Article by: - CA Pradeep Jain -CA Preeti Parihar
Introduction:- When we talk of penalty under Section 11AC and a number of interpretations and pelothra of litigation comes to mind. Penalty u/s 11AC of the Central Excise Act, 1944 is the harshest penal provision prescribed in the Act and is mandatory provided the conditions prescribed in the section are satisfied. It has always been a matter of litigation since inserted in the Act. This article deals with the various issues arising in this section because of Court decisions and Board Circulars. Section 11AC – An analysis:- Section 11AC of the Central Excise Act, 1944 prescribes that in the cases of non/short levy/payment or erroneous refund due to fraud, collusion, misstatement or suppression of facts with intent to evade payment of duty; the penalty equal to amount of duty determined under section 11A(2) will be imposed on the assessee. However, if the duty alongwith interest is paid within 30 days of the communication of order of Central excise officer, the penalty will be 25% of duty. But for availing this relief it is necessary that the penalty should also be deposited within the stipulated time of 30 days referred hereabove. Further, if the Commissioner (Appeal) or hon'ble Tribunal reduces or increases the duty so determined u/s 11A(2), the reduced/increased amount will be considered for the purpose calculating the penalty. Finally, the fourth proviso to this section provides that where the duty payable u/s 11A(2) is increased by Commissioner (Appeals) or Tribunal, then also the benefit of reduced penalty under first proviso will be allowed if the incremental duty and penalty alongwith interest is paid within 30 days of the order of the Commissioner (Appeals) or Tribunal. Duty paid before issue of show cause notice – whether attracts penalty? Section 11A of the Central Excise Act, 1944 provides that the show cause notice is to be issued for non levy or short levy or non payment or short payment or erroneous refund of duty. In other words, if the duty and interest are paid before issue of show cause notice, there is no short levy/payment; therefore the conditions prescribed u/s 11A for issue of show cause notice are not satisfied and as such, the show cause notice cannot be issued. When show cause notice cannot be issued, the question of imposition of penalty also does not arise as it is dependent upon issue of show cause notice. There was conflict between department and assessees regarding this opinion and the litigation had undergone divergent decisions given by various appellate authorities. It was held by tribunal and even the various High Courts have also decided that the Section 11AC is not attracted when the duty is paid before the issue of show cause notice. The some of the decisions are quoted below:- · CCE, Mangalore v. Shree Krishna Pipe Industries [ 2004 (113) ECR 718] · Rashtriya Ispat Nigam Ltd. v. CCE, Vishakapatnam [ 2003 (54) RLT 317] as affirmed by hon'ble Apex Court & reported at 2004(163) ELT A53 (SC) · Union of India vs T.P.L. Industries Ltd. [2007 (214) E.L.T. 506 (Raj.)] These decisions for some time settled the matter in favour of the assessees who have deposited the duty and interest prior to issuance of show cause notice. Penalty u/s 11AC – Mandatory or Discretionary? The decisions given by relying on the judgments referred above were as usual not acceptable to the department and inspite of High Court decisions in favour of the assessees, the litigation continued. Then, hon'ble Supreme Court of India gave the landmark judgment in the case of Union of India v. Dharmendra Textile Processors 2008-TIOL-192-SC-CX-LB. In this case, it was held that the penalty imposed u/s 11AC of the Central Excise Act, 1944 is mandatory and the authorities, tribunal or Court do not have any discretion to reduce the penalty. This decision seemed to blow away the expectations of the assessees who were relying upon the above referred decisions. Demand should be issued by invoking "intent to evade payment of duty" After the decision of Dharmendra Textiles, the department started invoking the penal provision of Section 11AC in every demand. It was contended that the penalty under Section 11AC is mandatory and it will be equal to duty. But the assesses are maintaining that the penalty under Section 11AC can be invoked only when there is wilful suppression, fraud, collusion etc. Unless and until, the demand is issued by invoking intent to evade payment of duty, the penalty under Section 11AC can not levied. Thus, the demand should be issued under proviso to Section 11A then the penalty under Section 11AC can be imposed. This is provided in the language of the Section 11AC itself. But the department is issuing show cause notice in each and every case by proposing penal action under 11AC. Penalty u/s 11AC – whether dependent on demand u/s 11A(2):- Section 11A of the Central Excise Act, 1944 empowers the Central Excise Officer to issue a show cause notice in the cases where any duty is short levied/paid or not levied/paid or erroneously refunded. Sub section (2) to section 11A states that after considering the representation made by the notice as referred in sub section (1) of section 11A, the Central excise officer will determine the excise duty payable by that person, the amount of duty should not exceed the amount proposed in the show cause notice. The person shall be liable to pay the excise duty so determined. As such, the penalty imposable u/s 11AC is dependent upon the fact that the show cause notice should have been issued to the person and the duty so determined in consequence of that notice will be the base for calculating the amount of penalty u/s 11AC of the Central Excise Act, 1944. Some of the decisions given on this line are listed as follows:- · Union of India vs Perfect Thread Mills Ltd. [2009 (234) ELT 49 (Raj.)] · UOI vs. Rajasthan Spinning & Weaving Mills [2009-TIOL-63- SC-CX] In both of the above cases, it was held that in case the duty is paid by the assessee prior to issuance of the show cause notice, there was no reason to issue any show cause notice to the assessee. When the show cause notice is not issued, there is no determination of duty u/s 11A(2) by the adjudicating officer as determination u/s 11A(2). Since the penalty u/s 11AC is dependent on the fact that the demand is issued u/s 11A(2), inapplicability of section 11A(2) will also lead to inapplicability of section 11AC.
All these decisions without any further ambiguity cleared the situation that there is positive correlation between demand issued u/s 11A(2) and penalty u/s 11AC of the Central Excise Act, 1944. It is the nature of law that as soon as one issue seems to be settled by judicial rulings, another issue arises out of the same provision. Same thing happens with section 11AC of the Central Excise Act, 1944. Conflicts of section 11A(2) viz a viz 11AC seemed to be settled by above discussed decisions, very soon, the litigation arose in the proviso to section 11A(2) pertaining to benefit of reduced penalty. Benefit of 25% Penalty – whether available at Adjudication stage or also at Appellate stage:- The new issue arising in the chain of litigation of section 11AC pertain to benefit of 25% penalty as provided in first proviso to section 11A(2) of the Act. This issue was regarding the question whether benefit of reduced rate of 25% penalty is available at adjudication stage only or this benefit may be availed at appellate stage also. The fire burst up with the decision of hon'ble Punjab and Haryana High Court in the case of Commissioner of Central excise Commissionerate, Rohtak vs JR Fabrics (P) Ltd. [2009-TIOL-259-HC-P&H-CX]. A detailed decision elaborating the various provisions related to section 11AC and section 11A(2) was given. The gist of this decision is produced as follows for the sake of convenience:- In this case, the duty and interest were paid before issuance of show cause notice and the same was intimated to the department. But the show cause notice was issued and the case was adjudicated as follows: Duty and interest already paid were appropriated by the adjudicating authority. Penalty equal to amount of duty was imposed u/s 11AC and 38A and rule 25 of erstwhile Central Excise (No. 2) Rules, 2001. Penalty of Rs. 1 lacs was imposed on managing director of the company. On appeal being filed, Commissioner (Appeal) modified Order in original and removed the penalty on Managing director. The assessee reached Tribunal wherein it was held that the assessee was liable liable to pay only 25 percent of duty amount as penalty by placing reliance on a judgement of the Delhi High Court in the case of CCE v. Malbro Appliances Private Ltd. 2007(208) ELT 503. Whereas, the revenue counsel relied on the decision of Union of India v. Dharmendra Textile Processors 2008(231 )ELT 3(SC) = 2008-TIOL-192-SC-CX-LB and argued that a plain reading of 2nd proviso to Section 11 AC of the Act would make it clear that equal amount of duty found to be paid to the revenue is to be realised as penalty and therefore the amount of 25% imposed by the Tribunal as penalty is liable to be set aside. It was contended by the counsel of the assessee that the first two provisos postulate a concessional rate of 25% penalty in case the amount of duty as determined under sub section 11 A (2) of the Act and the interest payable thereon stand paid within thirty dates from the date of communication of the order of the officer determining such duty. The second proviso further imposes an obligation that the benefits contemplated by first proviso are to be available if the amount of penalty so determined has also been paid within a period of thirty days. In other words, if the duty as determined under Section 11 A(2) of the Act by the Central Excise Officer is paid within thirty days then penalty equal to the amount of duty is not required to be paid and the amount contemplated in lieu of the penalty is 25 % of the total amount of excise duty determined the officer concerned. But since this benefit was not extended to the assessee – neither by the adjudicating authority or first appellate authority; Tribunal extended the same to the assessee. The decision given as above was backed by good analysis of the provisions of section 11A(2) and section 11AC. It seemed to affirm the decisions given by the various appellate authorities on the previous issues arising in the section 11AC. The main outcome of the decision was that the benefit of reduced rate of penalty is also available at appellate stage if the same is not allowed at the adjudication stage to the assessees. Once again a favourable decision was given in favour of the assessees, but it seems that such decisions are not appreciated by the Revenue. The reason being issuance of Circular No. 898/18/09-CX dated 15.9.2009 which says benefit of reduced penalty is available only at adjudication stage. Circular No. 898/18/09-CX dated 15.9.2009:- This latest circular is issued in consequence of a decision given by Commissioner (Appeals) wherein the benefit of reduced rate of penalty u/s 11AC is allowed within 30 days of the communication of the Order in Appeal. In this circular it is clarified that benefit of reduced penalty is available only at the adjudication stage and the period of 30 days as prescribed in proviso to section 11AC is to be calculated from the date of passing order in original. The circular says Commissioner (Appeal) cannot allow this benefit at appellate stage.
