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The Institute of Chartered Accountants of India Vasai Branch of WIRC NewsletterThe Institute of Chartered Accountants of India Vasai Branch of WIRC Newsletter 3April 20142 April 2014

Photo - Gallery

Award Function

Team of VASAI BRANCH Receiving “Highly Commendable Performance” award & Certificate under Large Branch Category- ”

From WIRC for the year 2013

Group Photo taken in orientation programme of WIRC Held on 23rd & 24th March in Alibuag.

Seminar on International Women’s Day held on 09.03.2014

Speakers

(L-R) – CA. Shweta Jain (Past Charperson-Vasai Branch), Mrs. Catleen Pereira (Mayor-MBMC), CA. Kishor Vaishnav (Chairman-Vasai Branch), Ms. Suman Kothari

(Mira Bhayander Corporator) & CA. Preksha Jain (Secretary & Treasurer) addressing at Inauguration of Seminar on International Women’s Day. Participants

CA. Shweta Jain Dr. Madhu Agarwal Dr. Rajesh Koradia Smt. Bharati Narvekar Smt. Mamta Morias

(L-R) – CA. Umesh Mestry (Vice Chairman Vasai Branch), CA. K.B. Kothari (Committee Member -Vasai Branch), CA. Ramanand Gupta (Imm. Past Chairman-Vasai

Branch), CA. Dayaram Paliwal (Past Chairman-Vasai Branch) & CA. Kishor Vaishnav (Chiarman – Vasai Branch) taken photo at 64th Annual Day Program of ICAI.

Team of VASAI BRANCH of WICASA Receiving “Highly Commendable Performance” award & Certificate under Large Branch Category- ”

From WIRC for the year 2013


At this outset, I would like to extend my wishes to all of you on the occasion of Gudi Padwa and would like to wish you all a very prosperous and wealthy fiscal year 2014-15. As the New Year begins, we have to plan our professional activities, social actions and family events by moving towards new frontiersand by rising above the ordinary and thinking

beyond imaginations with our entire TEAM of ICAI, WIRC and our Vasai Branch.The Indian General Elections of 2014 whic his approaching, will be held in nine phases, the longest election in the country’s history, from 7 April to 12 May 2014 to constitute the 16th

LokSabha in India. As Chartered Accountants, it is our duty not only as a responsible citizen of the country but also as partners in Nation Building, to vote and encourage others to vote, so that a proper, stable government is elected where in the various problems of the country like corruption, poverty, unemployment, illiteracy, safety of women, inflation, etc. can be solved on a priority basis.Last month, various events were organized. The seminar on “Women Vision 2025” was organized on the occasion of the International Women’s Day. It was a grand success and was graced by Mrs. Catleen Pereira, the first lady of Mira-Bhayander, the Mayor of Mira-Bhayander Mahanagar Palika. Women in large numbers from all sections of the society were present for the same.A seminar was organized on “Bank Branch Audit” with the galaxy of star speakers CCM CA. Nilesh Vikamsey, CA. Vipul Choksi, CA. K. V. S. Shyamsunder, CA. Nitant Trilokekar and CA. Anjali Gupta where in a large number of members attended to update themselves before conducting the Bank Branch audit and made the seminar a huge success. Branch also felicitated newly qualified chartered accountants on this apt occasion.We also organized a special students seminar on the topic “Valuation of Intangible Assets and Transfer pricing” where in students gained a broader perspective over the subject. We had also organized Mock tests for CA. Final and IPCC students at the branch level.In the Sports fields, our team participated at Pune for a cricket tournament held by CA. Arts & Sports Circle of Pune Branch and achieved a grand victory & was awarded with the Winner’s Trophy under the captainship of our past Chairman

CA. Unmesh Narvekar. I would like to congratulate our entire team that made us feel proud. I invite all the members to arrange such types of sports functions amongst various professional groups of our society in order to create the CA Brand Value.This month, various programs are planned for the members and students. For members, there is Faculty Development Programme, a Seminar on Latest Changes & issues involving in Co-operative law and a Tax Clinic on Mvat & CST related Issues.We have announced a Motivational lecture For CA Students on 12th April in the Vasai Hostel keeping in view the approaching examinations. We have also organized a Seminar on Share base payment and Amalgamation intercompany holdings whereinstudents can get a broad idea over the subject. Also a Crash course on ISCA is being organized from 8th April to 14th April. A debate competition is being held on 26th April, the topic for the same being “Clash-Ultimate Challenge”.On the Social Contributions, we have planned a Blood Donation Camp jointly with Lion’s Club on 6th April, 2014 at Rajasthan Hall, Bhayandar (W). I request all the members to participate and contribute in these Social eventsand also request to arrange such types of social events.As I communicated in the orientation meeting of WIRC branches at Alibaugh held on the 23rd and 24th of March 2014 about our top most priority and a challenging aspect of acquiring the Branch owned premises. As the strength of members and students is growing rapidly due to the geographical location of our branch thus making it essential for the smooth functioning and permanent growth of the branch, establishing our own premises is of utmost importance. At this junction, I humbly request all the members to come forward and contribute by identifying and suggesting a suitable location for the same.Mahatma Gandhi said, “It is not the whistle that move the train but the power harnessed in the steam” For us, suggestions & feedbacks are most important guides to improve our performances. So, please do send us your suggestions & feedback not only in writing but you are free to call me 24x7.

