The Institute of Chartered Accountants of India(Setup by an Act of Parliament)
VOLUME - IV 2013l MAY
THE INSTITUTE OF CHARTERED
ACCOUNTANTS OF INDIA
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WESTERN INDIA REGIONAL COUNCIL
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Email :
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BARODA BRANCH OF WIRC OF ICAI
Telefax :
E-mail:
Web :
ICAI Bhawan, Post Box No. 7100,
Indraprastha Marg, New Delhi - 110002.
+91 (11) 39893989
www.icai.org
ICAI Bhawan, 27, Cuffe Parade,
P O Box No. 6081, Colaba, Mumbai - 400 005.
+91 (22) 39893989
www.wirc-icai.org
“ICAI Bhawan”, Kalali-Tandalja Road,
Atladra, Vadodara - 390 012.
+91 (265) 2681115 / 2680593
www.baroda-icai.org
Chairman's Message
Managing Committee
CA. Ashish Parikh CA. Kejal Pandya
CA. Vishal Doshi CA. Ashok Thakkar
CA. Bimal Bhatt CA. Neena Patel
CA. Tejal Parikh
CA. Ashish Parikh
CA. Nayan Kothari
CA. Pradeep Agrawal
CA. Yash Bhatt
CA. Viral Shah
CA. Abhishek Nagori
98252 31545
98244 33445
98985 60967
99243 88339
98243 62211
94260 75397
CA. Arpan Dodia 98983 83530
CA. Dhiren Parikh 93762 11099
CA. Kejal Pandya 98259 77220
Chairman
Vice Chairman
Immediate Past Chairman
Secretary
Treasurer
Ex-officio
Members
Editorial Team
` 20/- COPY
Index
Anand Mahindra, celebrating his birthday in the month of May, is the Chairman and Managing
Director of Mahindra & Mahindra. He graduated from Harvard College, Cambridge, and
completed his MBA from Harvard Business School,Boston. He spearheaded Mahindra’s growth
and diversification into new business areas like real estate and hospitality management. Under
Anand Mahindra's leadership, the Mahindra group has grown rapidly through both acquisitions
and greenfield business development with several high-profile mergers in the past few years,
including the acquisition of Satyam Computer Services.
Baroda Branch of Western India Regional Council of The Institute of Chartered Accountants of India
BARODA BRANCH OF WIRC OF ICAI
Respected Members,
In taking the pride being a Chairman of the most
vibrant and one of best branches of Institute of Chartered Accountants
of India, me and my team members believe and envision a bright
future for our fraternity, and strive hard to fulfill all requisites to achieve
the same through innovation and hard work.
The branch is instrumental in evolving technical inputs for its members
by conducting various seminars, workshops, lecture meeting etc. .
Major planks of our activities during the month of April’13 include Real
Estate Conclave (Legal, Accounting & Taxation Aspects), lecture
meeting on Cyber Crime and Security, lecture meeting on revised
reporting requirements, teleconferences, study circle meetings and
the Senior Citizen’s Cricket Match- the most energetic activity.
Dear members, it gives me an immense pleasure to share that the
programme of “Real Estate Conclave- Jointly with CREDAI” was a
grand success. The most attention-grabbing session was the
Interactive Session with the panel of experts from the department of
Income Tax, Excise and Customs (for Service tax) and Commercial Tax
(for G-VAT). The audiences were fully involved in the discussion of the
pre –drafted issues and the comments of the experts on the same. I, on
behalf of Baroda Branch of WIRC of ICAI , owe a special gratitude to the
Chief Commissioner – Income Tax, Vadodara, Chief Commissioner –
Excise & Customs, Vadodara, and Commissioner –Commercial Tax,
Ahmadabad for deputing commissioners & Jt. Commissioners from
their respective departments.
Baroda Branch has got again a chance to become a facilitator for
process of recruiting fresh Chartered Accountants for Madhya Gujarat
Vij Company Limited, Vadodara and Kaneria Granito Limited, Dahej,
Bharuch.
The most energetic activity of the month was Senior Citizen’s Cricket
Match and where our senior members returned with a grand victory.
In the coming month we have planned to participate the first ever
Regional Volleyball Tournament at Surat, Full Day Seminar on Audit of
Urban Co-operative Society and International RRC.
Well ,Summer has set at its peak and we dislike the sweltering summer
heat but the it comes with vacation time - time to take holidays and
enjoy the family life.
With cool regards,
Chairman
"Growth is never by mere chance; it is the result
of forces working together." ……..
Wishing a very happy summer holidays!
CA. Ashish Parikh
Pg.
Forthcoming Events ... 02
Income Tax Updates ... 03
Service Tax Updates ... 04
No Penalty for ... 05
fied Error
FAQs on IAS - 8 ... 06
Self Start and ... 07
Procurement-to-Pay Cycle ... 07
Self Dedication
Publisher elsewhere .... 09
Photo Flash ... 11
Due Date Planner ... 10
Bona
Baroda Branch of WIRC of ICAI
If you tell the truth, you don't have to remember anything - Mark Twain
2
Forthcoming Events
Seminar on Audit of Urban Co-operative Bank
Organised and Hosted by Baroda Branch of WIRC of ICAI
Day & Date :
Time :
Topic Speaker
Saturday, 11.05.2013
09.00 am to 05.30 pm
Inaugural Session Key note address by
Ms. Rakshadevi, GM, UBD,
Reserve Bank of India
Guests of Honour Shri N. V. Patel, Director,
Gujarat Federation of
Co-operative Banks and
Chairman-VUDA
Shri Ramesh Patel,
Director-Gujarat Federation
of Co-operative Banks and
Chairman-Baroda
Federation of Co-operative
Banks
Management of credit -
exposure norms,
sanction,
charge over securities,
monitoring NPA recovery
etc - Observation based
on earlier inspection /
audit reports
Compliance with rules
regulations applicable to
a) Investments
b) Prevention of money
laundering
c) Banking Regulation Act
d) Audit etc.
