REMOVAL OF NAMES FROM THE REGISTER OF COMPANIES

Transcription

1 REMOVAL OF NAMES FROM THE REGISTER OF COMPANIES Chapter XVIII of the Act deals with the removal of names from the Register of Companies. The Registrar of Companies is required to maintain a Register of Companies when a company is incorporated. This chapter provides the situation when the name of the companies may be removed and the procedure for such removal. Powers of Registrar: Section 248 of the Act gives powers to the Registrar of Companies to remove the name of company from the Register of Companies. Section 248(1) of the Act provides that where the Registrar has reasonable cause to believe that- a company failed to commence its business within one year of its incorporation; * The subscribers to the memorandum have not paid the subscription which they had undertaken to pay within a period of 180 days from the date of incorporation of the company and a declaration under Section 11(1) to this effect has not been filed within 180 days from the date of incorporation; or * A company is not carrying on any business or operation for a period of two immediately preceding financial year and has not made any application within such period for obtaining status of a dormant company under Section 455, he may initiate the procedure for removal of name of the company from the Register of Companies. The provisions of this Chapter shall not apply to Section 8 companies. The name of the company may be removed in two ways. One is by the initiation of the company and the other is suo motu action of the Registrar of Companies. Section 248 is akin to the Section 506 of the Companies Act, 1956 which provides that Registrar shall remove the name of the company from the register of companies where the Registrar has reasonable cause to believe that a company is not carrying on business or in operation. If, in any case where a company is being wound up, the Registrar has reasonable cause to believe either that no liquidator is acting, or that the affairs of the company have been completed wound up, and any returns required to be made by the liquidator have not been made for a period of six consecutive months, then the Registrar may remove the name of a company from the register of companies. Section 248 provides more grounds that Section 506 of the Companies Act to remove the name of a company from the register of companies. By the company; Section 248(2) of the Act provides that a company may voluntarily offer for the name of its name from the Register of Companies for which the following are required: The company should extinguish all its liabilities; Special resolution should be passed; or Consent of 75% members in terms of paid up share capital. The company may file an application in the prescribed manner to the Registrar for removing the name of the company from the Register of Companies on all or any of the grounds specified in Section 248(1) of the Act. In case the company is regulated under a Special Act, the approval of the Regulatory Body constituted or established under that Act shall be obtained by the Company. Such approval shall be enclosed with the application. An application filed by the company may be withdrawn. The Registrar may reject the application as soon as the conditions under Section 248(1) are brought to the notice. In the Companies Act, 1956 there was no provision enabling a company to make such application. Restrictions for the company; Section 249 of the Act provides that an application under Section 248(2) of the Act on behalf of a company shall not be made if, at any time in the previous three months, the company- Has changed its name or shifted its registered office from one State to another; Has made disposal for value of property or rights held by it, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business; Has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement; Has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or is being wound up under Chapter XX, whether voluntarily or by the Tribunal.

2 Section 249 of the Act is newly introduced in the Act where no such provisions are there in the Companies Act, The Registrar, on receipt of such application from the company shall publish in the prescribed manner and also in the Official Gazette for the information of the General Public. On publication of the same the company stands dissolved. Procedure : The following is the procedure to be adopted by the Registrar in respect of removal of name of a company from the Register of Companies: Where the Registrar is satisfied that the circumstances prescribed in Section 248(1) has been there, the Registrar shall send a notice to the company and all the directors of the company, indicating his intention to remove the name of the company from the register of companies; In the notice the Registrar shall direct the company to send their representations along with copies of relevant documents, if any, within a period of 30 days from the date of the notice; After the expiry of the time mentioned in the notice the Registrar may, unless the cause to the contrary is shown by the company, strike off its name from the register of companies; The Registrar shall publish notice thereof in the Official Gazette and on the publication in the Official Gazette of this notice, the company shall stands dissolved. Before passing an order as mentioned above, the Registrar shall satisfy himself that sufficient provision has been made for the realization of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time; If necessary, the Registrar shall obtain necessary undertakings from the Managing Director, director or other person who is in charge of the management of the company to this effect; Despite of the undertakings given by the person who is in charge of the management of the company the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies; The liability, if any, of every director, manager or other officer who was exercising any power of management and of every member of the company dissolved shall continue and may be enforced as if the company has not been dissolved. Power of Tribunal Section 248 (8) provides that ion no provisions of this Section shall affect the power of the Tribunal to wind up a company the name of which has been struck off from the Register of Companies. Effect of dissolution Section 250 provides that where a company stands dissolved under Section 248 (5) it shall on and from the date mentioned in the notice cease to operate as a company. The certificate of incorporation issued to the company shall be deemed to have been cancelled from such date except for the purpose of realizing the amount due to the company and for the payment or discharge of the liabilities or obligations of the company. Section 250 is newly introduced in the Act. Such provision is not available in the Companies Act, Appeal to Tribunal Any person aggrieved by an order of the Registrar, notifying a company as dissolved under Section 248, may file an appeal to the Tribunal, under Section 252. The time limit for filing such appeal is within three years from the date of the order of the Registrar. The Tribunal may confirm the order of the Registrar. If the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar it may order restoration of the name of the company in the register of companies. Before passing such order the a reasonable opportunity of making representations and of being heard shall be given to the Registrar, the company and all the persons concerned Restoration of name If the Registrar is satisfied that the name of the company has been struck off from the register of companies either inadvertently or on the basis of incorrect information furnished by the company or its directors which requires

