Financial analysis of borrowers won’t be deemed as facilitation of loan agreement as per India-France treaty

CREDIT LYONNAIS V. ADIT (INTERNATIONAL TAXATION) (2013) 40 taxmann.com 87 (Mumbai - Trib.)

Where role of assessee in facilitating foreign currency loan to its client is providing financial analysis of borrowers, general market conditions and regulatory environment, such nature of services will not fall under Para 4 of protocol between India and France.

Facts:

• The assessee had facilitated foreign currency loan to its clients from head office outside India but did not show any income on the said transactions contending that services provided by assessee was limited to providing financial analysis of borrowers, general market conditions and regulatory environment and it has no role to play in decision of granting of loan; 
• The TPO did not accept the contention of the assessee and computed the arm's length charges being 25 per cent of the total amount comprising interest and fee received by the offshore branches of the bank and made an adjustment. On appeal, the CIT(A) reduced the adjustment from 25 per cent to 20 per cent.

The Tribunal held as under:

• As per Para 4 of the India-France protocol if the role of the PE is only to facilitate the conclusion of foreign trade or loan agreement or mere signing thereof, then no profit shall be attributable to PE in terms of article 7(2) of the Indo-France DTAA; 
• The assessee provided the services regarding credibility analysis of clients, their capacity to repay the loan and risk involved in the loan transaction; 
• Therefore, the role of the assessee in providing such services were inevitable for taking the decision of providing loan and as such couldn’t be said to be a mere facilitation of conclusion of the loan agreement or signing thereof; Thus, Para 4 of the Protocol does not apply in the instant case; 
• Since the assessee has provided certain services for that arms length charges could be determined as per the provisions of transfer pricing regulation. The interest couldn’t be taken into account for attribution of income towards service charges/fees and, therefore, only the fee charged by the foreign branches could be taken into consideration for making adjustment under transfer pricing provisions; 
• As none of the parties have come out with the suitable comparables, the estimation made by the CIT (A) at the rate of 20 per cent was justified, however, the same would be only in respect of the fee and charges other than interest received by the foreign branches.

Mere denial of section 11 relief won’t invalidate trust registration

TAMIL NADU CRICKET ASSOCIATION V. DIRECTOR OF INCOME-TAX (EXEMPTIONS) (2013) 40 taxmann.com 250 (Madras)

Mere fact that an income is not exempt under section 11 would not render Tamil Nadu Cricket Association's registration under section 12AA liable to be cancelled

The High Court held as under:

• If a particular activity of the institution appeared to be commercial in character, and it was not dominant, then it was for the Assessing Officer to consider the effect of section 11 of the Act in the matter of granting exemption on particular head of receipt; 
• The mere fact that the said income does not fit in with section 11 of the Act would not, by itself lead to the conclusion that the registration granted under section 12AA is bad and, hence, to be cancelled; 
• Only possible enquiry under section 12AA of the Act for cancellation is to find out whether the activities of the trust are genuine or in accordance with the objects of the trust; 
• If any income arising on the activities is not in accordance with the objects of the trust, the assessee's income, at best, might not get the exemption under section 11 of the Act. But this, by itself, would not result in rejection of the registration as 'trust' under section 12AA of the Act; 
• The question as to whether the particular income qualified under section 11 of the Act or not was not the same as activity being genuine or not which was relevant for cancellation of registration; 
• Thus, the tribunal was not right in upholding the cancellation of registration under Section 12AA(3) granted to Tamil Nadu Cricket Association.

Quotation price isn’t analogous to actual price paid; former can’t be used for benchmarking under CUP method

SINOSTEEL INDIA (P.) LTD. DY. CIT (2013) 40 taxmann.com 240 (Delhi - Trib.)

Under CUP method, a quotation which hasn't fructified into a transaction can’t be used for benchmarking

The Tribunal held as under:

• When the statute read with rules specifically provides that the ALP under the CUP method should be determined by considering 'the price charged or paid' in a comparable uncontrolled 'transaction', one fails to comprehend as to how any 'quotation' which has not fructified into a 'transaction' can be substituted with the actual price charged or paid in a transaction; 
• As the law provides for considering the price charged or paid in a comparable uncontrolled transaction, there can be no scope for considering a quotation price in isolation which is not preceded with or succeeded by any actual transaction.

Freezing bank account not akin to seizure of currency; assessee can't ask for de-freezing of bank account under Customs Act

Ravi Crop Science v. Union of India [2014] 41 taxmann.com 69 (Delhi)

 

Though 'goods' defined under section 2(22) of Custom  Act include currency, yet, freezing of bank account cannot amount to seizure of currency and hence, assessee couldn’t seek de-freezing of bank account under section 110, if no notice was issued within 6 months of such freezing.

Facts:                                    

• The petitioners were importing high value pesticides/insecticides/ hazardous products in guise of Sodium Bi-Carbonate; 
• Said transactions were pending investigation. The Department freezed petitioner's bank account; 
• The petitioner argued that since no show-cause notice was issued against it under section 124 even after expiry of 6 months from freezing of account, it was liable to be de-freezed as per section 110.

The High Court rejected petitioner’s claim with the following observations:

• If notice required under section 110(2) was not served within 6 months or extended time-limit, goods were liable to be returned; 
• Sections110 and 124 are independent, distinct and exclusive of each other. Even if any seized goods are returnable in terms of section 110, proceedings for confiscation of goods under section 124 may still continue; 
• Section 110(3) deals with seizure of documents or things which in opinion of concerned officer would be relevant to any proceedings under Act; 
• Freezing of bank account was not seizure of any document or thing useful or relevant to any proceedings under the Act; rather freezing of account was only with a view to stop petitioner from withdrawing proceeds of alleged violations under the Act; 
• Though 'goods' as defined under section 2(22) include currency, yet, there is no precedent to show that freezing of bank account would amount to seizure of currency. Since freezing of bank account was not seizure of 'goods' as envisaged under section 110, petitioner was not entitled to de-freezing of bank account unconditionally; 
• Hence, the amount deposited in said bank account after date of freezing account was to be released, subject to furnishing of a bank guarantee in respect of such amount.

Section 40(a)(ia) contemplates actual tax deduction and not mere debit entry in account of payee

Atul Auto Ltd. v. JCIT [2013] 40 taxmann.com 394 (Rajkot - Trib.)