With Warm Regards

CA Kishor Vaishnav

CHAIRMAN’S COMMUNICATION

3The Institute of Chartered Accountants of India Vasai Branch of WIRC Newsletter

MANAGING COMMITTEE

CA. Kishor Vaishnav, Chairman CA. Umesh Mestry, Vice-ChairmanCA. Preksha Jain, Secretary & Treasurer

EDITORIAL BOARDEditor : CA. Kishor Vaishnav Joint Editor : CA. Vimal Agarwall CA. Unmesh Narvekar, l CA. Haresh Mehta, l CA. Pramod Dhamankar, l CA. Hemant Shah, l CA. Haresh Kenia, l CA. Lalit Munoyat, l CA. Kamal Dhareva, l CA. Preeti Agarwal, l CA. Rajesh Utkur, l CA. Sanjay Paharia.

T E A M

CA. Dayaram Paliwal, Past ChairmanCA. Ramanand Gupta, Imm. Past ChairmanCA. Kanhaiyala B. Kothari, Committee Member

April 2014

CA. Vimal Agarwal, Committee MemberCA. Sumeet Doshi, Committee MemberCA. Shruti Shah, WIRC-Nominee


FORTHCOMING PROGRAMMES FOR MEMBERSDate Seminar on Timings Venue Speakers Co-ordinators Fees CPE6th April 2014

Blood Donation Camp 8.30 am Onwards

Rajasthan Hall, Near Navrang Hotel, 60 Feet Road, Bhayandar (West)

- CA. Umesh Mestry 9320473468 CA. K.B. Kothari 9594196090

Free -

19th April 2014 Faculty Development Programme

9.30am to 5.30pm

Amruta Building, Indralok Phase-II, New Golden Next Road, Bhay. (East)

CA. Mangesh Kinare CA. Dilip Apte Mr. Rakesh Jain

CA. Umesh Mestry 9320473468 CA Ramanand Gupta 9322231113

250 4

26th April 2014 Tax Clinic - Mvat & CST related Issues

10.30 am to 12.30 pm


Eminent CA. Vimal Agarwal 9320617447CA. Pramod Dhamanakar 9987155522

Free -

27th April 2014 Seminar on Latest Changes & Issues Involving in Co-operative law

9.30am To 5.30pm


CA. Girish Kulkarni CA. Tarun Ghia CA Ramesh Prabhu CA. Vimal Punmiya

CA. Umesh Mestry 9320473468 CA. K.B. Kothari 9594196090

400 6

FORTHCOMING PROGRAMMES FOR STUDENTSDate Seminar on Timings Venue Speakers Co-ordinators Fees CPE

12th April 2014 Motivational Lecture for CA Students before Exam

10.00 am to noon

Vasai Hostel Dr. Mahesh Gaur CA. Vimal Agarwal 9320617447CA. Umesh Mestry 9320473468

Free -

12th April 2014 Seminar on Share base payment & Amalgamaion inter Company

11.00 am to 2.00 pm


CA. Jay Chhaiyra CA. Bhanwar Borana

CA. Dayaram Paliwal 9820331010Mr. Nikash Mehta 9220568723

Free -

8th April to 14th April 2014

Crash course on ISCA (Everyday)

1.00pm to 5.00pm

Vasai Hostel CA. Chantelle Pereira CA Ramanand Gupta 9322231113CA Sumeet Doshi 9869525956

700 -

26th April 2014 "Clash-Ultimate Challenge" - Debate Compitition

5.00 pm onwards


Eminent CA. Dayaram Paliwal 9820331010Ms. Neha Chandak 9768283807

Free -

FORTHCOMING PROGRAMMES OF BHAYANDAR CPE STUDY CIRCLEDate Seminar on Timings Venue Speakers Co-ordinators Fees CPE