3 restoration in the register of companies, he may within a period of three years from the date of passing of the order dissolving the company under Section 248, file an application before the Tribunal seeking restoration of such company. There was no provision like this in the Companies Act, 1956 permitting Registrar to file application before the Tribunal for restoration of the name of the company. A copy of the order passed by the Tribunal shall be filed by the company with the Registrar within 30 days from the date of the of the order of the Tribunal. On such receipt of the order the Registrar shall cause the name of the company to be restored in the register of companies and shall issue a fresh certificate of incorporation. Section 252 (3) provides that if- A company; or Any member; or Creditor; or Workman If feels aggrieved by the company having its name struck off from the register of companies, the same may file an application before the Tribunal. The time limit for filing such application is twenty years from the date of publication in the Official Gazette of the notice under Section 248 (5) of the Act. The Tribunal may, if it is satisfied that the company was, at the time of its name being struck off, carrying on business or in operation or otherwise, it is just that the name of the company be restored to the Register of Companies, order the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed just for placing the company and all other persons in the same position as nearly as may be as if the name of company had not been struck off from the register of companies. In the old Act there was no provision for the workman to file application before the Tribunal. Creditor In re Harvest Lane Motor Bodies Limited 1968 (5) TMI 35 - IN THE CHANCERY DIVISION it was held that in using the word creditor simpliciter (in Section 506 of the Companies Act, 1956) the Legislature can not have been intending thereby to differentiate between those creditors whose debts are fixed and ascertained and those whose debts are contingent and prospective, providing redress for the grievances of the former but ignoring the grievances of the latter. The word creditor is wide enough to include a person whose debt is contingent or prospective. Effect of restoration The effect of an order of restoration is that the company is to be deemed to have continued in existence as if its name had not been struck off. The object is to put both the company and their parties in the same position as they would have occupied if the dissolution of the company had not been intervened. Not only is the corporate existence of the company restored, but also it takes effect retrospectively, so that at the date of restoration the company is to be regarded as never having been dissolved. Punishments Section 249 (2) provides that if a company files an application under Section 248(2) in violation of Section 248(1), the company shall be punishable with fine which may extend to 1,00,000/- Section 251 provides that where it is found that an application by a company under Section 248(2) has been made with the object of evading the liabilities of the company or with intention to deceive the creditors or to defraud any other persons, the persons in charge of the management of the company shall, notwithstanding that the company has been notified as dissolved- be jointly and severally liable to any person or persons who had incurred loss or damage as a result of the company being notified as dissolved; and be punishable for fraud in the manner as provided in Section 447. In addition, the Registrar may also recommend prosecution of the persons responsible for filing of an application under Section 248(2). Section 251 is new provision. Such provision was not in the Companies Act, By: Mr. M. GOVINDARAJAN Explanatory Note by CBDT: CBDT has yesterday issued Explanatory Notes to the Provisions of the Finance (No.2) Act, 2014 which came into effect on What is the purpose of explaining the Finance Act six months after enactment? But the CBDT does that every year. Maybe it takes about six months for the budget makers to understand the budget. Some of the explanations are given below: Capital gains exemption in case of investment in a residential house property: The sub-section (1) of section 54 of the Income-tax Act, before its amendment by the Act, inter alia, provided that where capital gain arises from the transfer of a long-term capital asset, being buildings or lands appurtenant thereto, and being a residential house, and the assessee