The Tribunal held in favour of revenue as under:

• Deduction of tax at source as contemplated by section 40(a)(ia) needs to be real and not illusory; 
• Deduction of tax at source implies subtraction of the amount of tax from the amount payable by the assessee to the payee out of which tax is deductible at source before it is paid to the payee or is credited to the account of the payee; 
• It is after deduction of such tax from the amount payable to the payee that the assessee can pay/credit the remaining amount; 
• The law contemplates real deduction of tax at source out of amount payable by the assessee and not mere book entries by which such tax is debited to the running account of the payee in the books of the assessee, unless such entries are supported by actual deduction; 
• There was no evidence before the revenue that tax was actually deducted by the assessee at source out of the amounts paid or credited by it to the payees, although such tax was deductible at source; 
• Unless the assessee proves that it has actually deducted the tax at source out of amounts paid/credited in favour of the payees, it was not possible to delete the impugned disallowance. Therefore, the appeal of the assessee was liable to dismissed.

Cenvat credit available for fuel used by one unit to generate power for consumption by two manufacturing units

Commissioner of Customs & Central Excise, Noida, U.P v. Jindal Polyester [2014] 41 taxmann.com 173 (Allahabad)

Fuel used for generation of electricity, a part of which is also supplied to another unit of same  manufacturer, is eligible for credit as input; assessee is not required to have two separate power facilities for two different units.

Facts:

• The Assessee was availing of Cenvat credit of duty paid on Furnace Oil used as fuel in DG sets for generation of electricity. A part of electricity so generated was supplied to another unit engaged in manufacture of Polymer Chips, which was main input of the assessee; 
• The Department denied proportionate credit on Furnace Oil used in generation of electricity consumed by the other unit.

The High Court held in favour of assessee as under:

• Tax law should be interpreted in conformity with normal commercial practice. Therefore, the manner of 'use' , should be accepted as to economical, efficient and convenient manner of 'use' because a contrary interpretation would lead to frustrating purpose of law in granting credit; 
• Generation of electricity in one unit for use in all neighbouring units of a manufacturer is more efficient and economical than setting-up generating facility at each and every factory; 
• So long as factory and manufacturer are one, credit cannot be denied merely because of separate registration and/or different line of production as there is no such statutory regulation or rule; 
• It is logical that if two units are being run at one place, producing two different items and electricity is supplied to both of them by a common generator; credit benefit shall be available in respect of both the manufacturing units, unless statutorily provided otherwise; and 
• It was neither expedient nor desirable unless provided otherwise statutorily to have separate electricity generating sets for different manufacturing units. Accordingly, credit was to be allowed.

Big blow to ill-gotten wealth invested in real estate; Supreme Court affirms seizure of asset acquired from illegitimate means

The Supreme Court held as under:

• To understand the exact nature of the forfeiture contemplated under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA) it is necessary to examine the nature of the property which is sought to be forfeited and also the persons from whom such forfeiture is sought to be made. The Act is made applicable to five classes of persons specified under section 2; 
• Of the five categories of persons to whom the Act has been made applicable, only one category specified under section 2(2)(a) happens to be of persons who are found guilty of an offence under one of the enactments mentioned therein and convicted; 
• The other four categories of persons to whom the Act is applicable are persons unconnected with any crime or conviction under any law. Section 6 of the Act authorises the competent authority to initiate proceedings of forfeiture only if it has reasons to believe that all or some of the properties of the persons to whom the Act is applicable are illegally acquired properties?; 
• It is well known fact that people carrying on activities such as smuggling to make money do it in a clandestine manner. Direct proof is difficult to get if not impossible. The nature of the activity and the harm it does to the community provide a sufficiently rational basis for the Legislature to make such an assumption; 
• Conviction is only a factor by which persons can be identified to whom Act can be made applicable. Connection with the conviction is too remote and, therefore, in our opinion, would not be hit by the prohibition contained under Article 20 of the Constitution of India; 
• If a subject acquires property by means which are not legally approved, sovereign State would be perfectly justified to deprive such persons of the enjoyment of such ill-gotten wealth. There is a public interest in ensuring that persons who cannot establish that they have legitimate sources to acquire the assets held by them do not enjoy such wealth; 
• Such a deprivation, in our opinion, would certainly be consistent with the requirements of Article 300A and 14 of the Constitution which prevent the State from arbitrarily depriving a subject of his property.

Central Excise Rule providing for interest rate in excess of rate specified in Excise Act is ultra vires: High Court

K.C. & Sons Appliances (P.) Ltd. v. Union of India  [2014] 41 taxmann.com 177 (Gujarat)

Rule cannot provide for rate of interest in excess of that provided in section/Act itself; Rule 8(3) of the Central Excise Rules providing for interest at rate exceeding that provided in erstwhile section 11AB of Central Excise Act was held ultra vires

Facts:

• On delay in payment of duty, the assessee discharged interest at rate of 2 per cent per month; 
• Department argued that interest, as per rule 8(3), was to be paid at the rate of 2 per cent per month or Rs. 1,000 per day, whichever was higher and accordingly raised demand for differential interest; 
• The assessee argued that rule 8(3) was ultra vires erstwhile section 11AB (now, section 11AA), as said rule provided for interest at rate exceeding rate provided in said section 11AB.

The High Court held in favour of assessee as under:

• In view of judgment of the Rajasthan High Court in Lucid Colloids Ltd. v. Union of India 2006 (200) ELT 377, the expression "or rupees one thousand per day, whichever was higher" in rule 8(3) ibid were invalid, being ultra vires the erstwhile section 11AB; 
• Therefore, interest chargeable on delayed payment had to be only at rate of 2 per cent per month or 24 per cent per annum, as notified for purpose of erstwhile section 11AB; 
• Thus demand for differential interest was to be set aside.

Section 13 not violated if firm owned by trustee won tender floated by trust or when trustee got business advances

Dy. DIT(Exemptions) v. Sri Vekkaliamman Educational & Charitable Trust [2013] 40 taxmann.com 478 (Chennai - Trib.)

 

Where firm of managing trustee won construction bids on competitive basis and sum was advanced to said firm, neither section 13(2)(c), nor section 13(1)(d) was violated.