20th April 2014 Cyber Crime 10.00 am to 1.00 pm

New Zaika, Bhayandar (West)

Eminent CA. Deepak Bansal 9320981019 - 3

FORTHCOMING PROGRAMMES OF VASAI-VIRAR CPE STUDY CIRLCEDate Seminar on Timings Venue Speakers Co-ordinators Fees CPE5th April 2014 Issues On TDS 4.00 pm to

7.00 pmHotel Kubera, Vasai (W)

CA. Nihar Jambusaria CA. Xavier Rajan 9371720027CA. Jagadeesh Devadiga 9890121996 CA. Anandi Bhase 9890121996

600/-Mem. 300/- Stu.

3

3rd May 2014 LBT assessment - issues 4.00 pm to 7.00 pm

Hotel Kubera, Vasai (W)

Eminent CA. Xavier Rajan 9371720027CA. Jagadeesh Devadiga 9890121996 CA. Anandi Bhase 9890121996

- 3

7th June 2014 SME Listing 4.00 pm to 7.00 pm

Hotel Kubera, Vasai (W)

Eminent CA. Xavier Rajan 9371720027CA. Jagadeesh Devadiga 9890121996 CA. Anandi Bhase 9890121996

- 3

FORTHCOMING PROGRAMMES OF PALGHAR CPE STUDY CHAPTERSDate Seminar on Timings Venue Speakers Co-ordinators Fees CPE

8th April 2014 TDS Provisions and Procedures

2 .45 pm to 6.00 pm

Lion’s Club Conference Hall, Near Panchbatti, Palghar (W), Thane - 401 404

CA. Ravi Soni CA. Bharat Dhonde 9049491967CA. Kiran K. Shinde 9762623479CA. Deepak Gurnani

- 3

FORTHCOMING - PROGRAMMES

ANNOUNCEMENTStudents registered for Articleship Training on or before 30th April, 2012 to undergo

GMCS - II Course instead of GMCS Course Students who registered for Practical Training on or before April 30, 2012 were required to undergo General Management Communication Skills (GMCS) Course before applying for membership of the ICAI as per Regulation 51A/72A of the Chartered Accountants Regulations, 1988. The Council at its Meeting held from 10th to 12th February, 2014 decided that students registered for Practical Training on or before April 30, 2012 shall undergo GMCS –II course only instead of existing GMCS course before applying for membership of the ICAI as per Regulation 51A/72A of the Chartered Accountants Regulations, 1988. In this connection, above students are being advised to register at the portal www.icaionlineregistration.org or contact the nearest Regional Council/Branch for registration in GMCS-II Course.


DETAIL PROGRAMMES SCHEDULE

Venue Branch Premises, Bhayandar(E)Day & Date Saturday, 19th April, 2014

Timing 9.30 am to 2.30 pmParticipation Fees ` 250/- Programme Chairman CA. Kishor Vaishnav 9892194382

Programme Director CA. Ramanand Gupta 9322231113CA. Unmesh Narvekar 9821236179

Co-Ordinators CA. Umesh Mestry 9320473468

For Registrations and Details Please contact

022-65568900

Faculty Development ProgrammeCPE

4HRS

Timing Particular Speakers9.30 am to 10.00 am Inauguration Session CA. Girish Kulkarni-

Treasurer of WIRC & Chiarman of Committee of Co-operative Society (Maharashtra)

10.00 am to 12.00pm Key Note address including Deemed Conveyance & Property Disputes involving Families, co op. disputes, Development Agreements, Tax issues for co ops, Role of CAs in co ops

CA. Tarun Ghia- CCM

12.00 pm to12.15 pm Tea Break -

12.15 pm to 1.15 pm Overview of Professional Opportunities in Co-operative Sector and latest changes in Co-operative Law

CA. Ramesh Prabhu- President of Vasai Taluka Housing Federation,Chief secretary-MSWA

1.15 pm to 2.15 pm Lunch Break

2.15 pm to 3.15 pm 97th Constitutional Amendment & Setup of regulation of housing through Maharashtra (Regulation & Development) Act,2012

CA. Ramesh Prabhu- President of Vasai Taluka Housing Federation,Chief secretary-MSWA

3.15 pm to 3.30 pm Tea Break

3.30 pm to 5.30 pm Income tax Provisions regarding capital gains, sale and purchase flats/commercial units including TDS aspects

CA. Vimal Punmiya

Program ScheduleTiming Particular Speakers

9.30 am to 10.00 am Inauguration Session & Speech on OP & GMCS Programe Objectives & Importance

