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Announcements - Definition of Relative in Chapter-IV of the Council General Guidelines, 2008 - (29-07-2011)

2011-08-06T08:31:00.001-07:00

ANNOUNCEMENT

No. ICAI/ESB//2011/02

All the members of the Institute of Chartered Accountants of India (ICAI) are hereby informed that in terms of its

decision taken at the 299th Meeting of the Council held on 27th – 28th October, 2010, it has been decided that the

term “relative” for the purpose of Chapter-IV of Council General Guidelines, 2008 (Opinion on Financial Statements

when there is substantial interest) will have the same meaning as assigned to it in AS-18..

Accordingly, the Chapter IV of the Council General Guidelines, 2008 as appended to the ICAI publication

titled “The Chartered Accountants Act, 1949 “ is modified and modified version shall read as under -

“Chapter IV
Opinion on financial statements when there is substantial
interest

4.0 A member of the Institute shall not express his opinion on financial statements of any business or enterprise

in which one or more persons who are his “relatives” within the meaning of Accounting Standard (AS - 18) has / have,

either by themselves or in conjunction with such member, a substantial interest in the said business or enterprise.

Explanation: For this purpose and for the purpose of compliance of Clause (4) of Part I of the Second Schedule to

the Chartered Accountants Act, 1949, the expression “substantial interest” shall have the same meaning as

is assigned thereto under Appendix (9) to the Chartered Accountants Regulations, 1988. “

This decision shall be in force with effect from 28th June, 2011

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Announcements - Amendment in Council General Guidelines , 2008 - (29-07-2011)

2011-08-06T08:20:00.001-07:00

ANNOUNCEMENT

No. ICAI/ESB/2011/01

All the members of Institute of Chartered Accountants of India (ICAI) are hereby informed that in terms of the Council decision taken at its 306th Meeting held on 7th - 8th June, 2011, the Chapter-XII (Minimum Audit Fee in respect of Audit) of the Council General Guidelines, 2008 appended to the ICAI publication titled “ The Chartered Accountants Act, 1949” has been repealed with effect from 7th June, 2011

Announcement of KYC Norms -ICAI

2011-08-06T08:17:00.000-07:00

No. ICAI/ESB/2011/03

Announcement of KYC Norms

All the members of Institute of Chartered Accountants of India (ICAI), who are in practice, are hereby informed that the Council has formulated the following Know Your Client Norms (KYC norms) at it’s 307 th Meeting held on 13thJuly,2011, which shall be recommendatory in nature, and apply only in case of attest function.

KNOW YOUR CLIENT (KYC) NORMS

The financial services industry globally is required to obtain information of their clients and comply Know Your Client Norms (KYC norms).

Keeping in mind the highest standards of Chartered Accountancy profession in India, the Council of ICAI thought it necessary to recommend such norms to be served by the members of the profession who are in practice.

In light of this background, the Council of ICAI approved the following KYC Norms. However, these norms are recommendatory in nature and every Chartered Accountant carrying out attest function is encouraged to follow them.

1. ENTITY INFORMATION

A. GENERAL INFORMATION

 Name of the Entity

 Type of Entity

 Business Description

B. CORPORATE STRUCTURE

 Name of ultimate parent company

 Name of Parent company Name of Affiliates

C. REGULATORY INFORMATION

 Company PAN No

 Company Identification No

 Directors’ Identification No

 Directors’ Names & Addresses

 Name(s) and Addresses of Companies, in which above

person is director.

D. ENGAGEMENT INFORMATION

 Type of Engagement

2. OTHER INFORMATION

 Entities financial Information

 Name of the ultimate parent Auditor

 Any known violation of any Law/Regulations

This decision shall be in force from 13 th July, 2011

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ITAT case:HUF is a “relative” for gifts exemption u/s 56(2)(v), (vi) & (vii)

2011-06-30T12:07:00.000-07:00

CASE OF: Vineetkumar Raghavjibhai Bhalodia vs. ITO (ITAT Rajkot)

The assessee received a gift of Rs.60 lakhs from his HUF. The AO & CIT(A) held that as HUF was not covered by the definition of “relative”, the gift was chargeable to tax u/s 56(2)(v). The alternate submission that gift was exempt u/s 10(2)was rejected on the basis that s. 10(2) applied only to amounts received “out of income of the estate” on partial or total partition of the HUF. On appeal by the assessee, HELD allowing the appeal:

(i) S. 56(2)(v) exempts gifts from a “relative”. Though the definition of the term “relative” does not specifically include a Hindu Undivided Family, a ‘HUF” constitutes all persons lineally descended from a common ancestor and includes their mothers, wives or widows and unmarried daughters. As all these persons fall in the definition of “relative”, an HUF is ‘a group of relatives’. As a gift from a “relative” is exempt, a gift from a ‘group of relatives’ is also exempt since the singular will include the plural;

(ii) The gift was also exempt u/s 10(2) because the two conditions required to be satisfied for relief viz (1) that the assessee is a member of the HUF and (2) that he receives the sum out of the income of such HUF (may be of an earlier Year) were satisfied.

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Registration Of Lawyers For Service Tax Stayed By Madras High Court

2011-06-30T10:52:00.000-07:00

The Revenue Bar Association, Madras, filed a Writ Petition in the Madras High Court challenging the validity of levy of service-tax on “legal consultancy services”. The Court has passed an order of interim injunction dated 24.06.2011 restraining the Ministry of Finance from compelling the members of the Petitioner from registering themselves with the service tax authorities andcollecting service-tax from them until further orders.

Click here to download Madras HC order dated 24.06.11 staying service-tax on lawyers:

http://dhavaldesaisays.files.wordpress.com/2011/06/service_tax_registration_stay.pdf

Details regarding stay orders passed by other High courts-

AP High Court-Pursuant to a Writ Petition challenging the imposition of service tax on lawyers and the prayer seeking interim relief by way of “restraining the Respondents from giving effect to directly or indirectly or acting upon the impugned provisions or collecting any service tax on the assistance provided as an officer of the Court by an advocate“, the Andhra Pradesh High Court vide order dated 18.5.2011 has ordered “Since it is represented that the other High Courts have already granted stay in similar circumstances, there shall be interim stay, until further orders”

Delhi High Court-The Delhi Bar Association has filed a Writ Petition in the Delhi High Court being WP No. 2792 of 2011 to challenge the levy of service-tax on “Legal Consultancy Services”. The High Court has today (29th April 2011) issued notice on the Writ Petition and stayed the application of the impugned provision till the next date of hearing being 23rd May 2011.

Gauahati High Court-The Bar Association of Gauhati has filed a Writ Petition in the Gauhati High Court to challenge the levy of service-tax on “Legal Consultancy Services”. The High Court has on 29th April 2011 said the matter requires in-depth scrutiny and directed that service-tax would not be recovered till the next date of hearing being 25th May 2011.

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New services at NSDL website

2011-06-30T10:33:00.000-07:00

Two new services started at NSDL website

PAN view - Taxpayer view for TDS/TCS credit (from F. Y. 2005-06 onwards) at https://onlineservices.tin.nsdl.com/TIN/JSP/form16A/LinkToUnauthorizedPanView.jsp

To know whether your deductor/collector has filed quarterly TDS/TCS statement and provided your PAN, provide details as below.

PAN of the Deductee:
TAN of the Deductor:
Financial Year:

Verification of Forma16A generated by TIN website by Tax Payer at https://onlineservices.tin.nsdl.com/TIN/JSP/form16A/LinkToUnauthorizedView.jsp

verification of Form 16A generated from TIN website issued by Deductor to the deductee.

Financial Year:
Quarter:
TAN of the Deductor:
PAN of the Deductee:
Certificate Number:
Total Amount Deducted:

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Extension in date of Package scheme of incentives-2007 to 31/08/2011

2011-06-30T10:24:00.001-07:00

Forwarded MSG attached.

Dear Friends

The PCI(Maharashtra) 2007 has extended upto 31/08/2011 the GR is attached

Click here to download the GR passed:http://dhavaldesaisays.files.wordpress.com/2011/06/20110630125414001.pdf

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AIR Related scrutiny assessments should be limited to info in AIR

2011-06-28T06:14:00.000-07:00

FORWARDED MSG ATTACHED OF MR. Hiten Gada

Dear All,

Please go through the letter from CBDT in this behalf addressed to all the
CCITs and DGITs.
The assessment for AY 2009-10 are now taken up for hearing. Please make use
of this letter to convey to officer that scope of inquiry should be
restricted to matter reported in AIR If he is extending the scope in its
questionnaire they send, you may reply against the same asking for a copy of
AIR info and please ask him to restrict his scope.
I believe before submitting details as per lengthy questionnaire, it would
be advisable to obtain the copy of AIR info and submitt only the relevant
details.

To read that letter click here:https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0Bz0INWeiJAEQNWExNmY3YzYtZDExMi00YmQxLTk4M2MtMzY5NWYyMzEwNjFk&hl=en_US

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High Court stay for Service tax on bar attached hotels

2011-06-18T11:27:00.000-07:00

It is understood from reliable sources that Kerala High Court has granted stay for two months on service tax on Bar attahced hotels.

Service tax on Air conditioned Restaurent (Bar attached hotel) service was made taxable from 1.5.2011

The order is awaited. will share the copy of the order at the earliest.

This is for your information

With Warm Regards,

CA. TONY.M.P
THRISSUR,KERALAMobile: 094470 80631.

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Shareholding of promoter / promoter group to be in dematerialized mode

2011-06-18T11:18:00.000-07:00

CIRCULAR

Cir/ISD/ 3/2011 June 17, 2011

To,
All Stock Exchanges

Dear Sir / Madam,

Sub: Shareholding of promoter / promoter group to be in dematerialized mode

1) SEBI had vide SEBI/Cir/ISD/1/2010 dated September 02, 2010 issued a circular on “trading rules and shareholding in dematerialized mode”. The said circular was issued in order to moderate sharp and destabilizing price movements in shares of companies, to encourage better price discovery and to increase transparency in securities market. The aforesaid circular inter-alia mandated securities of companies to be traded in normal segment, if and only if, the company has achieved atleast 50% non-promoter shareholding in dematerialized form and maintained the same on a continuous basis.

2) In order to further promote dematerialization of securities, encourage orderly development of the securities market and to improve transparency in the dealings of shares by promoters including pledge / usage as collateral, SEBI in consultation with Stock Exchanges, has decided that the securities of companies shall be traded in the normal segment of the exchange if and only if, the company has achieved 100% of promoter’s and promoter group’s shareholding in dematerialized form latest by the quarter ended September 2011 as reported to the stock exchanges.

3) In all cases, wherein the companies do not satisfy the above criteria, the trading in securities of such companies shall take place in trade for trade segment.

4) For the above purpose the exchanges shall take the latest shareholding pattern as required to be submitted by the listed companies with exchanges in pursuance to the Listing agreement as of the preceding quarter or of any subsequent date.

5) The Stock Exchanges are advised to:

a) put in place the adequate systems and issue the necessary guidelines for implementing the above decision.

b) make necessary amendments to the relevant bye-laws, rules and regulations as applicable for the implementation of the above decision immediately.

c) bring the provisions of this circular to the notice of the listed companies/issuers and member brokers of the Exchange and also to disseminate the same on the website.

d) communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report.

6) This circular is issued in exercise of powers conferred by sub-section (1) of Section 11 of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

7) This circular is available on SEBI website athttp://www.sebi.gov.in/ under the head ‘legal framework’.

Yours faithfully,

S. Ramann

Officer on Special Duty

Integrated Surveillance Department

022-26441450

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NEW DIRECTOR'S RELATIVE (OFFICE OR PLACE OF PROFIT) RULES, 2011

2011-05-21T01:35:00.000-07:00

Director's Relative (Office or Place of Profit) Rules, 2011

NOTIFICATION NO. G.S.R. 357(E), DATED 2-5-2011

In exercise of the powers conferred by clause (b) of sub-section (1) of section 642, read with sub-section (1B) of section 314 of the Companies Act, 1956, the Central Government hereby makes the following Rules in supersession of the earlier Notification No. GS.R. 89(E), dated 5-2-2003, namely:—

1. (1) Short Title and Commencement: (1) These rules may be called Director's Relative (Office or Place of Profit) Rules, 2011.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. Applicability : These rules shall apply to all companies registered under the Companies Act, 1956 except as provided in these rules.

3. Approval of the Central Government in case of Appointment of Relatives, etc. of Directors : No appointment for an office, or place of profit in a company shall take effect unless approved by the Central Government on an application, in respect of:—

(a) Partner of film or relative of a Director or Manager; or

(b) Firm in which such Director, or Manager of relative of either is a partner; or

(c) Private Company of which such Director or Manager or relative of either is a Director, or member, which carries a monthly remuneration exceeding, Rs. 2,50,000 p.m.

(d) An individual who is a relative of a Director, or Manager and is appointed as an Advisor or Consultant and paid remuneration including commission on periodical basis.

4. Selection of Relatives of Directors and Directors to Hold a Place of Office/Profit:—

(a) The selection and appointment of a relative of a Director for holding office or place of profit in the company with a salary exceeding Rs. 2,50,000 per month shall be approved by adopting the same procedure applicable to non-relatives and approved by a Selection Committee.

Explanation : For the purpose of the sub-rule, in the case of listed public companies, the expression "Selection Committee" means a committee, consisting at least three members, the majority of which shall be independent Directors and an outside Expert:

Provided that in case of unlisted companies, independent Directors are not necessary but outside experts should be there in the Selection Committee:

Provided further that in the case of private companies, Selection Committee is not necessary.

5. Procedure for Examination of Application : The application under rule 3 shall be examined with respect to the following, in addition to all other requirements under the Companies Act, 1956:—

(a) In the case of individual appointee, an undertaking from him that he/she will be in the exclusive employment of the company and will hold a place of profit in any other company.

(b) The monetary value of all allowances and perquisites and of total remuneration package (monthly/annually proposed to be paid to the appointee and details of the services that will be rendered by him to the company.

(c) Details of shareholding pattern particularly the shareholding of the directors along with his/her/their relatives, the public holding, institutional holding (each institution separately) and the quantum of dividend paid by the company during the last three preceding financial years.

(d) Details of the educational qualification/experience, pay scale, allowances and other benefits of similarly placed executives.

(e) In case of the appointment of a relative, an undertaking from the Director/Company Secretary of the company that the similarly placed employees are getting the comparable salary.

(f) List and particulars of the employees who are in receipt of remuneration of Rs. 2,50,000 or more per month.

(g) The total number of relatives of all the Directors either appointed as Manager/Whole time Director, Manager or in any other position in the company, the total remuneration paid to all of them altogether as a percentage of profit as calculated for the purpose of section 198 of the Companies Act, 1956.

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Supreme Court stays Delhi High Court's service tax order on rent

2011-01-14T21:56:00.000-08:00

January, 13th 2011

The Supreme Court has stayed an order of the Delhi High Court, which stopped the Centre from recovering service tax on renting of immovable property for commercial use, including shops and malls, from some firms.

A Supreme Court bench comprising Justices Mukundakam Sharma and A R Dave stayed the interim order passed by the Delhi High Court on May 18, 2010. The Centre has challenged the order.

"There shall be an interim stay of the operation of the impugned judgement till the next date," said the apex court, directing that the matter be listed for next hearing on January 20.

The High court, allowing the appeal of around 20 firms including Home Solutions Retail, had stayed the amendments made by the government in the Budget, 2010-11.

In the Finance Act, 2010, the government had amended taxing entry of "Renting of Immovable Property service", with retrospective effect, from June 1, 2007

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UPLOADED NEW 5 DIGIT ACTIVITY CODES FOR VAT AUDIT PURPOSE.

2010-12-29T10:29:00.000-08:00

MVAT AUDIT 2009-10-ACTIVITY CODES

AS WE FOUND THAT MANY OF OUR CA FRIENDS AND STP'S ARE NOT HAVING THE NEWLY REQUIRED ACTIVITY CODE 5 DIGIT FILES.

HERE BY WE ARE UPLOADING IT FOR OUR COMMUNITY.

CLICK HERE TO DOWNLOAD (2 LINKS)-- DOWNLOADING TAKES TIME (FILE SIZE 1.31 MB)

http://dhavaldesaisays.files.wordpress.com/2010/12/activitycode1-2-1.pdf

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0Bz0INWeiJAEQNDFiOTQyODItNmQ2MS00ZDgxLWJjNzctYWRlNzRkYTZjMDM3&hl=en

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Case law-Ability to pay demand is no bar for grant of stay on recovery

2010-12-25T23:45:00.000-08:00

KEC International Limited vs. ACIT (ITAT Mumbai)

The assessee filed a stay application before the Tribunal. The Department opposed by relying on the observations of the Supreme Court in CCE vs. Dunlop India 154 ITR 172 (SC) and contended that as paucity of funds had not been sufficiently demonstrated, for this reason alone stay should not be granted. HELD rejecting the Department’s contention and granting stay while following B. N. Nobis & Co vs. JCIT 71 TTJ 153 (Kol):

(i) While the Supreme Court has decried ‘the practice of granting interim orders merely because assessee is able to show a good prima facie case’, the observations have to be understood in the context of the case which was one of indirect taxation where the burden had already been passed on to the consumer. Also it was a case of a Writ Petition under Article 226 & not that of an appellate jurisdiction. The observations of the Supreme Court in the context of grant of stay in writ proceedings does not have binding force on, or even direct relevance to, the principles governing grant of stay during appellate proceedings though it does provide guidance on principles governing the decision to grant stay;

(ii) The Court has made it clear that though there are no hard and fast rules regarding grant of stay, prudence, discretion and circumspection are called for and stay should not be granted as a matter of course. Considerations about balance of convenience, question of irreparable injury and implications to public interest have to be borne in mind;

(iii) The Supreme Court’s observations in Dunlop cannot be interpreted to mean that the Tribunal is denuded of the powers to grant stay until case for financial stringency is successfully made out by the applicant. There is no conflict in holding this view as also adhering to the settled principles governing grant of stay which lay down thatfinancial constraints of the applicant are important, even if not sole of qualifying, consideration in entertaining a stay application, besides considerations like existence of strong prima facie case, balance of convenience and possibilities of Revenue’s rights of recovery being prejudiced by waiting till the outcome of appeals.

