NOVEMBER 2015 -...

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2015 NOVEMBER Pune VOL - IV - Issue No. 11

Transcript of NOVEMBER 2015 -...

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2015

NOVEMBER

Pune VOL - IV - Issue No. 11

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Never expect things to happen, struggle and make them happen. Never expect yourself to be given a good value, create a value of your own.

2News Letter Pune Branch of WIRC of ICAI/November 2015

CA. Milind Kale For Being Elected As

The Chairman Of The Cosmos Co-op. Bank Ltd.CA. Milind Kale

atular tg ion no sC !!!atular tg ion no sC !!!

CA. Shekhar SaneSpeaker- Seminar on CENVAT Credit

� An Overview

CA. Kusai GoawalaSpeaker- Lecture series on Companies Act & Seminar on Significant Accounting Policies

CA. B.B.ManeSpeaker - Lecture Series on Audit under

Maharashtra Co-operative Act

CA. Yogesh PoddarSpeaker - Seminar on MIS Report

Using Tally & Ms-Excel

Participants for Seminar on MIS Report Using Tally & Ms-Excel

CA. Dilip PhadkeSpeaker - Seminar on Preparation of

Vat Audit & Way to GST

CA. Parag Kulkarni

PROGRAMME FOR YOUNG MEMBERS

Panelists :- CA. Shashank Karnad, CA. Peshwan, CA. Harisekar, CA. Tirtharaj Khot, CA. Pramod Jain

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Dear Members,

Warm greetings of the season & best wishes for a very bright &

delightful DIWALI for you and your family & friends!

The significance of festivals has been an important passageway to the

most profound aspects of life. Festival is a tool to bring life to a state of

exuberance and enthusiasm. In one of my general surfing on net one

article amused me in which it was stated that in the ancient erawhen

our ancestors were mainly agriculturiststhe whole culture was in a

state of celebration; there used to be a festival every day of the year. If

today was ploughing day, it was a kind of celebration. Tomorrow was

planting day, another kind of celebration. Day after tomorrow was

weeding, that was also a celebration. Harvesting, of course, is still a

celebration. Nevertheless, with times changing and our daily routines

running at the rocket rapidity we now celebrate very few festivals in

the larger social context.

After the hard and long working hours of the last couple of months its

celebration time for all of us as the joyful and dazzling festival of lights

is just round the corner. May this festive season fetch-in health and

happiness for everyone and light-up every dark corner with peace and

prosperity.

Back to the Branch activities during October, 2015 the activities for the

members' included Seminar on CENVAT Credit � An Overview;

Seminar on Preparation of Vat Audit & Way to GST; Lecture series on

Companies Act-2013; Seminar on Significant Accounting Policies;

Lecture Series on Audit under Maharashtra Co-operative Act; Seminar

on MIS Report Using Tally &Ms-Excel; Programme for Young CA

Members; Workshop on Advanced Power Point; post-graduation

Certif icate Course on Concurrent Audit of Banks; Open

forum/discussion on Tax Audit Extension 2015: What we learnt?;

Seminar on Transfer Pricing � Important Developments (including

BEPS); &Seminar on Challenges of Recent Recession.

The programmes conducted for students covered school level Debate

Competition; Seminar on How to face CPT Exam?;Motivational

Lectures; Series of seminar on income tax & transfer pricing; Mock

Test for Final & IIPC Students.

As usual the forthcoming programmes are being planned; there will be

'Investor Awareness Programme' for members as well for public at

large during last week of November, 2015. All the forthcoming

programme details will be uploaded on Branch website from time to

time, so request you all to keep visiting our website www.puneicai.org.

There is one unusual event planned which will break the monotony of

the professional work routines of the CA members and will provide

them an opportunity to bring out & present their hidden artistic talents

of performing art viz. 'DRAMA'. Yes, the Branch has organized for the

first time from 11th to 13th Inter-Firm One Act Play Competition

December, 2015. The details of the competition are already uploaded

on Branch website. I appeal to the members to please visit the website

and register for this competition at the earliest possible date.

It is observed that the dedicated email id [email protected]

opened up for the convenience members and students is not yet used

widely. So far the tickets generated are 178 only which are answered

in given time frame by the Branch officials. I appeal once again to use

this facility extensively for emailing your query/enquiry.

I conclude this communiqué with the best wishes for you and your

family for cheerful celebrations of Diwali and a prosperous & fulfilling

year ahead.