CA. Mangesh Kinare (Imm. Past Chairman - WIRC)Chairman GMCS Co-ordina-tion Committee of WIRC

10.00 am to 12.00 pm Train the Trainer – In-troductory Session, the art & Science of effective Training

Mr. Rakesh Jain – BE, MBA, Director of ISMT Manage-ment Institute

12.00 pm to 12.15 pm Tea Break -

12.15 pm to 1.15 pm IMP of Communication Skills-A General View at Global, Local & Corporate Level

CA. Dilip Apte – RCM

1.15 pm to 2.15 pm Updating Syllabus & Contains of OP & GMCS course as per ICAI Guidelines

CA. Unmesh Narvekar

2.15 pm to 3.00 pm Vote of Thanks followed by Lunch.

-

Program Schedule

Note:- 1. The Faculty Development Program is being conducted as per ICAI

Guidelines for qualitative improvements in faculties. 2. Hence it is recommended by branch to attend and enrich. 3. Preference will be given to those faculties who have attended such

FDPs conducted by ICAI, Regional offices or Branches subject to ICAI guidelines.

4. Branch Management Reserves the necessary rights in this matter as per the ICAI Guidelines.

Venue Branch Premises, Bhayandar(E)Day & Date Sunday, 27th April, 2014

Timing 9.30 am to 5.30 pmParticipation Fees ` 400/-Programme Chairman CA. Kishor Vaishnav 9892194382

Programme Director CA. Umesh Mestry 9320473468

Co-Ordinators CA. Dayaram Paliwal 9820331010CA. Vimal Agarwal 9320617447

For Registrations and Details Please contact

022-65568900

Seminar on Latest Changes & Issues Involving in Co-operative law

CPE 6

HRS

Venue Branch Premises, Bhayandar(E)Day & Date Saturday, 26th April, 2014

Timing 10.30 am to 12.30 pmParticipation Fees Free for All Co-Ordinators CA. Vimal Agarwal 9320617447

CA. Pramod Dhamanakar 9987155522Speaker CA. Haresh Mehta 9823137477

CA. Sushas Kelkar 9823901084For Registrations and Details Please contact

022-65568900

Tax Clinic on Mvat /CST Related IssueThe first time Vasai Branch Organizing Tax Clinic Program

Note : Participate can send their Query in Advance at Vasai Branch E-mail ID: [email protected]

Coaching Classes For CA Students

Particular CA-CPT CA-IPCC

Fees Per Student 8000 16000(BOTH GRP)

Approximate Commitment Date

Dec-2014 May-2015

Start & End Date For Classes

1st July 2014 to 31st Oct 2014

1st June 2014 to 28th Feb 2015

Timing 12.30 am to 5.00 pm (Every Day)

Mon to Sat - 7.00 am to 10.00 am Or 6.00 pm to 9.00 pm Sunday – 7 HRS

Amruta Building, IndraLok Phase-II, New Golden Nest Road, Bhayandar(East), Thane-401 105

Contact:-022-65568900/65568901, Email-Id:- [email protected]:- www.vasai-icai.org.

