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VOL. XLIII, NO. 10
JANUARY, 2015
PRICE: RS. 5
NEWSLETTERNEWSLETTER OF NORTHERN INDIA REGIONAL COUNCIL OF THE ICAI
Front the Desk of the Chairman...Front the Desk of the Chairman...Front the Desk of the Chairman...
Chairman
EDITORIAL BOARD
Central Council Member-ICAI (Northern Region)
Regional Council Members (NIRC of ICAI)
Chairman
Vice-Chairman CA. Manoj Kumar Bansal
Members CA. Swadesh Gupta
CA. Rajesh Kumar Agrawal
CA. Raj Chawla
CA. (Ms.) Yogita Anand
CA. Vishal Garg
CA. Rajinder Narang
CA. Deepak Garg
CA. Hans Raj Chugh
Editor CA. Radhey Shyam Bansal
NORTHERN INDIA REGIONAL COUNCIL OF
The Institute of Chartered Accountants of India
"ICAI Bhawan", 5th Floor, Annexe Building,
Indraprastha Marg, New Delhi-110002
Printed and Published by CA. Amit Threja Deputy Secretary, on
behalf of the Northern India Regional Counicl of The Institute of
Chartered Accountants of India "ICAI Bhawan",
Indraprastha Marg, New Delhi-110 002
Phones: +9111 30100500
Fax: + 9111 30100509 and
Printed at Dolphin Printo-Graphics,
4E/7, Pabla Building, Jhandewalan Extension,
New Delhi-110 055
DISCLAIMER: The NIRC is not in any way responsible
for the result of any action taken on the basis of the
advertisement published in the Newsletter. The Members,
however, may bear in mind the provision of the Code of
Ethics while responding to the advertisements.
CA. Charanjot Singh Nanda 9811130985
CA. Sanjiv Kumar Chaudhary 9810127362
CA. Sanjay Agarwal 9811080342
CA. Naveen ND Gupta 9810689998
CA. Vijay Kumar Gupta 9810050029
CA. Atul Kumar Gupta 9810103611
CA. Radhey Shyam Bansal Chairman 9811019657
CA. Manoj Kumar Bansal Vice-Chairman 9810159656
CA. Swadesh Gupta Secretary 9312580854
CA. Rajesh Kumar Agrawal Treasurer 9868156062
CA. Raj Chawla NICASA - Chairman 9811081083
CA. (Ms.) Yogita Anand Executive Member 9582447118
CA. Harit Agrawal Executive Member 9911460661
CA. Vishal Garg Executive Member 9814133353
CA. Rajinder Narang Executive Member 9416045023
CA. Deepak Garg Executive Member 9811064105
CA. Hans Raj Chugh Executive Member 9811207924
CA. Gopal Kumar Kedia Member 9810131451
CA. Pramod Maheshwari Member 9810017953
CA. Radhey Shyam Bansal
Dear Professional Colleagues,
"Continuous effort – not strength or intelligence – is the key to
unlocking our potential "– Liane Cardes.
Swachh BharatAbhiyan
The New Year 2015 has brought another 365 days for everyone on
the earth. We all are making New Year resolutions and try to fulfill
them to the extent best possible for us. There are unfulfilled agenda
left over from the previous year and new goals are compiled and
blended with unfinished goals and a New Year resolution is ready at
individual level.
I wish all the Members and Students a Peaceful, Prosperous and
Happy New Year 2015.
Last Year was the year where the our country witnessed the sea
change in political scenario. Lots of initiative has been taken by the
new Government.
I am glad to inform you that Hon'ble Prime Minister of India Shri
Narender Modi has nominated the ICAI for "Swachh BharatAbhiyan"
in addition to other personalities and organizations. It is a great pride
for us that first time a professional body has been nominated by the
Hon'ble Prime Minister of India for "Swachh BharatAbhiyan".
The year 2014 was full of activities for NIRC of ICAI. Lots ofActivities
were conducted for the betterment of the Members at large and the
CAStudents.
thNIRC of ICAI is organizing "Swachhta Abhiyan" on 18 January,
2015 at 10.00 A.M. at Bye-lane adjacent to ICAI Bhawan, I.P Marg,
New Delhi i.e. Shri T.S. Grewal Marg to contribute in "Swachh Bharat
Abhiyan" of Hon'ble Prime Minister of India. Members and Students
are invited to attend the same in large number.
I invite all the Branches to hold the "Swachhta Abhiyan" in their
Branches also.
Regional CouncilActivities
National Convention for CAStudents
"Education is the manifestation of perfection already in a man" –
Swami Vivekananda
StudentActivities
Last month NIRC organized the following Seminars:
Two Days National Conference on Indirect Taxes Organised by Indirect
Tax Committee of the ICAI hosted by NIRC of the ICAI, Workshop on VAT,
Workshop on Standards onAuditing organized byAuditing andAssurance
Standards Board (AASB) of the ICAI hosted by NIRC of the ICAI, Two
days Workshop on International Taxation (including DTAA, Transfer
Pricing & Withholding of Tax), Seminar on GST.
National Convention for CAStudents organized by Board of Studies of the
Institute of Chartered Accountant of India hosted by NIRC of ICAI held onth th
17 and 18 December 2014 at the Siri Fort Auditorium, Khel Gaon Marg,
New Delhi. The Convention with a theme of "Indian Economy in the
Current Scenario…………. Global Leader" was attended by more than
1500 students from all over country.
Dr. Subramanian Swamy Hon'ble Past Member of Parliament and
renowned economist was the chief guest at the said convention. CA. K.
Raghu, Hon'ble President ICAI, CA. Manoj Fadnis, Hon'ble Vice President
ICAI and Central Council Member also grace the occasion with their
esteemed presence.
The students presented their papers on the various topics i.e TheAuditor's
Report on Financial Statement- SA700, 705 & 706,Accounting Standards
-31 & 32, Companies Act 2013 – Issues in Implementation, Changing role
of Auditor under the Companies Act 2013, Fixed Assets and Depreciation
thereon under the new CompaniesAct, Detection of frauds with the recent
changes in Cyber Laws, Challenges in Implementation of GST in India,
Role of CAin new regime of foreign Trade Policy, Transfer Pricing : Recent
measures to reduce litigation, TaxAudit u/s 44AB : Recent Developments,
Power of Sub conscious mind, Money versus Values. There was stiff
competition and the best among one of them was awarded a winner
trophy by the judges/expert on the concerned topics.
A Gala Cultural Evening was presented by CA Students on the evening
on the 1st day. The student enjoyed and appreciated the talent of CA
Students fraternity. The event witnessed that CA Students are ahead not
only in the studies but has got other talent also.
NIRC organized Seminar for CA Students titled "How to face CPT Exam"th
on 7 December, 2014 at ICAI Bhawan, Vishwas Nagar and Seminar for
CA Students on Real Estate Issues & Taxation (A CA's Perspective)
Priority setting (key to professional progress) Schedule III of companiesth
Act, 2013 on 4 January, 2015, large number of students participated in
the said seminars. I request all the branches to host motivational
programmes for CA students which can help them to cop-up with their
preparation with new zeal and enthusiasm.
Elocution and Quiz Contest
Cricket Touranament
Industrial Visit of CAStudents to Haridwar
Classes for CAStudents
Forthcoming Programmes
"Dreams are fuel of life, bigger the dreams, bigger is the life."- Nadeem
Kazi.
thNIRC organized the Regional Level Elocution and Quiz Contest on 28
December, 2014 at ICAI Bhawan, Vishwas Nagar. The students
participated in the programme with the great zeal and enthusiasm.
The cricket matches for tournament were held on every Saturday and
Sunday. So far we have completed 30 no. of league matches as the part of
the series. The participating teams are participating with full zeal and vigor.
I wish best of luck to all the participating team.
NIRC of ICAI organized Industrial Visit to "Patanjali Yogpeeth" and
"Gurukul Kangri University" at Haridwar. Nearly 150 students participated
in said visit. It was a wonderful experience for CA Students to connect
themselves with the Nature and to have a glimpse how Indian Ayurvedic
medicine system works.
For the benefit of the CA Students the Regular/ Revisionary Classes for
IPCC and Final CA Course were started to those students who would
appear in the examinations of the Institute to be held in May 2015.
During the coming Month NIRC is organizing various CPE programs for
the benefit of Members, to name a few Seminar on Concurrent Audit ofth
Banks on 10 January, 2015, Seminar on Companies Act 2013 & Directth
Tax Jointly with Yamuna Nagar Branch of NIRC of ICAI on 16 January,st
2015, Seminar on Taxation of Non Profit Organisation on 31 January,
2015,Awareness Programme on Financial Reporting Practices organized
by Financial Reporting Review Board of ICAI hosted by NIRC of ICAI ONth
7 February, 2015, Seminar on Goods and Services Tax (GST) & AnnualST
Award Function of NIRC of ICAI ON 21 February 2015, Discussion onst
Union Budget 2015 on 1 March, 2015, Clause by Clause Discussion ofth
Finance Bill & Session on Mock Tribunal on 14 March, 2015, Centralth
Statutory Auditors' Meet (CSA Meet) on 15 March, 2015 and Seminar onth
Bank Audit on 20 March, 2015. All the members are requested to kindly
join all the programs.
I wish my brothers and sisters, their family members and the students a
HAPPY LOHRI, MAKAR SANKRANTI and a very HAPPY REPUBLIC
DAY. May this New Year bring more glory to our Institute and Success in
abundance to all its members and students.
CA. Radhey Shyam Bansalth
Date: 07 January, 2015 Chairman, NIRCof ICAI
Place: New Delhi M : 9811019657
Secretary
Front the Desk of the Secretary...Front the Desk of the Secretary...Front the Desk of the Secretary...
Dear Colleagues,
At the outset I wish a Happy Peaceful and Prosperous New
Year to all the Members and CA Students. I wish the
dreams and goals for 2015 shall come true. A New Year's is
a fresh start, a new chapter in life waiting to be written.
New questions to be asked, embraced, and loved.
Answers to be discovered and then lived in this
transformative year of delight and self-discovery. Today
carve out a quiet interlude for yourself in which to dream,
pen in hand. Only dreams give birth to change. Take a leap
of faith and begin this wondrous new year by believing.
Believe in yourself. And believe that there is a loving
Source - a Sower of Dreams - just waiting to be asked to
help you make your dreams come true.
Our profession is dedicated to the service of the society
and the nation. We as a fraternity is extremely delighted
as one among us CA Suresh Prabhu has joined the Union
Cabinet as the Railway Minister. This is the second
representation of our fraternity in the Union Cabinet as
CA Piyush Goyal is the Power Minister. It is an immense
moment of pride for all of us.
As you are aware that ICAI has been nominated by
Hon'ble Prime Minister of India for "Swachh Bharat
Abhiyan". I congratulate all the Members and Students on
this occasion. This is of immense importance as we have
become the first professional body to be associated with
such a noble cause, which relates to the day to day
working of the society as a whole. Let us contribute and
strength in the mission of our Prime Minister of India. It's
a moment of proud for Chartered Accountant fraternity
and CA Students. In this regard a "Swchhta Abhiyan" onth
18 January, 2015 at 10.00 A.M at Bye-lane adjacent to
ICAI Bhawan, I.P Marg, New Delhi i.e. Shri T.S. Grewal
Marg.