Thanking you. With best regards�..!

It's not sure whether success gives happiness or not, but a happy mind can always lead to success.

Plot No. 8, Parshwanath Nagar, CTS No. 333, Sr. No. 573, Munjeri, Opp. Kale hospital, Near Mahavir Electronics, Bibwewadi, Pune 411 037

Tel: (020) 24212251 / 52Web: www.puneicai.orgEmail: [email protected]

PUNE BRANCH OF WIRC OF ICAI

Chairman Communiqué

3News Letter Pune Branch of WIRC of ICAI/November 2015

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Luck is like sand in hands. It will sneak out through fingers, no matter gripped firmly or held loosely. Only hands in the praying posture can save it.

4News Letter Pune Branch of WIRC of ICAI/November 2015

1st Nov, 2015Seminar on Internal Financial Controls ICAI Bhawan Bibvewadi, Pune-37

9:30 AMTo

5:30 PMRs. 800/-

6th,7th & 8th Nov, 2015

Workshop on Way ahead to Service Tax and VAT after GST Implementation

ICAI Bhawan Bibvewadi, Pune-379:30 AM

To5:30 PM

Rs. 1800/-

11th ,12th & 13th Dec, 2015

Inter-Firm One Act Play Competition

Jawaharlal Nehru Auditorium, Ghole road, Pune

5 PMTo

8 PMRS. 3000/-

6 Hrs

18 Hrs

NA

COMPLIANCE CALENDAR FOR NOVEMBER - DECEMBER, 2015

15th November, 2015 TDS certificates issue for quarter ended September, 2015 - Govt. deductors - Forms 16A/27D

PF epayment of October, 2015

21st November, 2015 ESI payment of October, 2015

MVAT and CST return for October, 2015 -Form 231-235, CST 1

MVAT and WCT TDS payment of October, 2015

22nd November, 2015 Issue TDS certificate u/s 194-IA for October, 2015 TDS deducted - Form 16B

30th November, 2015 Filing Audit report u/s 92E - Form 3CEB

Filing Income tax returns - Assessees with Transfer pricing provisions applicability - ITR 4/5/6

Filing Wealth Tax return - Assessees with Transfer pricing provisions applicability - Form BB

Excise Annual return - Units paying duty > Rs.1 crore(CENVAT + PLA) - ER-4

Filing Non XBRL Balance sheet - Form AOC 4 CFS

Profession Tax and return for October, 2015 - MTR-6, FORM IIIB

6th December, 2015 Service tax epayment of November,2015 - GAR-7

7th December, 2015 TDS/TCS payment of November, 2015 - ITNS 281

Submitting Form27C received in November, 2015 to IT Commissioner

10th December, 2015 Excise return for November, 2015- ER-1/2/6

STPI MPR Performance report for November, 2015

15th December, 2015 Advance Income tax payment - Companies 75%, Others-60%; Challan 280

PF epayment of November, 2015

Compiled by CA. Amruta Saswadkar, Pune. [email protected]

DATE PARTICULARS

For Upcoming Events please keep visiting www.puneicai.org

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Do not criticize, everybody is doing some good, but give what little you can to improve the human condition around you.

Do not curse darkness, but bring in a little light that is the surest way to destroy darkness.

5News Letter Pune Branch of WIRC of ICAI/November 2015

ELECTION TO THE TWENTY THIRD COUNCIL AND TWENTY SECOND REGIONAL COUNCILS

�SINGLE TRANSFERABLE SYSTEM OF VOTING � AN APPRISAL�The next elections to the Council and Regional Councils of the Institute will be held on 4th and 5th December, 2015 at Ahmedabad, Bangalore, Chennai, Delhi/New Delhi, Gurgaon, Hyderabad, Jaipur, Kolkata, Mumbai, Pune, Surat and Thane and on 5th December, 2015 at all other places where polling booths have been set up. The members especially those who are new would, naturally, be interested in knowing how the �single transferable vote� system under which the elections are held operates. The broad details of the system are given below:-

(1) Each voter has only one vote for election to the Council and one vote for election to the Regional Council. The voter, in order to cast his vote, shall place on his ballot paper the number 1 (in Arabic or Roman numerals, or in words) against the name of the candidate for whom he desires to vote, and may, in addition, place on his ballot paper the number 2, or numbers 2 and 3, or the numbers 2, 3 and 4 and so on opposite the names of other candidates in the order of his preference. A voter has as many preferences as the total number of candidates from that Regional Constituency/ Regional Council. However, for the purpose of facilitating the process of election by avoiding fractions, each valid vote is notionally considered to be of the value of 100 so that if a part of the vote has subsequently to be transferred from one candidate to another (next in the order of preference), it does not become necessary to resort to fractions, which would make the counting cumbersome.