Analysis of Circular:-
The analysis of Circular viz a viz first and second proviso to section 11AC makes it clear that mere plain reading of these provisos can derive the interpretation drawn by the Circular. The first and second provisos ibid are reproduced as follows:- "Provided that where such duty as determined under sub-section (2) of section 11A, and the interest payable thereon under section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. Of the duty so determined:" "Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso:" The analysis of above makes it clear that the first proviso talks of reduced amount of penalty if the duty so determined u/s 11A(2) alongwith interest is deposited within 30 days of communication of that order. In other words, it affirms the fact that the benefit of reduced penalty will be available if duty and interest are deposited within prescribed limit of 30 days. The second proviso says that the benefit of reduced penalty will be available if the penalty is also deposited within the period of thirty days referred to in the first proviso. However, this interpretation taken in the Circular would fail in case where the duty and interest are paid before the issue of show cause notice and the order appropriates the duty and interest but imposes penalty equal to amount of duty. In such cases, the first condition is duly satisfied as the duty and interest so paid before issue of show cause notice, come within the time limit prescribed under first proviso. However, it is clear that benefit of reduced rate of penalty is allowable to such assessees as per first proviso. But since the order in original has imposed the 100% penalty, the assessee would have no option but to go to Commissioner (Appeal) for availing this benefit. As such, the interpretation taken by the Circular is not considering all the aspects pertaining to the scheme of section 11AC of the Central Excise Act, 1944. Circular vs P & H High Court decision:-
The circular no. 898/18/09-CX dated 15.9.2009 says that the Commissioner (Appeal) cannot allow the benefit of reduced rate of penalty under proviso to section 11AC. Is this Circular contrary to the decision of hon'ble Punjab & Haryana High Court in the case of Commissioner of Central excise Commissionerate, Rohtak vs JR Fabrics (P) Ltd. [2009-TIOL-259-HC-P&H-CX] as discussed above? Let's recall – in this case, the benefit of reduced rate of penalty was allowed at Tribunal stage. Hon'ble High Court has affirmed this act of Tribunal by saying that if the duty and interest are paid within 30 days of communication of order, then the benefit of reduced penalty to the extent of 25% of duty should be extended to the assessee. It was decided that where the duty and interest are paid within 30 days of communication of order, then the benefit of reduced rate of penalty is available to the assessee. Given in the facts and circumstances of the case, the duty and interest were deposited prior to issue of show cause notice. It was held that it is an obligation on the adjudicating authority that he allows this benefit to the assessee by passing order in original imposing reduced rate of penalty. Since the adjudicating officer as well as Commissioner (Appeal) failed to do so, hon'ble Tribunal allowed the same which was affirmed by hon'ble Tribunal. It was further held that the benefit of reduced rate of penalty is not at the discretion of any adjudicating or appellate authority, it is by virtue of provisos inserted in the section 11AC. In the Circular, the clarification so given is contradicting this decision. The clarification says that the Commissioner (Appeal) cannot extend the benefit of reduced rate of penalty to the assessee whereas the detailed decision so given by hon'ble P&H High court has held that once the mandatory conditions of paying duty and interest within 30 days of passing of order are satisfied, the benefit of reduced rate of penalty is to be allowed to the assessee. The prime authority to allow this benefit is the Adjudicating officer, if he fails to do so, Commissioner (Appeal) has right to do so.
Beginning of a new litigation:- Once again, the Board has brought up a Circular that is contradictory to the decisions given by the Appellate authorities. The Circular no. 898/18/09-CX dated 15.9.2009 and the decision of hon'ble Punjab & Haryana High Court in the case of Commissioner of Central excise Commissionerate, Rohtak vs JR Fabrics (P) Ltd. [2009-TIOL-259-HC-P&H-CX] are contradictory to each other. There is no doubt that department will take shelter of Circular and the assessees would go in shed of this decision, as a result, a new battle would commence. There are a lot of decisions which state that the decisions of High Court or any other appellate authority are binding on the Revenue. But, looking to the increase in contradictory Board Circulars and judicial pronouncements, further clarification is required as to which one will prevail over the other in case of contradiction. Still awaited...
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31 October 2009
PENALTY U/S 11AC: CONTROVERSY CONTINUED....
New Features Added in TIN
| Important features added to TIN by NSDL |
October 30, 2009
Dear Members,
We have been informed by National Securities Depository Ltd. (NSDL) that they have introduced two new features in TIN this week.
1. Online registration of TAN
A facility to register TAN online is available on the TIN website (www.tin-nsdl.com). The Income Tax Department requires all deductors to register their TANs online. Authenticated access (through user ID and password) will be provided to registered deductors. Registration is free.
An acknowledgment number will be displayed on successful registration. This acknowledgment number is to be kept securely. In future user id / password will be provided to the deductors who have successfully registered.
On login, the following will be available to the deductors-
i. view of the status of all statements filed;
ii. download of consolidated quarterly e-TDS / TCS statement for preparation of correction statement; and
iii. other functionalities related to quarterly TDS /TCS statement.
| Guidelines for TAN Registration |
General
- TAN registration should be done online at the website of the Tax Information Network www.tin-nsdl.com.
- Fields marked with (*) are mandatory.
- Select the values from the drop down wherever provided.
- Register all active TANs.
Details of Deductor
- Mention details of deductor (TAN).
- Select appropriate deductor category from the dropdown.
- Mention PAN of deductor. Mention "PANNOTREQD", in case PAN is not available i.e. deductor is not required to have PAN as per the statute.
- PAO Code and DDO Code are mandatory for deductor category "Central Government".
- If PAO Code is not available then mention value "PAOCDNOTAVBL".
- If DDO Code is not available then mention value "DDOCDNOTAVBL".
- For PAO Registration number, mention registration number allotted, if any, by Central Record Keeping Agency (CRA) under New Pension Scheme (NPS).
- For DDO Registration number, mention registration number allotted, if any, by Central Record Keeping Agency (CRA) under New Pension Scheme (NPS).
Contact Details of Deductor
- Mention demographic details of deductor (TAN) i.e. complete address and contact details.
- Provide valid email id and telephone no. / mobile no.
- Provide details of responsible person and designation.
Statement Details
- Mention details of any regular e-TDS / TCS quarterly statement accepted in TIN on or after April 01, 2008.
- Check the status of e-TDS / TCS statement at the Quarterly Statement Status available at the TIN website by entering the TAN and Provisional Receipt Number of the statement before providing statement details.
- For entering statement details you may refer the Provisional Receipt issued at the time of acceptance of the e-TDS / TCS statement.
Generation of Acknowledgement
- After filling up the information, click "submit". On submission of details if system shows any errors, rectify and re-submit the form.
- A confirmation screen with all the data filled by the user will be displayed. The same can be either confirmed or edited.
- On confirmation, an acknowledgement number will be displayed.
- Print the acknowledgment and preserve the same for future use.
- For future correspondence mention the TAN registration number provided by TIN along with the TAN.
- You can re-generate the "Acknowledgement for TAN Registration" by registering again
2. Taxpayers can now view details of paid refund in their Annual Tax Statement (Form 26AS)
Taxpayers who have registered to view Form 26AS online can view details of paid refund in their Form 26AS from F.Y. 2009-10 (A.Y. 2010-11) onwards. Refunds received during the selected A.Y. will be displayed in Form 26AS. For instance, refunds pertaining to A.Y. 2005-06 which are received in F.Y. 2009-10 (A.Y. 2010-11) will be displayed in Form 26AS for F.Y. 2009-10 (A.Y. 2010-11).
The following details related to refund will be displayed:
- A.Y. for which refund is paid
- Mode of payment i.e. ECS, paper (refund cheque), etc.
- Amount of refund
- Date of payment
Taxpayers can register online at the TIN website to view Form 26AS.
