launched a financial education site. Mainly aimed at teaching basics of banking, finance and central banking to children in different age groups, the site will soon also have information useful to other target groups, such as, women, rural and urban poor, defence personnel and senior citizens.
To explain complexities of banking, finance and central banking in a simple and interesting way, the Reserve Bank has used comic books format for children. It has created two special created characters for this purpose – 'Raju' who learns all about banking and 'Money Kumar' who explains subjects dealt with by the Reserve Bank of India, such as monetary policy, bank regulations and currency notes. Two comic books are already available on this site – 'Raju and the Money Tree' explains basic banking and 'Money Kumar and Monetary Policy!' explains the role and relevance of the Reserve Bank's monetary policy for the common person.
The site has films on security features of currency notes of different denominations and an educative film to persuade citizens to not to staple notes. Interestingly, the site also has games section. This section aims at educating children through entertainment. The games currently on display have been especially designed to familiarise school children with India's various currency notes.
The site will soon be available in Hindi as well as in 11 regional languages.
The site can be accessed at http://rbi.org.in/financialeducation/Home.aspx or from the quick link provided on the home page of the main RBI website at http://rbi.org.in/home.aspx

SEBI Order - Ketan Parekh

PR No.295/2007
Order against Shri Ketan V. Parekh and his associated entities by Securities and Exchange Board of India (SEBI)

SEBI conducted investigations into the buying, selling and dealings in the scrips of Himachal Futuristic Communications Limited, Zee Telefilms Limited, Adani Exports Limited, Global Tele-Systems Limited, Ranbaxy Laboratories Limited, Shri Adhikari Brothers Television Network Limited, Shonkh Technologies International Limited, Padmini Technologies Limited and Aftek Infosys Limited during the period October 1999 to March 2001.

The investigations revealed that Shri Ketan V. Parekh and 17 other entities who were directly/indirectly related/associated to him were involved in market manipulation in the aforesaid scrips in violation of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 and/or SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The modus operandi adopted by all the above mentioned entities in manipulating various scrips was, by and large, the same and Shri Ketan V. Parekh was found to be the master mind behind all the acts of omission or commissions by these entities.

In view of the above, Dr. T.C. Nair, Whole Time Member, SEBI, has passed an order dated November 12, 2007:

a. Restraining Shri Ketan V. Parekh and his 10 associates namely Shri Kartik K. Parekh, Classic Credit Ltd., Panther Fincap and Management Services Ltd., Luminant Investment Pvt. Ltd., Chitrakut Computers Pvt. Ltd., Saimangal Investrade Ltd., Classic Infin Ltd., Panther Investrade Ltd., Goldfish Computers Pvt. Ltd., and Nakashtra Software Pvt. Ltd. from accessing the securities market and also prohibiting them from buying, selling or otherwise dealing or associating with the securities market in any manner whatsoever, whether directly or indirectly, for a period of fourteen years.

b. Restraining Shri Navinchandra N. Parekh, Shri Kirtikumar N. Parekh, Shri Jayant N. Parekh and Shri Vipul D. Parekh, from accessing the securities market and also prohibiting them from buying, selling or otherwise dealing or associating with the securities market in any manner whatsoever, whether directly or indirectly, for a period of one year.

c. Restraining Triumph International Finance India Ltd., Triumph Securities Ltd., and NH Securities Ltd. from accessing the securities market and also prohibiting them from buying, selling or otherwise dealing or associating with the securities market in any manner whatsoever, whether directly or indirectly, for a period of five years.

In regard to the entities namely, Shri Ketan V. Parekh, Shri Kartik K. Parekh, Classic Credit Ltd., Panther Fincap and Management Services Ltd., Luminant Investment Pvt. Ltd., Chitrakut Computers Pvt. Ltd., Saimangal Investrade Ltd., Classic Infin Ltd. and Panther Investrade Ltd., which were covered under SEBI order dated December 12, 2003 (debarring them from securities market), this order shall run concurrently and shall be deemed to be effective from December 12, 2003.