Last month we have organized the following Seminars like
Two Days National Conference on Indirect Taxes
Organised by Indirect Tax Committee of the ICAI hosted by
NIRC of the ICAI, Workshop on VAT, Workshop on
Standards on Auditing organized by Auditing and
Assurance Standards Board (AASB) of the ICAI hosted by
"Nothing worthwhile comes easily. Work Continuous
work, and hard work, is the only way to accomplish
result that last."- Steve Jobs
NIRC of the ICAI, Two days
Workshop on International
Taxation (including DTAA,
T r a n s f e r P r i c i n g &
Withhold ing of Tax) ,
Seminar on Goods and
Services Tax.
National Convention for CA
Students organized by
Board of Studies of the
Institute of Chartered Accountant of India hosted by NIRCth th
of ICAI to be held on 17 and 18 December 2014 at the
Siri Fort Auditorium, Khel Gaon Marg, New Delhi. The
Convention with a theme of "Indian Economy in the
Current Scenario…………. Global Leader" was attended by
more than 1500 students from all over country. The
students presented their papers on the various topics.
There was stiff competition at and the best among one of
them was awarded a winner trophy by the judges/expert
on the concerned topics.
During the coming Month NIRC is organizing various
seminars for the benefit of Members, to name a fewth
Seminar on Concurrent Audit of Banks on 10 January,
2015, Seminar on Companies Act 2013 & Direct Tax Jointlyth
with Yamuna Nagar Branch of NIRC of ICAI on 16 January,
2015, Seminar on Taxation of Non Profit Organisation on st
31 January, 2015, Awareness Programme on Financial
Reporting Practices organized by Financial Reportingth
Review Board of ICAI hosted by NIRC of ICAI ON 7
February, 2015, Seminar on Goods and Services Tax (GST)ST
& Annual Award Function of NIRC of ICAI ON 21 Februaryst
2015, Discussion on Union Budget 2015 on 1 March,
2015, Clause by Clause Discussion of Finance Bill &th
Session on Mock Tribunal on 14 March, 2015, Centralth
Statutory Auditors' Meet (CSA Meet) on 15 March, 2015th
and Seminar on Bank Audit on 20 March, 2015. I invite all
the members to take the benefit of all these seminars.
Date: 17th January, 2015 Secretary, NIRC of ICAI
Place: New Delhi M : 9312580854
Hard work never brings fatigue. It brings Satisfaction."
– Narender Modi
CA. Swadesh Gupta
CA. Manoj Kumar BansalVice-Chairman, NIRC of ICAI
INCOME TAX
SERVICE TAX
1. CBDT -Central Board of Direct Taxes has authorized the commissioner of
Income-tax (Exemptions), to act as 'prescribed authority' for the purposes of
sub-clause (IV) and sub-clause (v) of clause (23C) of the Income TaxAct.
2. Income Tax Return and other details exempt from RTI Law – Delhi High
Court.
3. Addition u/s 50C of the Income Tax Act for mere variance with stamp duty
valuation without investigation not justified. ITAT, MUMBAI [Inderlok Hotels
Pvt. Ltd. v/s ITO].
4. Under Section 80P of the Income Tax Act, A Co-Operative credit society is a
bank if it satisfies the conditions of a primary bank.
5. Estimation of income by AO without disclosing to assessee materials relied
upon by him wasn't justified. [High Court of Kerala (Podikunju Musaliar
Memorial Educational & Charitable Trust vs. CIT)].
6. Section 2(22)(e) of the Income Tax Act is not attracted on security deposit
made in normal course of business. [CIT vs. Creative Dyeing and Printing
Pvt. Ltd., 318 ITR 476].
7. The facility to provide response against outstanding tax demand is made
available to the assessee in the e-filing portal.
8. Submit ITR grievance for ITR-V, processing, refund, rectification and
communication to CPC online at help desk, submit grievance, CPC in PAN
login.
9. Sharp rise in creditors/ loans without much increase in scale of operations
would be deemed as unexplained u/s 68 of the Income Tax Act. [High Court
of Delhi Narinder Kumar v. CIT].
10. Section 14A of the Income Tax Act cannot be invoked when no exempt
income was earned. [Punjab and Haryana High Court in CIT vs. M/s. Lakhani
Marketing Inc].
11. Addition cannot be made in respect of same type of expenses, which were
accepted by A.O. in preceding assessment years. [CIT vs. Smt. Kailash
Grover, Punjab & Haryana High Court].
12. Books of accounts of the assessee cannot be treated defective in case
defect found in audit report. [ITO vs. M/s Royal Health Care Pvt. Ltd., ITAT
Mumbai].
13. Bombay High court reprimanded the department and gave 'last opportunity'
and warned of 'heavy costs' for wasting judicial time by filing appeal on
'covered matters'. [CIT vs. Kirloskar Oil Engines Ltd].
14. Government notifies 'Reliance Retirement Fund' as pension fund for
deduction u/s. 80C of the Income Tax Act. [Notification No. 90/2014 Dated
23rd December 2014].
15. The act of the AO of disallowing advertisement expenses as claimed by
assesses u/s 37(1) of the Act by contending that such expenses were
exorbitant and not related to the revenue generating activity of the assesses.
[CIT vs. Discovery Communication India, High Court of Delhi].
1. Unless the activity undertaken results in the emergence of an "erected,
installed and commissioned plant, machinery, equipment or structure", the
activity will not come under the category of erection, commissioning and
installation service. [Mumbai CESTAT in the matter of Surindra Engineering
Co. Ltd vs. CCE]
2.Department nominated CA and CMA can conduct Service tax audit.
Records to be produced in time specified by auditor (15 days earlier).
[Service Tax 3rdAmendment Rules W.e.f. 05-12-2014].
1. Rule 5A(2) of Service tax rules re-introduced via notification no. 23/2014-ST
after being held ultra-virus by High Court of Delhi in the case of Travelite
(India) vs. UOI & Ors.
2. Where transaction between assessee-distributor and state government
involved only sale and purchase including 'on sale or return' of lottery tickets,
which are actionable claims, in that case assessee was not acting as agent
of government. There was no
service involved in transaction and
no service tax could therefore be
levied. [The Honorable High Court
of Sikkim in case of M/s Future
Gaming Solution of India Private
Limited vs. Union of India].
3. Adjustment of excess Service tax
paid cannot be denied for mere
non-compliance of procedure.
[Jubilant Organosys Ltd. vs. CCE]
4. Service tax department can also
conduct service tax audit along
with CA or CMA. [CBEC clarifies
vide Circular No. 181/7/2014-ST
dated December 10, 2014].
5. Where assessee has made pre-deposit as directed by commissioner (A)
Service tax, department cannot make coercive recovery during pendency of
stay application. [Orissa Stevedores Ltd. vs. DC, Central Excise, Customs &
Service Tax, Cuttack].
6. Process of grinding of wheat into wheat products such as maida, atta, suji
and bran would amount to manufacture and accordingly is outside the ambit
of service tax. [Jayakrishna Flour Mills (P) Ltd. vs. CCE, Madurai, CESTAT
Chennai].
1. Match all unmatched challans with online correction before submitting
request for consolidated TDS file as it cannot be downloaded if it has
unmatched challans.
2. CBDT notifies annual circular for TDS on salary for FY 2014-2015. Circular
contains rates of deduction of income-tax on income chargeable under the
head "Salaries".
3. W.e.f. 01-01-2015, correct PAN errors and challan mismatch cases identified
by CPC TDS in 7 days from processing of TDS returns, to avoid demand
notices.
1. No fresh/renewal of existing deposits by unratedAsset Finance Companies if
they do not get investment grade rating by 31-03-2016. [Revised regulatory
framework for NBFC].
2. SEBI has passed an order providing the exit to Inter-connected Stock
Exchange of India Limited ("ISE").
3. DGFT dispenses registration requirement for export of certain types of cotton
yarn. [Notification no. 103(RE-2013)/2009-14, Dated: December 8, 2014].
4. RBI has reviewed the policy for Foreign Direct Investment (FDI) for railways
sector and has now permitted 100% FDI in railway infrastructure sector
under automatic route subject to conditions.
5. Ministry of Corporate Affairs (MCA) has circulated a draft cabinet note to
amend new CompaniesAct 2013.
6. Good news for CAs in service: - Now ICAI granting FCA membership to CA
who are in service for 5 years or more for details visit ICAI homepage.
7. Government has exempted excise duty on goods donated to people affected
in Jammu and Kashmir.
8. CBDT has signed a first bilateral Advance Pricing Agreement (APA) with
Japanese Company for a period of five years.
9. No VAT on sale of 2nd hand car and other capital assets used in business if
no input credit taken. [Anand Decors vs. Commissioner Trade & Taxes, High
Court Delhi].
10. Leasehold property can be transferred through assignment which is
compulsory to register. Sub-registrar cannot refuse registration. [Delhi
Government Circular of 12-11-2014].
TDS
OTHERS
January, 2015 NEWSLETTERNIRC
5
ViceC
hairman
UPDATES, DECEMBER 2015
7. Enabling provisions to prescribe thresholds beyond which fraud shall be reported toCentral Government, below the threshold, it will be reported toAudit Committee. Disclosureof the fraud below the threshold also be made in the Board's Report:
• Section 143(12): This sub-section has been substituted. As per new sub-section, if andauditor of the company while doing audit, finds any fraud involving such amount or amountsas may be prescribed, is being or has been committed by company by its officer oremployee, the auditor shall report the matter to the Central Government.
Earlier, there was no restriction of amount of fraud, any amount of fraud has to be reported toCentral Government.
In case, auditor finds fraud of lesser amount than the specified amount, then he has to reportthis fraud toAudit Committed or Board, as the case may be.
In case, auditor reported fraud of specified amount to Audit Committee/Board but has not reported to Central Government, then the company shall disclose the details about suchfrauds in the Board's report.
• Section 134(3): The corresponding amendment made in this sub-section by insertingclause (ca) after clause (c) which states that Board's Report of the company shall include the details in respect of frauds [having lesser amount than the specified amount] reported byauditor other than those which are reportable to Central Government.
8. To align with SEBI policy and for ease of business, Empowering audit committee to giveomnibus approvals for related party transactions on annual basis:
Proviso has been proposed to be inserted in clause (iv) of sub-section (4) of section 177, whichstates thatAudit committee may make omnibus approval for related party transactions proposed tobe entered into by the company subject to some conditions [which may be prescribed under rules].
9. Exemption introduced in section185 for loans to wholly owned subsidiaries andguarantees/securities on loans taken from bank by subsidiaries:
Clause (c) and (d) inserted after clause (b) of the proviso of section 185(1);
As per clause (c) any loan made or any guarantee/security provided by a holding company to itswholly owned subsidiary company shall be out of the purview of section 185.