VASAI BRANCH OF WIRC OF ICAIPlanner Calendar 2014-2015


April May June July August September October November December January February March1 Tu 1 Th 1 Su 1 Tu 1 Fr 1 Mo 1 We 1 Sa 1 Mo 1 Th 1 Su 1 Su2 We 2 Fr 2 Mo 2 We 2 Sa 2 Tu 2 Th 2 Su 2 Tu 2 Fr 2 Mo 2 Mo3 Th 3 Sa 3 Tu 3 Th 3 Su 3 We 3 Fr 3 Mo 3 We 3 Sa 3 Tu 3 Tu4 Fr 4 Su 4 We 4 Fr 4 Mo 4 Th 4 Sa 4 Tu 4 Th 4 Su 4 We 4 We5 Sa 5 Mo 5 Th 5 Sa 5 Tu 5 Fr 5 Su 5 We 5 Fr 5 Mo 5 Th 5 Th6 Su 6 Tu 6 Fr 6 Su 6 We 6 Sa 6 Mo 6 Th 6 Sa 6 Tu 6 Fr 6 Fr7 Mo 7 We 7 Sa 7 Mo 7 Th 7 Su 7 Tu 7 Fr 7 Su 7 We 7 Sa 7 Sa8 Tu 8 Th 8 Su 8 Tu 8 Fr 8 Mo 8 We 8 Sa 8 Mo 8 Th 8 Su 8 Su9 We 9 Fr 9 Mo 9 We 9 Sa 9 Tu 9 Th 9 Su 9 Tu 9 Fr 9 Mo 9 Mo10 Th 10 Sa 10 Tu 10 Th 10 Su 10 We 10 Fr 10 Mo 10 We 10 Sa 10 Tu 10 Tu11 Fr 11 Su 11 We 11 Fr 11 Mo 11 Th 11 Sa 11 Tu 11 Th 11 Su 11 We 11 We12 Sa 12 Mo 12 Th 12 Sa 12 Tu 12 Fr 12 Su 12 We 12 Fr 12 Mo 12 Th 12 Th13 Su 13 Tu 13 Fr 13 Su 13 We 13 Sa 13 Mo 13 Th 13 Sa 13 Tu 13 Fr 13 Fr14 Mo 14 We 14 Sa 14 Mo 14 Th 14 Su 14 Tu 14 Fr 14 Su 14 We 14 Sa 14 Sa15 Tu 15 Th 15 Su 15 Tu 15 Fr 15 Mo 15 We 15 Sa 15 Mo 15 Th 15 Su 15 Su16 We 16 Fr 16 Mo 16 We 16 Sa 16 Tu 16 Th 16 Su 16 Tu 16 Fr 16 Mo 16 Mo17 Th 17 Sa 17 Tu 17 Th 17 Su 17 We 17 Fr 17 Mo 17 We 17 Sa 17 Tu 17 Tu18 Fr 18 Su 18 We 18 Fr 18 Mo 18 Th 18 Sa 18 Tu 18 Th 18 Su 18 We 18 We19 Sa 19 Mo 19 Th 19 Sa 19 Tu 19 Fr 19 Su 19 We 19 Fr 19 Mo 19 Th 19 Th20 Su 20 Tu 20 Fr 20 Su 20 We 20 Sa 20 Mo 20 Th 20 Sa 20 Tu 20 Fr 20 Fr21 Mo 21 We 21 Sa 21 Mo 21 Th 21 Su 21 Tu 21 Fr 21 Su 21 We 21 Sa 21 Sa22 Tu 22 Th 22 Su 22 Tu 22 Fr 22 Mo 22 We 22 Sa 22 Mo 22 Th 22 Su 22 Su23 We 23 Fr 23 Mo 23 We 23 Sa 23 Tu 23 Th 23 Su 23 Tu 23 Fr 23 Mo 23 Mo24 Th 24 Sa 24 Tu 24 Th 24 Su 24 We 24 Fr 24 Mo 24 We 24 Sa 24 Tu 24 Tu25 Fr 25 Su 25 We 25 Fr 25 Mo 25 Th 25 Sa 25 Tu 25 Th 25 Su 25 We 25 We26 Sa 26 Mo 26 Th 26 Sa 26 Tu 26 Fr 26 Su 26 We 26 Fr 26 Mo 26 Th 26 Th27 Su 27 Tu 27 Fr 27 Su 27 We 27 Sa 27 Mo 27 Th 27 Sa 27 Tu 27 Fr 27 Fr28 Mo 28 We 28 Sa 28 Mo 28 Th 28 Su 28 Tu 28 Fr 28 Su 28 We 28 Sa 28 Sa29 Tu 29 Th 29 Su 29 Tu 29 Fr 29 Mo 29 We 29 Sa 29 Mo 29 Th 29 Su30 We 30 Fr 30 Mo 30 We 30 Sa 30 Tu 30 Th 30 Su 30 Tu 30 Fr 30 Mo

31 Sa 31 Th 31 Su 31 Fr 31 We 31 Sa 31 Tu


RECENT CASE LAWS & OTHER DEVELOPMENT/AMENDMENTS

— Compiled by — CA. Archana Yadav | e-mail: [email protected]|9702477497

Corporate Guarantee – No Transfer pricing adjustments during Income Tax Assessment

Bharti Airtel Limited vs. ACIT (ITAT – Delhi): I.T.A. No.: 5816/Del/2012

Coporate Guarantee issued by a Company to third party on behalf of its associated enterprises is out ambit of transfer pricing regulations of Income Tax Act,1961. In a major relief to M/s Bharti Airtel Ltd , Delhi Income Tax Tribunal has held that issuance of corporate guarantee is not an international transaction u/s 92B since it does not have any bearing on profits, income, losses or assets of enterprise.

Facts of the case :

M/s Bharti Airtel had provided a corporate guarantee to Deustche Bank for its associated enterprises based in Sri Lanka for Rs. 20 crores guaranteeing a repayment of working capital facility not exceeding Euro 3.6 million.

