newsletter june 2017 - baroda branch of wirc of...

-NEWSLETTERBARODA BRANCH OF WESTERN INDIA REGIONAL COUNCIL OF

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

Volume - V | June 2017

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

MANAGING COMMITTEE

EDITORIAL TEAM

CONTENTS

CA. Arpan Dodia

CA. Dhiren Parikh

CA. Hitesh Agrawal

CA. Krunal Bhrambhatt

CA. Pradeep Agrawal

CA. Viral K Shah

CA. Vin d Pahilwani

CA. Abhijit J Kotecha

CA. Manoj Sahu

98983 83530Chairman

93762 11099Vice-Chairman

99980 28737Secretary

78748 11551Treasurer

98985 60967Ex-officio

98243 62211IP - Chairman

98980 78176Committee Member



o

CA. Arpan Dodia CA. Abhijit J Kotecha

CA. Rahul Parikh CA. Nayan R Kothari

CA. Neena Patel CA. Gunjan Agrawal

CA. Vrushali Shah CA. Priyanka Doshi

CA. Dhruti Vaidya CA. Sagar Mehta

Forthcoming Events 2

Congratulations / Obituaries 3

Direct Tax Updates 4

Service Tax Updates 5

Excise And Service Tax 5

Ex-Factory Sale - Where

is Place of Supply ??

Benami Transactions 7

Professional Values 8

FCRA Compliances 10

Cherising Memories 11

5

e

Dear colleagues,

As we look at the month of June, we all look forward to the monsoon and to a season of cheer all around!

Our country is changing at a very fast pace. There are many new things happening around us and we feelvery fortunate that we not only have the opportunity to witness these changes, but also become the mediumof the changes.

We finally have the GST rates out and a near certainty of implementation with effect from 1st July. Thegovernment and revenue department is working hard and taking quick decisions to rollout GST. We,Chartered Accountants are the partners in nation building and it is our duty to support the initiative of thegovernment and make an equal effort in advancing the adoption of GST. In a bid to help our members moveseamlessly to the GST regime, the Baroda Branch is regularly conducting various initiatives viz. organisingworkshops, seminars, group discussions, etc.

It is very well said by Shri Mahatma Gandhiji, “Learn as if you were to live forever.” I feel this gives usinspiration to learn more and more to cope up with the upcoming changes and opportunities in ourprofession. Our Honourable Prime Minister Shri Narendra Modiji also stated in his “Maan ki Baat” that weshould “Come out of our comfort zone” and work hard for the up bringing of the society and nation.

The month of May was packed with events organised with the objective of learning and entertainment formembers. Apart from the regular programmes on GST, the Branch also conducted programmes on othervital topics. We also organised Full Day Training Program for Peer Reviewers and Full Day Seminar on ICDS.Furthermore for the first time, the Baroda Branch organised Day Night Cricket Tournament “CharteredAccountant Premier League - (CAPL)” and achieved great success. I congratulate the wining team and theplayers that won the man of the match award.

The upcoming month is the month of learning. The Baroda Branch has organised almost different eventsin the month as a part for celebrating - I am sure that the upcoming events will helpthe members in fulfilling their learning need and desire.

Another noteworthy development is the compilation of data base of members who are interested in sharingknowledge at different forums at Baroda Branch viz. Study Circle, Lecture Meetings, GMCS, OrientationCourse, Information Technology Training Program, etc. We request members who are interested incontributing as faculty at any forum to contact any of the committee members or at branch.

One more initiative taken by the Baroda Branch on the occasion of World Environmentday is that it has started to convert its “Waste to Compost Fertiliser” and contribute inGo Green initiative of Honourable Prime Minister.

I will be happy to receive your feedback and suggestions on [email protected].

Chairman

CA. Arpan Dodia

50The Golden Jubilee Year.

Baroda Branch of WIRC of ICAI 2

FORTHCOMING EVENTS

Intensive Workshop on GST - Series III

Intensive Workshop on GST - Series IV

Direct Tax Refresher Course

Day & Date :

Time :

Faculty :

Fees : CPE :

Friday & Saturday, 01 & 02-06-2017

8:00 am to 10:00 am

As per schedule circulated

Rs. 200/- per Session 2 Hrs. per Session

Venue : ICAI Bhawan

Day & Date :

Time :

Faculty :

Fees :

CPE :

Tuesday to Friday & Mondays to Wednesdays

13, 14, 15, 16, 19, 20, 21, 26, 27& 28-06-2017

8:00 am to 10:00 am

Details will follow in E-Mail Circular

Rs. 200/- per Session Rs. 1,800/- for full series

2 Hrs. per Session

Venue : ICAI Bhawan

Day & Date :

Time :

Faculty :

Fees :CPE :

Saturday, 03, 10, 17 & Friday, 23-06-2017

2:00 pm to 6:30 pm


Rs. 500/- per Session & Rs. 1700/- for Full Series4 Hrs. per Session

Venue : ICAI Bhawan

BRANCH EVENTS

GST Sahaayta Kendra (Open for All)

CPEHRS.4

CPEHRS.16

Time :

Fees :

Day & Date Faculty

CA. Anirudh Sonpal,CA. Siddharth Jadeja

CA. Anirudh Sonpal, CA. Siddharth Jadeja,CA. Varun Fitter, CA. Dhruvank Parikh

5:00 pm to 7:00 pm

Nil

Saturday & Sunday03 & 04-06-2017

Friday to Sunday16, 17 & 18-06-2017

Venue : ICAI Office at 2B, Ramkrishna Chambers,Productivity Road, Vadodara

Certificate Course on GST

Day & Date :

Time :

Faculty :

Fees :