As per clause (d), any guarantee given or security provided by a holding company to its subsidiarycompany shall also be out of purview of section 185.
Proviso has also been introduced after clause (c) and (d), as per that proviso the loans made under(c) and (d) are to be utilized by the subsidiary company for its principal business activities only.
10. Amending section 188 for replacing 'special resolution' with 'resolution' for approval ofrelated party transaction by non-related shareholder:
In sub-section (1) of section 188, the word 'special resolution', at both the place where they occur,the word 'resolution' shall be substituted.
In sub-section (3) also, for the words "special resolution", the word "resolution" shall be substituted.
11. Amending sub-section (1) of section 188 to exempt related party transactions betweenholding companies and wholly owned subsidiaries fro the requirement of approval of non-related shareholders:
thAfter the third proviso, 4 proviso has been inserted, which states that the requirement of passingthe resolution under the first proviso shall not be applicable for transactions entered into between aholding company and its wholly owned subsidiary whose accounts are consolidated with suchholding co and placed before the shareholders at the general meeting for approval.
12. Amending sub-section (6) of section 212 to provide for bail restrictions to apply only foroffense relating to fraud u/s 447:
In sub-section (6) for the words, brackets and figures "offences covered under sub-sections (5) and(6) of section 7, section 34, section 36, subsection (1) of section 38, sub-section (5) of section 46,sub-section (7) of section 56, subsection (10) of section 66, sub-section (5) of section 140, sub-section (4) of section 206, section 213, section 229, sub-section (1) of section 251, sub-section (3)of section 339 and section 448 which attract the punishment for fraud provided in section 447" thewords and figures "offense covered under section 447" shall be substituted.
13. Amending section 419(4) to provide for winding up cases to be heard by 2-member bench instead of 3-member bench:
In sub-section (4) of section 419, the word "or winding up" shall be omitted.
14. Amending section 435 and 436 to provide for that Special Courts to try only offencescarrying imprisonment of two years or more:
Section 435: In sub-section (1) of section 435 for the words "trial of offences under this Act" thewords "trial of offences punishable under this act with imprisonment of two years or more" shall besubstituted.
Proviso has also been introduced after sub-section (1) which states that all other offences shall betried by a Metropolitan Magistrate or a Judicial Magistrate of the Firs Class having jurisdiction to tryany offence under this act or under any previous company law.
Section 436: In clause (a) of sub-section (1) of section 436 for the words "all offences under thisAct",the words "all offences specified under sub-section (1) of section435" shall be substituted.
The lower house of Parliament passed the Companies (Amendment) Bill, 2014 but it is pending atthe level of upper house and president. But the proposed changes shall come into force on such dateswhen Central Government may by notification in official gazette appoint such date and different dates fordifferent provisions for their enforcement. Following changes have been proposed in the bill:
1. Omitting requirement of minimum Share Capital for ease of doing business:
a) Private Company [2(68)]: The requirement of minimum capital of ` 100,000 have beenomitted in the proposal.
b) Public Company [2(71)]: The requirement of minimum share capital of ` 500,000 have beenomitted as per proposal.
c) Commencement of business [sec. 11]: The consequential change by omitting the minimumcapital requirement in Private and Public Company has been proposed in the section.
2. Omitting mandatory requirement of affixing common seal for ease of doing business:
a) Section 9: The mandatory requirement of affixing common seal has been omitted whiledoing business on behalf of the company whether its acquire, hold and dispose of property,both movable and immovable, tangible and intangible, to contract and to sue and be sued,by said name. [for ease of doing business]
b) Section 12(3) (b): The requirement of keeping common seal by the company madeoptional.
c) Execution of bills of exchange, etc. [Section 22]: In case of authorization to any personfor execution of bills of exchange, etc., affixing of common seal on authorization letter hasmade optional.
One proviso has been proposed to be inserted after sub-section (2) stating that if a companydoes not have common seal, the authorization under this section shall be made by twodirectors or by a director and the Company Secretary, wherever the company hasappointed a Company Secretary.
Further, on the deed signed by such an attorney on behalf of company, affixing of commonseal is made optional.
d) Certificate of shares [Section 46]: Share Certificate issued under common seal of thecompany made optional. But in case, company is availing this option, Share Certificate hasto be signed by two directors or by a director and a Company Secretary, wherever thecompany has appointed a Company Secretary.
e) Section 223(4)(a): The report of any inspector appointed by Central Government shall beauthenticated, whether common seal of the company whose affairs have been investigatedwill be affixed on report or not.Affixing of common seal on such report made optional.
3. Inserting a new section to provide for punishment for deposits accepted in violation of theCompaniesAct, 2013
Section 76A: If a company accepts or invites or allows any deposit in contravention of the section73 or section 76 or rules made thereunder
or
If a company fails to repay the deposit or any interest due thereon within the time specified u/s 73 or76 or rules made thereunder or such other time as allowed by tribunal as per sec. 73, then:
• The company shall alongwith the amount of deposit and interest due, be punishable with thefine which shall not be less than INR 1 crore but may extend to INR 10 crore; and
• Every defaulting officer shall be punishable with imprisonment which maximum of sevenyears or fine minimum of INR 25 Lacs but maximum to INR 2 crores or with both.
Further, if it is proved that the defaulting officer of the company has contravened such provisions knowingly or willfully with the intention to deceive company or its shareholders or depositors etc, heshall be liable for actions u/s 447.
4. Amending section 117 to prohibit public to inspect board resolutions filed with the registrar:
Proviso inserted after clause (g) of sub-section (3) of section 117 which states that public cannot inspect or obtain copies of the board resolutions filed the registrar (ROC) as like other documents.
5. Amending section 123 (Declaration of dividend) to add provisions for writing off pastlosses/depreciation before declaring dividend:
th4 proviso has been proposed to be inserted which states that company shall declare dividend onlywhen, carried over previous losses and depreciation not provided in previous year or years, are setoff against profit of the company for the current year.
6. Amending section 124 to give benefits to shareholders who have not claimed dividends:
As per proposal, the earlier condition of transferring shares to "Investor Education and Protection Fund" was dividend should remain unclaimed or unpaid for a period of 7 years. But now thiscondition has been changed to seven consecutive years. Clarification has also been inserted in the form of Explanation which states that if any dividend is paid or claimed for any year during thesaid period of seven consecutive years, the share shall not be transferred to Investor Educationand Protection Fund.
CA. Yogita Anand
COMPANIES (AMENDMENT) BILL, 2014
January, 2015 NEWSLETTERNIRC
The views expressed herein are personal views of the authors and do not necessarily represent the views of the NIRCs6
Networking
Benefits of Networking
Are you Merger ready?
Networking has become buzz word for the rapid growth and development. In the modern world wheretechnology is becoming obsolete every day, the way and manner in which the business is being done ischanging at a very fast speed. The concept of one stop shop and the realization that the customer i.e. theclient is the king has changed the way the accounting profession is being carried out.
Given the fact that the Indian CA profession is dominated by the small firms, the networking will be animportant method for these firms to meet the emerging challenges and opportunities. It will enable the firmsto deliver services at multi-locational points without having their physical presence. Networking of firmscan also be encouraged between different firms situated at the same place. This type of networking will enable each affiliate of the network to develop expertise in a specialized branch of the profession. The firms should be encouraged to work in a focused area of professional services. This will mean that the firmwill have to decide in which particular area to practice and more important to decide in which area not to practice. It can then network with another firm which has opposite preference of professional practice.
In order to have an orderly and sustainable growth of the CA firms, it is desirable that the comingtogether of the firms begins with networking and then matures to mergers. Networking will enable the firmsto develop working relationships with each other. This is like the pre-marriage courtship period. Once thefirms have developed sufficient confidence in each other then they can venture into a marriage which is inthe form of mergers. However, it is not to suggest that there cannot be mergers without networking.
To overcome the space constraints
Cost and Time effective service
To satisfy the multi-locational clients
To provide and accelerate multidisciplinary services
Empowering the small firms.
It can be a vehicle for promoting oneself and business i.e. a cost effective marketing tool.
It enhances awareness of task environment, keeping one up-to-date with changes.
It provides with new opportunities to expand horizons of individual and business.
It enhances team-working, camaraderie and opportunities for mutual sharing.
It enables to gain support and resources in a group, which is particularly important for small businesses
Please answer the below questions in your mind to understand if you and your firm are ready for amerger. If for most of the questions the answer is positive then it indicates that you are ready to accept thechanges the mergers would bring along. If you think your answers are more negative or are unsure of theanswer then you should take your time to evaluate your pros and cons.
Below questions are only a brief overview of the many possibilities that can arise on event of a merger.
Are you ready to sacrifice your current position and accept the position that will be offered to you?Even if it meant a position change to a Manger from being a Partner.
Are you willing to come out of the comfort zone and fight it out?
Work Life balance may be compromised are you ready for this change?
Mergers are expensive, do you have enough capital to fund?
Are you open to accept that your freedom may be restricted?
Are you ready for the risks that the merger would bring along?
Are you ready for all the travel it may require which may be round 6-8 days a month?
Are you ready to share and accept the new vision of the company?
Are you ready to accept the society perception on Merger and you?
You may have to adopt new culture – are you ready to accept to this change?
Would you like to be policy driven
What does the family say?Are they supportive of your decision?
Are you ready to face the critics constructive or destructive?
I get success myself, or should I call it team success and join?
Are you hungry for more work, exposure, more knowledge?
Are you ready to take up the BIG Game?
Do you need to invest in lot of time in meetings and conference calls?
Do you think merger is alternative to corporates?
Do you enjoy all India meetings instead of office meetings?
TheAuthors are Network Partners of the existing CANetwork in India - BATGACH &Affiliates
Objective and need for Networking -
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Introduction to CAFirm Mergers
Framework laid down by the ICAI for firm Merger
CAFirms Merger in India
Merger Story
In the corporate world, merger and demerger have become universal practices for securing survival,growth, expansion and globalization of enterprise and achieving multitude of objectives. Merger is thefusion of two or more existing companies.
The mergers should be effected to develop core competencies and to render professional services of alarger range spread over bigger geographical area. A merged big entity will always have a superiorfoothold.Anetwork of such bigger entities will lead to formation of bigger firms in near future.
Before the firms decided to go on a merger they have to analysis if they are ready for the leap. Somepre-requisite which is required before for the firms decide to take on the plunge are to see if the other partyalso shares the same wavelength in terms of the vision, and there is commonality of thinking between thepartners. It is important that the partners are open to communication and be willing to accept the change.There should be clarity on organizational ethics.
Merger of firm brings with it many advantages such as improved efficiency through in-housespecialization, increased credibility and recognition, increased Investment in training, technology andinfrastructure.
In the ever changing shape of professional practice it is important that firms provide multidisciplineservices which will add value to the existing clientele and the need for networking and PR increases theexposure.
Firms when they decide to come together they should have clear understanding about the fundamentalguiding factor for the organization and all the partners and staff should be aware.
Merger agreement in prescribed form to be filed with Institute.
The existing names of the merging firms frozen in the Institute's records for 3 years.
Seniority granted to the new firm from the date of establishment of the firm under whose name themerged entity operates.
