Page 89 – Vaish Associates Advocates

Inter-corporate deposit to fall outside the ambit of ‘deposit’ under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999

In the recent judgment of Mr. Ashish Mahendrakar v. State of Maharashtra and Others (decided on September 13, 2019), the Hon’ble Bombay High Court declared that an inter-corporate deposit/loan, that is, a loan advanced/deposit made by a company with another company would not amount to a “deposit” within the meaning and for the purpose of the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 (“MPID Act”).

FACTS
Birla Power Solutions Limited (“Company”) had accepted deposits from 2009 to 2013. Shri Hajarimal Somai Memorial Trust (“Trust”) on March 09, 2012 had made a deposit of INR 1 crore with the Company. The deposit was to be repaid along with an interest of 10.75% per annum. The date of maturity of the deposit was March 08, 2013. However, the Company defaulted in the repayment of the principal amount and the interest.

Thus, Bhagwan Suryakant Seth filed a first information report against the Company, the managing director and other directors. Accordingly, an investigation was conducted and a charge-sheet was prepared. In the said chargesheet, Mr. Ashish Mahendrakar (“Petitioner”), one of the authorized signatories for the Company, who had executed important documents of the Company, had been indicted as accused number 11. MPID Special Case No. 4 of 2014 is pending before the special court (“MPID Case”).

In the meantime, the State of Maharashtra (“Respondent”), exercising its powers under Sections 4, 8 and 12 of the MPID Act, had issued two attachment orders dated March 19, 2016 and November 24, 2016. Further, a forensic audit was conducted with relation to the amounts accepted by the Company. The outstanding amount stated in the forensic audit included the amounts payable to the Trust.

ISSUE
Whether an inter-corporate deposit/loan registered under the provisions of the Companies Act, 1956 would amount to a deposit within the meaning and for the purpose of the MPID Act?

ARGUMENTS
The counsel appearing for the Petitioner contended that an inter-corporate deposit/loan would fall outside the purview of the MPID Act and would be governed by the Companies Act, 2013 (“Companies Act”) and its rules. The definition of ‘deposit’ under Section 2(c) of the MPID Act, if properly construed, does not include inter-corporate deposits. Further, the counsel for the Petitioner asserted that inclusion of the inter-corporate deposits in the outstanding amount of the forensic audit and the consequent attachment orders by taking into account the outstanding amount is legally impermissible and therefore, requested the Bombay High Court to quash the names of the inter-corporate deposit holders/lenders from the list of depositors in the MPID Case.

The Petitioner submitted that the object of the MPID Act was to protect the interests of the public, that is, the middle class and poor people, from companies who would swindle their deposits by offering unprecedented higher rates of interests and awards. The aim of the MPID Act was not to govern inter-corporate debts or transactions. Secondly, the Petitioner submitted that inter-corporate transactions are regulated by the Companies Act. On the other hand, Chapter V of the Companies Act and the Companies (Acceptance of Deposits) Rules, 2014 (“Rules”) regulate the acceptance of deposits. In the definition of the term ‘deposits’ in the Rules, inter-corporate deposits have been specifically excluded. Lastly, it was stated by the Petitioner that since the Companies Act has been enacted by the central legislature, the provisions of the Companies Act, the rules framed thereunder, and other central legislations cannot be overridden by the provisions of the MPID Act, which has been enacted by the state legislature.

On the other hand, the counsel for the Respondent had submitted that the present matter lacked substance since the Petitioner did not have any locus to file the matter. This was because none of the attached properties were of the Petitioner. The Respondent further submitted, that the definition of ‘deposits’ in the MPID Act had an exhaustive list of exclusions and inter-corporate deposits was not part of this exclusion list. Therefore, MPID Act did govern inter-corporate deposits. Lastly, the Respondent had submitted that the purpose of the MPID Act was to provide an effective mechanism to help the investors, whether a corporate or non-corporate, who has been duped by the financial establishments.

OBSERVATIONS OF THE BOMBAY HIGH COURT
The Bombay High Court observed that the Petitioner was arraigned in the charge-sheet as an accused, and thus, the Petitioner did have locus to file the present matter. The Bombay High Court then reviewed the definition of ‘deposit’ as per the MPID Act, which stated that term deposit covers receipt of money or acceptance of any valuable commodity, except those which have been specifically excluded in the definition.