Tuesdays,Thursdays & Sundays,

06, 08, 11, 13, 15, 18, 20, 22, 25 & 27-06-2017

10:00 am to 5:00 pm


Rs. 18,000/-

Venue : The Grand Mercure Surya Palace, Vadodara

CPEHRS.30

Organised by

Hosted by

Indirect Tax Committee of ICAI

Baroda Branch of WIRC of ICAI

Intensive Study RRC

Day & Date :

Time :

Faculty :

Fees :

Friday to Sunday, 09, 10 & 11-06-2017

As per Schedule Circulated


Rs. 9,900/- per Person on Double Occupancy Basis

Venue : The Deltin Hotel, Daman

CPEHRS.12

Organised by

Supported by

WIRC of ICAI


Jointly Organised with CREDAI, Vadodara

CPEHRS.24

Impact Analysis of GSTImpact of proposed GST on Real Estate Sector

CPEHRS.2

Day & Date :

Venue :

Tuesday, 13-06-2017

ICAI Bhawan

Time :Faculty : CA. Avinash Poddar, Surat

Fees :

10:30 am to 12:30 am

Rs. 200/- for CA Members & Rs. 400/- for Others

Standard Operating Processes (SOP) –Documentation for better controls

CPEHRS.2

Jointly Organized with Baroda CPE Study Circle

Jointly Organised with Baroda Branch of WICASA

Day & Date :

Venue :

Tuesday, 13-06-2017

ICAI Bhawan

Time :Faculty : CA. Saket Kanodia, Ahmedabad

Fees :

6:00 pm to 8:00 pm

Rs. 200/- & Nil for Study Circle Members

Lecture Meeting on Taxation of DemonetizedDeposits & Overview of RERA for CA Members

CPEHRS.2

Day & Date :

Venue :

Saturday, 17-06-2017

ICAI Bhawan

Time :Faculty : CA. Tarun Ghia, CCM, ICAI

Fees :

6:30 pm to 8:30 pm

Rs. 200/- & Nil for Participants of DTRCFollowed by Fellowship Dinner

Workshop on GST for Article Assistants, Office Staff ofCA Firm & Accountants

Day & Date :

Venue :

Monday to Friday, 19, 20, 21, 22 & 23-06-2017

ICAI Bhawan

Time :Faculty :

Fees :

5:00 pm to 8:00 pmDetails will follow in E-Mail Circular

Students - Rs. 200/- & Others - Rs. 600/-for Full Series

Celebration of International Yoga Day CPEHRS.2

Followed by

on “Impact of Technology in our Life”

Day & Date :

Venue :

Wednesday, 21-06-2017

Garden, ICAI Bhawan

Time :

Faculty : CA. Rajan Modi

Mr. Animesh Bhatt*

Fees :

6:30 pm to 8:30 pm

Yoga Master -

Charcha Master -

Rs. 100/- Open for all & Nil for CA Students

Jointly Organised with Baroda Branch of WICASA

Direct Tax Clinic

Day & Date :

Venue :

Thursday, 22-06-2017

ICAI Bhawan

Time :

Faculty : CA. Manish G Shah & CA. Narendra Hindocha

Fees :

6:00 pm to 8:00 pm

Rs. 100/-

CPEHRS.2

Mm¶ no MMm©


50th Annual General Meeting of Baroda Branch

Day & Date :

Venue :

Tuesday, 27-06-2017

ICAI Bhawan

Time : 4:00 pm onwards

Celebration of 68th CA Day

SPOCUL

Day & Date :

Venue :

Events :

Saturday, 01-07-2017

ICAI Bhawan

- CA Happy Street Season 2 - Flag Hoisting

- Blood Donation Camp - Health Checkup

- Tree Plantation - Public Program on GST

- Quiz Contest on GST - CA Talent Hunt 2K17

STUDY CIRCLE MEETINGS

Day & Date : Tuesday, 06-06-2017

Impact of IND AS on Corporate TaxationTopic :

Faculty : CA. Kinjesh Thakkar


Standard Operating Processes-Documentation forbetter controls


Topic :

Faculty : CA. Saket Kanodia

Jointly with


Achieve Your desired outcome through NLPTopic :

Faculty : CA. Shyam Sachdev

WICASA EVENTS

Time : CPE

Venue :

Fees :

6.00 pm to 8.00 pm ( : 2 Hrs for each Program)

Conference room, ICAI Bhawan

Rs. 200/- (for non CPE members)

Day & Date : Saturday & Sunday, 10 & 11-06-2017

Full day seminar on e-filing & compliance of various

notices(Online) under Income Tax Act, 1961

Day & Date : Saturday, 17-06-2017

9.00 am to 4.00 pmTime :

Workshop on GST for Article Assistants, Office Staff ofCA Firm & Accountants

Day & Date : Monday to Thursday, 19, 20, 21 & 22-06-2017

5.00 pm to 8.00 pm


Time :

Jointly with

Quiz

Day & Date : Saturday, 24-06-2017

C o n g r a t u l a t i o n s

for being appointed byGovernment of Gujarat,

Education Department as amember in the Committee forRegulation of Fees for Self-

Finance Schools of Vadodara.

for being Honored with

“indiacsr”

Author Awards for co-authoring-

Indian Corporate Citizenship

(Case Study on CSR)

O b i t u a r i e s

CA. Subhash C. Shah

Mem. No.: 030981D.O.B.: D.O.D.:05-07-1952 | 08-05-2017

CA. Kantilal G. Shah

D.O.B.: D.O.D.:13-07-1940 | 06-05-2017

Celebration of International Yoga Day

Day & Date : Wednesday, 21-06-2017

Time :

Jointly with

6:30 pm to 8:30 pm


CA. Bimal R. Bhatt CA. Lalit Mehta

Those we love can never be more than a thought away...for as long as there’s a memory...they live in our hearts to stay.