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Cash Flow v/s Profit & loss A/c

2010-12-18T10:28:00.000-08:00

In case of entities like companies which present its financial statements on accrual basis, Cash flow Statements fulfills vital information needs of users?

The Supreme Court in Reliance Energy Ltd Vs. Maharashtra State Road Development Corporation Ltd.

When P&L accounts and balance sheets are prepared on accrual basis, revenues and expenses are recognized on accrual basis

i.e. when events or transaction occurs. However, timing of cash flow is not reckoned in such system of accounting.

Similarly, in cases where accounts are based on accrual system of accounting, recognition of assets & liabilities is not dependent on the actual timing of cash spent on capital Expenditure & Cash inflow on Capital receipts.

Thus, financial statements prepared on accrual basis don not reflect the timing of Cash flow & amount of Cash flow.

The object of the cash flow statement is to assess the company ability to generate the cash flow in future and to assess reason for difference between “NET PROFIT” and “NET CASH FLOW” from operations.

In Fact Cash flow from operations is the regular sources of cash for any enterprise that determines whether or not an enterprise will continue to exist in the long run.

Accrual basis of accounting requires that revenues be recorded when earned and the expenses be recorded when incurred. Earned revenues more often include credit sales that have not been collected in cash & expense incurred that may not have been paid in cash during the accounting period.

Thus, Net Income will not indicate the net cash provided by operating activities or net loss will not indicate the net cash used in operating activities.

In order to calculate the net cash provided by (or used in) operating activities, it is necessary to replace revenues and expenses on accrual basis with actual receipts and actual payments in cash. This is done by eliminating non- cash revenues and non-cash expenses from the given earned revenues & incurred expenses in the profit & loss account.

Profit & Loss account is also debited with purely non-cash items which reduces and increase the profits respectively but do not affect the cash at all. Eg: Depreciation, P/L on sale of fixed assets, amortization of deferred revenue expenses and so on.

Since Cash provide by operations is to be calculated, certain Non-operation item like rent income, interest income, dividend income, refund of tax etc should be adjusted although these items may have recorded on cash basis. Such items are analysed separately in the cash flow statement as operating, financing & investing activities.

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CA IPCC Group 1 papers with sugested answers.

2010-05-25T01:42:00.000-07:00

Frnds,

Just click here to download the IPCC grp1 papers with sugested answers.

Click here: http://taxpertindia.blogspot.com/2010/05/ca-ipcc-group-1-papers-with-sugested.html

I am thankful to Pavan kumar & Sayad vakeel (both are CA Students) who have contributed to our blog and this file is shared by them.

Dhaval Desai

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Company Audit Important Sections,AS and SA's and revised text of Companies Act 227 (1A)

2010-05-05T05:04:00.000-07:00

Friends,

I know that at the end time i m publishing this article but i believe that this file will surely help you to score well in exams and will help you to score well.

Best wishes
Dhaval Desai & this document is verified by Pappu Mishra.

Click here to download the files
1.Company Audit (Sections,AS and SA.s) & Companies Act 227 (1A): http://taxpertindia.blogspot.com/2010/05/company-audit-important-sectionsas-and.html

This file is Shared by and his message is given below.

Friends here is some important sections of company audit.You are advised to verify the same from module/compilations.This is exclusively for Taxpertindia members and welwishers. Have a good luck!!!!

Vakeel Ali
Dhule, Maharashtra.

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Auditing Standards revised for CA Final/PCC/IPCC & PE-II

2010-04-29T08:29:00.001-07:00

Dear Subscriber,

Notes on Standards on Auditing.

Please note "What I had best with me in this regards I am providing the link for download but before using make it sure that these notes are updated as per your exam attempt."

Link-
http://taxpertindia.blogspot.com/2010/04/auditing-standards-revised-for-ca.html

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Notification & Circulars from 01.05.2009 to 31.10.2009

2010-04-29T08:18:00.000-07:00

Just click here to download the relevant Notification & Circulars from 01.05.2009 to 31.10.2009:
http://taxpertindia.blogspot.com/2010/04/notification-circulars-from-01052009-to.html

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May'10 Exams:RECENT CHANGES IN STANDARDS ON AUDITING (w.e.f 01.04.2010)

2010-04-12T05:16:00.000-07:00

Friends,
I m sharing with u a very good pdf file with recent changes in standards on auditing.
Hope this file will help u & gain u the conceptual knowledge.

Click here to download
RECENT CHANGES IN STANDARDS ON AUDITING: http://taxpertindia.blogspot.com/2010/04/may10-examsrecent-changes-in-standards.html

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-1650+ student members registered.

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May'10 exms:Fast track ready reference notes on IDT Amendments & case laws.

2010-04-12T04:17:00.001-07:00

Friends,

Less than one month is left for your May'10 exams and many things may be left to be revised.
So to help u, a fast track ready reference notes of IDT amendments (4 pages) and IDT case laws (16 pages) is shared with u for your ready reference.

Clik here to download:
IDT AMENDMENTS: http://docs.google.com/leaf?id=0Bz0INWeiJAEQNzUxYTY4ZWMtOTk0MS00MjYwLWJlZWYtMGNlNTEwN2E4MDUy&hl=en

IDT CASELAWS: http://docs.google.com/leaf?id=0Bz0INWeiJAEQODQ5NjEwOTctNGIxZi00ZDBiLTliY2ItN2VkZjliNGY5OTMy&hl=en

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Final NEW Suggested Answers November 2009- ISSUED BY ICAI

2010-03-29T04:55:00.000-07:00

Hello,
I would like to bring your attention on a new post published on the Website. Details of the post follow; I hope you will find it interesting.
Best regards,
Dhaval

Final NEW Suggested Answers November 2009- ISSUED BY ICAI
GROUP - I Not Yet Released.

Group - II Click here to download: http://www.box.net/shared/rfufppujov

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PCC Suggested Answers November 2009 - ISSUED BY ICAI

2010-03-29T04:47:00.000-07:00

Hello,
I would like to bring your attention on a new post published on the Website. Details of the post follow; I hope you will find it interesting.
Best regards,

PCC Suggested Answers November 2009 - ISSUED BY ICAI
Group - I -- Not Yet Released Group --- wud soon upload

Group II- Click here to download: http://www.box.net/shared/sq7lnff203

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"Tax-Rate of C-schedule goods (except declared goods) is increased from 4% to 5% from 1st April 2010."

2010-03-16T00:44:00.001-07:00

"Tax-Rate of C-schedule goods (except declared goods) is increased from 4% to 5% from 1st April 2010."

Click here to download the file:
http://docs.google.com/fileview?id=0Bz0INWeiJAEQY2VkNmVkOGMtMjgxOS00NjcwLWE5MjktZWQ1ODlkMzZjODU4&hl=en

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Compilation of Suggested Answers Professional Competence Course( PCC) Cost Accounting

2010-03-09T03:28:00.001-08:00

CHAPTER 1 - BASIC CONCEPTS

CHAPTER 2 - MATERIAL

CHAPTER 3 - LABOUR

CHAPTER 4 - OVERHEADS

CHAPTER 5 - NON INTEGRATED ACCOUNTING

CHAPTER 6 - METHOD OF COSTING (I)

CHAPTER 7 - METHOD OF COSTING (II)

CHAPTER 8 - STANDARD COSTING

CHAPTER 9 - MARGINAL COSTING

CHAPTER 10 - BUDGETS AND BUDGETARY CONTROL

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Revision Test Papers for MAY 2010 Examination

2010-03-09T03:23:00.000-08:00

Enclosed 4 CA Final-MAY 2010 Exams---Competition (Amendment) Act, 2009,Prevention of Money Laundering (Amendment) Act, 2009

2010-03-05T02:17:00.001-08:00

Friends

Enclosed herewith the link to download The Competition (Amendment) Act, 2009 and Prevention of Money Laundering (Amendment) Act, 2009 Which would b applicable for May 2010 Exams.-- ICAI

Just click here: http://www.box.net/shared/c745hqpfd1

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Enclosed 4 PCC/IPCC-MAY 2010 Exams---The Payment for Gratuity (Amendment) Act, 2009

2010-03-05T02:13:00.001-08:00

Friends

Enclosed herewith the link to download The Payment for Gratuity (Amendment) Act, 2009 Which would b applicable for May 2010 Exams.-- ICAI

Just click here: http://www.box.net/shared/7q45qga8ju

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Announcement relating to taxation papers for students appearing in May 2010 examination PE-II [Income-tax and Central Sales Tax], PCC/IPCC [Taxation], Final (Old) Course [Direct Taxes] and Final (New) Course [Direct Tax Laws] - (22-02-2010)

2010-02-22T21:37:00.000-08:00

Announcement relating to taxation papers for students appearing in May 2010 examination PE-II [Income-tax and Central Sales Tax], PCC/IPCC [Taxation], Final (Old) Course [Direct Taxes] and Final (New) Course [Direct Tax Laws] - (22-02-2010)

Announcement relating to taxation papers for students appearing in May 2010 examination

PE-II [Income-tax and Central Sales Tax], PCC/IPCC [Taxation],

Final (Old) Course [Direct Taxes] and Final (New) Course [Direct Tax Laws]

(1) Fringe Benefit Tax is not applicable from A.Y.2010-11 and hence, is not relevant for May 2010 examination.

(2) Consequential Notification of new perquisite rules on 18.12.2009 not to apply for May 2010 examination

Consequent to abolition of fringe benefit tax, certain benefits taxed earlier as fringe benefits in the hands of the employer would now be taxable as perquisites in the hands of the employees. For this purpose, new perquisite valuation rules have been notified vide Notification No.94/2009/ F.No.142/25/2009-S.O.(TPL), dated 18.12.2009 with retrospective effect from 1.4.2009. However, the new perquisite valuation rules would be applicable only for November 2010 examination. They would not be applicable for May 2010 examination, since only notifications/circulars issued up to 31^st October, 2009 are relevant for May 2010 examination.

(3) Applicability of erstwhile Rule 3 for May 2010 examination

(a) Therefore, the erstwhile Rule 3 would be applicable for May 2010 examination. All the perquisites which were earlier taxable in the hands of the employee, only if the employer was not liable to pay fringe benefit tax, would now be taxable in the hands of the employee in all cases, since no employer is liable to pay fringe benefit tax for A.Y.2010-11.

(b) Rule 3(7), providing for valuation of “other fringe benefits and amenities”, is based on the terms of the provisions contained in the erstwhile clause (vi) of section 17(2). The Finance (No.2) Act, 2009 has amended section 17(2) by including certain other perquisites under clauses (vi) and (vii) of section 17(2). Consequently, the residual clause, namely, clause (viii) of section 17(2), now provides for taxing the value of any other fringe benefit or amenity as may be prescribed. Therefore, the Rule 3(7), prescribing the fringe benefits or amenities in terms of the erstwhile clause (vi) [now clause (viii)] of section 17(2)] have been given in the latest study material relevant for May 2010 examination.

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ISCA NOTES & Information Technology ACT 2008 (2 FIles uploaded)

2010-02-17T10:11:00.000-08:00

Friends.. There might be a sure shot question in the forthcoming exam…

The Information Technology Act 2000 is covered under Chapter 14 of Paper 6: MICS ( Final Old ) and Chapter 10 of Paper 6: Information Systems

This act was amended in the Year 2009. And keeping in mind the institute’s eternal inclination towards all the recent amendments I would say that we all should go through amendments made in the Act (since the changes are of significant importance too!).

and i am also hereby uploading ISCA (CA FInal NEW)notes with past papers analysis which are prepared by Nikunj S. Shah B.Com., LL.B., FCA, DISA(ICA), CIA(USA), ACFE --- which would sure shot help u to score well marks.

Or click here to download: http://www.box.net/shared/qfbgsa7vyf

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Import & export rate for the month of January & February (Issued by custom authorities)

2010-02-10T01:14:00.001-08:00

Click at the below mentioned link to download
January Rates: Exchange rates

February Rates: Exchange rates

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CA Results Analysis

2010-02-03T03:29:00.000-08:00

RESULT ANALYSIS OF CHARTERED ACCOUNTANTS PROFESSIONAL EDUCATION ( EXAMINATION-II) , PROFESSIONAL COMPETENCE AND INTEGRATED PROFESSIONAL COMPETENCE EXAMINATIONS HELD IN NOVEMBER-2009

The results of the Chartered Accountants Professional Education Examination-II (PEE-II) ,Professional Competence(PCE) and Integrated Professional Competence Examinations(IPCE) were declared recently.
The details of percentage of candidates passed in the above said examinations are given below:

EXAMINATION	GROUP	No.of candidates appeared	No.of candidates passed	% of pass
PEE-II	Both Group	3407	43	1.26
	Group – I	7025	682	9.71
	Group - II	9191	525	5.71

EXAMINATION	GROUP	No.of candidates appeared	No.of candidates passed	% of pass
PCE	Both Group	37661	5810	15.42
	Group – I	46955	12053	25.66
	Group - II	58180	15275	26.25

EXAMINATION	GROUP	No.of candidates appeared	No.of candidates passed	% of pass
IPCE	Both Group	7601	844	11.10
	Group – I	25587	2942	11.50
	Group - II	7737	1038	13.42

Tuesday, February 02, 2010
	Ministry of Corporate Affairs
	THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA DECLARES RESULTS OF PROFESSIONAL EDUCATION EXAMINATION ( PEE-II ), PROFESSIONAL COMPETENCE EXAM ( PCE ), AND INTEGRATED PROFESSIONAL EDUCATION EXAMINATION ( IPCE )
	17:52 IST

	The Institute of Chartered Accountants of India ( ICAI ), functioning under the aegis of Ministry of Corporate Affairs, here today announced the results of Professional Education Examination ( PEE- II ), Professional Competence Exam (PCE ) and Integrated Professional Education Examination ( IPCE ) held in November, 2009. In the PEE- II Shri Avinash Karwa of Solan ( H.P.) topped by scoring 64.5%. Shri Nafih Omer of Dubai ( UAE ) came second and Kumari Isha Sen of Allahabad has been placed third. Kumari Rupali Gupta of Jaipur topped the PCE by scoring 76 % , whereas Kumari Lakshami Niranjani G. of Coimbatore came second with 74.5 %. Shri Nitin Naraindas Wadhwani of Ulhasnagar has been placed third with 73.5 %. In the IPCE Kumari Amita Maheshwari of Jodhpur was placed first by scoring an impressive 77 %. Second place was achieved by Kumari Bhumika Rajiv Shah of Mumbai by scoring 75 % , whereas Kumari Sonam Bhandari of Howrah with 74.14 % came third. The Chartered Accountancy Examination is held twice every year. The Curriculum of the Chartered Accountancy Course has been designed, developed and maintained in such a way that the members of the Profession can become the valued Trustees of the World Class Financial Competence, Good Governance and Competitiveness. ------------------ KKP/ska

Friends annoyed refreshing website for CA Results---here its gets directly refreshed

2010-02-01T00:33:00.001-08:00

Friends you may b Anoyed refreshing ICAI website 4 results then visit http://taxpertstudents.blogspot.com/ page gets refreshed Automatically

Best of luck for the results.

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Supplementary Study Paper for PCC/IPCC and CA Final May and Nov 2010 students

2010-01-29T23:55:00.001-08:00

Supplementary Study Paper for PCC/IPCC and CA Final Students May and Nov 2010 Exams

Hereby i m attaching herewith the link to download the Supplementary Study paper

PCC/IPCC: http://www.box.net/shared/u16un066ij

CA Final: http://www.box.net/shared/7udnv1g3vp

FBT ADJUSTMENT AGAINST ADVANCE TAX-CBDT CIRCULAR

2010-01-29T01:23:00.000-08:00

CIRCULAR NO

2/2010, Dated: January 29, 2010

Sub: Adjustment of “Advance Tax in respect of Fringe Benefits” for Assessment Year 2010-11 against “Advance Tax” – matter regarding.

The Finance Act, 2005 introduced a levy namely Fringe Benefit Tax (FBT) on the value of certain fringe benefits as contained in Chapter XII H (Sections 115 W to 115 WL) of Income Tax Act, 1961. By the Finance (No. 2) Act, 2009 a new Section 115 WM was inserted to abolish the FBT with effect from Assessment Year (A.Y.) 2010-11. Consequently, benefits given to employees are taxed as perquisites in the hands of employees in terms of amendments to Clause 2 of Section 17 of Income Tax Act, 1961. However, during the current Financial Year 2009-10 some assessees have paid “advance tax in respect of fringe benefits” for Assessment Year 2010-11. In such cases the Board has decided that any installment of “advance tax paid in respect of fringe benefits” for A.Y. 2010-11 shall be treated as Advance Tax paid by assessee concerned for A.Y. 2010-11. The assessee can adjust such sum against its advance tax obligation in respect of income for A.Y. 2010-11 or in case of loss etc claim such payment as refund as advance tax paid in A.Y. 2010-11.