Provisions of Chapter X-B
of Gujarat Co-operative
Societies Act-Regulations
relating to appropriation of
profits, waiver/write off of
bad debts etc., effect of
97th amendment of the
constitution and the
amendment of state Act
Notes on Accounts,
Accounting Standards,
Rules relating to different
types of taxes payable by
UCB
(Breakfast from 08.30 am)
Shri K. V. Lakum, Director,
appraisal, National Institute
documentation, of Co-operative Mgmt.
and
Guest Speaker from
National Institute of
Co-operative Management
CA. B. K. Patel,
Ahmedabad
relative
CA. Samir Parikh, Vadodara
Branch Events
Fees :
Venue :
1000/-
ICAI Bhawan, Vadodara
`
CPE 06
INTERNATIONAL RESIDENTIAL REFRESHER COURSE (RRC)HONGKONG – -MACAU SHENZHEN@
From 24th May ’13 to 31st May ’13 (Friday to Friday)
WIRCSUB-REGIONAL CONFERENCE
Day & Date :
Venue :
21-22.06.2013
Hotel Surya Palace, Vadodara
CPE 12
WICASA Events
NATIONAL CONVENTION FORCA STUDENTS
Day & Date :
Venue :
11-12.07.2013, Thursday and Friday
Sir Sayajirao Nagar Gruh, Akota
MEGA EVENTS
DETAILS ANNOUNCE IN NEXT NEWSLETTER
CPE10
Certificate Course on International Taxation
Day & Date :
Fees :
Venue :
Starting from 01.06.2013, Saturday,
100 Hours training, every Saturday-
Sunday
25,000/-
ICAI Bhawan, Vadodara
`
CPE 100
Study Circle
Domestic Transfer Pricing Issues
Day & Date :
Time :
Faculty :
Fees :
Venue :
14.05.2013, Tuesday
06.00 pm to 08.00 pm
CA. Abhijit Kotecha
200/- for non members
ICAI Bhawan, Vadodara
`.
CPT Mock Test (Paper Set by Board of Studies of ICAI)
Day & Date :
First Session (Morning)
Time :
Subject :
Second Session (Afternoon)
Time :
Subject :
Fees :
Venue :
For Registration contact Baroda Branch
02.06.2013, Sunday
10.00 am to 12.30 pm
Section - A Fundamentals of
Accounting
Section - B Mercantile Laws
02.00 pm to 04.00 pm
Section - C General Economics
Section - D Quantitative Aptitude
200/-
ICAI Bhawan, Vadodara
Reporting time 10.00 am
`.
Baroda Branch of WIRC of ICAI
An error does not become truth by reason of multiplied propagation, nor does truth become error because nobody sees it - Mahatma Gandhi
3
Income Tax JudgementsCompiled by CA. Narendra Hindocha
1. Assessment in consequence of search in case of
related parties
2. New material required for reassessment
3. Valuation of shares for section 56
Section 153C requires reassessment in case of assesses
other than assesses who are searched, if Assessing
Officer is satisfied that assets/books or documents
found belong to such other assessee. Assessment in
consequence of this provision was held void when the
Assessing Officer did not show copy of reasons which led
him to the satisfaction contemplated in the provision.
Such was the order in case of ACIT vs. M/s. Global Estate
(ITAT Agra). Such reasons were not furnished by the AO
on the ground that there was no requirement in the Act
which required such reasons to be furnished. The ITAT
held that S. 153C is analogous to s. 158BD. In the context
of s. 158BD, the Supreme Court held in Manish
Maheshwari 289 ITR 341 that the recording of
satisfaction is a condition precedent. This principle
applies to s. 153C as well. The burden is on the Revenue
to show that the necessary ingredients of s. 153C have
been complied with. Decisions in case of Vijaybhai N.
Chandrani 333 ITR 436 (Guj) and other judgements were
also followed.
In earlier years, Courts held that an assessment under
section 147 cannot be made merely on the basis of
reappraisal of materials already on record or based on
change of opinion and unless the Assessing Officer
receives some new material to indicate escapement of
income, he cannot make assessment under section 147.
After amendments in the provisions also the Courts held
that assessment under section 147 cannot be made
merely on the basis of change in opinion. However,
some of the issues that arose were whether the
provisions can be pressed into service, when either no
assessment was made (returns were accepted under
section 143(1) or when the issue was not at all considered
during assessment under section 143(3) as no details
relating thereto were called for or when details were
called for and also submitted but the Assessing Officer
had accepted these details without dealing with them in
the order and possibly considering them logically in the
context of relevant facts and law.
In case of Delta Air Lines Inc vs. ITO, ITAT Mumbai held
that assessment under section 147 cannot be made in
absence of “new material” even when original return was
accepted under section 143(1) without being assessed
under section 143(3). The same view has been taken in
HV Transmissions Ltd (ITAT Mum) & Aipita Marketing 21
SOT 302
To curtail issue of shares at excessive premiums with a
view to camouflage unlawful transactions, Section
56(2)(viib) provide, with effect from A.Y. 2013-14, that in
case of issue of shares by a company(not one in which
public have substantial interest), for consideration
exceeding fair market value, the excess will be construed
as income in the hands of the company. For this purpose,
fair market value is required to be determined under
Rule 11UA.Such determination was required to be based
on book value. Considering that the book value may not
necessarily represent fair market value, the Rule is
amended from 29th November, 2012 so as to allow such
determination also by Discounted Free Cash Flow
method, at the option of the assessee, such value to be
determined by a merchant banker or Chartered
Accountant other than the Company’s auditor or tax
auditor
This sounds more like miscarriage of justice to me.