Mem. No.: 008871

An Appeal to Members of WIRC of ICAI forcontribution to CABF

Chartered Accountants Benevolent Fund (CABF) established in1962 by ICAI, is one of the largest bodies providing welfare andsupport to the Chartered Accountants fraternity. It provides financialassistance for medical treatment, education, maintenance or anyother similar purpose to necessitous persons of the CA fraternity.Financial assistance in lump sum is also given to the widows /relatives of the deceased member in case of accidental / unnaturaldeath at age below 55 years. A considerable number of members /family is already getting such assistance from CABF.

To continue this endeavour, CABF invites contribution from our CAmembers. The contribution can be made in the form of:

1. Life Membership - Rs. 2,500/-

2. Ordinary Membership - Rs. 500/- annually

3. Voluntary Contribution - An honourable amount up to anyextent

All subscriptions and contributions made towards CABF is eligiblefor deduction under section 80(G) of Income Tax Act, 1961.

Please contribute generously towards the Fund through at parcheque / DD favouring “Chartered Accountants Benevolent Fund”and send it to Baroda Branch for onward submission to the saidFund.

Let’s all gear up for GST & CA Day - a Co-incidence


Contributed by :

can be reached atnarendrahindocha

@gmail.com

CA. Narendra Hindocha

DIRECT TAX UPDATES

1. Income Computation and DisclosureStandards

Income Computation and DisclosureStandards were to be effective fromAssessment Year 2016-17 but later theappl icabi l i ty was defer red toAssessment Year 2017-18.

Original Standards never becameeffective as new Standards werenotified on 29-09-2016.

Circular dated 23-03-2017 clarifiesvarious issues relating to theseStandards. Below are small notes onsome clarifications:

- Standards to apply even ifinconsistent with some judicialdecisions. The logic is that manydecisions were rendered whenthere were no authentic guidelinesrelating to relevant issues. I believethe judiciary will still have power toprevail over these standards inappropriate cases.

- Income-tax rules relating tospecific cases to prevail over theStandards. Standards to applyeven in cases where sections44AD etc relating to computation ofincome on presumptive basis areapplicable. The Standards will notapply to computation of book profitunder section 115JB. Contributionto gratuity and other retirementbenefits governed by AS 15 not tobe hit by ICDS X.

- Treatment of Derivatives to begoverned by ICDS I,VI,VIII. As markto market losses are not to beallowed, by same consideration,mark to market gains not to betaxed.

- Retention moneys taxable butsubject to criteria relating tocertainty of collection.

- Business expenditure to be allowedon ly fo r the per iod a f te r

commencement of commercial production.

- In case of interest on security accounted on accrual basis but not later received dueto sale thereof, income to be adjusted in gain on sale.

- Bill discounting charges to be considered borrowing costs. Borrowing costs to theextent of disallowance under section 40(a)(ia) or 40A(2) not to be capitalized. Ibelieve the Standard, to that extent goes beyond provisions of Income-tax Act andnot valid as these sections do not apply to capital expenditure.

- Required disclosures to be made in Form 3CD and net effect to be disclosed inReturn of income.

This has now relevance for large number of taxpayers from Assessment Year 2017-18as it now applies even if there is addition of one employee and it also applies tobusinesses other than manufacturing.

Notification dated 3rd April, 2017 prescribes the revised Form of Audit Report requiredto claim deduction under section 80JJAA in view of change in the provisions. Therelevant form 10DA is required to be furnished electronically.

The section allows deduction equal to 30% of remuneration to additional employees fora period of 3 years, subject to prescribed conditions.

One view appears to be that the report will be required in each of the three years,although reading the form of the report, it appears that the reporting is in respect offigures of first year. Further, in case there are additional employees also in the next year,the deduction will be for additional employment in first as well as second year but theform does not appear to permit reporting of deduction relating to additionalemployment during 2 years.

We are all used to depreciation at 60% on computers and gas cylinders, 80% on energysaving devices including windmills and 100% on pollution control equipments andtemporary structures. This is set to change with The Income-Tax (29th Amendment)Rules, 2016 brought vide Notification No. 103 of 2016 (S.O. 3399(E), dated November7, 2016.

With effect from 1st April 2017, highest rate of depreciation 40% in place of50/60/80/100.

Finance Act 2017 introduced section 139AA requiring quoting of Aadhaar Number in theReturn of income from 1st July, 2017. There is additional requirement to intimateAadhaar number to such authority and in such form and in such manner and within suchtime as may be prescribed. Apparently, quoting is not enough and the number needs tobe linked which would happen if the name, date of birth and gender in the Income-taxand Aadhaar database match.

There are serious concerns regarding use of Aadhaar number taken before theSupreme Court and the consequences of non-linking or not quoting or intimating thenumber appear uncertain. However, to buy convenience for the time being, I decided tolink the two numbers.

Initially, linking was not possible in large number of cases, but according tocommunication emailed on 11th of May by the Income-tax Department to taxpayers,the linking is now simplified. It would appear that in case of difference in name in the twodatabase, linking would be permitted if you reattempt after entering name as per theAadhaar database. In case of small difference, the linking would be after entering OTPreceived from Aadhaar database. In case of total difference in name as per the twodatabase, the linking will be refused and it will be necessary to change name in one of theDatabases.

2. Deduction under section 80JJAA for additional employees

3. Depreciation

4. Linking of Aadhaar card with Permanent Account Number


EX-FACTORY SALE – WHEREIS PLACE OF SUPPLY ??

