can the date of audit report be later than the Notice to AGM eg: Dt of Notice 05.09.09 Dt 0f AGM 30.09.09 and the DT of audit report is 28.09.09

As I understand , A notice of AGM to be given 21 days in advance to transact following business of the company. 1. declaring dividend 2. Adoption of accounts and auditor report, directors report. 3. election of directors  4. appointment of Auditors. Apart from this special business can be transacted. In absence of this it will be incomplete notice.In your case if audit has not been completed on time of signing the notice , a company can not sent copy of annual accounts and auditor report to the members. In absence of annual accouts and auditor report U can call meeting but hav to be adjourn. More than this may be consultant with Company Secretary

k thanks sir..

There is a lot of argument in most of the posts whether a gift deed should be made or not. The entire mindset of most people seem to be more on form over substance rather than substance over form. Everyone are just hell bent on giving everything a proper legal form and totally ignore the substance.

One thing is certain, a stamp paper cannot make anything genuine. It is the law of the state or land whether a stamp paper has to be used. I will discuss that later. If a stamp paper could make anything genuine, then on a Rs.100 stamp paper I Mr. so and so hereby gift the Chhatrapati Shivaji Maharaj Terminus Mumbai to Mr. so and so out of natural love and affection. Absurd, isnt it?

Now let us get to the substance of the transaction rather than the legal form. What is essential for assessee to establish as per the incometax act is the ICG
I = Identity
C = Capacity
G = Genuineness

First you should establish the identity of the person giving you the gift. If the gift has come to you out of natural love and affection, you will not have problem for this. You will have the identity proof, cheque number and such details and also proof of clearance of cheque or debit from donor's side. Just simply having a money coming from some bank account does not establish identity. You could very well have a letter from the donor stating that he is giving you the cheque for you (out of love and affection) and there are no strings attached or compulsion to return the same and no reciprocation is expected. The money is yours at your disposal as you like to use it.

Next you have to establish capacity. It should not be by cash deposited to the account and then cheque issued. the balance sheet and cash flow of the donor to gift should be established beyond dout.

Last, but not the least is genuineness. A stamp paper does not establish genuineness and natural love and affection. It is wholly by test. There can be natural love and affection between the relatives as specified in the definition provided for by the department. Obviously a person will not have love and affection for neighbour's wife and children togift large amounts. Say you have gifts like these from non relatives of aggregate below Rs.50,000 on stamp paper. AO can doubt the element of love and affection unless you can really proove it and proceed to tax it as income from other sources as the test of genuineness fails. A stamp paper does not prove love and affection. That has to exist beyond doubt.

Nowhere in the act is it written that a stamp paper should be used to express love and affection even from a relative. It exists naturally.

The Act does not mention stamp paper for the gift. It is just that people feel the need of showing genuineness by a stamp paper. That is a misconception.

Now for the requirement of stamp paper, you have to strictly follow the law of the state where you or donor are residing. If the subject gift is an immovable property, you will have to follow the laws and registration procedures of the State where the property is situated and use appropriate stamp duty.

Read the clause under section 56. It reads
Provided that this clause shall not apply to any sum of money received

(a) from any relative; or

(b) on the occasion of the marriage of the individual; or

(c) under a will or by way of inheritance; or

(d) in contemplation of death of the payer; or

(e) from any local authority as defined in the Explanation to clause (20) of section 10; or

(f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or

(g) from any trust or institution registered under section 12AA.

If you receive any sum of money from these sources, this clause shall not apply. Nowhere is the condition mentioned that there should be a gift deed. Everyone has the habit of reading this as a gift because of the redundant gift tax act. However, the clause reads as ANY SUM OF MONEY RECEIVED FROM. Moreover would a  fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or any trust or institution registered under section 12AA pay the money with a stamp paper?

In this same clause, property from 1/10/2009 is defined as:-
(d) property means

(i) immovable property being land or building or both;

(ii) shares and securities;

(iii) jewellery;

(iv) archaeological collections;

(v) drawings;

(vi) paintings;

(vii) sculptures; or

(viii) any work of art;

If the gift is for immovable property it will have to be stamped according to law of state where property is situated.

If the gift is for all property mentioned above other than the immovable property, then it is based on the state of where the donor would be resident. If Donor is non resident, then obviously it would be of country of residence of the donor. However, it can also be as per the state where the actual gift deed for the above properties is drawn. If I am not mistaken, Maharashtra state levies a stampduty of 4% on paintaings of MF Hussain. Maybe it was withdrawn but it was definitely proposed.