 

The Tribunal held as in favour of assessee as under:

• The Assessing Officer (‘AO’) declined to grant benefit of section 11, as in the present case construction of building had been carried out by the firm of a managing trustee and, thus, derived direct benefit from the assessee-trust; 
• A perusal of section 13(2)(c) would show that the income or property of the trust or any part of it had be deemed to have been used or applied for the benefit of the person referred to in sub-section (3), if any amount was paid by way of salary, allowance or otherwise to any person referred to in sub-section (3) out of the resources of the trust for services rendered and the amount so paid was in excess of what might be reasonably be paid for such services; 
• In the instant case, the AO had outrightly held that the assessee was not entitled to the benefit of section 11 without ascertaining the reasonableness of the amount paid for the services rendered; 
• The construction contract had been awarded to the firm on the basis of open bid. Since the firm quoted lowest rates, the contract was awarded to the firm. Since the contract was awarded on competitive basis and the profit earned was reasonable, the provisions of section 13(2)(c) were not violated; 
• The CIT (A) had given a well reasoned finding that the sum advanced by the assessee to the firm was business advance. The amounts were advanced for the on-going construction work in the normal course of business activity. The order of CIT(A) was to be confirmed and the appeal of the revenue was to be dismissed.

No collection of CST at higher rate if rate of tax on Intra-State sales of same goods was reduced unconditionally

Assistant Commissioner v. Telco Construction & Equipment Co. Ltd. [2014] 41 taxmann.com 130 (Rajasthan)

Where rate of tax on intra-state sale of Hydraulic Excavators was reduced by way of an unconditional exemption to 2 per cent, Inter-State sale of such goods without C-Form could not be charged to a higher rate, viz., 4 per cent and would be liable to tax at 2 per cent

The assessee was engaged in sales of Hydraulic Excavators and was paying tax at rate of 2 per cent on such sales as per Notification, dated 30-3-2000. The Department found that the assessee had made Inter-State sales of such goods and rate of tax on such Inter-State sales without C-Form was at 4 per cent, as per Notification dated 27-8-1992 and, accordingly, raised demand.

The High Court held assessee liable to tax at 2 per cent with the following observations:-

• Notification dated 27-8-1992 issued under section 8(5) of the Central Sales Tax Act, 1956 provided for rate of tax at 4 per cent on Inter-State sales without C-Form. However, Notification dated 30-3-2000 issued under section 15 of the Rajasthan Sales Tax Act, 1994, which was general and unconditional in nature, provided for exemption from tax and provided for rate of tax on said goods at 2 per cent without any condition as to furnishing of C-Form.
• Once rate of tax for Hydraulic Excavators was provided under Notification dated 30-3-2000 at 2 per cent, there was no occasion for assessee to obtain 'C-Form' so as to pay tax under section 8 of the Central Sales Tax Act, 1956, which was at 4 per cent.
• Hence, fact that sale was an Inter-State transaction and assessee had not furnished 'C-Form' was of no consequence.
• Since rate of tax was reduced to 2 per cent by way of exemption, notification dated 27-8-1992 had no application to case. Accordingly, the demand was set aside.

PANs are issued without de-facto verification, these can’t solely divulge real identity of individuals

CIT v. N Tarika Properties Investment (P.) Ltd [2013] 40 taxmann.com 525 (Delhi)

Facts:

• On basis of some information from the Investigation Wing that assessee was identified as one of beneficiaries who had received bogus entries; notice under section 148 was issued to the assessee and it was required to furnish information in respect of persons who had been allotted shares; 
• The assessee filed confirmation from the respective persons who had subscribed to the share capital; 
• The Assessing Officer (‘AO’) held that the assessee had failed to discharge the onus in proving the identity of subscribers, genuineness of the transactions and the creditworthiness and, accordingly, made an addition in the hands of the assessee; 
• The CIT (A) deleted the addition. Further, the Tribunal confirmed the said order. Aggrieved revenue filed the instant appeal.

The High Court held in favour of revenue as under:

• PAN is allotted on the basis of applications without actual de facto verification of the identity or ascertainment of the active nature of business activity; 
• PAN is allotted as a facility to revenue to keep track of transactions and, thus, the PAN cannot be treated as sufficiently disclosing identity of the individual; 
• The mere filing of share application was not enough as the said application was not an unimpeachable document and did not on its own prove the genuineness or authenticity of the transaction; 
• Mere production of PAN or assessment particulars does not establish the identity of a person. The identification of a person includes the place of work, the staff and the fact that it is actually carrying on business and further recognition of the said company in the eyes of public; 
• Assessee had not been able to discharge the initial onus and had not been able to establish its identity and creditworthiness of the share applicants and the genuineness of the transaction. Thus, the assessee had not discharged the onus satisfactorily and the additions made by the AO were justified.

De-facto ownership of asset to be considered for computing holding period of capital assets, rules High Court

CIT v. A. Suresh Rao [2014] 41 taxmann.com 475 (Karnataka)

Facts:

• The assessee, a Chartered Accountant, sold the property on 29.05.2008 for certain consideration. He worked out long-term capital gain and claimed exemption under section 54EC and section 54F; 
• The assessing authority was of the view that the sale deed executed in favour of the assessee was on 27.02.2008 and he sold the property on 29.05.2008, i.e., within four months from the date of purchase and, therefore, the capital gains arising therefrom could not be construed as long-term capital gain; 
• Accordingly, he disallowed the exemption claimed under Sections 54EC and 54F. On appeal the CIT(A) upheld the order of Assessing Officer. Further, the Tribunal set aside said order. Aggrieved revenue filed the instant appeal

The High Court held in favour of assessee as under:

• For the purpose of computing 36 months holding period of a capital asset under section 2(42A), there is no requirement in section that holding period should only include the period for which assessee was the owner of the asset with a registered deed of conveyance conferring title on him; 
• The words "held by the assessee" in section 2(42A) does not mean vesting of legal title in the property to the assessee; 
• As Bangalore Development Authority allotted plot to assessee in 1988, due to legal disputes between it and the original owners of site, it cancelled the booking and allotted another plot in 2007 and that was also cancelled for same reason and fresh plot was allotted in 2008 and same was registered in assessee's name; 
• The consideration paid in 1988 was to be treated as consideration for the sale deed and capital gains resulting from plot sold in 2008, was long-term capital gains and eligible for benefits under sections 54F and 54EC.

High Court treats revised return of income as application for condonation of delay; allows legitimate tax refund

Devdas Rama Mangalore v. CIT [2014] 41 taxmann.com 508 (Bombay)

 

Revised return of income to be considered as application for condonation which consequently results in refund of legitimate taxes

The High Court held as under:

• The application of petitioner for condonation of delay under section 119(2)(b) was denied by adopting a very hyper technical view that it was made beyond 6 years from the date of the end of the assessment year 2004-05;
• In the instant case the revised return of income filed on 8 September, 2011 would be considered as application for condonation of delay and tax refund would be granted.