Further, the Bombay High Court observed that the statement of objects and reasons in a statute cannot determine the true meaning and effect of the provisions of such statute, but it may provide a gainful reference for understanding the background of the legislation, the state of affairs that preceded the enactment, the attendant and surrounding circumstances in relation to the statute and the mischief which the statute sought to curb.

The Bombay High Court relied on New Horizons Sugar Mills Limited v. Government of Pondicherry through Additional Secretary and Another [(2012) 10 SCC 575] wherein the Supreme Court dealt with issues of the objects behind the enactment of, and the legislative competence to enact, the Tamil Nadu Act, the Maharashtra Act and the Pondicherry Act. The apex court had stated:

“In addition to the above, it has also to be noticed that the objects for which the Tamil Nadu Act, the Maharashtra Act and the Pondicherry Act were enacted, are identical, namely, to protect the interests of small depositors from fraud perpetrated on unsuspecting investors, who entrusted their life savings to unscrupulous and fraudulent persons and who ultimately betrayed their trust.

The three enactments referred to hereinabove, were framed by the respective legislatures to safeguard the interests of the common citizens against exploitation by unscrupulous financial establishments mushrooming all over the country. That is, in fact, the main object indicated in the Statement of Objects and Reasons of the three different enactments….We have to keep in mind the beneficial nature of the three legislations which is to protect the interests of small depositors.”

The Bombay High Court thus observed, that MPID Act and the enactments passed by other state legislatures were to protect the interests of the depositors. On reviewing the MPID Act, no distinction had been made between a corporate and an ordinary deposit. Further, the term ‘depositor’ had not been defined under the MPID Act.

The Bombay High Court also observed that a corporate entity while making a business decision should have a feel of the financial market. The entity should weigh in a number of factors before making such a decision such as the creditworthiness of the other company, the business model of such company, the financial condition and the corporate structure and governance of the company. Moreover, the company should check whether such other company would be able to honour its financial commitment. A company, having key personnel should make an informed decision and should not be easily lured by a mere promise of higher percentage of return on investments. According to the Bombay High Court, this was the reason why inter-corporate deposits were excluded from the definition of deposits in the Companies Act and its Rules.

Another angle taken by the Bombay High Court was that if the corporate depositors are clubbed with other depositors as investors, then this would be detrimental to the small time depositors as, if such corporate depositor would compete with the small depositors and claim pari passu distribution, then the small depositors would be deprived of realization of their money to the full potential.

DECISION OF THE BOMBAY HIGH COURT
The Bombay High Court held that an inter-corporate deposit/loan would not amount to a “deposit” within the meaning and for the purpose of the MPID Act. Thus, the petition was allowed and the inter-corporate loan for the proceedings leading to the MPID Case would not be taken into consideration for such proceedings.

Vaish Associates Advocates View
The Bombay High Court has justly observed that the MPID Act is to protect the rights of the small investors, that is, the middle and poor class and not that of the companies, which are expected to make informed decisions after due diligence and not be easily lured by mere promise of high returns on investments unlike an unsuspecting small time depositor. The intent of the MPID Act is to protect the interests of small depositors, who invest their life’s earnings and savings in schemes for making profit which are floated by unscrupulous individuals and companies, both incorporated and unincorporated. More often than not, the investors end up losing their entire deposits. Thus, the remedy provided by the MPID Act is for small investors and not for enforcement of rights of one corporate entity against another.

Further, Section 186 of the Companies Act provides for loan and investment by a company to another company. The remedy for a company having deposited in another company and where such company has failed to repay the depositor company, would be regulated by section 186 of the Companies Act and not the MPID Act.

For more information please write to Mr. Bomi Daruwala at [email protected]

Competition News Bulletin – October 2019

We are pleased to share the October 2019 edition of our newsletter- Competition News Bulletin. Some highlights of this issue are as under:

CCI Imposes Penalty on LPG Gas Vendors for Cartelization in Bidding Process in tender floated by HPCL
CCI imposes penalty for collusive bidding in tender floated by Pune Municipal Corporation
CCI orders investigation against Maruti Suzuki for allegedly controlling discounts of its dealers in Western India
EC opens investigation into possible anti-competitive conduct of Amazon
CCI directs investigation into India specific warranty policy of Intel finding it potentially abusive of dominance
EC fines Qualcomm for engaging in predatory pricing in the market for UMTS baseband chipsets
CCI approves acquisition of shares of TVS Automobile Solutions Pvt. Ltd by Mitsubishi
EC approved acquisition of Pfizer’s Consumer Health Business by GlaxoSmithKline subject to conditions