The assessee’s contention was that since the assessee had had not incurred any costs or expenses on account of issue of such guarantee, and the guarantee was issued as a part of the shareholder activity, the same was issued for NIL consideration. However, based on market quote of such corporate guarantee the appellant in it transfer pricing study determined arm’s length commission for issuing such guarantee @ 0.65% p.a. of the guarantee amount and accordingly offered to tax.

The TPO relying on OECD guidelines which states that “an intra –group service would usually exist where the higher credit ratings were due to a guarantee by another group member”, was of the view that , by issuing the corporate guarantee, the appellant has benefitted its associated enterprise by increasing its credit rating. TPO applied the CUP method & determined ALP @2.68% plus a mark-up of 200 basis points. The decision of GE Capital Canada Inc Vs The Queen (2009 TCC 563) was also taken in consideration for the same while making the adjustment.

Delhi High Court view :

For the Explanation to Section 92B inserted from Finance Act,2012 which enlarges the scope of Section 92B , Delhi High Court was of the view that “ the provisions of Explanation to Section 92 B enlarge the scope of Section 92 B itself, even as it is modestly described as ‘clarificatory’ in nature, it is an issue to be examined whether an enhancement of scope of this anti-avoidance provision can be implemented with retrospective effect. Undoubtedly, the scope of a charging provision can be enlarged with retrospective effect, but an anti-avoidance measure, that the transfer pricing legislation inherently is, is not primarily a source of revenue as it mainly seeks compliant behaviour from the assessee vis-à-vis certain norms, and these norms cannot be given effect from a date earlier than the date norms are being introduced.”

Delhi High Court also commented on GE Capital Canada Inc Vs The Queen (2009 TCC 563) , case of Canandian Income Tax Law relied by TPO while making adjustments , wherein Delhi High Court stated that “Coming to the foreign decisions on the issue of ALP adjustments in guarantee commission, we have noted that in the case of GE Capital Canada Inc Vs The Queen (2009 TCC 563), the Tax Court of Canada has indeed dealt with ALP determination of the guarantee fees but then it was done in the light of their domestic law provisions which are quite at variance with the Indian transfer pricing legislation. Unlike elaborate wordings of Section 92 B of the Indian Income Tax Act, 1961 defining ‘international transaction’, Section 247 of the Canadian Income Tax Act only gives an inclusive definition which does not even really attempt to define the expression ‘transaction’. It is nobody’s case that the relevant legal provisions are in pari material (same subject matter/read together). We need not, therefore, deal with those foreign judicial precedents.

With above detailed view Delhi High Court held that “ When an assessee extends an assistance to the associated enterprise, which does not cost anything to the assessee and particularly for which the assessee could not have realized money by giving it to someone else during the course of its normal business, such an assistance or accommodation does not have any bearing on its profits, income, losses or assets, and, therefore, it is outside the ambit of international transaction under section 92B (1) of the Act.”


— Compiled by — CA. Haresh P. Kenia|e-mail:[email protected] |9821351838

Finance Bill 2014 - Interim Budget 2014-15

221 TAXMAN (st)49

Relevant extract of speech of shri P.Chidambaram ministry of Finance on February 17,2014 concerning Finance Budget 2014-15 and the clause wise finance bill as introduced in the lok sabha on February 17,2014 is available at above magazine. The object of Financed Bill is to continue exiting rate of income tax for F.Y.2014-15.

Double Tax Agreement-protocol –amending the conventions between India and United Kingdom of Great Britain and Northern Ireland

221 TAXMAN (st.)77

The notification No 10 dated 10/02/2014 gives protocol amending the conventions between India and United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital

The central government hereby directs that all the provisions of said protocol shall be given effect to in the union of India from 27/12/2013.This amends the notification No.GSR 91(E) dated 11/02/1994.

CBDT clarification on scope of Additional Income Tax on distributed income u/s 115R

DIRECT TAXES LAW UPDATE

221 TAXMAN (st.)76

The CBDT vide circular No.6/2014 dated 11/02/2014 clarified that additional income tax u/s 115R (2) of the act is to be levied on income distributed by way of dividend to unit holder of mutual fund/ specified companies and receipt for redemption/repurchase of units or allotment of additional units by way of bonus units would not be subjected to levy of additional income tax under that section. This clarification is issued as instructions to subordinate authorities. The object of issue of clarification is that some field authorities are taking view that Mutual Fund/Specified companies are required to pay additional income tax u/s 115R (2) not only income distributed by way of dividend but also payments made at the time of redemption/repurchase of units as well as at the time of allotment of bonus units to existing investors. The CBDT clarified that redemption/repurchase of units would not attract levy of tax u/s 115R (2) as such income is not of the nature of income “Distributed” to the unit holders and hence lies outside of the preview of the section. Further, the income so distributed is specifically exempt from the tax u/s 10(35) of the Act in the hands of the recipient. The recipient of such income is liable to pay capital gains tax if applicable on transfer of such units as per the relevant provisions of the act and should not be subject to additional income tax u/s 115R of the act.