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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx
28 October 2009
Cash Borrowings- No Penalty u/s 271D
Income Tax - Assessee is real estate developer - borrows funds in cash to buy a plot of land - violation of Sec 269SS - Penalty u/s 271D - Since ready cash-backing helps in negotiating land deals, a reasonable cause existed u/s 273B - Penalty not sustainable: ITAT Third Member
Inl Income tax related disputes, Revenue is mandatorily one of the parties. Does it mean that by the virtue of its status in all disputes, it is an adversary of the assessees. Not necessarily. It has a unique status as it is expected to grant the relief to an assessee even if one has not claimed it out of ignorance. In other words, Revenue is expected to collect revenue only as per the law, and not to disprove a particular business practice and deny the concessions granted by the legislature. This is what happened in this case when the assessee, a real estate developer, could not resist the temptations to buy a piece of land at an attractive price, and decided to have the backing of hard cash to negotiate a better deal. For the deal the assessee borrowed cash from a trusted source and went ahead with the negotiations. But the deal fell through and the assessee had to deposit the cash in its bank account and issue a cheque for the same amount to the source which lent him the cash from his cash book register.
This transaction was noticed by the AO who questioned the assessee. An explanation was furnished. The loan was obtained in cash with a view to enable the company to finalize the negotiations without any loss of time. According to the assessee, this cash loan was obtained in the best interest of business so that the deal could be expedited. It was considered necessary to have the funds in cash form on the ground of business expediency. The assessee also tried to explain the reasonable cause for obtaining this loan in cash so that the violation of the provisions of section 269SS would not attract any penalty by virtue of the provisions of section 273B of the Act.
However, the AO did not buy the theory of compelling reasons to borrow the cash and declined to believe the theory of reasonable cause as per the provisions of Sec 273B. The AO treats it as a glaring violation of Sec 269SS and initiates penaly proceedings u/s 271D.
The issue went to the CIT(A) where the assessee filed some additional evidence by way of an affidavit stating therein that the assessee had borrowed money for the purchase of land which was not ultimately materialize. The AO objected the filing of the affidavit. The CIT(A) ultimately sustained the order of the AO levying the penalty.
Finally the issue went to the Tribunal where a difference of opinion cropped up between the Members. The Member, AM, declines to buy the theory of reasonable cause pleaded by the assessee whereas the Member, JM, manages to see adequate reason to invoke Sec 273B. Thus the issue goes to the Third Member who finally goes with the Member, JM. The Third Member observes that,
++ The assessee-company is a builder and developer of lands. It is natural for it to look for purchase of lands which it can develop and make profits. When an opportunity presents itself, it was natural for the assessee to seize the same.
++ The assessee no doubt had a cash balance of above Rs. 12,00,000 in its books on 1-3-2002, but apparently the market price of the lands was around Rs.15 to Rs.20 lakhs and therefore the assessee, instead of using up the cash balance in its books and restricting the borrowing to a much lesser amount, resorted to borrowing the sum of Rs.15 lakhs from N.K. Chemist in cash.
++ The advantage of negotiating for the purchase of agricultural lands for development with ready cash-backing cannot be disputed. It was this advantage that obviously propelled the assessee to keep the cash ready and negotiate with Mukeshbhai Desai for the purchase of land. All this is supported by the averments in the affidavit filed by Mukeshbhai Desai. These averments have not been impeached or discredited or found false.
++ When the deal did not materialize, the assessee deposited the cash in the bank and issued a cheque in favour of N.K. Chemist and closed the borrowing. The learned JM has viewed the above circumstances as constituting reasonable cause and I have no strong reasons to disagree with him in his conclusion. The learned AM has observed that land deals can be closed by paying a token sum as advance and therefore there was no need to borrow monies equivalent to the entire price payable.
++ There may be many ways in which a business deal can be put through and it is well-settled that essentially it is for the businessman to put a transaction through in the manner best suited to his interests. Possibly the transaction could have been put through in the manner suggested by the learned AM, but the Tribunal has to test the reasonableness of the explanation that is offered by the assessee in the touchstone of normal course of human conduct and probabilities.
++ Unless the explanation trotted out is so perverse or strange or unusual that it cannot conform to the normal course of human conduct or probabilities, the fact that the transaction can be put through in several other or different ways should not be an impediment in accepting the explanation as constituting reasonable cause. There is nothing to suggest that the assessee's explanation is in any manner improbable or impossible. It is supported on material facts by the affidavit of Mukeshbhai Desai.
Finally the Third Member agrees with the Judicial Member and holds that the explanation furnished by the assessee does constitute a reasonable cause u/s 273B and it does not call for levy of penalty u/s 271D.
CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx
SLR Increased
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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx
27 October 2009
BL Award to CA. TN Manoharan
Finance Minister Pranab Mukherjee was the chief guest at the event, which was attended by several top-notch industrialists.
Awards were given away in 22 categories, besides four special awards, a Life Time Achievement Award and the Business Achievement of the Year Award.
The Business Achievement of the Year Award was given to Directors of Satyam Consultancy Services.
NDTV Profit, Business Leadership Awards 2009 was presented by Hirco.
ONBEHALF OF MYSELF AND NELLORE BRANCH OF SIRC OF ICAI CONGRTULATE SHRI T.N. MANOHARAN FOR RECEIVING BUSINESS LEADERSHIP AWARD 2009 FROM THE FINANCE MINISHER ON 26TH OCTOBER,2009
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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx
Announcement on ROC Scrutiny Assignment
| Announcement for panel for outsourcing of work of Technical Scrutiny of Balance Sheets - (26-10-2009) |
| Announcement for panel for outsourcing of work of Technical Scrutiny of Balance Sheets - (23-09-2009)
The Institute has received an Office Memorandum (OM) from the Ministry of Corporate Affairs. As per the OM, the Registrar of Companies will prepare a panel of professionals for Technical Scrutiny of Balance Sheets filled by the Companies for the State concerned.
The Scheme of outsourcing the work will be for the financial year 2009-10. The details of the Scheme specifying the eligibility criteria, mode of application, Procedure to be followed by the ROC for outsourcing of work, is provided in the Office Memorandum issued by the Ministry
The Institute of Chartered Accountants of India while appreciating the initiative taken by the Ministry for ensuring good corporate governance and transparency for safeguarding the interest of the shareholders, creditors and the economy as a whole wishes to provide professional expertise of its members to the Registrar of Companies. For the purpose, it has been decided to send a panel of the members of the Institute to the Ministry.
Procedure for Registration for the empanelment: The chartered accountants/firms which have already applied for the Multi-purpose panel for the year 2009-10 will be automatically empanelled for the subject empanelment. In case, they have not applied for the same, the following details may please be mailed at pdc@icai.in with the subject "Empanelment with the office of RoC"
i. Name of the Member ii. Membership No. iii. Professional Address iv. Year of COP v. Mobile No. vi. E-mail id
For any further clarifications, the members may please contact Professional Development Directorate at pdc@icai.in or 30110440, 30110444, 30110480, 30110508 and 30110451. |
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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx
26 October 2009
FM on DTC -2011-12
Direct Taxes Code to be implemented from fiscal 2011-12: Pranab
The government plans to implement the Direct Taxes Code (DTC) from 2011-12 after addressing all concerns relating to controversial proposals like taxation of retirement benefits, weeding out incentives for housing sector and changes in the Minimum Alternate Tax (MAT). The proposals in the Code are only "illustrative" and are open for discussion and there is no need to think that these "have been decided," Finance Minister Pranab Mukherjee told news agency. Giving the roadmap for the Code that will replace the Income Tax Act of 1961, he said, "It will be implemented from 2011. So, the finance bill of 2011-12 would be appropriate." The government, Mukherjee said, has identified seven critical areas of concern in the Code and would take suggestions on board before finalising it. The critical areas of concern include
- Shifting the base for computation of Minimum Alternate Tax (MAT) from book profits to assets;
- Capital gains taxation in case of non-residents;
- Double tax avoidance agreements;
- General Anti-Avoidance Rules (GAAR);
- Taxation of foreign companies;
- Taxation of charitable institutions; and
- Shift to EET system for taxation of savings.
