The Institute of Cost Accountants of India

(Statutory Body under an Act of Parliament)

JUNE 2013 ● ● ● ● ● Vol. 1 ● ● ● ● ● No. 3

CMA E-BULLETIN

www.icmai.in

2 JUNE 2013, VOL. 1. NO. 3

CMA E-BULLETIN

CONTENTS

Indian Economy 3-5

Banking 5-7

Foreign Trade 8-9

Income Tax 9-14

Central Excise 15-15

Customs 15-16

Service Tax 17-18

SEBI 19-20

Guest Column

CMA Manas Kr. ThakurChairmanResearch & Publications Committee

The New Africa and the Opportunities ahead

We believe it or not, the fact remainsthat a sweeping change is blowingthrough the entire continent ofAfrica. The matter which is acting ascatalyst of changes is the emergenceof democracy in many states. At theend of cold war, three out of fifty

three countries had democracy; the figure has risen totwenty five where democracies obviously of differentshades are thriving. The role of armies has beencontained to a great extent and the politicians whowant to be re-elected have to yield results. In otherwords, the more democracy in the continent is settingthe tone for better governance. Peace has returned toa large extent as war and civil strife has declineddramatically. The perennial hotspots like Angola,Chad, Liberia and Sierra Leone are quiet and evenCongo, Somalia and Sudan are much less violent thanthey used to be. The number of coups, which averaged20 per decade in 1960-90, has fallen to an average of ten.

Africa is just now the fastest-growing continent andGDP is expected to rise by an average of 6% a yearover the next decade. Over the past ten years the realincome per person has increased by more than 30%,whereas in the previous 20 years it shrank by nearly20%. FDI has gone from $15 billion in 2002 to $37billion in 2006 and $46 billion in 2012. If we go by the

Editorial Preface

Greetings!

We are pleased to release the third issue of

‘‘CMA E-Bulletin’’ before our esteemed

readers. We have inserted one important

segment in this issue viz. ‘‘Indian Economy’’

for the benefit of the readers. The ‘‘Guest

Column’’ has also been incorporated in this

issue like the previous one. Hope you will

enjoy reading this issue of e-bulletin. We look

forward to your valuable suggestions and

comments for further improvement.

During last few weeks, the rupee

continued to be under pressure

and reaches the psychologically

important mark of 60 to the dollar

very recently. This pushed to

the background a much needed

Chairman's Message

discussion on the reasons behind the rupee’s fall.

The sharp fall in the rupee might have stretched the

options available to the policymakers. The rupee has

also dragged down with the stock markets. This, of

course, was inevitable. Plenty of cheap money from

the U.S. has gone into Indian capital market earlier.

Investors, now, mostly the foreign institutional

investors, are moving back to the U.S. by dumping

Indian stocks.

I hope the relevant updates on different sectors of our

economy incorporated here will highly enrich our

professional knowledge base.

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3JUNE 2013, VOL. 1. NO. 3

INDIAN ECONOMY

� RBI, Sebi oppose key suggestions toamend financial sector lawsEconomic Times

India's lead financial regulators—TheReserve Bank of India (RBI) and theSecurities and Exchange Board of India(SEBI)—have opposed some of the keyrecommendations of a commissionconstituted by the government to amendfinancial sector laws, saying they areill-conceived and could undermine theauthority of regulators.

� CAD likely to improve as govt, RBIsharpen attack on gold importsEconomic Times

The government and the Reserve Bankof India (RBI) have stepped up theirconcurrent efforts to check the unbridledgold imports as they look to improvethe current account deficit (CAD).

� Ponzi schemes: IMG mulls quasi-judicial powers for RBI, SEBIEconomic Times

An inter-ministerial group has deliberatedon ways, including grant of quasi-judicialpowers to RBI and SEBI, to protect gullibleinvestors from fraudulent money poolingschemes. The discussions of the panel,which was formed in the wake of Saradhascam, come against the backdrop of manyentities exploiting legal loopholes to cheatthe public with ponzi schemes.

statistics relating to human development in Sub-Saharan Africa; it has definitely shown great leaps.Secondary school enrolment grew by 48% between2000 and 2008 after many states expanded theireducation programmes and waived the school fees.The malaria deaths in some of the worst affectedcountries have declined by 30% over the past decadewhile HIV infections have gone up to 74%. Lifeexpectancy across Africa has increased by about 10%and child mortality rates in most countries have fallensharply.

There is no reason to believe that conflicts have saidgood-bye to Africa; rather they do flare up but usuallyless violently than before. Armed forces spend moretime in their barracks, though ethnic and religioustensions remain. With the growth of market economiesand the spread of democracy, land disputes andelection flicker, then die down again. The continent isnot quite at peace, but it is safer than it was. And yetthe national accounts are getting back to order, debtsare coming down and new roads are being built. Thisis the picture in much of Africa. The allocation ofpower is becoming fairer and its use more competent,though there is much to do. African governments arebeginning to accept the importance of goodgovernance, not least for improving the lot of the poor.In all major global forums, the leaders regularlydeclare their undying interest in 'Capacity-building'.This realisation will certainly spawn newopportunities in all fields.

This has opened a new vista for Indian industrialists,businessmen, professionals and teachers. China hasalready made her presence felt in the continent in abig way. India, unlike many other countries, has longstanding relationship with the continent and Indianprofessionals are still respected highly in most of thecountries. With the advancement of economy, therewill be more demand for the professionals withknowledge and experience in accounts, costing andfinancial management. The Cost and ManagementAccountants in their individual capacity may fill upthe growing demand for the professionals while theInstitute may come forward to partner with manycountries in capacity building of Africa in new shape.The knowledge pool available with the institute maycome of a good stead in that regard and this will be agreat contribution from an Indian institute towardscapacity building of emerging Africa. This opportunityhas to be turned into a sustainable opportunity andinstitute can leave its footprint in the internationalarena by availing of this opportunity.

Arabinda Das, IA&ASPrincipal DirectorIndian Audit & Accounts DepartmentRegional Training Institute, Kolkata

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� RBI to come out with paper on bankingstructure : SubbaraoTimes of India

RBI will come out with a paper on thebanking structure in the countrydiscussing issues like consolidation evenas it prepares to issue new bank licencesafter a decade. RBI will also involveenforcement agencies and tax authoritiesbefore it issues new bank licences tocorporate entities for which applicationscan be made till July 1.

� India set to be world's largest cottonproducer by 2022

India is projected to replace China as theworld's largest cotton producer by 2022on account of higher growth in output,according to OECD-FAO report.

� India probably world's 3rd largesteconomy : OECD

Until around 2020, China is set to haveto highest growth rate among majorcountries, but could be then surpassedby India, it further said.

� Indian cos directly invested $1.8 bnoverseas in May : RBI

Indian companies directly invested$1.83 billion overseas in May, withinvestments in equities at $318.86million, and loans worth $291.28 million,data from the RBI showed on Friday.