Assessee kept paying lumpsums to contractor debiting
a running account. At the yearend, entry for tax
deductible at source is passed and tax is paid to
Government before due date for filing return. The
disallowance under section 40(a)(ia) was confirmed by
The ITAT Rajkot Bench in case of Income-tax Officer –
Ward 1(4) vs. Bhoomi Construction in IT APPEAL NO. 601
(RJT.) OF 2012 by order dated 08.02.2013 holding that
there was failure to deduct tax as debit to the running
account of the payee does not amount to deduction. I
remember a case in which Notice Board at the entrance
to a temple required leaving shoes near the Board and a
person trying to enter barefooted was stopped for not
leaving shoes near the Board.
Generally, logically when an assessee is entitled to
exemption or deduction with reference to his income,
and during assessment, such income increases due to
additions, the assessee is entitled to exemption /
deduction with reference to the enhanced income. I find
it difficult to comprehend the reason for the same, but
section 92C(4) prohibits deduction under sections
10A/10AA/10B or Chapter VIA in respect of such
additions. During assessment proceedings, an assessee
entitled to deduction under section 10A, apparently
smelled the additions and revised the return to make
such addition in the return itself and then claim
deduction under section 10A with reference to the
higher income. However, not only the Income-tax
Department, by even judicial forums held that this was
too late. The decision : Deloitte Consulting India Pvt. Ltd.
Mumbai versus The Assistant Commissioner of Income-
Tax, Circle 2(2), Mumbai and others 2013 (2) TMI 241 -
BOMBAY HIGH COURT
4. Obligation to deduct tax not fulfilled by debiting
account of payee
5. Transfer pricing adjustment in case of assessee
entitled to deduction/exemption
Baroda Branch of WIRC of ICAI
Truth can be stated in a thousand different ways, yet each one can be true - Swami Vivekananda
4
Service Tax - Case LawsCompiled by CA M. J. Parsiya
1 Where Chartered Accountant's services were
provided and bills were raised prior to 1-4-2012, the
rate of service tax applicable thereon would be 10
per cent and not 12 per cent.
2 Commissioner (Appeals)/ Department cannot take
different stand for different assessees in respect of
same issue.
3 Services in relation to erection, commissioning and
installation of storage tank facility for storage of
imported inputs/ammonia outside factory are
eligible as input services.
It has happened many Chartered Accountants have
provided Chartered Accountant's services and raised
invoices thereof before 1-4-2012 but payment against
those invoices have been received on or after 1.4.2012.
Rate of service tax was increased from 10 per cent to 12
per cent from 1-4-2012. Relying on Rule 7(c) of the
Point of Taxation Rules, 2011, department demanded
service tax at 12 per cent, as payment was received on
or after 1-4-2012. It is held on account of deletion of
reference to Chartered Accountant's services in rule 7(c)
with effect from 1-4-2012, chartered accountant's
services ceased to be covered by rule 7 ibid.
Accordingly, said rule 7 was inapplicable to services
provided and invoices raised before 1-4-2012 even if
payment was received on or after 1-4-2012. Such
contingency was covered by rule 4(a)(ii) ibid and point
of taxation would be date of raising of invoice.
Accordingly, rate of service tax applicable was 10 per
cent - CBEC Circulars to the contrary were quashed. -
Delhi Chartered Accountants Society (Regd.) v. UOI, 30
taxmann 95 (Delhi High Court)
On very same issue and in case of different assessees,
Commissioner (Appeals) passed two separate orders,
one favouring assessee and another against assessee. It
is held Commissioner (Appeals) is not justified in taking
different stand for different assessees in respect of
same issue. Certainly there must be some consistency.
They are entitled to take a different view or stand only
when there is change of law or any other binding
decision of superior forum warranting such change of
view.
Revenue cannot pick and choose between assessees of
same nature to file appeal in respect of very same issue.
When a judgment of Tribunal favouring another
assessee had become final and conclusive, Revenue
cannot contest very same issue in respect of another
assessee. If an issue is decided in favour of any party
and had attained finality and accepted by parties, said
affected party in that case is certainly precluded from
questioning its correctness in another case. - CCE v. EID
Parry (I) Ltd, 32 taxmann 112 (Madras High Court).
Assessee took credit of services used in relation to
erection, commissioning and installation of storage
tank for storage of inputs viz. imported ammonia
outside factory. It is held as per rule 3(1) of CENVAT
Credit Rules, 2004, input services may be received
anywhere and credit is available if they are received by
manufacturer. Hence, credit could not be denied on
ground that services were received outside factory.
Further, since storage and use of imported ammonia
was an intrinsic part of process of manufacture of final
products, services in question were used directly or
indirectly in relation to manufacture of final product.
Accordingly, assessee was eligible for credit. – Deepak
Fertilizers and Petrochemicals Corpn. Ltd. v. CCE, 32
taxmann 135 (Bombay High Court).
However, writ petition alleges that tax liability has been
wrongly calculated by including non-taxable sums in
value of services and penalty has been wrongly levied,
which are matters of merit, such matter can be looked
into by appellate authority only. In such cases, writ
petition is not maintainable in view of effective
alternate remedy available under Act. - Salem
Municipal Corpn. v. CCE, 32 taxmann 167 (Madras High
Court)
Department sought to initiate recovery proceedings, in
pursuance of Circular No. 967/01/2013-CX, dated 1-1-
2013, pending stay applications even though such
applications, in some cases, were pending because of
vacancy in posts of appellate authorities. It is held said
Circular had not legal sanction/backing. Even section
37B of Central Excise Act, 1944 does not permit
issuance of impugned circular for purpose conveyed by
it. Valuable right of appeal granted by statute was
sought to be trivialized or annihilated by any
administrative means, which was impermissible, as such
right can be circumscribed only by and upto extent
ordained by statute itself. Since posts of appellate
authorities were lying vacant in some cases, it would be
grossly unfair, unjust and unreasonable to allow
recovery pending disposal of stay applications and
would amount to allowing department to take
advantage of their own lapses and failings. - Mangalam
Cement Ltd. v. SCE, 32 taxmann 52 (Rajasthan High
Court)
4 Writ is maintainable if an order is passed by an
authority without jurisdiction in this behalf, but, no
writ can be filed against wrong calculation of tax
liability, which are matters of merit and can be gone
into by Appellate Authority only.