New name for merged firm possible without losing seniority.
Demerger possible within 5 years of merger.
Two of India's biggest accounting firms Haribhakti & Co and DB Desai & Co have joined forces tocreate a company with 50 partners and 1,250-strong workforce, signaling the first wave of domesticconsolidation to challenge the dominance of Big Four multinational accountants.
The alliance will boost the combined entity's presence in 10 cities and bolster revenues to Rs. 200crore. While Desai & Co has its network of clients in the East and North, Haribhakti group is an establishedname in the West and South. "Dilip Desai is known for taxation and Haribhakti group is known for audit andconsultancy.
The coming together of two firms symbolizes the importance of size and depth, something Indian firmsstarted realizing.
One of the biggest mergers in the history of accountancy is the formation of Ernst and Young. Thebelow is the time line of events which led to the formation of one of the big 4 of today.
Harding & Pullein founded in England. Joined by Frederick Whinney.
Whinney made a partner.
Thomas Clarkson starts a trustee and receivership firm in Toronto.
Arthur Young starts his first firm, Stuart and Young, in Chicago. Harding & Pullein renamed Whinney,Smith & Whinney.
Alwin and Theodore Ernst form Ernst & Ernst in Cleveland, US.
Arthur and Brother Stanley formArthur Young & Company in Chicago.
Arthur Young allies with Broad Paterson & Co, England. Ernst & Ernst allies with Whinney, Smith &Whinney.
Clarkson allies with Woods Gordon & Co to expand into management consulting.
Clarkson Gordon & Company allies withArthur Young & Co.
Ernst & Whinney forms and becomes the fourth largest accountancy firm in the world. ArthurYoung's European offices join several large local European firms.
Arthur Young combines with Ernst & Whinney to create Ernst & Young.
Ernst & Young unveils a new, more integrated global structure.
Ernst & Young combines withAndersen practices in 57 countries.
Ernst & Young creates its EMEIAArea, bringing together 87 countries.
Ernst & Young creates itsAsia-PacificArea, bringing together 22 countries.
Ernst & Young updates its brand name to EY, and introduces our purpose: Building a better workingworld.
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CA. Mahesh Bansal CA. Guru Prasad
NETWORKING AND MERGERS OF CA FIRMS
January, 2015 NEWSLETTERNIRC
The views expressed herein are personal views of the authors and do not necessarily represent the views of the NIRCs 7
As per Section 65B(13) of Finance Act 1994 as inserted w.e.f. 1-7-2012, Associated
Enterprise has the meaning assigned to it in Section 92Aof Income TaxAct, 1961
Under section 92A(1) an enterprise would be regarded as 'associated enterprise' of another
enterprise if—
it participates, directly or indirectly, or through one or more intermediaries, in the
management or control or capital of the other enterprise, or
the persons participating, directly or indirectly, or through one or more intermediaries, in its
management or control or capital also participate in the management or control or capital of
other enterprise.
Two enterprises shall be deemed to be associated enterprises if at any time during the
previous year—
(i) one enterprise holds, directly or indirectly, shares carrying at least 26% of the voting power in
the other enterprise.
(ii) any person or enterprise holds, directly or indirectly, shares carrying at least 26% of the
voting power in both these enterprises.
(iii) a loan advanced by one enterprise to the other enterprise constitutes at least 51% of the
book value of the total assets of the other enterprise.
(iv) one enterprise guarantees at least 10% of the total borrowings of the other enterprise.
(v) more than half of the board of directors or members of the governing board, or one or more of
the executive directors or members of the governing board, of one enterprise are appointed
by the other enterprise.
(vi) more than half of the board of directors or members of the governing board, or one or more of
the executive directors or members of the governing board, of both the enterprises are
appointed by the same person(s).
(vii) the manufacture or processing of goods or articles or business carried out by one enterprise
is wholly dependent upon the use of know-how, patents, copyrights, trade-marks, licenses,
franchises, or any other business or commercial rights of similar nature, or any data,
documentation, drawing or specification relating to any patent, invention, model, design,
secret formula or process, of which the other enterprise is the owner or has exclusive rights.
(viii) one enterprise or persons specified by it, supply and influence the prices and other
conditions relating to 90% or more of the raw materials and consumables required for the
manufacture or processing of goods or articles carried out by the other enterprise.
(ix) the goods or articles manufactured or processed by one enterprise, are sold to the other
enterprise or to persons specified by the other enterprise, and the prices and other
conditions relating thereto are influenced by such other enterprise.
(x) where one enterprise is controlled by an individual, the other enterprise is also controlled by
such individual or his relative or jointly by such individual and relative of such individual.
(xi) where one enterprise is controlled by a HUF, the other enterprise is controlled by a member
of such HUF or by a relative of a member of such HUF, or jointly by such member and his
relative.
(xii) where one enterprise is a firm, association of persons or body of individuals, the other
enterprise holds at least 10% interest in such firm, association of persons or body of
individuals.
(xiii) there exists between the two enterprises, any relationship of mutual interests, as may be
prescribed.
6.1 Service tax is levied at the rate of 12% of the value of taxable services(section 66). Section
67 pertaining to valuation of taxable service for charging service tax states that value shall
be the gross amount charged for the service provided or to be provided and includes book
adjustment. As per rule 6 of the Service Tax Rules, 1994, service tax is required to be paid
only after receipt of the payment.
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Deemed associated enterprises [Section 92A(2)]
TRANSACTIONS BETWEENASSOCIATED ENTERPRISES:
Departmental clarification on Associated Enterprises -- CBE&C TRU letter F. No.
334/1/208-TRU dated 29-02-2008 clarifies as follows :
6.2 It has been brought to the notice that the provision requiring payment of service tax after
receipt of payment are used for tax avoidance especially when the transaction is between
associated enterprises. There have been instances where in service tax has not been paid
on the ground of non-receipt of payment even though the transaction has been recognized
as revenue/expenditure in the statement of profit and loss account for the purpose of
determining corporate tax liability.
6.3 As an anti-avoidance measure, it is proposed to clarify that service tax is leviable on taxable
services provided by the person liable to pay service tax even if the amount is not actually
received, but the amount is credited or debited in the books of account of the service
provider. In other words, service tax is required to be paid after receipt of payment or
crediting/debiting of the amount in the books of accounts, whichever is earlier. However,
this provision is restricted to transaction between associated enterprises. This provision
shall also apply to service tax payable under reverse charge method (Section 66A) as
taxable services received from associated enterprises. For this purpose section 67 and rule
6(1) are being amended.
6.4 The term 'associated enterprise' has the same meaning as assigned to it in section 92A of
the Income Tax Act, 1961. It is a relative concept i.e. an enterprise is an associated
enterprise when it is viewed in relation to other enterprises. This concept is used in the
Income Tax Act for applying transfer pricing provisions. An enterprise which participates,
directly or indirectly, or through one or more intermediaries, in the management or control or
capital of the other enterprise is considered as associated enterprise. It also covers an
enterprise in respect of which one or more persons who participate, directly or indirectly, or
through one or more intermediaries, in the management or control or capital of the other
enterprise.
6.5 Section 92A(2) of the Income Tax Act specifies various situations under which two
enterprises shall be deemed to be associated enterprises. Enterprise means a person who
is engaged in the provision of any services of any kind. For details, relevant provisions of
Income TaxAct may be referred to.
"Gross amount charged" includes payment by cheque, credit card, deduction from account
and any form of payment by issue of credit notes or debit notes and book adjustment and any
amount credited or debited, as the case may be , to any account, whether called 'suspense
account' or by any other name, in the books of account of a person liable to pay service tax, where
the transaction of taxable service is with any associated enterprise.
As per second proviso of Rule 7 of Point of Taxation Rules 2011 as amended w.e.f. 1.4.2012,
in case of "Associated Enterprises", where the person providing the service is outside India,
thepoint of taxation shall be the date of credit in the books of account of the person receiving the
service or date of making the payment, wichever is earlier
As per first proviso of Rule 7 of Point of Taxation Rules 2011 as amended w.e.f. 1.4.2012, if
the payment for such serivce is not made within six months from date of invoice, the point of
taxation will be determined as if this rule does not exist
Provisions relating to service tax liability will apply, if the amount is considered as
expenditure in accounts, even if amount is not creditd to account of associate enterprise, but
credited to suspense account or any other account and even if payment is not received
As per Rule 4(7) of CCR, credit of Cenvat Credit is allowed only after payment is made to
serivce provider. However in case of Associate Enterprise, service tax is payable when entry has
been made in books of account. So for availing of CCR, it has been clarified that as per deeming
fiction in section 67(4)(c) of Finance Act 1994, book adjustment is deemed payment. Further rule
4(7) does not indicate form of payment. Thus debit in books of account can also be payment made.
Hence is such case Cenvat credit is allowable(CBE&C circular 122/03/2010-ST dated30-4-2010)
In case the Associate Enterprise is situated in India, no separate provision has been made,
therfore normal rule of Point of taxation will apply.
These are views of author
Author can be reached at [email protected]
As per Explanation (c) to section 67 of Finance Act, 1994 (as amended w.e.f. 10-05-
2008),
Relevant provisions of Cenvat Credit Rules, 2004
Deparmental clarification as per TRU letter Fno. 341/34/2011-TRU dated 31.3.2011
clarifices as below :
POINT OF TAXATION RULES WHILE DEALING WITH ASSOCIATED ENTERPRISES
CA. Alok Kaushik
January, 2015 NEWSLETTERNIRC
The views expressed herein are personal views of the authors and do not necessarily represent the views of the NIRCs8
1. Scope
2. Control –AKey Concept of IFRS 10
Parent entity shall present consolidated financial statements. This IFRS applies to all Entities, except as
follows:
a) parent need not present consolidated financial statements if it meets all the following conditions:
• It is a subsidiary (wholly or partially-owned) of another entity and all its other owners, including
those not otherwise entitled to vote, have been informed about, and do not object to, the
parent not presenting consolidated financial statements
• Its debt or equity instruments are not traded in a public market
• It did not file, nor is it in the process of filing, its financial statements for the purpose of issuing
any class of instruments in a public market
• Its ultimate or any intermediate parent produces IFRS compliant consolidated financial
statements available for public use
b) it is a post or long term-employment benefit plan to which IAS 19 Employee Benefits applies
An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee
EXECUTIVE SUMMARY OF THE STANDARD
IFRS 10 focuses on principles for the presentation and preparation of consolidated financial statements when an entity controls
one or more other entities. This Standard supersedes SIC-12 Consolidation—Special Purpose Entities and part of IAS 27
Consolidated and Separate Financial Statements. This is effective for the annual periods beginning on or after 1 January 2013.
IFRS 10 defines the principle of control and establishes control as the basis for determining which entities are consolidated in
the consolidated financial statements. An investor controls an investee when it is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee.
power
exposure,or rights,
to variablereturns
abilityto use
its powerControl
Link between power and returns
Not only power and rights to variable returns are sufficient, ability to use power to affect the return is required to establish control.
Returns
Returns can be only positive, only negative or both positive and negative.