(2) At the time of counting of votes, the covers containing the postal ballot papers are opened and the voting papers are separated. To these are added the voting papers taken out from the ballot boxes used at different polling booths. The ballot papers are, in the first place, examined and invalid papers are rejected and excluded from the process of counting. The total value of the valid votes is then calculated by multiplying the number of such votes by 100, as mentioned above. This total value is then divided by the number of vacancies increased by one, and the quotient increased by one gives the value that is required for any candidate to get elected. This figure is termed as the �quota�. Thus, if in a constituency, eight members are to be elected and there are 4,500 valid votes, the quota will be:-

4500 x 100

---------------- + 1 = 50,001

8 + 1

In other words, a candidate should get 50,001 votes to get elected. The addition of one to the quotient is explained by the fact that if it is not done, there is a possibility that more candidates may get elected than the number of vacancies.

The first Count(3) After working out the �quota�, the votes are sorted out and divided into parcels according to the candidates for whom the first preference is marked on the respective votes. The value of the first preference votes received by each candidate is then worked out and the process is known as the first count.

(4) All the candidates, the value of whose votes is equal to or greater than the quota, are declared elected. The votes of the candidates who obtain exactly the quota are set aside as there is no question of transfer of any surplus from those votes.

Transfer of Surplus and Subsequent Counts(5) Then starts the process of transfer of the surplus values of the votes of those candidates who have secured more than the quota at the first count. Their cases are taken one by one in the strict order of the value of their votes, the largest surplus being dealt with first. In case no candidate obtains the quota in the first count, exclusion of candidates is resorted to (see para 12).

(6) The votes of the candidate whose surplus is to be transferred are scrutinized and all those votes which are capable of being transferred (viz., on which the next preference is marked for a candidate, who has not already been elected, or if the next preference is marked for an elected candidate, the preference marked next to that and so on) are separated. The remaining votes which are not capable of further transfer are set aside and treated as exhausted.

(7.1) Before the votes are transferred to the candidates marked next in preference, a new value of each vote is worked out. This value is arrived at by dividing the total surplus of the candidate by the number of votes to be transferred, the remainder being ignored, subject to the condition that the new value does not exceed the original value at which the vote was received by the candidate whose surplus is being transferred (viz., 100 in the case of first preference votes).

(7.2) Thus, if after the first count, a candidate has a surplus of 2,962 and there are 65 votes in his parcel which are capable of being transferred, each vote will be transferred at the new value of (2,962÷65) 45. The remainder of 37 [2962-(65x45 = 37)] is treated as loss in value.

(8) The votes under transfer are then divided into parcels according to the candidates to whom they are to be transferred. The parcels of the transferred votes are also added as sub-parcels to the parcels of original (viz., first preference) votes of the candidates concerned. The total value of the votes going to a particular candidate is obtained by multiplying the new value of each vote by the number of votes going to him and is added to the value of his original votes. The result of the transfer is then struck out and the candidates who obtain at this stage the �quota� are also declared as elected.

(9) This process of transfer of the surpluses of the elected candidates continues till the required number of candidates are elected or till all the surpluses have been dealt with.

(10) As already stated, the surpluses are transferred in the strict order of their value, but all surpluses arising at an earlier count are disposed of before the surpluses arising at subsequent counts are taken up.

(11) In the case of transfer of surplus of a candidate who was not elected at the first count but only as a result of transfer of some votes to him at a subsequent count, since the surplus arises out of the last sub-parcel of his votes, it is only the last sub-parcel that is scrutinized and the unexhausted votes contained therein which are capable of further transfer are revalued, in the manner stated in para 7.1 and 7.2 above, and then transferred to the candidates marked next in order of preference. If there is no vote in the last sub-parcel which is capable of further transfer, the whole of the surplus is treated as loss in value.

Exclusion of Candidates(12) When there is no surplus left for transfer and the number of candidates elected is less than the number of seats, the

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Be bold when you lose, be calm when you win. Changing the face can change nothing, but facing the change can change everything.