Contributed by :

can be reached [email protected]

CA. Abhay Desai

BACKGROUND

LEGAL PROVISIONS

Suppose a factory is located at a place inGujarat. Said factory receives an order froma customer having registered place ofbusiness at Mumbai for supply of goods.However as per terms of order the sale shallbe done on ex-factory basis i.e. property ingoods will pass to buyer at the factory gatein Gujarat and seller or buyer at the requestof the seller shall arrange for transportationof goods to Mumbai. Thus movement ofgoods is contemplated under the contractand property in goods passes at the factorygate. In this case where will be the place ofsupply ? Factory gate in Gujarat orregistered place of business of buyer inMumbai ? If it is Gujarat, it shall be an intra-state supply of goods and hence suppliershall charge CGST & SGST of Gujarat. In thiscase, the buyer will not be able to claim thecredit of said taxes as he is not registered inGujarat. Let us examine this issue in detail.

Sec. 10(1)(a) of IGST Act, 2017 contains

SERVICE TAX UPDATES

Contributed by :can be reached at

[email protected]

CA. Manilal Parsiya

Central Government vide Notification No. 17/2017-ST dated 04-05-2017 seeks to amendnotification No. 25/2012-ST dated 20.06.2012 so as to exempt life insurance services under'Pradhan Mantri Vaya Vandana Yojana'.

CBEC vide Order No.1/2017-ST dated 25-04-2017 has extended the due date of filing halfyearly Service Tax Return for the period from 1st October,2016 to 31st March, 2017 from 25thApril, 2017 to 30th April, 2017.

JUDICIAL DECISION ON EXCISE AND SERVICE TAX


[email protected]

CA. Anirudh Sonpal

I. CENVAT CREDIT

II. VALUATION

1.1 Services pertaining to maintenance of hardware, server, other office equipments as alsocivil work repairs of premises would be qualify as Input Service, eligible for cenvat credit,and all civil works are not excluded particularly when the inclusive part of the definition ofInput Service includes modernization, repairs, renovation etc.[CMC Ltd vs CCE&ST, Hyderabad – Hyderabad Cestat]

1.2 Hotel services, used by employees of assessee during travelling, would qualify as anInput Service, eligible for cenvat credit, since such services are necessary for providingoutput service.[Vodafone Essar South Ltd vs CCE, Meerut – Allahabad Cestat]

1.3 Ownership is not the criteria for allowing the credit on capital goods, the only criteria isthat the capital goods should be installed in the factory of the assessee and used in themanufacture of final product; even though for intervening period, after insurance claim,the ownership of the machine got transferred to the insurance company and thereafterthe appellant has taken the ownership after making payment of Rs.12 lacs, the factremains that the capital goods remained in the factory of the appellant and wassubsequently installed and used by them.[Tata Motors Ltd vs CCE, Pune – Mumbai Cestat]

1.4 Even if manufacturer of both dutiable and exempted goods, who availed cenvat credit ofduty paid on inputs, failed to maintain separate accounts of inputs for dutiable as well asexempted goods, it was entitled to reverse proportionate cenvat credit and, therefore,option of paying amount equal to 10 per cent of sale value of exempted goods at time ofclearance of exempted goods could not be enforced on it.[CCE, Mumbai vs IVP Ltd – Mumbai HC]

2.1 Clubbing of rent amounts received by each co-owner, as per their share in jointly ownedrented property is not permissible when each such co-owner entered into rent agreementis their individual capacity; each such co-owner is eligible to claim the exemption uptoRs.10 lacs.[Anil Saini vs CCE, Chandigarh – Chandigarh Cestat]

2.2 With reference to SSI exemption under Central Excise provisions, the HonourableTribunal held that the exemption cannot be denied simply because the assessee hadcharged duty in invoices by mistake but if such duty reversed on realizing the mistake,especially when declaration for availing the exemption and ER-I returns showingclearances at ‘nil’ rate of duty filed as per law[CCE&ST, Bhopal vs Dwarka Insulation & Conductors Pvt Ltd – Delhi Cestat]

III. MANUFACTURE/ SERVICE

3.1 Process of cutting old tyres into threep i eces does no t amoun t t omanufacture u/s 2(f) of the CEA, 1944.[Tinna Rubber & Infrasture Ltd vs UoI –HC]

3.2 Excise Duty, alongwith interest andpenalty payable on mercury recoveredor retrieved pursuant to closure ofplant.[Travancore Cochin Chemicals Ltd vsCCE, Kochi – HC]

3.3 Where assessee, a restaurant, suppliedfood to its workers at a subsidized ratein an area outside restaurant, supply offood to workers would not come withinmeaning of expression 'service' asdefined in section 65B(44) of theFinance Act, 1994.[Bhimas Hotels Pvt Ltd vs UoI – AndhraPradesh HC]


provisions related to determination of placeof supply of goods where the supplyinvolves movement. Said provision isreproduced below for ready reference:

“10. (1) The place of supply of goods, otherthan supply of goods imported into, orexported from India, shall be as under,––

(a) where the supply involves movementof goods, whether by the supplier orthe recipient or by any other person,

of such goods

at which the

Hence as per above provision, placeof supply shall be location wheremovement of goods terminates fordelivery to the recipient.

Recipient has been defined u/s 2(93) ofCGST Act, 2017 as follows:

“(93) “recipient” of supply of goods orservices or both, means—

(a) where a consideration is payable forthe supply of goods or services orboth, the person who is liable to paythat consideration;

(b) where no consideration is payable forthe supply of goods, the person towhom the goods are delivered ormade available, or to whompossession or use of the goods isgiven or made available; and

(c) where no consideration is payable forthe supply of a service, the person towhom the service is rendered,

and any reference to a person to whom asupply is made shall be construed as areference to the recipient of the supply and

acting as such onbehalf of the recipient in relation to thegoods or services or both supplied”

Hence as per above definition recipient alsoincludes an agent acting on behalf of suchrecipient.