4 within a period of one year before or two years after the date of transfer, purchases, or within a period of three years after the date of transfer constructs, a residential house, then, the amount of capital gains to the extent invested in the new residential house is not chargeable to tax under section 45 of the Income-tax Act. The provisions contained in sub-section (1) of section 54F of the Income-tax Act, before its amendment by the Act, interalia, provided that where capital gains arises from transfer of a long-term capital asset, not being a residential house, and the assessee within a period of one year before or two years after the date of transfer, purchases, or within a period of three years after the date of transfer constructs, a residential house, then, the portion of capital gains in the ratio of cost of new asset to the net consideration received on transfer is not chargeable to tax. Certain courts had interpreted that the exemption is also available if investment is made in more than one residential house. The benefit was intended for investment in one residential house within India. Accordingly, sub-section (1) of section 54 of the Income-tax Act has been amended to provide that the rollover relief under the said section is available if the investment is made in one residential house situated in India. Similarly, sub-section (1) of section 54F of the Income-tax Act has been amended to provide that the exemption is available if the investment is made in one residential house situated in India. Enabling CBDT to relax provisions relating to levy of fee under section 234E of the Income-tax Act: As per the existing provisions of the Income-tax Act, a deductor/collector is required to furnish periodical tax deducted at source (TDS)/tax collected at source (TCS) statements (quarterly) containing the details of deduction/collection of tax made during the quarter by the prescribed due date. Delay in furnishing of TDS/TCS statement results in delay in granting of credit of TDS/TCS to the deductee/collectee and consequently leads to delay in issue of refunds to the deductee/collectee or raising of infructuous demand against the deductee/collectee. In order to provide effective deterrence against delay in furnishing of TDS/TCS statement, the Finance Act, 2012 inserted section 234E in the Income-tax Act to provide for levy of fee of Rs.200 per day for late furnishing of TDS/TCS statement from the due date of furnishing of TDS/TCS statement to the date of furnishing of TDS/TCS statement. The levy of fee under section 234E of the Income-tax Act has proved to be an effective tool in improving the compliance in respect of timely submission of TDS/TCS statement by the deductor/collector. However, the levy of fee under section 234E of the Income-tax Act could not be waived / reduced even in the cases where the delay in filing of TDS/TCS statement was due to circumstances beyond the control of the deductor/collector. For removing the genuine hardship faced by the deductors/collectors due to levy of fee mandated by the section 234E of the Income-tax Act, section 119 (2)(a) of the Income-tax Act has been amended to enable the CBDT to relax the provisions of the section 234E of the Income-tax Act in suitable cases. Power of Survey: The provisions contained in section 133A of the Income-tax Act enable the Income-tax authority to enter any premises in which business or profession is carried out for the purposes of survey. An income-tax authority acting under this section may impound and retain in his custody any books of account or documents inspected by him during the course of survey. However, prior to its amendment by the Act, the said section provided that such income-tax authority shall not retain in his custody any such books of account or document for a period exceeding ten days (exclusive of holidays) without obtaining the approval of the Chief Commissioner or Director General therefor, as the case maybe. Section 133A has further been amended to provide that an income-tax authority may, for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions of Chapter XVII-B or Chapter XVII-BB, as the case may be, enter any office, or a place where business or profession is carried on, within the limits of the area assigned to him, or any such place in respect of which he is authorised for the purposes of the said section by such income-tax authority who is assigned the area within which such place is situated where books of account or documents are kept. It has also been provided that an income-tax authority while acting under sub-section (2A) of section 133A, may place marks of identification on the books of account or other documents inspected by him and take extracts and copies thereof. He may also record the statement of any person which may be useful for, or relevant to, any proceeding under the Income-tax Act. Mode of acceptance or repayment of loans and deposits: e-loans allowed. The provisions contained in section 269SS of the Income-tax Act, before its amendment by the Act, inter-alia, provided that no person shall take from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft, if the amount of such loan or deposit or aggregate of such loans or deposits is twenty thousand rupees or more. Similarly, the provisions of section 269T of the Income-tax Act, before amendment made by the Act, inter-alia, provided that no loan or deposit shall be repaid otherwise than by an account payee cheque or account payee bank draft, if the amount of such loan or deposit together with interest or the aggregate amount of such loans or deposits together with interest, if any payable thereon, is twenty thousand rupees or more. In the present times many banking transactions take place by way of internet banking facilities or by use of payment gateways. Accordingly, the provisions of the said sections 269SS and 269T have been amended to provide that acceptance or repayment of any loan or deposit by use of electronic clearing system through a bank account shall not be prohibited under the said sections if the other conditions regarding the quantum etc. are satisfied. CBDT Circular No. 01/2015., Dated: January 21, 2015