— Compiled by — CA. Kunal Mangal | e-mail: [email protected]| 9869432770Re-Assessment U/s. 147 in relation to Bogus PurchaseInitiation of Reassessment U/s. 147 of the Income Tax Act, 1961 (‘the Act’) is not something which is a surprise for Trader or Manufacturer Assessees these days. Since, past few years there has been plethora of re-

opening cases which relates to the major issue of bogus purchases. Some of the products or articles which have been a major hit in such cases are iron & steel, pharmaceutical products, gems, jewellery & precious stones, dyeing & colour raw material etc. In India, states like Maharashtra, Gujarat, Rajasthan and West Bengal are the mecca of Income Tax cases pertaining to bogus purchases.Latest trend which one can see is the reopening of the Assessment by the Income Tax Officer on the basis of the information given by the Sales Tax Department. The information mainly contains the scanned copies of the statements/deposition/affidavits given by the suppliers before the Sales Tax Department and tabular information containing the purchase amounts. There are many cases where the Assessee has done no mala-fide business and all the documentary evidences to support the purchases like Purchase bills, Delivery challans, Transportation bills, Stock Register, Bank statements, Audit report, letters of confirmation of suppliers, Sales Tax return & Audit report etc. are submitted before the Assessing Officer (‘AO’). During the assessment proceedings almost all the notices U/s. 133(6) or 131 of the Act sent by the AO to the supplier returns un-served. When the Assessee is asked to produce the suppliers for verification of purchases, the Assessee in most cases is not able to produce them. Despite submitting all the evidentiary documents, the AO disallows the alleged bogus purchase and adds it to the income of the Assessee. With respect to this issue, I have made an attempt to lay down few judgments of Hon’ble Courts which can be useful to the Assessees while filing an appeal before the Appellate Authorities.Since, the AO disallows the alleged bogus purchases mainly on the basis of the statements/deposition/affidavits of the suppliers; it is paramount to know the validity of such statements.l Since, these statements are the scanned/duplicate copies of the

original statements; these statements are Secondary evidences as per Section 63 of the Indian Evidence Act, 1872. As per Section 65 of the Evidence Act, secondary evidence can be admitted as evidence only in the circumstances/conditions specified therein. The circumstances are as follows,(a) When the original is shown or appears to be in the possession

or power of the person against whom the document is sought to be proved, or of any person out of reach of, or not subject to, the process of the Court, or of any person legally bound to produce it, and when, after the notice mentioned in Section 66, such person does not produce it;

(b) When the existence, condition or contents of the original have been proved to be admitted in writing by the person against whom it is proved or by his representative in interest;

(c) When the original has been destroyed or lost, or when the party offering evidence of its contents cannot, for any other reason not arising from his own default or neglect, produce it in reasonable time;

(d) When the original is of such a nature as not to be easily movable;(e) When the original is a public document within the meaning of

Section 74;(f) When the original is a document of which a certified copy is

permitted by this Act, or by any other law in force in India to be given in evidence;

RECENT CASE LAWS & OTHER DEVELOPMENT/AMENDMENTS

(g) When the originals consist of numerous accounts or other documents which cannot conveniently be examined in Court and the fact to be proved is the general result of the whole collections.

Since, none of these conditions are fulfilled in this case; such statements/depositions can neither be admitted as evidence nor can be used against the Assessee.

l Hon’ble Jodhpur Bench of the Income Tax Appellate Tribunal in the cases of Income-Tax Officer. Vs Permanand (2006) 107 TTJ 395 and Jagdamba Trading Company vs. Income tax officer (2007) 107 TTJ 398 ITAT Jodhpur ‘SMC’ Bench has held that the statements made before the sales tax authorities which do not have any concern with the income-tax proceeding of the Assessee, have hardly any evidentiary value against the Assessee.

l Hon’ble Supreme Court in the case of ITO vs. Lakhmani Mewal Das, 103 ITR 437(SC) has held that a general confession by a person that all his transactions are bogus or that he has indulged only in bogus transactions cannot be basis for re-opening the assessment of an Assessee who has transactions with this person. This is more particularly so when the Assessee has not been specifically named in the confession. Similar view has been followed in the following judgments,- Shaf Broadcast Private Limited vs. Asst. Commissioner of