5 Circular No. 967/01/2013-CX, dated 1-1-2013 is
void upto extent it provides for recovery of dues
during pendency of stay applications even though
such pendency is not attributable in any manner
whatsoever to assessees.
Baroda Branch of WIRC of ICAI
Truth will ultimately prevail where there is pain to bring it to light - George Washington
5
6 Input services used in manufacture of exempted
intermediate product is eligible for credit, if such
intermediate product is used in manufacture of
dutiable final product.
Assessee was engaged in manufacture of exempted
crude oil/natural gas at Mumbai Offshore and also in
manufacture of dutiable refined oil, etc. at Uran plant
out of use of crude oil/natural gas. Assessee took credit
of input services at Mumbai Offshore facility, which was
engaged in manufacture of crude oil/natural gas.
Department denied credit relying on rule 6(1). It is held
merely because assessee manufactures exempted
goods, it cannot be denied benefit of availing of credit
on that quantity of input service which is utilised in or in
relation to manufacture of dutiable final products.
Manufacture of dutiable final products at Uran Plant
could not take place without process in question.
However, Cenvat Credit would not be available on that
quantity of input services, which were used in
manufacture of exempted crude oil/natural gas sold to
purchasers directly from Mumbai Offshore – ONGC v.
CCE, 32 taxmann 141 (Bombay High Court).
No Penalty for Bona fide ErrorCompiled by CA Abbas Gulamhusainwala
The penalty under the Income-tax Act is the major concern for
us. As it is the normal trend, the assessing authorities initiate
and impose the penalty under section 271(1) (c) of The
Income-Tax Act, 1961 (Act) for almost all the adjustments. As
per the provisions of the Income tax, the penalty cannot be
imposed if the error committed by the assessee is a bona fide
mistake. However, the assessee has to go for the long battle to
get the relief for the bona fide mistake committed by him.
In recent past, few judgments have come up in which the
appellate authorities have considered various mistakes even
committed by the professional or corporate assessee as bona
fide mistakes and dropped the penalty proceedings under
section 271(1)©. The few important cases are discussed
hereunder.
In the recent judgment of Price Waterhouse Cooper (P) Ltd,
the Hon’ble Supreme Court has provided the relief to the
appellant. The appellant company is a worldwide leading
management consultancy firm. At the time of filing of return
of income, the company missed to disallow the Gratuity
Payment under the section 40A (7), though it was disclosed in
the tax audit report. On receipt of notice under section 148 of
the Act, the company accepted the mistake and offered the
amount for tax. The AO charged the penalty at 300 percent of
the tax amount.
The CIT (A) and the ITAT confirmed the penalty on the ground
that the reputed firm was not expected to commit such
mistake. The High Court affirmed the decision of on the
Price Waterhouse Cooper (P) Ltd – 26 September 2012
ground that being the civil liability element of mens rea is not
necessary.
The Supreme Court has deleted the penalty as it was a bona
fide and inadvertent error. The Supreme Court has held “The
caliber and expertise of the assessee has little or nothing to do
with the inadvertent error. That the assessee should have
been careful cannot be doubted, but the absence of due care,
in a case such as the present, does not mean that the assessee
is guilty of either furnishing inaccurate particulars or
attempting to conceal its income.”
The case is of Sania Mirza, the assessee, a renowned
professional international tennis player, received an award of
Rs. 30 lakhs. The amount was not disclosed for tax but was
disclosed in the statement of affairs filed with the ROI. In the
reassessment under section 147, the assessee offered the said
amount to tax. The AO levied penalty u/s 271(1)(c) which was
confirmed by the CIT(A) on the ground that the assessee had
furnished inaccurate particulars of her income and concealed
her income. However, the Tribunal cancelled the penalty on
the ground that a “bona fide mistake” had been made on her
behalf by her Advocate/Chartered Accountant and there was
neither concealment of income nor a furnishing of inaccurate
particulars.
The Andhra Pradesh High Court has affirmed the decision of
the ITAT and held that as the amount was shown by her in the
return, it cannot be said that there was any concealment. As
the amount was correctly mentioned, there is also nothing
inaccurate in the particulars furnished by her. The only error
that seems to have been committed was that it was not shown
as a capital receipt. But as soon as this was pointed out, the
error was accepted and the amount was surrendered to tax.
This is not a fit case for imposition of penalty.
The another recent judgment is of Somany Evergreen Knits
Ltd, one of the fastest growing company in the field of textiles
for the knitted wear at Solapur, had committed two mistakes
(i) higher amount of depreciation (ii) claimed capital loss
arisen out of sale of plant as revenue expenses. During the
course of assessment, the assessee released the mistake. The
AO charged the penalty which was confirmed by the CIT (A).
The Tribunal held that both mistakes had occurred due to a
mistake/ wrong advice given by the Chartered Accountant
and that there was a “bona fide mistake”. It was also held that
“the bonafide of the assessee is established from the fact that
the assessee accepted the mistake and did not prefer any
appeal against the order of the AO”.
The High Court held that in any event, even the revenue does
not dispute that it was a bonafiide mistake on the part of the
assessee, imposition of penalty upon the assessee is not
warranted
Sania Mirza – Andhra Pradesh High Court – 5 January
2013
Somany Evergreen Knits Ltd, -Bombay High Court – 1
April 2013
Baroda Branch of WIRC of ICAI
Seek not greatness, but seek truth and you will find both - Horace Mann
6
The above discussed case laws have opened entire new line of
interpretation of section 271(1) (c) as every mistake does not
mean that the assessee is guilty of either furnishing inaccurate
particulars or attempting to conceal its income. The mistake is
bona fide, no penalty could be imposed. This view is
completely contrary to the declaration of law in Dharamendra
Textiles Processors’ case that being the civil liability the
element of mens rea is not necessary for income-tax penalty.