2. This circular may be brought to the notice of all officers in the field for compliance.

Hindi version to follow

F. N0.385/05/2010-IT (B)

(Ansuman Pattnaik)
Director (Budget)

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Results of the Chartered Accountants PE–II, PCE and IPCE held in November, 2009 are likely to be declared on Friday, the 29th January, 2010 around 2 P.M. - (21-01-2010)

2010-01-21T10:04:00.000-08:00

January 21, 2010
The results of the Chartered Accountants Professional Education – II, Professional Competence Examinations and Integrated Professional Competence Examination held in November, 2009 are likely to be declared on Friday, the 29th January, 2010 around 2 P.M. and the same as well as the merit list (candidates securing a minimum of 55% and above marks and upto the maximum of 50th Rank) on all India basis will be available on the following website:

http://www.caresults.nic.in

Arrangements have also been made for the students desirous of having results on their e-mail addresses to pre-register their requests at the above website, i.e., http://www.caresults.nic.in from 22nd January, 2010. All those registering their requests will be provided their results through e-mail on the e-mail addresses registered as above immediately after the declaration of the result.

Further facilities have been made for students of Professional Education – II, Professional Competence Examinations and Integrated Professional Competence Examination held in November, 2009 desirous of knowing their results with marks on SMS. The service will be available through MTNL, India Times and Reliance.

For getting results through message students should type:

i) for Professional Education - II Examination result the following

CAPE2(Space)XXXXX (Where XXXXX is the five digit PE II examination roll number of the candidate)

e.g. CAPE2 00171

ii) for Professional Competence Examination result the following

CAPCE(Space)XXXXX (where XXXXX is the five digit PCE examination roll number of the candidate)

e.g. CAPCE 00197

iii) for Integrated Professional Competence Examination result the following

CAIPCE(Space)XXXXX (where XXXXX is the five digit IPCE examination roll number of the candidate)

e.g. CAIPCE 00297

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

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Useful Presentations - Tax and Allied Aspects of Construction Industry

2010-01-16T00:51:00.000-08:00

---------- Forwarded message ----------

From: Rebecca Andrews <rebecca.andrews88@yahoo.in>
Date: Sat, Jan 16, 2010 at 12:08 PM
Subject: Useful Presentations - Tax and Allied Aspects of Construction Industry
To:

Click Here to download the files: http://www.box.net/shared/al9sgpbfvj

I am pleased to forward Power Point Presentations at Chamber of Tax Consultants on 9th January 2010, on following Topics :

1. Accounting Standards Applicable to
Construction Industry by Jayant Gokhale

2. PRECAUTIONS FOR PURCHASE AND ACQUISITION OF PROPERTY
By SHAILESH S. VAIDYA, PARTNER, KANGA AND COMPANY,
ADVOCATES AND SOLICITORS.

3. Construction & Works Contracts (Service Tax) by Sunil Gabhawala

Kind regards,

Rebecca Andrews

14th January,2010
Dear Members,

Please find attached herewith Presentations given by CA. Jayant Gokhale, CA. Sunil Gabhawalla and Shri Shailesh Vaidya Solicitor at the Two Days Conference on "Tax and Allied Aspects of Construction Industry" held on 8th & 9th January, 2010 at J. W. Marriott Hotel, Juhu, Mumbai - 400 049.

Thanks & Regards,

For THE CHAMBER OF TAX CONSULTANTS

Sd/-

SUNIL RAMANI
CHAIRMAN
ADVANCE REFRESHER COURSE COMMITTEE

Encl : As above

TDS | Payments to Contractors (Sec 194C) -- covering most of the circulars

2010-01-13T04:11:00.001-08:00

Under the Indian Income Tax Act, the following provisions relate to the
Tax Deduction at Source from payments to Contractors and Subcontractors
under section 194C.

Person responsible for paying
any sum for carrying any work to any resident
contractor should deduct tax at source.

Tax
should be deducted at source only if the contract is between the
contractor and the following specified persons:

1. The Central Government or any State Government.

2. Anylocal authority.

3. Any corporation established by or under a Central, State or Provincial Act

4. A company

5. Any Co-operative Society.

6. Any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both.

7. Any Society registered under the Societies Registration Act, 1960 or any
law corresponding to that Act in any part of India.

8. Any Trust.

9. Any University established by or under any Central, State or Provincial Act
or any institution declared to be a University under the University
Grants Commission Act.

10.Any firm.

11.Any individual or Hindu Undivided Family whose books are required to be
audited under section 44AB during the immediately preceding financial
year. [The turnover from business/profession exceeds the limits
specified u/s 44AB during the immediately preceding financial year].

Note: Budget 2008 introduced the burden of
deduction of tax under this section to Association of Persons and Body
of Individuals also, whether they are incorporated or not.

Individual or HUF need not deduct tax if the contract is exclusively for personal
purposes.

Income Tax should be deducted at the time of payment or credit to the account of the contractor whichever is earlier.

Income Tax is to be deducted at source @ 1% on Advertising contracts and @2% on any other contracts on the amount paid/credited. In the case of sub-contracts, the main
contractor should deduct tax at source @1% on the amount paid/credited
to the subcontractor.

Provisions of Section 194C are applicable only where the contract is either a “contract for carrying out any work” or a “contract for supply of labour for works contract”. Hence, these provisions are not applicable for payments made under the contract of sale of goods.
For the purpose of this section, the following contracts are also
included in the scope of “Work”:

1. Advertising.

2. Broadcasting
and telecasting including production of programs for broadcasting and
telecasting.

3. Carriage
of goods and passengers by any mode of transport other than Railways.

4. Catering.

No deduction of tax at source shall be made under this section in the
following circumstances:

1. If the amount paid/payable or credited/likely to be credited to the
contractor/sub-contractor does not exceed Rs.20,000/-
in a single instance. However, the total of amounts paid or credited
during the financial year should not exceed Rs.50,000/-.
If the said amount exceeds Rs.50,000/-, then, the liability for payment
arises on the whole of amount paid or credited and not on the amount in
excess of Rs.50,000/-

2. In the case of a sub-contractor who is a resident individual and who owns
not more than two goods carriages during the previous year, no tax
shall be deducted at source during the course of business of plying,
hiring or leasing goods carriages if he provides a declaration to the
person responsible for payment to that effect in the prescribed form.
[Form 15-I]

Income Tax is to be deducted on the amount of payment/credit and not on the
income part of the amount.

In a case where advance payments are made in pursuance of contract to be
adjusted against work to be done, tax has to be deducted at the time of
the advance payments.

The provisions of Sec 194C does not apply to payments made to Airlines or
travel agents for the purpose of travel of individuals even though the
payment/credit is made by the specified persons. But, if the aircraft
is chartered for carriage of passengers or goods, this section shall be
applicable. [Circular No.713 dt.2-8-1995 and No.715 dt.8-8-1995]

In the case of advertising
contracts, tax needs to be deducted only when the client makes payment
to the advertising agency and not when the advertising agency makes
payment to the media (includes both print and electronic media).
[Circular No.715 dt.8-8-1995]

If there is a consolidated bill given by advertising agencies which may include artwork charges etc apart from advertising charges, the rate applicable is 1% on the whole.
Tax is to be deducted on the gross amount of the bill (including the portion of media bill) and not on the commission of the advertising agency. But, payments made to Doordarshan
(Now Prasar Bharati) are not subject to TDS since it is a government agency and hence, not liable to income tax.
[Circular No.715 dt.8-8-1995].

The contract for putting up a hoarding is an advertising contract and hence, is covered under section 194C. [Circular No.715 dt.8-8-1995]

But, if a particular space has been taken on rent by a person who subsequently sub lets it for putting up a hoarding, the TDS liability is not under Section 194C but under section 194-I. [Circular No.715 dt.8-8-1995]

In the case of sponsorship for debates, seminars and other functions held in colleges, schools and associations with a view to earn publicity through display of banners,
etc., put up by the organisers, the agreement of sponsorship is in essence an agreement for carrying out a work of advertisement. Therefore, provisions of section 194C
will apply. [Circular No.715 dt.8-8-1995]

Tax is deductible at source on payments for costs of advertisements issued in the souvenirs brought out by various organisations.
[Circular No.715 dt.8-8-1995].

Payments to Clearing and Forwarding agents for carriage of goods are subject to TDS. The Clearing and Forwarding agents themselves are also liable to deduct tax
on payments to a carrier of goods. [Circular No.715 dt.8-8-1995]

Payments to couriers are also covered u/s 194C because the carriage of documents, letters etc is in the nature of carriage of goods. [Circular No.715 dt.8-8-1995]

In the case of payments to transporters, each GR can be said to be a separate contract, if the goods are transported at one time. But if the goods are transported
continuously in pursuance of a contract for a specific period or
quantity, each GR will not be a separate contract and all GRs relating to that period or
quantity will be aggregated for the purpose of TDS. Even when the goods
are received on ‘freight to pay’ basis, the TDS provisions would be
applicable, irrespective of the actual payment. [Circular No.715
dt.8-8-1995].

TDS is not required to be made when payment is made for serving food in a restaurant in the normal course of business of the restaurant. [Circular No.715 dt.8-8-1995].

Payments to recruitment agencies are in the nature of payment for services rendered and not for carrying out any work. Hence, they are not covered under section 194C.
However, such payments are liable to TDS under section 194J. [Circular
No.715 dt.8-8-1995].

The provisions of Section 194C
would apply in case of supply of any article or thing as per prescribed
specifications only if it is not a contract for sale. [Circular
No.13/2006 dt.13-12-2006].

Electrical contracts,
maintenance contracts are covered by Section 194C. If any technical
services are rendered, such payments would be covered under Section
194J. [Circular No.715 dt.8-8-1995].

Since Section 194C refers to
“any sum paid”, if the bill contains reimbursement of expenses also,
the TDS is applicable on the reimbursements also. [Circular No.715
dt.8-8-1995]. However, if there are separate bills for contract
payments and reimbursement of expenses, then, TDS is not required to be
made on reimbursement of expenditure.

Rendering of services for procurement of orders is not covered by Section 194C. [Circular No.715 dt.8-8-1995].

In case of payments made to cold storages, thecustomer is not given any right to use any demarcated space/place or the machinery of the cold store and thus does not
become a tenant. Therefore, the provision of 194-I is not applicable to
the cooling charges paid by the customers of the cold storage. However,
since the arrangement between the customers and cold storage owners are
basically contractual in nature, the provision of section 194-C will be
applicable to the amounts paid as cooling charges by the customers of
the cold storage. [Circular No.1/2008 dt.10-1-2008].

Disclaimer: All the information provided above is for informative purposes only. You are advised to consult your tax consultant before you act upon any of the above information. In spite of this, if any person acts upon this information and suffers any loss, we are not to be held liable.

Though all efforts have been made to provide latest information, you are advised to check latest circulars, latest changes in law etc from the Indian Income Tax Department.

Result of the Information Systems Audit [ISA] Assessment Test held on 19th December, 2009 is likely to be declared on 17th January, 2010 around 2.00 PM - (13-01-2010)

2010-01-13T03:55:00.000-08:00

12th January, 2010
The result of the Information Systems Audit [ISA] Assessment Test held on 19th December, 2009 is likely to be declared on 17th January, 2010 around 2.00 PM at the Institute’s office at New Delhi.

The result of the above Assessment Test will be available on the Institute’s website www.icai.org

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia
2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
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ICAI launched facility to post your Grievance online

2010-01-13T03:50:00.000-08:00

ICAI - e-Samadhaan (The ICAI Helping Hand), Grievance Resolution Management System, For more details click on below:- http://www.icai.org/help/

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia
2.Posted www.taxpertindia.blogspot.com
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Results of the Chartered Accountants Final and Final (New Course) Examinations held in November, 2009 and Common Proficiency Test (CPT) held in December, 2009 are likely to be declared on Sunday, the 17th January, 2010 around 2:00 PM - (08-01-2010)

2010-01-08T02:02:00.000-08:00

January 7, 2010

The results of the Chartered Accountants Final and Final (New Course) Examinations held in November, 2009 and Common Proficiency Test (CPT) held in December, 2009 are likely to be declared on Sunday, the 17th January, 2010 around 2:00 PM and the same as well as the merit list (candidates securing a minimum of 55% and above marks and upto the maximum of 50th Rank in the case of Final Examination and candidates securing a minimum of 60% and above marks and upto the maximum of 10th Rank in the case of Common Proficiency Test) on all India basis will be available on the following website:

http://www.caresults.nic.in

Arrangements have also been made for the students of Final, Final (New Course) Examinations and Common Proficiency Test (CPT) desirous of having results on their e-mail addresses to register their requests at the above website, i.e., http://www.caresults.nic.in from 11th January, 2010. All those registering their requests will be provided their results through e-mail on the e-mail addresses registered as above immediately after the declaration of the result.

Further facilities have been made for students of Final, Final (New Course) Examinations and Common Proficiency Test (CPT) held in November/December, 2009 desirous of knowing their results with marks on SMS. The service will be available through MTNL, India Times and Reliance.

For getting results through the message students should type:

i) for Final Examination result the following

CAFNL(space)XXXXX (Where XXXXX is the five digit Final examination roll number of the candidate)

e.g. CAFNL 00028

ii) for Final (New Course) Examination result the following

CAFNLNW(space)XXXXX (Where XXXXX is the five digit Final (New Course) examination roll number of the candidate)

iii) for Common Proficiency Test result the following

CACPT(Space)XXXXXX (Where XXXXXX is the six digit Common Proficiency Test roll number of the candidate

e.g. CACPT 000171

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

http://www.caresults.nic.in

Arrangements have also been made for the students of Final, Final (New Course) Examinations and Common Proficiency Test (CPT) desirous of having results on their e-mail addresses to register their requests at the above website, i.e., http://www.caresults.nic.in from 11th January, 2010. All those registering their requests will be provided their results through e-mail on the e-mail addresses registered as above immediately after the declaration of the result.

Further facilities have been made for students of Final, Final (New Course) Examinations and Common Proficiency Test (CPT) held in November/December, 2009 desirous of knowing their results with marks on SMS. The service will be available through MTNL, India Times and Reliance.

For getting results through the message students should type:

i) for Final Examination result the following

CAFNL(space)XXXXX (Where XXXXX is the five digit Final examination roll number of the candidate)

e.g. CAFNL 00028

ii) for Final (New Course) Examination result the following

CAFNLNW(space)XXXXX (Where XXXXX is the five digit Final (New Course) examination roll number of the candidate)

iii) for Common Proficiency Test result the following

CACPT(Space)XXXXXX (Where XXXXXX is the six digit Common Proficiency Test roll number of the candidate

e.g. CACPT 000171

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

Arrangements have also been made for the students of Final, Final (New Course) Examinations and Common Proficiency Test (CPT) desirous of having results on their e-mail addresses to register their requests at the above website, i.e., http://www.caresults.nic.in from 11th January, 2010. All those registering their requests will be provided their results through e-mail on the e-mail addresses registered as above immediately after the declaration of the result.

Further facilities have been made for students of Final, Final (New Course) Examinations and Common Proficiency Test (CPT) held in November/December, 2009 desirous of knowing their results with marks on SMS. The service will be available through MTNL, India Times and Reliance.

For getting results through the message students should type:

i) for Final Examination result the following

CAFNL(space)XXXXX (Where XXXXX is the five digit Final examination roll number of the candidate)

e.g. CAFNL 00028

ii) for Final (New Course) Examination result the following

CAFNLNW(space)XXXXX (Where XXXXX is the five digit Final (New Course) examination roll number of the candidate)

iii) for Common Proficiency Test result the following

CACPT(Space)XXXXXX (Where XXXXXX is the six digit Common Proficiency Test roll number of the candidate

e.g. CACPT 000171

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

Further facilities have been made for students of Final, Final (New Course) Examinations and Common Proficiency Test (CPT) held in November/December, 2009 desirous of knowing their results with marks on SMS. The service will be available through MTNL, India Times and Reliance.

For getting results through the message students should type:

i) for Final Examination result the following

CAFNL(space)XXXXX (Where XXXXX is the five digit Final examination roll number of the candidate)

e.g. CAFNL 00028

ii) for Final (New Course) Examination result the following

CAFNLNW(space)XXXXX (Where XXXXX is the five digit Final (New Course) examination roll number of the candidate)

iii) for Common Proficiency Test result the following

CACPT(Space)XXXXXX (Where XXXXXX is the six digit Common Proficiency Test roll number of the candidate

e.g. CACPT 000171

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

For getting results through the message students should type:

i) for Final Examination result the following

CAFNL(space)XXXXX (Where XXXXX is the five digit Final examination roll number of the candidate)

e.g. CAFNL 00028

ii) for Final (New Course) Examination result the following

CAFNLNW(space)XXXXX (Where XXXXX is the five digit Final (New Course) examination roll number of the candidate)

iii) for Common Proficiency Test result the following

CACPT(Space)XXXXXX (Where XXXXXX is the six digit Common Proficiency Test roll number of the candidate

e.g. CACPT 000171

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

i) for Final Examination result the following

CAFNL(space)XXXXX (Where XXXXX is the five digit Final examination roll number of the candidate)

e.g. CAFNL 00028

ii) for Final (New Course) Examination result the following

CAFNLNW(space)XXXXX (Where XXXXX is the five digit Final (New Course) examination roll number of the candidate)

iii) for Common Proficiency Test result the following

CACPT(Space)XXXXXX (Where XXXXXX is the six digit Common Proficiency Test roll number of the candidate

e.g. CACPT 000171

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

CAFNL(space)XXXXX (Where XXXXX is the five digit Final examination roll number of the candidate)

e.g. CAFNL 00028

ii) for Final (New Course) Examination result the following

CAFNLNW(space)XXXXX (Where XXXXX is the five digit Final (New Course) examination roll number of the candidate)

iii) for Common Proficiency Test result the following

CACPT(Space)XXXXXX (Where XXXXXX is the six digit Common Proficiency Test roll number of the candidate

e.g. CACPT 000171

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

e.g. CAFNL 00028

ii) for Final (New Course) Examination result the following

CAFNLNW(space)XXXXX (Where XXXXX is the five digit Final (New Course) examination roll number of the candidate)

iii) for Common Proficiency Test result the following

CACPT(Space)XXXXXX (Where XXXXXX is the six digit Common Proficiency Test roll number of the candidate

e.g. CACPT 000171

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

ii) for Final (New Course) Examination result the following

CAFNLNW(space)XXXXX (Where XXXXX is the five digit Final (New Course) examination roll number of the candidate)

iii) for Common Proficiency Test result the following

CACPT(Space)XXXXXX (Where XXXXXX is the six digit Common Proficiency Test roll number of the candidate

e.g. CACPT 000171

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

CAFNLNW(space)XXXXX (Where XXXXX is the five digit Final (New Course) examination roll number of the candidate)

iii) for Common Proficiency Test result the following

CACPT(Space)XXXXXX (Where XXXXXX is the six digit Common Proficiency Test roll number of the candidate

e.g. CACPT 000171

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

and send the message to:

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

52001 - for DOLPHIN AND TRUMP users only

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

58888 - for all mobile services - India Times

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

51234] - for Reliance subscribers (Also accessible through R-World and Voice Portal – To call 51234815 from Reliance Mobiles)

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
3.Get Tax updates from my blog through by joining my google group
CA_taxmannindia:http://groups.google.co.in/group/ca_taxmannindia?hl=en
5.Get Free Quality SMS updates from my blog on your MOBILE:http://labs.google.co.in/smschannels/subscribe/ca_taxmannindia
OR
Send a message JOIN ca_taxmannindia to 9870807070 thru ur mobile nd receive updates

(G. SOMASEKHAR)
ADDITIONAL SECRETARY (EXAMS.)