� Chidambaram threatens tax evaders,says crackdown loomingNew Delhi, Thursday May 02 2013

In a strong message to tax evaders, thegovernment today said that it will stepup efforts to bring more people into netand also endeavour to recover tax arrears.

� India's wholesale price inflationprobably eased further in AprilBangalore, Dated: May 10, 2013

India's headline inflation is expected tohave eased for a third straight month

in April, as core inflation cooled and fuelcosts fell, giving the central bank greaterroom to ease policy.

� India's economic growth expected at5.5-6.5% in 2013 : Moody'sNew Delhi, Dated: May 15, 2013

Indian economy is expected to pick upand grow in the range of 5.5-6.5 per centin 2013 even thoughgovernment steps fornew investments have been ‘‘relativelysmall in scope’’, Moody’s said today.

� Indirect tax collection up 3.3% inAprilNew Delhi, Dated: May 15, 2013

Indirect tax collection in April, the firstmonth of the 2013-14 fiscal, grew by ameagre 3.3 per cent to Rs 33,684 crorewith excise duty collection declining 14.7per cent year-on-year.

� Finance Ministry ratifies 8.5% intereston Provident Fund deposits for2012-13Dated: May 15, 2013

The Finance Ministry has approvedpayment of 8.5 per cent rate interest for2012-13, up from 8.25 per cent in the previousfiscal, benefiting over 5 crore EmployeesProvident Fund Organisation's .

� Rate-cut expectations rise afterinflation surpriseMumbai, Dated: May 16, 2013

The unexpectedly sharp fall in Indianwholesale inflation for April hasprompted many economists to changetheir policy rate cut views, according toa Reuters poll on Thursday.

� Growth in core industries slows to2.3% in AprilNew Delhi, Dated: May 31, 2013

Growth in eight infrastructure industriesslowed to 2.3 per cent in April mainlydue to contraction in crude oil, naturalgas and fertiliser output.

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� Petrol price hiked by 75 paise, dieselby 50 paise, LPG cheaper by Rs. 45New Delhi, Friday May 31 2013

Petrol price was today hiked by 75 paisaper litre and diesel by 50 paisa a litreas rupee hit 11-month low making oilimports costlier.

� Petrol price hiked by Rs. 2 per litredue to weak rupeeNew Delhi, Dated: June 15, 2013

Petrol price was today hiked by a steepRs. 2 a litre, the second increase in ratesthis month, as devaluation of rupeeagainst US dollar made imports costlier.

� India Inc disappointed over RBIdecision not to cut key ratesNew Delhi, Dated: June 17, 2013

Expressing disappointment over RBI'sdecision to keep key rates unchanged,India Inc today said the time wasappropriate for cut in interest rates torevive the country's economic growth.

� Elevated food prices putting pressureon inflation in India, says RBIMumbai, Dated: June 17, 2013

Expressing concerns over price situation,the RBI today said expensive food itemslike cereals and vegetables has continuedto put pressure on overall inflation rate.

� Govt to re-issue Rs. 1000cr inflationbondsIndia Infoline News Service

Dated: Jun 19, 2013

Govt. will issue 1.44%, 2023 inflationbonds worth Rs. 1000cr on June 25.

� US QE cannot be indefinite: RaghuramRajanIndia Infoline News Service

Dated: Jun 20, 2013

Indian Rupee fall 1.6% on Thursday toits record low ofRs. 59.92 against theUS Dollar.

BANKING

� Establishment of Connectivity withboth depositories NSDL and CDSL—Companies eligible for shifting fromTrade for Trade Settlement (TFTS) toNormal Rolling Settlement[CIR/MRD/DP/ 19 /2013]

Dated: June 11, 2013

It is observed from the informationprovided by the depositories that thecompanies listed in Annexure 'A' haveestablished connectivity with both thedepositories. The stock exchanges mayconsider shifting the trading in thesesecurities to normal Rolling Settlementsubject to the following:

(a) At least 50% of other than promoterholdings as per clause 35 of ListingAgreement are in dematerialized modebefore shifting the trading in the securitiesof the company from TFTS to normalRolling Settlement. For this purpose, thelisted companies shall obtain a certificatefrom its Registrar and Transfer Agent(RTA) and submit the same to the stockexchange/s. However, if an issuer-company does not have a separate RTA,it may obtain a certificate in this regardfrom a practicing company Secretary/Chartered Accountant and submit thesame to the stock exchange/s.

(b) There are no other grounds/reasons forcontinuation of the trading in TFTS.

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prudential floor for implementationof Basel II vis-à-vis Basel I is herebywithdrawn.

� Bank Rate: RB I/2012-13/492 RPCD.CO.RRB.RCB.BC. No.73 /03.05.33/2012-13Dated: May 3, 2013

As announced in the Annual MonetaryPolicy Statement 201 3-14, the Bank Ratestands adjusted by 25 basis points from8.50 per cent to 8.25 per cent with effectfrom May 3, 2013. All penal interest rateson shortfall in reserve requirements,which are specifically linked to the BankRate, also stand revised as indicated inAnnex.

� Export of Goods and Software—Realisation and Repatriation ofexport proceeds—Liberalisation[RBI/201 2-13/503 A.P. (DIR Series) Circular No. 105]

Dated: May 20, 2013

Attention to Authorised Dealer Category-I(AD Category-I) banks is invited to A.P.(DIR Series) Circular No. 52 datedNovember 20, 2012 extending the enhancedperiod for realization and repatriation toIndia, of the amount representing the fullvalue of goods or software exported, fromsixmonths to twelve months from the dateof export. This relaxation was available upto March 31, 2013. The issue has since beenreviewed and it has been decided, inconsultation with the Government of India,to bring down the above stated realizationperiod from twelve months to nine months

Revised Rate

(Effective fromMay 3, 2013)

Bank Rate plus3.0 percentagepoints (11.25 percent) or BankRate plus 5.0percentage points(13.25 per cent).

Item

Penal interestrates on shortfallsin reserve require-ments (dependingon duration ofshortfalls).

Existing Rate

Bank Rate plus3.0 percentagepoints (11.50

per cent) or BankRate plus 5.0percentage points(13.50 per cent).

� Rupee Export Credit-Interest Sub-vention:RBI/2012-13/507DBOD.Dir.BC.No.94 /04.02.001/2012-13Dated: May 24, 2013

As per the circular DBOD.Dir.(Exp).BC.No.70/04.02.001/2012-13 dated January14, 2013 wherein interest subvention of2% was extended w.e.f. January 1, 2013to March 31, 2014 on pre and postshipment rupee export credit for certainemployment oriented export sectors. Incontinuation of the above circular it hasbeen decided to widen the interestsubvention scheme to the followingsectors for the period April 1, 2013 toMarch 31, 2014, on the same terms andconditions:1. ITC(HS) and Textiles good to 6

tarifflines as per the list given in theAnnex-I.

2. Additional 101 tarifflines in engineer-ing good sector in addition to theexisting 134 lines as per the list givenin Annex-II.