FAQs on IAS – 8:Accounting Policies, changes inaccounting estimates and errors(Ind – AS 8)Compiled by CA. Prashant K. Upadhyay
1. What are the items, comprising accounting
estimates?
2. In case of change in accounting estimate, does the
same require prospective application or
retrospective restatement?
3. Changes in accounting policies should be applied
prospective or retrospective effect?
4. Can inappropriate accounting policies be rectified
either by disclosure of the accounting policies used
or by notes or explanatory material?
5. When it is difficult to distinguish between a change
of estimate and a change in accounting policy then
which course the entity should adopt?
Followings are the items on which accounting estimates
are made:
a) Bad debts
b) Inventory obsolescence
c) Fair Value of financial assets or financial liabilities
d) The useful lives of or expected consumption of, the
benefits embodied in depreciable assets
e) Warranty obligation
As per Para 36 the same should be recognized
prospectively by including in profit or loss in a) the
period of change, if the change affects that period only;
or b) the period of the change and future period, if the
change affects both.
In terms of Para 19(a) & (b) read with Para 23, the
changes in accounting policies should be applied
retrospectively.
In terms of Para 7 read with IASB framework, the same
cannot be rectified either by disclosure of the accounting
policies used or by notes or explanatory material. Hence,
In terms of Para 19(a) & (b) read with Para 23, the
changes in accounting policies should be applied
retrospectively.
As per Para 35, treat the entire change as a change in
estimate (Prospective application) with appropriate
disclosure.
6. Whether retrospective application can be used on
the basis of information that was available when
accounts were approved or as on the balance sheet
date?
7. What is provision in the standard if it is impracticable
to make a retrospective application of a particular
policy or estimate or item?
8. Gain recorded on the outcome of a contingency such
as a lawsuit is correction of an error or change in
estimate?
9. What treatment should be given for prior period
errors like fraud?
10. What are the disclosure requirements as to prior
period errors:
In terms of Para 23 to 26, the same can be used on the
basis of information that was available as on balance
sheet date.
In terms of Para 24, when it is impracticable to determine
the period-specific effects of changing an accounting
policy on comparative information for one or more prior
periods presented, then the entity should apply the new
accounting policy to the carrying amounts of assets and
liabilities as at the beginning of the earliest period for
which retrospective application is practicable, which may
be the current period, and should make a corresponding
adjustment to the opening balance of each affected
component of equity for that period.
In terms of Para 48, Corrections of errors are
distinguished from changes in accounting estimates.
Account ing est imates by thei r nature are
approximations that may need revision as additional
information becomes known. Hence, the gain or loss
recognized on the outcome of a contingency is not the
correction of an error.
In terms of Para 42, an entity should correct material
prior-period errors retrospectively in the first set of
financial statements authorized for issue after their
discovery by a) restating the comparative amounts for
the prior period(s) presented in which the error occurred
or b) if the error occurred before the earliest prior period
presented, restating the opening balances of assets or
liabilities and equity for the earliest prior period
presented.
An entity needs to disclose:
Nature of Prior-period error;
For each prior period presented, to the extent
practicable, the amount of the correction:
a) For each financial statement line item affected, and
b) For basic and diluted earnings per share (only if the
entity is applying IAS 33 – EPS)
Financial statements of subsequent periods need not
repeat these disclosures.
The amount of the correction at the beginning of the
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Baroda Branch of WIRC of ICAI
It is error alone which needs the support of government. Truth can stand by itself - Thomas Jefferson
7
Self Start and Self DedicationCompiled by CA. Bimal R. Bhatt
Self Start :
Self Dedication :
Self-start is taking the initiative. It is the spark that ignites
the engine of progress in the journey of life. Initiative is the
signal of self. Do not wait for somebody else to push you
into action. Act by your-self. Great ‘Birtruhari’ has said that
there are people who do not undertake tasks being afraid
of failure. There are others who start the works but
abandon them when obstructions are faced. There are
some others who not only undertake the worthy
assignments but conclude them inspite of difficulties,
problems and obstructions. These are called “Dhiras” (the
daring). You be that start the worthy works by your own
self. Do not wait for instructions for making A.O.P. (Annual
Operating Plans), Performance review, etc. Take initiative,
start little advance. Anticipate the things to come. Gain the
time. Do not wait for the year end to come to evaluate your
unit’s performance. Continuously evaluate by year, month,
week and day. When an assignment is given, do not be
satisfied when you complete what is asked for. Think what
is the next step. What more can be done? By doing what
little more the value of what you have done will increase?
When you complete the assignments and even when you
could not complete do not wait for the follow up. Give
feedback about situation, progress or non-progress on
your own.
Start every year something new regarding your processes,
plants, products, projects and people.
When you meet a person be first to smile and greet.
Rama was
Be “first to talk, talk kindly and be a pleasant
person”. Ram or Shyam, each one can adopt this simple
pleasant way. Be first to accept your own short comings. Be
first to recognize other’s contributions.
Come on! Be first, take initiative, be a self starter and be on
road to self.
Self dedication is offering of one’s body, mind, intellect and
spirit to one’s own chosen goals, objectives, principles,
values and programmes. Dedication is complete devotion.
“Prathama bhashi, Mathura bhashi,
Priyamvada”.
Self Start is the spark That ignites the engine of progress in
the journey of life.
Our ancient Rishish said “ Uttishtal! Jagrita!—“Arise!
Awake!”
While self start is the signal of self, dedication is the
foundation of self. Dedication means offering one’s
services and energy with unwavering sincerity, integrity
and honesty.
One can dedicate oneself to a cause, an organization or
another person or his own ideals.
Only that person who is dedicated to first to his own ideas
can dedicate himself to a cause, organization or another
person.