The Bulletin is amongst India’s first comprehensive Newsletters on the subject published by Vaish Associates Advocates with an aim to supplement CCI’s efforts towards competition advocacy

For more information please write to Mr. M. M. Sharma at [email protected]

Jurisdiction determined as per Section 42 and the doctrine of Forum Conveniens

Aasma Mohammed Farooq and Ors. v. Union of India and Ors.
Link to Judgement / MANU/DE/4514/2018

In this case a writ petition had been filed before the Delhi High Court (Court) challenging the provisions of Section 5(1), 5(5), 8(3), 8(5) and 8(6) of the Prevention of Money Laundering Act, 2002 (‘Act’). The Petitioners sought quashing of provisional attachment, impugned original complaint and the show cause notice.

The notice to show cause under Section 8 of the Act had been issued by the Adjudicating Authority, based in Delhi.

On behalf of the respondent, the maintainability of the petition was objected on the ground that it would go against the principles of ‘forum conveniens’ and so the Court should not entertain this petition.

As per Section 42 of Act, i.e., Appeal to High Court – Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law or fact arising out of such order:

Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.

Explanation.-For the purposes of this section, “High Court” means-

(i) The High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain;

and

(ii) Where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain.

In this case, reference had also been placed on the judgment of Five Judges of this Court in the case of M/s. Sterling Agro Industries Ltd. v. Union of India & Ors. (AIR 2011 Delhi 174)[http://lobis.nic.in/ddir/dhc/DMA/judgement/01-08-2011/DMA01082011CW65702010.pdf] to contend that even if the impugned order has been issued by an Authority and the same constitutes a part of cause of action to make the writ petition maintainable in this Court, yet the same may not be a singular factor for this Court to decide the matter on merits and this Court can refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens.

The Court held that because the notice under Section 8 of the Act has been issued by the Authority in Delhi it can entertain the writ petition because a part of cause of action has arisen under the jurisdiction of this Court but decided against it as it is not the forum conveniens.

Since the petitioner was based in Mumbai and the properties were located in Mumbai. Moreover, the provisional attachment order had been passed in Mumbai. The complaint though, filed before the Adjudicating Authority in Delhi, it encompassed all the facts that had arisen in Mumbai. It is only after filing of the original complaint as contemplated under Section 5(5) of the Act before the Adjudicating Authority, which is located in Delhi that the impugned notice had been issued from Delhi but the fact remains that nothing had happened in Delhi. Only notice to show cause had been issued by Adjudicating Authority based in Delhi.

Therefore, the Court decided that in this case the Bombay High Court shall be the forum conveniens and it is where the party aggrieved against the orders passed by the Appellate Authority shall approach, in terms of Section 42 of the Act and thus, this Court shall not entertain the present writ petition.

The writ petition was dismissed as infructuous, with liberty to the Petitioner to approach the Bombay High Court.

For more information please write to Mr. Vijay Pal Dalmia at [email protected]

Independence of proceedings of Special Courts and Enforcement Authorities under PMLA

Case: Navdeep Singh vs. Assistant Director, Directorate of Enforcement
Judgement Copy / MANU/PH/1764/2018

In this case before the High Court of Punjab and Haryana (Court), the petitioner, Navdeep Singh, had filed a petition for quashing of complaint under the Prevention of Money Laundering Act, 2002 (PMLA).

Prior to this, there was specific information with the police to the effect that the petitioner had indulged in sale of narcotics and it was pursuant to the said secret information that the petitioner and his co-accused, Srabjit Singh, were arrested and the petitioner was found in possession of 95 grams of heroin and an amount of Rupees 9 lacs was also recovered from him. Consequently, FIR was lodged for offence under Sections 21 and 25 of Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act). Since offence under Section 21 of NDPS Act is listed amongst the scheduled offences in the ‘Schedule’ to the PMLA, therefore, an offence under Section 3 punishable under Section 4 of the PMLA was attracted.

When the proceedings under Section 5 of the PMLA Act for attachment of amount of Rupees 9 lacs were initiated and provisional attachment order was passed which was confirmed by the Adjudicating Authority, the trial in respect of the NDPS case was still pending. Even when the complaint was filed, the trial was still pending and it was afterwards that the trial concluded and the petitioner and his co-accused were convicted.