� Prudential Guidelines on CapitalAdequacy and Market Discipline —

New Capital Adequacy Framework(NCAF) — Parallel Run and PrudentialFloor

[RBI/2012-13/508 DBOD.BP.BC. No.95/21 .06.001/2012-13]

Dated: May 27, 2013

As per the circular DBOD.BP.BC. No.71/21.06.001/2010-11 dated December 31,2010 on the above subject, in terms ofwhich banks were advised to continuewith the parallel run for a period of threeyears, till March 31, 2013, subject toreview. Banks were also advised toensure that their Basel II minimumcapital requirement continues to behigher than the prudential floor of 80%of the minimum capital requirementcomputed as per Basel I framework forcredit and market risks. The matter hasbeen reviewed and the parallel run and

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from the date of export, with immediateeffect, valid till September 30, 2013.

� ‘Non Banking Financial Company-Micro Finance Institutions’ (NBFC-MFIs)— Directions—Modifications inPricing of Credit—Margin capRBI/201 2-13/517 DNBS (PD) CC.No.327/03.10.038/2012-13

Dated: May 31, 2013

Attention is invited to para 6 ofDNBS.(PD)CC.No.300/03.10.38/2011-12dated August 3, 2012 modifying inter aliathe pricing of credit as given inDNBS.CC.PD.No.250/03.10.01/2011-12dated December 2, 2011. On a review,it has been decided that the margin capfor all NBFCs irrespective of their sizewould be 12% per cent till March 31,2014. However, with effect from 1st April,2014 margin caps as defined by MalegamCommittee may not exceed 10 per centfor large MFIs (loans portfolios exceedingRs. 100 crore) and 12 per cent for theothers.

� Lending against GoldRBI/201 2-13/509 DBOD. No. Dir. BC. 96 /13.03.00/

2012-13

Dated: May 27, 2013

Please refer to paragraph 98 of theMonetary Policy Statement 2013-14announced on May 3, 2013 (extractenclosed) on lending against gold,proposing to restrict the facility ofadvances against the security of gold coinsper customer to gold coins weighing upto 50 gms. As per extant instructionscontained in our circular DBOD.Leg.BC. 95/ C.124 (P) - 78 dated July 22, 1978,banks should not grant any advanceagainst gold bullion. Banks are currentlypermitted to grant advances against goldornaments and jewellery subject to Boardapproved policies in terms of our circularDBOD.No.BC.138/21.01.023/94 datedNovember 22, 1994.

� Interest Rates on Rupee Export Credit—UCBs[RBI/2012-13/519 UBD.BPD. (AD) Cir.No. 4/

13.05.000/2012-13]

Dated: June 4, 2013

Please refer to our circular UBD.BPD.(AD).Cir.No. 2/13.05.000/2012-13dated January 22, 2013 on the captionedsubject, extending the interest subventionof 2% up to March 31, 2014 on pre andpost shipment rupee export credit tospecified export sectors.The Governmentof India has decided to widen the interestsubvention scheme to include thefollowing sectors for the period April 1,2013 to March 31, 2014.

(a) Export of ITC (HS) and textiles goodsto 6 tariff lines as per the list given inAnnex-I.

(b) Additional 101 tariff lines in engineeringgoods sector in addition to the existing134 lines, as per the list given in Annex-II.

� Interest Rates on Rupee Export Credit[UBD.BPD.Dir. (Exp).No. 10 /13.05.000/2012-13]

Dated: May 31, 2013

In exercise of the powers conferred bySections 21 and 35 A of the BankingRegulation Act, 1949 read with Section56, and in partial modification of itsDirective UBD.BPD.Dir. (Exp). No. 9/13.05.000/2012-13 dated January 21, 2013,the Reserve Bank of India, being satisfiedthat it is necessary and expedient in thepublic interest so to do, hereby directsthat, the Interest Subvention Schemeon Rupee Export Credit, valid uptoMarch 31, 2014, has been widened toinclude (i) export of ITC (HS) and textilegoods to 6 tariff lines (as per the list givenin the Annex-I) and (ii) additional 101tariff lines in engineering goods sectorin addition to the existing 134 lines (asper the list given in Annex-II).

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(d) Edible oils from Domestic Tariff Area(DTA) to Special Economic Zones(SEZs) to be consumed by SEZ unitsfor manufacture of processed foodproducts, subject to applicable valueaddition norms.

(e) Edible oils produced out of minorforest produce, ITC(HS) Code15159010, 15159020, 15159030,15159040, 15179010 and 15219020.

(f) 10,000 MTs of Organic edible oils perannum. The conditions notified inNotification No. 50 dated 03.06.2011for export of organic edible oils willcontinue to apply.

3. Export of edible oils in branded consumerpacks of upto 5 Kgs is permitted witha Minimum Export Price of USD 1500per MT.

4. Export of coconut oil is being permittedthrough all Land Custom Stations(LCS) on Indo-Nepal, Indo-Bangladesh,Indo-Bhutan and Indo-Pakistan bordersin addition to export through all EDIports.

� Notification No. 20 (Re-2013)/2009-2014Dated: June 13, 2013

S.O. (E), In exercise of the powersconferred by section 13 of the ForeignTrade (Development and Regulation) Act,1992 (22 of 1992) and in supersessionof the earlier Notifications mentionedbelow, the Central Government herebyauthorizes the officers specified incolumn 2 of the table below for thepurposes of exercising powers underSection 13 read with Section 11 of theFT(DR) Act, 1992, subject to the limitsspecified against such officers in thecorresponding entry in column 3 of thesaid Table, namely:

Foreign Trade

� Amendment in Notification No. 39(RE-2012)/2009-14 dated 25th March,2013 relating to export of edible oils[Notification No 22 (RE-2013)/2009-2014]

Dated: June 18, 2013

1. Export of edible oils was initiallyprohibited for a period of one year witheffect from 17.03.2008 vide NotificationNo. 85 dated 17.03.2008 which wasextended from time to time. videNotification No. 24(RE-2012)/2009-14dated 19th October 2012, prohibition onexport of edible oil has been extendedtill further orders.

2. Following exemptions are permittedfrom the prohibition on export of edibleoils:

(a) Castor oil

(b) Coconut oil from all EDI Ports andthrough all Land Custom Stations (LCS)on Indo-Nepal, Indo Bangladesh, Indo-Bhutan and Indo-Pakistan borders.

(c) Deemed export of edible oils(as inputraw material) from DTA to 100%EOUs for production of non-ediblegoods to be exported.