UNEXPLAINED JEWELLERY CA. Bhupendra Shah [email protected]

1. Background: What is the date of acquisition of unproved jewelry has always been a bone of contention. Now the said issue is settled by the Bombay High Court .

2.Unexplained money, etc. Section 69A provides that, � Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.�

3. In one case a search action under section 132 on 19-3-1986 was carried out at assessee's premises where a locker key belonging to assessee's aunt was seized. On 28-7-1986, the locker of assessee's aunt was opened by the revenue. The jewellery valued in the aggregate of Rs. 2.53 lakhs was found in her locker from which jewellery valued at Rs. 2.41 lakhs was claimed to be belonging to the assessee. The assessee submitted that said jewellery was received as gift by him from one 'D'.The Assessing Officer did not accept the assessee's

explanation of source of the jewellery found. Consequently, he added the cost of the jewellery as deemed income under section 69A.The Commissioner (Appeals) upheld Assessing Officer's order. On appeal, it was submitted by assessee that the addition of deemed income under section 69A to be made on account of jewellery found on opening of the locker on 28-7-1986 could only be made in the assessment year 1986-87 and not for the relevant assessment year. However, the Tribunal upheld Assessing Officer's order. Section 69A provides that where in any financial year, an assessee is found to be the owner of any jewellery which is not recorded in the books of account and the explanation offered by assessee about the nature and source of acquisition is not satisfactory, then value of such jewellery would be deemed to be income of the assessee in the year in which the assessee was found to be the owner of the jewellery. Admittedly, the locker key which was seized by the department during the course of the search on 20-3-1986, did not belong to the assessee. Thus, on that date the quantum of jewellery in the locker of, aunt of assessee which belonged to the assessee could not be ascertained/forecast. The normal presumption would be that the jewellery in the locker would belong to her and not to another person. Therefore, it is only on opening of the locker on 28-7-1986, did the revenue find the jewellery and also that some part thereof, belonged to the assessee as claimed by the assessee and as also declared by in her assessment proceedings as recorded in the order of

6News Letter Pune Branch of WIRC of ICAI/November 2015

exclusion of candidates is resorted to. The process of exclusion comprises the transfer of votes (both original and transferred) of the candidate to be excluded to the candidates marked next in order of preference and who have not already been elected or excluded.

(13) The candidate, the value of whose votes is lowest at the time of exclusion, is first excluded.

(14) The parcels and the sub-parcels of the votes of the candidates to be excluded are taken up one by one in the order in which they were received and the votes contained in each parcel and sub-parcel which are capable of further transfer are transferred to the candidates marked next in order of preference at the same value at which they were received by him. Each parcel and sub-parcel is dealt with separately. It is only after the parcel and all the sub-parcels have been duly transferred that count is completed.

(15) If, as a result of transfer of votes of a parcel, or a sub-parcel, any other candidate secures the quota and is elected, the count in progress is completed but no further votes are transferred to the elected candidate from the subsequent sub-parcels. The following example would make it clear. Let us suppose that the votes of candidate �A� who is to be excluded consist of the original parcel and two sub-parcels subsequently transferred to him. Suppose as a result of the transfer of votes contained in the original parcel, another candidate �B� gets elected. Then the remaining two sub-parcels will be dealt with one by one but no vote therefrom will be transferred to candidate �B� and such of the votes as would have normally gone to �B� will now be straightaway transferred to the candidates marked next to �B� in the order of preference on the respective votes.

(16) The process of exclusion continues till the requisite number of candidates has been elected or the number of candidates left in the field (i.e., the continuing candidates) is equal to the number of vacancies still unfilled.

(17) If, as a result of any exclusion, another candidate gets the quota and is thus elected, no further exclusion is done till the surplus of the elected candidate has been transferred and it becomes necessary thereafter to again resort to exclusion. In other words, a candidate is to be excluded only when there is no surplus to be transferred.

(18.1) If, at any time during the course of counting of votes, the number of candidates remaining in the field is reduced to the number of vacancies not yet filled, all those candidates are declared as elected without resorting to any further calculations.

(18.2) It, therefore, follows that a candidate may be elected even though he does not get the required quota.

(19) If at a particular time only one vacancy is left unfilled and the value of votes (both original and transferred) of anyone continuing candidate at that time exceeds the total value of votes of all the other candidates left in the field, including the surplus of any candidate not yet transferred, that candidate is declared as elected.