Coming to our issue, can it be said thattransporter in case of ex-factory sale is anagent of the buyer as property in goods hasalready passed to the buyer at factory gateand thus the place of supply shall be thefactory gate where delivery to recipient hastaken place ?

the place of supply

shall be the location of the goods at

the time movement of

goods terminates for delivery to the

recipient.”

shall include an agent

REASONING

CONCLUSION

In our opinion transporter is not an agent of the buyer on following grounds:

1. The Carriage by Road Act, 2007 has been enacted for the regulation of commoncarriers, limiting their liability and declaration of value of goods delivered to them todetermine their liability for loss of, or damage to, such goods occasioned by thenegligence or criminal acts of themselves, their servants or agents and for mattersconnected therewith. No person can engage in the business of a common carrier,unless he has a certificate of registration.

A “common carrier” has been defined under the Carriage by Road Act as a personengaged in the business of collecting, storing, forwarding or distributing goods to becarried by goods carriages under a goods receipt or transporting for hire of goodsfrom place to place by motorised transport on road, for all persons indiscriminatinglyand includes a goods booking company, contractor, agent, broker, and courier agencyengaged in the door-to-door transportation of documents, goods or articles utilisingthe services of a person, either directly or indirectly, to carry or accompany suchdocuments, goods or articles, but does not include the Government.

Under the Carriage by Road Rules, 2011 as amended, issued under Carriage by RoadAct, the liability of common carrier for loss or damage to any consignment is limited to10 times of the freight paid or payable provided such amount shall not exceed the valueof the goods declared in the goods forwarding note.

Sec. 148 of Indian Contract Act, 1872 defines bailment. It is defined as the delivery ofpossession of goods from one person to another for some purpose upon a contract.And when the purpose would be completed, the goods would be returned or otherwisedisposed of according to the direction of the person who had delivered them.

Question before the Bombay High court in 1878 in case ofwas whether

common carriers should be considered as bailee. It was held that the definition ofbailment u/s 148 of Indian Contract Act, 1872 is large enough to include bailment forcarriage.

It must also be noted that an agent has a right to represent the principal or to act on hisbehalf. A transporter has no right to represent the buyer. Hence we can conclude thatthe transporter cannot be considered as agent of the buyer.

2. Kind reference is also invited to Explanation 1 to Sec. 3 to CST Act, 1956. Saidexplanation is reproduced below for ready reference:

- Where goods are delivered to a carrier or other bailee for transmission, themovement of the goods shall, for the purposes of clause (b), be deemed to commence at thetime of such delivery and terminate at the time when delivery is taken from such carrier orbailee.”

Hence even as per said explanation, transporter is a bailee and not an agent of buyer. Buyercan be said to have received the goods only when the goods are delivered by the transporterat his place of business.

Based on above reasoning, in our opinion in case of ex-factory sale where movement hasbeen contemplated of goods through a transporter in the contract whether arraged by buyeror seller, place of supply shall be the place of business of buyer. Thus in our case, for ex-factory sale at Gujarat to customer based in Mumbai, place of supply shall be Mumbai wheregoods have been received by the recipient and IGST shall be payable by the supplier.

It may be noted that under the contract of supply if movement of goods is not contemplated,as per Sec. 10(1)© of IGST Act, 2017 place of supply shall be the location of goods.

Kuverji Tulsidas v. Great

Indian Peninsular Railway Company (1878-1880) ILR 3-4 Bom 73

“Explanation-1


Introduction

What is Benami Property:

Law against benami properties?

How it affects the people?

Why this Act?

• The Benami Transactions (Prohibition) Act, 1988 has been on the statute book sincemore than 28 years, the same could not be made operational because of certaininherent defects. With a view to providing effective regime for prohibition of benamitransactions, the said Act was amended through the Benami Transactions(Prohibition) Amended Act, 2016. The amended law empowers the specifiedauthorities to provisionally attach benami properties which can eventually beconfiscated.

• The Benami Transactions (Prohibition) Amendment Act, 2016 came into effectfrom1st November, 2016. Several benami transactions have been identified since thecoming into effect of the amended law. Show cause notices for provisional attachmentof benami properties have been issued in several cases involving properties of thevalue hundred crores. The benami properties attached include deposits in bankaccounts and immovable properties.

• Benami in Hindi means without name. So, a property bought by an individual not underhis or her name is benami property.

• To evade taxation, people invest their black money in buying benami property. The realowners of these properties are hard to trace due to fake names and identities. Theperson on whose name the property is purchased is called Benamdar.

• The benami transactions include buying assets of any kind — movable, immovable,tangible, intangible, any right or interest, or legal documents.

• The PBPT Act prohibits recovery of the property held benami from benamdar by thereal owner. Properties held benami are liable for confiscation by the Government withoutpayment of compensation.

• Benami properties were used to dodge taxes and reduce tax liability.

• It is being done to curb on black money. People with unaccounted income will surehave a tough time ahead. As for the general public, it won’t be much of an issue if theirtransactions are legal.

• Rather than hoarding the black money in cash, the tax evader invests theiraccumulated illegal money in buying benami properties. The whole process affectsthe revenue generation of government hampering growth and development of the

state.

• Since the percentage of tax payer inthe country is a dismal low, thegovernment fails to successfullyimplement its policies and schemesdue to lack of resources. A tough lawagainst benami properties is the needof the hour to check corruption.