1.FOLLOW US ON TWITTER CLICK HERE: http://twitter.com/taxpertindia2.Posted www.taxpertindia.blogspot.com
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Fringe benefit tax to hit employees with company cars

2010-01-08T01:30:00.000-08:00

The new perquisite rules have been notified and are applicable from April 1,2009, for the current financial year. There is significant difference in respect of the taxability of the car benefit under the Fringe Benefit Tax (FBT) regime vis-à-vis the perquisite taxation.

FBT regime

Under FBT, a fringe benefit was deemed to have been provided by the employer to its employees for the expenditure incurred and/or payment made for repair, running (including fuel), maintenance of the motor car and the depreciation thereon. Therefore, irrespective of whether the car was owned by the employer or by the employee, the expenditure incurred by the employer or the expense reimbursed to the employee was subject to FBT.

Twenty per cent of such expense incurred/reimbursed was considered to be the fringe benefit, which was liable to tax at 30% plus surcharge and cess, as applicable. Hence, the effective tax on the expenditure incurred used to be 7% approximately of the expenditure incurred.

New perk rules

Under the new perquisite rules, a distinction is to be made between the car owned by the employer and the car owned by the employee, as the value of the tax perquisite in the two scenarios varies considerably. Even though there could be different permutation and combination, under which the car benefit could be provided by the employer to the employee, this article primarily focuses on two scenarios where the car is either owned by the employer or employee and the car expenses are met/reimbursed by the employer.

Car provided by the employer

Where the car is owned or hired by the employer and is used wholly and exclusively in the performance of official duties, no perquisite value is to be determined.

If such a car is used exclusively for the private or personal purposes, the actual expenditure incurred by the employer as increased by the amount representing normal wear and tear, would be treated as perquisite value.
In practice, generally, a car is provided for both official and personal use. In that case, the perquisite value is to be determined as Rs 1,800 per calendar month where the cubic capacity of the engine does not exceed 1.6 litre and Rs 2,400 where it exceeds 1.6 litre. In case a chauffeur is provided, Rs 900 is to be added to the aforesaid perquisite value.

EMployee-owned cars

Where the employee owns the car but the actual repair, running and maintenance expenses are met or reimbursed by the employer and such car is used wholly and exclusively for official purposes, then there would be no perquisite value. However, where such a reimbursement is for both official and personal purposes, the perquisite value is to be determined as the actual amount of expenditure incurred by the employer less than Rs 1,800/Rs 2,400, depending on the cubic capacity and Rs 900 if a chauffeur is provided.

Employee-owned cars lose shine

Therefore, it is pertinent to note that while under FBT regime in both the scenarios, the tax impact was similar, however, the perquisite value and the corresponding tax could be significantly more in case the car is owned by the employee while expenses are met by the employer for use of car for both official and personal purpose. This is particularly an area of concern as in the instant case, the reimbursements have been made from April till date and would now need to be covered under the new perquisite rules and taxed accordingly. Thus, this tax needs to be withheld from January-March salary for the entire year.

Further, cars provided by the employer to employee for both official and personal purposes do look more attractive now as part of overall compensation strategy.

Vikas Vasal, Executive Director, KPMG
Source: Economic Times
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Cos to get fringe benefit from Q4 advance tax

2010-01-08T01:24:00.000-08:00

The government will allow companies to adjust the fringe benefit

tax (FBT) paid by them against the advance tax due in the March
quarter,
reducing the hazard of claiming a refund and slightly improving profits at a time of rising costs, said an income-tax department official.

“The Central Board of Direct Taxes has taken an in-principle decision to allow corporates to adjust FBT paid in the first quarter against their advance tax,” he said.

Finance Minister Pranab Mukherjee in his July 2009 Budget scrapped FBT, seen by many as more of a trouble than of help, in significantly raising the government’s revenues. But corporates have paid in advance, a portion of the tax due, in the first quarter that ended in June. It was replaced with a perquisites tax on employees receiving such benefits. FBT, introduced by former finance minister P Chidambaram in 2005, is a kind of a presumptive tax on expenditure incurred by a company on its employees.

Under FBT, some of the benefits such as travel and hotel stay given by an employer to the staff are deemed to be fringe benefits and taxed accordingly. Companies had to pay a 20% tax on such expenses.

A circular will soon be issued clarifying the issue on the adjustment, said the official who did not want to be identified. The government has so far collected about Rs 2,000 crore in the current financial year through the levy, he said.

Just like the corporate advance tax, FBT also had to be paid in four instalments in June, September, December and March.

However, loss-making companies and others such as liaison offices of foreign companies, which do not otherwise have a tax liability, will have to claim a refund.

Although the decision may not add significantly to profits, it could bring in a slight relief for corporates.

It is not yet clear how the individual salaried taxpayers who have paid FBT for gains such as employee stock options (Esops) will adjust it.

Source: Economic Times

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Blog opened specially devoted to CA,CS and ICWAI students

2010-01-04T00:44:00.000-08:00

Friends,

Blog specially devoted for CA,CS and ICWAI students is opened which can be accessed at
http://taxpertstudents.blogspot.com/

The blog is at a testing stage so if you encounter any problem please let us know at email:taxpertindia@gmail.com

As a kind of 1st installment as promised i have uploaded PCC NOV 2009 papers
click here to go to that post: http://taxpertstudents.blogspot.com/2010/01/nov-2009-papers.html

IF you have any kind of papers of CA,CS and ICWAI exams which you wud like to share then send us at
EMAIL: taxpertindia@gmail.com

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Govt Said that UTN no. is scrapped which was to come on 01.01.10

2009-12-31T07:40:00.000-08:00

The government has decided to shelve the introduction of the Unique Transaction Number (UTN) which tax payers need to quote along with Permanent Account Number (PAN) when tax is deducted/collected at source. The scheme was to have come into force from the New Year.

However, the finance ministry has not ruled out the possibility of introducing a new identity number like UTN from the next fiscal, in addition to the PAN to ensure prompt verification and granting of tax credits to tax payers.

“The introduction of UTN, which was scheduled to be implemented from January 2010, has been shelved in all probability . The process of filing tax returns remains the same as earlier,” a finance ministry official said.

A similar arrangement of having a new identity number is under contemplation but it would only happen from the next fiscal, the official said.

The government had earlier said the system of allotting UTN is expected to become operational by January 1, 2010.

The move to introduce UTN had invited concerns from tax payers as it would have brought in a slew of formalities for the tax payers, through their respective collectors and deductors, to avail the new number and file their returns on time.

The decision to shelve the UTN has been taken keeping in mind the approaching end of the fiscal year. Moreover , the exercise to have a new identity number like PAN is huge and it would have brought a lot of complications for tax payers, the finance ministry official said.

The Central Board of Direct Taxes (CBDT) had deferred UTN’s introduction to June 30 this year saying, “taxpayers filing their income tax returns for assessment year 2009-10 or any other earlier assessment year, may continue to file their returns without mentioning the Unique Transaction Number (UTN).”

The CBDT in a circular earlier said the new number (UTN) is mandatory for filing tax returns due to certain lacunae like individuals having more than one PAN.

The income-tax department was also in touch with the National Securities Depository (NSDL) regarding future steps to be taken for “putting in place” a new system for UTN.

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HOW TO PREPARE FOR CPT?

2009-12-30T21:59:00.000-08:00

Dear Fri+ends,

Here is my first Article,written especially for taxpert blog.Please read it, it is for the benefit of CPT students.

ur Fri+end
Vakeel Ali

To download the belowgiven article click here: http://www.box.net/shared/nrmsbc0le7

HOW TO PREPARE FOR CPT?

1.For all subjects

Read module carefully and prepare ur own short and sweet notes. Prepare ur notes after understanding in depth. Use these notes for revision purpose. Solve all the previous exam questions chapter- wise. ie complete one chapter with ur notes and then solve the question papers. While solving the question papers do not see the given answers. Firstly give ur answer and then compare the same with suggested given answer. Do this for each chapter. After completing whole chapters and all syllabus be prepare for self test which is similar to final exam.ie Use previous question papers and solve it within the given time(Do this assuming that u r appearing for the final exam ). After observing and solving previous question papers u will come to know that what is imp. for theory and practical and u definitely get an idea of format of question papers linking with each chapter. That means on which chapters questions are mostly asked. Have group discussions with CPT appearing/passed students.

Do not solve directly objective type questions. Firstly absorb the chapter in detail.

Be habitual of solving at least 100 objective questions regularly so that in one month u will cover near about 3000 objective questions.

Do not be hurry while selecting the alternative from the given options, firstly understand the question and then match ur required answer from alternatives.

Sometimes it is observed that students take much times in confusing questions. Do not waist ur valuable time, firstly solve the questions on which u have more confidence.

For QA.(Maths)

Please note that there is no mark for steps. So try to solve by Direct method. eg solution for x+y=2 and x-y=0 Answers are given in questions so select it from given options. Ans options1.(1,0) 2.(0,0) 3.(1,1) 4. non of above. Here just put given values of alternatives in the equation whichever option is satisfying equation will be the required answer. In above example answer is option 3. as 1+1=2 and 1-1=0 hence there is no need to solve it by usual methods. This method is not possible everywhere but is possible in many cases. IF u r much confident then start Maths at first otherwise at last.

For law:

U will understand it by studying case laws so grasp definitions and various sections.

For ECo.

Figures such as growth rate of a particular year, industrial growth rate, what was target and actual. Grasp all the Definitions and concepts.

For Account.

Give ur max. time to clear concepts. Grasp here what is practically and what is theoretically important. Take suggestions and tips from those who have passed CPT. Take their interviews.

BE CONNECTED WITH OUR BLOG www.taxpertindia.blogspot.com, WE WILL SOON MAKE SOME TIPS FOR DIRECT METHODS OF ANSWERING OF QA(MATHS)FOR CPT STUDENTS AS WE ARE RECEIVING MANY SUGGETIONS FROM CPT STUDENTS.

Written by:- Vakeel Ahmad Munaf Ali Sayyad

Dhule. Maharashtra

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IFRS convergence PPT

2009-12-29T21:48:00.001-08:00

Just click on the below mentioned link to download the PPT.

ifrs convergence.pdf

No ST on foreign service prior to 18.4.2006 Says Supreme Court

2009-12-19T08:27:00.000-08:00

Now It is Final - No Service Tax on foreign service prior to 18.4.2006: Supreme Court dismisses Revenue SLP

TIOL-DDT 1258
15.12.2009
Tuesday
IS it 1.1.2005 or 18.4.2006?

In the Hindustan Zinc case - 2008-TIOL-1149-CESTAT-DEL-LB, a Larger Bench of the Tribunal headed by the President held that, “the taxable service provided by a non-resident or from outside India, who does not have any office in India, having been specified as 'taxable service' with effect from 1.1.2005, under notification No.36 /2004, recipient of such service could not be held liable for paying service tax prior to 1.1.2005 notwithstanding the amendment in rule 2(1)(d) of the Service Tax Rules under notification no. 12/2004.”

The Department had challenged this in the Supreme Court and the Supreme Court had dismissed the Government's appeal - 2009-TIOL-87-SC-ST.

This, many in the Government, take as a reason to state that the Supreme Court had confirmed that Service Tax on import of services is payable from 1.1.2005 and not 18.4.2006 as held by the Bombay High Court in Indian National Shipowners Association – 2008-TIOL-633-HC-MUM-ST

The Supreme Court had not held that the tax is payable from 1.1.2005, but only dismissed the Revenue appeal against the CESTAT order holding that it was not payable before 1.1.2005. And there is a lot of difference in the two concepts.

Anyway not satisfied with the dismissal of its appeal by the Supreme Court, the Government filed a review petition in the Supreme Court in the Hindustan Zinc case. The Supreme Court found no merit in the prayer for Review and dismissed the Review Petition. - 2009-TIOL-117-SC-ST

You will remember that in Indian National Shipowners Association – 2008-TIOL-633-HC-MUM-ST the Bombay High Court held that the tax is payable only from 18.04.2006 and this decision had been widely followed.

But the litigation loving government does not keep quiet. It has filed a Special Leave Petition in the Supreme Court against the Bombay High Court judgement.

Yesterday the Supreme Court dismissed the SLP and in tune with TIOL tradition – we are the first to bring you this news.

Kind regards,

Rebecca Andrews

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New Perquisite Rules Notified dated: 18.12.09

2009-12-19T08:02:00.000-08:00

THE much-awaited perquisite valuation rules have finally been notified by the CBDT. The Board has amended Rule 3 to give effect to the abolition of FBT, announced in the Budget 2009. Vide Income Tax (13th) Amendment Rules, the Board has notified the new valuation guidelines w.e.f April 1, 2009 for the AY 2010-11.

You can Download this notification click here:http://www.box.net/shared/8oqh6xp1oh

INCOME-TAX (THIRTEENTH AMENDMENT) RULES, 2009 - SUBSTITUTION OF RULE 3 AND INSERTION OF RULE 40F

Notification No. 94/2009/F.NO. 142/25/2009-SO (TPL), dated 18-12-2009

In exercise of the powers conferred by section 295 read with sub-section (2) of section 17 of the Income-tax Act, (43 of 1961). The Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namlely :-

(1) These rules may be called the Income-tax (13th Amendment) Rules, 2009.
(2) They shall be deemed to have come into force on the 1st day of April, 2009.

In the Income-tax Rules, 1962, for rule 3, the following shall be substituted, namely: -

"3. For the purpose of computing the income chargeable under the head "Salaries", the value of perquisites provided by the employer directly or indirectly to the assessee (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules, namely:—

(1) The value of residential accommodation provided by the employer during the previous year shall be determined on the basis provided in the Table below:

Sl. NO.
Circumstances
Where accommodation is Unfurnished
Where accommodation is furnished

(1)
(2)
(3)
(4)

(1)
Where the accommodation is provided by the Central Government or any State Government to the employees either holding office or post in connection with the affairs of the Union or of such State.

License fee determined by the Central Government or any State Government in respect of accommodation in accordance with the rules framed by such Government as reduced by the rent actually paid by the employee.
determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment) or if such furniture is hired from a third party, the actual hire charges payable for the same as reduced by any charges paid or payable for he same by the employee during the previous year.

(2)
Where the accommodation is provided by any other employer and—

(a) where the accommodation is owned by the employer, or
(i) 15% of salary in cities having population exceeding 25 lakhs as per 2001 census;

(ii) 10% of salary in cities having population exceeding 10 lakhs but not exceeding 25 lakhs as per 2001 census;

(iii) 7.5% of salary in other areas,

in respect of the period during which the said accommodation was occupied by the employee during the previous year as reduced by the rent, if any, actually paid by the employee.

The value of perquisites as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, refrigerators, other household ap plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year.

(b) where the accommodation is taken on lease or rent by the employer.
Actual amount of lease rental paid or payable by the employer or 15% of salary whichever is lower as reduced by the rent, if any, actually paid by the employee.

The value of perquisite as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year.

(3)
Where the accommodation is provided by the employer specified in serial number (1) or (2) in a hotel (except where the employee is provided such accommodation for a period not Exceeding in aggregate fifteen days on his transfer from one place to another)
Not applicable

24% of salary paid or payable for the previous year or the actual charges paid or payable to such hotel, which is lower, for the period during which such accommodation is provided as reduced by the rent, if any, actually paid or payable by the employee:

Provided that nothing contained in this sub-rule shall apply to any accommodation provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site, or a dam site or a power generation site or an off-shore site—

(i) which, being of a temporary nature and having plinth area not exceeding 800 square feet, is located not less than eight kilometers away from the local limits of any municipality or a cantonment board; or

(ii) which is located in a remote area:

Provided further that where on account of his transfer from one place to another, the employee is provided with accommodation at the new place of posting while retaining the accommodation at the other place, the value of perquisite shall be determined with reference to only one such accommodation which has the lower value with reference to the Table above for a period not exceeding 90 days and thereafter the value of perquisite shall be charged for both such accommodations in accordance with the Table.

Explanation.—For the purposes of this sub-rule, where the accommodation is provided by the Central Government or any State Government to an employee who is serving on deputation with any body or undertaking under the control of such Government,-

(i) the employer of such an employee shall be deemed to be that body or undertaking where the employee is serving on deputation; and

(ii) the value of perquisite of such an accommodation shall be the amount calculated in accordance with Sl. No. (2)(a) of Table I, as if the accommodation is owned by the employer.