On the issues relating to taxation of savings at the time of withdrawal, the Minister said, "Whether it will be EET (exempt, exempt, tax) or ETE (exempt, tax, exempt) ... is to be finally arrived at a decision. So one need not rush to the conclusion that it has been decided. That is the short point that I would like to make it clear." DTC has proposed that all savings schemes should be taxed at the time of withdrawal. Under the current dispensation, the savings schemes like Public Provident Fund (PPF) and General Provident Fund (GPF) are not taxed at all, while in some schemes like National Savings Certificate (NSC) only interest accruals are taxed. The Code is also silent on tax incentives for housing sector as against the current practice of provide rebate on repayment of interest and principal on home loans. As regards the MAT, the Code proposes to levy minimum tax on assets instead of book profits. The proposal evoked sharp reaction from the industry which described the move as introducing wealth tax on enterprises. Referring to his interaction with the representatives of the industry on the Code at Delhi and Bangalore, Mukherjee said, "I told them to express (their) views candidly ... final decision will be taken after obtaining inputs from various stake holders and in depth discussions." The direct tax reforms are basically aimed at doing away with the "plethora of exemptions", Mukherjee said, adding "if somebody analysis the Act of 1961, as amended from time to time now (will) realise that the original character of the Act is lost through a series of amendments. "All 22 alphabets are lost, than 1,2,3,4 are also put while amending the Act. It
is substantially because of plethora of exemptions. So attempts have been made to make, to simplify it and in that process some critical areas and vital areas may (have been) left out," h
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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx
24 October 2009
Concept Paper on GST- ICAI
ICAI Concept Paper on GST Model for India-Suggestions - see attachment
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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx
23 October 2009
MCA Coommitment on IFRS
| Friday, October 23, 2009 | |||||
| Ministry of Corporate Affairs | |||||
THE CORE GROUP ON CONVERGENCE OF INDIAN ACCOUNTING STANDARDS REITERATES COMMITMENT TO CONVERGE WITH IFRSS BY 2011 FAVOURS IMPLEMENTATION OF CONVERGED ACCOUNTING STANDARDS IN PHASED MANNER | |||||
| 18:9 IST | |||||
| A meeting of the Core Group constituted by the Ministry of Corporate Affairs for convergence of Indian Accounting Standards with International Financial Reporting Standards ( IFRSs ) from the year 2011 was held on 15th October 2009 under the Chairmanship of Shri R. Bandyopadhyay, Secretary, Ministry of Corporate Affairs. The Group noted that the Ministry of Corporate Affairs had prescribed Companies ( Accounting Standards ) Rules, 2006 in December, 2006 which have already harmonized Indian Accounting Standards with IFRSs substantially in so far as the companies are concerned. For entities other than companies, Accounting Standards issued by ICAI are applicable which are also harmonized with IFRSs substantially. The Group also discussed certain critical areas involved in convergence like 'fair value versus historical cost'; application of prudential norms, fixation of minimum depreciation rates etc. and expressed the need for addressing them effectively and timely through a consultative and participatory process. The Core Group is supported by two Sub-Groups set up in July, 2009. Sub-group-I, which is chaired by Shri Y.H. Malegam, Chairman, NACAS and includes concerned Regulators like Reserve Bank of India ( RBI ), Securities and Exchange Board of India ( SEBI ), Insurance Regulatory and Development Authority ( IRDA ), has been set up to identify changes required in various laws, regulations and accounting standards for convergence with IFRS and to prepare a clear roadmap for achieving the same. Sub-Group-II, which is chaired by Shri T.V. Mohandas Pai, Director, Infosys, and includes Chief Financial Officers ( CFOs ) of various companies, has been set up to interact with various stakeholders in order to understand their concerns on the issue of convergence with IFRSs, identify problem areas and ascertain the preparedness of the stakeholders for such convergence. The Group reviewed the progress made by both the Sub-Groups. Sub-Group-II had completed its deliberations and forwarded its recommendations to Sub-Group I. Sub-Group I would submit its report by the end of this month. The Group decided that on receipt of this report, which would also cover the road map and phasing plan for convergence, the concerned regulators like M/o Finance, RBI, SEBI, IRDA etc would take necessary timely action to address changes in legislative and regulatory frameworks within their jurisdictions. Simultaneously, the Ministry of Corporate Affairs would take up the exercise for amending the Companies Act and Rules made thereunder, after taking inputs from ICAI and NACAS. The Group was also of the opinion that in view of practical difficulties involved in implementing/ applying the converged Accounting Standards to all companies at one go, it might be appropriate to apply the converged Accounting Standards in a phased manner. The Group expressed satisfaction at the progress made by the two Sub Groups as well as the initiatives taken by ICAI in respect of training, awareness and other capacity building measures. The Group desired that such initiatives like extensive training & awareness programmes and other capacity building measures for companies, professionals as well as regulators should be continued with increased momentum so that the convergence of Indian Accounting Standards with IFRSs is achieved smoothly and timely. The Group expressed confidence in the approach and process being followed on the matter and reiterated the commitment to converge with IFRSs by 2011. | |||||
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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx
22 October 2009
Case Law on Delay in taking Cenvat Credit
| Cenvat Credit cannot be denied just making delay in taking the credit |
| Tribunal in a recent case held that though Rule has it that credit should be taken immediately no outside limit was prescribed and therefore credit cannot be denied even if the credit is taken after a long period . Facts of the case was that CENVAT credit of Rs.1,65,089/- has been disallowed to the assessees, who are manufacturers of handmade branded biris, on the ground that credit was taken on invoices which did not contain details of payment of duty and that the credit in respect of inputs was not taken immediately on receipt of inputs in their factory and penalty of Rs.10,000/- was also imposed by the adjudicating authority (Assistant Commissioner). The above order was appealed against before the Commissioner (Appeals) who disallowed the credit only on the ground of delay in taking credit, and no finding was recorded on the second ground for denial namely that the documents on which credit was taken did not contain the details of payment of duty. Court had relied on the decisions of the Tribunal in Coromandel Fertilizers Ltd. Vs. CCE 2009 (239) ELT 99 and Shyam Forgings Vs. CCE 2008 (221) ELT 309 holding that although the rule as it stood prescribed that credit should be taken immediately no outside limit was prescribe and therefore credit cannot be denied even if the credit is taken after a long period M/s. A. Habeebur Rahman Sons Appellants .Vs. CCE, Chennai Respondent Date of Decision: 07.10.2009 |
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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx
Revised procedure for acceptance of proof Address.
| AS per the circular no 321 the additional procedure for acceptance of proof of address alongwith PAN applications received from Individuals and HUF are as under: 1. While accepting "Application for allotment of PAN (Form 49A)" if both the addresses (residence and office) are mentioned in the application form and office address has been selected as communication address, then POA has to be collected for residence as well as office address. 2. While accepting "Request for New PAN card or/and changes or correction in PAN data" applications, proof of all addresses provided in the application have to be collected. 3. Documents as per Rule 114(4) of Income Tax Rules will only be accepted as valid proof for both the abovesaid addresses. 4. Both proof of addresses will have to be in the name of applicant and should contain the name in the expanded form as given in the application. The exception provided for ration card communicated vide our circular TFCID/TIN/08/255 dated February 18, 2008 will continue to be applicable. We hereby informed that the above will be effective for all PAN applications received on or after November 1, 2009. |
20 October 2009
Circular on Payment of Excise Duty on Job Work
CIRCULAR NO
902/22/2009-CX., Dated: October 20, 2009
Subject: CBEC clarifies if goods are manufactured on jobwork basis, value for payment of excise duty to be determined as per Rule 10A
It has been brought to the notice of the Board that some manufacturers of Motor Vehicles are getting complete Motor Vehicles manufactured by sending the Chassis of the Motor Vehicles to independent body builders for building the body as per the design/specification of the manufacturer. The practice followed is that the Chassis is transferred to the Body builder on payment of appropriate Central Excise duty on stock transfer basis and is not sold to them . The body builder avails the Cenvat Credit of the duty paid on the chassis and clears the same on payment of duty to the Depot/Sales Office/Distributer of the Motor Vehicle manufacturer. The duty is discharged by the body builder on the assessable value comprising the value of Chassis and the job charges. The Depot/Sales office of the MV manufacturer sells the vehicles at a higher price than the price on which duty has been paid. Similar practice may be prevailing in respect of other commodities also.
2. The matter has been examined. Rule 10A (ii) of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 stipulates that where the excisable goods are produced or manufactured by a job-worker, on behalf of a principal manufacturer, then in a case where the goods are not sold by the principal manufacturer at the time of removal of goods from the factory of the job-worker, but are transferred to some other place from where the said goods are to be sold after their clearance from the factory of job-worker, and where the principal manufacturer and buyer of the goods are not related, and the price is the sole consideration for the sale, the value of the excisable goods shall be the normal transaction value of such goods sold from such other place at or about the same time.
3. A plain reading of the aforesaid provision of law makes it clear that the assessable value for the purpose of charging Central Excise duty, in the cases where the Job-worker transfer the excisable goods to the Depot/Sale office/Distributer and/or any other sale point of the principal manufacturer, shall be the transaction value on which goods are sold by the principal manufacturer from such a place. Accordingly, after the insertion of Rule 10 A, the practice of discharging the duty on cost construction method by the body builder is not legally correct. It is, therefore, clarified that wherever goods are manufactured by a person on job work basis on behalf of a principal, then value for the purpose of payment of excise duty may be determined in terms of the provisions of Rule 10 A of the Central Excise Valuation (Determination of price of Excisable goods) Rules, 2000 subject to fulfilment of the requirements of the said rule. It is requested that the practice followed in your zone may be verified for body builders of motor vehicles and/or other commodities, which are manufactured on job work basis to ensure that duty is paid correctly as per Rule 10A wherever required.