Power
Existing rights that gives the
current ability to direct the
relevant activities, ie the
activities that significantly affect
the investee's returns
Power arises from rights
(Substantive and potential both
are covered)
3. Accounting requirements
A parent shall prepare consolidated financial statements using uniform accounting policies for liketransactions and other events in similar circumstances.
A parent shall present non-controlling interests in the consolidated statement of financial position within equity, separately from the equity of the owners of the parent.
Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of thesubsidiary are equity transactions (ie transactions with owners in their capacity as owners).
• Combine like items of assets, liabilities, income, expenses, cash flows of the parent and subsidiary
• Eliminate parent's investment in each subsidiary with its portion of the subsidiary's equity.
• Fully eliminate intra group transactions and balances.
Consolidation procedures:
OVERVIEW OF IFRS 10 - CONSOLIDATED
FINANCIAL STATEMENTS
CA. Jinender Jain CA. Alok Garg
Overview of
IFRS
10 -Consolidated Financial
Statements
Parent and subsidiaries must have uniform accounting policies and reporting dates. If not, alignmentadjustments must be quantified and posted to ensure consistency. Reporting dates cannot vary by morethan 3 months.
As per Para 25 of IFRS 10, If a parent loses control of a subsidiary, the parent:
• Derecognises the assets and liabilities of the former subsidiary from the consolidated statement offinancial position.
• Recognises any investment retained in the former subsidiary at its fair value when control is lost andsubsequently accounts for it and for any amounts owed by or to the former subsidiary in accordancewith relevant IFRSs. That fair value shall be regarded as the fair value on initial recognition of afinancial asset in accordance with IFRS 9 or, when appropriate, the cost on initial recognition of aninvestment in an associate or joint venture
• Recognises the gain or loss associated with the loss of control.
No disclosures are specified in this standard. Although disclosures are given in IFRS 12, Disclosure ofInterest in Other Entities.
4. Loss of control in a Subsidiary
5. Difference between IFRS 10 and ExistingAccounting standards applicable in India
6. Disclosure Requirements
Particulars Indian GAAP IFRS
Primary guidance AS 21 IFRS 10
Determining when Control evaluated based on ownership Control evaluated based onto consolidate an entity interest or governance indicators. a single control Model.
Factors to be considered A mere ownership of When assessing control, an while evaluating control more than 50% of equity investor shall consider the
purpose and design shares is sufficient to Constitute control underof the Indian GAAP.investee in order to identify the relevant activities, how decisions about the relevant activities are made, who has the current ability to direct those activities and who receives returns from those activities.
Power with less than Concept of de facto Substantive Potential votinghalf of voting rights control does not exist. rights and De facto control are
considered in and Potential voting rightsPotential voting rights also not considered.establishing control.
Control of specified assets Control is assessed over Control is generally assessedonly legal entities. at the investee level.
IFRS 10 does contain guidance to consolidate only a portion of an investee as a separate entity (often referred to as a 'silo').
Reporting date of subsidiaries Difference cannot be more than 6 months. Difference cannot be more than 3 months.
January, 2015 NEWSLETTERNIRC
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The Direct expenditure relating to income which does not form part of total incomeStep 2 – The Interest expenditure (other than those included in Part-1) in proportion of averageinvestment to average asset.Step 3 – The expenditure on presumptive basis which is 0.5% of average investment
Note: For the purpose of 'Investment" in Step 2 and 3, only those investment should be considered which arecapable of giving rise to Exempt Income. In short, Investments such as Bank deposits, Bonds etc. which would giverise to non-exempt income should be ignored.
Section 14A was introduced to cover up cases where expenses in relation to income such as agriculturalincome, tax free bonds, etc. which did not undergo any tax under the Income-taxAct, was being claimed.
Certain incomes are not includible while computing the total income, as these are exempt under variousprovisions of the act. There have been cases, where deductions have been claimed in respect of such exemptincome.
This in effect means that the tax incentive given by way of exemption to certain categories of income is beingused to reduce also the tax payable on the non-exempt income by debiting the expenses incurred to earn theexempt income against taxable income which is against the basic principle of taxation where only net income is taxed. It was only to reject such claim this provision was introduced.
1. Issue: No disallowance can be made if no exempt income has been received during the year.CIT vs. Lakhani Marketing Incl.Punjab & Haryana High Court, I.T.ANo-970 of 2008Dated-02.04.2014
Facts: Assessee has not received any tax free income during the year under consideration although hewas holding securities capable of earning the tax free income.Decision: Held that, while invoking disallowance u/s 14A read with Rule 8D, following points are to be keptin mind:• That there must be income which is taxable under theAct;• That this income must not form part of total income under theAct;• That there must be an expenditure incurred by theAssessee; and• That the expenditure must have a relation to the income which does not form part of the total income
under theAct.Therefore unless and until there is receipt of exempted income for the concerned AY, section 14A of the Actcannot be invoked.
Commissioner of Income Tax vs. M/s Shivammotors Pvt Ltd.High Court (Allahabad), I.T.ANo-88 of 2014Dated- 05.05.2014
2. Issue: No Disallowance under Section 14A/ Rule 8D if Interest Income Exceeds Interest ExpenditureDecided Case LawITO vs. Karnavati Petrochem Pvt. Ltd.ITAT (Ahmedabad), I.T.A.No-2228/AHD/2012Dated- 05.07.2013Facts: During the course of assessment proceedings, Assessing Officer noticed that Assessee has madeinvestment in shares amounting to Rs.95,45,400/-. Assessing Officer was of the view that the investmentwould generate exempt income and therefore provision of section 14A becomes applicable. He accordinglyapplying the formula prescribed in Rule 8D of Income Tax Rules worked out disallowance under Section 14AofRs.15,63,883/-Decision: CIT(A) while granting relief to the Assessee has given a finding that no nexus has been establishedby theA.O. with the amount incurred by theAssessee for earning the tax free income. He has further noted thatin theAssessee's case the interest income was more than interest expense and thus theAssessee was havingnet positive interest income and therefore the same cannot be considered for disallowance and for which heplaced reliance on the decision of Kolkata Tribunal in the case of TradingApartment Limited and the decision ofTribunal in the case Morgan Stanley India Securities Private Limited. He however considered theadministrative expenses to be 0.5% of the average investments and disallowed the same.
3. Issue: Investments made by the assessee in its subsidiary are not be reckoned for disallowance u/s.14Ared with Rule 8D.Decided Case Law:EIHAssociated Hotels Ltd vs. DCITITAT Chennai, I.T.A. No. 1503/Madras/2012Dated-17.07.2013Facts: AO has made disallowance to the tune of Rs. 4,32,66,500/-. The contention of the assessee is that theassessee has earned dividend income of Rs.4.6 Lakhs which is fully exempt u/s. 10(34) of the Act. Theassessee has made voluntarily dis-allowance of Rs.45,927/- u/s. 14A. The assessee has made freshinvestments to the tune of Rs.9.4 Crores during the year. TheAssessing Officer held that the investments havebeen made from the fresh secured loans obtained during the year by the assessee. The CIT(A) after goingthrough the submissions made by the parties has come to the conclusion that the assessee has madeinvestments from its own funds except for the short term investments made in HDFC Cash Management Fundand DSPML Cash Plus Fund in respect of which the amounts were invested from interest bearing fundsborrowed from HSBC. The Revenue has not been able to controvert the findings of CIT(A).Decision: Held that, the investments made by the assessee in the subsidiary company are not on account ofinvestment for earning capital gains or dividend income. Such investments have been made by the assesseeto promote subsidiary company into the hotel industry. A perusal of the order of the CIT(A) shows that out oftotal investment of Rs.64,18,19,775/-, Rs.63,31,25,715/- is invested in wholly owned subsidiary. This fact
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Objectives of Section 14A
Recent Judicial Decisions relating to Section 14A
Similar view has been taken in the case of
Legislative History
Provisions of Section 14A
Section 14A has been inserted in CHAPTER IV of the Income-tax Act, 1961 by the Finance Act, 2001, withretrospective effect from 1-4-1962 is titled as "Expenditure incurred in relation to income not includible inTotal income". This section was amended by Finance Act 2006, i.e. w.e.f 01.04.2007 which empowered CBDT toprescribe rules for determination of amount of disallowance under this section. Rule 8D has accordingly beennotified by CBDT.
The reasons for making amendment in Section 14A was explained in Paras 11.1 to 11.3 of CBDT Circular No.14/2006 of 28-12-2006. As per this Circular the Legislature has clarified that the intention of insertion of sub-sections (2) and (3) was to provide a method for computing the expenditure incurred in relations to earning ofexempt Income, which was missing in the erstwhile Section 14A.
Also as per a recent Circular No-5/2014 dated-11.02.2014, CBDT has clarified that Section 14Aread with Rule8D can disallow the expenditure in relation to exempt income even where taxpayer in a particular year has notearned any exempt income.
As per the circular, the legislative intent is to allow only that expenditure which is relatable to earning of incomeand it therefore follows that the expenses which are relatable to earning of exempt income have to be consideredfor disallowance, irrespective of the fact whether any such income has been earned during the financialyear or not.
Before understanding the analogy of Section 14A, let us go through the provisions of Section 14Aas appearingin theAct:
1. For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect ofexpenditure incurred by the assessee in relation to income which does not form part of the total income underthisAct.
2. The Assessing Officer shall determine the amount of expenditure incurred in relation to such income whichdoes not form part of the total income under this Act in accordance with such method as may be prescribed, ifthe AO, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of theassessee in respect of such expenditure in relation to income which does not form part of the total incomeunder thisAct.
3. The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that noexpenditure has been incurred by him in relation to income which does not form part of the total income underthisAct :
Provided that nothing contained in this Section shall empower the Assessing Officer either to reassessunder Section 147 or pass an order enhancing the assessment or reducing a refund already made orotherwise increasing the liability of the assessee under Section 154, for any assessment year beginning onor before the 1st day ofApril, 2001."The reading of sub-section (1) of Section 14A makes it amply clear that no deduction shall be allowed in respect of expenditure which has been incurred in earning of Exempt Income. Sub-section (2) empowersthe Assessing Officer to determine the amount of Expenditure which is attributable to earning of ExemptIncome as per the method prescribed, if the Assessing Officer is not satisfied with the claim of Assessee.Further sub-section (3) clarifies that the provision of sub-section (2) would even apply in the cases where anassessee contends that he has not incurred any expenditure in earning of Exempt Income.In exercise of the powers given under Section 14A (2) CBDT vide Notification No. S.O. 47(E) on 24-3-2008(299 ITR (ST) 88) had amended the Income-tax Rules by insertion of a new Rule 8D so as to prescribe themethod for determination of expenditure in relation to income not includible in total income.
1. Where the Assessing Officer, having regard to the accounts of the assessee of a previous year, is not satisfiedwith—(a) Correctness of the claim of expenditure made by the assessee; or(b) Claim made by the assessee that no expenditure has been incurred, in relation to income which does not
form part of the total income under the Act for such previous year; he shall determine the amount ofexpenditure in relation to such income in accordance with the provisions of sub-rule (2).