(2)(A) The value of perquisite by way of use of motor car to an employee by an employer shall be determined in accordance with the following Table, namely:—

Sl.No.
Circumstance
Where cubic capacity of engine does not exceed 1.6 liters
Where cubic capacity of engine exceeds 1.6 liters

(1)
(2)
(3)
(4)

(1)
Where the motor car is owned or hired by the employer and—

(a) is used wholly and exclusively in the performance of his official duties;

(b) is used exclusively for the private or personal purposes of the employee or any member of his household and the running and maintenance expenses are met or reimbursed by the employer;

(c) is used partly in the performance of duties and partly for private or personal purposes of his own or any member of his household and—

(i) the expenses on maintenance and running are met or reimbursed by the employer;

(ii) the expenses on running and maintenance for private or personal use are fully met by the assessee.

No value:

Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.

Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by any amount charged form the employee for such use.

Rs. 1,800 (plus Rs. 900, if chauffeur is also provided to run the motor car)

Rs. 600 (plus Rs.900, if chauffeur is also provided by the employer to run the motor car)

No value:

Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.

Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by any amount charged form the employee for such use.

Rs. 2,400 (plus Rs. 900, if chauffeur is also provided to run the motor car)

Rs. 900 (plus Rs. 900, if chauffeur is also provided to run the motor car)

(2)
Where the employee owns a motor car but the actual running and maintenance charges (including remuneration of the chauffeur, if any) are met or reimbursed to him by the employer and—

(i) such reimbursement is for the use of the vehicle wholly and exclusively for official purposes;

(ii) such reimbursement is for the use of the vehicle partly for official purposes and partly for personal or private purposes of the employee or any member of his household.

No value:

Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.

Subject to the provisions of clause (B) of this sub-rule, the actual amount of expenditure incurred by the employer as reduced by the amount specified in Sl. No. (1)(c)(i) above.

No value:

Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.

Subject to the provisions of clause (B) of this sub-rule, the actual amount of expenditure incurred by the employer as reduced by the amount specified in Sl. No. (1)(c)(i) above.

(3) Where the employee owns any other automotive conveyance but the actual running and maintenance charges are met or reimbursed to him by the employer and

(i). such reimbursement is for the use of the vehicle wholly and exclusively for official purposes;

(ii) such reimbursement is for the use of vehicle partly for official purposes and partly for personal or private purposes of the employee.

No Value :

Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.

Subject to the provisions of clause (B) of this sub-rule, the actual amount of expenditure incurred by the employer as reduced by the amount of
Rs. 900.

Not applicable :

Provided that where one or more motor-cars are owned or hired by the employer and the employee or any member of his household are allowed the use of such motor-car or all of any of such motor-cars (otherwise than wholly and exclusively in the performance of his duties), the value of perquisite shall be the amount calculated in respect of one car in accordance with Sl. No. (1)(c)(i) of Table II as if the employee had been provided one motor-car for use partly in the performance of his duties and partly for his private or personal purposes and the amount calculated in respect of the other car or cars in accordance with Sl. No. (1)(b) of Table II as if he had been provided with such car exclusively for his private or personal purposes.

(B) Where the employer or the employee claims that the motor-car is used wholly and exclusively in the performance of official duty or that the actual expenses on the running and maintenance of the motor-car owned by the employee for official purposes is more than the amounts deductible in Sl. No. 2(ii) or 3(ii) of Table II, he may claim a higher amount attributable to such official use and the value of perquisite in such a case shall be the actual amount attributable to official use of the vehicle provided that the following conditions are fulfilled:—

(a) the employer has maintained complete details of journey undertaken for official purpose which may include date of journey, destination, mileage and the amount of expenditure incurred thereon;

(b) the employer gives a certificate to the effect that the expenditure was incurred wholly and exclusively for the performance of official duties.

Explanation.—For the purposes of this sub-rule, the normal wear and tear of a motor-car shall be taken at 10% per annum of the actual cost of the motor-car or cars.

(3) The value of benefit to the employee or any member of his household resulting from the provision by the employer or services of a sweeper, a gardener, a watchman or a personal attendant, shall be the actual cost to the employer. The actual cost in such a case shall be the total amount of salary paid or payable by the employer or any other person on his behalf for such services as reduced by any amount paid by the employee for such services.

(4) The value of the benefit to the employee resulting from the supply of gas, electric energy or water for his household consumption shall be determined as the sum equal to the amount paid on that account by the employer to the agency supplying the gas, electric energy or water. Where such supply is made from resources owned by the employer, without purchasing them from any other outside agency, the value of perquisite would be the manufacturing cost per unit incurred by the employer. Where the employee is paying any amount in respect of such services, the amount so paid shall be deducted from the value so arrived at.

(5) The value of benefit to the employee resulting from the provision of free or concessional educational facilities for any member of his household shall be determined as the sum equal to the amount of expenditure incurred by the employer in that behalf or where the educational institution is itself maintained and owned by the employer or where free educational facilities for such member of employees' household are allowed in any other educational institution by reason of his being in employment of that employer, the value of the perquisite to the employee shall be determined with reference to the cost of such education in a similar institution in or near the locality. Where any amount is paid or recovered from the employee on that account, the value of benefit shall be reduced by the amount so paid or recovered :

Provided that where the educational institution itself is maintained and owned by the employer and free educational facilities are provided to the children of the employee or where such free educational facilities are provided in any institution by reason of his being in employment of that employer, nothing contained in this sub-rule shall apply if the cost of such education or the value of such benefit per child does not exceed one thousand rupees per month.

(6) The value of any benefit or amenity resulting from the provision by an employer who is engaged in the carriage of passengers or goods, to any employee or to any member of his household for personal or private journey free of cost or at concessional fare, in any conveyance owned, leased or made available by any other arrangement by such employer for the purpose of transport of passengers or goods shall be taken to be the value at which such benefit or amenity is offered by such employer to the public as reduced by the amount, if any, paid by or recovered from the employee for such benefit or amenity :

Provided that nothing contained in this sub-rule shall apply to the employees of an airline or the railways.

(7) In terms of provisions contained in clause (viii) of sub-section (2) of section 17, the following other benefits or amenities and value thereof shall be determined in the manner provided hereunder:

(i) The value of the benefit to the assessee resulting from the provision of interest-free or concessional loan for any purpose made available to the employee or any member of his household during the relevant previous year by the employer or any person on his behalf shall be determined as the sum equal to the interest computed at the rate charged per annum by the State Bank of India, constituted under the State Bank of India Act, 1955 (23 of 1955), as on the 1st day of the relevant previous year in respect of loans for the same purpose advanced by it on the maximum outstanding monthly balance as reduced by the interest, if any, actually paid by him or any such member of his household:

Provided that no value would be charged if such loans are made available for medical treatment in respect of diseases specified in rule 3A of these Rules or where the amount of loans are petty not exceeding in the aggregate twenty thousand rupees:

Provided further that where the benefit relates to the loans made available for medical treatment referred to above, the exemption so provided shall not apply to so much of the loan as has been reimbursed to the employee under any medical insurance scheme.

(ii) The value of travelling, touring, accommodation and any other expenses paid for or borne or reimbursed by the employer for any holiday availed of by the employee or any member of his household, other than concession or assistance referred to in rule 2B of these rules, shall be determined as the sum equal to the amount of the expenditure incurred by such employer in that behalf. Where such facility is maintained by the employer, and is not available uniformly to all employees, the value of benefit shall be taken to be the value at which such facilities are offered by other agencies to the public. Where the employee is on official tour and the expenses are incurred in respect of any member of his household accompanying him, the amount of expenditure so incurred shall also be a fringe benefit or amenity:

Provided that where any official tour is extended as a vacation, the value of such fringe benefit shall be limited to the expenses incurred in relation to such extended period of stay or vacation. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity.

(iii) The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity:

Provided that nothing contained in this clause shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof either case does not exceed fifty rupees per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.

(iv) The value of any gift, or voucher, or token in lieu of which such gift may be received by the employee or by member of his household on ceremonial occasions or otherwise from the employer shall be determined as the sum equal to the amount of such gift:

Provided that where the value of such gift, voucher or token, as the case may be, is below five thousand rupees in the aggregate during the previous year, the value of perquisite shall be taken as "nil".

(v) The amount of expenses including membership fees and annual fees incurred by the employee or any member of his household, which is charged to a credit care (including any add-on-card) provided by the employer, or otherwise, paid for or reimbursed by such employer shall be taken to be the value of perquisite chargeable to tax as reduced by the amount, if any paid or recovered from the employee for such benefit or amenity:

Provided that there shall be no value of such benefit where expenses are incurred wholly and exclusively for official purposes and the following conditions are fulfilled:—

(a) complete details in respect of such expenditure are maintained by the employer which may, inter alia, include the date of expenditure and the nature of expenditure;

(b) the employer gives a certificate for such expenditure to the effect that the same was incurred wholly and exclusively for the performance of official duties.

(vi) (A) The value of benefit to the employee resulting from the payment or reimbursement by the employer of any expenditure incurred (including the amount of annual or periodical fee) in a club by him or by a member of his household shall be determined to be the actual amount of expenditure incurred or reimbursed by such employer on that account. The amount so determined shall be reduced by the amount, if any paid or recovered from the employee for such benefit or amenity:

Provided that where the employer has obtained corporate membership of the club and the facility is enjoyed by the employee or any member of his household, the value of perquisite shall not include the initial fee paid for acquiring such corporate membership.

(B) Nothing contained in this clause shall apply if such expenditure is incurred wholly and exclusively for business purposes and the following conditions are fulfilled:—

(a) complete details in respect of such expenditure are maintained by the employer which may inter alia, include the date of expenditure, the nature of expenditure and its business expediency;

(b) the employer gives a certificate for such expenditure to the effect that the same was incurred wholly and exclusively for the performance of official duties.

(C) Nothing contained in this clause shall apply for use of health club, sports and similar facilities provided uniformly to all employees by the employer.

(vii) The value of benefit to the employee resulting from the use by the employee or any member of his household of any movable asset (other than assets already specified in this rule and other than laptops and computers) belonging to the employer or hired by him shall be determined at 10% per annum of the actual cost of such asset or the amount of rent or charge paid or payable by the employer, as the case may be, as reduced by the amount, if any, paid or recovered from the employee for such use.

(viii) The value of benefit to the employee arising from the transfer of any movable asset belonging to the employer directly or indirectly to the employee or any member of his household shall be determined to be the amount representing the actual cost of such assets to the employer as reduced by the cost of normal wear and tear calculated at the rate of 10% of such cost for each completed year during which such asset was put to use by the employer and as further reduced by the amount, if any, paid or recovered from the employee being the consideration for such transfer :

Provided that in the case of computers and electronic items, the normal wear and tear would be calculated at the rate of 50% and in the case of motor cars at the rate of 20% by the reducing balance method.

(ix) The value of any other benefit or amenity, service, right or privilege provided by the employer shall be determined on the basis of cost to the employer under an arm's length transaction as reduced by the employee's contribution, if any :

Provided that nothing contained in this clause shall apply to the expenses on telephones including a mobile phone actually incurred on behalf of the employee by the employer.

(8)(i) For the purposes of clause (vi) of sub-section (2) of section 17, the fair market value of any specified security or sweat equity share, being an equity share in a company, on the date on which the option is exercised by the employee, shall be determined in accordance with the provisions of clause (ii) or clause (iii).

(ii) In a case where, on the date of the exercising of the option, the share in the company is listed on a recognized stock exchange, the fair market value shall be the average of the opening price and closing price of the share on that date on the said stock exchange :

Provided that where, on the date of exercising of the option, the share is listed on more than one recognized stock exchanges, the fair market value shall be the average of opening price and closing price of the share on the recognised stock exchange which records the highest volume of trading in the share :

Provided further that where, on the date of exercising of the option, there is no trading in the share on any recognized stock exchange, the fair market value shall be—

(a) the closing price of the share on any recognised stock exchange on a date closest to the date of exercising of the option and immediately preceding such date; or

(b) the closing price of the share on a recognised stock exchange, which records the highest volume of trading in such share, if the closing price, as on the date closest to the date of exercising of the option and immediately preceding such date, is recorded on more than one recognized stock exchange.

(iii) In a case where, on the date of exercising of the option, the share in the company is not listed on a recognised stock exchange, the fair market value shall be such value of the share in the company as determined by a merchant banker on the specified date.

(iv) For the purpose of this sub-rule,—

(a) "closing price" of a share on a recognised stock exchange on a date shall be the price of the last settlement on such date on such stock exchange :

Provided that where the stock exchange quotes both "buy'' and "sell" prices, the closing price shall be the "sell" price of the last settlement;

(b) "merchant banker" means category I merchant banker registered with Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(c) "opening price" of a share on a recognised stock exchange on a date shall be the price of the first settlement on such date on such stock exchange :

Provided that where the stock exchange quotes both "buy" and "sell" prices, the opening price shall be the "sell" price of the first settlement;

(d) "recognised stock exchange" shall have the same meaning assigned to it in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(e) "specified date" means,—

(i) the date of exercising of the option; or

(ii) any date earlier than the date of the exercising of the option, not being a date which is more than 180 days earlier than the date of the exercising.

(9) For the purposes of clause (vi) of sub-section (2) of section 17, the fair market value of any specified security, not being an equity share in a company, on the date on which the option is exercised by the employee, shall be such value as determined by a merchant banker on the specified date.

Explanation.—For the purposes of this sub-rule, `merchant banker' and `specified date' shall have the meanings assigned to them in sub-clause (b) and sub-clause (e) respectively of clause (iv) of sub-rule (8).

(10) This rule shall come into force with effect from the 1st day of April, 2009.

Explanation.—For the purposes of this rule-

(i) "accommodation" includes a house, flat, farm house or part thereof, or accommodation in a hotel, motel, service apartment, guest house, caravan, mobile home, ship or other floating structure;

(ii) "entertainment" includes hospitality of any kind and also, expenditure on business gifts other than free samples of the employers own product with the aim of advertising to the general public;

(iii) "hotel" includes licensed accommodation in the nature of motel, service apartment or guest house;

(iv) "member of household" shall include—

(a) spouse(s),

(b) children and their spouses,

(c) parents, and

(d) servants and dependents;

(v) "remote area", for purposes of proviso to this sub-rule means an area that is located at least 40 kilometres away from a town having a population not exceeding 20,000 based on latest published all-India census;

(vi) "salary" includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, by whatever name called from one or more employers, as the case may be, but does not include the following, namely:—

(a) dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned;

(b) employer's contribution to the provident fund account of the employee;

(c) allowances which are exempted from payment of tax;

(d) the value of perquisites specified in clause (2) of section 17 of the Income-tax Act;

(e) any payment or expenditure specifically excluded under proviso to sub-clause (iii) of clause (2) or proviso to clause (2) of section 17;

(f) lump-sum payments received at the time of termination of service or superannuation or voluntary retirement, like gratuity, severance pay leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments;

(vii) `maximum outstanding monthly balance' means the aggregate outstanding balance for each loan as on the last day of each month.

appendix 2

Section 17 of Income-tax Act, 1961

"Salary", "perquisite" and "profits in lieu of salary" defined.

17. For the purposes of sections 15 and 16 and of this section,—

(1) "salary" includes—

(i) wages;

(ii) any annuity or pension;

(iii) any gratuity;

(iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages;

(v) any advance of salary;

(va) any payment received by an employee in respect of any period of leave not availed of by him;

(vi) the annual accretion to the balance at the credit of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule;

(vii) the aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof; and

(viii) the contribution made by the Central Government or any other employer in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD;

(2) "perquisite" includes—

(i) the value of rent-free accommodation provided to the assessee by his employer;

(ii) the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer;

Explanation 1.—For the purposes of this sub-clause, concession in the matter of rent shall be deemed to have been provided if,—

(a) in a case where an unfurnished accommodation is provided by any employer other than the Central Government or any State Government and—

(i) the accommodation is owned by the employer, the value of the accommodation determined at the specified rate in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from, or payable by, the assessee;

(ii) the accommodation is taken on lease or rent by the employer, the value of the accommodation being the actual amount of lease rental paid or payable by the employer or fifteen per cent of salary, whichever is lower, in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from, or payable by, the assessee;

(b) in a case where a furnished accommodation is provided by the Central Government or any State Government, the licence fee determined by the Central Government or any State Government in respect of the accommodation in accordance with the rules framed by such Government as increased by the value of furniture and fixtures in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the aggregate of the rent recoverable from, or payable by, the assessee and any charges paid or payable for the furniture and fixtures by the assessee;

(c) in a case where a furnished accommodation is provided by an employer other than the Central Government or any State Government and—

(i) the accommodation is owned by the employer, the value of the accommodation determined under sub-clause (i) of clause (a) as increased by the value of the furniture and fixtures in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from, or payable by, the assessee;

(ii) the accommodation is taken on lease or rent by the employer, the value of the accommodation determined under sub-clause (ii) of clause (a) as increased by the value of the furniture and fixtures in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from, or payable by, the assessee;

(d) in a case where the accommodation is provided by the employer in a hotel (except where the assessee is provided such accommodation for a period not exceeding in aggregate fifteen days on his transfer from one place to another), the value of the accommodation determined at the rate of twenty-four per cent of salary paid or payable for the previous year or the actual charges paid or payable to such hotel, whichever is lower, for the period during which such accommodation is provided, exceeds the rent recoverable from, or payable by, the assessee.

Explanation 2.—For the purposes of this sub-clause, value of furniture and fixture shall be ten per cent per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the assessee during the previous year.

