NEWSLETTER OF NORTHERN INDIA REGIONAL … July Newsletter 26-7...NEWSLETTER OF NORTHERN INDIA...

NEWSLETTER OF NORTHERN INDIA REGIONAL COUNCIL OF THE ICAI

VOL. XLVI, NO. 4

July, 2016

From the Desk of the Chairman...

Dear Professional Colleagues,

I wish all of you a very Happy CA Day.

Indian accountancy profession had started its journey on 1st July,

1949 since than ICAI has been playing a key role in promoting

accountancy profession in the world and contributing in education

and training .

With the Growth of the Indian economy and India emerging as a

Global Power, it has become utmost important for the all of us to keep

ourselves update to provide the better and quality services to the

clients and meet out the expectations of all the stakeholders. In this,

knowledge occupies a crucial position. Your NIRC also plays very

important role in spreading knowledge on the topics of professional

interest by the elite and star speakers.

During last month, Your NIRC has organized Mega Seminars on

Service Tax, Banking and Companies Act (IFC and CARO 2016). Sub

Regional Conference was also organized during the last month with

emerging topics on Direct Taxation (ICDS & TDS), Companies Act (

NCLT & NCLAT) and GST at Chandigarh and Shimla. Four different

Workshops on TDS, VAT, GST & on Real Estate ACT were also

organized during evening hours to inculcate the knowledge of these

emerging topics amongst Members. A special Workshop on

Professional Opportunities for young CAs was also organized for the

Young Chartered Accountants. All the Seminars and Workshops

were attended by large number of Members.

During Last month ,your NIRC has also Celebrated International

World Yoga Day on 21st June and on this occasion Yoga Shivir was

organized for the Members and Students in the Lawn of Engineers

Bhawan, I. P. Marg, New Delhi. Yoga Shivir was attended by a large

number of members and Students.

Your NIRC equally feels the Responsibilities towards the Society.

Considering the fact that the Social Responsibilities are part and

parcel of the duties of the NIRC, your NIRC has organized Swachta

EDITORIAL BOARD

Printed and Published by Dr. Deepak ChandaSr. Assistant Director, on behalf of the NorthernIndia Regional Council of The Institute of Chartered Accountants of India “ICAI Bhawan”,Indraprastha Marg, New Delhi-110 002

[email protected] ; [email protected]

Date: 20th July, 2016Place: New Delhi

CA. Deepak Garg

Chairman, NIRC of ICAI

M : 9811064105

convenient to join such Programmes of learning and gain an

insight into present corporate structure in line with the CA profession.

Chartered Accountants Benevolent Fund, which was

established under the Societies Registration Act "By the

members of the Institute" and for the members of the

Institute. The Objective of the fund is to provide financial

assistance for maintenance, education or medical treatment to

its members and their families in distress. In order to

strengthen the financial position of the fund, your NIRC desires

that all the members of our Northern Region should join CABF

extending their helping hands to support their Professional

colleagues and dependents. On behalf of TEAM NIRC, It is my

earnest appeal that all of you must become Member of the

fund and contribute voluntarily for the noble and pious cause

of CABF. If you have already registered for the same, I again

request you to come forward and make more and more

contribution for this noble cause.

At Last on behalf of Team NIRC I would like to wish to all the

Students who have appeared in their Exams . Whatever the

result may be, I will only say that Work hard as much as you

can. Nothing is impossible even the word Impossible says I am

possible. Regular Studies with full dedication, thorough and

Full Use of Study Material issued by Board of Studies, Practice

of Sample papers and RTPs, Appearance in Mock Tests are the

few ways for Success in the examination. I will request the

members to please convey my message to CA Students .

At Team NIRC, we are committed to provide better services to

the members as well as students. At last I would like to request

you to kindly forward your views and suggestion for the

effective working of the NIRC and best services to the

members and students.

Never think you are nothing, Never think you are everything,

But always think you are something and you can achieve

anything.

In the last

Diwas on 29th June at ITO. Hon'ble President and Vice

President of ICAI along with other Central council Members

and Northern Regional Council Members of ICAI actively

participated in the activities of cleanliness nearby area of ICAI

Bhawan, ITO. In this series Blood Donation Camp with the

help & Support of Rotary Club were organized on CA day i.e.

1st July at its Vishwas Nagar office wherein good number of

units of the blood has been donated by the Members and

Students. Health Check Camp was also organized with the

help of Renowned Doctors. A Special Lecture on

Physiotherapy was also organized on that event. Another

activities like Run for Society and Tree Plantation were also

conducted on that day. To Celebrate 67th Year of the

Chartered Accountants, your NIRC has organized a Cultural

Programme on the eve of the CA day on 30th June at Talkatora

Stadium. It was really a wonderful event and divinely talented

performance by the SAM Group from Divya Jyoti Sansthan.

The event was appreciated by everyone. The Event was

inaugurated by the Hon'ble National Vice President of BJP Shri

Shyam Jaju ji .Your Team NIRC also feels honoured by the

presence of our Respected & Hon'ble President of ICAI CA. M

Deva Raja Reddy ji, Hon'ble Vice President of ICAI CA. Nilesh

Shivji Vikamsey ji and Central Council Members of the ICAI

and other dignitaries along with their families. Your Team

NIRC is committed towards Such Programs in future too which

brings a kind of togetherness and closeness within the CA

families. Team NIRC is thankful to all of you for making this

programme a Grand success.

At Team NIRC, we are always committed to provide better

services to the students also. Students are Backbone of our

offices. Looking into the needs of the students various Free of

cost Seminars were also organized for the Students on

Sundays on various emerging topics like CARO 2016 and what

after CA Course. Mock Tests for CPT students were also

organized. A Mega Motivational Programme for Young

Chartered Accountants and GMCS Scholars was also

organized on 30th June at Talkatora Stadium. A large number

of Students attended the same and gained a lot from all the

Eminent Speakers.

Next couple of months will also be enriching for all Members

and Students, as NIRC of ICAI has planned a variety of CPE

Programmes for the benefit of Members. Such programmes

will bring an interaction between members and other

stakeholders. Details of which are available in this Newsletter.

You are requested to please block your diary and make it

Date: 20th July, 2016Place: New Delhi

CA. Sumit Garg

Secretary, NIRC of ICAI

M : 9560064645

From the Desk of the Secretary...From the Desk of the Secretary...From the Desk of the Secretary...

“Beautiful things happen in your life when

you distance yourself from all the

negative things”

Constitution of NCLT to replace CLB

Income Computation and Disclosure

Standards

A warm greetings to all the professional mates

with lots of happiness, success and blissful life

for number of years ahead. A newsletter is

always a way to interact with you Although the

interaction is one way through this newsletter,

and I expect that you all will make it a two way

interaction with your suggestions and views for

the development of our profession.

MCA has issued a notification for the

constitution of NCLT and NCLAT with effect from

June 1, 2016. With the constitution of NCLT, the

Company Law Board constituted under

Companies Act 1956, stands dissolved.

Constitution of NCLT makes practicing

Professionals eligible to appear before NCLT. It

provides another area of work exposure to our

members, which will also help us in developing

our soft skills.

The Central Government has recently notified

10 Income Tax Computation & disclosure

standards effective from FY 2015-16. This will

affect the compliance Practice of all tax Payers

whose Income is chargeable under the head

PGBP and Income from other Sources,

irrespective of their turnover, status and

applicability of tax audit ,provided they are

following the Mercantile system of maintaining

books of accounts.

ICDS were developed with a view to minimize

tax related disputes. Non compliance of ICDS

will result into Best Judgement Assessment by

tax authorities.

Past programs and future events

Concluding Remark

NIRC has conducted multiple numbers of

programs for professionals in June 2016 and on

the occasion of CA Day as well. We are also

planning to conduct many programs in July 2016.

For details please refer “Forthcoming Programs

section” in this newsletter.

Before concluding, I would like to say that your

words of wisdom, suggestions are our basic

essentials which provides us the basis to act in a

proactive and effective manner, and I wish that

you will always make an active participation by

sharing your views, contributing articles to e-

News, as your active participation will take all of

us to new heights

I sincerely thanks to all the Team Members for

giving their best inputs in making this News

Letter, and I wish that our association will

continue for a longer period.

Sec

reta

ryDear Professional Colleagues,

• MANU-GJ-925-2016 in PCIT-1 vs. B. A. Research India

Ltd. dated 16-06-2016 wherein Hon'ble Gujarat High Court

• MANU-KA-1289-2016 in CIT (Exemptions) vs. Bangalore

Bapist Hospital Society dated 16-06-2016 wherein Hon'ble

Karnataka High Court

• MANU-KA-1291-2016 in PCIT vs. Lokmanya Multiple Coop

Society Ltd. dated 16-06-2016 wherein Hon'ble Karnataka

High Court

• MANU-GJ-983-2016 in Associated Transrail Structure Ltd.

vs. ACIT dated 16-06-2016 wherein Hon'ble Gujarat High

Court

• MANU-GJ-0991-2016 in CIT-III vs. Bipin Chandra K

Bhatia dated 16-06-2016 wherein Hon'ble Gujarat High Court

held that the power of AO to verify the claim of deduction is not taken

away. He can certainly verify the accounts and deny the deduction

which does not arise out of the eligible business and does not form

the part of the income under section 80IB (8A) of the act. The AO

however cannot ignore the approval granted by the prescribed

authority and hold that the prescribed conditions are not fulfilled by

the taxpayer once the approval is granted by the prescribed

authority.

held that while in the year of acquiring the

capital asset, what is allowed as exemption is the income out of which

such acquisition of asset is made and when depreciation deduction is

allowed in the subsequent years, it is for the losses or expenses

representing the wear and tear of such capital asset incurred if, not

allowed then there is no way to preserve the corpus of the Trust for

deriving its income. As such, the arguments advanced by the

Revenue apprehending double deduction are totally misconceived.

held that If the assessee is not a Co-operative bank

carrying on exclusively banking business and if it does not possess a

license from the Reserve Bank of India to carry on business, then it is

not a Co-operative bank. It is a Co-operative society which also

carries on the business of lending money to its members which is

covered under Section 80P (2) (a) (i) i.e., carrying on the business of

banking for providing credit facilitates to its members. The object of

the aforesaid amendment is not to exclude the benefit extended

under Section 80P (i) to the society.

held that if the share application money is received by the

assessee company from alleged bogus shareholders, whose names

are given to the AO, then the Department is free to proceed to reopen

the individual assessments in accordance with law. Such amounts

cannot be regarded as undisclosed income u/s 68 of the assessee

company.

held that the penalty u/s. 158BFA (2) is not automatic and cannot be

levied in a mechanical manner. The provision enables the AO to levy

the penalty but does not make it mandatory. The expression used in

“Your time is limited; don't waste it living someone else's life. Don't

be trapped by dogma, which is living the result of other people's

thinking. Don't let the noise of other's opinion drowned your own

inner voice. And the most important, have the courage to follow your

heart and intuition, they somehow already know what you truly want

to become. Everything else is secondary.” -

It's my pleasure to present the DIRECT TAXES UPDATES for the

month of June 2016, which was brought into force by various

changes and amendments of Acts, Ratios, circulars and notifications

etc. from June 1st 2016 to June 30th 2016.

held that if AO has

cause or justification to know or suppose that income had escaped

assessment, it can be said to have reason to believe that income had

escaped assessment. The expression cannot be read to mean that

the AO should have finally ascertained the fact by legal evidence or

conclusion. If on the basis of subsequent valid information, the AO

forms a reason to believe on satisfying the twin conditions prescribed

under section 147 of the Act that no full and true disclosure of facts

was made by the assessee at the time of original assessment and,

therefore, the income chargeable to tax had escaped assessment,

his belief and the notice of reassessment based on such

belief/opinion needs no interference.

held that the

object of introducing section 269SS is to ensure that a taxpayer is not

allowed to give false explanation for his unaccounted money, or if he

has given some false entries in his accounts, he shall not escape by

giving false explanation for the same. While introducing section

269SS, section 273B was also incorporated in the statute which

provides that no penalty shall be impossible on an assessee for any

failure referred to in the said provision if the assessee proves that

there was reasonable cause for such failure. In other words penalty is

not automatic u/s 271D of the Act on mere violation of provisions of

section 269SS of the Act.

held that a right is conferred on the respondent to seek for recalling

of the order passed ex-parte, even though the same is on merits.

Even if the appeal is disposed of on merits, after hearing the

appellant, the same can be recalled by the tribunal, if the respondent

appears afterwards and satisfies the tribunal that there was sufficient

cause for his non appearance. Thus, if sufficient cause is shown the

tribunal is obligated to consider the same and make an order setting

aside the ex-parte order, no matter, whether it is an order simplicitor

or on merits.

Steve Jobs.

RATIOS

• MANU-GJ-973-2016* in J P Iskon Ltd. vs. DCIT dated 22-

06-2016 wherein Hon'ble Gujarat High Court

• MANU-GJ-982-2016 in Rajaram L Akhani vs. ITO dated

22-06-2016 wherein Hon'ble Gujarat High Court

• MANU-TN-1175-2016 in CIT vs. P Venketasan & Others

dated 21-06-2016 wherein Hon'ble Tamil Nadu High Court

UPDATES JUNE 2016

CA. Pooja Bansal (Mrs.)Vice Chairperson, NIRC

Namaste

My Dear Professional Colleagues,

July, 2016 NIRC NEWSLETTER

The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs 5


Act, 2016 as FAQ's

• 23/2016 dated 24-06-2016, clarifications issued for Amendment

in sec 206C as FAQ's

• 22/2016 dated 08-06-2016, clarifications issued for Amendment

in sec 206C as FAQ's

• 52/2016 dated 23-06-2016, notifying Corrigendum that “to

section 115TC” shall be read as “below section 115TCA”. in

Notification Number 46/2016 given on 17-06-2016.

• 11/2016 dated 22-06-2016, notifying the procedure for online

submission of deduction of tax u/s 200(3) and statement for

collection of tax under proviso for section 206C(3) of the Income

tax act, 1961 read with rule 31A (5) and rule 31AA (5) of

Income tax rules.

• 47/2016 dated 17-06-2016, notifying that No TDS shall be

deducted in certain cases.

• 46/2016 dated 17-06-2016, notifying that No TDS shall be made

on the payments of the nature specified in section 10(23D)

received by Securitization Trust as defined in

clause (d) of the Explanation to section 115TC.

• 9/2016 dated 09-06-2016, notifying the due date for quarterly

furnishing of 15G/15H.

• 42/2016 dated 06-06-2016, notifying the CII for FY 2016-17 to

be 1125

To conclude this update series, I'd like to convey that if you have a

positive mind and faith, instead of being discouraged when

something bad happens, you will learn lessons that will be for your

good, and you will grow from experience. One needs to have the

power of positive thinking to experience the BEST IN LIFE.

NOTIFICATIONS

sub section 158BFA (2) is "the Assessing Officer ... may direct the

person shall pay by way of penalty...... “As giving discretion to the

Assessing Officer to levy or not to levy the penalty on proper

evaluation of the relevant facts.

held that

when the services are rendered partially, revenue is to be shown

proportionate to the degree of completion of the service and

therefore the assessee was justified in spreading over the amount of

membership fee and expenses.

held

that in absence of any evidence of assessee having made the

payments and in presence of denial by the sellers, cannot be an

evidence, as envisaged in Section 158BB (1) of the Act and

consequently, cannot be considered as evidence for computation of

any undisclosed income.

held that consideration for installation cannot not

be characterized as FTS and brought within the ambit of Article

12.4(a) of the DTAA. The resultant position is that no part of the

income earned by the Petitioner from the contract with IOCL can be

taxed in India.

* Favoring Revenue.

• 25/2016 dated 30-06-2016, clarifications issued for The Income

Declaration Scheme, 2016 incorporated as Chapter IX of the

Finance Act, 2016 as FAQ's

• 24/2016 dated 27-06-2016, clarifications issued for The Income

Declaration Scheme, 2016 incorporated as Chapter IX of the Finance

• MANU-GJ-0937-2016 in Prithvi Associates vs. ACIT dated

14-06-2016 wherein Hon'ble Gujarat High Court

• MANU-GJ-0939-2016 in CIT vs. Narvinsinh R Parmar

dated 10-06-2016 wherein Hon'ble Gujarat High Court

• MANU-DE-1379-2016 in Tecnip Singapore PTE Ltd. vs.

Director Income Tax dated 02-06-2016 wherein Hon'ble

Delhi High Court

CIRCULARS

INFORMATION-FOR MEMBERS

Permission for other engagement by Member

Issuance of Congratulatory Card to Members

Permission for pursuing other courses by member

A member in practice is required to seek permission of the Council under CA Regulation 190(A). The permissible category

of engagement approved by the Council is given under Appendix No. 9 of CA Regulations 1988. A member having COP can

be sleeping partner in a family business or Director / Director simplicitor or promoter in MCS Company registered by ICAI.

In order to recognize continuance of professional services by a member having Certificate of Practice for the period of 50

years without any break in membership, the Council of ICAI has decided to grant a Congratulatory Card. Such Card is

being issued to all specified category of members completing 50 years of experience on 1st April of the year.