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Previous Notifications which standsuperseded:

1. Notification S.O.24(E) dt. 20th January 19992. Notification S.O. 194(E) dt. 6th March 20003. Notification S.O. 106(E) dt. 30th January, 20064. Notification S.O. 1534 dt. 14th September, 20065. Notification S.O. (E) dt. 17th April, 2009

(Issued from File No. 01/69/594/007/2008/OM1/O&M)

� Prohibition on import of milk and milkproducts from ChinaNotification No. 23 (RE-2013)/2009-2014

Dated: June 18, 2013

Prohibition on import of milk and milkproducts (including chocolates andchocolate products and candies/confectionary/ food preparations withmilk or milk solids as an ingredient) fromChina is extended for one more year,i.e., till 23.6.2014 or until further orders,whichever is earlier.

� Amendment in Para 2.38 of ForeignTrade Policy, 2009-2014Notification No. 24 (RE-2013)/2009-2014

Dated: June 19, 2013

Defective parts/spares imported exclusi-vely for undertaking root cause analysis,testing and evaluation purpose by theCompanies/firms and Original EquipmentManufacturers may not be re-exported.

without limit

Up to Rs. 25 crores

Up to Rs.10 crores

Without limit in respect of Export Oriented Unitsand units in Special Economic Zones

Without limit in respect of units in SoftwareTechnology Parks (STPs) and ElectronicsHardware Technology Parks (EHTPs).

Sl.No.

1.

2.

3.

4.

5.

Designation of Officer

Additional Director General of ForeignTrade

Joint Director General of Foreign Trade

Deputy Director General of ForeignTrade/ Assistant Director General ofForeign TradeDevelopment Commissioner, SpecialEconomic Zones

Designated Officer, Department ofElectronics & Information Technology

Value of goods or services or technology coveredby an authorization issued, registration certificate/permits issued for import or export or in respectof goods or services or technology for which importor export is permitted without any authorization

Income Tax

� Allows Sec 80IA deduction availabledespite non-filing of audit reportDated: June 14, 2013

Allows Sec 80IA deduction though theaudit report was not submitted alongwith tax return and confirms ITAT ruling;Emphasis on having the accounts audited

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� Permits ‘Loophole’ exploitation; sharesale effecting immovable propertytransfer, legitimate tax planningBhoruka Engineering Inds. Ltd. [TS-252-HC-2013(KAR)]

Dated: June 13, 2013

Long term capital gains exemption u/s10(38) allowed on sale of shares in a groupcompany that had effect of transferringunderlying land; Land was acquired intoa listed company and immediate sharetransfer made to transfer control over thecompany; Reverses ITAT ruling, rejectsRevenue's contention that circuitousarrangement and colourable device wasadopted to avoid taxes; Assessee byresorting to tax planning, has takenadvantage of loopholes in the law; ForParliament to amend law & plug theloophole; Court cannot read into theSection, which was not intended to, by theParliament at the time of enacting theprovision; Where taxpayer has alternativeways to effect the transaction, he canchoose the manner which reduces taxliability; Rejects Revenue's reliance onMcDowell ruling, follows SC ruling inAzadi Bachao Andolan and Vodafone :Karnataka HC.

� ITAT: Trust assessed as individualeligible for Sec 10(15) exemption onRBI bondsMumbai ITAT Jehan Trust

[TS-244-ITAT-2013(Mum)]

Upholds Sec 10(15) exemption on RBIbonds to trust; Trust had sole individualas beneficiary; Rejects Revenue's standthat exemption available only toindividuals and does not include trust;Tax to be levied on trustee in like manneras beneficiary; Relies on Bombay HCruling in Shardaben Bhagubhai MafatlalPublic Charitable Trust.

� Revised corporate tax return forms forAY 13-14 seek more disclosures

CBDT notifies tax return forms (ITR 5, 6& 7) for AY 2013-14; Calls for disclosure

and not on furnishing of audit reportalong with return of income; ReliesGujarat Oil & Allied Industries rulingwhich held that having accounts auditedwas main criteria for Sec 80IA (7)deduction; since assessee's accounts wereaudited, deduction u/s 80IA (7) alloweddespite not furnishing of audit report.CITvs. Sanjay Kumar Bansal [TS-250-HC-2013(UTT)].

� Amended Form 3CEB introduces shareissue and buy-back disclosureDate: June 13, 2013

New Form 3 CEB requires additionaldisclosures on international transactions;Specified details on internationaltransactions of guarantee, businessreorganization/restructuring, purchase/sale of securities and issue/buybackof equity shares, debentures, preferenceshares to be given; Method ofdetermination of ALP for issue andbuyback of shares to be stated; CBDTamends Rule 10A to define the term AEfor specified domestic transaction (SDT).

� Sec 50C inapplicable to stock-in-tradeland introduced as capital in JVAli Akbar Jafari [TS-253-ITAT-2013(PUN)]

Dated: June 13, 2013

Value of development rights showedunder the head ‘‘Current Assets’’ held asstock in trade and not as capital asset;Deeming provisions of Sec. 45(3) andSec. 50C not applicable to Stock in tradeintroduced as capital contribution inJoint Venture (JV); Allahabad HCruling in Kan Construction Colonisersrelied upon and co-ordinate bench rulingin Purushottam Mukunddas Lohiadistinguished; Treats block assessmentincome as business income and not asincome from other sources; Allows set-off of loss against block assessmentincome : Pune ITAT.

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of payments to non-residents, baddebts, bifurcation of employees in Indiaand outside India, classification ofinvestments, tax filings pursuant to APA;ITR 5 applicable to partnerships and LLPsrequire disclosure of unsecured loan &advances from persons specified in Sec40A(2)(b), business and non-businessloans and advances; ITR 6 applicable tocorporate tax payers brings changes inline with revised Schedule-VI .

� ITAT: Non-agricultural land, even ifsituated in a remote village, constitutescapital assetACIT vs.Subramaniam Vadivel [TS-206-ITAT-2013(CHNY)]

Dated: May 23, 2013

ITAT held that, "When the basic natureof the land itself found to be non-agricultural, the arguments regardingstatus of the property, whether withinmetropolis or outside the limit of themetropolis, is irrelevant. A non-agricultural property, whether inside themunicipality or outside the municipalityor even in a remote village is a "capitalasset" and transfer of the same maygenerate income liable for capital gainstaxation". Mere bifurcation of land inrevenue records as "agricultural" wouldnot make it so; Agricultural history ofland is not the only test to be applied todecide the character at the time of sale;Lands must be utilised for economicalagricultural activities and shouldgenerate meaningful income; distin-guished co-ordinate bench ruling inPallavaResorts: Chennai ITAT.ITAT further stated that it could not beheld that non carrying on agriculturaloperations for one or two yearspermanently changes the character of theland. In the present case of the assessee,there was a permanent stoppage ofagricultural operations due to thedevelopment of real estate in that area.Thus, not carrying on agricultural

activities for a long time in the past wouldchange land's character and convert it intonon-agricultural land.Finally, it was held by ITAT that the landwas not actually or ordinarily used foragriculturaloperations on or around therelevant time of sale. Also, the incomereturned from agriculturaloperationscarried on in the land was just fornamesake and did not have anyproportion tothe efforts been made by atrue agriculturist. Hence, it definitely fellunder the category of "capital asset"and should be taxed accordingly.