Supreme Court relies on ratio of Mitsubishi’s case that filing of return doesn’t attract bar on advance ruling; sets aside two orders

Sin Oceanic Shipping ASA Norway v. Authority for Advance Rulings[2014] 41 taxmann.com 444 (Supreme Court)

• The assessee, Sin Ocean Shipping ASA Norway, filed the instant SLP, seeking to set-aside the orders passed by AAR [GTB invest ASA, In re [2012] 18 taxmann.com 262 (AAR- New Delhi)] and High Court [NETAPP B.V. v. AAR [2012] 24 taxmann.com 174 (Delhi)];
• In case of GTB (Supra), applicant's application for advance ruling was rejected by the authority. In case of NETAPP (supra), the High Court dismissed assessee's writ. The writ was filed by petitioner to challenge the order of AAR which rejected its request for advance ruling;
• In both these cases it was held that that applicant was debarred from seeking advance ruling if return was filed prior to date of filing of application before the authority;
• The Supreme Court admitted the instant SLP on the basis of case of Mitsubishi Corporation, Japan, In re [2013] 40 taxmann.com 335 (AAR- New Delhi);
• In case of Mitsubishi, the authority admitted the application of applicant, seeking advance ruling and it held that mere filing of return prior to filing of application of advance ruling does not attract bar on filing of application under Section 245R(2);
• Accordingly, orders of High Court and Authority, [i.e., order of GTB and NETAPP B.V] were set aside. Case of GTB was restored to authority, to give afresh ruling in accordance with law.

Budget

An itemised forecast of an individual's or company's income and expenses expected for some period in the future. With a budget, an individual is able to carefully look at how much money they are taking in during a given period, and figure out the best way to divide it among a variety of categories. When making a personal budget, an individual will typically designate the appropriate amount of money to fixed expenses such as rent, car payments, or utility bills, and then make an educated estimation for how much money they will spend in other categories, such as groceries, clothing, or entertainment. By keeping track of where one's money goes, one may be less likely to overspend, and more likely to meet their financial goals.

Small service provider's exemption was available to each co-owner on letting out of jointly owned properties

Dilip Parikh v. Commissioner of Service-tax [2014] 41 taxmann.com 311 (Ahmedabad - CESTAT)

 

If a property, jointly owned by two or more persons, is rented out by such persons separately to a single person, all such co-owners would be eligible for small service provider's exemption of Rs. 10 lakhs separately.

Facts:

• The assessees, being co-owners of a building, rented out such building to a tenant and rent was received by all such co-owners separately through different cheques;
• Since rent received separately by each co-owner did not exceed Rs. 10 lakhs, they claimed threshold exemption under Notification No. 6/2005-ST, as amended;
• The Department argued that amount was to be assessed collectively and sought to club all receipts alleging that separation was made with a view to gain tax benefit.

The Tribunal held in favour of assessee as under:

• Rental agreement between parties clearly provided that all co-owners were individually renting out such building to a single person. Cheques were also separately received by them;
• Small service provider’s threshold exemption speaks of aggregate value of taxable services and if, individually, all co-owners were considered as separate service providers, their aggregate value did not exceed exemption limit;
• Hence, prima facie, case was in favour of the assessee and pre-deposit requirement was waived off accordingly.

Hiring of vehicle on hourly basis shifts TDS obligations from section 194C to section 194-I front yard

Three Star Granites (P.) Ltd. v. ACIT [2014] 41 taxmann.com 91 (Kerala)

Where assessee entered into an agreement with a contractor for hiring of vehicles and made use of vehicles and paid hire charges on number of hours of use, section 194-I and not section 194C would be attracted.
Facts:

• The assessee entered into an agreement with contractor for hiring of vehicles to be used for loading, unloading and transportation of goods. It applied provisions of section 194C and deducted tax at 2 %;
• However, the Assessing Officer (‘AO’) held that the assessee was to deduct tax at source under section 194-I;
• On appeal, the CIT(A) confirmed the order of AO which was further affirmed by the Tribunal. Aggrieved-assessee filed the instant appeal.

The High Court held in favour of assessee as under:

• The agreement entered into by assessee was composite agreement for hiring of vehicles to be used for loading, unloading and transportation of goods;
• The owner of the vehicles was to retain ownership and possession of the vehicles. The vehicles were to be driven and operated by the persons who were to be paid by the owner;
• The agreement did not require the owner of the vehicles to do any work at all. It was the assessee who made use of the vehicles. He paid hire charges on the number of hours of use and, thus, clearly the assessee was not justified in contending that section 194C was applicable;
• What the assessee was permitted to do with the vehicles alone was mentioned in the contract. All those works were done by the assessee and no work within the meaning of section 194C was actually done by the owner;
• Section 194-I specifically contemplates liability of person paying rent to deduct income tax at the rate of ten per cent for the use of any machinery or plant or equipment. Thus, in the instant case section 194-I was attracted instead of section 194C.

India VIX Futures

National Stock Exchange (NSE) has decided to float futures contracts based on its volatility index (VIX) with effect from February 26^th 2014.

"India VIX Futures will enable the participants to hedge and express views on the expected volatility," NSE said in a statement.The India VIX futures can be used to hedge equity portfolios and held investors to take directional views on volatility, among others. According to NSE, all market participants currently permitted in the F&O segment are permitted to participate.

About India VIX
India VIX is a volatility index based on the index options prices of NIFTY. India VIX is computed using the best bid and ask quotes of the out-of-the-money near and mid-month NIFTY options contracts which are traded on the F&O segment of NSE. India VIX indicates the investor's perception of the market's volatility in the near term. The index depicts the expected market volatility over the next 30 calendar days. i.e. higher the India VIX values, higher the expected volatility and vice-versa.

India VIX computation methodology
India VIX uses the computation methodology of CBOE, with suitable amendments to adapt to the NIFTY options order book using cubic splines, etc.

The factors considered in the computation of India VIX are mentioned below:
1) Time to expiry:
The time to expiry is computed in minutes instead of days in order to arrive at a level of precision expected by professional traders.
 

2) Interest Rate:
The relevant tenure NSE MIBOR rate (i.e 30 days or 90 days) is being considered as risk-free interest rate for the respective expiry months of the NIFTY option contracts
 

3) The forward index level:
India VIX is computed using out-of-the-money option contracts. Out-of-the-money option contracts are identified using forward index level. The forward index level helps in determining the at-the-money (ATM) strike which in turn helps in selecting the option contracts which shall be used for computing India VIX. The forward index level is taken as the latest available price of NIFTY future contract for the respective expiry month.