Chartered Accountancy Course is a certificate course and recognized as a Post graduate qualification only for the purpose

of PhD Course of certain Universities. A member may pursue any additional academic course and submit the proof to ICAI

for noting of the same. A member can also join post qualification courses of the Institute. No prior permission of ICAI is

required for pursuing additional academic courses.

6

The views expressed herein are personal views of the author and do not necessarily represent the views of the NIRCs


be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others;

ix. any amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking pari passu with the first charge on any assets referred to in Schedule III of the Act excluding intangible assets of the company or bonds / debentures compulsorily convertible into shares of the company within ten years.

If such bonds or debentures are secured by the charge of any assets referred to in Schedule III of the Act excluding intangible assets, the amount of such bonds or debentures shall not exceed the market value of such assets as assessed by a registered valuer; (Amended by Companies (Acceptance of deposits) Amendment Rules, 2016)

(ixa) any amount raised by issue of non convertible debenture not constituting a charge on the assets of the company and listed on a recognised stock exchange as per applicable regulations made by Securities and Exchange Board of India.

x. any amount received from an employee not exceeding his annual salary, under a contract of employment with the company in the nature of non-interest bearing security deposit;

xi. any non-interest bearing amount received and held in trust; (Amended by Companies (Acceptance of deposits) Amendment Rules, 2016)

xii. any amount received in the course of or for the purposes of the business of the company:

a) as an advance for the supply of goods or provision of services provided that such advance is appropriated against supply of goods or provision of services within a period of three hundred and sixty five days from acceptance of such advance. In case of any advance which is subject matter of any legal proceedings before any court of law, the said time limit of three hundred and sixty five days shall not apply

b) as advance, accounted for in any manner whatsoever, received in connection with consideration for an immovable property under an agreement or arrangement, provided that such advance is adjusted against such property in accordance with the terms of agreement or arrangement. (Amended by Companies (Acceptance of deposits) Amendment Rules, 2015)

c) as security deposit for the performance of the contract for supply of goods or provision of services

d) as advance received under long term projects or for supply of capital goods except those covered under item (b) above.

e) as an advance towards consideration for providing future services in the form of a warranty or maintenance contract as per written agreement or arrangement, if the period for providing such services does not exceed the period prevalent as per common business practice or five years, from the date of acceptance of such service whichever is less; (Inserted by Companies (Acceptance of deposits) Amendment Rules, 2016)

f) as an advance received and as allowed by any sectoral regulator or in accordance with directions of Central or State Government; Inserted by Companies (Acceptance of deposits) Amendment Rules, 2016)

g) as an advance for subscription towards publication, whether in print or in electronic to be adjusted against receipt of such publications; " (Inserted by Companies (Acceptance of deposits) Amendment Rules, 2016)

If the amount received under (a) (b) and (d) above becomes refundable (with or without interest) because the company accepting the money does not have necessary permission or approval to deal in the goods or properties or services for which the money is taken, the amount received shall be deemed to be a Deposit under these rules. For the purpose of this sub clause, amount referred to in proviso shall be deemed to be deposits on the expiry of 15 days from the date they become due for refund. (Amended by Companies (Acceptance of deposits) Amendment Rules, 2015)

xiii. any amount brought in by the promoters of the company by way of unsecured loan in pursuance of the stipulation of any lending financial institution or a bank subject to fulfillment of the following conditions:

i. the loan is brought in pursuance of the stipulation imposed by the lending

INTRODUCTION:

APPLICABILITY:

WHAT IS A DEPOSIT?

WHAT IS NOT A DEPOSIT?

Section 73 to 76 of the Companies Act, 2013 read with Rules made, circulars/ notifications issued under Chapter V of the Act regulates the method, limitation, compliances for invitation and acceptance of deposits by companies. It prohibits acceptance of deposits from any other person except from the members through ordinary resolution or acceptance deposits by ''eligible company'' being a public company, subject to conditions specified in the rules.

Provisions of Chapter V (Acceptance of deposits by companies) and Rules made, circulars/notifications issued thereunder shall be applicable to all companies except:

• A Banking company

• A non banking financial company as defined in Reserve Bank of India, Act 1934

registered with Reserve Bank of India

• A housing finance company registered with National Housing Bank established under National Housing Bank, 1987; and

• A company specified by Central Government under proviso to sub section (1) of Section 73 of Act.

Section 2(31) of the Companies Act 2013 defines deposit as -“deposit” includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India;

As per Rule 2(c) of Companies (Acceptance of deposits by companies) Rules 2014 read amendments made and circulars/ notifications issued thereunder, following shall not be treated as deposits:

i. any amount received from the Central Government or a State Government, or any amount received from any other source whose repayment is guaranteed by the Central Government or a State Government or any amount received from a local authority, or any amount received from a statutory authority constituted under an Act of parliament or a state legislature;

ii. any amount received from foreign Governments, foreign/ international banks, multilateral financial institutions (including, but not limited to, International Finance Corporation, Asian Development Bank, Commonwealth Development Corporation and International Bank for Industrial and Financial Reconstruction), foreign government owned development financial institutions, foreign export credit agencies, foreign collaborators, foreign bodies corporate and foreign citizens, foreign authorities or persons resident outside India subject to the provisions of Foreign Exchange Management Act, 1999 and rules and regulations made there under;

iii. any amount received as a loan or facility from any banking company or from the State Bank of India or any of its subsidiary banks or from a banking institution notified by the Central Government under section 51 of the Banking Regulation Act, 1949 (10 of 1949), or a corresponding new bank as defined in clause (d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (5 of 1970), or from a co-operative bank as defined in clause (b-ii) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934);

iv. any amount received as a loan or financial assistance from Public Financial Institutions notified by the Central Government in this behalf in consultation with the Reserve Bank of India, regional financial institutions, Insurance Companies, Scheduled Banks as defined in the Reserve Bank of India Act, 1934;

v. any amount received against issue of commercial paper or any other instrument issued in accordance with the guidelines or notification issued by the Reserve Bank of India;

vi. any amount received by a company from any other company;

vii. any amount received and held pursuant to an offer made in accordance with the provisions of the Act towards subscription to any securities, including share application money or advance towards allotment of securities pending allotment, so long as such amount is appropriated only against the amount due on allotment of the securities applied for.

If the securities for which application money or advance for such securities was received cannot be allotted within 60 days from the date of receipt of the application money or advance for such securities and such application money or advance is not refunded to the subscribers within 15 days from the date of completion of sixty days, such amount shall be treated as a deposit under these rules. For the purpose of this rule any adjustment of the amount for any other purpose will not be treated as refund;

viii. any amount received from a person who, at the time of the receipt of the amount, was a director of the company or relative of director of a Private company. (Amended by Companies (Acceptance of deposits) Amendment Rules, 2015)

The director of the company or relative of director of a Private company, as the case may

CA. Nitin KanwarTreasurer, NIRC


ALL ABOUT DEPOSITS AS PER COMPANIES ACT 2013


Exemptions to Private Companies

Exceptions

MCA vide notification dated 05/06/2015 provided that clause (a) to (e) as discussed above shall not be applicable to Private companies which accepts from its members monies not exceeding 100% of aggregate of paid-up share capital and free reserves, and such company shall file the details of monies so accepted to Registrar in such manner as may be specified.

a) providing security, if any for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the property or assets of the company. In case when a company does not secure the deposits or secures such deposits partially, then, the deposits shall be termed as ''unsecured deposits'' and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits.

b) Section 73(3) states that every deposit accepted by a company under sub-section (2) shall be repaid with interest in accordance with the terms and conditions of the agreement referred to in that sub-section.

Section 73(4) states that when a company fails to repay the deposit or part thereof or any interest thereon under subsection (3), the depositor concerned may apply to the Tribunal for an order directing the company to pay the sum due or for any loss or damage incurred by him as a result of such nonpayment and for such other orders as the Tribunal may deem fit.

Further, Rule 3 provides that No company under sub-section (2) of section 73 and no eligible company shall accept or renew any deposit, whether secured or unsecured, which is repayable on demand or upon receiving a notice, within a period of less than six months or more than thirty-six months from the date of acceptance or renewal of such deposit:

A company may, for the purpose of meeting any of its short term requirements of funds, accept or renew such deposits for repayment earlier than six months from the date of deposit or renewal, as the case may be, subject to the condition that-

(a) such deposits shall not exceed ten per cent of the aggregate of the paid up share capital and free reserves and securities premium account of the company, and (Amended by Companies (Acceptance of deposits) Amendment Rules, 2015)

(b) such deposits are repayable not earlier than three months from the date of such deposit or renewal thereof.

Rule 3(3) states that no company referred to in sub-section (2) of section 73 shall accept or renew any deposits if the amount of such deposits together with the amount of other deposits

a) outstanding as on the date of acceptance or renewal of such deposits exceeds 35 per cent of the aggregate of the paid-up share capital and free reserves of the company. (Amended by Companies (Acceptance of deposits) Amendment Rules, 2016)

“Provided that a private company may accept from its members monies not exceeding one hundred per cent of aggregate of the paid up share capital, free reserves and securities premium account and such company shall file the details of monies so accepted to the Registrar in such manner as may be specified." (proviso inserted by Companies (Acceptance of deposits) Amendment Rules, 2016)

Rule 3(4) states that no Eligible company shall accept or renew

(a) Any deposit from its members, if the amount of such deposit together with the amount of deposits outstanding as on the date of acceptance or renewal of such deposits from members exceeds ten per cent of the aggregate of the paid-up share capital and free reserves of the company;

Rule 3(5) - deposits by Government Companies

No Government company eligible to accept deposits under section 76 shall accept or renew any deposit, if the amount of such deposits together with the amount of other deposits outstanding as on the date of acceptance or renewal exceeds thirty five per cent. of the aggregate of its paid up share capital and free reserves of the company

Rule 3(6) -Rate of interest of deposits/payment of brokerage

Rule 3(6) states that no company under sub-section (2) of section 73 or any Eligible company shall invite or accept or renew any deposits in any form, carrying a rate of interest or pay brokerage thereon at a rate exceeding the maximum rate of interest or brokerage prescribed by the Reserve Bank of India for acceptance of deposits by non-banking financial companies

Rule 3(7) – Eligibility to receive brokerage

Rule 3(7) states that the company shall not reserve to itself either directly or indirectly a right to alter, to the prejudice or disadvantage of the depositor, any of the terms and conditions of the deposit, deposit trust deed and deposit insurance contract after circular or circular in the form of advertisement is issued and deposits are accepted.

Rule 3(8) – Credit Rating (Inserted by Companies (Acceptance of deposits) Amendment Rules, 2016)

(a) Every eligible company shall obtain at least once in a year, credit rating for deposits accepted by it and a copy of the rating shall be sent to the Registrar of Companies alongwith the retum of deposits in Form DPT- 3

(b) The credit rating referred to in clause (a) shall not be below the minimum investment grade rating or other specified credit rating Ior fixed deposits, from any one

institutions on the promoters to contribute such finance; and

ii. the loan is provided by the promoters themselves or by their relatives or by both;

and

iii. the exemption under this sub-clause shall be available only till the loans of financial institution or bank are repaid and not thereafter.

xiv. any amount accepted by a Nidhi Company in accordance with the rules made under Section 406 of the Act. For the purposes of this clause, any amount:

a) received by the company, whether in the form of installments or otherwise, from a person with promise or offer to give returns, in cash or in kind, on completion of the period specified in the promise or offer, or earlier, accounted for in any manner whatsoever, or

b) any additional contributions, over and above the amount under item (a) above, made by the company as part of such promise or offer, shall be considered as a deposit unless specifically excluded under this clause" (Amended by Companies (Acceptance of deposits) Amendment Rules, 2016)

xv. any amount received by way of subscription in respect of a chit under the Chit Fund Act,1982 ; (Inserted by Companies (Acceptance of deposits) Amendment Rules, 2016)

xvi. any amount received by the company under any collective investment scheme in compliance with regulations framed by the Securities and Exchange Board of India, (Inserted by Companies (Acceptance of deposits) Amendment Rules, 2016)

xvii. an amount of twenty five lakh rupees or more received by a start-up company, by way of a convertible note (convertible into equity shares or repayable within a period not exceeding five years from the date of issue) in a single tranche, from a person (Inserted by Companies (Acceptance of deposits) Amendment Rules, 2016)

Rule 2(1)(d) under Chapter XV defines depositor as - 'Depositor' means:

i) any member of the company who has made a deposit with the company in accordance with sub-section (2) of section 73 of the Act, or

ii) any person who has made a deposit with a public company in accordance with section 76 of the Act.

Rule 2(1)(e) of Rules made under Chapter V defines eligible company as under :

“Eligible company” means a public company as referred to in sub- section (1) of section 76, having a net worth of not less than one hundred crore rupees or a turnover of not less than five hundred crore rupees and which has obtained the prior consent of the company in general meeting by means of a special resolution and also filed the said resolution with the Registrar of Companies and where applicable, with the Reserve Bank of India before making any invitation to the Public for acceptance of Deposits;

Provided that an eligible company, which is accepting deposits within the limits specified under clause (c) of sub-section (1) of section 180, may accept deposits by means of an ordinary resolution;

Section 73(1) states that, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under Chapter V of Companies Act 2013.

Section 73(2) states that a company may, subje ct to following:

i. the passing of a resolution in general meeting; and

ii. subject to such rules as may be prescribed in consultation with the Reserve Bank of India;

shall accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the following conditions, namely:—

a) issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed;

b) filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular;

c) depositing such sum which shall not be less than fifteen per cent. of the amount of its deposits maturing during a financial year and the financial year next following, and kept in a scheduled bank in a separate bank account to be called as deposit repayment reserve account;

d) providing such deposit insurance in such manner and to such extent as may be prescribed;

e) certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest on such deposits;

WHO IS A DEPOSITOR?

WHO IS AN ELIGIBLE COMPANY?

PROHIBITION ON ACCEPTANCE OF DEPOSITS FROM PUBLIC

CONDITIONS FOR ACCEPTANCE OF DEPOSITS FROM MEMBERS



the firm as well as of each partner who was involved in making any improper or misleading statement of particulars in the audit report or who acted in a fraudulent, unlawful or wrongful manner.

Section 245(3)(ii) states that the requisite number of depositors provided in sub-section (1) shall not be less than one hundred depositors or not less than such percentage of the total number of depositors as may be prescribed, whichever is less, or any depositor or depositors to whom the company owes such percentage of total deposits of the company as may be prescribed.

Rule 14 of Companies (Acceptance of deposits) Rules, 2014 provides that Every company accepting deposits shall, from the date of such acceptance, keep at its registered office one or more separate registers for deposits accepted/renewed, in which there shall be entered separately in the case of each depositor

Entries in the register shall be made within seven days from the date of issuance of the deposit receipt and such entries shall be authenticated by a director or secretary of the company or by any other officer authorized by the Board for this purpose.

The register or registers referred to in sub-rule (1) shall be preserved in good order for a period of not less than eight years from the financial year in which the latest entry is made in the register

When a company makes a repayment of deposits, on the request of the depositor, after the expiry of a period of six months from the date of such deposit but before the expiry of the period for which such deposit was accepted, the rate of interest payable on such deposit shall be reduced by one per cent from the rate which the company would have paid had the deposit been accepted for the period for which such deposit had actually run and the company shall not pay interest at any rate higher than the rate so reduced.

Nothing contained in this rule shall apply to the repayment of any deposit before the expiry of the period for which such deposit was accepted by the company, if such repayment is made solely for the purpose of-

a) complying with the provisions of rule 3; or

b) providing war risk or other related benefits to the personnel of the naval, military or air forces or to their families, on an application made by the associations or societies formed by such personnel, during the period of emergency declared under article 352 of the Constitution:

When a company referred to in under sub-section (2) of section 73 or any eligible company permits a depositor to renew his deposit, before the expiry of the period for which such deposit was accepted by the company, for availing of a higher rate of interest, the company shall pay interest to such depositor at the higherrate if such deposit is renewed in accordance with the

other provisions of these rules and for a period longer than the unexpired period of the deposit. For the purposes of this rule, where the period for which the deposit had run contains any

part of a year, then, if such part is less than six months, it shall be excluded and if such part is six months or more, it shall be reckoned as one year.

As per Rule 16, Every company to which these rules apply, shall on or before the 30th day of June, of every year, file with the Registrar, a return in Form DPT-3 along with the fee as provided in Companies (Registration Offices and Fees) Rules, 2014 and furnish the information contained therein as on the 31st day of March of that year duly audited by the auditor of the company.

Rule 17 provides that every company shall pay a penal rate of interest of eighteen per cent. per annum for the overdue period in case of deposits, whether secured or unsecured, matured and claimed but remaining unpaid.

Rule 21 provides that if any company referred to in sub-section (2) of section 73 or any eligible company inviting deposits or any other person contravenes any provision of these rules for which no punishment is provided in the Act, the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first day during which the contravention continues.

The gist of provisions discussed above is as follows:

• Company may accept deposit from its members by passing a resolution in general meeting and subject to conditions as may be prescribed in the Rules including Credit rating, Deposit insurance etc.