4. Trade and Industry may be informed.
5. Receipt of this circular may be acknowledged.
6. Hindi version would follow.
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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
18 October 2009
XBRL enabled Reporting by Banks
| ||
| Date : 14 Oct 2009 | ||
| RBI provides XBRL enabled filing of Online Returns | ||
|
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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
16 October 2009
Johnny and Service Tax Refund Part - I
| We are a Practising Chartered Accountants firm practising in the field of Indirect Taxes. Recently we came across a comment on us that Indirect Tax practitioners are not Humorous and correspondence with them is boring. Taking this comment as inspiration and a stepping stone we have drafted an article titled "Johnny and Service Tax Refund Part - I". The content of the articles is as under: - Johnny and Service Tax Refund Part - I By: - CA. Pradeep Jain Siddharth Rutiya With the help of this article an effort has been made to picturise the present situation existing in the refund structure mechanism under Service tax. This state of affair is elaborated with the means of poems and conversation between Johnny (an assessee) and his father. Johnny and Jill went up the hill, to get the refund order Johnny came back with a lack And Jill came hopeless after. Today, in the present scenario the assessee is facing enormous difficulty in getting refund orders as stated in the lines above. The refund claims are the Right of the assessee but the department is rejecting these claims on various grounds which are of trivial importance. This result in frustration and skepticism among assesses as regards the Refund mechanism. The various reasons on which the department is rejecting the refund claim as against the "Transport of Goods by Road Service" u/s 65(105)(zzp) are highlighted here by means of poetic conversation: - Johnny-Johnny! Yes papa! Got the refund? No Papa, Telling lies? No Papa, What's the reason? This papa: - Johnny says: I went to department to get the refund for GTA service but department said: - Johnny-Johnny go away, Come again another day. Your refund order has following Flay: - 1. The documentary proof of discharging service tax liability under transportation of goods by road service classifiable under section (105) (zzp) has not been submitted. The liability to pay service tax is on the manufacturer and as such you should have paid the service tax and produced the challan for the same. If the transporter has paid the service tax then you will not get the refund claim as liability to pay service tax is on you only. Rather than getting refund, you will receive a demand from the department. It is like "CHOBE JI GAYE CHHABE JI BANANE AUR DUBEY JI RAH GAYE." 2. The Exported goods have not been transported directly from the place of removal to inland container depot or port or airport, from where they are to be exported. The transport of goods from factory to ICD is added from 19/02/2008 and from ICD to port from 17/09/2007. As such, you will get refund from such date (i.e. 19/02/2008) only and not prior to that date. Your contention that it has retrospective effect does not hold good as the notification does not contain any such clause. 3. Invoice issued doesn't contain the name of the inland container depot or port or airport from where the goods are exported and hence the documents are not proper. Moreover, the consignment note (popularly known as "Bility" in trade) does not contain all the details required under Rule 4B of Service Tax Rules. It does not contain the truck number and as such refund can not be granted to you. Johnny says: I went to the department next day again with the corrections but department said: - Johnny-Johnny go away, Come again another day. Your refund order has following more flay: - 1. The transportation charges are received without service tax and the relevant documents confirming payment of service tax to Govt. have not been properly submitted. The liability to pay service tax is on you in case of transport of goods by road and as such you should have paid the service tax. If the transporter has paid the same then also you will not get refund. As told earlier, we will issue a demand to you. 2. Lorry Receipt and corresponding shipping bill doesn't contain details of exporter's invoice relating to export goods, 3. The drawback on the said service has already been claimed. Your contention that the notification says that drawback rates should not have included the specified services. The rates are fixed by Government and he knows that whether these are included or not. As you are not aware whether these are included or not, we also do not know whether these have been included or not. The burden is on you to prove the same that these are not included if you intend to claim drawback. Moreover, your contention that Drawback Rules says that only input services are included. The "input services" have same meaning as given under Cenvat credit Rules. As the department has disallowed credit on outward freight and as such the drawback is not included. Hence the drawback rates have not included the service tax paid on outward freight. This is not correct. The Cenvat credit is allowed on outward freight by Punjab and Haryana High Court in case of M/s Ambuja Cement Ltd. v/s Union of India & Ors. [2009 (236) ELT 0431 (P & H)]. Although we are not agreeing the same in case of demand but we follow the same while granting the refund. Further, the condition of drawback is waived from 7.12.2008 and as such the refund will be granted from that date but it does not have retrospective effect. When the law is clear there is no place for intentions. If the intention of the Government was to give you relief they should have straight forward granted exemption rather then exemption by way of refund with so many conditions. Johnny says: I went to the department next day again with the further corrections but department rejected saying: - Johnny-Johnny go away, You won't get refund anyway. It has following more flay: - 1. The declaration, as to whether such GTA service has been received from the service provider for purposes other than for export, is not enclosed along with the refund claim. 2. That the services are not covered in the specified services and and evidence regarding non availment of Cenvat Credit is not enclosed in the refund claim. 3. that the bills of Goods transport agency are not issued by GTA but are issued by CHA and as such the documentary evidence is not suffice; Fruitless again & again; Johnny now in grief and pain! Refund order now a dream; His efforts have downstream! By this humorous and poetic article above we conclude that the physical condition and mental state of assesses claiming refunds against export of goods is similar to that of Johnny in the poem. Every time the assessee is approaching the department his refund claims are being rejected on some or the other flaws. He has to return fruitless, hopeless with his futile efforts thinking whether he will be getting the refund or not. There are a number of services on which the refund is allowed. The assessee is facing difficulty in almost all of those services. Due to the large number of services we were not able to cover all the services in this article and hence we will be bringing further articles on the different services covered therein. Keep visiting for the next article…….. *-*-*-*-*-* |
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and fill ur days with pleasant surprises and moments!!
Ashwin Nagar India +91-9833015352
Success is not permanent and failure is not final
13 October 2009
Interest on Daily Basis on SB A/c
Date: Oct 12, 2009 | |
StCBs/DCCBs – Payment of Interest on Savings Bank Account on a Daily Basis | |
|
12 October 2009
TAXFACTS : By Ghia Tarun Jamnadas 10 10 2009
"Tax Facts" in Times Property Newspaper dated 10 10 2009
Query : When can a member of a co-operative society be appointed as the statutory auditor thereof? Reply : A member of the society can be appointed as a statutory auditor of the society provided that he is qualified to be so appointed and provided further that he is not a part of the committee of the society because if he is the part of the committee then as an auditor he would have to report upon his own actions and inactions.
Query : Can a person who is not a joint purchaser of the flat be a committee member?
Reply : A person who is an associate member of the society can become a committee member subject to consent of the ordinary member. For becoming an associate member one need not be a joint purchaser of the flat. A person may be admitted as an associate member of the society under an application in that behalf by the ordinary member. Upon getting elected in the committee, logically such an associate member can also become office bearer of the society.
Query : The Annual General Meeting of our society was not convened on or before 14 08 2009 and accounts finalization are taking a lot of time. Is it possible to convene the Annual General Meeting without producing final accounts?
Reply : The annual general meeting of a co operative society has to be held on or before 14th August in respect of the immediately preceding financial year. The date of the annual general meeting can be extended for a period of three months by the registrar of co-operative societies upon a specific application by the society. Duly audited accounts must be laid at the annual general meeting of the society.
Query : Can we claim income tax benefit on sale of plants grown in our nursery ? Reply : Whether plants grown in nursery tantamounts agricultural produce or not was a matter of dispute earlier. However, with effect from assessment year 2009-10, the Income Tax Act, 1961 has been amended to provide that income from saplings and seedlings grown in nursery would be treated as agricultural income. In view of such amendment, now such income is agricultural income and therefore not taxable. Although in general laws, to acquire agricultural land, one needs to be a farmer, but now atleast for the income tax purposes, one can earn agricultural income without being a farmer. |
11 October 2009
FM Press Note On DTC
Critical areas on dtc for detailed examination identified : fm
PIB Press Release, dated 9-10-2009
Finance Minister has announced that the Government has identified seven critical areas on the Direct Taxes Code for further detailed examination. At an interactive session with representatives of trade and industry from all over the country, here today, Shri Pranab Mukherjee said that the areas identified after interactions with all stakeholders are: The concept of Minimum Alternative Tax (MAT) based on gross assets; Capital Gains Taxation in the case of non-residents; The Income Tax Act and the Double Taxation Avoidance Agreement (DTAA); General Anti-Avoidance Rule (GAAR); Issues relating to effective management control and taxation of foreign companies in India; Taxation of charitable organizations; and Shift from EEE to EET taxation system.
