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Saturday, April 30, 2016

Sec. 10 of the Income Tax Act,1961 - Exempted Incomes

Income Exempted from tax under Sec. 10:

1)      Agriculture Income [Sec.10 (1)]: Agriculture income is fully exempted from tax u/s 10(1) and as such does not form part of total income. As per Section 2(1A) agriculture income includes:
a)      Any rent or revenue derived from land which is situated in India and is used for agricultural purpose;
b)      Any income derived from such land by agriculture or by the process employed to render the product fit for market or by sale of such produce by the cultivator or receiver of rent in Kind.
c)       Any income derived from any building provided the following conditions were satisfied:
Ø  The building is or on the immediate vicinity of the agricultural land;
Ø  It is occupied by the cultivator or receiver of rent or revenue
Ø  It is used as a dwelling house or store house or out house ;
Ø  The land is assessed to land revenue and it is not situated within the specified area.

2)      Receipt of share in HUF as a member [Sec. 10(2)]: The share in the profit of the HUF received by the member of HUF is wholly exempt.
3)      Receipt of share of profit in Partnership firm as partner [Sec.10 (2A)]:  The share in the profit of the firm received by the partner is wholly exempt.

Income From House Property - Deduction under Sec. 24

Deductions allowable under section 24 of the income tax act
Following two deductions will be allowable from the net annual value to arrive at the taxable income under the head ‘income from house property’:-
(a)    Statutory deduction: 30 per cent of the net annual value will be allowed as a deduction towards repairs and collection of rent for the property, irrespective of the actual expenditure incurred.
(b)   Interest on borrowed capital: The interest on borrowed capital will be allowable as a deduction on an accrual basis if the money has been borrowed to buy or construct the house. It is immaterial whether the interest has actually been paid during the year or not. If money is borrowed for some other purpose, interest payable thereon cannot be claimed as deduction.
Limit of deduction u/s 24(b)
A. In case of Let out/ deemed to be let out house property: Interest on Money borrowed is allowed as deduction without any limit. Here interest on money borrowed = interest of P/Y + 1/5 of Pre-construction period (PCP) interest. PCP started from the date of borrowing and ended on 31st mar immediately preceeding (Before) the year of completion.
B. In Case of Self Occupied House Property:  Max. Rs. 150000 is allowed as deduction if the following conditions are satisfied:
Ø  Loan taken after 1 – 4 – 99
Ø  For construction/purchase (Capital expenditure) of house

Income From House Property - Short Notes

Q. Write Short Notes on:
1.       Exempted House Property Income
2.       Deemed Ownership
3.       Unrealised rent and its Treatment
4.       Property owned by co-owners
5.       Dispute about ownership
6.       Deduction of Municipal tax

1. Properties exempted from tax under the head income from house property (Sec. 10)
1) Income from a farm house.
2) Annual value of one palace in the occupation of an ex-ruler.
3) Property income of a local authority.
4) Property income of an approved scientific research association.
5) Property income of an educational institution and hospital.
6) Property income of a registered trade union.
7) Income from property held for charitable purposes.

Wednesday, April 27, 2016

Dibrugarh University Question Paper - Direct Tax : II (May' 2015)

2015 (May)
Commerce (Speciality)
Course: 601
(Direct Tax: II)
Full Marks: 80
Pass Marks: 32
Time: 3 Hours
The figures in the margin indicate full marks for the questions.
1. (a) Write true or false:                              1x4=4
(i) Capital Assets means property of any kind held by an assessee whether or not connected with his business or profession.
(ii) Provision for bad and doubtful debts is an allowable deduction in computing business income.
(iii) Net wealth comprises of aggregate of all assets including deemed assets but excluding exempted assets.
(iv) As per Section 73(1) of the Income tax Act, the loss arising out of speculation business can be set off against profit from non-speculative business.