• Public companies may accept deposits, if it has a net worth of not less than one hundred crore rupees or a turnover of not less than five hundred crore rupees and which has obtained the prior consent of the company in general meeting by means of a special resolution and also filed the said resolution with the Registrar of Companies and where applicable, with the Reserve Bank of India before making any invitation to the Public for acceptance of Deposits.

• Companies accepting deposit from members or eligible companies as defined, has to fulfill the conditions specified in Companies(Acceptance of Deposits)Rules 2014.

REGISTER OF DEPOSITS

GENERAL PROVISIONS REGARDING PREMATURE REPAYMENT OF DEPOSITS

RETURN OF DEPOSITS TO BE FILED WITH THE REGISTRAR

PENAL RATE OF INTEREST

PUNISHMENT FOR CONTRAVENTION

SYNOPSIS

of the approved credit rating agencies as specified for Non Banking Financial Companies in the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 199g, issued by the Reserve Bank of India, as amended from time to time

Section 73(5) states that the deposit repayment reserve account referred to in clause (c) of sub-section (2) shall not be used by the company for any purpose other than repayment of deposits.

Companies (Acceptance of deposits) Amendment Rules, 2016 amends Rule 5 (1) of Companies (Acceptance of deposits) Rules, 2014 thereby providing relaxation to companies as companies may accept deposits without deposit insurance contract till the 31s March, 2017 or product, whichever is earlier."

Companies (Acceptance of deposits) Amendment Rules, 2016 inserted new Rule after Rule 16 which provides for the return of deposits which is required to be filed every year by the Company on or before 30th day of June of every year.

1. Every company, other than a private company, shall disclose in its financial statement, by way of notes, about the money received from the director

2. Every private company shall disclose in its financial statement, by way of notes, about the money received from the directors, or relatives of directors.”

Section 75(1) states that when a company fails to repay the deposit or part thereof or any interest thereon referred to in section 74 within the time specified in sub-section (1) of that section or such further time as may be allowed by the Tribunal under sub-section (2) of that section, and it is proved that the deposits had been accepted with intent to defraud the depositors or for any fraudulent purpose, every officer of the company who was responsible for the acceptance of such deposit shall, without prejudice to the provisions contained in sub-section (3) of that section and liability under section 447, be personally responsible, without any limitation of liability, for all or any of the losses or damages that may have been incurred by the depositors.

Section 75(2) states that any suit, proceedings or other action may be taken by any person, group of persons or any association of persons who had incurred any loss as a result of the failure of the company to repay the deposits or part thereof or any interest thereon.

Section 76(1) states that notwithstanding anything contained in section 73, a public company, having such net worth or turnover as may be prescribed, may accept deposits from persons other than its members subject to compliance with the requirements provided in sub-section (2) of section 73 and subject to such rules as the Central Government may, in consultation with the Reserve Bank of India, prescribe

Such a company shall be required to obtain the rating (including its networth, liquidity and ability to pay its deposits on due date) from a recognised credit rating agency for informing the public the rating given to the company at the time of invitation of deposits from the public which ensures adequate safety and the rating shall be obtained for every year during the tenure of deposits.

Every company accepting secured deposits from the public shall within thirty days of such acceptance, create a charge on its assets of an amount not less than the amount of deposits accepted in favour of the deposit holders in accordance with such rules as may be prescribed

Section 76(2) states that the provisions of this Chapter shall, mutatis mutandis, apply to the acceptance of deposits from public under this section

OTHER REMEDIES PROVIDED UNDER COMPANIES ACT, 2013

As per Section 245(1)(g) requisite number of depositor or depositors may, if they are of the opinion that the management or conduct of the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members or depositors, file an application before the Tribunal on behalf of the depositors for seeking orders including claiming damages or compensation or demand any other suitable action from or against—

• the company or its directors for any fraudulent, unlawful or wrongful act or omission or conduct or any likely act or omission or conduct on its or their part

• the auditor including audit firm of the company for any improper or misleading statement of particulars made in his audit report or for any fraudulent, unlawful or wrongful act or conduct; or

• any expert or advisor or consultant or any other person for any incorrect or misleading statement made to the company or for any fraudulent, unlawful or wrongful act or conduct or any likely act or conduct on his part;

• to seek any other remedy as the Tribunal may deem fit.

Section 245 (2) states that when the depositors seek any damages or compensation or demand any other suitable action from or against an audit firm, the liability shall be of

DEPOSIT REPAYMENT RESERVE

RELAXATION TO COMPANIES FROM DEPOSIT INSURANCE

DISCLOSURE IN FINANCIAL STATEMENTS

Rule 16A, so inserted provides that:-

DAMAGES FOR FRAUD

ACCEPTANCE OF DEPOSIT FROM PUBLIC BY CERTAIN COMPANIES

LEGISLATIVE CLAUSE



Second part will pass all the data that GSTN receives at point

of registration to tax depatment. Tax officials will be able to

raise queries, reject applications or pass orders on the

platform. The GSTN is working closely with the states and

the 30 designated banks to make the system functional.

Read more at : http://businessworld.in/article/Infra-For-

The-GST-Network-Nearly-Ready/08-07-2016-100195/

3) In order to iron out administerative differences between

the Centre and the states over the propsed GST regime, the

CBEC has formed a Committee to identify the key concerns

and sort them out through dialogue. The issues include

administertive threshold and revisionary powers.

R e a d m o r e a t : h t t p : / / w w w . b u s i n e s s -

standard.com/article/economy-policy/cbec-forms-panel-to-

iron-out-differences-over-gst-116070701312_1.html

• All intra-State supplies of goods and services would be

subjected to both Central Goods and Services Tax (CGST)

and State Goods and Services Tax (SGST), at a rate to be

notified

• And all inter-State supplies of goods and services would

be subjected toIntegrated Goods and Services Tax (IGST)

at a rate to be notified

• Draft IGST Act, 2016 has been proposed for inter-State

transactions and Model GST Act is applicable for Intra

state transactions.

• Taxable person means a person who carries on any

business at any place in India and is registered or required

to be registered under Schedule III of this Act.

• Central/ State Government may be regarded as a taxable

person in respect of activities engaged as public

authorities except otherwise specifiedin Schedule IV of

the Act.

• There will be electronic cash ledger and electronic credit

ledger maintained at common portal for each registered

Salient Features of Model GST law

Basicfeatures :

Brief Introduction : GST is a major indirect tax reform

which is basically levying of tax on goods and services under

one law.GST is a value added tax, levied at all points in the

supply chain with credit allowed for any tax paid on inputs

acquired for use in making the supply. It would apply to both

goods and services in a comprehensive manner with

exemptions restricted to a minimum.

In keeping with the federal structure of India, it is proposed

that GST be levied concurrently by the Centre (CGST) and

the States (SGST). It is expected that the base and other

essential design features would be common between CGST

and SGST, across SGSTs for the individual States. Both CGST

and SGST would be levied on the basis of the destination

principle. Thus, exports would be zero-rated. Intra State

supplies would attract both SGST and CGST whereas on the

other hand Inter-State supplies within India would attract an

Integrated GST (approximate equivalent to aggregate of

CGST and the SGST of the destination State).

Before we proceed, let us understand the present regime of

major indirect taxes in India with the help of below table :

Therefore, in the proposed GST regime, barring a few taxes,

all the Central and State Taxes will be subsumed under GST.

1) The Ministry of Finance has come up with the Model GST

Law for public comments and suggestions and put in the

public domain on June 14th, 2016. The Model law includes

Central/State Goods and Service Tax Act, 2016 which is

divided into 25 Chapters having 162 sections and 4 schedules

and the Draft IGST Act which is divided into 11 Chapters and

33 sections.

2) Information Technology Infrastructure is being ready for

the Goods and Service Tax Network (GSTN) before the

scheduled rollout of the GST regime on April 1, 2017. The

GSTN IT Infra will have two parts. One part will enable

taxpayers to go through a one timeregn. On GSTN Portal to

be able to file their tax returns and apply for tax refunds.

Latest on GST:

CA. Alok kaushik


OVERVIEW OF MODEL GST LAW


Transitional Provision

• Every person registered under any of the earlier laws shall

be issued a certificate of registration on a provisional basis in

such form a nmanner as may be prescribed

• Provision for carry forward of amount of CENVAT

credit/VAT input tax credit in return as Input Tax Credit

• Unavailed CENVAT credit in respect of Capital Goods,

which were not carried forward in return, would be allowed

• In case of revision of price upwards/downwards on or

after the appointed day for transaction in goods and/or

services prior to appointed day, issuance of supplementary

invoice or debit note is mandatorily required within 30 days of

such revision. In case of downward revision, tax liability can

be reduced if corresponding input tax credit has been

reduced

• Pending refund claim of duty/tax and interest filed before

appointed day will be sanctioned in accordance with provision

of earlier law; if in case rejected, amount shall lapse

• In the proceeding of appeal, revision, review or reference

relating to a claim for CENVAT credit found admissible under

earlier law shall be refunded in cash not as Input Tax Credit

taxable person

• Supply includes all forms of supply of goods and services

such as sale, transfer, barter, exchange, license, rental,

lease or disposal for a consideration and includes items

specified in Schedule I even for without consideration

• Composition Scheme available to a registered taxable

person involved in intra-State supply of goods and

services whose aggregate turnover is less than Rs. 50

lakhs (no availing credit and no recovery from the

recipient)

• Input Service Distributor concept will continue in GST.

• Every person would be required to obtain registration in

each State he operates

• A person having multiple business verticals in a State may

obtain separate registrations for each verticals in that

State

• A registered taxable person supplying taxable

goods/taxable services shall issue tax invoice at the time

of supply showing the description, tax charged and other

particulars as may be prescribed.

• Concept of credit note and debit note -Where a tax invoice

has been issued for supply of any goods and/or services

and the taxable value and/or tax charged in that tax

invoice is found to exceed / less than the taxable value

and/or tax payable in respect of such supply

• Every taxable person in respect of each registration shall

• details of outward supplies - 10th day of the succeeding

month;

• details of input supplies - 15th day of the succeeding

month;

• return of outward supplies, inward supplies, input tax

credit availed, tax payable and tax paid - 20th day of the

succeeding month

• annual return- 31st December of succeeding year

• No return can be filed unless the tax due as per the return

has been deposited and consequently the customers shall

not be able to avail credit of the tax charged by him

• No cross utilization of credit amongst CGST and SGST is

admissible.

• Provision for input tax credit in respect of inputs sent to

job-worker are introduced.

• Unutilised credit available on account of exports

(whereby no export duty is payable) can be claimed as

refund


Time of Supply of Goods

Time of Supply of Services


12


THINGS TO REMEMBER

Differences between Ind AS-7 and IAS-7

1) Bank O/Ds as Cash Equivalents

2) Derivatives Contracts

Example:

Example:

CFOA = Cash From Operating Activities, CFIA = Cash From

Investments Activities, CFFA = Cash From Financing

Activities.

As per IAS – 7 Interest / Dividend paid alternatively can be

classified as CFOA. Similarly Interest / Dividend received

can be classified as CFOA. But in case of Ind AS-7 the above

mentioned items are still covered by CFFA and CFIA i.e. as

AS-3 (Rev). Some important points on IAS – 7

As per Ind AS – 7 Amounts due to a bank are generally

considered to be financing activities. However, in

certain countries, bank overdrafts that are repayable on

demand and form an integral part of an entity’s cash

management may be included as a component of cash

equivalents.

Futures contracts, Forward contracts, Option contracts, and

Swap contracts:

As per Ind AS - 7 cash flows from futures contracts, forward

contracts, option contracts, and swap contracts

are normally classified as CFIA

Example: Arbitrage profits.

But if such contracts are held for dealing or trading

purposes then they are covered as CFOA.

A speculator regularly engaged in buying /

selling futures to earn profits.

When the payments or receipts are considered by the

entities as financing activities and are reported accordingly

(CFFA)

Interest rates swaps entered for Loan taken to

finance a business.

When a contract is accounted for as a hedge of an

identifiable position, the cash flows of the contract are

classified in the same manner as the cash flows of the

position being hedged. For example: If Cuba Ltd has


CA. Rakesh MakkarMember, NIRC

Ind AS 7: Cash Flow Statements

Ind AS-7 AS-3

Bank overdrafts that are

repayable on demand and form

an integral part of an entity’s

cash management may be

included as a component of cash

equivalents.

While going by the Indirect

Method of Cash Flow we

adjust Non-Cash items in

Operating Activities. Items like

undistributed profi ts from

associates and even adjustment

of non – controlling interest are

Non - Cash.

Ind AS – 7 encourages Reporting

of Cash fl ows Segment

– Wise.

Sale / Purchase of shares of

subsidiary is treated sometimes

as CFFA and sometimes as CFIA.

No separate title known as Extra

Ordinary activity is

permitted.

Classifi cation of derivatives like

forwards, futures, options,

swaps is provided in Cash Flow

Statement.

Ind AS-7 appl ies to al l

companies.

AS-3 is silent on this aspect

AS-3 is silent on this aspect

No mention

All such cash fl ows come under

CFIA.

CFOA, CFIA, CFFA includes Extra

Ordinary activities if any

respectively.

No such guidance provided.

AS-3 has scope restrictions i.e it

is not applicable to one

man company, small company.


market MFs.

Thetha Ltd has invested in 8% Preference Share for

1 month.

Mangolisa Ltd has post dated chaeques worth ?

7,00,000.

Cash and Cash Equivalent (C & CE) features: (i)

Short term liquid instruments, (ii) It carries

negligible risk, (iii) Its maturity should not exceed 3

months,

1) Not a C & CE as the original maturity of TD is more than 3

months.

2) Not a C & CE as equity instruments carry risk

3) Substantial loss of money i.e. 50% is too much risk

hence not a C & CE.

4) Yes (it is assumed all conditions are being satisfied).

5) Yes preference share investment is a cash equivalent.

6) No. It is not even a recognized transaction.

Mongolia Coppers Ltd purchased February

2018 copper futures to hedge against the rising prices of

copper which will be purchased in the month of February.

Today is 15th December 2017. Mongolio paid 10% margin

money today to enter the contract. Futures will be net

settled by cash. Till the settlement date mark to market

works out to be ? 45,000 loss. Comment on various cash

flows on account of copper inventory and its futures till

settlement date.

Solution:

As per Ind AS – 7: When a contract is accounted for as a

hedge of an identifiable position, the cash flows of the

contract are classified in the same manner as the cash flows

of the position being hedged.

CFOA (Inflows)

CFOA (Outflows) from Dec – Feb = (?

45000 – Margin maintained).

CFOA.

Case 5:

Case 6:

Solution:

Case

Problem 2:

Initial margins:

Mark to Market loss:

Purchase of inventory:

invested in equity shares of Cipla (CFIA). To protect against

downfall share prices, Cuba Ltd took PUT OPTIONS. In this

case cash flows from PUT OPTIONS will classified under

CFIA. Futures purchased for copper futures to be purchased

on a later date. As copper is inventory and an operating

activity, also the futures will also be classified as operating

activity.

Assets held for rentals and it is sold out is CFOA

i) All cash receipts and payments of associates and joint

ventures are CFIA.

ii) Controlling interest retained in Subsidiary:

Sale of shares.....................CFIA

Purchase of shares.............CFIA

Loan given to subsidiary..................CFIA

Loan taken from subsidiary.......................CFIA

Controlling interest lost in Subsidiary:

Sale of shares.....................CFIA

Purchase of shares.............CFIA

Loan given to subsidiary..................CFIA

Loan taken from subsidiary.......................CFFA

Identify whether the following is an element of

Cash and Cash Equivalent as per Ind AS - 7:

Delta Ltd has made a term deposit for 1 year for ?

30,00,000. As on 31/3/2016 the TD has remaining

maturity of 3 months only.

Gamma Inc has invested in equity shares only for

15 days $ 4 millions.

Beta Ltd has invested Yens 50 millions in Yankee

lulu Bank @9% for a period of 3 months

The investor has a right to withdraw the amount by giving a

notice. Pre mature withdrawal attracts penalty

whereby 50% interest should be foregone.

Cash kept for investments purpose in money

3) Assets held for Rentals

4) Investments in subsidiary, associates and joint

ventures: correct

PROBLEMS AND SOLUTIONS

Problem 1:

Case 1:

Case 2:

Case 3:

Case 4:


14

CA. Rohini Aggarwal, FCA, has been appointed as a member of the 5th Finance Commission of the State

of Haryana in pursuance of the provisions of the Articles 243 I and 243 Y of the Constitution of India and

Section 213 of the Haryana Panchayati Raj Act, 1994 and Rule 3 of the Haryana Finance Commission

Rules, 1994. Along with the recommendations for the improvement of financial position of Panchayats

and Municipal Bodies, the Commission will be making recommendations to the State Government

regarding determination of the taxes, duties, tolls and fees, which may be assigned to or appropriated

by Panchayats and Municipal Bodies; and also regarding the distribution of the net proceeds of the taxes,

duties, tolls and fees leviable by the State to these institutions.