2. The expenditure in relation to income which does not form part of the total income shall be the aggregate offollowing amounts, namely :—
(i) the amount of direct expenditure relating to income which does not form part of total income;(ii) expenditure by way of interest (in cases where the assessee has incurred any expenditure by way of
interest) during the previous year which is not directly attributable to any particular income or receipt, an amount computed in accordance with the following formula, namely :— A*B/C
Where,A= amount of expenditure by way of interest other than the amount of interest included in (i) incurred during the
previous yearB = the average of value of investment, income from which does not or shall not form part of the total income, as
appearing in the balance sheet of the assesse, on the first and last day of the previous yearC = the average of total assets as appearing in the balance sheet of the assesse, on the first and last day of the
previous year(iii) an amount equal to ½% of the average value of investment, income from which does not or shall not form
part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day ofthe previous year.
3. For the purposes of this rule, the "total assets" shall mean, total assets as appearing in the balance sheetexcluding the increase on account of revaluation of assets but including the decrease on account of revaluationof assets."Therefore for the purpose of section 14A(1), the computation of disallowance has to be made as per rule rule
8D (2) and (3) aggregating the following :
"Section 14A: Expenditure incurred in relation to income not includible in total income":-
Rule – 8D "Method for determining amount of expenditure in relation to income not includible in totalincome" reads as under –
�
�
�
A FRESH LOOK ON DISALLOWANCE OF EXPENDITURE
U/S 14A OF INCOME TAX ACT READ WITH RULE 8D
(ALONG WITH RECENT JUDICIAL DECISIONS)
CA. DEEPAK JAUHARI CA. ANITA JAUHARI
January, 2015 NEWSLETTERNIRC
The views expressed herein are personal views of the authors and do not necessarily represent the views of the NIRCs10
½% of average stock-in-trade:Rs.13,47,552Total addition under section. 14A:Rs.21,45,314(i.e. Rs.13,47,552 + Rs.7,97,762)Decision: There cannot be any income without any kind of expenses or labour howsoever, small it may be.Section 14A is still applicable where it provides that no deduction in respect of expenditure incurred by theassessee in relation to exempted income will be allowed. Rule 8D is a method prescribed when the dividend income is earned from investments. Therefore, in the facts and circumstances of the case of the assessee theexpenditure is estimated to be @10% of the dividend earned, as fair and reasonable estimation. Therefore, anexpenditure of Rs.1,89,155/- is disallowed in addition to an amount of Rs.1,57,227/- as disallowance undersection 94(7) in relation of earning of dividend income.A plain look at the rule shows that 8D(2)(ii) and (iii) can only be applied in the situations in which sharesare held as investments, and that this rule will not have any application when the shares are held asstock in trade. In other words,in a case where shares are held as stock in trade and not as investments, thedisallowance even under rule 8D is restricted to the expenditure directly relatable to earning of exempt income.Consequently, while Section 14A will still apply in the cases whether shares are held as stock in trade or asinvestments. Therefore disallowance u/s 14Acan be to the tune of Rs.1,89,155 only.
Decided Case LawREIAgro Ltd. vs. DCITITAT (Kolkata), I.T.ANo-1331/Kol/2011Dated-19.06.2013Facts: There is no linkage or nexus between the funds borrowed by assessee and the impugned investments,still interest expenditure has been disallowed by mechanically applying the provisions of Rule 8DDecision: Neither the AO nor CIT(A) has recorded any finding that having regard to the account of theassessee, they are not satisfied with the correctness of the claim of expenditure made by assessee or the claimmade by assessee that no expenditure has been incurred in relation to income which do not form part of the totalincome under the Act for the relevant assessment year. In the absence of any such finding, facts of the presentcase shows that the investment in shares was made out of own capital employed and not from borrowed funds,no disallowance on account of interest expenditure can be made by invoking rule 8D of the Rules. Accordingly,in the given facts and circumstances, we delete the addition and allow this issue of assessee's appeal.Conclusions
1. Section 14Ais applicable on all types of investments, whether held as SIT or as held as investments.2. Disallowance u/s 14A can be made only if tax free income has been received during the year. However
CBDT Circular NO.5/2014[F.No.225/182/2013-ITA.II],dated 11.02.2014 says that expenses which arerelatable to earning of exempt income has to be considered for disallowance ,irrespective of the factwhether any such income has been earned during the financial year or not
3. In order to invoke provisions of Section 14Aread with rule 8D, nexus has to be established between interestbearing borrowed funds and investment in securities providing tax free income.
4. Provisions of Section 14Aread with rule 8D can be invoked only if dis-satisfaction has been recorded byAO.5. Dividend received from investment made in subsidiary company is only incidental to the investment and no
disallowance can be invoked.CADEEPAK JAUHARI (Asstt. GM (Tax)-POWERGRID)CAANITAJAUHARI (Member of the Institute)Can be reached at [email protected]
6. Issue: Interest expenditure cannot be disallowed by mechanically applying (without establishingnexus between the interest bearing borrowed fund and investment yielding exempt income) provisionsof Rule 8D
As per the above case laws following conclusions can be drawn:
supports the case of the assessee that the assessee is not into the business of investment and theinvestments made by the assessee are on account of business expediency. Any dividend earned by the assessee from investment in subsidiary company is purely incidental. Therefore, the investmentsmade by the assessee in its subsidiary are not to be reckoned for dis-allowance u/s. 14A r.w.r. 8D. TheAssessing Officer is directed to re-compute the average value of investment under the provisions of Rule 8Dafter deleting investments made by the assessee in subsidiary company.
Decided Case LawKalyani Steels Ltd. vs.Addl. Commissioner of Income TaxITAT Pune, I.T.ANo-1733/PN/2012Dated-30.01.2014Facts: In this case, assessee has earned by way of dividends a sum of Rs.5,45,58,685/-, which is exempt u/s10(34) of the Act and thus the same does not form part of the total income under the Act. In the computation ofincome, assessee having regard to section 14A of the Act, determined the amount of expenditure incurred inrelation to such income at Rs.5,00,000/-. The AOhas not found it acceptable and has instead determined theamount of expenditure in relation to such income by applying rule 8D of the Rules.Decision: The tribunal has found that no reasons have been recorded as to why the disallowance determinedby the assessee was found to be incorrect, having regard to the accounts of the assessee. The only point madeby the Assessing Officer is to the effect that "the said disallowance was not acceptable". In-fact, tribunal findthat the assessee made detailed submissions to theAssessing Officer, which have been reproduced by the CIT(A) in his order. The points raised by the assessee have not been addressed by theAO and the same have beenbrushed aside by making a bland statement that the disallowance is "not acceptable".Therefore, in the present case, the Assessing Officer has not recorded any objective satisfaction in regard tothe correctness of the claim of the assessee, which is mandatorily required in terms of section 14A(2) of the Actand therefore his action of invoking Rule 8D to compute the impugned disallowance is untenable. Accordingly,the orders of the authorities below are set-aside on this aspect and theAssessing Officer is directed to retain thedisallowance u/s 14Aof theAct to the extent of Rs.5,00,000/-, as returned by the assessee. Similar decision hasbeen pronounced in the case of DCIT vs. Ashish Jhunjhunwala, ITAT (Kol), I.T.A. No-1809/Kol/2012, dated-14.05.2013.
Decided Case LawDeputy Commissioner of Income Tax vs. Gulshan Investment Co. LtdITAT Kolkata, I.T.ANo-666(Kol) of 2012Dated-11.03.2013Facts: Assessee is engaged in the business of share trading. During the course of scrutiny assessmentproceedings, the Assessing Officer noticed that while the assessee has earned dividend income ofRs.18,91,556, the assessee has not made any disallowance under section 14A in respect of "expensesrelatable to the above exempt income". The AO also noticed that the assessee had paid interest ofRs.10,34,315. On these facts, theAO computed the disallowance under section 14Ar.w.r. 8 D as follows:Disallowance under section 14A:During the relevant year, the assessee had earned dividend income of Rs.18,91,556/-. It was found that the expenses relatable to above exempt income has not been included back to the total income for taxation.Assessee paid interest for Rs.10,34,315/-. As per step 2 of Rule 8D, Rs.7,97,762/- is disallowed. As per step 3,disallowance worked out as under :-Opening value of stock-in-trade:Rs.20,17,95, 911Closing value of stock-in-trade:Rs.33,72,25,080Average stock-in-trade:Rs.26,95,10,496
4. Issue: Dissatifaction ofAO is a pre-requisite for invoking Provisions of Section 14Aread with Rule 8D
5. Issue: Rule 8D(2) (ii) & (iii) not applies to shares held as stock-in-trade while section 14Astill applies
The views expressed herein are personal views of the authors and do not necessarily represent the views of the NIRCs
GENERAL AMNESTY SCHEME FOR RETROSPECTIVE RESTORATION OF MEMBERSHIP (ONE TIME
DISPENSATION). DATE: 05.01.2015
Details of GeneralAmnesty Scheme are given below:-
With a view to mitigate the hardships being faced by members whose names stand removed as on date due to non-
payment of membership fee, the Council has decided to give an opportunity by way of General Amnesty Scheme one time
dispensation for restoration of their names retrospectively.
Continuation of membership entitles a member to designate himself as 'CA' and also other benefits of monthly Journal
of the Institute , Newsletters of Regional Councils & Branches of the Institute, participation in the conferences, seminars and
other programmes organized by the Institute, Regional Councils and/or Branches; regular update on programs being
organized and initiatives taken for the benefit of the profession and members; emerging professional opportunities, practice
area development, publications of the Institute etc.
This is an excellent opportunity to get name restored with retrospective effect.The benefit of the scheme may be availedst
by submitting the prescribed application in Form 9 on or before 31 March, 2015 alongwith the outstanding fee for the
intervening period of name removal and restoration fee of Rs. 1200/-.
stCategory I: The names of the members whose names are removed prior to 31 March 2014 on account of non payment of
fees and not restored as on date may apply for retrospective restoration of their names under General Amnesty Scheme
by filling Form 9 along with the membership fees for the year during which the name was removed and for the current year
together with the fee(s) for the intervening years and the additional fee of Rs.1200/- towards restoration. To avail benefitsst
of GeneralAmnesty Scheme, members should submit the requisite fees and Form '9' latest by 31 March 2015.