Skills can be acquired, will can be developed but
dedication is to be inculcated. It has to come from within.
An exemplary dedication means not body, mind, intellect
and spirit but every atom of the dedicated person is filled
with the objective to which he is dedicated.
When you undertake your own chosen and committed
project or assignment, be dedicated in unwavering
manner and unshakable way.
But it must be noted that dedication does not mean
becoming sub servant.
It can be seen one becomes tall and greater through his
dedication. Be dedicated and set an example in dedicated
leadership. When a person is dedicated, he gets love and
care in return, dedicated son-loving mother. Dedicated
workmen-caring management. Dedicated student-loving
teacher. Dedicated husband-loving wife. Dedicated wife-
loving husband.
Dedication and love are two facets of same relationship. Be
dedicated and Be loved. Be dedicated to your own self.
Only than you can like your own self.
the intensive intentions, are the starting
points for dedication. Make ‘Sankalpam’ to be on the
doors of self dedication.
“Sankalpam”,
(Source: “Gateways to Self Realisation” by “Guruji” G. Narayana)
earliest prior period presented.
If retrospective restatement is impracticable, an
explanation and description of how the error has been
corrected.
�
Procurement-to-Pay Cycle -Optimization of Process ControlContributed by CA. Sanjay Dudhoria
The procurement-to-pay cycle, which includes all activities from
the procurement of goods and services to receiving invoices
and paying vendors, is one of the key business processes in any
organization. It involves significant risks if complete cycle is not
managed effectively. Hence it is imperative to have optimal
checks and balances to ensure sufficient internal controls.
• Lack of integration and collaboration with preferred
vendors
• High purchase order and invoice-processing error rates
• High cost per transaction
• Lengthy reconciliation and payment cycles
An inefficient procure-to-pay process can rob an enterprise
of available capital through:
Baroda Branch of WIRC of ICAI
There is no God higher than truth - Mahatma Gandhi
8
• High cost of problem resolution
• Promote orderly, economical, efficient and effective
operations
• Produce quality products and services consistent with the
organization’s mission
• Safeguard resources against loss due to waste,
mismanagement, errors and fraud
• Promote adherence to Statutory Requirement fulfillment,
regulations, and procedures
• Develop and maintain reliable financial and management
data, and accurately report that data in a timely manner
• Vendor Master – Creation of duplicate and unauthorized
vendors, Unauthorized modifications in vendor master
data etc
• Purchase requisitions – Unauthorized requisitions,
Inventory build-up
• Purchase Orders – Unauthorized purchases, quantity,
price, returns, authorization matrix etc
• Accounts Payable – Incorrect payments, Duplicate
payments, Unauthorized invoice booking and credit notes
etc
• Statutory Compliances – Incorrect tax codes etc
One of the key reasons organizations have difficulty
managing and monitoring their procurement-to-pay cycle
process effectively is an over-reliance on manual controls,
which are prone to errors and can easily be changed. To
make better use of automated controls and optimize their
overall control environment, organizations need suitable
ERP solutions such as SAP.
In any standard ERP, following basis steps should generally
be mapped carefully to ensure effective control system in
place.
• Requisitions can be generated automatically through MRP
Process
• Manual PRs with proper authorization rights
• Important information like Plant, Cost Center, Internal
Order etc
• User should be able to view the history of the requisition
for better planning and inventory management
• Once the Requisition is approved then it can be converted
into a Purchase Order and the same should be sent to the
vendor.
• Purchase Group may be created for various types of
Purchases & Services, for categorisation.
• Various types of Purchase Orders are supported based on
Requisition as well as not based on Requisition (for
example Purchase Contracts , Make to Order).
Effective control system helps an organization to :
Following are the five major steps of the procurement-to-
pay cycle and some common risks organizations face in
each area due to lack of effective controls –
Create Requisitions
Creating Purchase Order
• Purchase Order is Authorized at various levels depending
upon the value of Purchase Order.
• Once the Goods are received against Purchase Order then
nothing can be changed in Purchase Order.
• Similarly once Purchase Order is fully released then key
information like Quantity, Rate and Tax Information can
not be changed without the management approvals.
• Change History of Purchase Order is available which keeps
track of who has changed what and when.
• Complete information like Basic rate, Tax information,
carrying & forwarding charges, freight, other charges are
defined as Conditions while creating Purchase order, such
that nothing can be added later, any deviations from
defined values, will be clearly highlighted.
• In cases such as Imports, where the Clearing agent, the
freight vendor, the Customs clearing agents are defined &
linked to the respective Conditions.
• The review of Purchase history gives the details of posted
invoices & advance settlement.
• Provision of expenses is done at the time of placing the
Purchase or Service Order.
• Payment Terms details are maintained.
• It automatically extracts and links key data from the
Purchase Order into Receipt to minimize manual data
entry so fully integrated with Purchase Order.
• Quality Checks are performed while receiving the goods
then only Stocks are updated.
• Excise Registers are updated automatically at the time of
Posting Goods Receipt.
• It updates Assets related information and Capital Stocks.
• The Goods Receipt & Invoice Receipt is routed through a
clearing account, which is hit, while Goods receipt is
posted & gets knocked-off while the Invoice against it, is
posted, hence review of this Clearing account gives the
status of un-posted Invoices.
• It processes PO related and Non-PO related Invoices.
• It automatically performs a three-way match (Invoice
Receipt/PO) to ensure that only matched invoices are
eligible for payment while automatically routing
mismatches to the appropriate users for review and
resolution (In case of Po related invoice Process).
• Any approved deviation from the Conditions defined in
the Purchase Order, is clearly seen such that the entry gets
posted as Price difference or to the respective expense, but
can be clearly highlighted.
• Control is put such that same invoice for the vendor cannot
be posted in that particular Financial Year.
• Review invoices for compliance with business rules.
