DPT-4 filing has become an enigma. With the extended last date approaching fast, the confusion around Form DPT-4 have sprang up again. I would say, few represent genuine concern, but majority of them are discernible upon serious reading of the law. All these concerns have been floating around since Sections 73 & 74 of the Companies Act, 2013 were notified. To rest all doubts, I am presenting here the interpretation.
First off, Ministry of Corporate Affairs (MCA) extended the date of filing DPT-4 till 31st August, 2014. It is a different matter that it was a case of Law Making Through Circulars (Read my Blog #Wake-up MCA – Act Amended Through Removal of Difficulties Power Under Section 470 at http://ashishmakhija.com/?p=71). No challenge to this power of MCA was presented, as it was a ‘please-all’ circular.
Now, let me address the concerns attached with DPT-4. The concerns are: –
- Whether private companies, who are likely to be exempt from the net of Section 74, need to file DPT-4 by 31st August, 2014?
- Whether the companies liable to file DPT-4 should state deposits as per Companies Act, 1956 or deposits as per Companies Act, 2013 in DPT-4?
Exemption to Private Companies
This is an easy one to answer. Yes, the MCA has proposed to exempt private companies from the applicability of section 74 and a draft notification was hosted on the MCA portal for public comments.
Four notifications relating to exemption to Section 8 companies, private companies, government companies and nidhi companies were laid in Rajya Sabha on 14th July, 2014 to fulfill requirement of Section 462 of the Companies Act, 2013. It is not clear whether these notifications were also laid in Lok Sabha. As per law, the MCA is liable to lay it before both Houses of Parliament, while it is in session, for a total period of 30 days which may be comprised in one session or in two or more successive sessions. If both Houses agree in disapproving the notification, then the notification shall not be issued or if they agree in making any modification, then the notification shall be issued with modification as agreed upon by both the Houses.
MCA can issue the notification provided all the formalities as stated above are completed. Till date, MCA has not issued the notification exempting any class of companies from the applicability of Section 74. Therefore, until such a notification sees the light of day, the compliance of Section 74 has to be made by all the companies.
Hope does not fade until 31st August, 2014 and the risk-taking companies can wait till the last day and if no such notification is issued, can file DPT-4 before the clock strikes 12 on the night of 31.08.2014.
Which definition of deposit to be applied for the purposes of Section 74?
This question assumes significance, as there is a marked difference between the definition of deposit as per CA 1956 and CA 2013. On careful analysis, it is logical to apply the definition of deposit as per CA 2013 and accordingly DPT-4 should be prepared showing all outstanding deposits. The reasons of this conclusion are enumerated below:
- The earlier definition of deposit as contained in Explanation to Section 58A of CA 1956 is no longer in force with notification of Sections 73, 74 and 76 of the CA 2013. Hence, it cannot be applied in the context of Section 74. It is nobody’s case that provisions of CA 1956 can still be enforced. It is a matter of different discussion altogether in view of the fact that section 465 is not yet notified and this Section deals with repeal of CA 1956 with some savings.
- A loan, which was not deposit, being exempt or otherwise, might have become deposit under CA 2013. Section 74 talks about ‘deposit’ and it does not talk about ‘deposit accepted under the CA 1956’. Here ‘deposit’ would mean deposit as per CA 2013, irrespective of the fact whether it was taken before the commencement of CA 2013.
- The auditor of such a company, while auditing for financial year 31.03.2015, will definitely consider the definition of deposit as per CA 2013 and all loans will be recategorised as deposits as per new Act.
- Let us consider the argument from other side. Whether any deposit of money, which was treated as deposit earlier, will it continued to be treated as deposit though it may be now exempt under Deposit Rules, 2014? Take an example of clause (v) of exempt deposits – “any amount received against the issue of commercial paper or any other instruments…”. It is now exempt under CA 2013 but was not exempt earlier. Since it is no longer a deposit, there is no need to show such items in DPT-4.
- The character of money received undergoes a change on 1.4.2014 from a ‘deposit’ to exempt deposit or vice versa due to change in law and DPT-4 requires status of deposit on the commencement of the Act.
MCA was expected to step in and clarify this aspect. They could have clarified otherwise. Unfortunately, this has not happened and hence DPT-4 be filed as per the above interpretation and particularly because it requires auditor’s certificate and the interpretation, which is stricter, must be deployed.
Last Date is not 31.08.2014 for all companies
It is generally presumed that last date for filing DPT-4 is 31.08.2014 in all cases. This is not so. DPT-4 is to be filed within 3 months from the commencement of the Act or from the date on which such payments are due. Due date is equally relevant and if the due date falls after 31.08.2014, then DPT-4 may be filed by 30.11.2014.
Ashish Makhija: email@example.com
Disclaimer: The views expressed here are views based on my personal interpretation and should not be deemed as legal or professional advise on the subject. If relied upon, the author does not take any responsibility for any liability or non-compliance.