5 Service Tax : Services to members of club or cooperative housing society is not service by one to another - not chargeable to service tax: CESTAT THERE are three appellants and issue involved in all the appeals is the same. The appellants are Matunga Gymkhana, Tahnee Heights Co-op Hsg. Soc. Ltd. & Mittal Tower Premises Co-operative Society. Alleging that the appellants had provided taxable services by Club or Association' service specified in Section 65 (105)(zzze) of the FA, 1994, tax demands were raised and confirmed against them by the lower authorities. Facts: ++ M/s Matunga Gymkhana runs a club for their members. The activities carried out by them relate to Sports, Yoga etc. According to them, their objective is charitable as per the constitution of the Gymkhana. They are a Public Charitable Trust registered under the Mumbai Public Trust Act. Their objective is for promotion of physical well-being and most of the sports facilities are utilized by the members and their children. According to them, Section 65 (25a) of the Finance Act, 1994 states that club or association means any body or body of persons providing services facilities for a subscription but does not include any body engaged in activities having objectives which are in the nature of public service and are of charitable, religious or political nature. Revenue was of the view that the activities are not charitable in nature as they are chargeable and neither are they in the nature of public service. According to Revenue, the appellant does not come within the purview of the exclusion clause under Section 65(25a) ibid. Therefore, the demand of service tax against the appellant was confirmed, appropriate interest ordered and penalties imposed under Sections 76, 77 & 78 of the Act. ++ M/s. Tahnee Heights Co-operative Housing Society formed a society in which all the members are shareholders. The society is registered under the Maharashtra Co-operative Societies Act. Charges are collected from the members for maintenance, repair, beautification etc. According to the appellant, they offer services to self and, therefore, would not be covered under service tax. In their view they are covered by the exclusion clause under Section 65(25a) which excludes anybody established or constituted by or under any law from the coverage of АавтТаТ club or association'. The appellant had however, paid service tax on persuasion by the department. Later they filed refund claims which were rejected on merits. Revenue took a view that the exclusion clause only refers to bodies which are established or constituted under a Statute and not bodies which are formed and registered under a statute. Therefore, the refund claims were rejected on merits without going into the aspects of unjust enrichment. ++ M/s. Mittal Tower Premises Co-operative Society - facts are similar to the second appellantm/s. Tahnee Heights Co-operative Housing Society. Here also, the appellants were managing and maintaining the land and building belonging to the society formed amongst members of the premises. They collected expenses from the members towards water charges, security charges, repair expenses, lift repairs etc. They are also registered under the Maharashtra Co-operative Housing Societies Act. In their case also the service tax had been paid initially and later refund was claimed. The refund claims were rejected on merits without going into the aspect of unjust enrichment. Before the CESTAT the appellant relied on the following decisions in support of their contention that they are not liable to service tax - (i) Ranchi Club vs. Chief Commr. Of C. Exc. & ST, Ranchi TIOL-1031-HC-JHARKHAND-ST

6 2-TIOL-1031-HC-JHARKHAND-ST.htm [held that in view of the mutuality and in view of the activities of the club, if club provides any service to its members may be in any form including as mandap keeper, then it is not a service by one to another] (ii) Sports Club of Gujarat vs. Union of India TIOL-528-HC-AHM-ST [it is hereby declared that Section 65(25a), Section 65(105) (zzze) and Section 66 of the Finance (No.2) Act, 1994 as incorporated / amended by the Finance Act, 2005 to the extent that the said provisions purport to levy service tax in respect of services purportedly provided by the petitioner club to its members, to be ultra vires.] (iii) M/s. Federation of Indian Chambers of Commerce & Industry vs. Commissioner of Service Tax, Delhi TIOL-701-CESTAT-DEL [there are no operative legislative provisions of the Act legitimizing the levy and collection of service tax from the appellants, for providing "club or association" service, in so far as these relate to any services provided to members of these appellants - services provided to non-members fall outside the ambit of "club or association" service prior to and subsequent to this date there is no specific allegation that the services provided to non-members fall within the expanded scope of this taxable service The AR supported the order of the lower authorities. The Bench adverted to the decisions relied upon by the appellant(s) and observed that in view of the judgments the issue at hand is no more res integra. Inasmuch as the appellants were not liable to service tax. Holding so, the orders were set aside and the appeals were allowed with consequential relief. Complied by : Arvind Dhanani Disclaimer The information contained in this message may be confidential. IF you are not the intended recipient, any use,interference with, disclosure or copying of this material is unauthorized and prohibited. Although this message and any attachments are believed to be free virus, no responsibility is accepted by signatory for any loss or damage arising in any way from receipt or use thereof. Messages to and from the company are mentioned for operational reasons and in accordance with lawful business.