• In the long run, it will bring about muchneeded Corporate Governance to ourindustry.

• Greater Transparency will help toweed out unscrupulous marketparticipants.

• There will be more interest frominternational investors and developersand a greater role for Indiandevelopers with a good track record.

• Interest rates may also fall in themedium term and sales will eventuallypick up, in the long term.

Effect on weaker sections of society

• First and foremost it will curb inflationwhich is their breaking backbone.

• It would increase government revenuewhich will ultimately lead to increasei n p u b l i c e x p e n d i t u r e o ndevelopmental and other welfareactivities.

• It will reduce income disparities tosome extent and create moreemployment opportunities.

• I t wi l l reduce cor r upt ion ingovernment offices.

• Where any books of account or otherdocuments are produced before theauthority in any proceedings underthis Act and the authority in this behalfhas reason to believe that any of thebooks of account or other documentsare required to be impounded andretained for any inquiry under this Act,it may impound and retain the booksof account or other documents for aperiod not exceeding three monthsfrom the date of order of attachmentmade by the Adjudicating Authority.

• Provided that the period for retentionof the books of account or other

Benami Transaction Act – Advantages

Benami Transactions –Books of Accounts

Benami Transactions (Prohibition) Amended Act, 2016


[email protected]

CA. (Dr.) Alok Shah


documents may be extended beyonda period exceeding three months fromthe date of order of attachment madeby the Adjudicating Authoritywherethe authority records in writing thereasons for extending the same.

• According to the Act, re-transfer ofBenami property is not allowed.However, the act also clarifies thatthose declaring Benami Propertyunder the Income Disclosure Schemeof 2016 will not be acted against.

• However, any property which is asubject matter of benami transactionshall be liable to be confiscated by theCentral Government.

I. Transaction or Arrangement whereconsideration provided by personother than the transferee or the personin whose name property is held

I HUF property held in the name ofKarta/ Members of HUF

ii Property held in Fiduciary capacity

iii Property held in name of spouseor child

iv Property held by individual in jointnames of self brother / sister /Lineal ascendant ( grandson orgranddaughter / great grandson ordaughter) / Lineal descendent(Parents / grandparents / greatgrandparents).

II. Where transaction is carried or madein a fictitious name

III. Benamidar not aware of or deniesknowledge of transaction.

IV. B e n e f i c i a l o w n e r w h o p a i dconsideration is fictitious or is untraceable.

• Finance Act, 2016 provides thatundisclosed income declared is not tobe treated as benami transaction incertain cases. Thus, the immunityfrom Prohibition of Benami PropertyTransactions Act shall apply iffollowing conditions are satisfied:

What will happen to Benami Property

Categories of Benami Transaction

Exceptions to category I.

Income Declaration Scheme (IDS) &Benami Act

1) Declaration in respect of the property at fair market value as on is madeby the beneficial owner, i.e., the person who provided consideration for purchase ofthe property.

2) The benamidar in whose name the property stands transfers the property to thedeclarant or his legal representative within periods notified by the Central Government(i.e. on or before ).

• When a declaration is made under IDS, 2016 of benami transaction where theowner of the property is not aware or denies knowledge of ownership, theimmunity from the act will not be available to the declarant.

• If a benami transaction where the person providing the consideration is fictitious ornot traceable is declared under IDS, 2016 the declarant will not be entitled toimmunity.

• When the property held benami is subsequently sold by the declarant but the saledeed is executed by the benamidar, the capital gain when the property is soldwould be assessable only in the hands of the beneficial owner, since once theincome invested in the undisclosed property is assessed in the hands of beneficialowner.

01-06-2016

30-09-2017


[email protected]

CA. Bimal R. Bhatt

Professional Values– Integrity, Competence and Innovation

Integrity is the backbone of all values. But a modern professional is not a monk. He musthave the knowledge and competence to deliver results in a highly demanding andcompetitive environment. But in our present corporate environment, even knowledge is notenough. The new professional has to be creative and innovative.

Honesty and transparency, knowledge and competence; innovation.

Truth is the foundation of all values. Integrity, honesty and transparency are the basis of trustand trust is the source of effective and enduring relationship between people or thecustomer. So honesty and transparency have to be maintained in every stage, process oractivity of the professional work of the engineer like for example procurement of material,relationship with the government, people, worker or the customer or drawing ofspecification. Any discrepancy or error or lapse in integrity has to be transparently exposedand corrected at the very first occurrence. Honesty and integrity ultimately pays in terms ofbottom line result, whatever may be the temporary setbacks. Take for example, the practiceof bribing which is a common form of ethical lapse among engineering and contracting firmsin their dealing with government agencies. Many professionals justify it by saying that it isnecessary and unavoidable in getting things done in government departments. But this stateof affairs exists because most of professional organization and individuals have not madeany concerted and collective effort to counter it with a persistent will for truth like forexample, exerting pressure through professional associations. There are examples to showthat when this persistent will not to yield to falsehood is there, then things change. Here aretwo illustrative examples:

A Civil Contractor, persuaded by his spiritually inclined wife and his Guru, decided not to givebribes and conduct his business with an entire honesty. The initial impact of the decisionwas negative. His business began to collapse. His financial condition deteriorated. But stillhe persisted in his resolution to be honest. His reputation for honesty spread in business andgovernment circles. Again he started getting contracts; business flourished and became

Key Perspectives

Honesty and Transparency


better than what it was when he was doing it without any scruples.