(b) Mention four exceptions to the rule given u/s 70 that a loss can be set off against any other income under the same head.                     4

2. Write short notes on any four of the following:                             4x4=16
(a) Unabsorbed depreciation

Dibrugarh University Question Papers - Financial Statement Analysis (May' 2015)

2015 (May)
Course: 602
(Financial Statement Analysis)
Full Marks: 80
Pass Marks: 32
Time: 3 Hours

The figures in the margin indicate full marks for the questions.
1. (a) Fill in the blanks with appropriate words:                                   1x5=5
(i) Financial statement analysis helps to measure ________ (Operating efficiency/Management efficiency/Employee’s efficiency)
(ii) GAAP stands for _______________.
(iii) Reporting to corporate governance reflects __________. (Company Management/Earning status/Socio economic status).
(iv) The institute of chartered accountants if India (ICAI) has decided to adopt IFRS in India from ____. (2011/2012/2013)
(v) According to IFRS, banking companies are to adopt _______ (Fair value accounting/Historical value accounting).

(b) State whether the following statements are true or false:                     1x3=3
(i) Financial statement analysis is an important means of assessing past performance and planning future performance.
(ii) The new name of standards issued the ISAB is international financial reporting standards (IFRS).

Friday, April 22, 2016

Position of Directors of a Company

Position of Directors
It is very difficult to define precisely the position of directors in a company. The Companies Act, 2013, is also silent on this issue. Directors have been described sometimes as trustees, sometimes as agents or sometimes as managing partners. They have some attributes of all of them, but they are neither trustees nor managing partner in full sense of the term. The legal position can be discussed as under:
1. Directors as Agent: Directors are, in the eyes of law, agents of the company for which they act. The company itself cannot act, it can act only through directors and by the reason of which a relation of principal and agent is established between the company and the directors. Wherever as agent is liable those directors would be liable; where the liability would attach to the principal and principal only, the liability is the liability of the company.
Where the directors make contracts on behalf of the company, they incur no personal liability provided they act within the scope of their authority. In such a case, the company alone would be liable. Directors incur a personal liability in the following circumstances:
a)      Where the contract in their own names.
b)      Where they use the company’s name incorrectly.
c)       Where director’s exceeds their powers.
But the position of directors differ from that of the agents because an agent can enter into a contract in his own name but a director cannot. Again an agent may not disclose the name of his principal but a director must disclose the name of his principal. Hence, the directors are not agents in the true sense.

Powers and Duties of Directors of a Company

Powers of directors
On incorporation, a company becomes a legal artificial person but it cannot act by itself and consequently it has to depend upon some human agency to act in its name. The members have no inherent right to participate in the management of the company. A large sized company may have its members running into lakhs, who are dispersed all over the country and they even lack the expertise to manage the affairs of the company, which makes it impossible to give the management of the company in their hands. Therefore a specialized body of persons called as directors are appointed by the members to manage the affairs of the company. The directors must act as a body without improper exclusion of any of the directors. The directors collectively referred to as BOARD. The board is the managerial body constituted by the members to whom is entrusted the whole management of the company.
The powers which vest in the board can be classified under three different heads:
1) General Powers: General powers are those which can be exercised in accordance with the articles. These powers are laid down in sec. 179 of the Companies Act, 2013. It empowers the board to exercise all such powers and do all such acts and things, as the company is authorised to exercise and do. There are, however, two limitations upon their powers:
First, the Board shall not do any act which is to be done by the company in general meeting
Second, the Board shall exercise its powers subject to the provisions contained in the Companies Act, or in the Memorandum or the Articles of the company or in any regulations made by the company in general meeting.

Thursday, April 21, 2016

Dibrugarh University Question Paper - Direct Tax - II (May' 2014)

2014 (May)
Course: 601
(Direct Tax - II)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the questions.
1. (a) Write True or False:                                             1x4=4
a.       Business outside India and business in India stand on the same footing for the purpose of computation of income from business and profession u/s 28 of the Act.
b.      Indexation of cost of capital asset is a must for all types of capital assets in computing income from capital gains.
c.       Short-term capital loss can be set off from short-term as well as out of long-term capital gains.
d.      Assets belonging to assesses on the valuation date are taxable under the Wealth-tax Act.

(b) Name four expenses which are not allowed as deduction in computing capital loss.            1x4=4

Dibrugarh University Question Paper - Consumer Behaviour (May' 2015)

2015 (May)
Course: 404
(Consumer Behaviour)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the questions.
1. (a) State whether the following statements are True or False:                               1x4=4
1)      Consumer behaviour is the reaction of individuals in obtaining and using goods and services.
2)      Acquired buying motives are inborn motives.
3)      Cultural values keep on changing through the passage of time.
4)      Exposure is the first stage in the information search process.
(b) Choose the correct option:                   1x4=4
1)      The buying process starts with information search/need recognition.
2)   Organization buying behaviour refers to decision making process in formal/informal organization.

