Yes, there are certain ways to avoid or minimize the penalty imposed for failure to furnish a TDS return under the Income Tax Act. The penalties are primarily covered under Sections 234E and 271H of the Act.

1. Understanding the Penalty for Late Filing of TDS Return

• Late Fee under Section 234E:

  • A fine of ₹200 per day is levied until the TDS return is filed.
  • The total penalty cannot exceed the amount of TDS deducted.

• Penalty under Section 271H:

  • A minimum penalty of ₹10,000 and a maximum of ₹1,00,000 may be imposed for failure to file the return within one year.
  • This penalty is in addition to the late fee under Section 234E.

2. Ways to Avoid or Reduce the Penalty

✅ File the TDS Return at the Earliest

• If you have missed the deadline, file the TDS return as soon as possible to minimize the late filing fee under Section 234E.

✅ Request for Waiver of Penalty under Section 271H

• Under certain circumstances, the Assessing Officer (AO) may waive the penalty under Section 271H if:
  • TDS is deposited to the government account.
  • Late filing fees under Section 234E are paid.
  • TDS return is filed before the expiry of one year from the due date.

✅ File an Appeal to the Commissioner of Income Tax (CIT) (Appeals)

• If a penalty is levied, you can challenge the order before the CIT(A) by providing a reasonable cause for delay (e.g., technical issues, natural calamities, unavoidable business disruptions).

✅ Apply for Condonation of Delay

• In some genuine cases, the Income Tax Department may consider a condonation request if the delay was beyond your control.

✅ Ensure Correct Filing of Returns to Avoid Additional Penalties

• Incorrect filing of TDS returns may increase penalties. Always verify:
  • PAN details of deductees.
  • TDS amount credited.
  • Quarterly return deadlines (31st July, 31st October, 31st January, and 31st May).

Final Advice

If you have missed filing a TDS return, do not delay further. File it immediately and pay the late fees to minimize the financial burden. If there is a reasonable cause for the delay, you may approach the IT department for penalty relief under Section 271H.

Is a Director Required to Disclose His Interest in Companies Incorporated Outside India?

Yes, under the Companies Act, 2013, a director is required to disclose his interest in any company, whether incorporated in India or outside India. The disclosure requirements are governed by Section 184 and Rule 9 of the Companies (Meetings of Board and its Powers) Rules, 2014.

1. Section 184 of the Companies Act, 2013 – Disclosure of Interest

A director must disclose his interest in any company, body corporate, firm, or other association of individuals in which he holds:
✅ Directorship
✅ Shareholding
✅ Partnership interest
✅ Any other financial interest

🔹 Frequency of Disclosure:

• At the first Board meeting after becoming a director.
• At the first meeting of every financial year.
• Whenever there is a change in his interest during the year.

🔹 Does it Apply to Foreign Companies?
✔ Yes, foreign companies are covered under the definition of “body corporate” as per Section 2(11) of the Companies Act, 2013.
✔ A director must disclose his interest in any foreign company where he holds directorship, shareholding, or any financial stake.

📌 Format of Disclosure:
Directors must provide disclosure using Form MBP-1 at the Board meeting.

2. Section 189 – Register of Contracts & Arrangements in Which Directors are Interested

🔹 Companies must maintain a Register of Contracts (MBP-4) where all disclosures of directors’ interests are recorded.
🔹 This register is open for inspection by directors and auditors.

3. SEBI & RBI Regulations for Listed and Foreign Companies

✔ If the company is listed, the director’s interest must be disclosed under SEBI (LODR) Regulations, 2015.
✔ RBI regulations also require Indian companies with foreign subsidiaries or investments to maintain disclosures of director interests.

Final Answer

✔ Yes, a director must disclose his interest even in companies incorporated outside India.
✔ This applies to directorships, shareholding, partnerships, and financial interests.
✔ Disclosures must be made in Form MBP-1 and recorded in Register MBP-4.
✔ Compliance with SEBI and RBI regulations may also be required for listed or regulated entities.

📌 Recommendation: Directors should ensure timely disclosure of foreign company interests to avoid non-compliance and penalties under the Companies Act, 2013.

Approval Requirement from Audit Committee for Related Party Transactions under Section 188

Section 188 of the Companies Act, 2013 governs Related Party Transactions (RPTs) and specifies when prior approval is required. Additionally, the Companies (Meetings of Board and its Powers) Rules, 2014 and SEBI (LODR) Regulations, 2015 impose further compliance requirements.