• It does not allow to pass the bill for the amount, more than
mentioned in Purchase Order and for quantity more than
the Receipt quantity
Receive Goods
Process Invoices
Baroda Branch of WIRC of ICAI
Without faith there is no truth, for that is all the truth is or ever was - Robert Brault
9
• It caters Advance Settlement against Advance Paid to a
vendor, the system prompts for settlement of advance
while posting Invoices.
• The Invoice can be posted only with the Tax structure
maintained at the PO level, it cannot be changed at the
Invoice Posting level.
• In case of Foreign Currency transactions, the Invoice is
posted with the Values maintained in the Foreign Currency
exchange data maintained in the system.
• If required, the Invoices can be blocked-for-payment after
posting of Invoice is done.
• In cases such as Imports, where the Clearing agent, the
freight vendor, the Customs clearing agents are defined &
linked to the respective Conditions, the respective Invoices
may be posted against the respective conditions & vendor
defined in the Purchase order.
• Payments for approved invoices are generated in a secure,
controlled environment using one of several payment
methods. It maintains payment visibility for all involved in
the Procure to Payment cycle.
• Review of Accounts Payable Checks.
• Sales Tax Compliance.
• It allows to Pay Advances to Vendor mentioned in
Purchase Order with a control on Amount and Payment
Terms mentioned in Purchase Order.
• The Advance payment is routed through Authorisation
Matrix.
• During the payment process, system prompts if any
vendor has un-settled advance.
• In case of Partial advance, the clearing process clearly gives
details of settled & balance amount.
• Control may be put, such that payment should not be
allowed, if there are un-settled balance with any vendor
• Order tracking, vendor, and item histories are easily
accessible, giving fast and reliable information when
required.
• It facilitates various kinds of Ledgers (Creditors , Debtors
etc. ) so that Payment history of a Vendor & Customer can
be tracked at any given point of time with the facility of
Drill Down which can take the user to the particular
transaction.
• Vendor & Customer Outstanding Reports , Trial Balacnes
etc..
• It provides vendor performance evaluation and statistics
based on:
• Actual Delivery and Promised Delivery Dates
• Rejected/Returned Goods
• Price Performance Statistics are maintained by Vendor,
Item, or a
• Combination of the two.
• Quality Parameters of Materials Supplied.
Generate Payments
Inquiry and Analysis
Vendor and Catalogue Management
Published elsewhere…How NRIs can invest inMutual FundsSource: Live Mint.. 01.04.2013
Asset management companies (AMCs) in India have been
increasing their focus to attract non-resident Indians (NRIs) to
invest in mutual funds (MFs) in India in the past few years. MF
industry says that official statistics available with them which
registrar and transfer agents provide, close to 6% of the
overall MF assets belong to NRIs. This figure, say experts, is
much higher if you just take into account only equity funds.
From launching and marketing offshore funds to setting up
shop abroad to attract the Indian investor settled abroad,
fund houses are keen to get you to invest in the India story.
“There is a strong appetite for Indian debt and equity
products in the overseas market. Sovereign wealth funds,
pension funds, institutional and high net worth individuals
have invested through our funds. We have set up branches
across various locations and expect to double our AUMs
(assets under management) over the next three years”, says
Sundeep Sikka, chief executive officer, Reliance Capital Asset
Management Co. Ltd.
One of the first things you need to do is to set up a bank
account in India to facilitate movement of your money.
Investors can either set up non-resident (external) rupee
account (NRE) or a non-resident ordinary rupee account
(NRO) with a bank. “An NRE account is preferable because it
gives you the flexibility of repatriating your proceeds out of
India without any restriction”, says Anil Rego, a Bangalore-
based financial planner. In other words, if you wish to invest in
India from your overseas earnings, you need an NRE account.
Financial planners also recommend NRE accounts for those
who are not sure of how long they’ll stay overseas and where
chances of them settling abroad, eventually, are high.
However, you need an NRO account if you are an NRI, and get
receipts in India, like rent.
NRIs from most countries can invest in India through MFs
available here. For US-based NRIs though, it gets a bit tricky.
Most US-headquartered fund houses that operate in India do
not accept money from a US-based NRI because there is a
rule laid out by the US securities market regulator, Securities
and Exchange Commission (SEC), which says only those fund
houses, globally or locally, registered with SEC can accept US
NRI or citizen’s money.
“In light of that, lot of AMCs in India have chosen to not accept
funds from investors residing in the US”, says Anthony
Heredia, chief executive officer, Morgan Stanley Investment
Management Ltd. This also means that US-based fund houses
that operate in India such as Franklin Templeton Asset
Management (India) Ltd, Morgan Stanley Investment
Management Ltd and so on also don’t accept NRI money that
come from those in the US.
Bank accounts
Are there any restrictions?