The material question before the Court was whether prosecution for offence under Section 3 of PMLA could be initiated during the pendency of attachment proceedings or before the attachment confirmation attains finality or before the conviction of the petitioner under the NDPS Act attains finality.

The counsel for respondents contended that there is no statutory bar for prosecuting the accused under PMLA either during pendency of proceedings under any other Act or even during pendency of the attachment proceedings under PMLA and placed reliance upon judgment of Delhi High Court in J. Sekar v. Union of India (2018 III AD ( Delhi ) 638) [http://lobis.nic.in/ddir/dhc/SMD/judgement/11-01-2018/SMD11012018CW53202017.pdf] in which the Division Bench, after examining the scheme of PMLA observed as follows:

“36. There are, therefore, two parallel streams-

(i) criminal proceedings before the Special Court for trial of the offences under Section 3 read with Section 4 PMLA and;

(ii) the departmental proceedings before the authorities instituted under the PMLA, i.e. the Director, the AA, and the AT, the orders of which are subject to appeal before the High Court.”

The Court held that the proceedings for attachment are separate and in the nature of interim measures required to be taken to avoid a situation where proceedings are rendered redundant on account of the property being squandered away. If the designated officer has reason to believe, based on the material in his possession, that a person is in possession of proceeds of crime and, such proceeds, are likely to be concealed, transferred or dealt with in any manner which may result in frustrating proceedings relating to confiscation of ‘proceeds of crime’, he may proceed to attach the property in question. In fact it is in anticipation of prosecution that attachment proceedings are initiated.

Additionally, the second proviso to Section 5(1), when read with the first proviso, would itself make it clear that attachment or pendency of attachment proceedings would not affect filing of a complaint under PMLA. While the first proviso to Section 5(1) envisages the provisional attachment being made simultaneously with the filing of the challan in the criminal Court for offences under Sections 3 and 4 of PMLA, the second proviso carves out an exception by providing that in case the Director or any other authorised officer has reason to believe that if such property involved in money laundering is not attached immediately the non-attachment of the property is likely to frustrate any proceeding under this Act, the attachment may be made prior to initiation of criminal proceedings.

While proceedings under Sections 5 and 8 of PMLA are conducted by Enforcement Authorities, a complaint for offence under section 3 of PMLA is dealt with by a Special Court presided over by a judicial officer. Needless to mention that the Special Court is neither bound not governed not influenced by any order passed by the Enforcement Authorities and has to act independently on the basis of evidence led before it.

IT was also held that it was not the order of attachment which is foundation for lodging a complaint under section 3 of PMLA but it is the factum of recovery of the amount of Rupees 9 lakhs, prima facie believed to be ‘proceeds of crime’ which forms the foundation for prosecuting the accused for offence under section 3 of PMLA.

Thus it was found that there is no ground for quashing the complaint and the petition was dismissed.

For more information please write to Mr. Vijay Pal Dalmia at [email protected]

Taxbuzz | Taxation Laws (Amendment) Ordinance, 2019 clarified by Circular No. 29 of 2019

Taxation Laws (Amendment) Ordinance, 2019 clarified by Circular No. 29 of 2019

The Taxation Laws (Amendment) Ordinance, 2019 (“the Ordinance”), promulgated by the President on 20.09.2019, had interalia introduced a new provision, viz., section 115BAA in the Income Tax Act, 1961 (“the Act”) providing for a lower rate of tax at 22% (plus applicable surcharge and cess) for domestic companies, subject to fulfilment of certain conditions. Simultaneously, section 115JB relating to payment of Minimum Alternate Tax (‘MAT’) on book profit was also amended to provide that companies opting for preferential rate of tax under section 115BAA of the Act will be exempt from MAT on book profit under the former section.
In our last TaxBuzz dated 25th September, 2019, where we had analyzed the aforesaid amendments introduced by the Ordinance, we had opined that since the provisions of section 115JB have been made inapplicable to companies opting preferential rate of tax under section 115BAA, the set-off of brought forward MAT credit available under section 115JAA against tax liability under the new provision would be highly contentious.
Further, the issue whether brought forward loss needs to be segregated to determine amount of loss attributable to claim of additional depreciation under section 32(1)(iia), for the purposes of determining tax liability under the new provision of section 115BAA, was ambiguous.
The CBDT vide Circular No.29 of 2019 dated 02.10.2019 (“the Circular”) has clarified that once a company has opted for preferential rate of tax of 25.17% under section 115BAA, such company shall not, in the year of exercise of option or in any succeeding assessment year be:
- allowed to claim set-off of any brought forward loss attributable to additional depreciation under section 32(1)(iia) of the Act;
- eligible to set-off brought forward MAT credit.