NIRC Congratulate



CA. Satish Agarwal

prohibited

&

(II) Also Certain additional Conditions be complianced for financial

Service Sector

(I) A Company as incorporated in India

(II) A body as ‘specifically’ created under Act of Parliament for this

purpose

(III) A ‘Registered’ Partnership Firm

(IV) An Entity as notified by RBI

(I) Real estate activities & Banking Business ‘Outside’ India

(II) However Indian banks as operating in India can set up JVs or WOSs

Outside India with approval from RBI under Banking Regulation Act,

1949

(I) Buying & Selling of real estate or trading in Transferable

Development Rights (TDRs)

(II) However ‘not’ includes the followings

(a) Development of Township

(b) Construction of Residential & Commercial premises or Roads &

Bridges

(I) Where Indian party ‘not’ required any approval from RBI for ODIs in

JV or WOS

(II) Where Indian party is permitted to approach AD-I bank with

application in Form ‘ODI’ and to enclose prescribed enclosures &

documents for remittances

(II) However permission is required from regulatory authority in India

& ‘Outside’ India both for ODIs in financial Service Sector

(I) Maximum 400% against ‘net’ worth of eligible Indian entity for ODIs

in JV or WOS for bonafide activities

(II) However ceiling 400% against ‘net’ worth ‘not’ required where

ODIs to be made (a) Out of balance as available in EEFC account (b) Out

of funds as raised through ADRs or GDRs

(a) Henceforth Indian party is permitted for ODIs 400% against ‘net’

Worth

+

(b) Out of balance as available in EEFC account

+

(c) Out of funds as raised through ADRs or GDRs

(IV) Indian party ‘not’ permitted where listed in RBI Caution list or

defaulter in CIBIL or under investigation of DOE

(V) Indian party is required to route ‘all’ transactions through one

branch of AD- I Bank

8. Indian Party Includes

9. Type of Activities as Prohibited for ODIs

10. Real Estate Business Includes

11. Automatic Route Includes

12. Limits for ODIs Under Automatic Route

1. Advantages for ODIs from India

2. Guidelines for ODIs from India

3. Address for Obtaining the Clarrifications

4. General Permission to Resident Individual for ODIs

5. ODIs Includes

6. Acquisition of Existing Company

7. Type of Activities as Permitted for ODIs

(I) Increases in exports of plant, machinery, goods and Services from

India

(II) Increases in foreign exchange earnings through dividend earnings,

royalty and technical Known-how fee etc.

(I) Foreign Exchange Management (Transfer or Issue of any Foreign

Security) Regulations, 2004 have been notified by RBI vide Notification

No. FEMA 120/RB-2004, dated July 07, 2004

(II)Notification FEMA No. 19 dated May 03, 2000

(III)(a) This notification is to regulate the acquisition & transfer of

foreign Security by resident in India i.e investment by Indian party in

joint ventures & wholly owned Subsidiaries Outside India &

(b) Also by resident individual in shares and Securities as issued

Outside India under LRS

(IV) Latest Master Circulars, direction & circulars on Direct Investments

by Residents in Joint Venture (JV) or Wholly Owned Subsidiary (WOS)

Outside India

(V) FAQs are available at www.rbi.org.in

The Chief General Manager RBI, Foreign Exchange Department,

Overseas Investment Division, Central Office Amar Building, 5th Floor,

Mumbai- 400001

(I) General permission is available for purchase or acquisition of

Securities Outside India

(a) Out of funds as held in RFC account

(b) Acquiring bonus shares against holding of foreign currency shares

(c) Out of foreign currency resources ‘Outside’ India by a person ‘not’

permanently resident in India

(IV) Investments may be maximum USD 2,50,000 per financial year

under Libera -lized Remittance Scheme (LRS) by resident individual

(I) Investments through contribution to capital or subscription to

Memorandum of Association of foreign entity for setting up or acquiring

a Joint Venture (JV)

or

(II) Wholly Owned Subsidiary (WOS)

(III) Does ‘not’ include portfolio investments

(I) Indian party can acquire the partial stake through JV or 100% stake

through WOS

(II) However valuation be made in accordance to prescribed norms

applicable in

India

(I) Indian party can invest in bonafide activity except specifically

Overseas Direct Investments (ODIs) From India


20. Concept of Designated Authorised Dealer - I bank for

‘Multiple’ JVs or WOSs

21. Concept of UIN & ‘Prior’ Registration with RBI

22. Utility of UIN

23. ODIs Under Approval Route

24. Parameters for Consideration Under Approval Route

25. ODIs in Financial Service Sector

Disclaimer:

(I) Concept of ‘one’ designated authorised dealer -I bank be obeyed for

‘one’ JV or WOS

(II) Henceforth ‘separate’ designated authorised dealer -I bank be

needed for ‘separate’ JV or WOS

(I) Indian party ‘not’ required to obtain ‘prior’ registration with RBI for

ODIs under automatic route

(II) However RBI is required to allot a unique Identification Number

(UIN) ‘after’ receipt of report of ‘first’ remittance in form ‘ODI’ from AD-

I bank

(III) ‘Subsequent’ ODIs be made in ‘same’ project ‘after’ allotment of

UIN

(IV) UIN be quoted in ‘each’ communication to RBI & AD-I bank

(I) Allotment of UIN ‘not’ constitute an approval from RBI for ODIs in JV

or WOS

(II) UIN is needed to connect with Inflow & Outflow under automatic

route available for ODIs

*Approval from RBI is needed for ‘certain’ ODIs

(I) ODIs in energy & natural resources sector exceeding limit i.e. 400%

(II) ODIs in ‘Unincorporated’ entities as engaged in oil sector exceeding

limit i.e. 400%

(II) UIN is needed to connect with Inflow & Outflow under automatic

route available for ODI

(III) ODIs by proprietorship concerns & ‘Unregistered’ partnership firm

(IV) ODIs by ‘registered’ trusts or societies as engaged in

manufacturing or educational or hospital sector

* Primafacie viability of JV or WOS Outside India

(I) ‘Likely’ contribution to ‘foreign’ trade & ‘other’ benefits to India

(II)(a) ‘Financial’ position & business track record of Indian party

&

(b) Also of foreign entity

(III) Experience & Expertise of Indian party in same or similar line of

activity of JV or WOS ‘outside’ India

* Indian company engaged in financial service sector can make ODIs in

JV or WOS ‘Outside’ India in financial service sector subject to

satisfaction of certain terms & conditions

(I) Should have earned ‘net’ profits in preceding ‘3’ financial years from

the financial service activities

(II) Should be registered with appropriate regulatory authority in India

for conducting the financial service activities

(III) Should have obtained the approvals from appropriate regulatory

authorities in India & ‘Outside’ India before venturing into financial

services activities

(IV) Should have fulfilled the prudential norms relating to capital

adequacy as prescribed by regulatory concerned in India

Despite every effort taken to avoid any error or omission,

there may still be chances for such

errors and omission to be crept in inadvertently. Author shall not be

responsible for any damage or loss in what

ever manner, consequent to any action taken on the basis of contents of

this article, caused to any person,

whether a reader or not.

(VI) Net worth Includes

(a) Net worth = Paid up Capital + Free Reserves

(b) Paid up Capital = Equity shares + Preference Shares

Indian party is required to submit a form ‘ODI’ alongwith needed

documents (a) Certified copy of Board Resolution (b) Statutory Auditor

Certificate (c) Valuation report where acquisition of ‘existing’ company

(I) Form ‘ODI’ is available as Annex to Master Circular/direction on

Direct Investment in Joint Venture (JV)/ Wholly Owned Subsidiary

(WOS) ‘outside’ India

(II) AD-I bank is required to submit part I & II &

III of form ‘ODI’ on line in overseas investment application with RBI (a)

For allotment of UIN (b) For reporting of ‘subsequent’ remittances (c)

For filing of APRs etc.

(III) Indian party to continue to submit the form ‘ODI’ physically &

online also to AD-I bank

ODIs in JV or WOS + Loans to JV or WOS + 100% amount of corporate

guarantee issued for JV or WOS + 50% amount of performance

guarantee issued for JV or WOS should ‘not’ exceed 400% of net worth

(I) ODIs exceeding USD 5 Million

(a) Share valuation be made by SEBI registered Merchant Banker in

India

or

(b) By Investment Banker or Merchant Banker registered ‘Outside’

India

(II) ODIs ‘not’ exceeding USD 5 Million * Share valuation be made by

CA or CPA

(III) ODIs through Swap of Shares

(a) Share valuation be made by SEBI registered Merchant Banker in

India

or

(b) By Investment Banker or Merchant Banker registered ‘Outside’

India

17. Creation of Charge on Immovable or Movable Properties & Other

Financial Assets

(I) Permission from RBI is required for creating a charge on immovable

properties

&

(II) Also for pledge of shares of Indian parent or group Companies

(I) ODIs in Pakistan

* ODIs ‘not’ permitted in Pakistan under automatic route (II) ODIs in

Nepal

* ODIs in Nepal is permitted in rupees under automatic route (III) ODIs

in Bhutan

*ODIs in Bhutan is permitted in rupees & freely ‘Convertible’ Currencies

both under automatic route

(I) Indian party is required to route ‘all’ transactions through one

branch of AD-I bank

(II) Moreover ‘one’ branch of AD-I bank is required to route ‘all’

transactions where two or more indian party invested in ‘same’ JV or

WOS

(III) Change of AD-I bank is permitted with permission from RBI ‘after’

obtaining NOC from existing AD-I bank

13. Procedure for ODIs under Automatic Route

14. Submission of Form ‘ODI’

15. Computation of Financial CommitmentFor ODIs Includes

16. Valuation Norms for Acquisition of Existing Company

18. ODIs in Pakistan, Nepal & Bhutan

19. Concept of Designated Authorized Dealer - I Bank for

‘Single’ JV or WOS

The views expressed herein are personal views of the authors and do not necessarily represent the views of the NIRCs 16


business), in a format specified by DIPP, from an incubator recognized by GoI; or

d) be funded by an Incubation Fund/Angel Fund/Private Equity

Fund/Accelerator/Angel Network duly registered with SEBI* that endorses

innovative nature of the business; or

e) be funded by the Government of India as part of any specified scheme to promote

innovation; or

f) have a patent granted by the Indian Patent and Trademark Office in areas

a f f i l i a t ed w i t h t he na tu r e o f bu s i ne s s be i ng p r omo ted .

* DIPP may publish a 'negative' list of funds which are not eligible for this

initiative.

To reduce the regulatory burden on startups thereby allowing them to focus on their

core business and keep the compliance cost low, the Action Plan and regulatory

reforms provide for the following relaxations / incentives for the startups:

• Compliance regime based on self certification : objective is to reduce regulatory

burden on startups allowing them to focus on their core business and to keep

compliance cost low . Startups shall be allowed to self-certify compliance with labour

and environment laws. In case of labor laws, no inspection will be conducted for three

years. In case of environment laws, startups under 'white' category would be able to

self certify compliance.

• Startup India hub : The “Startup India Hub” will be a key stakeholder in this

vibrant ecosystem and will. – Assist Startups through their lifecycle with specific

focus on important aspects like obtaining financing, feasibility testing, business

structuring advisory, enhancement of marketing skills, technology and

commercialization.

• Simplifying the startup process : A startup will be to able to set up by just filling

up a short form through a mobile app and online portal. This will serve as the single

platform for Startups for interacting with Government and Regulatory Institutions for

all business needs and information exchange among various stakeholders.

• Patent protection : Patent protection and IP rights are a major concern for India's

startups. The government will make IPR procedure transparent for stratups. In order

to allow startups to realise the value of their IPRs at the earliest possible. Patent

applications of the startups shall be fast tracked for examination and disposal.

Facilitators shall provide assistance for startups in filing and disposal of patent

applications related to patents, trademarks and design under relevant Acts.

Government shall bear the entire fees of the facilitators for any number of patents,

trademarks or designs that a startup may file. To enable startups to reduce costs in

their crucial formative years, startups shall be provided an 80% rebate in filing

patents vis-a-vis other companies.

• Relaxed norms of public procurement for startups : to provide an equal platform

to startups vis-a-vis the experienced startups/companies in public procurement,

startups (in the manufacturing sector) shall be exempted from the criteria of prior

'experience/turnover' without any relaxation in quality standards or technical

parameters.

• Faster exits for startups :To make it easier for startups to exit, provision for fast-

tracking closure of businesses have been included in 'The insolvency and Bankruptcy

Bill 2015'. Startups with simple debt structures may be wound up within a period of

90 days from making of an application for winding up on a fast-track basis.

• Fund of funds with a corpus of Rs 10,000 crore : To provide funding support for

development and growth of innovation driven enterprises, Government will set up a

fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over

a period of 4 years. The Fund will be in the nature of Fund of Funds, which means that

Incentives for Startups

Startups are the key to building entrepreneurial depth and an innovation driven

ecosystem. The U.S., especially in the Silicon Valley, has had the most successful

start ups and these have been contributing to the sustained technological and

business leadership of the U.S. Other countries are also attempting to leverage the

facilitative ecosystem for startups. Startups are disrupting the way we do business

and are emerging as an exciting and effective instrument for India's transformation.

Never before in India's economic history has 'entrepreneurship' been given such a

centre stage by the Government and policy makers.

It was on the occasion of India's 69th Independence Day that Prime Minister

Narendra Modi announced the Startup India initiative from the ramparts of India's

iconic Red Fort. Just five months later, on 16th January, the PM unveiled the historic

Startup Action Plan in a glitzy event well attended by investors and entrepreneurs

including founders of certain unicorn startups, to build a strong eco-system for

nurturing innovation and empowering startups and entrepreneurship in the country.

The Indian policy architects have announced much needed regulatory reforms to

promote the ease of doing business, particularly in respect of the startups. These

reforms include Startup India Action Plan, relaxations in norms governing cross-

border transactions involving startups and recommendations by the Companies Law

Committee to facilitate functioning of startups under the Companies Act, 2013.

1. It must be an entity registered/incorporated as

a) Private Limited Company under the Companies Act, 2013; or

b) Registered Partnership firm under the Indian Partnership Act, 1932; or

c) Limited Liability Partnership under the Limited Liability Partnership Act, 2008.

2. Five years must not have elapsed from the date of incorporation/registration.

3. Annual turnover (as defined in the Companies Act, 2013) in any preceding

financial year must not exceed Rs. 25 crore.

4. Startup must be working towards innovation, development, deployment or

commercialization of new products, processes or services driven by technology

or intellectual property.

5. The startup must aim to develop and commercialize:

a) a new product or service or process; or

The Startup must aim to develop and b) a significantly improved existing product

or service or process that will create or add value for customers or workflow.

6. The Startup must not merely be engaged in:

a) developing products or services or processes which do not have potential for

commercialization; or

b) undifferentiated products or services or processes; or

c) products or services or processes with no or limited incremental value for

customers or workflow

7. The Startup must not be formed by splitting up, or reconstruction, of a business

already in existence.

8. The Startup has obtained certification from the Inter-Ministerial Board, setup by

DIPP to validate the innovative nature of the business, and

a) be supported by a recommendation (with regard to innovative nature of

business), in a format specified by DIPP, from an incubator established in a post-

graduate college in India; or

b) be supported by an incubator which is funded (in relation to the project) from GoI

as part of any specified scheme to promote innovation; or

c) be supported by a recommendation (with regard to innovative nature of

“Startup” defined:


Building a Startup Ecosystem for fuelling India's Economic Growth

CS. Amrit Agrawal Dr. S K Gupta


withdrawn. The investment in the units of the specified fund shall be allowed up to Rs. 50 lakh.

• Long term capital gains arising on account of transfer of a residential property

shall not be charged to tax if such capital gains are invested in subscription of shares

of a company which qualifies to be an eligible start-up subject to the condition that

• the individual or HUF holds more than fifty per cent shares of the company

• Such company utilizes the amount invested in shares to purchase new asset

before due date of filing of return by the investor.

• Tax exemption on investments above Fair Market Value

In line with the exemption available to venture capital funds to invest in startups

above fair market value (FMV), investments made by incubators above FMV shall also

be exempted

In line with the incentives announced under the Startup India Action Plan, the

Reserve Bank of India (RBI)in its 'Sixth Bi-monthly Monetary Policy Statement,

2015-16, has announced various measures to ease cross-border transactions

involving startups.RBI has proposed these new measures to help startups receive

foreign venture capital and enable smooth exit of foreign VC investors. In case of

transfer of ownership of a startup, the RBI has proposed to allow payment of deferred

consideration as well as extension of indemnity escrow for a period of 18 months. The

RBI has also proposed to simplify the process for delayed reporting of FDI

transactions by building a penalty structure into the relevant FEMA regulations.

In addition to aforementioned measures, RBI is also considering (in consultation with

the Government) to permit startups to access rupee loans under ECB norms and

issuance of innovative FDI instruments like convertible notes by startups.RBI has

also clarified that issue of shares in the form of sweat equity for consideration other

than cash or against any legitimate payment owed by the company is permitted

under automatic route and Indian startups are allowed to collect payments on behalf

of their overseas subsidiaries.