4) Bid-Ask Quotes
The strike price of NIFTY option contract available just below the forward index level is taken as the ATM strike. NIFTY option Call contracts with strike price above the ATM strike and NIFTY option Put contracts with strike price below the ATM strike are identified as out-of-the-money options and best bid and ask quotes of such option contracts are used for computation of India VIX.In respect of strikes for which appropriate quotes are not available, values are arrived through interpolation using a statistical method namely “Natural Cubic Spline”

After identification of the quotes, the variance (volatility squared) is computed separately for near and mid month expiry. The variance is computed by providing weightages to each of the NIFTY option contracts identified for the computation, as per the CBOE method. The weightage of a single option contract is directly proportional to the average of best bid-ask quotes of the option contract and inversely proportional to the option contract's strike price.

Computation of India VIX
The variance for the near and mid month expiry computed separately are interpolated to get a single variance value with a constant maturity of 30 days to expiration. The square root of the computed variance value is multiplied by 100 to arrive at the India VIX value.
The India VIX values will be computed up to 4 decimals with a tick value of 0.0025.

For further details please refer to the white paper with the detailed methodology on computation of India VIX at www.nseindia.com

VIX is a trademark of Chicago Board Options Exchange (CBOE) and Standard & Poor's has granted a licence to NSE to use such mark in the name of the India VIX and for purposes relating to the India VIX.

Three thoughts on VIX for markets

The VIX has a small history in India so far. Three broad takeaways for markets:  

• VIX and Nifty have a negative co-relation: In general India VIX starts to increase at the time of stress in the markets and falls as investors become calm. It is perceived to be one of the best tools to predict near-term market volatility. The correlation between Nifty and VIX over last 5 years is negative 0.84, a significantly high number, making it a strong indicator for prediction of stress in markets. 
• Markets rise once VIX peaks: Once the VIX has peaked, markets usually give a positive return over 1 week and 1 month. Of the 4 instances when India VIX has crossed 30% mark, Nifty has always given a positive return with average return of 6.5% in a month.
• VIX rises ahead of election result; falls post result announcement: Market is usually jittery prior to the declaration of election results as it is uncertain about the outcome. India VIX had jumped sharply prior to the declaration of results showing the underlying fear of investors on the uncertainty of the results. India VIX increased from 36% on 1st April'09 to 55% a few days before results. However, it fell sharply to 43% once results were announced. it is expected that VIX will rise as we near May this year too.

Competition Commission of India approves of combination of two banks as resultant business would have insignificant impact on competition

Ratnakar Bank Ltd., In re [2014] 41 taxmann.com 331 (CCI)

 

Proposed combination was to be approved when presence of acquirer in mortgage and banking business in India after proposed combination was insignificant and same did not have any appreciable adverse effect on competition.
 

Facts:

• A notice was given under section 6 of the Competition Act, 2002 (‘the Act’) to the Commission for the proposed combination relating to the acquisition by Ratnakar bank of the 'Relevant Business' of RBS, which included credit card business, mortgage portfolio business and banking business, pursuant to the Master Sale & Purchase Agreement; 
• Mortgage portfolio included housing loans and loans against property and banking business' includes providing small and medium sized enterprises with high end products and services.

The Competition Commission of India held as under:

• Both Ratnakar Bank and RBS have a relatively small number of branches operating in India. They provide banking and financial services in India; 
• After the proposed combination comes into effect, RBS would exit the credit card business, mortgage portfolio and business banking segment;
• The Ratnakar Bank has no presence in the credit card business. Its presence in the mortgage and banking business in India would be insignificant after the proposed combination;
• Thus, the proposed combination was not likely to have an appreciable adverse effect on competition in India and, therefore, it was to be approved under sub-section (1) of section31 of the Act.

Section 40(a)(i) disallowances based on residential status doesn’t violate non-discrimination clauses of treaties

Dy. CIT v. Gupta Overseas [2014] 42 taxmann.com 42 (Agra - Trib.)

The Tribunal held as under:

1. As section 40(a)(i) creates differentiation based on residential status, it does not violate non-discrimination clauses of treaties which forbid discrimination based on nationalities; 
2. A differentiation in treatment due to residential status cannot be covered by the scope of Article 24(1)/ Art. 25(1)/Art. 26(1) as such a differentiation is not due to nationality factor.

Routing of a legitimate expenditure through Profit and Loss Account isn't a precondition to allow such expenditure

CIT V. NAISHAD I. PARIKH (2013) 39 taxmann.com 191 (Gujarat)

Where claim of assessee regarding share trading and future options losses was substantiated by it by furnishing valid and statutorily accepted documents, merely debiting these items directly in capital account instead of in profit and loss account, could not be a ground to disregard legally acceptable claim of assessee.

Facts:

• The Assessing Officer disallowed the assessee’s claim of share trading and F&O losses on the ground that these transactions were not routed through the profit and loss accounts; 
• On appeal, CIT (A) did not agree with the reasoning of the Assessing Officer and thus, deleted the said additions; 
• Further, the Tribunal concurred with the findings of the CIT (A) as far as future holding loss was concerned and held in favour of the assessee however, for share trading loss, it remanded the matter to Assessing Officer.

The High Court held in favour of assessee as under:

• The transactions would not cast any doubt and there was no dispute over the quantum of loss computed by the assessee and it had substantiated the entire transactions by furnishing otherwise valid and statutorily accepted documents; 
• The Apex Court in case of Kedarnath Jute Mfg. Co. Ltd. v. CIT (1971) 82 ITR 363 had held that "whether the assessee is entitled to a particular deduction or not will depend upon the provision of law relating thereto and not on the view which the assessee might take of his rights nor the existence or absence of entries in the books of account be decisive or conclusive in the said matter"; 
• Thus, merely debiting these items directly in capital account instead of in P&L account and thus, not routing share trading account through audited account under section 44AB couldn’t be deemed as a valid ground to disregard overwhelming legally acceptable evidences to reject the claim of assessee; 
• In the instant case though the item, as rightly pointed out by both the authorities, could not have been debited directly in the capital account but in view of voluminous documents substantiating the claim of the assessee, there was no reason to interfere.