Observations/ Comments

Considering that the CBDT vide aforesaid Circular has clarified the legislative intent of not allowing set-off of MAT credit once the company opts for preferential of tax under the new provisions of section 115BAA of the Act, it may not, in our view, be possible to contend otherwise.
It is advisable that for companies having unutilized MAT credit to first exhaust the same by remaining under the existing scheme of taxation and thereafter opt for the new scheme of preferential tax under section 115BAA. It may further be noted that since MAT payable under section 115JB has been reduced from 18.5% to 15% vide the Ordinance, there would be scope for increased set-off of brought forward MAT credit by 3.5%, if the companies opt to remain under the existing scheme of taxation.

For more information please write to:
Mr. Gaurav Jain at [email protected]
Mr. Deepesh Jain at [email protected]

Taxbuzz | The Taxation Laws (Amendment) Ordinance, 2019

With aim to provide fillip to the sluggish economy and promote growth and investment, the Government has by Ordinance made amendments in the Income Tax Act, 1961 (“the Act”) vide the Taxation Laws (Amendment) Act, 2019 which was promulgated by the President on 20.09.2019.

Key features of the aforesaid amendments are as under:

Section 115BAA – Lower tax rates introduced for domestic companies

A new section 115BAA has been inserted w.e.f. assessment year 2020-21 which provides option to a domestic company to pay tax at lower rate of 22% (plus applicable surcharge and cess) as opposed to normal tax rate of 30%/ 25% (plus applicable surcharge and cess), provided the income is computed-
- without claiming exemption/ deduction
  - u/s 10AA [SEZ units],
  - u/s 32(1)(iia) [additional depreciation qua new plant and machinery @ 20%/ 30%],
  - u/s 32AD [15% on new assets in undertaking set up in specified backward areas in Andhra Pradesh, Bihar, Telangana, and West Bengal]
  - u/s 33AB [specified percentage of amounts deposited with Tea/ Coffee/ Rubber Board]
  - u/s 33ABA [specified percentage of amounts deposited in Site Restoration Account]
  - u/s 35(1)(ii)/(iia), 35(2AA) [specified deduction for scientific research]
  - u/s 35AD [expenditure on specified business]
  - u/s 35CCC [expenditure on agricultural extension project]
  - u/s 35CCD [expenditure on skill development project]
  - under Part C of Chapter VIA except section 80JJAA of the Act (such as 80IA/ IB/ IC/ ID/ IE etc.)
- without set-off of any brought forward losses to the extent such loss relates to deductions mentioned above. Such losses would also not be allowed to be carried forward to subsequent years.
- after claiming depreciation other than additional depreciation u/s 32(1)(iia).
Benefit of lower rate under the aforesaid section can be exercised by the company from any year commencing from AY 2020-21 or onwards. Such option is to be exercised in prescribed manner, before due date of return u/s 139(1) for the year in which option is exercised. Option once exercised would be binding for subsequent years and cannot be withdrawn.

Observations/ Comments:

Effective tax rate u/s 115BAA would be 25.168% (including 10% surcharge and 4% cess). Surcharge in respect of income chargeable to tax under section 115BAA is prescribed @ 10%.
Benefit is available only to domestic companies and not to other categories of assessee like partnership firm, LLP, foreign company etc.
Domestic company will have to weigh the benefit of lower rate under this provision with effective tax rate under existing scheme arrived after taking specified deduction(s)/ exemption(s). If the benefit on accounts of deduction u/s 10AA or additional depreciation or under Chapter VIA (Part C) etc. are expected to be substantial over the years, the domestic company may choose not to exercise such option. Option u/s 115BAA in such cases may be exercised later when benefit of such deductions/ exemption recedes.
Only brought forward losses attributable to specified deductions/ exemptions are not allowable. Other brought forward losses and unabsorbed depreciation u/s 32(2) are allowed to be set off.