1. Applicability of Section 188

Section 188 applies when a company enters into a transaction with a related party, including:
✅ Sale, purchase, or supply of goods/materials
✅ Selling or disposing of property
✅ Leasing of property
✅ Availing or rendering services
✅ Appointment of related party to office or place of profit
✅ Underwriting of securities

If these transactions exceed the prescribed threshold limits, approval from the Board of Directors and in some cases, shareholders is required.

2. Threshold Limits for Shareholder Approval under Section 188

As per Rule 15(3) of the Companies (Meetings of Board and its Powers) Rules, 2014, shareholder approval via a special resolution is required if the transaction value exceeds the following limits:

Note: The limits are based on the last audited financial statements of the company.

3. Role of the Audit Committee in Related Party Transactions (RPTs)

• Section 177(4)(iv) of the Companies Act, 2013 mandates that the Audit Committee must approve all RPTs, including those covered under Section 188.
• Even if a transaction does not exceed the monetary limits of Section 188, it still requires Audit Committee approval if the company is required to have an Audit Committee.
• Listed companies and certain public companies must comply with SEBI (LODR) Regulations, 2015, which impose stricter approval requirements for RPTs.

4. Exemptions Where Audit Committee Approval May Not Be Required

Audit Committee approval is not required in the following cases:
❌ Transactions between holding and wholly-owned subsidiary (subject to disclosure requirements).
❌ Transactions entered in the ordinary course of business and at arm’s length price.

However, even in these cases, proper documentation and disclosure are essential.

5. Shareholder Approval for Certain Transactions

In addition to Audit Committee and Board approvals, shareholder approval via special resolution is required if the transaction value exceeds the thresholds mentioned above.

Final Answer

✅ Yes, Audit Committee approval is mandatory for all Related Party Transactions, including those under Section 188, unless they are exempted (ordinary course & arm’s length).
✅ If the transaction exceeds prescribed limits, Board and shareholder approval is also required.
✅ Listed companies must comply with SEBI (LODR) Regulations, 2015, which impose additional RPT approval requirements.

Yes, expenses can be adjusted against income of a similar nature under certain conditions, but this depends on accounting standards, tax laws, and specific business circumstances. Let’s analyze this from an accounting and Ind AS/AS perspective.

1. Accounting Treatment as per Ind AS & AS

(A) Ind AS Perspective

📌 Ind AS 1 (Presentation of Financial Statements):

• It generally requires income and expenses to be shown separately in the financial statements.
• Offsetting is allowed only when:
  • Required or permitted by another Ind AS
  • It reflects the substance of the transaction

📌 Ind AS 18 (Revenue Recognition) & Ind AS 115 (Revenue from Contracts with Customers):

• Expenses that are directly linked to revenue (such as cost of sales in case of trading income) can be adjusted against income.

📌 Ind AS 37 (Provisions, Contingent Liabilities, and Contingent Assets):

• If an entity incurs an expense that leads to a compensating claim (e.g., insurance claims, government subsidies), it can be recognized net of the claim if realization is virtually certain.

(B) AS Perspective (Indian GAAP – Accounting Standards)

📌 AS 9 (Revenue Recognition):

• It does not permit netting off expenses against revenue unless they are directly related (e.g., trade discounts, returns).

📌 AS 5 (Net Profit or Loss for the Period, Prior Period Items, and Changes in Accounting Policies):

• Extraordinary income and expenses should not be offset against each other but separately disclosed.

2. When is Offsetting Allowed?

✅ Examples Where Adjustment is Allowed:

• Commission Income vs. Commission Paid: If a company earns commission and pays a commission for the same transaction, they may be netted off.
• Trading Businesses: Cost of goods sold (COGS) is deducted from sales revenue.
• Banking Transactions: Interest income and interest expense of the same nature can be reported net if permitted by the standard.

❌ Examples Where Adjustment is NOT Allowed:

• Different sources of income (e.g., rental income vs. business expenses).
• Operating expenses against unrelated income (e.g., office rent cannot be adjusted against interest income).

3. Taxation Perspective

📌 Under Income Tax Act, 1961, netting off is not generally allowed except:

• Section 70 & 71: Business losses can be set off against business income but not against salary or capital gains.
• Depreciation as per Section 32: Can be adjusted against business profits.
• Capital gains adjustments (short-term vs. long-term).

Final Answer:

• Ind AS & AS generally prohibit offsetting unless specifically permitted.
• Business-related expenses can only be adjusted against income of a similar nature (e.g., direct expenses against trading income).
• Tax laws have specific rules for set-offs, so compliance with Income Tax Act, 1961 is necessary.