(20) When after counting of votes, a tie is found to exist between candidates, regard is given to the original votes and if the original votes are also equal, then the process of draw of lots is resorted to. In case of tie amongst more than two candidates, the candidate whose slip is picked up is excluded from the poll. If the tie is between two candidates, the candidate whose slip is picked remains in the poll or declared as successful, as the case may be.

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Success is the result of a delicate balance between making things happen and letting things happen.

7News Letter Pune Branch of WIRC of ICAI/November 2015

TRANSFER PRICING ALERT � INDIA MOVING TOWARDS GLOBAL PRACTICES IN TRANSFER PRICING

CA. Meghnand [email protected]

1. Use of multiple year data & range conceptWith the intention of aligning transfer pricing regulations in India with international practices and reducing litigations on some of the repetitive issues considerably, Finance Minister of India, Mr. Arun Jaitley, in his Budget speech during July 2014, had announced the introduction of the 'range concept' for determining the arm's length price (ALP) and allowing the use of multiple year data for comparability analysis.

Subsequently, during May 2015, the Central Board of Direct Taxes (CBDT) has released draft rules of the proposed application of range concept and use of multiple year data for computation of ALP, for public comments.

With the above backdrop, the CBDT has issued the much awaited Notification on the above aspects on 20th Oct, 2015.

The new mechanism will be applicable for computation of ALP of international transactions and specified domestic transactions undertaken on or after 1 April, 2014.The key facets of the notified mechanism are as follows:

A. Use of multiple year and weighted average data Eligible methods for application The multiple year data would be used in cases where the method used for determination of ALP is Transactional Net

Margin Method (TNMM), Resale Price Method (RPM) or Cost plus Method (CPM).

Current year is still of importanceThe draft rules proposed that if in two out of three years (current year and preceding two consecutive years), a comparable company satisfies the comparability criteria, then weighted average data for those 2 years will be considered for transfer pricing analysis.

However, with a major deviation in above approach, the notification provides that if a company is not considered to be a comparable for current year (FY 2014-15, as easy reference), then it will not be considered as comparable company, without looking at whether it satisfied comparability criteria for past 2 years or not. If the data for current year is not available for a company, data pertaining to the immediately preceding year can be considered to determine whether it is comparable or not. If yes, data for third preceding year will be evaluated. In furtherance, weighted average financial details of the company for the aforesaid years would be considered in the dataset.

The notified rules also provides that if during the assessment proceedings, data for current year become available for that company and it is considered to be non comparable for the current year, then that company will be removed from the comparison set, irrespective of the fact that it satisfies the

her Assessing Officer. Thus it is only in the previous year relevant to the assessment year 1987-88, i.e., financial year 1-4-1986 to 31-3-1987 that the assessee was found to be owner of the jewellery in the locker. Therefore admittedly the jewellery was found and seized only on the opening of the locker on 28-7-1986. The assessment year in the present case is correctly the assessment year 1987-88. The explanation was not acceptable for the reason that at no point of time it was claimed that the jewellery found in the locker was sourced from the cash received by assessee. The case of assessee has always been that the jewellery found in the locker was a gift received by him on 27-1-1986 from his aunt. This theory of gift being received from his aunt was not accepted by the authorities under the Act including the Tribunal. Thus the deemed income being the cost of jewellery found in the locker of aunt who was being assessed to tax in assessment year 1987-88 cannot be found fault with. It was ultimately held that, �we have considered the rival submissions. Section 69A of the Act provides that where in any financial year, an assessee is found to be the owner of any jewellery which is not recorded in the books of account and the explanation offered by assessee about the nature and source of acquisition is not satisfactory, then value of such jewellery would be deemed to be income of the assessee in the year in which the assessee was found to be the owner of the jewellery. Admittedly, the locker key which was seized by the department during the course of the search on 20 March 1986, did not belong to the appellant. Thus on that date the quantum of jewellery in the locker of Mrs. Malani which belonged to the

