Submission of Annual statement By Liaison Office in form 49C
As per The Income Tax Second Amendment Rule 2012, Rule 114DA inserted and form 49C is introduced to report annual statement of Liaison Office under section 285 of the Income Tax Act. Now the following issue arises:-
Applicability of the form 49 C
Section 285 inserted by the Finance Act, 2011, w.e.f. 1-6-2011 says that "Every person, being a non-resident having a liaison office in India set up in accordance with the guidelines issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999 (42 of 1999), shall, in respect of its activities in a financial year, prepare and deliver or cause to be delivered to the Assessing Officer having jurisdiction, within sixty days from the end of such financial year, a statement in such form and containing such particulars as may be prescribed."
Although section 285 was made effective from 01-06-2011, no form was prescribed. However, in 2012 Rule 114DA was inserted and form 49 C is introduced to report annual statement under section 285 w.e.f. 01-04-2012. Finally it is clear that the form 49 C is applicable w.e.f.01-04-2012.
Time Limit to submit form 49C
As per section 285 the time limit to submit the annual statement in form 49C is within 60 days from the end of financial year. It means that the time limit for the financial year ending 31st march 2012 is 30th May 2012.
Now, the information required to be provided in form 49C includes date of submission of Annual Activity Certificate. The regulation to submit AAC (Annual Activity Certificate) is being governed by RBI.
As per RBI master circular No. 11/2010-11 dated July 01, 2010 every Branch office / Liaison Office was required to submit AAC, at the end of Mach 31, on or before April 30 to the Designated Category Bank and a copy to the Directorate General of Income Tax (International Taxation), New Delhi. However, The Last date to submit the AAC was revised by circular no. 6 dated dated 9th August 2010. Para 2 of the circular says, “In view of the difficulties expressed by some Liaison Offices / Branch Offices in submitting the AACs within the prescribed period, it has been decided to review the current calendar for the same. Accordingly, the AACs from the Auditors, as at end of March 31, along with the audited Balance Sheet may be submitted on or before September 30 of that year. In case the annual accounts of the LO/ BO are finalized with reference to a date other than March 31, the AAC along with the audited Balance Sheet may be submitted within six months from the due date of the Balance Sheet.”
The Latest master circular no. 03/2011-12,dated July 01, 2011(updated as on January 30,2012) says that,
“Branch Offices / Liaison Offices have to file Annual Activity Certificates (AAC) (Annex 3) from Chartered Accountants, at the end of March 31, along with the audited Balance Sheet on or before September 30 of that year. In case the annual accounts of the LO/ BO are finalized with reference to a date other than March 31, the AAC along with the audited Balance Sheet may be submitted within six months from the due date of the Balance Sheet to the designated AD Category I bank and a copy to the Directorate General of Income Tax (International Taxation), New Delhi.
The certificates are to be filed by the following offices as applicable:
(a) In case of a sole BO/LO, by the BO/LO concerned;
(b) In case of multiple BO/LO, a combined Annual Activity Certificate in respect of all Offices in India by the Nodal Office of the BO/LOs.
The designated AD Category - I bank shall scrutinize the Annual Activity Certificate and ensure that the activities undertaken by the BO/LO are being carried out in accordance with the terms and conditions of the approval given by the Reserve Bank. In the event of any adverse findings being reported by the Auditor or noticed by the designated AD Category -I bank, the same should be reported immediately by the designated AD Category–I bank to the respective Regional Office of the Reserve Bank in respect of LOs and to the Central Office of the Reserve Bank in the case of BOs, along with the copy of the Annual Activity Certificate and their comments thereon.
After going through above it appears that the time limit for submission of Form 49 C was fixed on the basis of submission of AAC by 30th April. It is compulsory to file AAC before submission of form 49 C and if the last date of submission of form 49C is 30th May, then AAC has to be submitted before 30th May and time / relaxation given by the RBI to submit AAC will be overruled.
Procedure to submit Form 49 C
Rule 114DA says
(1) The annual statement as provided under section 285 for every financial year, shall be furnished in Form No. 49C.
(2) The annual statement referred to in sub-rule (1) shall be duly verified by the Chartered Accountant or the person authorised in this behalf by the non-resident person, who shall be known as the Authorised Signatory.
(3) The annual statement referred to in sub-rule (1) shall be furnished in electronic form along with digital signature.
(4) The Director General of Income-tax (Systems) shall specify the procedure for filing of annual statement referred to in sub-rule (l) and shall also be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to statements so furnished.”
As per clause (3) Form 49 C shall be furnished in electronic form along with Digital Signature and the Director General of Income Tax (system) shall specify the procedure for filing the annual statement in Form 49 C. No electronic form and procedure has been prescribed till date.