Section 115BAB – Lower tax rates introduced for domestic manufacturing companies

New section 115BAB has been inserted w.e.f. assessment year 2020-21 which provides option to a domestic manufacturing company to pay tax at a lower rate of 15% (plus applicable surcharge and cess) if such company is set-up and registered on or after 1st October, 2019 and commences manufacturing activity upto 31st March, 2023.
Surcharge in respect of income chargeable to tax under section 115BAA is prescribed @ 10%.
Akin to the provisions of section 115BAA, income for the purposes of the aforesaid preferential rate has to be computed without claiming exemptions / deductions, set-off of brought forward losses, as prescribed in that section and discussed above.
Additionally, following conditions must be fulfilled by the company to avail benefit of lower tax rate:
- company must not be formed by splitting up, or the reconstruction of a business already in existence;
- company must not use machinery or plant previously used for any purpose. Used plant and machinery to the extent of 20% of total value of plant and machinery is permissible;
- company must not use building previously used as a hotel or a convention centre.
Similar to provisions of section 80IA(10), sub-section (4) of section 115BAB empowers the assessing officer to determine/ deem reasonable profits of such domestic company, if such company has business arrangements or enters transaction with connected parties in a manner that it produces more than ordinary profits. Domestic transfer pricing provisions contained in section 92BA have been made applicable to transactions of eligible companies with connected parties.
Akin to provisions of section 115BAA, if company opts for lower rate of tax given under this section, it shall not be able to subsequently withdraw the option.
Comparative tax rates for assessment year 2020-21 pre and post the Ordinance for domestic companies are as under:

Section 115JB – Reduced tax on book profit of companies not claiming benefit u/s 115BAA/ 115BAB

Provisions of section 115JB have been amended to reduce the Minimum Alternate Tax (MAT) on book profit from 18.5% to 15%, w.e.f. assessment year 2020-21.
Companies availing benefit of lower tax rate under new provisions of sections 115BAA/ 115BAB have been exempted from MAT on book profit under section 115JB.

Observations/ Comments:

Considering that section 115JB shall not be applicable to companies opting for tax under the new provisions of sections 115BAA/ 115BAB, the issue whether brought forward MAT credit u/s 115JAA shall be available for set off against the tax liability under the new provisions would be contentious.

Section 115QA – Tax on buyback of shares

Section 115QA was inserted vide Finance Act, 2013 providing for 20% tax in the hands of domestic company on ‘distributed income’ to the shareholders on buyback of unlisted shares.
The aforesaid section was amended by the Finance (No.2) Act, 2019 to also include buy back of shares listed on a recognised stock exchange.
Since the aforesaid amendment was brought in the middle of the year through the interim budget (Finance No.2) Act, 2019 on 05.07.2019, the same was considered to be harsh for listed companies which had on the basis of the existing provisions of no buy back tax, announced buy back of its shares prior to promulgation of the aforesaid new provision.
As a measure of relief to such companies, section 115QA has been further amended to exclude transaction of buy-back of listed shares announced before 5th July, 2019.

Rationalization of surcharge

Vide Finance Act (No.2), 2019, surcharge on income tax was increased for individuals, HUF, BOI, AOP and artificial judicial person falling in higher income bracket in the following manner:

The aforesaid higher surcharge of 25% and 37% introduced vide Finance Act (No.2), 2019 has been removed for-
- Foreign Institutional Investors (FIIs) deriving income by way of capital gains from transfer of securities covered under section 115AD (1)(b);
- individuals, HUF, BOI, AOP and artificial judicial person deriving income by way of capital gains on transfer of equity shares or units of equity-oriented funds (covered u/s 111A and 112A) .
Unlike individuals / HUF, BOI, AOP the benefit of lower surcharge to FIIs covered under section 115AD(1)(b) is available on capital gains from transfer of all securities like debt oriented funds and not just equity/ equity oriented funds.
Withdrawal of higher surcharge would encourage/ boost investments in capital investments.

CBDT Circular- High Depreciation on Motor Vehicles

With intent to provide boost to ailing automobile sector, new higher rates of depreciation have been notified by CBDT for motor cars/ vehicles acquired on or after 23rd August, 2019 and before 1st April, 2020 and put to use by that date:
- For motor-cars other than those used in a business of running them on hire, rate of depreciation is enhanced to 30% as against existing rate of 15%;
- For motor buses, motor lorries and motor taxis used in a business of running them on hire, rate of depreciation is enhanced to 45% as against existing rate of 30%.