The Companies Law Committee (Committee) was set up last year to look into the

difficulties in interpretation and compliance of the Companies Act, 2013. The

The Committee has recommended certain changes specifically for encouraging

startups. Specifically, the recommendations have been made for reducing

compliance burden on account of the private placement procedure, excluding

convertible notes raised by startups from the definition of 'deposits', simplifying the

procedure to convert an LLP into a company, addressing concerns with regard to

insider trading provisions, allowing startups to raise deposits for its initial five years

without any upper limits, allowing startups to issue ESOPs to promoters working as

employees or executive directors or whole time directors, rules regarding availability

of names are being made liberal to allow for more innovative names, relaxing the

requirement for foreign nationals to be managing directors/whole time directors,

increasing the thresholds for private companies to comply with having an

Independent Director, Audit Committee, Nomination & Remuneration Committee,

doing away with the requirement for Government approval for managerial

remuneration.

Never before in India's economic history has 'entrepreneurship' been given a centre

stage by the Government and policy makers. These reforms would definitely make

life comparatively easier for startups and investors and foster the startup ecosystem.

However effective implementation of the policies announced by the govt needs to be

waited and watched . nevertheless the startup community in general looks quite

happy and feels that the govt initiatives would help startups grow faster and expend

their footprints across geographies.

While these reforms are laudable, there is still a lot more required to be done to make

India a preferred business destination particularly with respect to fast-track

resolution of commercial disputes, enforcement of contracts and IPR protection,

predictable forex regulations and taxation policies, uniformity in laws and policies in

different States and land acquisition reforms. At a time when India's success stories

are drifting to other business friendly jurisdictions like Singapore and Silicon Valley,

the policy architects should move quickly to rectify these irritants under Indian laws

and regulations to arrest this exodus and encash the huge potential of Indian

startups.

• Capital Gain Exemption in respect of LTCG gains arising out of transfer of

residential property invested in the shares of start-up Company

(Amendment in Section 54GB)

Relaxations in Norms for Cross-Border Transactions

Recommendations by Companies Law Committee

Will this blaze a startup trail ?

it will not invest directly into Startups, but shall participate in the capital of SEBI

registered Venture Funds.

• Credit Guarantee Fund : To catalyse entrepreneurship through credit to

innovators across all sections of society, credit guarantee mechanism through

National Credit Guarantee Trust Company/SIDBI shall be rolled out with a budgetary

corpus of Rs 500 cr per year for the next four years.

• Startup fests :To bolster the startup ecosystem in India, the Government is

proposing to introduce startup fests at national and international stages. These fests

would provide a platform to startups in India to showcase their ides and work before a

larger audience comprising of potential investors, mentors and other fellow startups.

• Launch of Atal Innovation Mission :The Atal Innovation Mission (AIM) shall have

two core functions: Entrepreneurship promotion through Self-Employment and

Talent Utilization (SETU), wherein innovators would be supported and mentored to

become successful entrepreneurs Innovation promotion – to provide a platform

where innovative ideas are generated.

• Harnessing Private Sector Expertise for Incubator Setup : To ensure professional

management of Government sponsored / funded incubators, Government will create

a policy and framework for setting-up of incubators across the country in public

private partnership. Building Innovation Centers at National Institutes In order to

augment the incubation and R&D efforts in the country, the Government will set up/

scale up 31 centres (to provide facilities for over 1,200 new Startups) of innovation

and entrepreneurship at national institutes.

In line with PM's action plan, Finance Minister, in his budget speech, has proposed

many incentives to encourage entrepreneurship in India. Some of the tax measures

which will be beneficial for new start-ups are as follows:-

• Optional lower tax rate for newly setup manufacturing companies: In case of

newly setup companies engaged solely in the manufacture or production of article or

thing, it is proposed that a reduced tax rate of 25% would apply. In order to claim the

benefit of reduced rate, following conditions should be satisfied –

• Company should be registered on or after 1st March 2016

• It should be engaged in the business of manufacture or production of article or thing

• It should not claim any benefit under section 10AA, benefit of accelerated

depreciation, benefit of additional depreciation, investment allowance, expenditure

on scientific research and any deduction in respect of certain income under Part-C of

Chapter-VI-A other than the provisions of section 80JJAA. Further, income is to be

computed without set off of any loss carried forward from any earlier assessment

year if such loss is attributable to any of such deductions.

• For computing income, depreciation is to be determined in a prescribed manner.

• Hundred percent deduction of profits for three years (Proposed new Section 80-

IAC of the Income-tax Act, 1961):

• It is proposed to provide a deduction of one hundred percent of the profits and

gains derived by an 'eligible start-up' from an 'eligible business' for three years.

'Eligible start-up' means a company

• Engaged in a business involving innovation, development, deployment or

commercialization of new products, processes or services driven by technology or

intellectual property ('Eligible Business'). Company should hold a certificate of

eligible business from the Inter-Ministerial Board of Certification as notified by

Central Government.

• Incorporated between 1st April 2016 and 31st March 2018

• Turnover of which does not exceed Rs. 25 Crores in any of the years from

Financial Year 2016-17 to Financial year 2020-21

The benefit would be available to the start-ups for three consecutive years out of the

first five years starting from the year of incorporation.

• In order to promote the start-up ecosystem in the country, it is envisaged in

'start-up India Action Plan' to establish a Fund of Funds which intends to raise Rs

2500 crores annually for four years to finance the start-ups.

• It is proposed to provide exemption from capital gains tax if the long term capital

gains proceeds are invested by an assesses in units of such specified fund, as may be

notified by the Central Government in this behalf, subject to the condition that the

amount remains invested for three years failing which the exemption shall be

Tax incentives for Startups

• Capital Gain Exemption in respect of LTCG proceeds invested in specified

start-up fund (New section 54EE)



Points to be taken care by auditor

Auditor's report on Internal Financial Controls over Financial

Reporting

Date of audit report and period

• Assessing the risk of management override by management

• Evaluating mitigating controls

• Using the Work of Others

• Materiality

• Use of Top-down Approach

As required by guidance note on Audit of Internal Financial Controls Over

Financial Reporting as issued by ICAI, auditor's report should include the

following:

a. title with word independent;

b. Auditor's statement should include that management is responsible for

maintaining & assessing adequate and effective internal financial controls

over financial reporting;

c. Audit's statement should include that audit was conducted in

accordance with the Guidance Note on Audit of Internal Financial Controls

Over Financial Reporting and the Standards on Auditing, to the extent

applicable;

d. A statement which states an audit included the understanding of

internal financial controls, risk assessment, testing and evaluation of the

adequacy and operating effectiveness of internal control over financial

reporting;

e. Report must state that due to inherent limitations i.e. changes in

conditions, or degree of compliance with the policies or procedures

,internal financial controls over financial reporting may not prevent or

detect misstatements;

f. Auditor should give opinion that company is maintaining and operating

effectively as of the balance sheet date, adequate internal financial

controls over financial reporting;

A separate reports may be issued by auditor on the company's financial

statements and on internal financial controls over financial reporting.

The period of testing should cover the entire period of the financial

statements. However, the reporting by the auditor will be based on the

situation existing as at the balance sheet date.

Audit report date on internal financial controls should be same as the date

of the audit report on the financial statements and not earlier the date on

which the auditor has obtained sufficient appropriate evidence to support

the auditor's opinion.

Several Countries had enacted legislation around Financial Reporting

Control (IFC) after major financial fraud detected. These controls

mandates the board of directors, senior management and the auditors to

assess and report on the adequacy and effectiveness of such controls.

The Companies Act, 2013 has significantly expanded the scope of internal

controls to be considered by the management of companies to cover all

aspects of the operations of the company. This is a reasonably advanced

reporting concept for India. In India, though there were no such

requirements earlier, however, similar reporting requirements existed

globally such as Sarbanes Oxley Act, 2002 of USA.

For Listed Companies, the concept of internal financial control is not new

in India. Equity Listing Agreement's Clause 49 required and continues to

require certification by CEO/CFO stating that they accept responsibility

for establishing and maintaining internal controls and evaluation of the

effectiveness of internal control systems pertaining to financial reporting

as well as reporting to auditors & audit committee of deficiencies & steps

taken for the rectification of deficiencies .

deals with powers &

duties of auditors. It requires that auditors report shall state about

adequacy of and operating effectiveness of IFC system in place.

According to said section, for the auditors it was voluntary for F.Y. ended

March 2015 but mandatory for F.Y. beginning on or after 1st April,

2015.

requires that the directors of listed companies shall

include in directors responsibility statement that they have established

IFCs and such controls are not only adequate but are operating

effectively as well as ensuring compliance with all applicable laws .

Auditors now also required to report on adequacy and operating

effectiveness of IFC's in case of unlisted companies since Section 143

(3)(i) of Companies Act 2013, does not specifically state that it is

applicable only in case of listed companies.

According to Rule 8(5)(viii) of the Companies (Accounts) Rules, 2014,

board of directors' report of all companies to state the details in respect of

adequacy of internal financial controls with reference to the “financial

statements”.

Reporting on internal financial controls will not be applicable with respect

to interim financial statements such as quarterly or half yearly

statements unless such is required under any other law or regulation.

According to Section 134(8) of Companies Act 2013, If a company

contravenes the provisions of this section, the company shall be

punishable with fine which shall not be less than fifty thousand rupees but

which may extend to twenty-five lakh rupees and every officer of the

company who is in default shall be punishable with imprisonment for a

term which may extend to three years or with fine which shall not be less

than fifty thousand rupees but which may extend to five lakh rupees, or

with both.

Applicability of Internal Financial Control (IFC)

Section143 (3) (i) of Companies Act 2013,

Section 134 (5)(e)

Unlisted companies

Applicability on interim financial statements

Penalty in case of default


CA. Kusum Gandhi

Internal Financial control (IFC) - Auditor's responsibilities

20


Dear Professional Colleagues,

I am happy to inform you that the next International Conference by ICAI has now been rescheduled to 22nd- 23rd October, 2016 at Hyderabad, coinciding with events of Confederation of Asian and Pacific Accountants (CAPA) at Hyderabad, India during said time.

The instant communication is to request you to block your dates i.e. 22nd and 23rd October, 2016 for participation in International Conference at Hyderabad and I also look forward to participation in large number of members from your Regional Council/Branch jurisdiction to participate in this Mega Conference which will be attended by icons of International & Indian Accounting fraternity. The full details of event will be available shortly on the website of the Institute.

With regards,

Yours sincerely,

M Devaraja ReddyHon'ble President, ICAI

Announcement

Members are requested to send their

Write-ups/Articles to be published in

NIRC Newsletter at

on or before 25th day of month

It may be noted that publication of article

is subject to approval of Editotrial Board

of NIRC of ICAI

[email protected]

FOR MEMBERSATTENTION OF MEMBERS

Kind Attention of Members is invited to the payment of Membership & COP Fee which becomes due on 01-04-2016 for the financial year 2016-17 as per the schedule below:

Particulars Membership Fee COP Fee

(Rs.) (Rs.) Associate Members Members 60 years of age as on 600 150001-04-2016

Members below 60 years as on 800 200001-04-2016

Fellow MembersMembers 60 years of age as on 1600 150001-04-2016

Members below 60 years as on 2200 200001-04-2016

Members are requsted to pay the above fee as per their status at the earliest and not later than 30th September,2016.

Apurv Agarwal

For securing 188 Marks out of 200 in attended NIRC Classes

CPT Exam June 2016,

NIRC Congratulates



1. Whether disallowance u/s 14A can be made where

exempt income producing assets are held as Stock in trade

by the assessee?

2. Whether disallowance can be made u/s 14A where

In case of dealers, investments in shares / securities are made not

with the intention to derive income by way of interest / dividend

rather to derive income by way of appreciation in the market value

of the share. However, during the course of business, dealer may

also receive interest / divided which is exempted from tax. Now the

million dollar question is that whether there is any expenditure

which has been incurred for earning this exempted income which is

to be disallowed u/s 14A?

In this case of CCI Ltd. Vs JCIT 250 ITR 291, Hon'ble High Court of

Karnataka held that disallowance u/s 14A was not applicable on

shares held as stock in trade. The dividend income was incidental

to the business of share trading and the expenditure was not

incurred with the intention to earn dividend. Since dividend was

earned on unsold portion of shares, no expenditure could be

disallowed.

In the case of Yatish Trading Co. P Ltd. 129 ITD 237[2011], Mumbai

ITAT held that interest incurred for share trading activity could not

be disallowed u/s14A, as the earning of dividend was only

incidental to the share trading activity. Simply because shares

purchased for trading incidentally resulted in dividend, it would not

change the nature, character and purpose of the interest

expenditure. In order to disallowance u/s 14A, there must be live

nexus between the expenditure incurred and earning of exempt

income.

The same view has also been taken in the following judgements:--

• CIT Vs. Leena Ramchandran 339 ITR 296 (Kerala High Court)

• DCIT Vs. India Advantage Securities Ltd. (ITA

6711/Mum/2011)

• MSA Securities Pvt. Ltd. (1523/MDS/2012 Chennai Tribunal)

• Global Finance Ltd. Vs. DCIT [2008] 119 TTJ 467 (Mum

Tribunal)

In view of the facts and legal position stated above, it can be

concluded that disallowance u/s 14A is not warranted in cases

where shares are held as stock in trade by the assessee as no

proximate relationship exists between the expenditure incurred

and the exempted income.

Section 14A of the Income Tax Act 1961 states as under:-

(1) For the purpose of computing the total income under this

chapter, no deduction shall be allowed in respect of expenditure

incurred by the assessee in relation to income which does not form

part of the total income under this Act.

(2) The Assessing Officer shall determine the amount of

expenditure incurred in relation to such income which does not

form part of the total income under this Act in accordance with such

method as may be prescribed, if the Assessing Officer, having

regard to the accounts of the assessee, is not satisfied with the

correctness of the claim of the assessee in respect of such

expenditure in relation to income which does not form part of the

total income under this Act.

(3) The provision of sub-section (2) shall also apply in relation to a

case where an assessee claims that no expenditure has been

incurred by him in relation to income which does not form part of

the total income under this Act.

Section 14A has been inserted in Chapter IV of the Income Tax Act

1961 by Finance Act 2001 w.r.e.f. 01st April 1962 in order to

disallow the expenditure incurred in relation to exempt income

which is not included in the total income of the assessee since it

was noticed in certain cases that some assessee were making

misuse of law by claiming deduction of expenditure incurred in

relation to exempt income and thereby tax incentive given by way

of exemptions was being used to reduce their tax liability on the

non exempt income.

Accordingly, Section 14A is meant to prevent misuse of the

provisions of law where assessee shift its expenditure from exempt

income to taxable income and thereby reduce its tax liability. After

the insertion of section 14A, expenses directly attributable to

exempt income is disallowed in assessing the total income of the

assessee.

Further, in exercise of the power given under Section 14A, Central

Board of Direct Taxes prescribed Rule 8D wherein methods for

allocation of expenses in relation to exempt income has been

specified. This rule may be applied by the AO where the assessee

does not maintain separate books of account for assets earning

exempt income and the AO doesn't satisfy with the allocation of

expenses made by assessee.

Now let us discuss the different aspects of Section 14A along with

important and relevant case laws:-

CA. Mudit Agarwal

EXPENSES INCURRED & DISALLOWABLE U/S 14A OF THE INCOME TAX ACT 1961, IN RELATION TO EXEMPT INCOME



3. Whether disallowance u/s 14A can be made even if the

assessee claims that there is no expenses incurred for earning the

exempt income?

Sub section (2) & (3) of Section 14A has been inserted for

providing the manner in which the assessing officer can determine

the amount of expenditure incurred in relation to income which

does not form part of total income. By virtue of powers given under

this sub section, Central Board of Direct Taxes prescribed Rule 8D

for calculating the estimated amount of expenditure which can be

disallowed.

Disallowance u/s 14A can be made irrespective of the fact that no

expense has been incurred for earning exempt income. It implies

that directly or indirectly some expenditure is always incurred for

earning exempt income.

In the case of Maxopp Investment Ltd. Vs. CIT [2012] 347 ITR 272,

Hon'ble High Court of Delhi held that The AO cannot proceed to

determine the amount of expenditure incurred in relation to

exempt income without recording a finding that he is not satisfied

with the correctness of the claim of the assessee. This is a condition

precedent. While rejecting the claim of the assessee with regard to

the expenditure or no expenditure in relation to exempt income,

the AO will have to indicate cogent reasons for the same. Rule 8D

comes into play only when the AO records a finding that he is not

satisfied with the assessee's method.

In the case of Development Credit Bank Ltd. Vs. DCIT [2013] 26

ITR 209, Hon'ble Mumabi Tribunal held that the road leading to

application of Rule 8D, goes through Section 14A(2). This is so

because unless the Assessing Officer gives a reasoned finding that

the expenditure shown or even not shown in his books are

incorrect, he cannot proceed to compute the disallowance as

prescribed.

In the case of CIT Vs. Deepak Mittal 361 ITR 131, Hon'ble High

Court of Punjab & Haryana held that whether in a given situation,

any expenditure was incurred which is to be disallowed, is a

question of fact. The contention of Revenue that directly or

indirectly some expenditure is always incurred which must be

disallowed u/s 14A and the impact of expenditure so incurred

cannot allow to be set off against the business income, cannot be

accepted. Disallowance u/s 14A requires finding of incurring of

expenditure where it is found that for earning exempted income,

no expenditure has been incurred, disallowance u/s 14A cannot

stand.