On the apprehensions expressed regarding the time schedule for implementation of the new Direct Taxes Code, the Finance Minister assured that next steps would be taken only after a comprehensive review of the draft Direct Taxes Code by taking on board the suggestions received. Every effort would be made to meet the aspirations and expectations of our taxpayers and our vibrant corporate sector.
Shri Mukherjee said that it has been the endeavour of the government to incorporate the best practices prevailing across the globe and to use innovative methods for attaining equity—vertical and horizontal, ensure growth with sustainability, create stable fiscal eco-system and have well regulated free markets. The new Direct Tax system would also take into account established and time tested practices which have withstood judicial scrutiny. He said, "We want to present the stakeholders with a tax regime which is simple and broad based leading to lowering of tax rates, better tax compliance and reduced litigation."
The Finance Minister said that it has been two months since the proposed draft direct tax code was released for public debate and he was moved by the amount of interest and intellectual debate it has generated amongst various sections of taxpayers, tax professionals and general public. We are receiving thoughtful feedbacks on our website and through other means—trade and industry associations, professional bodies and others, he added.
Shri Mukherjee said that he has kept his promise by putting the draft code in public domain within 45 days and he would like to expedite to give it a final shape. While thanking the industry and trade associations for enthusiastically participating in today's deliberations, Shri Mukherjee said that he looks forward to their suggestions in making the new Direct Taxes Code an effective instrument for meeting the economic challenges and development priorities of the country. The outcome of the discussions would be used for modifying the proposals contained in the draft Direct Taxes Code, the Minister said.
Minister of State for Finance, Shri S.S. Palanimanickam, Revenue Secretary, Shri P.V. Bhide and senior officers of the Finance Ministry were also present at the interactive session.
[BSC/BY/GN-349/09]
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CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
+91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
vmvsr@yahoo.co.uk
10 October 2009
Gifts of Property (Gifts-in-Kind) above Value of Rs.50,000/-
| The Income Tax Act 1961 (the Act) has been amended with effect from 1st October 2009 to provide that any gift-in-kind, being an immovable property or any other property, the value of which exceeds Rs.50,000 /- (rupees fifty thousand), will become taxable in the hands of the donee, being an individual or a Hindu Undivided Family (HUF), as income from other sources under clause (vii) of sub-section 2 of section 56 of the Act. Therefore, any such person who receives a gift of any such property on or after 1st October 2009 must pay the income tax due on the value of the gift and disclose the taxable value of such property in the return of income for assessment year 2010-11 and subsequent years. The following types of gifts will, however, not be subject to tax, i.e. gifts (a) from a person who is a relative; (b) on the occasion of marriage of the individual; (c) under a will or by way of inheritance; (d) in contemplation of death of the donor; (e) from any local authority as defined in the Explanation to section 10(20) of the Act; (f) from any fund or trust established under section 10(23C) of the Act; (g) from any trust or institution registered under section 12AA of the Act. Relative is defined in the Act as (i) spouse; (ii) brother or sister; (iii) brother or sister of the spouse; (iv) brother or sister of either of the parents; (v) any lineal ascendant or descendant; (vi) spouse of any of the relative at clauses (ii) to (v); of the individual. Gifts received from these relatives will not be subject to tax. |
New Direct Taxes Code to be introduced in 2011: FM
| The government will introduce the Direct Taxes Code by April 2011 after examining thoroughly seven proposals such as taxing savings schemes and clamping the Minimum Alternate Tax (MAT) on gross assets that have not found favour with the industry, trade and people at large. After an interaction with industry chambers here today, Finance Minister Pranab Mukherjee said, "The new Direct Taxes Code would have to be passed in the Parliament. It is to be effective from 2011. "He said the Code would be implemented only after "a comprehensive review" of the proposals. Revenue Secretary P V Bhide said, "The draft would be tabled in the Parliament during the winter session or the following session in February. – www.presstrustofindia.com |
ICAI seeks info on audit with foreign tie-ups
| Institute of Chartered Accountants of India (ICAI) has sought broad-ranging information about the association of its member institutions with foreign auditing firms. The move assumes significance following the accountancy fraud by the promoters of Satyam Computers that brought the role of auditors under scrutiny. The auditors concerned were associate firms of international auditing entity PricewaterHouseCoopers. ICAI is in the process of collecting basic information such as financial statement, details of the agreement, queries related to their functioning, revenue-sharing details and so on from the auditing firms that have foreign associations. Indian auditing firms are registered with ICAI, while foreign firms do not have to be associated with the apex standard-setting body. Though ICAI is yet to reveal what it intends to do with the data, sources said the information is being gathered to study the possibility of tightening regulatory monitoring of foreign firms that function through their Indian associates. "It is a general query to understand how they operate. Notices have been sent to Indian firms whom we regulate and lot of people are responding," said ICAI President Uttam Prakash Agarwal. Asked what ICAI would do with this information, Agarwal said, "Once we get the data we will apply our mind. "This latest move is part of the regulator's efforts to bring in more transparency and accountability to the accounting profession after Satyam's founder Ramalinga Raju confessed to long-term fraud on January 7. ICAI has already submitted its report on the auditors' role in the Satyam scandal, in which funds of the IT major were allegedly siphoned off by the Raju family by fudging accounts. The complaint against the auditors was their failure to detect the fraud. The institution is already in the process of curbing the practice of unrestricted registrations of the same entities in various states. The number of registrations one auditing firm can have is likely to be restricted to two. Similarly, ICAI is attempting to prevent all audit firms, whose individual auditor members are under scrutiny for unethical practices, from taking up government auditing contracts. – www.business-standard.com |
08 October 2009
RBI - Reg. - Clearing - Urban Co-operative Banks
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RBI - Service Importers - Reg. Bank Guarantee
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RBI - Reg. OTC Interest Rate Derivatives
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RBI - Micro, Small Enterprises - Priority Sector Lending
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07 October 2009
Constitutional Validity of Section 40(a)(ia)
Section 40(a)(ia) is constitutionally valid and there is no arbitrariness, unreasonableness or discrimination in said provision: Madras HC
What are the consequences of not deducting the TDS or after deducting not paying the deducted tax to the Government?
As per section 201 of Income Tax Act 1961,
• Without prejudice to any other consequences, the defaulter will be deemed to be an assessee in default.
• He is liable to pay an interest at 12% P.A. from the date on which the tax was deductible till the date of actual payment.
• The TDS along with the interest will be a charge on all the assets of the defaulter.
• He is liable to rigorous imprisonment for a term which shall not be less than 3 months, but which can extend up to 7 years and fine.
• He is liable to a penalty equal to the tax not deducted.
Knowing the above liabilities, no sane person would invite the wrath of the department by not deducting TDS or after deducting not paying to the government. But there is more! A new sub clause (1 a) of Sec 40 (a) has been inserted into the Income Tax Act by Finance Act (No. 2) of 2004. Under this clause if on any interest, commission or brokerage, rent, royalty, fees for professionals etc., TDS is deductible and if not so deducted or after deduction not paid, the entire expenditure will not be deducted while computing the income chargeable under Profits and gains of business or profession. Putting in English, this can be explained by the following example:-
Supposing you have paid Rs. 1.00 Crore in the previous year as Interest fee etc, and you have either not deducted tax or after deducting not paid it to the Government, apart from the five consequences mentioned above, this one Crore will not be permitted as an expenditure in your profits and gains computation. With the result you may have to pay a higher rate of income tax on the entire amount of Rs. 1.00 Crores in the year of default.
Supposing your income was Rs. 2.00 Crores and your expenditure (including the fee of Rs. 1.00 Crore) was Rs. 1.80 Crores, you get a profit of Rs. 20 lakhs on which you may have to pay an income tax of Rs. 6.00 lakhs . But if this Rs. 1.00 Crore is not allowed to be deducted your income is Rs. 2.00 Crores and expenditure is Rs 0.80 Crores leaving a profit of Rs. 1.20 Crores, on which you will have to pay a tax of about Rs. 36.00 Lakhs .
This seems to be a too heavy a blow that an assessee has approached the Madras High Court challenging the constitutional validity of this new clause (1a) of Sec 40 (a) of Income Tax Act 1961.
The High Court directed that:
• The assessee will file self assessment return by including the amount for which the tax is deducted at source.
• The petitioner will pay tax on self assessment income.
• The Dept will accept the return and is restrained from taking penal action as of now.
• The filing of the return and payment of tax shall be purely provisional.
• The petitioner will be liable to file modified returns and pay the due tax in the event the petitioner fails to get a final order in its favour from the High Court.