Explanation 3.—For the purposes of this sub-clause, "salary" includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, by whatever name called, from one or more employers, as the case may be, but does not include the following, namely:—

(a) dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned;

(b) employer's contribution to the provident fund account of the employee;

(c) allowances which are exempted from the payment of tax;

(d) value of the perquisites specified in this clause;

(e) any payment or expenditure specifically excluded under the proviso to this clause.

Explanation 4.—For the purposes of this sub-clause, "specified rate" shall be—

(i) fifteen per cent of salary in cities having population exceeding twenty-five lakhs as per 2001 census;

(ii) ten per cent of salary in cities having population exceeding ten lakhs but not exceeding twenty-five lakhs as per 2001 census; and

(iii) seven and one-half per cent of salary in any other place;

(iii) the value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases—

(a) by a company to an employee who is a director thereof;

(b) by a company to an employee being a person who has a substantial interest in the company;

(c) by any employer (including a company) to an employee to whom the provisions of paragraphs (a) and (b) of this sub-clause do not apply and whose income under the head "Salaries" (whether due from, or paid or allowed by, one or more employers), exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds fifty thousand rupees:

[***]

Explanation.—For the removal of doubts, it is hereby declared that the use of any vehicle provided by a company or an employer for journey by the assessee from his residence to his office or other place of work, or from such office or place to his residence, shall not be regarded as a benefit or amenity granted or provided to him free of cost or at concessional rate for the purposes of this sub-clause;

(iiia) [***]

(iv) any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee;

(v) any sum payable by the employer, whether directly or through a fund, other than a recognised provident fund or an approved superannuation fund or a Deposit-linked Insurance Fund established under section 3G of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), or, as the case may be, section 6C of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), to effect an assurance on the life of the assessee or to effect a contract for an annuity; 1[and]

(vi) the value of any other fringe benefit or amenity (excluding the fringe benefits chargeable to tax under Chapter XII-H) as may be prescribed :

The following sub-clauses (vi), (vii) and (viii) shall be substituted for the existing sub-clause (vi) of clause (2) of section 17 by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2010 :

(vi) the value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer, or former employer, free of cost or at concessional rate to the assessee.

Explanation.—For the purposes of this sub-clause,—

(a) "specified security" means the securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and, where employees' stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme;

(b) "sweat equity shares" means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called;

(c) the value of any specified security or sweat equity shares shall be the fair market value of the specified security or sweat equity shares, as the case may be, on the date on which the option is exercised by the assessee as reduced by the amount actually paid by, or recovered from the assessee in respect of such security or shares;

(d) "fair market value" means the value determined in accordance with the method as may be prescribed;

(e) "option" means a right but not an obligation granted to an employee to apply for the specified security or sweat equity shares at a predetermined price;

(vii) the amount of any contribution to an approved superannuation fund by the employer in respect of the assessee, to the extent it exceeds one lakh rupees; and

(viii) the value of any other fringe benefit or amenity as may be prescribed:

Provided that nothing in this clause shall apply to,—

(i) the value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer;

(ii) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family—

(a) in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees;

(b) in respect of the prescribed diseases or ailments, in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines :

Provided that, in a case falling in sub-clause (b), the employee shall attach with his return of income a certificate from the hospital specifying the disease or ailment for which medical treatment was required and the receipt for the amount paid to the hospital;

(iii) any portion of the premium paid by an employer in relation to an employee, to effect or to keep in force an insurance on the health of such employee under any scheme approved by the Central Government or the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), for the purposes of clause (ib) of sub-section (1) of section 36;

(iv) any sum paid by the employer in respect of any premium paid by the employee to effect or to keep in force an insurance on his health or the health of any member of his family under any scheme approved by the Central Government or the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), for the purposes of section 80D;

(v) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family other than the treatment referred to in clauses (i) and (ii); so, however, that such sum does not exceed fifteen thousand rupees in the previous year;

(vi) any expenditure incurred by the employer on—

(1) medical treatment of the employee, or any member of the family of such employee, outside India;

(2) travel and stay abroad of the employee or any member of the family of such employee for medical treatment;

(3) travel and stay abroad of one attendant who accompanies the patient in connection with such treatment,

subject to the condition that—

(A) the expenditure on medical treatment and stay abroad shall be excluded from perquisite only to the extent permitted by the Reserve Bank of India; and

(B) the expenditure on travel shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before including therein the said expenditure, does not exceed two lakh rupees;

(vii) any sum paid by the employer in respect of any expenditure actually incurred by the employee for any of the purposes specified in clause (vi) subject to the conditions specified in or under that clause :

Provided further that for the assessment year beginning on the 1st day of April, 2002, nothing contained in this clause shall apply to any employee whose income under the head "Salaries" (whether due from, or paid or allowed by, one or more employers) exclusive of the value of all perquisites not provided for by way of monetary payment, does not exceed one lakh rupees.

Explanation.—For the purposes of clause (2),—

(i) "hospital" includes a dispensary or a clinic or a nursing home;

(ii) "family", in relation to an individual, shall have the same meaning as in clause (5) of section 10; and

(iii) "gross total income" shall have the same meaning as in clause (5) of section 80B;

[* * *]

(3) "profits in lieu of salary" includes—

(i) the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto;

(ii) any payment (other than any payment referred to in clause (10), clause (10A), clause (10B), clause (11), clause (12), clause (13) or clause (13A) of section 10), due to or received by an assessee from an employer or a former employer or from a provident or other fund, to the extent to which it does not consist of contributions by the assessee or interest on such contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy.

Explanation.—For the purposes of this sub-clause, the expression "Keyman insurance policy" shall have the meaning assigned to it in clause (10D) of section 10;

(iii) any amount due to or received, whether in lump sum or otherwise, by any assessee from any person—

(A) before his joining any employment with that person; or

(B) after cessation of his employment with that person.
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Advance FBT paid for the FY:2009-10 is to be treated as advance income tax paid, so that the same can be adjusted against incometax liability

2009-12-11T22:38:00.000-08:00

THE POST BUDGET MEMORANDUM OF THE ICAI CLEARLY SPECIFIES AS UNDER

"Advance FBT paid should be treated as advance income tax paid, so that the same can be adjusted against incometax liability in order to avoid the procedural hassles and time involved in claiming refund. Further in case there is no advance tax payable either on account of loss or exempt income appropriate circular be issued to grant refund."

To download the post budget memorandum just click here : http://www.mediafire.com/file/yjylh2ligyi/16677postbudget_memorandum09.pdf

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MCA:~MKT. RESEARCH N ANALYSIS unit in Serious Fraud Investigation Office

2009-12-11T22:30:00.000-08:00

Press Information Bureau
Government of India

Thursday, December 10, 2009
	Ministry of Corporate Affairs
	MARKET RESEARCH AND ANALYSIS UNIT IN THE SERIOUS FRAUD INVESTIGATION OFFICE
	15:17 IST

	LOK SABHA The Government has set up a Market Research and Analysis Unit in the Serious Fraud Investigation Office with the objective of improvements in the regulatory system in Corporate Sector. Giving this information in the Lok Sabha today Shri Salman Khurshid, Minister of Corporate Affairs said the unit will inter-alia perform following main functions: (i) Repository of Information To collect information from various sources including media, other investigating agencies, employees, investors, deposit holders, banks, financial institutions etc. and analyse the trends. (ii) Improving investigation skills To analyse all the completed investigation cases to see if investigation process was followed in letter and spirit. Any deviation and its resultant effect on the outcome of investigation would be brought out to form a base for further improvement in investigation skills. (iii) Inputs for adopting best international practices To study investigation cases carried out by the investigation departments of the respective agencies in other countries to analyse the procedure and systems followed in those countries. Investigation modules based on best international practices shall be developed by the Unit for guiding cases of investigation. (iv) Coordination with other investigative agencies To co-ordinate with other investigative agencies on continuous basis to collect the requisite information on managerial and corporate behavior. The information thus collected would be synthesised with the information collected through media and the data gathered from MCA-21 project. This information bank can be used to throw early alerts on deviation from the legally accepted behavior of the corporate entities. ----------------------------------------- KKP/ska

NON-BANKING FINANCIAL COMPANIES (Frequently Asked Questions)

2009-12-10T04:23:00.000-08:00

To download this file click here:http://www.mediafire.com/file/3ojjyzjjmlm/NBFCpart1.pdf

Frequently Asked Questions on NBFCs

QUES -1 What is a Non-Banking Financial Company (NBFC)?

ANS -1 A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company).

QUES 2. NBFCs are doing functions similar to banks. What is difference between banks & NBFCs ?

ANS 2. NBFCs are doing functions akin to that of banks; however there are a few differences:

(i) an NBFC cannot accept demand deposits;

(ii) an NBFC is not a part of the payment and settlement system and as such an NBFC cannot issue cheques drawn on itself; and

(iii) deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors unlike in case of banks.

QUES-3. Is it necessary that every NBFC should be registered with RBI?

ANS 3. In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non-banking financial institution as defined in clause (a) of Section 45 I of the RBI Act, 1934.

However, to obviate dual regulation, certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI viz. Venture Capital Fund/Merchant Banking companies/Stock broking companies registered with SEBI, Insurance Company holding a valid Certificate of Registration issued by IRDA, Nidhi companies as notified under Section 620A of the Companies Act, 1956, Chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982 or Housing Finance Companies regulated by National Housing Bank.

QUES 4. What are the different types of NBFCs registered with RBI?

ANS 4. Originally, NBFCs registered with RBI were classified as:

(i) equipment leasing company;
(ii) hire-purchase company;
(iii) loan company;
(iv) investment company.

However, with effect from December 6, 2006 the above NBFCs registered with RBI have been reclassified as

(i) Asset Finance Company (AFC)
(ii) Investment Company (IC)
(iii) Loan Company (LC)

AFC would be defined as any company which is a financial institution carrying on as its principal business the financing of physical assets supporting productive/economic activity, such as automobiles, tractors, lathe machines, generator sets, earth moving and material handling equipments, moving on own power and general purpose industrial machines. Principal business for this purpose is defined as aggregate of financing real/physical assets supporting economic activity and income arising therefrom is not less than 60% of its total assets and total income respectively.
The above type of companies may be further classified into those accepting deposits or those not accepting deposits.
Updated on February 10, 2009

QUES 5.What are the requirements / is the procedure for registration with RBI?

ANS 5. A company incorporated under the Companies Act, 1956 and desirous of commencing business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 should have a minimum net owned fund of Rs 25 lakh (raised to Rs 200 lakh w.e.f April 21, 1999).

The company is required to submit its application online by accessing RBI’s secured website https://secweb.rbi.org.in/COSMOS/rbilogin.do (the applicant companies do not need to log on to the COSMOS application and hence user ids for these companies are not required). The company has to click on “CLICK” for Company Registration on the login page. A window showing the Excel application forms available for download would be displayed. The company can then download suitable application form (i.e. NBFC or SC/RC) from the above website, key in the data and upload the application form. The company may note to indicate the name of the correct Regional Office in the field “C-8” of the “Annx-Identification Particulars” worksheet of the Excel application form. The company would then get a Company Application Reference Number for the CoR application filed on-line. Thereafter, the company has to submit the hard copy of the application form (indicating the Company Application Reference Number of its on-line application), along with the supporting documents, to the concerned Regional Office. The company can then check the status of the application based on the acknowledgement number. The Bank would issue Certificate of Registration after satisfying itself that the conditions as enumerated in Section 45-IA of the RBI Act, 1934 are satisfied.

QUES 6. Where can one find list of Registered NBFCs and instructions issued to NBFCs?

ANS 6. The list of registered NBFCs is available on the web site of Reserve Bank of

India

and can be viewed at www.rbi.org.in. The instructions issued to NBFCs from time to time are also hosted at the above site. Besides, instructions are also issued through Official Gazette notifications. Press Release is also issued to draw attention of the public/NBFCs.

QUES 7. Can all NBFCs accept deposits and what are the requirements for accepting Public Deposits?

ANS 7. All NBFCs are not entitled to accept public deposits. Only those NBFCs holding a valid Certificate of Registration with authorisation to accept Public Deposits can accept/hold public deposits. NBFCs authorised to accept/hold public deposits besides having minimum stipulated Net Owned Fund (NOF) should also comply with the Directions such as investing part of the funds in liquid assets, maintain reserves, rating etc. issued by the Bank.

QUES 8. Is there any ceiling on acceptance of Public Deposits? What is the rate of interest and period of deposit which NBFCs can accept?

ANS 8. Yes, there is a ceiling on acceptance of Public Deposits. An NBFC maintaining required NOF/Capital to Risk Assets Ratio (CRAR) and complying with the prudential norms can accept public deposits as follows:

Category of NBFC having minimum NOF of Rs 200 lakhs	Ceiling on public deposit
AFC* maintaining CRAR of 15% without credit rating AFC with CRAR of 12% and having minimum investment grade credit rating	1.5 times of NOF or Rs 10 crore whichever is less 4 times of NOF
LC/IC** with CRAR of 15% and having minimum investment grade credit rating	1.5 times of NOF

* AFC = Asset Finance Company

** LC/IC = Loan company/Investment Company

As has been notified on June 17, 2008 the ceiling on level of public deposits for NBFCs accepting deposits but not having minimum Net Owned Fund of Rs 200 lakh is revised as under:

Category of NBFC having NOF more than Rs 25 lakh but less than Rs 200 lakh	Revised Ceiling on public deposits
AFCs maintaining CRAR of 15% without credit rating and	Equal to NOF
AFCs with CRAR of 12% and having minimum investment grade credit rating	1.5 times of NOF
LCs/ICs with CRAR of 15% and having minimum investment grade credit rating	Equal to NOF

Presently, the maximum rate of interest an NBFC can offer is 12.5%. The interest may be paid or compounded at rests not shorter than monthly rests.

The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand.

The RNBCs have different norms for acceptance of deposits which are explained elsewhere in this booklet.

QUES 9. What are the salient features of NBFCs regulations which the depositor may note at the times of investment?

ANS 9. Some of the important regulations relating to acceptance of deposits by NBFCs are as under:

i. The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand.

ii. NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 12.5 per cent per annum. The interest may be paid or compounded at rests not shorter than monthly rests.

iii. NBFCs cannot offer gifts/incentives or any other additional benefit to the depositors.

iv. NBFCs (except certain AFCs) should have minimum investment grade credit rating.

v. The deposits with NBFCs are not insured.

vi. The repayment of deposits by NBFCs is not guaranteed by RBI.

vii. Certain mandatory disclosures are to be made about the company in the Application Form issued by the company soliciting deposits.

QUES 10. What is ‘deposit’ and ‘public deposit’? Is it defined anywhere?

ANS 10. The term ‘deposit’ is defined under Section 45 I(bb) of the RBI Act, 1934. ‘Deposit’ includes and shall be deemed always to have included any receipt of money by way of deposit or loan or in any other form but does not include:

amount raised by way of share capital, or contributed as capital by partners of a firm;
amount received from scheduled bank, co-operative bank, a banking company, State Financial Corporation, IDBI or any other institution specified by RBI;
amount received in ordinary course of business by way of security deposit, dealership deposit, earnest money, advance against orders for goods, properties or services;
amount received by a registered money lender other than a body corporate;
amount received by way of subscriptions in respect of a ‘Chit’.

Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits ( Reserve Bank) Directions, 1998 defines a ‘ public deposit’ as a ‘deposit’ as defined under Section 45 I(bb) of the RBI Act, 1934 and further excludes the following:

amount received from the Central/State Government or any other source where repayment is guaranteed by Central/State Government or any amount received from local authority or foreign government or any foreign citizen/authority/person;
any amount received from financial institutions;
any amount received from other company as inter-corporate deposit;
amount received by way of subscriptions to shares, stock, bonds or debentures pending allotment or by way of calls in advance if such amount is not repayable to the members under the articles of association of the company;
amount received from shareholders by private company;
amount received from directors or relative of the director of an NBFC;
amount raised by issue of bonds or debentures secured by mortgage of any immovable property or other asset of the company subject to conditions;
the amount brought in by the promoters by way of unsecured loan;
amount received from a mutual fund;
any amount received as hybrid debt or subordinated debt;
any amount received by issuance of Commercial Paper.

Thus, the directions exclude from the definition of public deposit, amount raised from certain set of informed lenders who can make independent decision.

QUES 11. Are Secured debentures treated as Public Deposit? If not who regulates them?

ANS 11. Debentures secured by the mortgage of any immovable property or other asset of the company, if the amount raised does not exceed the market value of the said immovable property or other asset, are excluded from the definition of ‘Public Deposit’ in terms of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998. Secured debentures are debt instruments and are regulated by Securities & Exchange Board of India.

QUES 12. Whether NBFCs can accept deposits from NRIs?

ANS 12. Effective from April 24, 2004, NBFCs cannot accept deposits from NRIs except deposits by debit to NRO account of NRI provided such amount does not represent inward remittance or transfer from NRE/FCNR (B) account. However, the existing NRI deposits can be renewed.

QUES 13 Is nomination facility available to the Depositors of NBFCs?

ANS 13. Yes, nomination facility is available to the depositors of NBFCs. The Rules for nomination facility are provided for in section 45QB of the Reserve Bank of India Act, 1934. Non-Banking Financial Companies have been advised to adopt the Banking Companies (Nomination) Rules, 1985 made under Section 45ZA of the Banking Regulation Act, 1949. Accordingly, depositor/s of NBFCs are permitted to nominate one person to whom the NBFC can return the deposit in the event of the death of the depositor/s. NBFCs are advised to accept nominations made by the depositors in the form similar to one specified under the said rules, viz Form DA 1 for the purpose of nomination, and Form DA2 and DA3 for cancellation of nomination and change of nomination respectively.

QUES 14. What else should a depositor bear in mind while depositing money with NBFCs?

ANS 14. While making deposits with an NBFC, the following aspects should be borne in mind:

(i) Public deposits are unsecured.