Another example is from the housing division of a Chennai-based firm well known for itsvalue-based policies. The company was not able to hand over the flats to the customer at thepromised date because of prolonged delays in getting sanction for electrical works from theelectricity board. The company was determined not to take the easy and customary path ofgreasing the government officials. The company wrote letters to the authorities of theelectricity board and also explained their principled position to the customer. A small groupof understanding and sympathetic customers wrote letters to the highest political andgovernment authorities, demanding immediate action. And finally the moral force behind thecompany’s decision triumphed. The company got the sanction for the electrical workswithout compromising on its principles.

But a modern professional is not a cloistered monk or a full-time yogi in an ashram. He is aknowledge-worker who has to deliver results in a highly competitive and demandingcorporate environment. So for a professional, honesty is not enough to attain effectiveness.He must have knowledge and competence to deliver results. There are three types ofknowledge, which a professional has to possess for achieving effectiveness. The first one isthe specialized technical knowledge of the specific professional activity he is engaged in likefor example software or telecom or CAD.

The second type of knowledge is a basic understanding of sciences, disciplines ortechnologies related to the first one. For example a software engineer can enhance hisprofessional effectiveness by studying philosophical, linguistic and mathematical logic,especially the logic of ancient Indian grammarians like Panini. And for building a safe andhealthy future world, every professional must have a sound, theoretical and practicalknowledge of modern ecology and environmental sciences. The importance of ecologicalknowledge for engineer, technocrat and the manager is obvious, for decisions on resourceallocation and technology have profound ecological implications. Even the financeprofessional should have some knowledge of ecology to understand the environmentalimplications of costing or pricing. For example the prices of many products in the market liketimber or paper do not reflect the ecological cost of the product in terms of destruction offorests.

The third type of knowledge is a broad and holistic understanding of the higher ideal, valuesand purpose of the profession. For example, an engineer or technocrats must have someclarity regarding the higher purpose of technology in the evolutionary destiny of humanityand earth. This is something, which is lacking in modern professional work and studies.Here comes the importance of the ancient Indian concept of the

In ancient India every professional activity is put under the yoke of the Shastra. A Shastra, inthe ancient Indian conceptions is a holistic perspective of a human or cosmic activity, whichcontains three types of knowledge. First is a spiritual perspective which views the purpose ofthe activity in the context of the highest spiritual aim of life; second is an ethical or dharmicperspective which elucidates the moral, aesthetic and professional values and standardsunder which the activity has to be performed; third is the professional perspective whichexpounds the scientific, technical and skill dimensions of knowledge. Modern professionalsystems of knowledge would be immensely benefited if they can incorporate this ancientIndian concept of Shastra with suitable modification into their conceptual, educational andexecutive strategies.

But knowledge remains abstract and ineffective without competence. We may definecompetence as the ability to apply knowledge to deliver results. Here again there are threetypes of professional competence. The first one is the technical competence like forexample, in solving technical problems or finding new ways to improve the efficiency,economy and productivity of technical systems and process in production. In our presentcorporate environment economy is an important part of efficiency. The professional has to

Knowledge and Competence

Shastra.

be cost conscious and cost-effective. Hemust be able to arrive at the right balance ortrade-off between cost, quality, technicalexcellence and customer satisfaction. Wewill come to this subject again a little later.

The second type of knowledge is the abilityto deliver in time and according tospecifications; third are the “soft”management skills in planning, scheduling,t ime -managemen t , i n t e r pe r sona lrelationship, man-management and theability to focus all our attention on the task orin other words, concentration. So,efficiency, economy, productivity, result-orientation, and management skills are thedifferent facets of competence.

In our highly competitive corporateenvironment it is not enough to haveknowledge and competence. A modernprofessional has to be innovative. In simpleterms, innovation means adding or creatingsomething new. There are three types ofinnovation. First is the incrementalinnovation in improving the efficiency,productivity, and economy of an existingproduct, process or service. For example abetter lubrication system, which reducesthe amount and cost of lubricant and at thesame time enhances the efficiency of themachine, is an incremental innovation. Aswe have indicated earlier this type ofinnovation is an intrinsic part of theprofessional dharma of an engineer. Thesecond type of innovation is evolutionarywhich builds on what is known but at thesame time adds significant new value to theprocess or product. The compact, fuel-efficient and environmental-friendlyJapanese cars, which invaded theAmerican, market in the eighties andrecently Tata’s Nano are examples ofevolutionary innovation. The third type ofinnovat ion is the “breakthrough”innovations, which lead to a radically newproduct or process or technology. Sony’sWalkman, invention of the microchip byRobert Noyce and Kim Philby, fuel cellbased vehicles are examples of break-through innovations. Ideally, everyprofessional must constantly strive towardsall these three types of innovations. Thethird type of innovation mostly proceeds

Innovation


from individual genius or the collective workof highly qualified and talented scientistsand technocrats. But every professionalgroup can and must strive for constantadvancement in the first two categories ofinnovations. Interestingly a school ofmodern management thought conceivesinnovation as a continuous and unrelentingquest for the new and better in every activityof the corporate life. For example, a Kito deBoer, a McKinsey consultant states:

There is a spiritual element in thisMcKinsey’s concept of innovation. TheMother of Sri Aurobindo Ashram states,

So, ifthis constant search for better and forperpetual renewal can be deepened into anattitude of progressive perfection in workand in every activity for its own sake withoutseeking for any immediate pragmatic result,it can be a source of spiritual progress forthe individual and the collectivity. Anotherimportant factor to be noted here is thatinnovation requires something more thanknowledge and competence, it requiresimagination and intuition. The first type ofincremental innovations can be achieved toa certain extent through knowledge andcompetence. But even here to attainexcellence, there must be the ability to lookat things from angles, which are differentfrom the routine, customary, and thetraditional, which requires imagination. Theother two types of innovations require amuch greater component of imaginationand intuition. So cultivation of these twonon-rational faculties has to become anintegral part of the education and trainingprogramme for professionals.