In the case of Modern Info Technology Pvt. Ltd. Vs. ITO (ITA

429/Del/2012), Hon'ble Delhi Tribunal held that the correct

sequence in our considered opinion for making any disallowance

u/s. 14A is to firstly examine the assessee's claim of having

incurred some expenditure or no expenditure in relation to exempt

income. If the AO gets satisfied with the same then there is no need

to compute disallowance as per Rule 8D. It is only when the AO is

not satisfied with the correctness of the claim of the assessee, the

mandate of Rule 8D will operate.

sufficient own funds available with assessee for investing

in shares?

Section 14A read with Rule 8D disallows the certain interest

expenditure claimed by the assessee. The idea behind this is like

that the assessee has borrowed some funds, for which interest has

been paid by the assessee. These funds have been invested in tax

free investments. Since income from these investments is exempt

from tax, the interest paid on borrowed funds should also be

disallowed u/s 14A.

Now the million dollar question is that how can it be justified that

borrowed funds has been used for investment in tax free securities.

Numerous decisions have been announced on this issue by various

appellate authorities.

In the case of CIT Vs. Reliance Utilities and Power Ltd. 313 ITR 340,

Hon'ble Bombay High Court held that if there were funds available

both interest free and overdraft and/or loans taken, then a

presumption would arise that the investments would out of the

interest free funds generated or available with the company, if the

interest free funds were sufficient to meet the investments.

In the case of Catholic Syrian Bank Ltd. & Ors. 237 CTR 164,

Hon'ble Kerala High Court held that the assumption of the

Assessing Officer that the entire investment made by the assessee

bank in bonds, shares and securities was out of borrowed funds

was not justified. High Court noted that assessee-bank had a

specific case that they had funds available with them which were

neither borrowals nor interest bearing deposits and such funds also

had been utilised in making investments for earning tax free

income.

Recently, In the case of CIT-II Vs. Hitachi Home and Life Solutions

(I) Ltd. 41 Taxmann.com 540 and in the case of CIT Vs. UTI Bank

32 Taxmann.com 370, Hon'ble Gujrat High Court also held that

where assessee's intereset free funds far exceeded investments

made for earning exempted income, and Assessing Officer had also

failed to establish nexus between borrowed funds and investments

made, no disallowance could be made u/s 14A.

The same view has also been taken in the following judgements:-

• CIT Vs. Winsom Textiles Industries Ltd. 319 ITR 204 (PB)

• Munjal Sales Corporation Vs. CIT 298 ITR 298 (Supreme

Court)

• CIT Vs. Suzlon Energy Ltd. 354 ITR 630 (Guj)

• Reliance Industries Ltd. Vs. Addl. CIT 79 DTR 315 (Mum

Tri)

• Bunge Agribusiness (India) P Ltd. Vs DCIT 64 DTR 201

(Mum Tri)

In view of above facts and legal position, it can be concluded that

where the assessee has its own funds which exceeds the amount of

investment yielding exempt income, no disallowance can be made

u/s 14A. At least, this principle should be applied in case of banking

companies where there is no constraint of funds.



amount of exempt income.

In the case of ACIT Vs. Iqbal M. Chawbla, Hon'ble ITAT of Mumbai

held that Section 14A & Rule 8D cannot be applied in a mechanical

manner. Disallowance cannot exceed income claimed as exempt.

The same view has been taken in the following cases:-

• ACIT Vs. Punjab State Coop & Mktg (ITAT, Chandigarh)

• Daga Global Chemicals Pvt. Ltd vs. ACIT (ITAT, Mumbai) Dt

01.01.2015

• DCM Ltd. Vs. DCIT (ITAT, Delhi) Dt 01.09.2015

In view of above discussion having contrary views, it is very

difficult to say the correct position of law unless the issue is settled

by highest court of the land or through legislative amendment.

5. Whether exempt income includes deductions and allowances

for the purpose of making disallowance u/s 14A of the Income Tax

Act?

Section 14A has been introduced for making disallowance of

expenditure incurred in relation to income which does not form

part of the total income under the Act. Now the question arises that

section 14A is applicable only on the expenditure incurred in

relation to exempt income or it also includes deductions and

allowances available under the Act in relation to exempt income or

it also includes deductions and allowances available under the Act.

In the case of Meditap Specialties Pvt. Ltd. TS-393-ITAT-2012,

Hon'ble Mumbai Tribunal held that disallowance u/s 14A is not

applicable to SEZ income, which is eligible for deduction u/s 10AA

and 80IAB. Section 10AA is a deduction and not an exemption,

even though it falls under chapter III of the Act. It is impermissible

to mix both the deduction and exemption provisions and then take

them in one stride for computing disallowance u/s 14A.

In the case of Hoshang D. Nanavati Vs. ACIT, ITA No.

3567/Mum/07, Hon'ble Mumbai Tribunal held that disallowance

u/s 14A is not applicable to 'Depreciation'. ITAT further held that

Depreciation is an 'allowance' and not 'expenditure' relying on the

Hon'ble Supreme court decision in the case of Nectar Beverages

Pvt. Ltd. [314 ITR 314].

In the case of Snowtex investment Ltd, it was held that payment of

interest which was already disallowed under any other section,

could not be considered again for section 14A disallowance as it

would result in double taxation. [64 taxmann.com 157]

On the other hand, in the case of Punjab State Co-operative Milk

Producers Federation Ltd. Vs. ITO, 106 TTJ 51, Hon'ble Chandigarh

Tribunal held that A plain reading of section 14A reveals that any

expenditure which is related to the income, which does not form

part of total income under the Act, will not be allowed as a

deduction. Total income is defined under section 2(45). In order to

consider what is the total income of the assessee, effect has got to

be given to all the provisions of the Act, including the deductions

permissible under Chapter VI-A. The first step for computation of

total income is to determine the income under various heads of

The same view has also been taken in the following judgements:-

• CIT Vs. Metaman Auto Pvt. Ltd. 336 ITR 434 (PB)

• Wimco Seedllings Ltd. Vs. DCIT 293 ITR (AT) 216 (DEL)

• ACIT Vs. Eicher Ltd. 101 TTJ 369 (DEL)

In view of above facts and legal position, it can be concluded that it

is the Assessing Officer, who actually has to record the satisfaction

before making any disallowance that why the claim of assessee

(being certain amount of expenses or no expenses) is not

acceptable. Then only, he can apply Rule 8D.

4. Whether disallowance u/s 14A can be made even if the

assessee claims that there is no exempt income from the

investment?

It is also a very controversial issue whether disallowance u/s 14A

can be made even if there is no exempt income during a particular

year. Different judgements have already been announced but

expressed contrary view.

In the case of Cheminvest Ltd. Vs. ITO [2009] 121 ITD 318, Speical

bench of Hon'ble Delhi Tribunal held that disallowance u/s 14A had

to be made in respect of interest on loans, which were utilized for

investment in shares, even though no dividend income was earned

on those shares during the relevant year.

However, this decision was reversed by Hon'ble Delhi High Court in

appeal no. ITA 749/2014 dated 02.09.2015. It was stated that No

disallowance u/s 14A can be made in a year in which no exempt

income has been earned or received by the assessee.

Further, In the case of Avshesh Mecantile Pvt. Ltd Vs. DCIT [2012]

ITA 208/2009 & 5779/2006, Hon'ble Mumbai Tribunal held that no

disallowance can be made if there is no exempt income and

investments are also being capable of generating taxable income.

Central Board of Direct Taxes has also issued the Circular 5/2014

dated 11.02.2014, clarified that Rule 8D read with section 14A of

the Act provides for disallowance of the expenditure even where a

taxpayer in a particular year has not earned any exempt income.

Though the Circular / Notification issued by CBDT are not binding

on the assessee and cannot override the judicial view, the

clarification given by the CBDT seems to be correct in the sense

that when an assessee is having some investments yielding

exempt income, it doesn't make difference, whether or not, any

exempt income has been earned in any particular year for making

disallowance u/s 14A. Assessee can't take the plea that no

expenditure has been incurred in a particular year only because no

exempt income has been earned. It is just like a business where

whether profit is earned or not, expenditure is always incurred.

Therefore, there may be some portion of expenditure which is to be

disallowed u/s 14A even if there is no exempt income in a particular

year. However, before making disallowance u/s 14A, the assessing

officer has to record the satisfaction and give his finding so as to

reject the assessee's claim that no expenditure has been incurred

for earning exempt income.

On the contrary, there are a number of decisions vide which it was

stated that in any case, the disallowance u/s 14A can't exceed the



6. What is the applicability of Section 14A on computation of book

profit as per MAT provision u/s 115JB of the Income Tax Act?

Section 115 JB of the Income Tax Act provides that where the tax

liability under the normal provision of the Act is less than the tax

payable on book profits under this section, the corporate tax payer

is liable to pay MAT on book profits.

Further clause of (f) of the explanation 1 to section 115 JB requires

that the net profit as shown in the profit and loss account for the

relevant previous year prepared under sub-section (2), as

increased by—

(f) The amount or amounts of expenditure relatable to any income

to which section 10 [(other than the provisions contained in clause

(23G) thereof)] or section 10A or section 10B or section 11 or

section 12 apply, i.e. expenditure in relation to exempt income

which has been debited to profit & loss account.

Now the question arise that whether the provision of section 14A

read with Rule 8D is applicable on the book profit calculated u/s

115JB of the Act.

In the case of Goetze (India) Ltd. Vs. CIT 32 SOT 101, Hon'ble Delhi

Tribunal held that section 14A and clause (f) of section 115JA of the

IT Act has the same meaning. Section 14A contains sub-section (2)

and (3), which do not find place in the clause (f). Sub section (2) &

(3) of section 14A has prescribed the method (Rule 8D) to be

adopted in case department is not satisfied with the claim of

assessee and where no actual expenditure has been incurred

respectively. Accordingly, it was held that as far as computation of

book profit u/s 115JA is concerned, provision of sub-section (2) &

(3) of section 14A of the Act, cannot be imported into clause (f).

Therefore, the amount of disallowance based on formulary

approach (Rule 8D), cannot be treated the expenditure relatable to

exempt income for the purpose of deriving book profit u/s 115JB of

the Act.

In view of legal position stated above, it can be concluded that if

the expenditure in relation to exempt income has been calculated

by applying rule 8D, the same should not be added to the book

profit. On the other hand, the amount of expenditure in relation to

exempt income actually debited in the profit & loss account, is

required to be added to the book profit calculated u/s 115JB of the

Act. The basic logic behind this is that the book profit is calculated

on the basis of figures mentioned in profit & loss account. Any

imaginary figure which has been computed by applying any

formula cannot be a basis for calculating book profit.

From the above discussion, the author is of the view that the

provision of Section 14A read with Rule 8D is applicable where the

exempt income has been earned by the assessee on the

investment not held as stock in trade. However the assessing

officer has to first record satisfaction of the assessee for

disallowing any expense under this section so as to reject the claim

of the assessee and record his / her finding in this regard. Certain

issues which have been discussed above, requires more

clarification from the CBDT so that the intent of legislature for

inserting the section can be fulfilled.

Conclusion

income, as specified under section 14. After working out the gross

total income, deductions, as permissible under Chapter VI, are to

be made, which gives the total income. There is distinction

between gross total income and total income. The gross total

income is the income as computed under the provisions of the Act

before deductions under Chapter VI-A. It is, therefore, evident that

total income as per the return does not include the income referred

to in section 80P(2)(d). Therefore, the provisions of section 14A,

inserted with effect from 1-4-1962, were clearly attracted in the

instant case.

• Further, another question arises about the criteria for treating

any income to be exempt income under the Act. Whether, exempt

income is the one on which tax has not been levied or which is

exempted in the hands of assessee.

E.g. (1) In the case of dividend income, dividend distribution tax

u/s 115O is collected from the company at the time of distribution

and therefore, it is exempted in the hands of the recipient. (2) A

partnership firm pays tax on its profit and thereby profit distributed

to partners is exempted in the hands of partners. (3) In respect of

Long term capital gain on which STT is paid, exemption is provided

u/s 10(38).

In the case of Popular Vehicles & Services Ltd. [2010] 189 TAXMAN

14, Hon'ble Kerala High Court noted that the assessee borrowed

funds from banks for providing capital to partnership firm, in which

he is a partner. The assessee did not receive any interest for that.

The only benefit derived is share in profit, which is exempt u/s

10(2A). Therefore, the disallowance of proportionate interest on

borrowed funds diverted as interest-free loans to partnership firms

of which respondent-assessee is a partner, was rightly made by the

officer and we find no justification for the appellate authorities to

allow the claim.

On the other hand, in the case of Sudhir DattaRam Patil Vs. DCIT

[2005] 2 SOT 678, Hon'ble Mumbai Tribunal held that when the

statute has by fiction provided that the remuneration received by

the partner from the firm is to be assessed under the head

'business' under section 28 then automatically any interest paid by

the partner for the purpose of earning the remuneration must also

be deducted as per section 36(1)(iii). an assessee is entitled to the

deduction of the interest paid on moneys borrowed for investment

in the firm in which he has become a partner against the amount

received by him from the firm as remuneration/ salary and

assessed under the head 'business'.

In view of facts discussed above and different views expressed by

various appellate authorities, there is a need either to bring

amendments in section 14A or clarification from CBDT so as to

clarify the applicability of section on different types of income

which though do not form of total income of the assessee, but tax

has been paid on the same by distributor in the case of Dividend

income and by partnership firm in the case of share of profit. The

author is of the view that if tax has been collected on any stage, the

income should not be treated as exempt income for making

disallowance u/s 14A.



http://www.upsc.gov.in. The complete notification should be studied

carefully to understand the structure of the exam and other related

information. Plus there is exam calendar is too given on same website.

(1) Civil Services (Preliminary) Examinations (Objective Type) for the

selection of candidates for Main Examination; and

(2) Civil Services (Main) Examination (Written and Interview) for the

selection of candidates for the various services and posts.

Marks thus obtained by the candidates in the Main Examination

(written part as well as interview) would determine their final ranking.

Candidates will be allotted to the various services keeping in view their

ranks in the examination and the preferences expressed by them for

the various Services and Posts Remember a friend preparing for civil

service is integrated, means you have to prepare Prelims Mains and

interview simultaneously not separately. And once you completed the

circle then only you should fill the form otherwise it would be waste of

attempt. There are some candidates, who seat for 2 to 4 year,

continuously preparing for exam and after 2-4 year give their first

attempt.

There should not be any plan “B” meaning prepare for only UPSC at a

time don’t go for other exam because every exams (State PCS and

other competitive exam) had different syllabus pattern and all.

Online application Candidates must apply online using the website

“http://www.upsconline.nic.in/.” The candidates are required to pay a

fee of ?100/- (Rupees Hundred only) (excepting Female/SC/ST/PH

candidates who are exempted from payment of fee) either by remitting

the money in any branch of SBI by cash, or by using net banking

facility.

Prelims (PT) exam is generally conducted in month of August & Mains

in December and interview is conducted in the month of March. There

may be change in the month of exams. Because of work load of UPSC.

The tentative students apply for exam are more than 12 lakh but it has

been seen that less than 50 % that is 6 lakh approx. appeared in exams

and ONLY 50,000 to 70,000 are serious candidate. If you are not sure

about exam please do not give exam on exam date and your attempt

will not be counted by merely filling exam form.

Age Limits and attempts A candidate must have attained the age of 21

years and must not have attained the age of 32 years on the 1st of

August, 2016 i.e., he must have been born not earlier than 2nd August,

1984 and not later than 1st August, 1995. For 6 attempts allowed. Plus

The competitive examination comprises two successive

stages:--

Friends let me enlighten you towards the basic insight of India civil

service with enough details and rest if any, will cover in my next article.

It is practically impossible to explain each and everything that is

relevant to the preparation. I intentionally stayed away from

attempting anything near to such an idea because of the very nature of

the preparation. It is so much unique to each of us, so much based on

personality, habits and attitudes that a

one-stop solution is not possible.

Many people come to Civil Service with different motto which could be

earning money, power, and status etc. It is said “The best way to find

yourself is to lose yourself in the service of others” .Civil service is

Service it is neither a Job nor a Business. So please come to serve

people and indeed our Nation because nation needs you.

The first step towards your success is to choose your goal honestly. You

shouldn’t choose it just because your father or mother has a dream or

there is a pressure from your social circle. It should come from your

heart. And once you have decided upon your choice, stick with it. This

exam is not like any other entrance examination. It demands more

than a decent amount of time to prepare with determination, which is

possible only if the desire for coming into the service is burning in your

heart incessantly. And always remember “Every dog has its day! ‘’

There is no need to come from a reputed Institute like CAs AIIMS or

IITs, IIMs to succeed in the civil services examination, and we must be

a ‘topper’ at every stage of our education. You need not have a splendid

academic background. You need not have great scores in SSC or

Intermediate. Also you need not have come from a rich family.