� Provision for loss on REPO transactionsreal, not notional / contingentITO vs. SBI DHFL Ltd.

Dated: May 23, 2013

Loss on securities for outstanding Repotransactions is actual and real, notnotional or contingent; Deductionallowed for Repo Price Adjustmentdebited to profit and loss account as perRBI guidelines; Co-ordinate bench rulingin Securities Trading Corporation of IndiaLtd. relied upon.

� HC: Incidental business cannot dis-entitle approval as 'scientific researchinstitute' u/s 35(1) (ii)Centre for Development of Telematics and Anr

vs. Union of India &Ors[TS-212-HC-2013(DEL)]

Dated: May 27, 2013

Exemption u/s 10(21) to 'scientificresearch association' available even if itearns profits from incidental business;Mere receipt of royalty, consultancycharges would not dis-entitle assesseeto be a 'scientific research association' u/s 35(1)(ii) read with Sec 10(21); Noclear reference from CBDT to CentralGovernment to determine nature ofassessee's activities; Directs CentralGovernment to decide whether assesseeis 'scientific research association' or in thecategory of 'other institution' afresh :Delhi HC.

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� Expenditure disallowed for default inwithholding tax would qualify for sec.80-IB deductionsITO V. KEVAL CONSTRUCTION [2013] 33

taxmann.com 277 (Gujarat)

Disallowance for non-deduction of TDSliability would increase profit of assesseefrom business of developing housingprojects and ultimate profit would qualifyfor deduction under section 80-IB.The High Court held as under:Even if a expenditure incurred by theassessee for the purpose of developinghousing project was not allowable byvirtue of section 40(a) (ia) of the Act, sincethe assessee had not deducted the tax atsource as required under law, it couldn'tbe denied that such disallowance wouldultimately go to increase the assessee'sprofit from the business of developinghousing project. So, whatever be theultimate profit of assessee even aftermaking disallowance under section40(a)(ia) of the Act, would qualify fordeduction as provided for under thelaw.

� Share buyback tax, TDS on propertysale to come into effect from June 1

Tax on buy-back, TDS on transfer ofimmovable property and otheramendments by Finance Act 2013 to beeffective from June 1, 2013.

� No concealment penalty if exp. claimedin current year and withholding taxesdeposited in subsequent yearDYNATRON (P.) LTD. V. DY. CIT [2013] 33

taxmann.com603 (Mumbai - Trib.)

Provision of sec. 40(a) (i) would bedeemed to have been substantiallycomplied with if taxes withheld frompayment made to non-resident weredeposited subsequent to the previousyear in which expenditure was claimedby assessee. Hence, concealment penaltywould not be leviable.

� CBDT notifies rules for TDS onimmovable property transactionsDated: June 04, 2013

CBDT notifies rules for tax deductionat source on immovable propertytransactions exceeding Rs 50 lakhs u/s194-IA; deductor to electronically depositTDS within 7 days from end of month inwhich tax deducted and to issues TDScertificate within 15 days thereafter; Achallan-cum-statement in Form No 26QBto be furnished: CBDT notification.

� Delhi HC interprets sec. 80-I broadly;conditions stipulated by sec. 80-I to besatisfied only in initial AssessmentYearDELHI PRESS PATRA PRAKASHAN LTD. V.

CIT [2013] 34 taxmann.com 3 (Delhi)

The Delhi HC clarifies several aspects ofsec. 80-I provisions and held as under:

(1) Industrial undertaking which undertakesjob work would be entitled to section80-I deduction:

a. There was nothing in the language ofSection 80-I(2)(iii) of the Act to suggest thatthe assessee claiming the benefit of Section80-I must structure his business in anyparticular form. Carrying on job work isonly a method of structuring his business;

b. An assessee owning an industrial under-taking may either choose to purchase rawmaterial on its own and process the same orit may acquire raw material on job workbasis and utilize the same for carrying onthe industrial activity;

c. In either event so long as the industrialundertaking owned by the assesseefulfills the conditions as specified underSection 80-I(2), the benefit of Section 80-Icouldn't be denied to the assessee.

(2) Printing amounted to "manufacture orproduction of an article or thing"

a. It can't be said that the printing does notalter the character of the paper used andthere is no distinction between the rawpaper and the resultant product;

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b. The purpose and usage of a blank paperis completely different from the use andpurpose of a printed magazine orperiodical;

c. Once the blank paper undergoes aprocess of printing, the character of blankpaper changes completely and thecontent of the printed material nowbecomes the identity of a printed paper;

d. A printed magazine or periodical even ifit is not bound has a definite identity andits usage is completely different from ablank paper on which it is printed;

e. The expression used in Section 80-I(2)(iii)is "manufacture or produce any article orthing" which is much wider and, thus,would take in its sweep any article thatmay be manufactured or produced.

� ITAT : Waiver of interest notchargeable u/s 41(1) given earlierdisallowance u/s 43BSpel Semiconductor Ltd. [TS-228-ITAT-2013

(CHNY)]

Waiver of interest on bank loan taxableu/s 41(1) only where interest claimed asdeduction by assessee and allowed by AOin earlier years; Waiver held not taxablesince interest disallowed earlier by AO u/s 43B; Provisions of Sec 28(iv) for taxingwaiver applicable only to benefits orperquisites received in kind; Hencewaiver of interest, being cash benefit,not taxable u/s 28(iv); JurisdictionalHC ruling in Iskraemeco Regent Ltdfollowed : Chennai ITAT.

� ITAT: Upfront interest on debenturesallowable as deduction in year ofpaymentThe Arvind Mills Ltd. [TS-231-ITAT-2013(Ahd)]

Upfront interest on debenture allowableas deduction in year of payment;Revenue's argument to spread suchinterest over life of debentures, rejected;Relied on Gujarat HC ruling in Mohit

Marketing; Use of machinery for trial runto be construed as machinery used for thebusiness purposes; Depreciation allowedon windmill used for trial run; Deductionotherwise available under IT Act (Sec 43B)cannot be disallowed based on anycommunication/agreement between ITDept, assessee and BIFR : AhmedabadITAT.

� ITAT: Off market transactions heldgenuine, price close to market price,loss allowedHina Nitin Parikh [TS-232-ITAT-2013(Ahd)]

Accepts "off market" transactions asgenuine & allows loss; Off markettransactions on principle to principlebasis not in violation of SecuritiesContract (Regulation) Act, 1956; Assesseedid not become member of unrecognizedstock exchange; Payment and deliverysettled on cumulative basis; Transactionprice close to market price on relevantday; AO accepted profit earning offmarket transactions as genuine butconsidered similar loss transactions as notgenuine: Ahmedabad ITAT.

� CBDT notifies Cost Inflation Index forFY 2013-14 as 939

CBDT notifies Cost Inflation Index (CLI)for FY 2013-14 as 939; CLI to be used whilecomputing long term capital gains onspecified assets; CLI increased by 10.2%from previous year's CLI of 852.