The scale of membership fee as applicable from time to time is as given below:
(i) Retrospective restoration of membership under GeneralAmnesty Scheme;
Example:
Where the name of an Associate member was removed from the Register of Members in the year 1991-92, the fees tobe remitted with the Form '9' for retrospective restoration including fee for intervening years will be as under :
st thCategory II: The members whose membership exists as on 01 April 2014 and continued upto 30 September 2014 but
stsubsequently got removed as on 1 October 2014 on account of non-payment of fee are eligible for restoration of theirnames retrospectively under Regulation 19 of the CharteredAccountants Regulations, 1988. Such members may apply
stupto 31 March 2015 in Form 9 along with the membership fees i.e Rs.800/- as an associate and Rs.2200/- as fellow, asthe case may be, for the current year and the additional fee of Rs.1200/- towards restoration of name.Members desirous of availing the opportunity may also apply on-line for restoration of their name by visitingwww.icai.org and downloading pre-filled Form '9'. The link is given on home page "Know Your Institute - Restore yourMembership".
th(a) The members who had held their Certificate of practice as on 30 September, 2014 and the same had subsequently
stbeen cancelled on account of non payment of the related fee w.e.f 01 October, 2014 are eligible to have their
stCertificate of Practice restored retrospectively i.e from 1 October, 2014 provided application in Form 101 forrestoration along with the Certificate of Practice fee of Rs.2000/-[Rs.1500/- where a member has attained the age
st stof 60 years as on 1 April, 2014] for the current year from such members is received by the Institute latest by 31March, 2015.
st(b) Where, the Certificate of Practice stands cancelled on or before 31 March, 2014 on account of non payment of the
required fee, certificate of practice in such cases will be issued afresh from the prospective date, i.e., the date onwhich the application for the same together with Form '101'/ '6' and the requisite fee is received by the Institute.
Members desirous of availing the opportunity may also apply online for restoration/issue of afresh Certificate of Practiceby visiting www.icai.org and downloading Form '6' and the payment can be made online through link "online membershippayment under e-services".
For further clarification or more details, please contact the concerned Decentralised Office of the Institute or the HeadOffice over phone No. 0120-3045997 / 3045998 or e-mail to [email protected] V. SAGAR
Acting Secretary, ICAI
(ii) Retrospective restoration of membership under Regulation 19 of CARegulations, 1988:
(iii) Restoration of certificate of Practice:
ANNOUNCEMENT
*Rs.450/- and Rs.*Rs.600/- where an Associate member has attained the age of 65 years as on 1st April, 2008 and 1st April 2011.
**Rs.1300/- and **Rs.1600/- where a Fellow member has attained the age of 65 years as on 1st April, 2008 and 1st April 2011
*Rs.450/- and Rs.*Rs.600/- where an Associate member has attained the age of 60 years as on 28th March 2013.
**Rs.1300/- and **Rs.1600/- where a Fellow member has attained the age of 60 years as on 28th March 2013
Effective from Associate Fellow
1st April, 2011 *Rs.800 **Rs.2200
1st April, 2008 *Rs.600 **Rs.1,800
1st April, 2000 Rs.300 Rs.900
1st April, 1996 Rs.225 Rs.700
1st April, 1991 Rs.150 Rs.400
1st April, 1986 Rs.100 Rs.275
1st April, 1982 Rs.80 Rs.200
1st April, 1976 Rs.60 Rs.125
1st April, 1975 Rs.45 Rs.110
1st April, 1964 Rs.28 Rs.83
1st April 1949 Rs.25 Rs.25
stThe above Amnesty Scheme for retrospective restoration of membership will remain in force up to 5:30 pm till 31 March 2015 and shall stand withdrawn automatically thereafter.
SUMMARY OF FEE PAYABLE
Fee for the year 1991-92 [the year in which the name was removed] Rs.150
Fees for the intervening years (1992-93 to 2013-2014) Rs.8100
1992-93 to 1995-96 @ Rs.150*4 = Rs.600
1996-97 to 1999-00 @ 225*4 = Rs.900/-
2000-01 to 2007-08 @ Rs.300*8 = Rs.2400
2008-09 to 2010-2011 @ Rs.600*3=Rs.1800
2011-12 to 2013-2014 @Rs.800*3=Rs.2400
Fee for the current year (2014-15) Rs. 800
[where the associate member has not attained the age of 65 years as on 1st April, 2011]
[where the associate member has not attained the age of 60 years as on 28th March , 2013]
Restoration fee Rs.1200
TOTAL Rs.10250
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January, 2015 NEWSLETTERNIRC
11
(V. Sagar)
Acting Secretary
(V. Sagar)Acting Secretary
January, 2015 NEWSLETTERNIRC
12
REGIONAL COUNCIL ACTIVITIES FOR MONTH OF DECEMBER 2014
3rd December2014 (Wednesday)
Career Counselling Programme at LORETO CONVENT SCHOOL, 80Army Cantt, Dhaulakuan Road, Delhi.
5th December2014 (Friday)
6th December2014 (Saturday)
7th December
2014 (Sunday)
12th December2014 (Friday)
13th& 14thDecember 2014(Day One)
15th December2014 (Monday)
16th December2014 (Tuesday)
17th & 18th
December 2014
Day one (17th Dec. 2014)
S. Vaidyanath Aiyar Memorial Lecture on Personality Development 3 49Venue: Hindi Bhawan Auditorium, ITO, New Delhi.
Personality Development CA. Atul Chawla
Stress & Life Management, Controlling lifeSh. Deepak Jainby Controlling Body, Mind & Soul.
National Conclave on Technical Standards Organized by : Peer Review Board of ICAI 6 351Hosted by: NIRC of ICAI, Venue: Hotel Le Meridian, New Delhi.
Chief Guest Sh. Prasenjit Mukherjee, Deputy Comptroller andAuditor General (CAG) & Chairman, Audit Board
Guest of Honour Sh. P. Sesh Kumar, Director General (Commercial Audit)
Inaugural Address CA. Manoj Fadnis, Hon’ble Vice President, ICAI
Companies Act 2013: Auditor’s, Appointment, Responsibility & Reporting A. Arun Saxena
First Time Adoption of IND-AS CA. Shrenik Baid
Ethical Standards: Practitioner Perspective CA. Vinod Jain
Audit Documentation, Engagement Letter and Written Representation CA. Jitendra Agarwal
Seminar on "How to Face CPT Exam" and "Personality Development" for CA Students Guest Speaker=CA. (Dr.) K.M. Bansal 225
CA. Manish Bhasin,CA. Dharmendra Madan,CA. Rajan Khurana,CA. Pradeep Beniwal ,CA. (Dr.) Durga Dass Agrawal,Shri Ram Krishna Goswami
Sub Regional Conference of NIRC Hosted by: Himachal Pradesh Branch of NIRC 6 52Venue: Hotel Holiday Home, Cart Road, Shimla
Recent Changes in Service Tax - Reverse Charge CA. Vishal Garg
Corporate Social Responsibility under Companies Act 2013 CA. Yogita Anand
Foreign TradePolicy & Professional, Opportunities for Chartered Accountants CA. Hans Raj Chugh
Two Days National Conference on Indirect Taxes Organized by: Indirect TaxCommittee of ICAI Hosted by : NIRC of ICAIVenue: Sri Guru Gobind Singh College, Pitam Pura, New Delhi.
Address by Chief Guest CA. D. N. Panda, Member, CESTAT
Reverse Charge Mechanism Sh. Sachin Jain, Additional Commissioner, CBEC
Works Contract Provision under VAT and Service Tax & CA. D N Panda, Member CESTATPanel Discussion Sh. Amresh Jain, Additional Commissioner, CBEC
Sh. Govind Dixit, Additional Commissioner, CBEC
Chairman Technical Session CA. Sanjiv Kumar Chaudhary, CENVAT Credit Rules 2004Central Council Member, ICAICA. Puneet Agarwal
Opportunity & Challenges for Chartered Accountants under GST Sh. Sujit Ghosh
Applicability of Service Tax on Real Estate CA. Atul Kumar Gupta 12and Construction Industry Chairman, Indirect Taxes Committee of ICAI
Opportunity of Chartered Accountants in Custom Act Sh. Jatin Arora
Place of Provision of Service Rules and Rule 6A of Service Tax Rules 1994 CA. Prashanth Agarwal
Workshop on VAT Venue: IMA, I.P., Marg New Delhi. 4 92
Input Tax Credit-Intricacies and Precautions CA. Virender Chauhan
Tax Planning through sale in the course of Import and High Seas Sales CA. Vijay Gupta
Works Contract-Practical issues and Those Relating to CA. Rakesh GargSitus and Double Taxation
Workshop on Standards on Auditing Organized by: AASB of ICAI 4 133Hosted by: NIRC of ICAI Venue: IMA, I.P., Marg New Delhi.
Risk Assessment Including Assessment Including CA. Munish SaraogiAssessment of Fraud Risk in Audit of FinancialStatements (SA 315 and SA 240)
Auditor’s Report (SA 700, SA 705 and SA 706) CA. Sanjay Vasudeva
National Convention for CA Students organized by Board of Studies, ICAI and hosted Address by Dr. Subramanian Swamy, Hon’ble Past Member 1800
by NIRC of ICAI in Siri Fort Auditorium, New Delhi of Parliament and Renowned Economist.
Address by Director, Board of Studies, ICAI
Address by CA. P.P. Chhajed, Vice-Chairman, Board of Studies, ICAI
Address by CA. K. Raghu, Hon’ble President, ICAI.
Technical Session I
Accounts & Audit Motivational Session - "Unleash the Power within: Be an Efficient
Communication" – By CA. Charanjot Singh Nanda, Central Council Member, ICAI
January, 2015 NEWSLETTERNIRC
13
Date Name of Programme/Venue Chief/Guest Speakers CPE TotalHours Partcipants
Technical Session II
Company Laws
Technical Session III
Professional Opportunity for CA Profession
CA Students Parivaar Prastuti - Cultural Evening
Technical Session IV
Indirect Taxes
Technical Session V
Direct & International Taxation Interactive Session with and Shri Vijay Kapur,
Director, Board of Studies, ICAI
Technical Session VI
Make in India Valedictory Session
Two Days Workshop on International TaxationVenue: Hotel Tha Suryaa, New Delhi.
Inaugural Address and Discussion on Enhanced Relationship CA. Sanjiv Chaudhary, Central Council, Member, ICAIbetween Taxpayer and Tax Department Sh. S.M. Nigam, Member (IT) CBDT
Technical Session ITax Challenge for Tax Payer: Sh. Sanjeev Sharma, CITGlobal Standard on Exchange of Sh. Bhaskar Goswami, Addl. CITInformation Country-by country reportingCA. Aseem Chawla
Technical Session IIPermanent Establishment-Fixed Base PE, Agency PE, Agency PE, Service PE Ms. Punam K. Sidhu-CITProblems arise in case of virtual permanent establishment Profits attribution Sh. Atul Jainwith Authorised OECD Approach on profits attribution Sh. Sumeet HemkarProfits attribution and Transfer Pricing CA. Nitin Kanwar
Technical Session IIIInbound/Outbound Structuring of business from India with special focus on CA. Sunil Jain• Mauritius • Singapore • UAE CA. Hari Om Jindal
With Case study on • Apple • Google • Starbucks CA. Avinash Gupta
Technical Session IV
Taxability of Royalty & Fee for Technical Services (With special reference to Sh. Pramod Kumar, Member ITAT 12 173“The Tax Challenges of theSh. M. S. Ray, DIT (Intt. Taxation) Digital Economy”) Sh. S. P. Singh
• E-commerce transactions • Software Payments • Web Hosting / Web advertising
Subscription of foreign websites
Technical Session VI
Tax Dispute Resolution System in India Sh. Pramod Kumar, Member, ITATTax Dispute Resolution System in India Sh. Mukesh ButaniIs ITAT the only effective institution for resolution of cross boarder tax dispute? Sh. Sanjeev Sharma, CITDoes India need an effective alternative dispute resolution system?