As regards the remaining entities, the order shall come into effect from the date of the order.

Full order in http://www.sebi.gov.in/cmorder/ketanorder1.pdf

Insurance & its Concepts

The PRINCIPLES of Insurance include,

1. UGF – Utmost Good Faith: A duty to disclose accurately & fully ALL material facts whether requested or not. It is a Reciprocal Duty;

2. II – Insurable Interest arises out of LEGAL/FINANCIAL relationship; The striking feature being,

- BENEFIT (from existence) from safety, well being, freedom from liability;

- PREJUDICED (by loss) by damage or existence of liability;

LI: Uberrima Fidei i.e., Utmost Good Faith & Insurable Interest;

GI: UGF + II + Indemnity & Proximate clause.

TIME WHEN INSURABLE INTEREST SHOULD BE PRESENT:

I. FIRE & MISCELLANEOUS INSURANCE: EXIST @ the time of taking policy; CONTINUE during the currency (period) of policy; EXIST @ the time of loss for a valid claim;

II. MARINE CARGO INSURANCE: ONLY @ the time of loss.

III. MARINE HULL & MOTOR INSURANCE: EXIST @ the time of taking policy; EXIST @ time of loss.

INDEMNITY: To place the insured after a loss in the Same Financial Position as far as possible as he occupied immediately before loss, Neither better Nor worse. The measurement of Indemnity based on Intrinsic Market Value of property @ the time & place of damage/loss;

SUBROGATION – Corollary to Indemnity: "The transfer of rights & remedies of insured to insurer who has indemnified the insured in respect of loss". Insured does not receive more than actual amount of loss & any recovery effected from III-party goes to insurer.

CONTRIBUTION – Corollary to Indemnity: NOT for personal/accident insurance. Using "several insurance", to make profit out of loss. It is the right of insurers who have paid a loss under a policy, to recover a proportionate amount from other insurers, who are liable for the same loss. The pre-requisites include,

1. Common Peril (all policies) 2. Common interest & insured

3. Policy in force 4. Policy is legally enforceable.

PROXIMATE CAUSE: To provide indemnity for such losses as are caused by insured perils. The loss may be the result of two or more causes acting simultaneously or one after other; the most important, the most effective, the most powerful cause that has brought the loss. Otherwise, it will be a remote cause

POLICY CONTRACT:

A Policy Document as an evidence of contract. The policy document has,

1. Preamble: Proposal & declaration form part of policy.

WARRANTY = Truth of Statement.

2. Operative Clause: Mutual Obligation; Pay Premium & Pay Benefits.

3. Provisio: Subject to conditions (printed on back of the policy).

4. Schedule: Identifies the proposal referred in Preamble. Have contents like FPR.

5. Attestation: @ the end of first page – the signature & date.

6. Condition & Privileges: Explanatory/Restrictive/Privileges/Benefits.

RIDERS – Additional Covers: Helps to increase the clarity of policy; It defines the fate of policy in case of certain defined circumstance.

NOMINATION: (advisable)

1. Nominee does derive a right to sue only after Policy Proceeds become payable.

2. One can change nominee without consulting previous nominee/insurer.

3. Liable to legal heirs of deceased having proof of right to claim.

GUARANTEES:

1. Guarantee additions: Sum Assured get enhanced each year.
2. Guaranteed Surrender Value (SV): On payment of premium for 3 full years, Minimum SV = 30%[Premium paid (-) 1 ^st year Premium (+) Bonus additions].

ASSIGNMENT = Legal Transference – "passing interest in policy": Assignment cannot be altered; Assignee has the right to sue only after giving Notice to Insurer & receiving acknowledgement. It may be,

1. By endorsing Policy Document which is exempt from Stamp duty;
2. By separate Assignment Deed which is liable to be stamped.

ASSIGNMENT OF,

SNO.	ASSIGNMENT OF	CONDITION
1.	Fire & Marine Insurance	ONLY with the consent of Insurer & subject to conditions.
2.	Marine Cargo	Freely assignable.
3.	Marine Hill or Motor Policy	With the Consent of Insurers.