CIRCULAR NO. 1/2014

CHAPTER XVII-B OF THE INCOME-TAX ACT, 1961 - COLLECTION AND RECOVERY OF TAX - DEDUCTION AT SOURCE - CLARIFICATION REGARDING TDS UNDER CHAPTER XVII-B ON SERVICE TAX COMPONENT COMPRISED OF PAYMENTS MADE TO RESIDENTS

CIRCULAR NO. 1/2014 [F.NO.275/59/2012-IT(B)], DATED 13-1-2014

1. The Board had issued a Circular No.4/2008 dated 28-04-2008 wherein it was clarified that tax is to be deducted at source under section 194-I of the Income-tax Act, 1961 (hereafter referred to as 'the Act'), on the amount of rent paid/payable without including the service tax component.Representations/letters has been received seeking clarification whether such principle can be extended to other provisions of the Act also.
2. Attention of CBDT has also been drawn to the judgement of the Hon'ble Rajasthan High Court dated 1-7-2013, in the case of CIT (TDS) Jaipur v. Rajasthan Urban Infrastructure (Income-tax Appeal No.235, 222, 238 and 239/2011), holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act.
3. The matter has been examined afresh. In exercise of the powers conferred under section 119 of the Act, the Board has decided that wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately,tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component. 
4. This circular may be brought to the notice of all officer for compliance

Only drawer of cheque was liable under Negotiable Instrument Act even if cheque was issued from joint account

MRS. APARNA A. SHAH V. SHETH DEVELOPERS (P.) LTD. (2013) 40 taxmann.com 43 (Supreme Court)

The Supreme Court held as under:

• Considering the language used in section 138 of the Negotiable Instrument Act, 1881 (‘NI Act’) and taking note of background agreement pursuant to which a cheque was issued by more than one person, it was opined that it was only the drawer of the cheque who could be made liable for the penal action under the provisions of the NI Act; 
• Thus, under section 138 of the NI Act, it was only the drawer of the cheque who could be prosecuted. In the instant case, admittedly, the appellant was not a drawer of the cheque and she had not signed the same; 
• As per the provisions of the NI Act, in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted, unless the cheque has been signed by each and every person who is a joint account holder. It couldn’t be said that the complainant had no remedy against the appellant, but certainly not under section 138; 
• Under these circumstances, the appeal deserved to be allowed and process in Criminal case pending before the Court of Metropolitan Magistrate deserved to be quashed accordingly, against the appellant.

Succession & Wills

What is Estate?

Estate consists of various assets like immovable properties: House, factory, shop, office, farm, etc. and movable properties: jewellery, paintings, cash; bank balances, bullion, shares, mutual funds, insurance policies, recurring; fixed deposits etc. 

What is estate planning?

Estate planning is a systematic continuous process to control and mange assets fulfilling various familial, social; spiritual obligations while protecting the assets from creditors and optimising various costs.

Estate planning has varied objectives:

• Person want to retain control and management of his assets during his life time and also after his death.
• He wants to transmit his assets amongst the family members whether existing or non-existing.
• He wants to protect his property from the creditors.
• All this is done at a optimised costs. Costs can be taxes, stamp duty, etc.

Estate planning for whom?

It is generally thought that estate planning is required only for the High Networth Individuals (HNIs) or wealthy person. Middle class families who are barely hand to mouth is not required to do any estate planning. It’s a myth. In fact, every person irrespective of economic standing, age, marital status is required to plan for his estate.

Estate Planning devises

Estate planning can be devised using one or more of following:

a) Will

b) Trusts private or public charitable

c) Mutual Wills

d) Joint ownership, tenancy in common

e) Transfers during lifetime

At times each of the above devises is used in the complex structure. Complexity further added depending upon the place of situation of the property and applicability of personal laws.

Succession

The rights and obligations of the deceased person get transferred to the living person under the process of succession. They pass to some person, whom the dead person or the law on his behalf, has appointed to represent him in the world of living.

Succession depends on:—

(a) The law applicable to the deceased at the time of his/her death

(b) The machinery of succession, whether

(i) Testamentary under Will of the deceased, or

(ii) Intestate in the absence of valid Will, or

(iii) Operation of law, by nomination, transmission,

(c) The nature of property or rights and obligations held by the deceased at the time of death.

Movable property

Succession of the movable property in India of a deceased person is regulated by the law of country in which such person had his domicile at the time of his death. If a person dies leaving movable property in India in absence of proof of any domicile elsewhere, law in India regulates succession of his movable property.

Immovable property

The laws of India regulate succession of the immovable property situated in India, wherever such deceased person may have/had his domicile at the time of death.

Laws governing the succession of the deceased person at the time of death are dependent upon the nature of persons, which are as under:

• Hindu Succession Act, 1956 and some provisions of Indian Succession Act mainly govern Hindus, Buddhist, Sikh and Jains.
• Mohammedans are mainly governed by their Personal Law.
• Indian Succession Act, 1925 is applicable to others; i.e., Christians, Jews, Parsis (as applicable to Parsis) and the person whose marriage is solemnised under Special Marriage Act, 1954 (including their issues).

However if both the spouses are Hindus, Buddhist, Sikh and Jains even though their marriage is solemnised under Special Marriage Act, 1954 shall be governed by Hindu Succession Act. It may be noted that these provisions shall apply only to the person whose marriage is solemnised under Chapter II of the Special Marriage Act and not to the spouses who are already married and thereafter get their marriage registered under Chapter III of the Special Marriage Act.

Hindu Succession Act makes a distinction between Male & Female for deciding the manner of distribution of their estates. Heirs are defined as Class I, Class II, Agnates and Cognates for the Hindu male. Devolution of the property of Hindu male dying intestate is governed by section 8 and that of distribution of property of Hindu female dying intestate is governed by the Sections 15 & 16 of the Hindu Succession Act, 1956.

Property of the Hindu male devolves upon his widow/s, children (including heirs of a predeceased child through such child) and mother in equal share (Class I). In case none of them are present, the property Will pass to Class II heirs. Class II heirs are divided into nine categories consisting of father if he is alive and failing which to his son’s/daughter’s children, brother, sister and other relative specified in schedule. In case none of Class II heirs are present then the property shall devolve to agnates (person is said to be agnate of another if the two are related by blood or adoption wholly through males) and then to cognates (person is said to be cognate of the another if the two are related by blood or adoption but not wholly through males). Brothers & sisters under Class II shall not include brother/sister by uterine blood. However in absence of Class I heirs’ uterine brother is entitled to succeed to the estate of deceased bachelor.