Dibrugarh University Question Paper - Consumer Behaviour (May' 2014)

2014 (May)
Course: 404
(Consumer Behaviour)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the questions.
1. State whether the following statements are True or False:                      1x8=8
a)      Innate needs are also called secondary needs.
b)      Internal search means retrieval of knowledge of memory.
c)       Awareness about a particular brand is the first stage in the decision-making process.
d)      Complex decision-making is used incase of inferior or regularly purchased products.
e)      Reference groups provide points of comparison to evaluate attitudes and behaviour.
f)       There is a very close relationship between age and social class.
g)      Individual buying behaviour differs from organizational buying behaviour.
h)      The pricing costs include psychological as we as monetary costs.

Dibrugarh University Question Paper - Service Marketing (May' 2015)

2015 (May)
Course: 403
(Service Marketing)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the questions.
1. Fill in the blanks:                          1x8=8
a)      In service mix a hotel is an example of ____ service.
b)      ‘DINK’ is a reason for growth of services. The full form of ‘DINK’ is ____.
c)       In insurance sector, the price is called ____.
d)      The phrase ‘Marketing Mix’ was first used by ____.
e)      The pricing strategy in which payment is to be made only after the results are achieved is called ____ pricing.
f)       In gap model, the gap between expected service and perceived service is considered as gap no. ____.
g)      In SWOT, opportunities and threats are ____ factors.

Dibrugarh University Question Paper - Service Marketing (May' 2014)

2014 (May)
Course: 403
(Service Marketing)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the questions.
1. State whether the following statements are True or False:                      1x8=8
a)      Service purchase results in ownership of something physical.
b)      In case of services, it is easy to achieve standardization.
c)       The price of consultancy services is fee.
d)      The instrument SERVQUAL is related to market survey.
e)      Discrepancy between delivered service and what is communicated about the service to consumers is known as service promotion gap.
f)       Services are rendered only for profit.
g)      If a person purchases a service, his/her participation is a must.

Wednesday, April 20, 2016

Official Liquidator - Powers and Duties

Appointment of Official Liquidator (Sec. 359)
For the purposes of this Act, so far as it relates to the winding up of companies by the Tribunal, the Central Government may appoint as many Official Liquidators, Joint, Deputy or Assistant Official Liquidators as it may consider necessary to discharge the functions of the Official Liquidator. The liquidators so appointed under this section shall be whole-time officers of the Central Government. The salary and other allowances of the Official Liquidator, Joint Official Liquidator, Deputy Official Liquidator and Assistant Official Liquidator shall be paid by the Central Government.

Powers and duties of Company liquidator
Powers and duties of Company Liquidator in case of winding up by tribunal (Sec. 290):
1. Subject to directions by the Tribunal, if any, in this regard, the Company Liquidator, in a winding up of a company by the Tribunal, shall have the power:
a.       to carry on the business of the company so far as may be necessary for the beneficial winding up of the company;
b.      to do all acts and to execute, in the name and on behalf of the company, all deeds, receipts and other documents, and for that purpose, to use, when necessary, the company’s seal;
c.       to sell the immovable and movable property and actionable claims of the company by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels;
d.      to sell the whole of the undertaking of the company as a going concern;
e.      to raise any money required on the security of the assets of the company;

Winding up of a Company - Modes and Effect

Winding up - Meaning and Modes
Meaning: Winding up of a company is defined as a process by which the life of a company is brought to an end and its property administered for the benefit of its members and creditors. In words of Professor Gower, “Winding up of a company is the process whereby its life is ended and its Property is administered for the benefit of its members & creditors. An Administrator, called a liquidator is appointed and he takes control of the company, collects its assets, pays its debts and finally distributes any surplus among the members in accordance with their rights.”
Modes of winding up of a company
As per section 270 of the Companies Act 2013, the procedure for winding up of a company can be initiated either:
a) By the tribunal or,
b) Voluntary.
a) Winding up by the tribunal: As per new Companies Act 2013, a company can be wound up by a tribunal in the below mentioned circumstances:
1. When the company is unable to pay its debts
2. If the company has by special resolution resolved that the company be wound up by the tribunal.
3. If the company has acted against the interest of the integrity or morality of India, security of the state, or has spoiled any kind of friendly relations with foreign or neighboring countries.
4. If the company has not filled its financial statements or annual returns for preceding 5 consecutive financial years.