� Rent from PVR for cinema buildingtaxable as 'house property' incomeAnjala Exhibition Pvt Ltd. [TS-236-ITAT-

2013(DEL)]

Income from letting out vacant cinemabuilding to PVR Cinemas taxable as'income from house property', not asincome from other sources; Intention ofparties, not title of the agreement relevantin determining whether income wasrental income; Rejects Revenue's

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contention that income arose from JV/partnership agreement to run existingcinema building according to changingmarket needs; Bombay HC ruling inParekh Traders followed: Delhi ITAT.

� Disapproves SB ratio, Allows Sec 54benefit for two adjacent flatsCIT vs. Syed Ali Adil

Dated: June 07, 2013

Benefit of Sec 54 against long term capitalgains allowed for investment in twoadjacent flats purchased from differentvendors under two separate sale deeds;Investment in "a" residential housedoesn't indicate single house; Investmentin adjacent flats with common meetingpoint eligible for Sec 54 benefit;Disapproves ratio of ITAT Special Benchruling in Sushila M Jhaveri.

� ITAT: Disallows legal fees to defenddirectors in Narcotics case; Invokes Sec37(1) explanationOPM International Pvt. Ltd.

[TS-240-ITAT-2013(Mum)]

Dated: June 10, 2013

Disallows professional fees paid byassessee company to defend its Directorsinvolved in a Narcotics case; Explanationto Sec 37(1) clearly provides that nodeduction allowable for any expenditureincurred for the purpose of an offence orwhich is prohibited by law; Even indirectexpenditure which has a nexus with theoffence, would be disallowed : MumbaiITAT.

� HC: Upholds loss on shares heldas stock by Bank; RBI guidelinesirrelevantThe Karnataka Bank Ltd. [TS-242-HC-2013(KAR)]

Dated: June 10, 2013

Loss on valuation for shares held as stockin trade (based on lower of cost or marketvalue) for tax purposes upheld; Sharesheld as investments in balance sheet as

per RBI Guidelines but treated as stockin trade for tax purposes consistently fortwo decades; RBI Act or Companies Actdo not deal with permissible deductionsor exclusions under tax law; If marketvalue is less than the cost price, Bankentitled to deductions ; Rejects Revenue'sclaim of disallowing losses by relyingon RBI guidelines or balance sheetdisclosure & overrules ITAT ruling :Karnataka HC.

� Acquisition of a new flat in exchangeof an old flat is deemed constructionand allows sec. 54 benefitsSMT. VEENA GOPE SHROFF V. ITO [2013] 33

taxmann.com 344 (Mumbai-Trib.)

Where possession of new flat wasreceived within 3 years from date oftransfer, in exchange of an old flat underdevelopment agreement, it amounted toconstruction of property under section 54.The Tribunal held in favour of assesseeas under:

(1) If an the assessee had exchanged an oldflat with a new flat constructed by thebuilder under development agreementwhich amounted to transfer undersection 2(47);

(2) Thus, the only other condition which wasrequired to be satisfied was that assesseeeither had to purchase a new residentialflat within the prescribed limit orconstruct a new residential flat within aperiod of 3 years from the date of transfer;

(3) The acquisition of a new flat under adevelopment agreement in exchange ofthe old flat amounted to construction ofnew flat.

(4) Therefore, the provisions of section 54were applicable and assessee was entitledto exemption if the new flat had beenconstructed within a period of 3 yearsfrom the date of transfer;

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(5) Since cash compensation was part ofconsideration for transfer of the old flatand the assessee had invested the moneyin NABARD bonds, the exemption undersection 54EC would also be available. Theassessee's new flat got completed withina period of 3 years from the date oftransfer of the old flat. Therefore, theassessee's claim of exemption undersection 54 was to be allowed and the orderof the CIT (A) was set aside.

� Valuation loss is allowable even ifstock-in-trade shown as investment incompliance of RBI guidelines

Even though assessee-bank disclosedshares as investments in balance sheetto comply with RBI Guidelines, it wasnot estopped from treating the same asstock-in-trade for income-tax andclaiming valuation loss thereon as theseshares had been consistently shownas stock-in-trade in income-tax inthepastyears also.

� Notification No. 45/46Dated: June 19, 2013

Central Government makes CommoditiesTransaction Tax Rule, 2013 and said rulesshall come into force on 1st day of July,2013.

Central Excise

� Circular No. 970/04/2013-CXDated: May 23, 2013

CBEC specified certain conditions,limitations, safeguards and proceduresfor movement of excisable indigenousgoods to warehouses or retail outlets ofDuty Free Shops appointed or licensedunder Customs Act, 1962.

� Notification No.19/2013-CentralExciseDated: May 23, 2013

Seeks to allow duty free sale of goodsmanufactured in India to the Internationalpassengers or members of crew at theDFSs located at the arrival / departure hallof International Airports and specify theprocedures relating thereto.http://www.cbec.gov.in/excise/cx-act/notfns-2013/

cx-tarr2013/ce19-2013.htm

� Notification No.21/2013-Central ExciseDated: June 13, 2013

� Amends Notification No. 30/2012-Central ExciseDated: July 9, 2012

http://www.cbec.gov.in/excise/cx-act/notfns-

2013/cx-tarr2013/ce21-2013.pdf

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Customs

� Notification No.32/2013-Customs[F.No.605/10/2013-DBK]

Dated: 13th June, 2013

G.S.R.371(E).-In exercise of the powersconferred by sub-section (1) of section25 of the Customs Act, 1962 (52 of 1962),the Central Government, on beingsatisfied that it is necessary in the publicinterest so to do, hereby makes the fewamendments in the notification of theGovernment of India in the Ministry ofFinance (Department of Revenue)No. 93/2009 — Custom dated the11th September, 2009 published in theGazette of India, Extraordinary , PartII,Section 3 subsection (i) vide numberG.S.R. 659 (E), dated the 11th September,2009, namely :

After paragraph 2 and before theExplanation, the paragraph 3 shall beinsertedfor the purpose of calculation ofexport performance or for computationof entitlement under paragraph 3.14.4 orparagraph 3.14.5 of the Foreign TradePolicy, the incremental growth shall bein respect of each exporter [ImporterExporter Code (IEC) holder] without anyscope of combining the export for groupcompany or for transferring exportperformance from any other IEC holderand the incremental growth shall be in

terms of freely convertible currency to thedesignated markets.

The following categories of exports shallnot be counted for calculation of exportperformance or for computation ofentitlements:

◆ Export of imported goods or exportsmade through trans-shipment;

◆ Export from SEZ/ EOU /EHTP /STPI/BTP/FTWZ;

◆ Deemed Exports;

◆ Service Exports;

◆ Third Party exports;

◆ Diamond, Gold, Silver, Platinum,other precious metal in any formincluding plain and studded jewelleryand other precious and semi-preciousstones;

◆ Ores and concentrates of all types andin all formations.