Income Tax (ITA No. 1819/Mum/2012, dtd. April 17, 2013).- S. P. Agarwalla v. ITO (1983) 140 ITR 1010 (Cal.).- Income Tax Officer v. Aggarwal Steel Traders (1994) 77 Taxman

95 (Chd. ITAT).- Income-tax Officer vs. Central Finance Co. [1982] 13 TTJ 248

(MAD).l One more peculiar point which is noticeable that many of these

depositions do not contain the signature and/or seal of the Officer before whom the supplier gave the deposition. So this point itself makes such depositions invalid and can neither be used in Income tax assessment nor in the Sales Tax Assessments. Also, for many suppliers there are no depositions. The ITO has only a visit report of the Sales Tax Investigating Officer wherein it is nowhere mentioned that the supplier was involved in the business of accommodation entries. So, when the Sales Tax Dept is not sure whether the supplier is a hawala dealer or not, how can ITO initiate assessment U/s. 147 of the Act.

l Various Courts have held that without affording opportunity of cross-examination, a statement recorded at the back of the Assessee will not partake of the nature of evidence against the Assessee and cannot be read/used against the Assessee. Since, in the current cases, the Assessee at most times do not get the opportunity to cross examine, the Assessee can certainly take help of the following judgments,- Mohanlal R. Daga v. Income Tax Officer (2005) 147 Taxman 28

(Mum ITAT).- Commissioner of Income Tax v. Pradeep Kumar Gupta (2008)

303 ITR 95 (Delhi).- Prakash Chand Nahta vs. Commissioner of Income-tax [2008]

301 ITR 134 (MP).- Heirs and Legal Representatives of Late Laxmanbhai S. Patel vs.

Commissioner of Income-tax [2010] 327 ITR 290 (GUJ).- Multitex Filtration Engineers (P.) Ltd. vs. Deputy Commissioner

of Income-tax, Circle-5(1), New Delhi [2007] 13 SOT 208 (DELHI).


PHOTO - GALLERY

Seminar on Valuation of Intangible Assets & Transfer Pricing held on 22.03.2014

Seminar On Bank Branch Audit Held On 16th March, 2014

Speakers

Vasai-Virar Cpe Study Circle

Group photo of Managing Committee with the WIRC & ICAI Trophy & Award.

Palghar CPE Study Chapter

Group photo of Managing Committee Meeting with the Past Chairman of Vasai Branch

(L-R) Preksha Jain (Secretary & Treasurer – Vasai Branch), CA. Shrenik Ajmera (Speaker), CA. Dayaram Paliwal (Past Chairman – Vasai Branch), Surbhi Jain (Vice Chairperson-WICASA) & Neha Chandak (WICASA Committee) addressing at Inauguration of Seminar on Valuation of

Intangible Assets & Transfer Pricing

(L-R) CA Hemant Churi, CA Bharat Dhonde ( Convenor and Speaker), CA Suhas Kelkar ( Speaker), CA Madhukar Karve and CA Kiran Shinde

(Dy. Convenor) taken Group Photo at Seminar on Formation, Accounting & Taxation of TrustSeminar on tally ERP

ParticipantCA K.V. S.

Shyam SunderCA Nitant Trilokekar CA. Anjali Gupta CA. Vipul Choksi

CA. Kishor Vaishnav (Chairman-Vasai Branch) Presenting Floral Welcom to CA. Nilesh Vikamsey (Central Council Member)

Seminar on co-op housing societies

(L-R) CA. Dayaram Paliwal (Past Charman-Vasai Branch), CA. Preksha Jain (Secretary & Treasurer-Vasai branch), CA. Nilesh Vikamsey (Central Council Member), CA. Kishor Vaishnav (Chairman-Vasai Branch), CA. Deepak Bansal (Convenor-Bhayander CPE Study Circle)

at Inauguration Session

Participants

The Institute of Chartered Accountants of India Vasai Branch of WIRC NewsletterThe Institute of Chartered Accountants of India Vasai Branch of WIRC Newsletter PBApril 201412 April 2014

PHOTO - GALLERY

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Students at IPPC & Final Mock Test Winner Team of CA. Arts & Sports Circle of Pune Branch

Vasai Branch Committee Members Felicitating Newly Qualified CA held on 16th March 2014

Mock Test Cricket Tournament

Group Photo of Newly Qualified CA CA. Nilesh Vikamsey (Central Council Member) Presenting Mumento to CA. Pratik Agarwal 28th Ranker

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