Provisions of the Companies Act' 2013 relating to Extraordinary General Meeting

Provisions of the Company’s Act relating to Extraordinary General Meeting (EGM): (Sec. 100 of the Companies Act, 2013)
Every general meeting (i.e. meeting of members of the company) other than the statutory meeting and the annual general meeting or any adjournment thereof, is an extraordinary general meeting. Such meeting is usually called by the Board of Directors for some urgent business which cannot wait to be decided till the next AGM. Every business transacted at such a meeting is special business. An explanatory statement of the special business must also accompany the notice calling the meeting. The Articles of Association of a Company may contain provisions for convening an extraordinary general meeting.
The main purpose (Objectives) to hold these meetings are:
a)      Change in memorandum of association.
b)      Change in articles of association.
c)       Reduction or reorganization of share capital.
d)      Issue of debentures.
e)      Removal of directors.
f)       Removal of auditors.
The business transacted at an extraordinary general meeting, being special business, every notice of such meeting must be accompanied by an explanatory statement.
Legal Provisions Relating to Extraordinary General Meeting (EGM):
1. By Whom EGM is called:

Provisions of the Companies Act' 2013 relating to Board Meeting

Board Meeting
The directors are to act collectively in the form of a board, and the decisions are taken at the meetings of the Board of directors. These meetings may again be of two types:
a) Meetings of the Board of directors; and  (Sec. 173 of the Companies Act, 2013)
b) Meetings of the committee of directors.
A. Meeting of the Board of Directors: As the affairs of a company are managed by the board of directors, therefore it is necessary that the directors should often meet to discuss various matters regarding management and administration of affairs of the companies in the best interest of shareholders.
B. Meeting of a Committee of the Board: As per sec. 179(3), the board my, by a resolution passed at a meeting, delegate various powers to a committee of directors, managing directors, manager or any other principle officer of the company.
Provisions of the Companies Act, 2013 for Board Meeting
1.   Frequency of Meeting:
a) First Meeting: First Meeting of Board of Directors within 30 (Thirty) days from the date of Incorporation of company.
b) Subsequent Meetings:
One person Company, Small company and Dormant company: At least one meeting of Board of directors in each half of calendar year and minimum gap between two meetings should be at least 90 days.

Essentials of a Valid Meeting

Requisites of a Valid Meeting
If the business transacted at a meeting is to be valid and legally binding, the meeting itself must be validly held. A meeting will be considered to be validly held, if:
a)      It is properly convened by proper authority.
b)      Proper notice must be served. (Sec. 101 and Sec. 102 of the Companies Act, 2013)
c)       Proper quorum must be present in the meeting. (Sec. 103 of the Companies Act, 2013)
d)      Proper chairman must preside the meeting. (Sec. 104 of the Companies Act, 2013)
e)      Business must be validly transacted at the meeting.
f)       Proper minutes of the meeting must be prepared. (Sec. 118 and 119 of the Companies Act, 2013)
Proper Authority to Convene Meeting: A meeting must be convened or called by a proper authority. Otherwise it will not be a valid meeting. The proper authority to convene general meetings of a company is the Board of Directors. The decision to convene a general meeting and issue notice for the same must be taken by a resolution passed at a validly held Board meeting.
Notice of Meetings: A meeting in order to be valid must be convened by a proper notice issued by the proper authority. It means that the notice convening the meeting be properly drafted according to the Act and the rules, and must be served on all members who are entitled to attend and vote at the meeting. For general meeting of any kind at least 21days notice must be given to members. A shorter notice for Annual General Meeting will be valid, if all members entitled to vote give their consent. The number of days in each case shall be clear days, i.e. the days must be calculated excluding the day on which the notice is issued, a day or so for postal transit, and the day on which the meeting is to he held. Every notice of meeting of a company must specify the place and the day and hour of the meeting, and shall contain a statement of the business to be transacted thereat.