I think this will help Company Secretary, CS Final, friends when preparing for their Banking & Insurance paper (BILP).

THE MINIMUM WAGES ACT, 1948

Objective of the minimum wages act - To provide for fixing of minimum rates of wages

WAGES = all remuneration capable of being expressed in money & INCLUDES HRA but DOES NOT INCLUDE supply of light, amenity, etc… excluded by order, contribution to PF, expenditure in the nature of employment, & gratuity on discharge.

S-3 à Fixing Minimum Wages (an administrative act) by the Appropriate Government following prescribed procedure & revised periodically based on time/piece work and ensures a guaranteed rate; also gives overtime rates;

It may be based on hour/day/month/larger period; It will be different for different scheduled employment or class of work or adults/adolescents/child/apprentice.

S-4 à RATE: Consist of Basic Wages +/- Allowances based on ‘cost of living index number’ or an all-inclusive rate can be fixed.

S-5 à PROCEDURE:
STEP1: Appoint Committee;
STEP2: Publish proposals as by means of Notification;
STEP3: Give opportunity of being HEARD;
STEP4: Notify Minimum Wages > 3 months.
MAY NOT be in Scheduled Employment, if < wage =" mean">They can't ask anything more than this in IR. Be thorough with everything in this. Prepare the Notes this way for all subjects of Company Secretary exam study, u can win easily. See, this is the only act in Industrial Relations, that u r studying new, the rest is all what u did in CS Inter.
Enjoy Passin...

DGFT Toll Free

Yes, Government Departments are doing great, eager to see 2020 India now...

Director General of Foreign Trade (DGFT) & its Toll-Free facility.

While filing applications and making payments online, it has been observed that exporters/ importers face technical problems on account of non-availability of relevant documents, malfunctioning of system etc. For attending to these technical problems, DGFT has set up a Helpdesk. The trading community can access the Help Desk by dialing the toll free number 1800 111 550 or by e-mail at http://us.f505.mail.yahoo.com/ym/Compose?To=dgftedi@nic.in.
The help desk will be available between 10.00 AM to 7.00 PM on all working days. A complaint number may be provided by helpdesk if issues remain unresolved. The complaint number may be quoted for all future reference. For e-mails complaint Numbers may be conveyed on next working day if complaint is unresolved.

Direct Receipt of Import Bills / Documents - Liberalisation

RBI/2007-08/181 A.P. (DIR Series) Circular No.18

Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to item i.a. of A.P. (DIR Series) Circular No.66 dated February 6, 2004 in terms of which AD Category - I banks are permitted to make remittances for imports, where the import bills / documents have been received directly by the importer from the overseas supplier and the value of import bill does not exceed USD 100,000. Further, in terms of i.c. of the Annex to the aforementioned circular, status holder exporters, as defined under the Foreign Trade Policy are permitted to receive import bills / documents directly from the overseas supplier irrespective of the value of the import.

Continued in http://www.rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=3927

Fit and proper criteria for elected directors on the boards of nationalised banks

Fit and proper criteria for elected directors on the boards of nationalised banks
RBI/2007-08/178DBOD. No. BC.No.47/29.39.001/2007-08

'Fit and proper' criteria for elected directorson the boards of nationalised banks
It has been decided to lay down specific 'fit and proper' criteria to be fulfilled by the persons being elected as directors on the Boards of the nationalised banks under the provisions of Section 9(3)(i) of Banking Companies (Acquisition and Transfer of undertakings) Act 1970/80. The authority, manner/procedure and criteria for deciding the 'fit and proper' status etc. are as under http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=3916&Mode=0

Thanks & Regards
-- Alagar

Labour Laws

Credits to the author. It can be viewed in http://thisisvj.googlepages.com/LabourLaws.pdf
This PLUS http://www.dateyvs.com/ (Labour Primer) can make you the master of Labour Laws.

Enjoy referring...