Baroda Branch of WIRC of ICAI
Don't keep searching for the truth, just let go of your opinions
10
DATES COMPLIANCE PERIOD
05.05.2013 Payment of Service Tax - Monthly Cases / Excise Duty (for NON SSI) April'13
06.05.2013 E-Payment of Service Tax / Excise Duty (for NON SSI) April'13
07.05.2013 TDS Payment / E-payment April'13
09.05.2013 VAT / CST E-return - Monthly (For VAT or CST > ` 5,000/-) February' 13
10.05.2013 Excise Returns - ( Monthly Return by Large Units / Return by EOU / Monthly return
of receipt & consumption of each of Principal Inputs, assessees required to submit
ER-5 return)
12.05.2013 ESIC Return Oct. ’12 – March’13
15.05.2013 Payment of Professional Tax / PF / Excise Duty (for SSI) April '13
15.05.2013 TDS / E-TDS Return – Quarterly Qtr 4 (F. Y.: 2012-13)
15.05.2013 Unaudited Financial Results - filing with Stock Exchange – by Listed Companies Qtr 4 (F. Y.: 2012-13)
16.05.2013 Excise Duty E-Payment (for SSI) April '13
21.05.2013 ESIC Payment April '13
22.05.2013 VAT / CST payment / E-payment - Monthly April '13
25.05.2013 PF Return (Monthly) April' 13
30.05.2013 VAT /CST E-Return - Monthly (with Jan. '13 to Mar. '13 Stock Details)
(For VAT or CST <= ` 5,000/-)
30.05.2013 Audited Yearly Financial Results - filing with Stock Exchange -
by Listed Companies (if Co. opts for publishing unaudited financial result for
Q4_Fin. Yr.:12-13)
30.05.2013 TDS Certificate issuance – Form 16A (for other than Salary cases) Qtr 4 (Fin. Yr.: 2012-13)
31.05.2013 TDS Certificate issuance – Form – 16 (Salary cases) Fin. Yr.: 2012-13
April'13
March'13
Fin. Yr.: 2012-13
Due Date Planner Compiled by CA. Abhijit Kotecha
Some Indian fund houses, though, still accept money from US
NRIs, but they are essentially those that don’t have any
business interests in the US and therefore don’t need to
interact with SEC. Says a Mumbai-based financial planner who
requested anonymity: “This is not an Indian rule, but is a US
government rule. That is why we invest our NRI clients’
investments in pure Indian-domiciled fund houses.”
Most other NRIs can invest in any MF schemes available in
India.
If you are a US-based NRI, there are tons of options available
for you as well. Lots of MFs based in the US have India-
dedicated MF schemes, even those who have Indian
subsidiaries. Often, these MFs fall back on the research that
their Indian subsidiary provides. For instance, Franklin India
Growth Fund, a MF scheme available for the US citizens in the
US, invests in companies that are based in India. “Such
schemes are managed in the US and are actively managed.
But they use the experience and research inputs that their
Indian offices give because local talent always helps”, said the
Mumbai-based financial planner quoted earlier.
Apart from international fund houses available in the country
where you stay, that invests in India, you can use your NRE or
NRO accounts to invest in MF schemes domiciled in India.
For NRIs staying in other countries, Indian fund houses have
either opened branches abroad or hawk their own offshore
funds there. Fund houses such as UTI Asset Management Co.
Your options
Ltd, Kotak Mahindra Asset Management Co. Ltd, Reliance
Capital Asset Management Ltd and Birla Sun Life Asset
Management Co. Ltd have offshore funds to attract NRI
investors. Most Indian fund houses have opened shops in the
Gulf region and southeast Asian countries such as Singapore.
PAYMENT OPTIONS FOR PROGRAM REGISTRATION
Drop Box at 2-B, Ramkrishna Chambers,
BPC Road, Baroda. Kindly mention your
name, membership number and
program for which registration is
sought, on back side of the Cheque
Members are requested to register themselves in advance
by using above options and avoid spot registration to help
us to serve you better.
e-payment
In an era of increasing usage of
‘plastic money’ & Inernet - with
an objective of better services
to members & students, Baroda
Branch is having facilities of Registrations for seminar &
conference by paying through credit/debit card at ICAI
Bhawan orvisit www.baroda-icai.org foronline payment.
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We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable - Alexander Solzhenitsyn
11
PHOTOFLASH
Managing Committee of Baroda Branch at Orientation Programmeat Mumbai on 12 & 13.04.2013
ISA Course by CA. Farhad Wadia on 13.04.2013
Study Circle on Auditing Tools & Techniques under SAPby CA. Archit Shah, Vadodara on 16.04.2013
Cyber Crime and Cyber Security by CA. Manish Gokani on 20.04.2013
ISA Course by CA. Atul Gupta on 20.04.2013 ISA Course by CA. Manish Dafria on 27.04.2013
Senior Citizen Cricket with Jamadars Association on 28.04.2013Audit of Financial Statements 2012-13- Revised ReportingRequirements and other Development
CONGRATULATIONS
CA. Ashok Thakkar
Hearty congratulations for
being nominated as co-opted
member of Co-operative
Society (Gujarat) Committee
of WIRC
CA. Rahul Parikh
Hearty congratulations for
being nominated as co-opted
member of CPE Committee of
WIRC
CA. Bhupesh Porwal
Hearty congratulations for
being nominated as co-opted
member of Public Finance &
Government Account ing
Committee of WIRC
DISCLAIMER :
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The members, however, may bear in mind the provisions of the Code of Ethics while responding to the advertisements. The views and opinion expressed or implied in the Newsletter are
those of the authors / contributors and do not necessarily reflect those of Baroda Branch. Unsolicited matters are sent at the owner's risk and the publisher accepts no liability for loss or
damage. Material in this publication may not be reproduced, whether in part or in whole, without the consent of Baroda Branch. Members are requested to kindly send material of
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Baroda Branch of WIRC of ICAI
If a thousand old beliefs were ruined in our march to truth we must still march on - Stopford Brooke
12
Real Estate Conclave on 27.04.2013
Mr. Anand Kumar Gupta,Gen Secretary, Builders Associationof India
CA. Tarun Ghia, Mumbai. CCM Mr. Vipul Thakkar, President,CREDAI, Vadodara
CA. Ashish Parikh,Chairman, Baroda Branch
Shri Rajat Bansal,Commissioner, Income Tax,Vadodara
Shri D.D.Rishi,Commissioner,Central Excise and Customs,Vadodara
Shri Bhargav Mankad,Jt. Commissioner, VAT,Vadodara
CA. Natwar Thakrar, Mumbai CA. Puloma Dalal, Mumbai CA. Prakash Thakkar, Vadodara
Inauguaral Session Felicitation of CA. Abhishek Nagori, RCM Penal Discussion with Government Authorities
WICASA EVENTS on 01.04.2013
CA Jignesh Chheda on Full Day Revisionary on IT CA. Pradeep Agrawal on How to face CA ExamCA. Parin Shah, Vadodara, 30.04.2013on
Study Circle - Revised Schedule VI