For gift of cash and cheques,these are not properties as defined above and you will have to follow the law of the state where the cash or cheque is gifted or from where the bank account is located. I am not a lawyer so I cannot comment on this. However, most states have laws for stamping gifts of immovable and movable properties and cash and cheques do not fall under that definition. States are not entitled to levy taxes on cash transactions and cheque transactions other than revenue stamps as per law. If you pay a sum to or receive a sum from anyone even as per list specified as above, the state cannot levy any other duty other than revenue stamp on receipt of money. Now if you think you have to make a deed, it will have to be stamped similar to affidavits etc. Deed after all is a declaration. It is quite apparent from what is written in the income tax act that a covering letter will suffice to establish the identity and genuineness. Capacity has to be proved beyond doubt. The transaction can be termed non genuine say if your relative refuses to face the ITO if called upon and vouch for you and provide whatever details is asked for from him. The ITO will infer that there is no genuine love and affection.

These are purely how I understand the laws. If you feel that a stamp paper brings sanctity and legal form to a transaction, go ahead and use it.

Sir....i think you have read the law in toto......i request you to go through the recent cbdt circular too...... if u try reading between the lines....you can find out that......a gift deed in a stamp paper....(amount vary from state to state)...........notarised by a notary public....becomes a legal proof of substance............ the departmetn emphasies on proving the relation between the parties of gift...as gift between relatives is tax free receipt........... the assessing officer must be given a affidavit of gift....for spot verification of the relation of parties...... and the best way to prove it is......notarising ur affidavit on a stamp paper.........................

its simple and easy practise....... and if you feel following the legal procedures are useless..... its upto your decision........ have a great day

Parthasarthyji,

Please if possible give me link to the circular as I cannot find it under 2009. It is very good that department is willing to accept a stamp paper declaration or affidavit about relationship. At least you will not have to search for identity documents to prove relationship between donor and donee. Now as far as Gift Deed is concerned these stamp papers of Rs.10 and Rs. 100 will not do. If it is immovable property, stamp duty will have to be paid as per the state laws WHERE PROPERTY IS LOCATED and moreover there may be charges for registration also. If you read the Karnataka Stamp Act it is as follows:-

GIFTDEED (Brief Introduction)

Definition of Gift. Gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person called the donor, to another, called the donee, and accepted by or on behalf of the donee.

Therefore, a declaration deed or affidavit is possible only for the gift that may be by cash or cheque as the transfer of these two items do not involve stamp duty. Depositing of cheque by donee into bank account and encashing it is lready an acceptance. Therefore the declaration should be by donor and obviously would be according to stamp value of the state where Donor is located for cash gifts. Now for other movable items like shares and securities, the stamp value will have to be as per the state where the transaction or transfer of the property is taking place. Donee has to accept the transfer as oafter his acceptance he is liable for all future liabilities that may occur on the properties eg. property taxes etc.

Gift Deed for such items does make a gift genuine as the ownership of the donor is already established for the property he or she is gifting. Only relationship between donor and donee has to be proved and for that dept seems to be accepting the declaration on stamp paper or maybe on the gift deed for the property.

However, the declaration or deed on relationship and gifting of cash or cheque does not make the gift genuine. You are using it only to establish the relationship. These relationships itself finally establish the genuineness of love and affection. What is important is to prove the capacity of the donor as far as the cash or cheque is concerned.

Here is the link to a news article:-

https://www.business-standard.com/india/news/get-affidavit-for-gift-over-rs-50000kin/75448/on

From this it is evident that you need an affidavit confirming the relationship if you are receiving gift from your relative. You do not need a gift deed for a cash or cheque gift. However in addition to this affidavit YOU DEFINITELY NEED a gift deed for gift of property especially immovable and that too as per law of state of situation of immovable property or law of state where the gift is made for the immovable property.

Since the affidavit required by department is from the DONOR you have to get it on stamp duty on affidavits at the place where affidavit is made. Usually this would be the residence of the donor.

The press release says:-

"The donee has to get an affidavit affirming the donor to be his mother, father, brother, sister or any other relative so that at the time of claiming the exemption under the new arrangement, the income tax assessment officer can have an on-spot verification without any delay," a senior I-T official said.

An individual can preferably get one affidavit listing all such gifts in the entire assessment year from different or the same relative. The individual will hence reduce the trouble of preparing an affidavit each time he receives a gift, the official said.

During the assessment of the I-T returns, the affidavit will save you from the hassles of proving the gift, both movable and immovable, being received or inherited from any relative residing in any part of the world. It will also establish the donee's relationship with the donor, the officer said.

The CBDT had on September 30 notified that "with effect from October 1.... Any gift-in-kind, being an immovable property or any other property, the value of which exceeds Rs 50,000 will become taxable in the hands of the donee, being an individual or a Hindu Undivided Family (HUF), as income from other sources...".