◆ Cereals of all types;(ix) Sugar of alltypes and all forms;

◆ Crude/petroleum oil and crude/primary and base products of all typesand all formulations;

◆ Export of milk and milk products;

◆ Export performance made by oneexporter on behalf of other exporter;

◆ Supplies made to SEZ units;

◆ Items, export of which requires anexport authorization (except SCOMET);

◆ Export of Meat and Meat Products;

◆ Exports to Singapore, UAE and HongKong,

◆ S E Z / E O U / E H T P / B T P / F T W Zproducts exported through DTA units.''

� Circular No. 22/2013—CustomsDated: May 24, 2013

To reduce transaction costs and 'dwelltime', CBEC allow direct movement ofgoods from Gateway Port to ContainerFreight Station (CFS) of another CustomsStation with customs permission.

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Any person who has furnished returnunder section 70 of the Chapter anddisclosed his true liability, but has notpaid the disclosed amount of service taxor any part thereof, shall not be eligibleto make declaration for the periodcovered by the said return.Where a notice or an order of determinationhas been issued to a person in respect ofany period on any issue, no declarationshall be made of his tax dues on the sameissue for any subsequent period.

(2) Where a declaration has been made by aperson against whom,—

(a) an inquiry or investigation in respect of aservice tax not levied or not paid or short-levied or short-paid has been initiated byway of —

◆ search of premises under section 82 ofthe Chapter; or

◆ issuance of summons under section 14of the Central Excise Act, 1944, asmade applicable to the Chapter undersection 83 thereof; or

◆ requiring production of accounts,documents or other evidence underthe Chapter or the rules made thereunder; or

(b) an audit has been initiated, and suchinquiry, investigation or audit is pendingas on the 1st day of March, 2013, then, thedesignated authority shall, by an order,and for reasons to be recorded in writing,reject such declaration.Procedure for making declaration andpayment of tax dues:

1. Subject to the provisions of this Scheme,a person may make a declaration to thedesignated authority on or before the31st day of December, 2013 in suchform and in such manner as may beprescribed.

2. The designated authority shallacknowledge the declaration in suchform and in such manner as may beprescribed.

Service Tax

� Service Tax Voluntary ComplianceEncouragement Scheme, 2013[Notification No. 10/2013-ST]

Dated: May 13, 2013

The Service Tax Voluntary ComplianceEncouragement Scheme (VCES) hascome into effect upon enactment of theFinance Bill 2013 on the 10th May, 2013.The Service Tax Voluntary ComplianceEncouragement Rules, 2013 has beenissued to bring into effect the Scheme.Various procedures for obtaining regis-tration, form and manner of declaration,form and manner of acknowledgement ofdeclaration, manner of payment of taxdues and form and manner of issuingacknowledgement of discharge of taxdues under the Service Tax VoluntaryCompliance Encouragement Scheme,2013 are specified through Service TaxVoluntary Compliance EncouragementRules, 2013.

Person who may make declaration of taxdues:

(1) Any person may declare his tax dues, inrespect of which no notice or an order ofdetermination under section 72 or section73 or section 73A of the Chapter has beenissued or made before the 1st day ofMarch, 2013, provided:

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3. The declarant shall, on or before the31st day of December, 2013, pay notless than fifty per cent. of the tax duesso declared under sub-section (1) andsubmit proof of such payment to thedesignated authority.

4. The tax dues or part thereof remainingto be paid after the payment madeunder sub-section (3) shall be paid bythe declarant on or before the 30th dayof June, 2014. Provided that where thedeclarant fails to pay said tax dues orpart thereof on or before the said date,he shall pay the same on or before the31st day of December, 2014 along withinterest thereon, at such rate as is fixedunder section 75 or, as the case maybe, section 73B of the Chapter for theperiod of delay starting from the 1stday of July, 2014.

5. Notwithstanding anything containedin sub-section (3) and sub-section (4),any service tax which becomes due orpayable by the declarant for the monthof January, 2013 and subsequentmonths shall be paid by him inaccordance with the provisions of theChapter and accordingly, interest fordelay in payment thereof, shall also bepayable under the Chapter.

For more details please visit the link:http://www.servicetax.gov.in/st_servicetax_volu_compliance.pdfhttp://www.servicetax.gov.in/st-circulars-

home.htm

� Service tax paid on rent of premises usedfor storage of manufactured goods iseligible for input service credit

[2013] 33 taxmann.com 513 (Mumbai - CESTAT)

Nitcon Industries (P.)Ltd., v., Commissioner of

Central Excise, Mumbai-II

Section 2(i) of the Cenvat Credit Rules,2004 —CENVAT Credit—Input service—Renting Services - Assessee took premiseson rent for storage of manufacturedgoods—Department denied credit of

service tax paid on rent on ground thatsuch services had no nexus withmanufacture and, further, such rentedpremises were outside factory—HELD :Any service availed by assessee who isa manufacturer of excisable goods incourse of their business is entitled forCENVAT credit—In this case, there wasno dispute as to use of rented premisesfor storage of manufactured goods—Itwas immaterial whether such premiseswere within factory or outside that—Inview of decision of CCE v. Ultra TechCement Ltd. [2010] 29 STT 244 (Bom.)assessee was entitled to input servicecredit of service tax paid rent [Para 3] [Infavour of assessee].

� Penalty to be waived off if there was adoubt on the chargeability of service tax[2013] 34 taxmann.com 70 (Mumbai - CESTAT)Shivnath Hanumant Kandi v. Commissioner of

Central Excise, Aurangabad

ST : Where, in view of ongoing litigations,assessee was under doubt as to liabilityto service tax, he is eligible for benefitof waiver of penalty in view of suchreasonable cause for non-payment ofservice tax.

� ST couldn't be demanded from serviceprovider if same was discharged by hisagent[2013] 34 taxmann.com 66 (Mumbai - CESTAT)Zaheerkhan B. Khan v.Commissioner of Service

Tax, Mumbai

ST: Definition of assessee includes agent;therefore, if service tax liability of serviceprovider has been discharged by hisagent, service tax cannot be demandedfrom service provider.

� Cenvat Credit not to be reversed ifservice-tax isn't payable due to non-recovery of consideration[2013] 34 taxmann.com 43 (Ahmedabad - CESTAT)Commissioner of Service Tax, Ahmedabad v.KrishnaCommunication

ST : In case of assessee paying service tax

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on receipt basis under rule 6(1) of STRules, 1994, no Cenvat credit reversal canbe required even if no service tax ispayable on output services owing to non-recovery of consideration.

� Sec. 78 penalty is leviable if service taxis paid only when revenue discoversthe suppression by assessee[2013] 33 taxmann.com 512 (Ahmedabad - CESTAT)

ASAL Marketing (P.) Ltd.v.Commissioner of ServiceTax, Ahmedabad

ST: Where it is found that, but forinvestigation taken up by revenue,assessee would not have paid service taxdemanded, it is a case of suppression/mis-declaration by assessee and assesseeis liable to penalty under section 78.