(ii) A proper deposit receipt which should, besides the name of the depositor/s, state the date of deposit, the amount in words and figures, rate of interest payable and the date of maturity. Depositor/s should insist on the above and also ensure that the receipt is duly signed by an officer authorised by the company in that behalf.

(iii) The Reserve Bank of India does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

QUES 15. It is said that rating of NBFCs is necessary before it accepts deposit? Is it true? Who rates them?

ANS 15. An unrated NBFC, except certain Asset Finance companies (AFC), cannot accept public deposits. An exception is made in case of unrated AFC companies with CRAR of 15% which can accept public deposit without having a credit rating upto a certain ceiling depending upon its Net Owned Funds (c.f Ans to Q 8). AN NBFC may get itself rated by any of the four rating agencies namely, CRISIL, CARE, ICRA and FITCH Ratings India Pvt. Ltd.

QUES 16. What are the symbols of minimum investment grade rating of different companies?

ANS 16. The symbols of minimum investment grade rating of the Credit rating agencies are:

Name of rating agencies	Nomenclature of minimum investment grade credit rating (MIGR)
CRISIL	FA- (FA MINUS)
ICRA	MA- (MA MINUS)
CARE	CARE BBB (FD)
FITCH Ratings India Pvt. Ltd.	tA-(ind)(FD)

It may be added that A- is not equivalent to A, AA- is not equivalent to AA and AAA- is not equivalent to AAA.

QUES 17. Can an NBFC which is yet to be rated accept public deposit?
ANS 17. No, an NBFC cannot accept deposit without rating (except an Asset Finance Company complying with prudential norms and having CRAR of 15%, as explained above at Ans. to Q 8).

QUES 18. When a company’s rating is downgraded, does it have to bring down its level of public deposits immediately or over a period of time?

ANS 18. If rating of an NBFC is downgraded to below minimum investment grade rating, it has to stop accepting public deposit, report the position within fifteen working days to the RBI and reduce within three years from the date of such downgrading of credit rating, the amount of excess public deposit to nil or to the appropriate extent permissible under paragraph 4(4) of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

QUES 19. In case an NBFC defaults in repayment of deposit what course of action can be taken by depositors?

ANS 19. If an NBFC defaults in repayment of deposit, the depositor can approach Company Law Board or Consumer Forum or file a civil suit in a court of law to recover the deposits.

QUES 20. What is the role of Company Law Board in protecting the interest of depositors? How one can approach it?

ANS 20. Where an NBFC fails to repay any deposit or part thereof in accordance with the terms and conditions of such deposit, the Company Law Board (CLB) either on its own motion or on an application from the depositor, directs by order the non-banking financial company to make repayment of such deposit or part thereof forthwith or within such time and subject to such conditions as may be specified in the order.
As explained above, the depositor can approach CLB by mailing an application in prescribed form to the appropriate bench of the Company Law Board according to its territorial jurisdiction alongwith the prescribed fee.

QUES 21. Can you give the addresses of the various benches of the Company Law Board (CLB) indicating their respective jurisdiction?

ANS 21. The details of addresses and territorial jurisdiction of the bench officers of CLB are as under:

Sr.No.	Addresses	Territorial Jurisdiction
1.	Bench Officer, Company Law Board, Northern Region Bench, Shastri Bhavan, ‘A’ Wing, 5th Floor, Dr. Rajendra Prasad Road, New Delhi 110 001.	Uttar Pradesh, Jammu & Kashmir, Punjab, Himachal Pradesh, Rajasthan, Haryana and Union Territories of Chandigarh and Delhi
2.	Bench Officer, Company Law Board, Southern Region Bench, Shastri Bhavan, ‘A’ Wing, 5th Floor, Block 8, No 26, Haddows Road, Chennai 600 006.	Tamil Nadu, Andhra Pradesh, Kerala, Karnataka, Union Territories of Amindivi, Minicoy and Lakshadweep Islands and Pondicherry
3.	Bench Officer, Company Law Board, Western Region Bench, 2nd Floor, N.T.C. House, 15, Narottam Morarjee Marg, Ballard Estate, Mumbai-400 038.	Maharashtra, Gujarat, Madhya Pradesh, Goa and Union Territories of Dadra & Nagar Haveli, Daman and Diu.
4.	Bench Officer, Company Law Board, Eastern Region Bench, 9, Old Post Office Street, 6th Floor, Kolkata 700 001.	West Bengal, Orissa, Bihar, Assam, Tripura, Manipur, Nagaland, Meghalaya, Arunachal Pradesh, Mizoram, Union Territories of Andaman and Nicobar Islands.
5.	Bench Officer, Company Law Board, Principal Bench at New Delhi, Shastri Bhavan, ‘A’ Wing, 5th Floor, Dr. Rajendra Prasad Road, New Delhi 110 001.	All Principal Bench matters all over India.

QUES 22. We hear that in a number of cases official liquidators have been appointed on the defaulting NBFCs. What is their role and how one can approach them?

ANS 22. Official Liquidator is appointed by the court after giving the company reasonable opportunity of being heard in a winding up petition. The liquidator performs duties of winding up and such duties in reference thereto as the court may impose.
Where the court has appointed an official liquidator or provisional liquidator, he becomes custodian of the property of the company and runs the day-to-day affairs of the company. He has to draw up a statement of affairs of the company in prescribed form containing particulars of assets of the company, its debts and liabilities, names/residences/occupations of its creditors, the debts due to the company and such other information as may be prescribed. The scheme is drawn up by the liquidator and same is put up to the court for approval. The liquidator realizes the assets of the company and arranges to repay the creditors according to the scheme approved by the court. The liquidator generally inserts advertisement in the newspaper inviting claims from depositors/investors in compliance with court orders. Therefore, the investors/depositors should file the claims within due time as per such notices of the liquidator. The Reserve Bank also provides assistance to the depositors in furnishing addresses of the official liquidator.

QUES 23. Consumer Court play useful role in attending to depositors problems. Can one approach Consumer Forum, Civil Court, CLB simultaneously?

ANS 23. Yes, a depositor can approach any or all of the redressal authorities i.e consumer forum, court or CLB.

QUES 24. Is there an Ombudsman for hearing complaints against NBFCs?

ANS 24. No, there is no Ombudsman for hearing complaints against NBFCs. However, in respect of credit card operations of an NBFC, if a complainant does not get satisfactory response from the NBFC within a maximum period of thirty (30) days from the date of lodging the complaint, the customer will have the option to approach the Office of the concerned Banking Ombudsman for redressal of his grievance/s.

QUES 25. What are various prudential regulations applicable to NBFCs?

ANS 25. The Bank has issued detailed directions on prudential norms, vide Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998. The directions interalia, prescribe guidelines on income recognition, asset classification and provisioning requirements applicable to NBFCs, exposure norms, constitution of audit committee, disclosures in the balance sheet, requirement of capital adequacy, restrictions on investments in land and building and unquoted shares.

QUES 26. Please explain the terms ‘owned fund’ and ‘net owned fund’ in relation to NBFCs?

ANS 26. ‘Owned Fund’ means aggregate of the paid-up equity capital and free reserves as disclosed in the latest balance sheet of the company after deducting therefrom accumulated balance of loss, deferred revenue expenditure and other intangible assets.
'Net Owned Fund' is the amount as arrived at above minus the amount of investments of such company in shares of its subsidiaries, companies in the same group and all other NBFCs and the book value of debentures, bonds, outstanding loans and advances made to and deposits with subsidiaries and companies in the same group, to the extent it exceeds 10% of the owned fund.

QUES 27. What are the responsibilities of the NBFCs accepting/holding public deposits with regard to submission of Returns and other information to RBI?

ANS 27. The NBFCs accepting public deposits should furnish to RBI

i. Audited balance sheet of each financial year and an audited profit and loss account in respect of that year as passed in the annual general meeting together with a copy of the report of the Board of Directors and a copy of the report and the notes on accounts furnished by its Auditors;

ii. Statutory Annual Return on deposits - NBS 1;

iii. Certificate from the Auditors that the company is in a position to repay the deposits as and when the claims arise;

iv. Quarterly Return on liquid assets;

v. Half-yearly Return on prudential norms;

vi. Half-yearly ALM Returns by companies having public deposits of Rs. 20 crore and above or with assets of Rs. 100 crore and above irrespective of the size of deposits ;

vii. Monthly return on exposure to capital market by companies having public deposits of Rs. 50 crore and above; and

viii. A copy of the Credit Rating obtained once a year along with one of the Half-yearly Returns on prudential norms as at (v) above.

QUES 28. What are the documents or the compliance required to be submitted to the Reserve Bank of

India

by the NBFCs not accepting/holding public deposits?

ANS 28. The NBFCs having assets of Rs. 100 crore and above but not accepting public deposits are required to submit a Monthly Return on important financial parameters of the company. All companies not accepting public deposits have to pass a board resolution to the effect that they have neither accepted public deposit nor would accept any public deposit during the year.

However, all the NBFCs (other than those exempted) are required to be registered with RBI and also make sure that they continue to be eligible to retain the Registration. Further, all NBFCs (including non-deposit taking) should submit a certificate from their Statutory Auditors every year to the effect that they continue to undertake the business of NBFI requiring holding of CoR under Section 45-IA of the RBI Act, 1934.

RBI has powers to cause Inspection of the books of any company and call for any other information about its business activities. For this purpose, the NBFC is required to furnish the information in respect of any change in the composition of its Board of Directors, address of the company and its Directors and the name/s and official designations of its principal officers and the name and office address of its Auditors. With effect from April 1, 2007, non-deposit taking NBFCs with assets of Rs 100 crore and above were advised to maintain minimum CRAR of 10% and also comply with single/group exposure norms. The companies have to achieve CRAR of 12% by March 31, 2009 and 15% by March 31, 2010.

QUES 29. The NBFCs have been made liable to pay interest on the overdue matured deposits if the company has not been able to repay the matured public deposits on receipt of a claim from the depositor. Please elaborate the provisions.

ANS 29. As per Reserve Bank’s Directions, overdue interest is payable to the depositors in case the company has delayed the repayment of matured deposits, and such interest is payable from the date of receipt of such claim by the company or the date of maturity of the deposit whichever is later, till the date of actual payment. If the depositor has lodged his claim after the date of maturity, the company would be liable to pay interest for the period from the date of claim till the date of repayment. For the period between the date of maturity and the date of claim it is the discretion of the company to pay interest.
QUES 30. Can a company pre-pay its public deposits?

ANS 30. AN NBFC accepts deposits under a mutual contract with its depositors. In case a depositor requests for pre-mature payment, Reserve Bank of India has prescribed Regulations for such an eventuality in the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 wherein it is specified that NBFCs cannot grant any loan against a public deposit or make premature repayment of a public deposit within a period of three months (lock-in period) from the date of its acceptance. However, in the event of death of a depositor, the company may, even within the lock-in period, repay the deposit at the request of the joint holders with survivor clause / nominee / legal heir only against submission of relevant proof, to the satisfaction of the company.

An NBFC subject to above provisions, which is not a problem company, may permit after the lock–in period, premature repayment of a public deposit at its sole discretion, at the rate of interest prescribed by the Bank.

A problem NBFC is prohibited from making premature repayment of any deposits or granting any loan against public deposit/deposits, as the case may be. The prohibition shall not, however, apply in the case of death of depositor or repayment of tiny deposits i.e. up to Rs. 10000/- subject to lock in period of 3 months in the latter case.

QUES 31. What is the liquid asset requirement for the deposit taking companies? Where these assets are kept? Do depositors have any claims on them?

ANS 31. In terms of Section 45-IB of the RBI Act, 1934, the minimum level of liquid asset to be maintained by NBFCs is 15 per cent of public deposits outstanding as on the last working day of the second preceding quarter. Of the 15%, NBFCs are required to invest not less than ten percent in approved securities and the remaining 5% can be in unencumbered term deposits with any scheduled commercial bank. Thus, the liquid assets may consist of Government securities, Government guaranteed bonds and term deposits with any scheduled commercial bank.

The investment in Government securities should be in dematerialised form which can be maintained in Constituents’ Subsidiary General Ledger (CSGL) Account with a scheduled commercial bank (SCB) / Stock Holding Corporation of India Limited (SHICL). In case of Government guaranteed bonds the same may be kept in dematerialised form with SCB/SHCIL or in a dematerialised account with depositories [National Securities Depository Ltd. (NSDL)/Central Depository Services (

India

) Ltd. (CDSL)] through a depository participant registered with Securities & Exchange Board of India (SEBI). However in case there are Government bonds which are in physical form the same may be kept in safe custody of SCB/SHCIL.

NBFCs have been directed to maintain the mandated liquid asset securities in a dematerialised form with the entities stated above at a place where the registered office of the company is situated. However, if an NBFC intends to entrust the securities at a place other than the place at which its registered office is located, it may do so after obtaining the permission of RBI in writing. It may be noted that liquid assets in approved securities will have to be maintained in dematerialised form only.

The liquid assets maintained as above are to be utilised for payment of claims of depositors. However, deposit being unsecured in nature, depositors do not have direct claim on liquid assets.

QUES 32. Please tell us something about the companies which are NBFCs, but are exempted from registration?

ANS 32. Housing Finance Companies, Merchant Banking Companies, Stock Exchanges, Companies engaged in the business of stock-broking/sub-broking, Venture Capital Fund Companies, Nidhi Companies, Insurance companies and Chit Fund Companies are NBFCs but they have been exempted from the requirement of registration under Section 45-IA of the RBI Act, 1934 subject to certain conditions.

Housing Finance Companies are regulated by National Housing Bank, Merchant Banker/Venture Capital Fund Company/stock-exchanges/stock brokers/sub-brokers are regulated by Securities and Exchange Board of India, and Insurance companies are regulated by Insurance Regulatory and Development Authority. Similarly, Chit Fund Companies are regulated by the respective State Governments and Nidhi Companies are regulated by Ministry of Corporate Affairs, Government of India.
It may also be mentioned that Mortgage Guarantee Companies have been notified as Non-Banking Financial Companies under Section 45 I(f)(iii) of the RBI Act, 1934.

QUES 33. There are some entities (not companies) which carry on activities like that of NBFCs. Are they allowed to take deposits? Who regulates them?

ANS 33. Any person who is an individual or a firm or unincorporated association of individuals cannot accept deposits except by way of loan from relatives, if his/its business wholly or partly includes loan, investment, hire-purchase or leasing activity or principal business is that of receiving of deposits under any scheme or arrangement or in any manner or lending in any manner.

QUES 34. What is a Residuary Non-Banking Company (RNBC)? In what way it is different from other NBFCs?

ANS 34. Residuary Non-Banking Company is a class of NBFC which is a company and has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner and not being Investment, Asset Financing, Loan Company. These companies are required to maintain investments as per directions of RBI, in addition to liquid assets.   The functioning of these companies is different from those of NBFCs in terms of method of mobilisation of deposits and requirement of deployment of depositors' funds as per Directions. Besides, Prudential Norms Directions are applicable to these companies also.

QUES 35. We understand that there is no ceiling on raising of deposits by RNBCs, then how safe is deposit with them?

ANS 35. It is true that there is no ceiling on raising of deposits by RNBCs but every RNBC has to ensure that the amounts deposited and investments made by the company are not less than the aggregate amount of liabilities to the depositors.

To secure the interest of depositor, such companies are required to invest in a portfolio comprising of highly liquid and secure instruments viz. Central/State Government securities, fixed deposits with scheduled commercial banks (SCB), Certificate of deposits of SCB/FIs, units of Mutual Funds, etc.

QUES 36. Can RNBC forfeit deposit if deposit installments are not paid regularly or discontinued?

ANS 36. No Residuary Non-Banking Company shall forfeit any amount deposited by the depositor, or any interest, premium, bonus or other advantage accrued thereon.

QUES 37. Please tell us something on rate of interest payable by RNBCs on deposits and maturity period of deposits?

ANS 37. The amount payable by way of interest, premium, bonus or other advantage, by whatever name called by a RNBC in respect of deposits received shall not be less than the amount calculated at the rate of 5% (to be compounded annually) on the amount deposited in lump sum or at monthly or longer intervals; and at the rate of 3.5% (to be compounded annually) on the amount deposited under daily deposit scheme. Further, a RNBC can accept deposits for a minimum period of 12 months and maximum period of 84 months from the date of receipt of such deposit. They cannot accept deposits repayable on demand.

SHARED BY: PAPPU MISHRA (MUMBAI)

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Import & export rate for the month of December (Issued by custom authorities)

2009-12-08T06:17:00.000-08:00

Just click the below mentioned link to download the notification:
http://www.cbec.gov.in/customs/cs-act/notifications/notfns-2k9/csnt174-2k9.htm

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Reversal of cenvat credit on WIP/ finished goods written off in the books of accounts -reg

2009-12-08T04:36:00.001-08:00

Circular No. 907/27/2009-CX

F.No.267/141/2009-CX8

Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise & Customs)

New Delhi, dated the 7th December, 2009.

To,

All Chief Commissioners of Central Excise (including LTU),

All Commissioners of Central Excise (including LTU),

All Director Generals.

Sir/ Madam,

Subject: Clarification on issues related to reversal of cenvat credit on WIP/ finished goods written off in the books of accounts -reg.

References have been received from field formations stating that as per Rule 3(5B) of CENVAT Credit Rules, 2004, if the value of inputs is fully written off, then the manufacture is required to pay an amount equal to cenvat credit taken. However, there is no provision to demand reversal of credit taken on inputs which have gone into manufacture of work in progress (WIP), semi finished goods and finished goods which have also been written off fully in the books of accounts.