“To us at McKinsey, innovation is much

more than product development or R&D.

Innovation goes to the heart of sustaining

corporate advantage through the process

of continuous change and renewal. It has

far more to do with continually challenging

the status-quo and pushing for corporate

renewal than it has to do with creativity and

ingenuity.”

“In

works, aspiration for perfection is true

spirituality and defines perfection as ‘a

constant will for progress in work.”

(Source: Fourth Dimension Inc.)

FCRA Compliances

Compiled by :can be reached at

[email protected]

CA. Mayur Thakkar

MAJOR FCRA COMPLIANCES

Following Forms are required to be filed under The Foreign Contribution (Regulation) Act (FCRA),2010 (All the below given forms are to be filed online only)

FormNumber

FC-1(Part-A)

FC-1(Part-D)

FC-2

FC-3(Part – A)

FC- 3(Part – B)

FC-3(Part – C)

FC-4(IncludesAuditor’sreport)

FC-5

FC-6

Nature

Intimation

Intimation

Permission

Permission

Permission

Permission

AnnualReturn

Permission

Intimation

Purpose

cut-off is Rs. one lakh in onefinancial year.

(Election candidates are prohibited of taking anyForeign Contribution)

For informing the Government about receiving large giftsfrom relatives (Who are Foreign Citizen). This applies to allindividuals and HUFs. The

(Person has to file this intimation for each receipt aftercrossing Rs. One lakh during the financial year)

If Any Election Candidate has received any ForeignContribution during 180 days prior to being nominated.There is no minimum amount limit.

Persons holding public office should apply in form FC-2before accepting foreign hospitality. There is no lower cut-off, though a dinner invitation or a lift is exempt.

Persons who want to accept foreign contribution regularlyshould apply in form FC-3 for registration.

(Generally NGOs having a proven track record of threeyears and have spent Rs. Ten Lakhs or more for the objectof the trust)

Persons who cannot get FCRA registration should applyfor prior-permission.

(Prior permission is linked to specific project of NGOs andfor a specified sum of Foreign Contribution. ThoughForeign contribution may be received in instalments)

The FCRA registration is valid for 5 years only so need toapply for renewal in FC -3 Part C

Form FC-6 is an annual report on how much foreigncontribution has been received and used during thefinancial year. This includes contribution in money as wellas in kind. – To be filed by FCRA registered person orhaving prior permission persons

Any FCRA registered person who intends to transferForeign contribution to any unregistered person.

Any FCRA registered person who wants to changeAssociation name or Designated bank account orUtilization Bank Account or more than 50% of Keymembers.

Due date offilling

Within 30 days ofreceipt

Within 45 days ofbeing nominated

14 days inadvance

NA (Generallytakes 4 to 6

months to getregistered)

NA (Generallytakes 3 to 6

months to getPrior permission)

Ideally 5-6before

expiry

31st December

Beforetransferring such

contribution

Within 15 days ofchange

months

All FCRA Compliances are compulsory in nature and any violation thereof may lead to penalty or Imprisonment orboth as per the provisions of the act.

From Bank’s Point of View (Can be used for BANK AUDITS – Concurrent & Statutory)

Banks are required to report two kinds of transactions to the Government.

The first

The second

Currently, A Scheme of Government is going on whereby All the Associations/Org. Having registration or Priorpermission can file their Annual returns without penalty for FY 2010-11 to 2014-15. The scheme is available from15th May 2017 to 14th June 2017.

is where a remittance has been received by someone without FCRA registration or permission.

is where a person (Having FCRA registration or not) receives more than one crore rupees in a period of thirtydays. These intimations should be sent within 30 days.


Cherising Memories...“All Gujarat Full Day Training Programme for Peer Reviewers” on 06-05-2017

CA. Uday Sathe CA. Arpit Patel CA. Bimal Chopra CA. Tarun Kansal

“Intensive Workshop on GST - II”on 02 & 03-05-2017

CA. Dhruvank Parikh Adv. Ajay Banerjee

Lecture Meeting on “Understanding New IT Return

Forms & Form 3CD” on 12-05-2017

CA. Sanjay Shah

“Recent Amendments in Income Tax ActAffecting to Citizens” on 14-05-2017

CA. Bhupendra Shah

“Intensive Workshop on GST - lll” on 17, 18, 19, 24, 25, 26, 29, 30& 31-05-2017

CA. Avinash Poddar, CA. Anirudh Sonpal, CA. Purvin Shah, CA. Abhay Desai, CA. Shailendra Saxena, CA. Siddharth Jadeja, CA. Varun Fitter

“Chartered Accountants Premier Leauge” 20 & 21-05-2017

Lecture meeting on “Statement of Financial Transactions” (SFTs)on 22-05-2017

CA. Virat Bhavsar CA. Manas Rindani CA. Mayur Thakkar

STUCY CIRCLE MEETINGS

“FAR & Most AppropriateMethod” on 16-05-2017

“FCRA Compliances-Roleof CA” on 23-05-2017

“Joint Public Program on GST”

with FGI on 06-05-2017


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Full Day Seminar on “Income Computation & Disclosure Standards” (ICDS) on 27-05-2017

CA. Milin Mehta CA. Kishor Karia CA. Gautam Nayak CA. Jagdish Punjabi CA. Kusai Goawala CA. V. Ravi

WICASA EVENTS for the month of May-2017

CPT Mock Test English Workshop

Industrial Visit

Excel Workshop

Industrial Visit

How to face CPT Exams

National Talent Hunt

National Talent Hunt

Visit to Kamatibag

Picnic Picnic

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