Illegitimate children cannot be included within the meaning of the words sons & daughters as used in the list of Class I heirs. When a man marries second time during lifetime of his first wife, children from both wives would be entitled to share the retiree benefits after his death. The second marriage being void, his second wife would not be entitled to the retiree and pensioner benefits. The first wife would be entitled to gratuity, provident fund, family pension and other benefits. With the deletion of section 24 remarried women (widow of predeceased son, widow of predeceased son of a predeceased son) can succeed to the estate of Hindu dying intestate. A Hindu who has converted himself to Muslim is not entitled to inherit the property of a Hindu under Hindu Succession Act. A step-mother is not entitled to get property of her son or her daughter; however she can be an heir as father’s widow under Entry VI of Class II.

When a Hindu dies, after the commencement of the Hindu Succession (Amendment) Act, 2005 his interest in the joint family properties governed by the Mitakshara law, shall devolve by testamentary or intestate succession and not by survivor-ship. The interest of a Hindu Mitakshara co-parcener shall deemed to be share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, whether or not he was entitled to claim partition.

• Further his co-parcenary/joint property shall be deemed to have been as if partition had taken place.
• The daughter is allotted the same share (assets/liability) as is allotted to a son.
• The child of the predeceased son/daughter or grandchild of the pre-deceased son/daughter shall be entitled for the share of predeceased son/daughter.

Whereas property of Hindu female shall devolve upon her husband and children (including heirs of a predeceased child through such child) in equal share. In case none of them are present, property Will pass to the heirs of her husband and failing which to her mother and father and later on to the heirs of the father and lastly to the heirs of mother. However any property inherited by female Hindu from her father/mother shall, in absence of her children (including grand children) devolve upon heirs of father and any property inherited from her husband or her father in law shall, in absence of her children (including grand children) devolve upon heirs of the husband.

Husband Will not be entitled to succeed to the property left by his wife, if she has acquired the said property from her father. Accordingly issue less female Hindu’s property (property acquired from her father/mother) shall devolve on the heirs of her father. However property earned by a woman exclusively is Stridhan and Will devolve upon her heirs. In other words where property was inherited by a lady from her parent(s), it shall not pass to her husband or to her husband’s heir where she dies without children or children of predeceased children. Any property possessed by a female Hindu shall be held by her as full owner thereof and not as a limited owner (Sec. 14). Illegitimate daughter cannot claim heir-ship as per section 15 of the Act. Further ‘step son’ and ‘step daughter’ are not included in the term ‘son’ or ‘daughter’ in section 15(1) and accordingly are not entitled to share in property.

By the 2005 Amendment Act, four categories of heirs which were hitherto placed in Class II were elevated to Class I heirs namely (i) Daughter’s son’s son, (ii) Daughter’s daughter’s daughter; (iii) Daughter’s son’s daughter; and (iv) Son’s daughter’s daughter. While adding these categories to Class I, the corresponding entries in Class II were not deleted. Thus there is overlapping between Class I and Class II schedule.

The Law Commission of India in its 204th Report on the Hindu Succession Act, 1956 has suggested to the Government that that father should be placed along with mother in Class I and both together should take one share. The Commission has also suggested revision of Class I heirs as in the opinion of the Commission, Class I heirs list in the Schedule is complex and cumbersome and is not amenable to easy understanding.

Person dying intestate

If person dies without making a ‘Will’, he is said to have died intestate and in such case his property Will be inherited by his heirs in accordance with law of succession as discussed above and in case a person dies leaving behind Will his property shall be distributed as per the terms of ‘Will’ which is know as Testamentary Succession. In other words Testamentary Succession means succession to a property of the deceased in accordance with the provisions in the last Will and Codicil of the deceased.

A Mohammedan can, by ‘Will’, dispose of not more than 1/3rd of his estate after payments of debts and balance 2/3rd of property devolves according to the applicable Shariat Law. However testator may bequest more than 1/3rd of his property provided heirs consent to such bequest only AFTER Testators death. If the testator has no heirs, he may bequest the whole of his property to stranger. In matters of Succession and inheritance, Hindu Law governs a Khoja.

‘Will’ means a legal declaration of the intention of a testator with respect to his property, which he desires to be carried into effect after his death — Section 2(h) of Indian Succession Act, 1925. ‘Will’ as including Codicil and every writing making a voluntary posthumous disposition of property — Section 3(64) of General Clauses Act, 1987.

‘Codicil’ means an instrument made in relation to Will and explaining, altering or adding to its dispositions and is deemed to form part of the Will — Section 2(d) of Indian Succession Act, 1925.

Essential Characteristics of Will are:

• The document must be in accordance with the requirements laid down under section 63 of Indian Succession Act, 1925; i.e., executed by a person competent to make Will and attested as required under the Act.
• The declaration should relate to the properties of the testator, which he wishes to bequeath.
• The declaration must be to the effect that it operates after the death of Testator and is revocable during his life time.
• After the Indian Succession Act, 1925, Wills (except made by Mohammedans) should be made in writing.

Types of Wills

Under the Indian Succession Act, Will can be Privileged Will or Unprivileged Will.

Privileged Will

Any soldier being employed in an expedition or engaged in actual warfare, or an airman so employed or engaged, or any mariner being at sea, may, if he has completed the age of eighteen years, dispose of his property by a Wills made in the manner provided in Section 66. Such Wills are called privileged Wills. Privileged Wills may be made orally and may not always be in writing. If written in handwriting of testator, it may not be signed or attested. It is governed by sections 65

Unprivileged Will

Wills made by the persons other than stated above are Unprivileged Will. Such Wills are required to be in writing, signed by testator and attested by the two witnesses (except those made by Mohammedans). It is governed by section 63.

Will can be made by

Every person of sound mind, not being minor may dispose of his property by Will. As a general rule, until, the contrary is established, a testator is presumed to be sane and to have a mental capacity to make valid Will. However no person can make Will while he is in a state of mind arising from intoxication or from illness or from any other cause such that he does not know what he is doing — (Sec. 59 Indian Succession Act). Even persons who are deaf or dumb or blind can make Will provided they are aware what they do. Further person who is ordinarily insane, may make his Will during the interval in which he is of sound mind.