Believe me your preparation stage would probably be the most fruitful

stage of your life. Preparation gives you an opportunity to know

yourself better, to assess your strengths and weaknesses, and to be a

better person every day. It will be the best learning stage of all of your

lives.

"Stand up, be bold and take the whole responsibility on your shoulders

and know that you are the creator of your own density. All the strength

and success that you want are within yourself.”

Before starting the preparation, it is very important to have a complete

understanding about the exam process, its structure and the various

aspects related to the preparation.

UPSC generally issues the notification in the Employment News. The

same should also be available on the UPSC website

Mind makeup:--

Know your examination:--

CA. Vikash Agarwal

An Basic Insight of Indian Civil Service (IAS) Exam



syllabus and past 10-12 years question in order to check whether you

are on right track or not.

In my conscious opinion, in the initial phases it is always better to go

for a certain amount of self-preparation before even thinking of joining

any coaching institute. Unless one has some basics about the topics, it

would be very tough to comprehend and recollect whatever is being

taught in a coaching institute. One good thing with coaching is you will

get likeminded people there with whom you may form group for Group

discussion, sharing / exchange of Notes, It might happen that

someone is good at History someone in Geography and like that. And

at the same time you may exchange / Share FOOD (ha-ha) too

because you will get people from PAN India out there. So it is good

source of knowing India as well.

The average age of joining into services also increased progressively

over the years to 27.5 years. Well, most of it depends on the kind of job

(and the job environment) some jobs have a very restrictive work

place. If the job environment is not conducive for any study, no other

option but to leave, if you are serious about getting into the services.

Even if you are outside India, you can prepare for the exam, as

effectively as anyone else preparing from within the country. Here it is

advised that you prepare for at least 1 to 2 year then opt for job. In this

way your foundation is strong and with short revision and updating

current update you can give exam, many toppers did the same.

Gandhi ji had an freedom strategy “Struggle –pause- Struggle’’ it is

advised not to be “Devdas” it means make preparation your passion

not burden and during study you should spend time with your friends

/relative, it will help you in refreshing your mind and Motivation as well.

Though the exam demands hard work from the aspirant, it should be

“intelligent hard work”. The most important aspect of the whole

preparation is to plan it. Without plan noting happen and it is advised to

go for regular revision

at frequent interval plus opt for regular test series this will help you to

analysis where you are standing. The following points should be kept in

mind while doing preparation:

(a) The focus should be on gaining basic clarity in each topic, which will

come only through lot of logical questioning.

(b) More time should be spent on thinking about the topic and making

innovations, rather than on reading too many study material.

(c) The previous papers should be thoroughly analyzed to understand

the expectations of the examiner.

(d) The preparation should be focused and all the hard work should be

channelized in the right direction

(e) Reading between the lines this is most important and crucial.

Discuss what you read with your friends or colleagues, you would be

able to talk about a topic only when you understand it, and when

discussions help in looking at different aspects of the same topic, poses

new questions to clarify upon. It is advised to read Single book 20

Whether to join coaching or not??

Working Aspirants:--

Time management

Smart work:

there is relaxation in age & attempt for OBC SC, ST & PH students too.

Minimum Educational Qualifications The candidate must hold a degree

of any of Universities incorporated by an Act of the Central or State

Legislature in India or other educational institutions established by an

Act of Parliament or declared to be deemed as a University Under

Section-3 of the University Grants Commission Act, 1956, or possess

an equivalent qualification. That is you must be graduate at least (B

com BA BSC B Teck)

List of services:-- There are 24 Services you have to opt for them after

your Prelims exam and the same depend on your ranking and other

criteria too.

(i) Indian Administrative Service.(IAS) (ii) Indian Foreign

Service.(IFS) ,(iii) Indian Police Service.(IPS)

(iv) Indian P & T Accounts & Finance Service, Group ‘A’. (v) Indian Audit

and Accounts Service, Group ‘A’.

(vi) Indian Revenue Service (Customs and Central Excise), Group

‘A’.(IRS) (vii) Indian Defense Accounts Service, Group ‘A’. (viii) Indian

Revenue Service (I.T.), Group ‘A’. (ix) Indian Ordnance Factories

Service, Group ‘A’ (Assistant Works Manager, Administration). (x)

Indian Postal Service, Group ‘A’.(xi) Indian Civil Accounts Service,

Group ‘A’.(xii) Indian Railway Traffic Service, Group ‘A’.(xiii) Indian

Railway Accounts Service, Group 'A'. (xiv) Indian Railway Personnel

Service, Group ‘A’.(xv) Post of Assistant Security Commissioner in

Railway Protection Force, Group ‘A’(xvi) Indian Defense Estates

Service, Group ‘A’.(xvii) Indian Information Service (Junior Grade),

Group ‘A’.(xviii) Indian Trade Service, Group 'A' (Gr. III).(xix) Indian

Corporate Law Service, Group "A". (xx) Armed Forces Headquarters

Civil Service, Group ‘B’ (Section Officer’s Grade).(xxi) Delhi, Andaman

& Nicobar Islands, Lakshadweep, Daman & Diu and Dadra & Nagar

Haveli Civil Service, Group 'B'.(xxii) Delhi, Andaman & Nicobar Islands,

Lakshadweep, Daman & Diu and Dadra & Nagar Haveli Police Service,

Group 'B'. (xxiii) Pondicherry Civil Service, Group 'B'. (xxiv)

Pondicherry Police Service, Group ‘B’.

The best way to start the preparation is through newspapers. There is

no better alternative than newspapers. In

fact, newspapers are the single most important source of information

that can get you through the exam.

(a) The Hindu (b) Times of India,(c) Economic Times (d) Indian

Express

The Hindu is most preferred by students. Read the newspaper

religiously, every single day. This has to become a habit; newspaper is

from now, a part of your daily routine. And at the same time make snap

short Notes out of it.

Some of the sections to cover in newspapers

(a) National and social events (b) International (c) Economics and

business (d) Sports (e) Editorial and Op-Ed (f) Opinions and

discussions

Do not try to mug up, or by heart, or remember anything at this stage.

Please note that many questions will come from newspaper in both PT

and mains and sometimes even your interview too depend on

newspaper. It is seriously advise to go through Prelims and mains

Other Important Points to be noted--



NCERT 1972 both Part 1 and 2 11th and 12th New NCERT both 1 and 2

D R Khullar for Indian Geography (specially the maps) G C Leong Atlas

Oxford student atlas for Indian states Orient Longman for Indian

thematic maps and World economic geography After completion solve

UPSC previous years paper from 2001 to 2013, class notes if any.

Ancient India NCERT

Old by R S Sharma Medieval India NCERT by Salish Chandra Modern

India NCERT by Bipin Chandra (India after Independence)

Contemporary world history New NCERT by Arjun Dev India and the

contemporary world Part 1 and 2 (class 9th and 10th Old NCERT)

hemes in Indian History part 2 Old NCERT class 12th Contemporary

world politics 12th class New NCERT Grover and Mehta Modern India

(only selected topics) Modern India Spectrum (emphasis on appendix)

Indian culture past to present: a descriptive analysis Eminent

personalities of Modern India by spectrum

Indian

economic development 11th class NCERT Uma Kapila; Indian

economic performances and policies Economic dictionary by Penguin

Economic surveyThe Hindu articles Pratiyogita Darpan Economic issue

(glossary, International organization, agriculture, industry and

banking) 12th Five year Plan Volume 1 2 and 3

M Laxmikanth M Bakshi Indian

constitution Indian politics after ndependence Democracy in India by A

S Narang Indian constitution at work 11th standard New NCERT Indian

political theory 11th New NCERT Our parliament by Shubash Kashyap

The Hindu articles from December 2013 to December 2016 Important

reports of ARC

Indian society and diversity and

RELATED issue ,One year Yojna and Kurukshetra Social change and

development in India 12th NCERT new Important Hindu and Parakram

magazine articles

International

organizations by Spectrum publications Foreign relations and India

Important Hindu articles United Nations website

9th and 10th standard NCERT general

science India Year Book science and technology chapter The Hindu

Thursday edition Spectrum Science and technology Yearly updated

notes of Science reporter magazine

9th, 10th, 11th and 12th Geography NCERT

environment chapters India year book Environment chapter D R

Khullar environment chapter The Hindu environment related articles

Environment Bio Diversity and related National International Efforts)

Ethics integrity and

aptitude for IAS preparation Facebook page Ethics integrity and

aptitude book Few ARC report recent bills and model thinkers from

newspaper and other sources

M Tiara and R S Aggarwal for general mental ability Ren and Martin for

English 10th Standard NCERT for Mathematics 10 year papers of CDS,

CPF and UPSC for mathematics and English SSC 10 year’s paper for

mathematics and English Any manual/work books for practice

“PICTURE ABHI BAKI HAI MERE DOST”

INDIA AND World HISTORY AND CULTURE

INDIAN ECONOMY AND ECONOMIC DEVELOPMENT

INDIAN POLITY AND GOVERNANCE

SOCIAL AND NATIONAL ISSUES

INTERNATIONAL RELATION AND ORGANISATION

SCIENCE AND TECHNOLOGY

ENVIRONMENT

ETHICS, INTERGRITY AND APPTITUDE

CSABOOKS

times rather than 20 books 1 time. Do not buy each and every material

that comes in to the market and stick to basics. UPSC don’t want

master in topic or PhD in topic.

Do not pay heed to rumors Rajender Nagar (Karol Bagh) Mukherjee

Nagar. Friends there are two famous place for IAS preparation in Delhi

Rajender Nagar is for English medium students and Mukherjee Nagar

for Hindi medium and at both the place all the time too many rumors

going. So my advice is please ignore all and never rely on, unless the

same come by Notification either by UPSC or DOPT.

In this digital world, you must start the use of Internet, laptop and FM

Radio channel (106.4 MHz) for your preparation but my advice is to use

the gadgets in strict way.

Make notes in your own words otherwise it will next to impossible to

revise the topic during exam. Remember quality reading is important

than quantity reading. Remember to set targets daily or weekly goals

in your plan and see how many times you are able to reach them and

how many times you fail too.

Please note that in mains there will be compulsory qualify paper of

Hindi (or Any Schedule 8 Language) & English and many time it has

been seen that candidate do not take these papers seriously and failed,

the number of which

800 to 900 candidates per year. The reason is simple they left reading

Hindi 5 -10 year back and many more reason ,so be careful.

As per new syllabus you have to opt for one option for Mains and since

very beginning option paper is deciding factor whether you will get

Interview call or not. Deciding a suitable option is very much crucial.

Believe me no one can tell you which option is good or bad for you. That

is you have to decide your own. This is so that candidate opts for

“Sanskrit” Pali” Mathali” and any suitable option they feel so. However

few point must be consider while opt for any option.

(a) Easily Availability of Study material and coaching.

(b) Your own interest in Subject because here UPSC wants you must be

expert in that subject.

(c) Overlapping with other paper of General Study and Essay in order

reduce burden of reading.

(d) Few popular options History Geography Public Administration

Sociology, Commerce etc.

Three things cannot be long hidden: the sun, the moon, and the truth.

If you have talent and had work hard will surely achieve the same

www.worhview.com/foru www.Iaskracker.com www.iaspassion.com

www.pmindia.nic.in

www.downtoearth.org www.prsindia.org www.ncert.nic.in

http://murunal.org vision ias.com.

Do not waste time in unnecessary on searching so many website.

GEOGRAPHY NCERT 6th, 7TH and 8th Old NCERT 11th and 12th Old

Language Hindi English

Choice of optional paper

Few Important Websites

List of important books for UPSC examination (Prelims and

mains)


For example: Income X is chargeable to tax in India in

FY 2016-17 and in foreign country in FY 2017-18. Here,

since the income is taxable in FY 2017-18 in foreign

country, there may be cases where foreign tax is paid

by the end of FY 2017-18. Since, therulesprovide for

grant of FTC in the year in which income was offered to

tax in India, taking credit of foreign tax in India in FY

2016-17 may prove to be a challenge since the basic

condition for grant of FTC (payment of foreign tax) has

not materialised up to the date of filing of return in

India for FY 2016-17.

Sub-rule 2 of the Rules provide that where a Double

Taxation Avoidance Agreement ('DTAA') has been

entered between India and the foreign country, eligible

foreign tax shall be the taxes covered under the

respective DTAA.

However, where no DTAA has been entered between

India and the foreign country, eligible foreign tax shall

mean the tax payable under the law in force in that

country in the nature of income-tax referred to in

clause (iv) of the Explanation to section 91 of the Act.

Sub-rule 3of the Rulesprovide that an assessee would

be allowed to claim FTC against the amount of tax,

surcharge and cess payable by such assessee in India

under the Act. However, it has been clarified that claim

of FTC will not be allowed in respect of any sum payable

by way of interest or penalty.

Sub-rule 4 of the Rulesprovide that no credit shall be

available in respect of any amount of foreign tax or part

2. Eligible Foreign Taxes on which relief is

allowed

3. Grant of FTC

Computation of Foreign Tax Credit ('FTC') in case

ofassessee's with cross border payments has been a

major hassle for tax professionals. Absence of well-

defined set of rules, coupled with few judicial

precedents had resulted in diversified practices. The

Central Board of Direct Taxes ('CBDT') by Income-tax

(18th Amendment) Rules, 2016 have inserted Rule 128

to the Income-tax Rules, 1962 ('Rules') providing the

rules for grant of Foreign Tax Credit. The said rules,

applicable from April 1, 2017,will help provide much

needed clarity in an area which was until now marked

by diverse interpretations. This will help reduce the

hassle in claiming credit on tax paid in foreign countries

and help achieve the Government's vision for non-

adversarial tax regime.

Sub-rule 1of the Rules provide that a resident assessee

will be eligible to claim FTC if any tax has been paid by

him in a country or specified territory outside India.

Grant of FTC shall be allowed only in the year in which

the income corresponding to such tax has been offered

to tax or assessed to tax in India.

The rule further provides that where income on which

foreign tax has been paid or deducted, is offered to tax

in more than one year, credit of foreign tax shall be

allowed across those years in the same proportion in

which the income is offered to tax or assessed to tax in

India.

This rule may create certain complicacies where there

is a mismatch in timing of taxation of a particular

stream of income in India and foreign country in

accordance with their respective tax laws.

1. Eligibility to claim FTC

CA. Paras Dawar

Analysis of Rules for grant of Foreign Tax Credit



the date of filing of return for FY 2016-17. Presume, the

dispute gets settled in the favour of UK tax authorities

by order of Supreme Court of UK on June 30, 2020 and

A Ltd. deposits such disputed tax with UK authorities on

July 15, 2020. Here, an ambiguous situation shall arise

for A Ltd. on how the credit of such disputed foreign tax

paid on July 15, 2020 would be availed in India's tax

return for FY 2016-17. (Please note that proviso to sub-

rule 4 categorically provides that credit for such foreign

tax on settlement of dispute shall be available for the

year in which such income is offered to tax or assessed

to tax in India)

Sub-rule 5 of the Rules provide that credit of foreign tax

shall be the aggregate of the amounts of credit

computed separately for each source of income arising

from a particular country. Further, the credit allowable

shall be the lower of the tax payable under the Act on

such income and the foreign tax paid on such income.

Proviso to clause (i) of sub-rule 5 clarifies that where

foreign tax paid exceeds tax payable in accordance

with DTAA, such excess shall be ignored.

In simpler words, a separate calculation would be

required to be made on each and every stream of

income arising from each and every foreign country

individually in accordance with the manner prescribed

in next paragraph. The aggregate of such different

FTCs computed from each and every stream of income

above from different foreign countries shall be the

credit of foreign tax paid allowable from the tax payable

in India.

For the above purpose, FTCfrom each and every

stream of income arising from each and every foreign

country shall be lower of:

i. the tax payable under the Act on each and every

suchstream of income, or

ii. the foreign tax paid on each and every suchstream

of income

Further, the credit shall be determined by conversion of

the currency of payment of foreign tax at the

4. Manner of calculating FTC

thereof which is disputed in any manner by the

assessee.

However, proviso to sub-rule 4 takes into consideration

situation where the dispute in relation to foreign tax

credit has settled. Proviso to sub-rule 4 provides that

credit of such disputed tax shall be allowed for the year

in which such income is offered to tax or assessed to

tax in India if the assessee within six months from the

end of the month in which the dispute is finally settled,

furnishes the following:

a. evidence of settlement of dispute,

b. evidence of discharge of such disputed foreign tax,

and

c. an undertaking that no refund in respect of such

amount has directly or indirectly been claimed or shall

be claimed.

The rules notified mark a change in position CBDT had

taken in the draft rules which created an embargo on

grant of credit of foreign tax which wasdisputed by the

assessee by way of an appeal and such appeal was

subsequently settled.

Further, the rules notified provide that credit of

disputed tax shall be allowed for the year in which such

income is offered to tax or assessed to tax in India on

settlement of such dispute. However, ambiguity still

exists on how the assessee would claim credit of such

foreign taxes on settlement of dispute.