appellant could not be ascertained/forecast. The normal presumption would be the jewellery in the locker of Mrs. Malani would belong to her and not to another person. Therefore, it is only on opening of the locker of Mrs. Malani on 28 July 1986, did the revenue find the jewellery and also that some part thereof, belonged to the appellant as claimed by the appellant and as also declared by Mrs. Malani in her assessment proceedings as recorded in the order of her Assessing Officer at Kolkata on 25 November 1986. Thus it is only in the previous year relevant to the Assessment Year 1987-88 i.e. financial year 1 April 1986 to 31 March 1987 that the appellant was found to be the owner of the jewellery in the locker belonging to Mrs. Malani. The three decisions relied upon by the appellant do not have any application to the present facts. The basic difference in all the cited cases to the present facts is that the locker key which was seized on 20 March 1986 did not belong to the appellant but to one Mrs. Malani and therefore it was only on the opening of her locker that the question of finding jewellery in the locker and if found, the ownership of such jewellery would arise for determination. In all the cited cases the offending goods/money etc was found in the possession of the party in whose hand Section 69A of the Act was applied.�

4. Conclusion: In terms of section 69A, assessee would be treated in possession of jewellery, from date of opening of locker, i.e., when jewellery was found and seized by revenue, and would be added to his income accordingly.[2015] Ajay Dhoot [62 taxmann.com 51 (Bombay)]

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There is only one person who is capable to set limits to your growth. It is you. You are the only person who can influence your happiness, success and realization.

8News Letter Pune Branch of WIRC of ICAI/November 2015

comparability for past 2 years. Further, new comparables can be added during the assessment stage based on the comparability of current year data, even if that data was not available during the transfer pricing analysis carried out by the taxpayer. In a way, the current year still remains of paramount importance and use of past years data is primarily for the calculation of weighted average margins of the company and not as a factor for selecting the company as a comparable.

B. Use of range mechanism Eligible methods for application The �range� concept shall be used in cases where the method used for determination of ALP is CUP, TNMM, RPM or CPM.

Number of comparables to apply range mechanismIn the draft rules, CBDT proposed that the range concept would apply only where nine or more companies are selected as comparable, and where inadequate comparable companies exist, the arithmetic mean concept would continue to apply. However, the CBDT has relaxed this norm by reducing the minimum number of comparable companies from 9 to 6 or more companies. This is a welcome change proposed as there are industries in India such as manufacturing, specialised services etc. wherein it would be difficult for the Indian taxpayer to identify a large comparable set.

Range specificationThe data points lying within the 35th to 65th percentile of the data set series would constitute the arm's length range. The CBDT has broadened the allowed range from 40/60 percentile to 35/65 percentile.

In case transfer price is out of arm's length rangeIf the price at which the international transaction or the specified domestic transaction has been undertaken, is outside the arm's length range, then the arm's length price shall be taken to be the median of such data set.

C. Use of arithmetic meanAs per the notified rules, when the numbers of comparables are lesser than 6, then instead of the range, the arithmetical mean of the values included in the data set shall be considered to arrive at the ALP along with allowable deviation not exceeding 3% (as may be notified by the CBDT) from transfer price.

Specifying the use of multiple year data and range mechanism are welcome steps by the India Government at a conceptual level. It aligns with the intention of India Government to streamline transfer pricing matters in comparison with the global practices. However, the practical application of the rules notified by the CBDT in this regard could pose further challenges and may result into increased uncertainty for the taxpayers.

Companies frequently face the problem that comparable data for the current year is not available during the transfer pricing analysis and therefore, use of past years data becomes critical. However, considering the notified rules, addition or deletion of comparables based on data available after the due date of transfer pricing compliances will put taxpayers in a uneven scenario.

2. Internal guidelines for Assessing Officer ('AO') / Transfer

Pricing Officer ('TPO') to conduct Transfer Pricing assessmentsThe CBDT has recently published revised internal guidelines for the tax officers with respect to assessing transfer pricing matters. The revised guidelines will replace the initial guidelines issued by the CBDT way back in the year 2003, soon after the introduction of specific transfer pricing regulations with effect from 1 April 2002 and further clarifications issued from time to time.

As per the revised guidelines the selection of transfer pricing assessment cases shall be based on risk parameters. It is worthwhile to note that in the earlier years, volume based criteria was used, such that if the international transactions with associated enterprises exceed a particular monetary limit (INR 50 million and then practically increased to INR 150 million), the transfer pricing matters would be mandatorily referred to the specialised transfer pricing officer for detailed scrutiny.

Further, the CBDT directed that each transfer pricing officer shall not be assigned more than 50 cases to scrutinize during the audit cycle.