Essential clauses of Will

1. Name: The name and description like age, religion, community etc. of the testator. 
2. Revocation of earlier Wills: A declaration that the present Will is his last Will and testament and that he revokes all other earlier Wills, codicils. 
3. Appointment of Executors: An executor is a person named by the testator in the Will to whom the testator has confided the execution of Will. If legacy or bequest is given to executor it should be mentioned in the Will that he would be entitled to legacy even if he does not accept to act as the executor of the Will unless there is any contrary intention. 
4. Direction to pay dues if any 
5. Legacies and Bequest: This is important clause in the Will, because under these clauses the testator makes the disposition of his property. He can make requests to future person also. 
6. Residue clause: It is always advisable to have Residue Clause disposing of the residue (i.e., remaining property belonging to the testator at the time of the death which is not specifically disposed) of the testator’s property. If there is no residue clause such remaining property Will go to the legal heir of the testator. Even the legacy which lapse go back to intestacy if there is no residue clause. 
7. Testimonial Clause: The testimonial clause is as "in witness whereof I said _______ have hereunto set and subscribed my hand at ______ on this __ day of ______ 20__." 
8. Execution Clause: This is the last clause of the Will which begins with "Signed and acknowledged by the within named Testator as his last Will and Testament". The Testator should sign the execution clause in the presence of two witnesses who should also subscribe their signatures as witness in the presence of the Testator. The witness and/or his spouse cannot be made beneficiary under the Will as any bequest in their favour would be void. However validity of the Will and all other bequests made under it continue to remain valid. In such a case the indisposed portion of the bequeathed property shall devolve as per the law of inheritance. These provisions are not applicable to Hindu, Sikh, Jain or Buddhist. It is preferable to have a doctor to certify that testator is of sound mind and under no influence of alcohol when he made the Will.

Other Important points

1. Preparation of a Will does not require any specific legal language.
2. Will need not be stamped.
3. Registration of Will is not mandatory. However a registered Will has certain advantages.
4. A Will can be revoked at any time by the testator during his life time.
5. A Will stands revoked by marriage of the maker Section 69. However this rule does not apply to Hindus, Buddhists, Sikhs, Jains or Mohammedans Sec. 57.
6. Either the Hindu Succession Act or the Indian Succession Act does not put any embargo on the power and authority of the executants that a Will cannot be executed in the favour of a person who is professing another religion. 
7. It is important to note that the attesting witnesses need not know the content of the Will.
8. No alternation made in a Will after the execution shall have any effect, unless such alternation has been executed in the same manner as a Will and attested by two attesting witnesses Sec. 71.
9. In respect to construction of Wills, the law is well settled that intention of the testator has to be ascertained from the words used in the Will, keeping in view the surrounding circumstances, the position of the testator and his family relationship and that the Will must be read as whole.
10. No man having a nephew or niece or any nearer relative shall have power to bequeath any property to religious or charitable uses, except by a Will executed not less than twelve months before his death, and deposited within six months from its execution in some place provided by law for the safe custody of the Wills of living persons. However it is not applicable to Hindus, Buddhists, Sikhs, Jains & Parsis.
11. Any testator may, either personally or by duly authorized agent deposit with any Registrar his Will in a sealed cover superscribed with the name of the testator and that of his agent (if any) and with a statement of the nature of the document as per Section 42 of Registration Act, 1908.
12. The testator, or after his death any person claiming as executor or otherwise under a Will, may present it to any Registrar or Sub-Registrar for registration under section 40.

Probate

Probate is a certificate granted under the seal of Competent Court, certifying the Will (a copy whereof is annexure thereto) as the Will of the testator and granting the administration of the estate of the deceased in accordance with that Will to the executor named under the Will. No right as executor or legatee can be established in any Court of justice, unless a court of competent jurisdiction has granted probate of the Will under which the right is claimed, or has granted letters or administration with the Will or with the copy of an authenticated copy of the Will annexed.

As per Section 213 of Indian Succession Act, Probate is not necessary in the case of Will made by Mohammadans, However probate is necessary:

1. To all Wills codicils made by any Hindu, Buddhist, Sikh or Jain, on or after 1-9-1870, within the territories of the Lieutenant-Governor of Bengal or within the local limits of the ordinary original civil jurisdiction of the High Courts of Judicature at Madras and Bombay (Section 57); 
2. To all such Wills and codicils made outside those territories and limits so far as they relate to immovable property situate within those territories or limits (Section 57); 
3. In the case of Wills made by any Parsi dying, after the commencement of Indian Succession (Amendment) Act, 1962, where such Wills are made within the local limits of the ordinary original civil Jurisdiction of the High Courts at Calcutta, Madras and Bombay, and where such Wills are made outside those limits, in respect of immovable property situated within those limits. 
4. Wills of Christians dying after 27-5-2002 made within the territories mentioned in (1) above.

Letters of Administration

A letter of administration can be obtained from the Court of competent jurisdiction in cases where the testator has failed to appoint an executor under a Will or where the executor appointed under a Will refuses to act or where he has died before or after proving the Will but before administration of the estate. Letters of Administration are not always necessary in cases of intestacy of Hindus, Mohammedans, Buddhists, Sikhs, Jains, Indian Christians or Parsis. Letter of Administration are always necessary where a person (governed by the Indian Succession Act) dies intestate.

Succession Certificate

In case, where grant of Probate or Letters of Administration is not compulsory, Succession Certificate can be granted by the Court with respect to any ‘debt’ or ‘security’ to which a right is required to be established by Letters of Administration or Probate and for this purpose ‘security’ means Government Securities, shares, stocks and debentures in companies and incorporated institutions, debentures or securities issued by or on behalf of local authorities and any other security which the State Government may notify.

Court fees on application of Probate and Letters of Administration

Court fees are payable in the slab manner (In the State of Maharashtra) as under:

Value of property in the application Rate

Value of property in the application	Rate
Up to Rs. 50,000	2%
Between Rs. 50,001 & Rs. 200,000	4%
Between Rs. 200,001 & Rs. 300,000	6%
Above Rs. 300,001	7.5% but restricted to Rs.75,000

A maximum Court fees payable in the State of Maharashtra is Rs. 75,000 for obtaining a probate. No court fees was payable in case the Will is administered by the Woman Executor; i.e., executrix up to 23.03.2000. Court fees are payable only in respect of such assets of the estate as were at the time of death of the testator locally within the jurisdiction of the authority which grant probate.

Will vis-à-vis Nomination

The nomination continues only till the Will is executed. Once the Will is executed, the Will takes precedence over the nomination. Nomination does not confer any permanent right upon the nominee, nor does it create any legal right in his favour. In other words generally nominee is for all purposes a trustee for the property. However the provisions of law, under which nomination is made need to considered carefully to understand whether nomination would prevail or not.

Conclusion

In order to achieve your objective and have a happy ending best time to start planning as soon as possible. It’s better to act now, since life is full of uncertainties and no one has a second chance. Further more, in absence of social benefits in India, estate planning is important. Role of advisers is crucial who can guide to achieve objective considering the applicable laws with optimised costs.