For example: A Ltd., a resident company, is in receipt of

income in the nature of FTS from UK in FY 2016-17. A

Ltd. is of the opinion that no tax is payable on this FTS

arising from UK as per beneficial definition of FTS under

Article 13 of India-UK DTAA. However, the tax

authorities of UK are of the opinion that A Ltd. is liable

to pay tax in UK. A Ltd. has disputed such claim of UK

tax authorities by way of an appeal which is pending for

disposal. A Ltd., being Indian company is liable to file

its Indian Income Tax Return for FY 2016-17 by

September 30, 2017. As on the date of filing of Indian

Income Tax Return, the dispute in relation to tax on FTS

income from UK is pending. As per rule 4, A Ltd. shall

not be eligible to claim credit of such disputed tax on



c. a statement signed by the assessee if it is

accompanied by :

1. an acknowledgment of online payment or bank

counter foil or challan for payment of tax where the

payment has been made by the assessee;

2. proof of deduction where the tax has been

deducted.

Such documents shall be furnished on or before the

duedate return of income under section 139(1) of the

Act.

Form No.67 shall also be furnished in a case where the

carry backward of loss of the current year results in

refund of foreign tax for which credit has been claimed

in any earlier previous year or years.

The Finance Act, 2015 by insertion of clause (ha) in

section 295 of the Act empowered CBDT to frame rules

regarding 'procedure for granting relief or deduction of

any foreign tax paid against the Indian tax payable'.

However, CBDT while framing such rules in Rule 128

has extended its brief and has acted outside the

authority conferred to it by the Act.

The authority conferred to CBDT was restricted to

framing procedural rules for grant of foreign tax credit.

However, CBDT has provided entire substantive law

regarding grant of foreign tax credit. An illustration of

this is found in sub-rule 5 of the Rules which puts a cap

of maximum FTC that could be claimed. The vires of

such provisions if tested through judicial scrutiny may

lead to reading down of such substantive provisions.

The rules notified are a welcome step towards

providing clarity on various issues related to grant of

credit of taxes paid outside India. Various issues

requiring clarification or creating unnecessary

hardships on assessee in the draft rules have been well

addressed in the rules notified. However, litigation on

various other aspects can not be completely ruled out.

Controversy on vires of Substantive Provisions

Conclusion

telegraphic transfer buying rate on the last day of the

month immediately preceding the month in which such

tax has been paid or deducted.

The above rule throws light in an area which was until

now marked by divergent practices due to absence of

any specific law. Having said that, the requirement of

calculating the FTC separately on each and every

stream of income from a foreign country would make

the entire calculation process complex and convoluted.

One of the most welcome proposal in the rules notified

is regarding grant of FTC where tax is payable under

the provisions of section 115JB or 115JC of the Act.

Sub-rule 6 of the Rules provide that the credit of

foreign tax shall be allowed against MAT/AMT in the

same manner as is allowable against tax payable under

the normal provisions of the Act.

However, sub-rule 7 of the Rules come as a rider on

sub-rule 6 and provides where the amount of FTC

available against the tax payable under the provisions

of section 115JB or 115JC exceeds the amount of tax

credit available against the normal provisions, then

while computing the amount of credit under section

115JAA or section 115JD in respect of the taxes paid

under section 115JB or section 115JC, as the case may

be, such excess shall be ignored. The said rule is

clarificatory and will obviate taking claim of excess FTC

twice, first, directly upon payment of taxes when being

paid under MAT and second, indirectly by means of MAT

credit against future tax liabilities.

For claiming FTC, assessee shall be required to furnish

following documents :-

i. a statement in Form No.67

ii. certificate or statement specifying the nature of

income and the amount of tax deducted therefrom or

paid by the assessee,-

a. from the tax authority of foreign country; or

b. from the person responsible for deduction of such

tax; or

5. FTC where MAT/AMT is payable

6. Documents required to be furnished



CA. Nidhi Agarwal

Unclaimed Monies Treatment



34

REGIONAL COUNCIL ACTIVITIES

Date Name of Programme/Venue Chief Guest/Speakers CPE Hrs

TotalParticipants

Workshop on Professional Opportunities for Young CAsVenue: G -19, Bar Room, CR Building, ITO, New Delhi

28th June 2016(Tuesday)

2

Professional Opportunities for Young CAs CA. Charanjot Singh NandaPast CCM, ICAI

25

Seminar on Companies ActVenue : Hotel the Suryaa, New Friends Colony, Delhi

9th July 2016( Saturday)

6

CARO 2016 Sh. Vijay Kumar JhalaniCentral Council Member, ICAIChairman Technical Session

CA. Anil SharmaGuest Speaker

245

Internal Financial Control ( IFC) CS. Nesar AhmedPast President, ICSI

• National Company Law Tribunal ( NCLT) & National Company Law Appellate Tribunal (NCLAT) - Convergence of Corporate Jurisdiction• How to Appear before National Company Law Tribunal (NCLT)

Sh. ArunSaxenaAdvocate

Board Processes and Procedures – Secretarial Standards on Board Meetings CS. G. P. Madaan

Seminar on Service TaxVenue : Hotel Royal Plaza, Ashoka Road, New Delhi

4th June 2016( Saturday)

6

How to assess the Taxability under Service Tax CA. Atul K GuptaCentral Council Member, ICAI

297

Determination of an Activity as Service or not – with reference to Negative list,Mega Exemptions, Declared and Exempted Services)

CA. Bimal Jain

Practical Difficulties in Service Tax covering KrishiKalyanCess ( KKC), CENVAT Credit, Place of Provision, Export of Service & Filing Service Tax Return

CA. Dinesh AhujaCA. PuneetAgrawal

Professional Opportunities in Service tax For Practitioners CA. Dinesh AhujaCA. PuneetAgrawalCA. RajenderArora

Seminar on BankingVenue : NDMC Convention Centre, CP, New Delhi


6

Chief Guest Smt. MeenakshiLekhiMember of Parliament, LokSabha

175

Guest of Honour CA. Amarjit ChopraPast President, ICAI

Chairman Technical Session CA. Sanjay AgarwalCentral Council Member, ICAI

Credit Analysis from Bankers Perspective

Issues in Restructuring of Advances and NPA Management

Sh. S. R. BansalEx. Chairman, Corporation Bank

CA. Ajay Kumar Jain

Guest of Honour Sh. Anyesh RoyDCP Cyber Crime Economic Offence Wing

Case Studies- Detection of Fraud CA. Ritesh AggarwalVice President, Citi Bank

Innovative Lending Schemes in Banking and Professional Opportunities for Chartered Accountants

Dr. RajnishKatariaDirector & CEO, NIBSCOM

Sub Regional Conference of NIRC of ICAI Hosted by Chandigarh Branch of NIRC of ICAIVenue : Hotel JW Marriott, Chandigarh

17th June 2016( Friday)

6

National Company Law Tribunal ( NCLT) & National Company Law Appellate Tribunal (NCLAT) - Convergence of Corporate Jurisdiction

Justice M. M. KumarPresident , National Company Law Tribunal

254

How to Appear before National Company Law Tribunal (NCLT), Law and Practice of NCLT CA. AshishMakhija

How to Set up Ethical Practice CA. Charanjot Singh NandaPast CCM, ICAI

Overview, Introduction, Salient Features, ICDS vs Judicial Pronouncements, Difference between AS and ICDS , Impact and Effect of ICDS

CA. SanjivK.ChaudharyCentral Council Member, ICAI

Sub Regional Conference of NIRC of ICAI Hosted by H. P. Branch of NIRC of ICAIVenue : Hotel Holiday Home, Shimla


6

Overview, Introduction, Salient Features, ICDS vs Judicial Pronouncements, Difference between AS and ICDS , Impact and Effect of ICDS

CA. Sanjay AgarwalCentral Council Member, ICAI

78

Indirect Tax Dispute Resolution Scheme & Latest Cases, Latest in Service Tax including KrishiKalyanCess (KKC)

CA. Gaurav Gupta

Recent Changes in TDS CA. Neeraj Bansal

Workshop on TDS & TCSVenue: Hindi Bhawan, Rouz Avenue Marg, Delhi

22nd June 2016(Wednesday)

4

Practical Problems relating to TDS :•What constitutes reasonable cause for the purpose of levy of Penalty for default in deport of TDS.•Prosecution & Compounding•Sec.40(a)(ia) - Jurisprudence till date, Retrospective, Impossibility Doctrine•Amendments - NRI – PAN Provision for Expenses on 31st March, Provision for Audit fee on 31st March, Provision without Receipt of Bills and on Estimate•Assessee in default - for levy of Penalty•Recent controversiesLaw relating to TCS with special reference to amendments made by the Finance Act, 2016

CA. Ajay Wadhwa

141

CA. Rajiv Kumar Jain

Workshop on VATVenue: ICAI Bhawan, Vishwas Nagar, Delhi

23rd June 2016(Thursday)

3

•Works Contract – Salient Features under Delhi VAT and Haryana VAT•Taxation on Builders / Developers under Delhi and Haryana VAT•Composition Schemes for Works Contractors / Developers under DVAT / HVAT•Tax Planning in Works Contract – VAT & ST Perspective•Impact of Recent Important Judicial Pronouncements•WCT Implications under Inter-state Works Contract•Works Contract and GST Prospects

CA. H. L. MadanChairman Technical Session

35

CA. AnkitGulguliaGuest Speaker

Workshop on GST Venue:-ICAI Bhawan, Vishwas Nagar, Delhi

12th July 2016(Tuesday)

3

GST – A Way Forward CA. Gaurav Gupta

Workshop on Real Estate Act 2016 & implication of Taxation in Real Estate Transactions Venue:-Hindi Bhawan, Rouz Avenue Marg, ITO, Delhi

13th July 2016(Wednesday)

4

Real Estate (Regulation & Development) Act 2016 & Implication ofDirect & Indirect Taxation in Real Estate Transaction.

CA. Sunil AroraCA. Rakesh Garg


1935


The Board of StudiesorganizesLIVEOnline Mentoring sessions for all levels of CA Course. The topic specific and subject specific sessions by BoS faculty members aim to mentor students on the successful strategies to succeed in their forthcoming examinations and also clear their doubts/ queries. The online mentoring takes learning and development to the doorsteps of students through a uniform platform across the country. Students can ask specific queries/ questions, many of which would get answered subject to relevance and availability of time.

Date Course Paper Topic Faculty Time Link

June 8 IIPC Paper-3: Cost

Accounting and

Financial Management

Essentials of

preparation of Cost

Accounting and


Dr. N.N. Sengupta

CA. Sanjit Sharma

3-5 pm http://bit.ly/22oD10v

June 10 IIPC Paper-4: Taxation How to prepare

Taxation – Income Tax

and Indirect Taxes

CA. Shefali Jain

CA. Aparna Chauhan

3-5 pm http://bit.ly/25l73HH

June 16 IIPC Paper-1: Accounting

and Paper-2: Business

Laws, Ethics and

Communication

Company Accounts CA. Seema Gupta

Ms. Nisha Gupta

http://bit.ly/1WhEZzV3-5 pm

June 17 FINAL Paper-7: Direct Tax

Laws and Paper-8:

Indirect Tax Laws

Essentials for

preparation in Direct

and Indirect Tax Laws,

covering statutory

updates/ judicial

updates relevant for

November, 2016

examination

CA. Priya Subramanian

CA. Smita Mishra

http://bit.ly/1TyNZL43-5 pm

June 29 FINAL Paper-1: Financial

Reporting and

Paper-3: Advanced

Auditing and

Professional Ethics

Accounting Standards CA. Shilpa Agrawal

CA. Karuna Bhansali

http://bit.ly/1WNMNt73-5 pm

June 30 FINAL Paper-2: Strategic


and Paper-5:Advanced

Management

Accounting

Essentials of

preparation of

Advanced Management

Accounting and

Strategic Financial

Management

CA. Ashish Gupta

CA. Deepak Kumar

Gupta

http://bit.ly/1TxmQ0A3-5 pm

ANNOUNCEMENT

The schedule foronline mentoring sessions in June, 2016 isas below:

The aforementioned mentoring sessions will also be hosted at the scheduled date and time in the <Regional

Council/ Branch Name> premises.Students of the respective course appearing in forthcoming examination are encouraged to come and learn

from BoS Faculty Member(s) to have a better understanding of the subjects and enhance preparation for their

forthcoming examinations.Director,

Board of Studies

1936


Forthcoming Programmes of NIRC of ICAI

Timings of AGM

CPE hours for Seminar

9.30 am

Timings of Seminar 10.30 AM - 01.30 PM

3 (Three) Hours

Fee for Seminar Rs. 100/- Pay Online at (On the Spot Payment only through Cheque / DD) No Fee for Annual Members of NIRC (Seminars 2016-17)

www.nircseminars.org

Venue ICAI Bhawan, Vishwas Nagar, Shahdara, Delhi

64th Annual General Meeting of NIRC of ICAI

&

Seminar on Learn, Earn & Return for CA. Professionals

Date & Day 30th July 2016 (Saturday)

CPE HRS.3

MEMBERS

STUDENTS ACTIVITIES

th5 June, 2016 (Sunday) 183

CPT Mock Test for CPT Students.

Venue: ICAI Bhawan, Vishwas Nagar, Delhi. th12 June, 2016

(Sunday) 240Seminar for CA Students on CARO 2016

Venue: ICAI Bhawan, Vishwas Nagar, Delhi.

th19 June, 2016 (Sunday) 270

Seminar for CA Students on WHAT AFTER CA

Venue: ICAI Bhawan, Vishwas Nagar, Delhi.

th21 June, 2016 (Tuesday) 78

A Programme on YOGA for Members & CA Students (On the occasion of 2nd International Day of Yoga)

Venue: The Institute of Engineers of (India), Near ICAI Bhawan, ITO, Delhi.

th29 June, 2016 (Wednesday) 150

Swachh Bharat Abhiyan

Venue: ICAI Bhawan I.P. Marg New Delhi.

th30 June, 2016 (Thursday) 746

Motivational Talk for GMCS Scholars

Venue: Talkatora Indoor Stadium, Talkatora Road, New Delhi.

1625CA Utsav (Cultural Evening) followed by dinner


st1 July, 2016 (Friday) 105

Run for Society

Venue: From Yamuna Sports Complex (Gate No. 4 to ICAI Bhawan, Vishwas Nagar, Delhi.

101Flag Hoisting

Venue: ICAI Bhawan, Vishwas Nagar, Shahdara, Delhi.

125Blood Donation Camp, Health Checkup Camp, Tree Plantation, Food/Books/Clothes, distribution to

under privileged and old age home

Venue: ICAI Bhawan, Vishwas Nagar, Shahdara, Delhi.

nd2 July, 2016 (Saturday) 31

"Citizen & Member Awareness Programs on the Income Declaration Scheme, 2016”

Venue: ICAI Bhawan, Annexe Building, 7th Floor, Auditorium, I.P. Marg, New Delhi – 110 002

th8 July, 2016 (Friday) 35

Industrial VISIT for CA. Students

Venue: M/s, Northern Distributors, Sanjay Gandhi Transport Nagar, Delhi.

th14 & July,2016 (Thursday & Friday)

th151028

National Convention for CA Students


DATE TOPIC & VENUE STUDENTS

*Note : Sub Regional Conference scheduled for 6 August 2016 & Joint Seminar with Amritsar branch on 5 August 2016 stands cancelled.

Inconvenience caused is deeply regretted.

http://www.nircseminars.org


1937


A view at the Seminar on Service Tax

A view at the seminar on Banking

A view at the 2nd International Day of Yoga

A view at the Workshop on TDS A view at the Workshop on VAT


1938


A view at the Sub Regional Conference of NIRC of ICAI Hosted by Chandigarh Branch

A view at the Swachata Diwas Celebrated on 29th June 2016

A view at the CA UTSAV-2016

A view at the CA UTSAV-2016 A view at the Physiotherapy Lecture on the occasion of CA Day


1939


A view at the Marathon on the occasion of CA. Day

A view at the Tree Plantation on the occasion of CA. Day

A view at Flag Hoisting Ceremony on the occasion of CA. Day

A view at the Seminar on Service Tax, Excise Duty on Jewellers, Companies Act & CARD-2016

A view at the Seminar on Citizen & Member Awareness Programe

on Income Declaration Scheme 2016

A view at the Seminar on Companies Amendment Act 2016, CARO 2016 & Internal Financial Control

Total Number Of Pages : 40 (Fourty)

NIRC Newsletter- July, 2016

DL( )-01/1192/2015-17U(C)-257-2015-17

C

40

CPT, IPCC & Final Classes of NIRC of ICAI

Announcement For Regular Classes

Team NIRC is pleased to inform that we are organizing state of the Art, Coaching

Classes for CPT, IPCC & Final Exams.

* Focused study plan as per ICAI Exams. * Experienced and Subject Expert Faculty.* Separate class Notes for each Subject. * Suitable timings for all classes before and after the office hours.* Most comfortable environment for studies.

For more information visit us on www.nirc-icai.org.

NICASA Chairman

NIRC Newsletter- July, 2016

NEWSLETTER OF NORTHERN INDIA REGIONAL … July Newsletter 26-7...NEWSLETTER OF NORTHERN INDIA...

Documents

Transcript of NEWSLETTER OF NORTHERN INDIA REGIONAL … July Newsletter 26-7...NEWSLETTER OF NORTHERN INDIA...