Company Secretary - Qualification, Rights and Duties

Definition and qualification of a Company Secretary:
Company Secretary Appointment and his Rights and Obligations needs to understand the definitions and as per sec. 2(24) of Companies Act 2013, Company Secretary means a Company Secretary define in sec. 2(1)(c) of the Company Secretaries Act 1980. As per this clause, Company Secretary means a person who is a member of Institute of Company Secretary of India. Company Secretary is managerial personnel in a private sector company and in a public sector company, a Company Secretary is a person who can represent his company before any quasi-judicial body in relation to any legal dispute and other legal litigation.
To be qualified as a company secretary, one must clear the:
1.     Company Secretary Executive level programme and Professional level programme.
2. Must have training certificates which includes student induction programme, executive development programme, professional development programmed and long term internship with specified cs entity.
However to apply for the above programmes, one must:
(a)    Be a graduate from any recognized university or institution.
(b)   Should not be less than 17 years of age.
Thus, a company secretary should be a member of the institute of companies secretaries of India.
Legal Position of a company secretary
The legal position of a company secretary may be explained as follows:

Membership in a Company - Acquisition and Termination, Rights and Liabilities

Membership in a Company
Who is a Member of Company?
The members of a company are the persons who collectively constitute the company as a corporate entity. Section 2(55) of the companies Act, 2013 defines a member as:
a)      The subscription to MOA of a company shall be deemed to have agreed to become members of the company and on its registration, shall be entered as members in its register of members.
b)      Every other person who agrees in writing to become a member of a company and whose name is entered in the register of members shall be a member.
c)       Every person holding equity share of a company and who name is entered ass beneficial owner in the records of the depository shall be deemed to be the member of the company.

Who can be a member in a company or Capacity of parties to become a member of a company:
Any person who is competent to contract may become the member of the company as per the provision of Memorandum and Articles of Association of the company. Provisions of the Companies Act, 2013 for various categories of person are given below:

1. Minor: If the company allots shares to a minor in ignorance of minority, following consequences shall follow:

Various Types of Companies under the Companies Act' 2013

Kinds of Companies
A. Classification on the basis of liability
1. Companies with limited liability
(a)   Companies limited by guarantee [Sec.2(21)]- where the liability of the members of a company is limited to a fixed amount which the members undertake to contribute to the assets of the company in the event of its being wound up, the company is called a company limited b guarantee.
(b)    Companies limited by shares [Sec.2(22)]- where the liability of the members of a company is limited to the amount unpaid on the shares, such a company is known as a company limited by shares
2. Unlimited companies [Sec.2(92)] - A company without limited liability is known as an unlimited company. In case of such a company, every member is liable for the debts of the company.
B. Classification on the basis of number of members
1. Private company [Sec.2(68)] - A private company is normally what the Americans call a ‘close corporation’. According to Sec.2(68), a private company means a company which has a minimum paid-up capital of Rs. 1,00,000 or such higher paid-up capital as may be prescribed by CG, and by its Articles:
a.       Restricts the right to transfer its shares, if any. The restriction is meant to preserve the private character of the company.
b.      Except in case of one person company, limits the number of its members to 200 not including its employee-members. Joint shareholders shall be counted as one member only.

Legal Effect of MOA and AOA

Legal Effect of Memorandum and articles of association (Sec. 10 of the Companies Act, 2013)
Under sec.10 of the Companies Act, 2013, the memorandum and the articles when registered, shall bind the company and its members to the same extent as if it had been signed by them and had contained a covenant on their part that the memorandum and the articles shall be observed. With respect to the above section, the importance of Memorandum of Association and articles can be summed up as follows:

Importance of MOA:
a) It is the foundation of a business. It shows the capacity to contract of a company.
b) It is constitution of a company which relates with the outside world. No company is allowed to temper with its contents without the sanction of central government or court of law.
c) Any act of the company outside the scope of activities as laid down in the memorandum is said to be ultra vires and non binding on it.
d) Every member shall be bound to comply with the provisions contained in the memorandum. In case of non-compliance, the company may sue a member.

Importance of AOA:
a)      Binding on members in their relation to the company- the members are bound to the company by the provisions of the articles just as much as if they had all put their seals to them.