2. The matter has been examined. Rule 3(5B) of the CENVAT Credit Rules, 2004, provides that if the value of any input on which cenvat credit has been taken is written off fully in the books of accounts, then the manufacturer is required to reverse the credit taken on the said input. As far as finished goods in concerned, it is stated that excise duty is chargeable on the activity of manufacture or production. Even though liability for payment of tax has been postponed to the time of removal of goods for the factory, but still the legal liability to pay the excise duty has been fastened on the goods, when it has been manufactured or produced. Therefore, normally all goods manufactured suffer excise duty at the time of removal, but if the manufactured goods are destroyed due to natural causes etc., Rule 21 of Central Excise Rules, 2002, provides for remission of duty. Further, Rule 3(5C) of CENVAT Credit Rules, 2004, also requires reversal of credit on the inputs when the duty is ordered to be remitted under the said Rule 21. Therefore, if the goods have been manufactured, in that case, a manufacturer is liable to pay excise duty unless duty is remitted under Rule 21. Therefore, if the value of finished goods is written off, the manufacturer would be liable to pay excise duty or he would be required to reverse the credit on the inputs used, if duty has been remitted on finished goods.

3. As regard writing off work in progress (WIP), it is stated that if the WIP has reached the stage, when it can be considered as manufactured goods, in that case, the same treatment as applicable to finished goods, discussed in para2 above would apply. However, if the activity carried out on the WIP goods cannot be considered as amounting to manufacture, in that case, the said goods should be considered as input and the treatment for reversal of credit applicable to input would be applicable.

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Reversal of cenvat credit on WIP/ finished goods written off in the books of accounts -reg

2009-12-08T04:36:00.000-08:00

Scope for making addition on a/c of disallowance of expenditure u/s 40(a) in a case where assessee follows ‘completed contract method’: ITAT MUMBAI, BENCH ‘J’

2009-12-06T12:28:00.000-08:00

Scope for making addition on a/c of disallowance of expenditure u/s 40(a) in a case where assessee follows ‘completed contract method’
The correct procedure in “completed contract method” is that instead of making addition, if some expenditure are found to be not allowable, the AO should correct the amount of work-in-progress by reducing or enhancing work-in-progress as the case may be

ITAT MUMBAI, BENCH ‘J’

Savala Associates

v.

ITO

ITA No. 4441/M/2008

October 27, 2009

RELEVANT EXTRACTS:

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6.1 On plain reading of above section, we find that certain expenditures are not allowable if the assessee failed to deduct tax or after deduction same was not paid in time. However, such expenditures are allowable Provided that where in respect of any such sum. Tax has been deducted in any subsequent year, or has been deducted—

(A) during the last month of the previous year but paid after the said due date; or

(B) during any other month of the previous year but paid after the end of the said previous year.

Such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.

6.2 The above provision is related to amount not deductible while computation of income chargeable under the head 'profits and gains of business or profession. Basically, income chargeable under the head 'profit and gains of business or profession' or 'income from other sources', be computed in accordance with cash or mercantile system of accounting regularly employed by the assessee. Recognition/ identification of income under the I.T. Act is attainable by several methods of accounting considering the nature of business activities. It may be noted that the same result could be attained by any one of the accounting methods. "Completed contract method'' is one such method. Similarly, "percentage of completion method" is another such method. Under the "completed contract method", the revenue is not recognized until the contract is complete. Under the said method, costs are accumulated during the course of the contract period. As per the accepted accounting principle, it is accumulated under one head of account, work-in-progress'. The project constituted the stock-in-trade of the assessee. The project did not constitute a fixed asset of the assessee. In the last accounting period when work is completed, the profit and loss account is prepared, that 'work-in-progress' account is to be transferred in profit & loss account. Thus, the "completed contract method" determines profits/loss only when contract is completed. Now question arises how the profit is to be calculated in case of 'completed contract method'. One of the important aspects to be seen is Cost incurred by a contractor which can be divided into Cost that relate directly to a specific contract; Cost that can be attributed to the contract activity in general and can be allocated to specific contracts and Costs that relate to the activities of the contractor generally, or that relate to contract activity but cannot be related to specific contracts. Examples of costs that relate directly to a specific contract include :site labour costs, including supervision: materials used for project construction; depreciation of plant and equipment required for a contract; costs of moving plant and equipment to and from a site. Examples of costs that can be attributed to the contract activity in general and can be allocated to specific contracts include: insurance; design and technical assistance; construction overheads. Examples of costs that relate to the activitiesof the contractor generally, or that relate to contract activity but cannot be related to specific contracts, include: general administration and selling costs; finance costs; research and development costs; depreciation of plant and equipment that cannot be allocated to a particular contract. In case of ""completed contract method", the above expenses related to individual project have to be capitalized in work-in-progress which is similar to stock in trade, of respective individual project. Opening balance of work-in-progress of individual project will go up in the relevant year. When these projects were completed, in that year, income has to be computed after considering increased opening work-in-progress and receipts of the relevant project. Accordingly, in the year when these projects were completed, income on account of those projects is be computed after considering increased opening balance of work-in-progress due to addition of expenses for the period of project in work in progress. Contrary, if certain expenditures are not allowable under the Act the work in progress will not increased by that amount. Such expenses are to exclude from the Work in progress if same were included by the assessee. For the above purposes the AO has to examine the work in progress account in each assessment year. If on examination the AO did not find any mistake in work-in-progress account then said work-in-progress is to be carried forward in the next year and so on till completion of project. If on examination, the AO found that the work-in-progress shown in books of account is not correct, the AO is empowered to correct the same. In other words, it can be said that work-in-progress is just like one side of profit & loss account i.e. debit side, the AO can have all powers to examine this debit side of profit & loss account including the power of examination of allowability / disallowability of expenditure u/s 40(a) of the Act. In the case under consideration we find that the AO has rightly noted that the expenditure claimed by the assessee which are subject to TDS liability but TDS was no paid in time; therefore these were disallowable u/s 40(a). In principle we agree with above view of revenue that in case oi "completed contract method" the AO is empowered to examine the expenditures incurred during the year which increases the opening work in progress or addition in work in progress. But we do not agree with the view of revenue that addition is to be made in total income, if some expenditure were found not allowable/The correct procedure in "completed contract method” is.. that instead of making addition the AO should correct the amount of work-in-progress by reducing or enhancing work-in-progress as the case may be a such corrected WIP will be finally considered in profit and loss account/contract account for the year in which work is completed. The result of calculation of correct profit in case of "completed contract method" could be attained by this procedure. In the case under consideration, the AO made addition in all the projects including incomplete projects, which is not warranted. Such addition in total income is warranted only in respect of project which is completed during the year. The learned AR has conceded the additions in respect of completed works. Necessary calculation is required after verification from original record. The original record is not readily available at this stage under the circumstances we send back this matter to the file of the AO with direction to delete the additions made in total income in respect of incomplete projects. However the addition in respect of completed project is to confirm subject to verification of calculation of the amount. The AO is further directed to correct the amount of work-in-progress of incomplete works/projects in accordance with the above discussion and after providing opportunity of hearing to the assessee.

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Change of method of accounting of overdue charges from mercantile basis to cash system does not create any income: HIGH COURT OF MADRAS

2009-12-06T12:10:00.000-08:00

Change of method of accounting of overdue charges from mercantile basis to cash system does not create any income

HIGH COURT OF MADRAS

CIT

v.

Annamalai Finance Ltd.

TAX CASE (APPEAL) NO. 1087 OF 2009

NOVEMBER 2, 2009

RELEVANT EXTRACTS :

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In the instant case, learned counsel for the Revenue is not in a position to demonstrate or satisfy us that due to the change of accounting method adopted by the respondent/assessee, which is permissible in law as per the ratio laid down in (i) CIT v. Matchwell Electricals (I.) Ltd. (2003)263 ITR 227 (Bom) and (ii) Hela Holdings Pvt. Ltd. v. CIT (2003) 263 ITR 129 (Cal), the Revenue suffered any loss or such a change of methodology attracts tax evasion. Concededly, there is no finding to that effect in the assessment order or in the order of the Commissioner of Income-tax (Appeals).

The change of method of accounting of overdue charges from the mercantile basis to cash system, method of accounting, as followed by an assessee, does not create any income; but the method of accounting only recognizes income. Therefore, either to apply the accrual system or cash system, recognition of income is a paramount factor. In the present case, the disputed amount is the overdue charges receivable `by the assessee from various parties on the basis of hire-purchase and lease agreements. As per the terms of the agreements, overdue charges are payable by the parties concerned to the assessee when they make defaults in paying the instalments as per the schedule of payments. When the instalment itself is overdue, is not collected, there is no basis for making out a case that the additional overdue charges payable by the parties would be collectible with certainty. The terms of the agreements which enable the assessee-company to demand overdue charges is only an enabling provision and that enabling provision does not guarantee the collection of overdue charges. It only gives a cause of action to the assessee. In such cases it is very difficult to recognize income against overdue charges.

We are, therefore, of the considered opinion that the Tribunal has rightly deleted the additions made towards overdue charges, acknowledging the change of method of accounting of overdue interest alone on cash basis.

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Set off of long term capital loss with indexation against long term capital gains without indexation is allowable ITAT, MUMBAI BENCH ‘B’

2009-12-06T12:01:00.000-08:00

Set off of long term capital loss with indexation against long term capital gains without indexation is allowable
ITAT, MUMBAI BENCH ‘B’, MUMBAI

Keshav S. Phansalkar

v.

ITO

ITA NO. 3261/MUM/2007

JUNE 3, 2009

RELEVANT EXTRACTS :

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8. Section 70(3) of the Act postulates that for any assessment year where there is a loss in respect of long term capital asset, the asscssee shall be entitled to have the amount of such loss set off against the income, if any fas arrived at under a similar computation) made for the assessment year in respect of any other long term capital asset. Section 112 of the Act provides for tax on long term capital gains. Section 112 of the Act provides that where the total income of the assessee includes any income arising from the transfer of a long term capital asset, assessable under the head 'income from capital gains', the tax payable by the assessee on the total income shall be aggregate of the amount of income tax payable on the total income as reduced by the amount of such long term capital gains and the amount of income tax calculated on such long term capital gains @ 20% in the case of an individual / Hindu undivided family, being resident and domestic company and also in the case of nonresident, not being a company or foreign company and in any other cases. The proviso under section 112 of the Act reads as under:-

"Provided that where the total income as reduced by such long-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such long-term capital gains shall be computed at the rate of twenty per cent;

(b) in the case of a fdomestic] company,—'

(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income: and

(ii) the amount of income-tax'calculated on such long-term capital gains at the rate of [twenty] per cent:

[(c) in the case of a non-resident (not being a company) or a foreign company,—

(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income; and

(ii) the amount of income-tax calculated on such long- . term capital gains at the rate of twenty per cent;]

[(d)]in any other case [of a resident],—

(i) the amount of income-tax pay able on the total income as reduced by the amount of long-term capital gains, had the total income as so reduced been its total income ; and

(ii) the amount of income-tax calculated on such long-term capital gains at the rate of [twenty] per cent."

9. While computing the tax on long term capital gains, the provisions of the Act by way of section 112 recognizes two methods of computing gain arising on the transfer of long term capital asset. The provision for computation of tax on sale of assets being listed securities/units or zero coupon bond is provided in the proviso under section 112(1) of the Act. In respect of listed securities/units or zero coupon bonds, the option is available to the assessee, to compute the tax payable on the income arising on the transfer of such assets either by indexation of cost of acquisition or without indexation. The proviso to section 112(1) of the Act provides that where the assessee exercises the option of indexation of cost of acquisition and working out the tax on income from long term capital gains with indexation, rate of tax applicable is 20% as provided under the Act. How ever, in case the assessee opts not to resort to provisions of second proviso to section 48 i.e. opts long term capital gain without indexation, then the tax is to be worked out @ 10% of such amount of capital gain. In case, where the assessee computes the income from long term capital gains with indexation on which tax payable @ 20% of such gains and such tax exceeds 10% of the amount of capital gains worked out by the assessee without indexation, then the proviso to section 112 of the Act provides that the excess shall be ignored for computing the tax payable by the assessee. In other words, the assessee has to work out the long term capital gains with indexation and without indexation and in case, the working with indexation is exercised, which in turn is assessable @ 20% gains and such amount exceeds 10% of the amount of capital gains worked out without indexation, then such excess is to be ignored. The word . used in the proviso to section 112 of the Act is "shall" implying thereby that the computation of long term capital gain with indexation and LTCG without indexation has to be carried out by the assessee before exercising the option of paying tax either on gain arising after indexation or without indexation. Once the computation of long term capital gain with or without indexation has been worked put by the assessee,. men the quantum of tax payable on long term capital assets with indexation @ 20% and the 10% lax payable on gains arising without indexation is the indicator for adopting one of the methods of computation of income from capital gains. In all such cases, where the lax on I/I'CG without indexation being 10% of the gains is less than 20% of tax payable in respect of the income arising from long term capital asset with indexation, then the assessee has an option of paying lower of the tax.

10. Section 14 of the Act classifies the heads of income for the purpose of charge of income tax and computation of total income and the following heads of income are provided :

"A.—Salaries

B - Omitted

C—Income from house property.

D—Profits and gains of business or profession.

E—Capital gains.

F—Income from other sources"

Thereafter provision of computing the income under the respective heads of income is provided under various sections and Chapter E relating to capital gains is enshrined in sections 48 to 55 of the Act. The Act recognizes two types of capital gains arising in the hands of the assessee i.e. income from sale of long term capital asset and income from sale of short term capital asset. The difference between the two arising on-sate of long term capital asset and short term capital asset is the period of holding of the respective asset as provided under the respective sections. Once the income from capital gains is determined under section 45 to SS of the Act and in case there is a loss from one source as against the gain from another source under the same head of income, then the provisions of section 70 come into play. Section 70(1) clearly provides that where the net result for any assessment year in respect of any sources falling under any head of income other than capital gains is loss, then the assessee shall be entitled to set off of such loss against income from any other source under same head. Section 70(2) provides that where as a result of computation of income under section 48 to 55 in respect of airy short term capital asset, if there is a loss then the assessee shall be entitled to set off of the said loss against the income, if any, arrived at under a similar computation made for the assessment year in respect of any other short Term capital asset. Section 70(3) of the Act provides for similar computation in respect of capital asset other than the short term capita) asset. Section 71 of the Act provides for set off of loss from one head against income from another head and section 72 provides for carry forward and set off of business losses.

11. Reading the provisions of set off of carry forward losses against the income arising to the assessee, it transpires that the Act recognizes two instances for set off. The first instance of set off of losses from one source of income is against the income arising from another source under the same head of income and the second set off provided under section 71 of the Act talks of the set off of loss from one head against the income from another head. In case, the assessee has different sources of income under one head of income, then section 70(1) provides for set off of losses arising from one source against the another source under the same head of income except in case of capital gains. In respect of capital gains, the Act recognizes two types of capital gains in respect of transfer of short term capital asset and in respect of any capital gain arising on transfer of asset other than the short term capital asset The head of income in both the cases is 'capital gains' i.e. Chapter E dealing with capita] gain, but the Act recognizes two kinds of capital gains i.e. one arising in respect of short term capital asset and the second arising in respect of long term capital asset. Section 70(3) of the Act dealing with set off losses arising on transfer of long term capital asset against the gain arising on account of sale of long term capital asset talks of two sources of income under the same head 'income from capital gains'. Similarly, under section 70(2) of the Act similar provisions are provided in respect of short term capital asset. The first step to be determined is whether the assessee has transferred short term capital asset or long term capital asset. Any losses arising on the transfer of a capital asset is necessarily to be adjusted against the capital gain arising thereunder, whether short term or long term Any losses arising from transfer of long term capital assets is to be adjusted against the gain arising from transfer of long term capital gains. The aforesaid provisions of section 70 were substituted by Finance Act, 2002 with effect from 1.4.2003 and prior to its substitution, the section provided that where, die net result for any assessment year, in respect of any source falling under any head of income was loss, the assessee was entitled to have such amount of loss set off against the income from other sources falling under the same head of income. Prior to the amendment of Finance Act, 2002 losses arising on the transfer of short term capital asset could be set off against the gain arising from the transfer of long term capital asset. But after the amendment with effect from 1.4.2003, the amended provisions of section 70 do not allow such set off between the gain/loss arising on transfer of short term capital asset/long term capital asset.

12. The provisions of Section 112 of the Act are only to be applied for working out the tax on long term capital gain as clarified by us in paras hereinabove. There are two methods of computing the tax on income arising from transfer of long term capital asset i.e. with indexation or without indexation and in case where the tax payable being 10% of the amount of capital gains without indexation is less than the tax worked out on transfer of long term capital asset after indexation, then the assessee has an option of paying the lower amount of tax. The two methods of computing the gain/loss on transfer of long term capital asset fall under the same head of income i.e. capital gain on transfer of long term capital asset The spirit of section 70(3) covers all such transactions where the gains are arising on the transfer of long term capital asset and in case of any set off of loss arising from one source i.e. transfer of long term capital asset against gain arising on the transfer of another sources of transfer of long term capital asset is to be allowed under the provisions of section 70(3) of the Act. Accordingly, we are of the view that the option of the assessee to work out the gain arising on transfer of long term capital asset with or without indexation is distinct from allowing the set off of loss arising under one particular method of computation against gain arising on account of following another method of computation of gains on transfer of long term capital asset Both workings are for the purpose of determining the income from transfer of long term capital assets and the same falls under the same-head of income and such set off of loss arising from one source against the gain arising from another source under same head is allowable to the assessee in accordance with the provisions of section 70(3) of the Act. Accordingly, we direct the Assessing Officer to set off the capital loss -worked out by the assessee with indexation against the long term capital gains 'without indexation worked by the assessee in the original computation of income, '. but after detennimng the tax on gains on the transfer of long term capital asset is worked out after following the formula provided in the proviso to section 112 of the Act. The grounds of appeal are thus allowed.

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