This move is in line with recommendations of the Tax Administration Reform Commission (TARC) made in May 2014. TARC had recommended the need for broad-based selection criterion for risk assessment. The earlier mechanism of selecting cases based on threshold limits were resulting in overburdening the tax authorities with significant amount of irrespective the level of transfer pricing risks in some of those cases.

With the revised guidelines for selection of cases for transfer pricing audit based on risk parameters, India is evolving towards global practices in tax administration. The updated guidance will result in more targeted and effective use of limited tax administration resources. One can also expect the audit proceedings to be more detailed and intensive, especially given that senior officers are expected to handle a limited number of complex cases.

While the updated guidance does not identify the risk parameters that would be considered, taxpayers may need to keep in mind the typical factors that may suggest a transfer pricing risk in the Indian context, such as payments for intra group services and use of intangibles, significant transactions with related parties in low tax jurisdictions, business restructurings, loss making operations, significant marketing spend, etc.

The author, Meghnand M. Dungarwal is a Transfer pricing and International-tax consultant and can be reached at [email protected].

OBITUARY

CA. Vijay Vasant KenjaleMembership No. : 035381Date of Birth : 11th September, 1948Date of Demise : 25th October, 2015May GOD grant eternal peace to his noble soul!

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Change does not happen when circumstances improve. Change happens when you decide to improve your circumstances.

9News Letter Pune Branch of WIRC of ICAI/November 2015

The Government's determination to introduce GST is palpable from the fact that in the month of October 2015, the Government has placed in the public domain four reports on key business processes i.e. registration, payment, refunds and returns in GST regime. From these four reports one can fairly gauge the broad structure and process in GST regime.

This article analyses these reports in detail in the following paras.

1. Report on GST Registration

This report provides that the taxable person in the GST regime will be required to take State specific single registration for Central GST (CGST), Integrated GST (IGST) and State GST (SGST) purposes (multiple registrations in a State for business verticals would also be permitted) . In GST regime the registration number would be a PAN based 15 digit alpha numeric registration number.

Registration would be granted through common GST portal. Applicant will be required to apply online and within three working days the State and Centre should raise query or reject the application. However, in case any of the authority neither rejects the application nor raises a query during this period, then the registration would be deemed to have been approved by both the authorities and the GST Common Portal will automatically generate the registration certificate.

It appears from the report that there will be specific provisions for migration of existing registrations to GST regime. This migration process is expected to start sufficiently in advance to ensure smooth transition.

As regards effective date for registration the report states that the date of registration will be the date of application in case the registration is obtained within time limit prescribed by GST law. In case there is a delay in applying for registration, the same could result in denying of GST creditson procurements prior to registration.

Report also suggests that voluntary registration permissible and casual dealers (for conducting a business for a limited period in a State) will have to obtain registration and pay taxes. Further, irrespective of turnover, a person engaged in inter-State supplies or a person liable to GST under reverse charge would be require to compulsory obtain registration.

The current concept of Input Service Distributor is also

expected to continue for distributing the credit of GST paid on 'services' proposed to be used at multiple locations which are separately registered. The report recommends that the GST law drafting committee to consider similar provisions for distributing credits on 'inputs'.

The report also provides copy of GST registration application form which contains 21 fields requiring various details from the applicant. Interestingly, in the form has listed out 15 business premises /activities wherein registration could be obtained such as manufacturing, wholesale, retail, leasing, Works contract, Special Economic Zone (SEZ) etc.

2. Report on GST Payments

This report provides that the taxable person will be required to make payment of CGST, SGST, IGST and Additional Tax through internet banking. Over the counter (OTC) payment could be permissible only for payments up to Rs. 10,000/- per challan.

For making e-payment of GST taxpayer will be required to access Goods and Services Tax Network (GSTN) for generation of the Challan where basic details (such as name, address, email, mobile number and GST registration number) of the tax payer will be auto populated in the challan. Once the taxpayer chooses a particular bank for payment of taxes, GSTN will direct him to the website of the selected bank wherein taxpayer will make the payment using the USER ID and Password provided by the bank to enter into the secured e- banking area of his bank.

In the challan the taxpayer will have to use separate accounting codes for making payment of CGST, SGST, IGST or Additional Tax. Further, accounting codes will also be provided for interest, penalty, fees or others payments.

Interestingly, it is specifically provided that the payment of GST could be made by tax payer himself or by his Authorised representative on his behalf.

3. Report on GST refunds

This report provides that in ten situations such as exports, excess payment by mistake, refund of pre-deposit, refund to international tourists etc wherein the taxpayer can claim refund of GST paid.