This and several other similar writs are now decided by the madras High Court.
In all these writ petitions, the common challenge is to Section 40(a )(ia) of the Income Tax Act to declare it as ultra vires of the Constitution.
The contentions are three fold.
1. that the implication of Section 40(a)(ia) is arbitrary, unreasonable and in violation of Article 14 of the Constitution;
2. it imposes unreasonable restrictions in violation of Article 19(1)(g) of the Constitution and
3. it lacks legislative competence and is in violation of Articles 265 and 300A of the Constitution.
The High Court observed on several grounds raised by the petitioners,
Draconian?:
It cannot be said that the objective sought to be achieved viz., augmentation of TDS provisions by bringing out a stringent provision in the form of Section 40(a)(i) or 40(a)(ia) can be said to be draconic or highly excessive in its approach. Therefore, the submission made does not inspire to hold that the provision should be held to be unreasonable or arbitrary and in violation of Article 14 of the Constitution. For the same reason, the contention that it is in violation of Article 265 of the Constitution is also liable to be rejected.
Within Legislative Competence?:
When there is a provision inbuilt in the impugned Section itself providing for rectification of any default and thereby restore the financial implications suffered, it will have to be held that by virtue of such a procedural safeguard provided in the provision, it would be well within the Legislative competence of the Parliament in having set out a provision as contained in Section 40(a)(ia) of the Act. The proviso provides a remedial measure and thereby enable the assessee to claim for deduction either in the immediate subsequent year or in any other subsequent year to the relevant year in which the default came to be committed.
Harsh?:
when Section 40(a)(ia) is read along with its proviso, there is no scope to hold that the said provision is so very harsh or creates any insurmountable situation for the assessee to claim the deduction of expenditure actually made. It is held that Section 40(a)(ia) cannot be read in isolation but must be read along with its proviso and when it is read in that manner, there would be no scope to hold that there will be any harsh treatment meted out to any assessee in the matter of disallowance of any expenditure validly made by them.
Hostile scheme of taxation , in which on the ground of default of tax recovery from a contractor's income, the whole of the contractors income is taxed at the hands of the petitioners while such tax on the said sum is paid by the contractor himself in his returns even in the absence of the TDS effected by the petitioners?. It can be noticed that the disallowance provided under Section 40(a) (ia) is for the failure of the petitioners in making the TDS as provided under Chapter XVII-B of the Act, which varies from 2% to 10%. If the TDS has been effected , such deduction would be credited to the tax liability of the contractor when his liability is assessed. Only in the event of non-deduction or non-payment of the deducted amount, there would be scope for the contractor being mulcted with the entire liability inclusive of TDS which could have been otherwise made under Chapter XVII-B. Therefore, the argument of the petitioners which proceeds on the basis of double taxation is palpably erroneous. Since the submission has been made by an erroneous reading of the relevant provision, the said submission is liable to be rejected at the very outset. Certainly on this ground, it cannot be held that there was any hostile treatment meted out to the petitioners as that would amount to any arbitrariness or unreasonableness violative of Article 14 of the Constitution.
The relief through the mechanism of the proviso is onerous and near impossible since Section 40(a)(ia) shifts the business expenditure of the previous year, to the subsequent year which when computed along with regular expenditure of the subsequent year, exaggerates the expenditure to yield huge loss neutralizing the profit with mere carry forward facility under Section 72 and thereby the tax referred in the year of assessment can hardly be secured back unless business is carried on with profit to absorb the loss of the subsequent year. The said argument is to be stated only to be rejected. Such a submission made on hypothetical basis cannot invalidate the provision. After all the proviso has been inserted in order to ensure that even a defaulter is not put to serious prejudice, in as much as, by operation of the substantive provision, the expenditure which is otherwise allowable as a deduction is denied on the ground that the obligation of TDS provisions are violated. The law makers while imposing such a stringent restriction wanted to simultaneously provide scope for the defaulter to gain the deduction by complying with the TDS provision at a later point of time. Therefore such a remedial measure provided in the form of a proviso cannot be tested in the anvil of the grievance which is sought to be demonstrated by stating that in order to get the adjustments one has to survive in the business and that in the course of such survival, he should also make a profit. On the basis of such extreme imaginary consideration, which are farfetched, the vires of a provision cannot be tested.
Section 2(24) having defined the term 'income' have included only profits or gains of business or profession and the disallowance provided under Section 40(a)(ia) is indisputably an expenditure in the hands of the assessee and in the absence of deeming such expenditure as income of the assessee falling under Section 2(24) of the Act, no tax liability can be imposed on the assessee. The said submission failed to take note of one important factor viz., the proviso which would enable the assessee to claim the deduction as and when in any subsequent year compliance of the TDS provisions are duly made. It can also be stated that the disallowance committed under Section 40(a )(ia) is not a disallowance in toto but a temporary phenomenon, the ratification of which is in the hands of the assessee themselves. Therefore, it is a misnomer to call it an income while as a matter of fact it is an expenditure not properly claimed.
Section 40(a)(ia) does not serve any socio-economic cause. Even assuming to be true, it cannot be a ground for striking down the said provision. It is besides the fact that after the introduction of Section 40(a)(ia), the object with which the provision came to be introduced was nearly achieved, in as much as, the statistical data of collection and refund for the financial year 2008-09 upto 01.08.2009, discloses that at least 50% of such collection was by way of TDS.
Section 40(a)(ia) fails to cover all assessee in all situation and thereby it is highly inequitable and unreasonable: Section 40(a)(ia) will apply wherever Chapter XVII-B gets attracted. Therefore, in respect of all those assessee who are governed by Chapter XVII-B would be equally governed by Section 40(a)(ia). We are unable to understand as to how there could be any inequality or unreasonableness in such a situation. On the other hand, in respect of assessees who are governed by Chapter XVII-B of the Act, Section 40(a)(ia) does not make any discrimination and consequently the said contention has no legs to stand.
Section 40(a)(ia) is the only provision where it provides for Double Taxation. It is a misnomer to call the process created under Section 40(a)(ia) as one resulting in Double Taxation. We are not therefore impressed with such a contention of the petitioners.
The High Court concluded:
(a) That so far as it is reasonably possible to read down a provision in order to construe the legislation as being within its power.
(b) By applying the doctrine of Reading Down, no additional words into a statutory order which would transgress the limits of such order or the scheme. It can only be resorted to give the statute a reasonable meaning in order to make it constitutionally valid.
(c) Under the guise of Reading Down a provision nothing can be supplemented. Where a literal interpretation leads to an absurd or intended result, the language of the statute can be modified to accord with the intention of Parliament and to avoid absurdity.
(d) The Doctrine of Reading Down a statutory provision is to make it a valid provision and prevents its nullification as unconstitutional.
Keeping the above principles in mind, it will have to be stated that having considered the various submissions on the grounds of arbitrariness, unreasonableness as well as discrimination, the High Court found that such grounds are not available for the petitioners when challenging the impugned Section 40(a)(ia).
Therefore when there is no ambiguity to be cleared, the question of applying the doctrine of Reading Down to Section 40(a)(ia) does not arise. Equally, there is no doubt that the provision is constitutionally valid, having regard to the various inbuilt safeguards in the substantive Section read along with its proviso. In such circumstances, the very question of applying the doctrine of Reading Down does not arise.
In as much as we have reached a conclusion that the object sought to be achieved while enacting Section 40(a)(ia) was for augmenting the provision of TDS, with which object we do not find any impermissibility or lack of constitutionality and hence there is no scope for applying the doctrine of Reading Down to the said provision.
The High Court finally held:
In all these writ petitions, wherever the petitioners seek to challenge the action of the respondents on merits, such questions will have to be agitated by the said petitioners before the appropriate Appellate Forum.
Where the challenge is to the vires of Section 40(a)(ia), in as much as those writ petitions where the challenge is made to the vires of the substantive provision, in all fairness those parties should be permitted to work out their appellate remedies within a reasonable time.
It is held that Section 40(a)(ia) is constitutionally valid and there is no arbitrariness, unreasonableness or discrimination in the said provision.
--
CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
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Magunta Layout,
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Andhra Pradesh
India
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06 October 2009
05 October 2009
Suggested Answers - June 2009 Final New Course
02 October 2009
15 Strategies for Enhancing Memory
1. Take the mystery away.
The first and perhaps most important strategy is to insure that all students understand how memory works and identify their particular profiles of memory strengths and challenges. Then, students should be taught memory management strategies.
2. Give directions in multiple formats.
Students benefit from being given directions in both visual and verbal formats. In addition, their understanding and memorizing of instructions could be checked by encouraging them to repeat the directions given and explain the meaning of these directions. Examples of what needs to be done are also often helpful for enhancing memory of directions.