Technical Session VII: Mock TribunalSpecial Mock tribunal Session with Sh. T. S. Kapoor, Member, ITATMembers of ITAT (With special reference to Sh. C. M. Garg, Member, ITATTP and International Taxation aspects) Ms. Punam K. Sidhu, CIT(DR)
Sh. Yogesh Verma-CIT (A)CA. Ashutosh JainSh. Vishal Kalra
Seminar on GST 6 300Venue: India Habitat Centre, Lodhi Road, Delhi.
Structure of GST vis-à-vis India GST CA. Vijay Gupta
Constitutional Amendments on GST CA. J. K. Mittal
Mechanism and key impacts of Indian GST CA. Rakesh Garg
Regional Level Elocution & Quiz Contests 2014 for CA Students Judges: 50
CA. Pradeep Dixit,CA. Akash Arora,CA. Jatin Tagra,CA. Harsh VardhanCA. Jayendra Malhotra
Seminar on "Real Estate Issues & Taxation/Priority Settings (Key to Professional CA. (Dr.) K.M. Bansal 215
Progress) and Schedule III of Companies Act, 2013"for CA Students CA. Umesh Varma,CA. Sanjay Issar
Industrial Visit for CA. Students at "Haridwar Patanjali Herbal & Food Parks" 150
and Gurukul Pharmacy
Seminar on Concurrent Audit of Banks 6 122Venue: Hotel Radisson Blu, Paschim, Vihar, New Delhi.
Introduction of the Seminar by Special Invitee CA. Lokesh Gupta
• Role of Chartered Accountants in the Detection and Prevention of Frauds Sh. Nirmal Joshiin Banks with some relevant caseChief Vigilance Officer studies State Bank of Bikaner & Jaipur
Loans and Advances with special emphasis on audit in CBS CA. Bhagwan Das Guptaenvironment Recent Changes in Prudential Norms on Income Past Chairman, NIRC of ICAIRecognition, Asset Classification and Provisioning relating to Advances. CA. Anil Aggarwal
KYC Norms & Obligations of Banks under Prevention ofMoney Laundering ACT (PMLA 2002)
Joint Seminar with Faridabad of NIRC of ICAI on "Way to Success"for CA Students CA. Atul Chawla 250
Shri Praveen Narang,CA. Brajesh Agarwal
Day two (18th Dec. 2014)
19th& 20thDecember 2014(Day One)
27th December2014 (Saturday)
28th December
2014 (Sundary)
4th January
2015 (Sundary)
7th & 8th January
2015
10th January2015 (Saturday)
11th January
2015 (Sunday)
January, 2015 NEWSLETTERNIRC
14
Date Name of Programme/Venue Chief/Guest Speakers CPE TotalHours Partcipants
Forthcoming Programmes of NIRC of ICAI
6CPE HRS.
Members
Date & Day 31st January 2015 (Saturday)
Venue Hotel The Suryaa,
New Friends Colony, Delhi.
Timing 09.30 AM to 05.00 PM
Limited Seats. Registration on First
cum First Serve subject to availability
of Seats in the Hall.
Fee Rs. 1500/- for Members
Rs. 2000/- for Non Members
(Corporate Delegates)
No Fee for Annual Members of NIRC
Seminar on Taxation
of Non Profit Organization
Members
Date & Day 1st March 2015 (Sunday)
Venue To be hosted on NIRC Websit
Timing 10.00 AM to 01.00 PM
6CPE HRS.
Members
Date & Day 20th March 2015 (Friday)
Venue Hotel Le Meridien (Sovereign Hall),
Windsor Place, Janpath, New Delhi.
Timing 09.45 AM to 05.30 PM
Limited Seats. Registration on First
cum First Serve subject to availability
of Seats in the Hall.
Fee Rs. 2000/- for Members
Rs. 2500/- for Non Members
(Corporate Delegates)
No Fee for Annual Members of NIRC
(Year 2014-15)
6CPE HRS.
Members
Date & Day 15th March 2015 (Sunday)
Venue Hotel Le Meridien (Inspire Hall),
Windsor Place, Janpath, New Delhi.
Timing 09.30 AM to 05.30 PM
Fee Rs. 2000/- for CSAs
6CPE HRS.
Members
Date & Day 14th March 2015 (Saturday)
Venue To be Hosted on NIRC Website
Seminar 09.45 AM to 05.30 PM
Timings Limited Seats. Registration on First
cum First Serve subject to availability
of Seats in the Hall.
Fee Rs. 2000/- for Members
Rs. 2500/- for Non Members
(Corporate Delegates)
No Fee for Annual Members of NIRC
(Year 2014-15)
3CPE HRS.
Members
Date & Day 21st February 2015 (Saturday)
Venue Stein Auditorium, India Habitat
Centre, Lodhi Road, New Delhi.
Seminar 09.30 AM to 01.30 PM
Timings Limited Seats. Registration on First
cum First Serve subject to availability
of Seats in the Hall.
Annual 02.30 PM to 05.30 PM
Function Timings
Fee Rs. 1500/- for Members
Rs. 2000/- for Non Members
(Corporate Delegates)
No Fee for Annual Members of NIRC
Seminar on Goods
and Services Tax (GST)
& Annual Award Function of NIRC of ICAI
Discussion on Union
Budget 2015
Clause by ClauseDiscussion of Finance Bill
& Session on Mock Tribunal
Central Statutory
Auditors’ Meet (CSA Meet)(Programme is only for Central Statutory Auditors of Bank)
Seminar on Bank Audit
continuous period of not less than five years, any one or more posts carrying duties mentioned in
clause (i) above;
(iii) being employed under a local authority, , is ordinarily holding or has ordinarily held for a continuous
period of not less than five years, any one or more posts carrying duties mentioned in clause (i) above
provided the local authority has within its jurisdiction a population of not less than five lakhs of
persons during each of the five years of his service;
(iv) has served for a continuous period of not less than five years as a full-time paid assistant under a
chartered accountant:
Members fulfilling above conditions may apply to the concerned Regional Office with the prescribed
Fee and application in "Form 3" along with required documents for grant of Fellow Membership.
Respective details andApplication Form are available on the Institute's website, vide link given below:
http://www.icai.org/new_post.html?post_id=1564&c_id=89
V. SagarDate : 9/12/2014 Acting Secretary
Regulation 5 (3) of the Chartered Accountants Regulations, 1988 provides for eligibility to become a
fellow member of the Institute on the basis of service in specified industries and organizations
An associate member is eligible for admission as a Fellow Member if he/she satisfies the eligibility
conditions laid down under Regulation 5(3) of the CharteredAccountants Regulations, 1988 as under;
For the purpose of sub-section (3) of section 5, an associate shall be deemed to have acquired the
experience normally acquired as a result of continuous practice for a period of five years as a chartered
accountant, if he:-
(i) being in government service or being employed in an educational institution approved by the Council
or being employed in a private or government, industrial, commercial or trading undertaking, is
ordinarily holding or has ordinarily held for a continuous period of not less than 5 years, any one or
more posts carrying duties relating to accounts, costs accounts, audit, finance, taxation, company
law and or secretarial work;
(ii) being employed under a statutory authority, is ordinarily holding or has ordinarily held for a
Grant of Fellow membership on the basis of serviceANNOUNCEMENT
January, 2015 NEWSLETTERNIRC
15
January, 2015 NEWSLETTERNIRC
16
GLIMPSES-REGIONAL COUNCIL ACTIVITIES
A View at the Sub Regional Conference of NIRC Hosted by Himachal Pradesh Branch of NIRC held on12th December 2014 at Hotel Holiday Home, Cart Road, Shimla
A view at thev Two Days National Conference on Indirect Taxes Organized by Indirect Tax Committee of ICAIHosted by NIRC of ICAI at Sri Guru Gobind Singh College, PitamPura, New Delhi held on 13th & 14th December 2014
A view at the Workshop on Standards on Auditing Organized by AASB of ICAI Hostedby NIRC of ICAI at IMA, I.P., Marg New Delhi, held on 16th December 2014
A View at the Workshop on VAT at IMA, I.P., Marg New Delhi,held on 15th December 2014
A View at the national Convention for CA Students Organized by BOS of ICAI Hosted by NIRC of ICAI held on 17th December 2014 at Siri Fort Auditorium, New Delhi.
January, 2015 NEWSLETTERNIRC
17
GLIMPSES-REGIONAL COUNCIL ACTIVITIES
A View at the Two Days Workshop on International Taxation held on 19th & 20th December 2014 at Hotel The Suryaa, New Delhi
A View at the national Convention for CA Students Organized by BOS of ICAI Hosted by NIRC of ICAI held on 18th December 2014 at Siri Fort Auditorium, New Delhi.
A View at the national Convention for CA Students Organized by BOS of ICAI Hosted by NIRC of ICAI held on 17th December 2014 at Siri Fort Auditorium, New Delhi.
A View at the Seminar on GST held on 27th December 2014 at India Habitat Centre, Lodhi Road, New Delhi
January, 2015 NEWSLETTERNIRC
18
GLIMPSES-REGIONAL COUNCIL ACTIVITIES
A View at the Seminar on GST held on 27th December 2014 at India Habitat Centre, Lodhi Road, New Delhi
A View at the Seminar on Concurrent Audit of Banks held on 10th January 2015 at Hotel Radisson Blu, Paschim Vihar, New Delhi
A View at the Seminar on GST & Cost Audit Organised by Bhatinda Branch of NIRC of ICAI
A View at the Regional Level Elocution & QuizContests 2014 for CA Students
A View at the Seminar on "Real Estate Issues & Taxation/Priority Settings(Key to Professional Progress) and Schedule III of Companies Act, 2013"for CA Students
A View at the Sports Competition for CA Students Organized by Rohtak Branch of NIRC of ICAI
January, 2015 NEWSLETTERNIRC
19
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Become life member of CABF, A fund Registered under Societies Registration Act 1860.
The Fund provides financial assistance maintenance/medical needs of the members of the Institute and their
families in distress.
Join today as a life member and be a part of the benevolent fraternity.
Contribute voluntarily any some over and above life contribute for the noble and pious cause.
Contribution are exempt from tax under section 80-G of Income Tax Act.
The Fund thanks all members who have contributed generously for the cause
DL(C)-01/1192/2015-17
U(C) -257/2012-14
Licensed to post without prepayment Posted
At N.D. P.S.O., New Delhi-110002, on January 11-12, 2015
NIRC Newsletter- January, 2015
CHOOSE A CAUSE TO FEEL THE MAGIC
Chartered Accountant Benevolent Fund
A fund set up by the members. for for the members
Life Subscription of the fund
Rs. 2500
Ordinary/Annual Subscription of the fund
Rs. 500 per annum
Payable in favour of Chartered Accountants
Benevolent fund at New Delhi
Choose to Contribute for
R. N. I. No. 21759/71
thPublished on 17 January 2015