For export of goods, the report suggests that the exporter should procure the goods on payment of appropriate GST and then claim refund of the same from respective Governments. It is also recommended that the option to procure duty free inputs for

REPORTS BRING CLARITY ON KEY BUSINESS PROCESSES IN GST REGIME CA. Pritam Mahure [email protected]

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Two rules for peaceful life: Depression in failure should never go to heart, and Ego in success should never go to brain.

10News Letter Pune Branch of WIRC of ICAI/November 2015

exported goods should not be available in the GST regime. As regards, deemed exports, the report suggests that deemed exports should be treated at par with exports.

The report also suggests that refund form should be electronic format and refunds should be granted in a time bound manner and delay in processing of refund should enable assessee claim refund for such delay.

4. Report on returns in GST regime

Every registered assessee will be required to file returns (including NIL returns). However, persons exclusively dealing in exempted / Nin-rated or non-GST goods or services would neither obtain registration nor file returns. It is pertinent to note that there could be 8 GST returns as under:

3 returns - Outward supplies (GSTR 1), Inward supplies (GSTR 2) and Monthly return (GSTR 3)

Return for compounding dealers (GSTR 4)

Return by non-resident tax payer (GSTR 5)

Input Service Distributor (ISD) return (GSTR 6)

Tax deducted at Source (GSTR 7)

Annual return (GSTR 8)

It is pertinent to note that GSTR-3 would be entirely auto-populated through GSTR-1 (of counterparty suppliers), own GSTR-2, ISD return (GSTR-6) (of Input Service Distributor), TDS return (GSTR-7) (of counterparty deductor), own ITC Ledger, own cash ledger, own Tax Liability ledger. However, the taxpayer may fill the missing details to begin with.

As there are multiple returns, for most of the organisations, in

GST regime, compliances are expected to increase dramatically. Take example of a service tax assessee, who currently files 2 returns on an annual basis. Now, in GST regime, Service tax assessee could be required to file as many as 61 returns (5 returns per month plus 1 annual return)!!! Thus, in Human Resource (HR) department and Chartered Accountants will have to anticipate the increase (and decrease in certain cases) in the manpower and plan accordingly.

Way forward

The aforesaid reports also suggest continuation of reverse charge mechanism (including partial reverse charge), pre-deposit, proportionate credit in case of mixed supplies (taxable and exempt) etc. Thus, the taxpayer should be rest assured for nostalgic feelings and goose bumps if they stumble upon few re-produced excise and service tax provisions in GST regime as well!

However, this step of the Government to invite comments from the public at large,is commendable and shows Governments conscious efforts for introducing GST. So, in days to come, India can hope for a Good and Simple Tax regime!

(Readers can also view videos on the aforesaid topic by visiting youtube.com and searching the term 'Pritam Mahure')

CA. Dr. Ashokkumar Pagariya, Nominated As The Chairman Of

Direct Taxes Committee Of MACCIA, Mumbai.CA. Dr. Ashokkumar Pagariya

atular tg ion no sC !!!atular tg ion no sC !!!

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A single moment of misunderstanding is so poisonous that it makes us forget within a minute, the hundreds of lovable moments spent together; so always stay calm and think positive.

11News Letter Pune Branch of WIRC of ICAI/November 2015

ELOCUTION CONTEST FOR CA STUDENTS 2015-16

ParticipantsCA. D. S. Rawat, Speaker

SEMINAR FOR CA STUDENTS ON THE TOPIC �ACCOUNTING STANDARDS�

STUDENTS ACTIVITY

Landlord/s interested in offering the appropriate class rooms, may please contact Pune Branch office, Students' Section at Plot No. 8, Parshwanath Nagar, Munjeri, Opp. Kale Hospital,

Bibwewadi, Pune 411037 Tel. 020-24212251/52 | Email: [email protected] | [email protected]

Pune Branch of WIRC of ICAI urgently requires suitable class rooms on lease/rental basis for conducting

GMCS & Orientation programmes for CA students

Total class rooms required � 4 (four) with sitting capacity about 60 students per class room

Location desired � centrally located preferably in the vicinity of educational institutes within Pune city with easy access and adequate parking facility

QUIZ CONTEST FOR CA STUDENTS 2015-16Debate Competition for Students-2015

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16,500/-16,000/-15,000/-8,000/-4,500/-