� Rent paid for leasehold premises forstorage of manufactured goods iseligible for Input service credit[2013] 33 taxmann.com 513 (Mumbai - CESTAT)Nitcon Industries (P.) Ltd.v.Commissioner of

Central Excise, Mumbai-II

ST : Service tax paid on rent of premisesused for storage of manufactured goodsis eligible for input service credit.

SEBI

� Enhancement in Foreign Investmentlimits in Government debtCIRCULAR: CIR/IMD/FIIC/8/2013

Dated: June 12, 2013

The Government of India has enhancedthe Government Debt Limits by USD 5billion (equivalent to approximately INR29,137 cr converted at the RBI referencerate of 1 USD = INR 58.274 as on June12, 2013).It has been decided that the aforesaidenhanced limit of USD 5 billion shall beavailable for investments only to thoseFIIs which are registered with SEBIunder the categories of Sovereign WealthFunds (SWFs), Multilateral Agencies,Endowment Funds, Insurance Funds,Pension Funds and Foreign CentralBanks.

� Clarification on SEBI's Circular datedAugust 13, 2012 providing for the‘‘Manner of Dealing with AuditReports filed by Listed Companies’’CIRCULAR: CIR/CFD/DIL/9/2013

Dated: June 5, 2013

◆ SEBI has, vide circular dated August13, 2012 providing for the "Mannerof Dealing with Audit Reports filedby Listed companies", mandated listedcompanies to submit either Form A(Unqualified/ Matter of EmphasisReport)or Form B (Qualified/ Subject

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provided by the depositories that theCompanies listed in Annexure 'A' haveestablished connectivity with both thedepositories.The stock exchanges may considershifting the trading in these securitiesto normal Rolling Settlement subject tothe following:

◆ At least 50% of other than promoterholdings as per clause 35 of ListingAgreement are in dematerialized modebefore shifting the trading in the se-curities of the company from TFTSto normal Rolling Settlement. For thispurpose, the listed companies shallobtain a certificate from its Registrarand Transfer Agent (RTA) and submitthe same to the stock exchange/s.However, if an issuer-company doesnot have a separate RTA, it mayobtain a certificate in this regardfrom a practicing company Secretary/Chartered Accountant and submit thesame to the stock exchange/s.

◆ There are no other grounds/reasonsfor continuation of the trading inTFTS.

The Stock Exchanges are advised to reportto SEBI, the action taken in this regardin the Monthly/Quarterly DevelopmentReport.

� Scheme of Arrangement underthe Companies Act, 1956-Revisedrequirements for the Stock Exchangesand Listed Companies ClarificationCircular: CIR/CFD/DIL/8/2013

Dated: May 21, 2013

1. This is with reference to SEBI CircularNo. CIR/CFD/DIL/5/2013 datedFebruary 4, 2013 on the captioned subject.

2. Subsequent to the issuance of the aforesaidCircular, SEBI has received queries/representations from market participantsexpressing operational difficulties inimplementing certain provisions of the

To/ Except For Audit Report) alongwith the Annual Report to the StockExchanges. It is also envisaged thatthe qualified audit reports will bescrutinized by Qualified Audit ReviewCommittee (QARC) and if necessary,the company will be required to restateits books of accounts to provide trueand fair view of its financial position.

◆ SEBI is in receipt of various querieswith regard to restatement of booksof accounts of listed companies en-visaged in the captioned circular. Theprimary concern raised is whether therestatement of books of accounts needsto be carried out in the same financialyear or in the subsequent financial yearas a prior period item.

◆ In order to address the aforesaidconcern, it is clarified that the restate-ment of books of accounts indicatedin Paragraph 5 of the said circular shallmean that the company is requiredto disclose the effect of revised finan-cial accounts by way of revised pro-forma financial results immediately tothe shareholders through StockExchange(s). However, the financialeffects of the revision may be carriedout in the annual accounts of the sub-sequent financial year as a prior perioditem so that the tax impacts, if any,can be taken care of.

◆ his circular is issued in exercise of thepowers conferred under Section 11 readwith Section 11A of the Securities andExchange Board of India Act, 1992.

◆ All Stock Exchanges are advised toensure compliance with this circular.

� Establishment of Connectivity withboth depositories NSDL and CDSL—Companies eligible for shifting fromTrade for Trade Settlement (TFTS) toNormal Rolling SettlementCIRCULAR: CIR/MRD/DP/ 19 /2013

Dated: June 11, 2013

It is observed from the information

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said Circular. Accordingly, uponexamination of the representations andconcerns raised therein, it has beendecided to provide clarifications andmodify certain provisions of the saidCircular as detailed below:

Applicability:

◆ SEBI Circular No. CIR/CFD/DIL/5/2013 dated February 4, 2013 isapplicable to all listed companiesundertaking a Scheme of Arrangementunder Part IV and Chapter V of PartVI of the Companies Act, 1956, (Amal-gamation/ Merger/ Reconstruction/Reduction Of Capital, etc.).

◆ Thus, it is hereby clarified that theCircular referred to in paragraph 3.1above and this Circular are applicableeven to cases where no exemption fromRule 19(2)(b) of Securities Contracts(Regulation) Rules, 1957 is sought fromSEBI.

◆ Requirement of submission ofValuation Report from IndependentChartered Accountant:

◆ All listed companies undertaking aScheme of Arrangement under PartIV and Chapter V of Part VI of theCompanies Act, 1956, (Amalgamation/Merger/Reconstruction/ ReductionOf Capital, etc.) are required to submita valuation report in terms of Para(I) (A) read with Part A, Annexure Iof the SEBI Circular No. CIR/CFD/DIL/5/2013 dated February 4, 2013.

◆ However, 'Valuation Report from anIndependent Chartered Accountant'need not be required in cases wherethere is no change in the shareholdingpattern of the listed company /resultant company.

For more details:

http://www.sebi.gov.in/cms/sebi_data/attachdocs/1369139160079.pdf

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This publication does not constitute professional advice. The information

in this publication has been obtained or derived from sources believed

by The Institute of Cost Accountants of India (ICAI) to be reliable. Readers

of this publication are advised to seek their own professional advice

before taking any course of action or decision, for which they are entirely

responsible, based on the contents of this publication. ICAI neither

accepts nor assumes any responsibility or liability to any reader of this

publication in respect of the information contained within it or for any

decisions readers may take or decide not to or fail to take.

DIRECTORATE OF RESEARCH & JOURNAL

THE INSTITUTE OF COST ACCOUNTANTS OF INDIA

HEADQUARTERS

CMA BHAWAN, 12, SUDDER STREET, KOLKATA-700 016, INDIA

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E-mail ID: rnj.dpnandy@icmai.in. Website: www.icmai.in

UPDATED UPTO 20 JUNE 2013

Behind Every Successful Business Decision, there is always a CMA

Editor : Dr. Debaprosanna Nandy