3. Teach students to over-learn material.
Students should be taught the necessity of "over-learning" new information. Often they practice only until they are able to perform one error-free repetition of the material. However, several error-free repetitions are needed to solidify the information.
4. Teach students to use visual images and other memory strategies.
Another memory strategy that makes use of a cue is one called word substitution. The substitute word system can be used for information that is hard to visualize, for example, for the word occipital. These words can be converted into words that sound familiar that can be visualized. The word occipital can be converted to exhibit hall (because it sounds like exhibit hall). The student can then make a visual image of walking into an art museum and seeing a big painting of a brain with big bulging eyes (occipital is the region of the brain that controls vision). With this system, the vocabulary word the student is trying to remember actually becomes the cue for the visual image that then cues the definition of the word.
5. Give teacher-prepared handouts prior to class lectures.
Class lectures and series of oral directions should be reinforced by teacher-prepared handouts. The handouts for class lectures could consist of a brief outline or a partially completed graphic organizer that the student would complete during the lecture. Having this information both enables students to identify the salient information that is given during the lectures and to correctly organize the information in their notes. Both of these activities enhance memory of the information as well. The use of Post-Its to jot information down on is helpful for remembering directions.
6. Teach students to be active readers.
To enhance short-term memory registration and/or working memory when reading, students should underline, highlight, or jot key words down in the margin when reading chapters. They can then go back and read what is underlined, highlighted, or written in the margins. To consolidate this information in long-term memory, they can make outlines or use graphic organizers. Research has shown that the use of graphic organizers increases academic achievement for all students.
7. Write down steps in math problems.
Students who have a weakness in working memory should not rely on mental computations when solving math problems. For example, if they are performing long division problems, they should write down every step including carrying numbers. When solving word problems, they should always have a scratch piece of paper handy and write down the steps in their calculations. This will help prevent them from loosing their place and forgetting what they are doing.
8. Provide retrieval practice for students.
Research has shown that long-term memory is enhanced when students engage in retrieval practice. Taking a test is a retrieval practice, ., the act of recalling information that has been studied from long-term memory. Thus, it can be very helpful for students to take practice tests. When teachers are reviewing information prior to tests and exams, they could ask the students questions or have the students make up questions for everyone to answer rather than just retelling students the to-be-learned information. Also, if students are required or encouraged to make up their own tests and take them, it will give their parents and/or teachers information about whether they know the most important information or are instead focused on details that are less important.
9. Help students develop cues when storing information.
According to the memory research, information is easier retrieved when it is stored using a cue and that cue should be present at the time the information is being retrieved. For example, the acronym HOMES can be used to represent the names of the Great Lakes â€" Huron, Ontario, Michigan, Erie and Superior. The acronym is a cue that is used when the information is being learned, and recalling the cue when taking a test will help the student recall the information.
10. Prime the memory prior to teaching and learning activities.
Cues that prepare students for the task to be presented are helpful. This is often referred to as priming the memory. For instance, when a reading comprehension task is given, students will get an idea of what is expected by discussing the vocabulary and the overall topic beforehand. This will allow them to focus on the salient information and engage in more effective depth of processing. Advance organizers also serve this purpose. For older students, CliffNotes or other similar study guides for pieces of literature are often helpful aids for priming the memory.
11. Use Post-Its.
The use of Post-Its for jotting down information can be helpful for students who have short-term memory or working memory challenges.
12. Activate prior knowledge.
In order to enhance the likelihood that students will elaborate on new incoming information, teachers should activate their prior knowledge and make the new information meaningful to them. An easy way of accomplishing this task is to ask, “What do you know�, “What do you want to know�.
13. Give extended time.
If students have difficulty with the speed of retrieving information from memory, they should be given extended time for taking tests so that a true picture of what they know may be gained.
14. Use multisensory methods.
When learners, both young and old, experience something through multiple senses, they are much more likely to remember it. Use a Multisensory approach by engaging as many of the senses as possible when teaching (seeing, touching, hearing, smelling, and tasting).
15. Review material before going to sleep.
It should be helpful for students to review material right before going to sleep at night. Research has shown that information studied this way is better remembered. Any other task that is performed after reviewing and prior to sleeping (such as getting a snack, brushing teeth, listening to music) interferes with consolidation of information in memory.
How to Pass CA in FIRST ATTEMPT ?
HOW TO PASS CA IN FIRST ATTEMPT- DR N.K. AGRAWAL
Dr N.K. Agrawal gives students some tips on how to prepare for the CA examinations
AN OLD joke on passing CA examinations goes like this: There was a writing in a church that read, "Jesus never fails". A CA student added below that, "Then let him try the CA examination"!
Passing the CA exam is not as difficult as it is made out to be. Several students clear it in the first attempt and even secure ranks. Why, then, are others unable to crack it? The reasons are several.
Capabilities of the students
There is no CAT-like entrance test to join the course. The course costs less than school education. There are two streams of students joining the course one that joins after the intermediate or plus-two stage, and the other that joins after graduation. The stage at which one joins the course can be crucial. The inherent ability of a student can be an important factor. A bright student chooses the course by choice and not by chance. Such students take the PE I examination route.
Medium of instruction
A second major contributing factor is the medium of instruction. Those who study in regional-medium schools, face a lot of difficulty in comprehending the subject.
Exposure
A third factor is the exposure to the business world, terminologies, and so on. Students from rural and semi-urban areas face difficulty in understanding the subject due to inadequate exposure. Another drawback could be the lack of access to reading material, non-availability of textbooks, Internet facilities, so on. While these students are sincere, they may lack the right guidance.
Students can overcome the fear of the examination by following a regular and systematic study routine.
General study
Start preparing for the examination immediately on joining the course. Study regularly and conscientiously. It does not matter how many hours you study, but how much you understand. Qualitative study is important. In addition to the student journal, subscribe to the journal of the Institute. It helps to keep yourself updated. Keep track of the latest in all the subjects: accounting standards (new standards, revision of old ones, interpretations, etc.) auditing and assurance standards, amendments to company law and other laws, Finance Act and Income-Tax law. Contribute and subscribe to a good business newspaper. Essays on capital markets, tax matters and other subjects will be helpful.
Study material
Your study material is the most important. Supplement it with a good standard textbook. A good student does not require tuition. Tuitions certainly are helpful, but only when you have it in you to use them. For a professional, self-study and getting to the root of the subject is essential.
Attitude
Subjects such as law require repeated reading. Candidates often complain of not being able to remember the provisions/sections. Now, this is a matter of attitude. When one can remember film songs, sequences, dialogues, phone numbers, why not the section numbers? Students tend to read out of compulsion. Examinations are imposed on them. If it were not for examinations, would students have studied? Apply the attitude you have towards play to studies. The world will begin look different.
Strategies
Follow a strategy of study. Remember, you cannot study accounts independent of company law. Income-tax cannot be studied independent of accounting. Thus, these subjects are inter-related. You have to study all the subjects for the examination. Take, for example, the issue of shares by a company. Read provisions of company law from S. 55 onwards prospectus, contents, liabilities for misstatements, and so on till S.108. You would have grasped the legal requirements. Then work out problems in accounting on issue of shares at par, premium, discount, for consideration in other than cash, etc. Follow it up with audit of issue of share capital, resolutions to be passed, documents to verify, and so on.
Study the tax provisions for allowability of share issue expenses, etc. Thus, you would have covered the issue from all points of view. This may look cumbersome in the beginning, but once you get used to it, things become interesting. This way you will have covered a part of company law, a part of income-tax, part of auditing, as well as a part of accounting.
Group study
Group study can be helpful too. Form yourselves into groups of six. Thus six friends can cover six subjects. Rotate them among yourselves. Engage in group discussions. Subjects like tax, law, etc., can be tackled better this way. Use a marker to highlight the material items as and when you study it for the first time. When you read the second time, you can concentrate only on the highlighted part. Grammar is, of course, to be built in into the answer.
All subjects are important
One should realise that the candidate should pass in all subjects and secure 50 per cent in the aggregate to clear the examination. Scoring 90 per cent in one and 10 per cent in another, will lead you nowhere. Distribute time judiciously for all subjects.
Other activities
Each of us has hobbies. Spare some time for that. This will help you unwind. It increases productivity. Develop certain hobbies and pursue them. A light game, for instance, or a crossword puzzle. At the same time, know when to stop. Get your priorities right. A student should be physically fit, spiritually sound and mentally alert. Also, spare some time for fitness. You should be strong enough to withstand the stress and strain of hard work. Endurance is important.
Writing
Practise writing. What you read will prove futile if you cannot reproduce it on the D-day.
Eligibility tests
Eligibility tests are conducted by the ICAI to orient students for the exam. But students tend to circulate the question papers among themselves and write only those papers. Such a practice is not advisable. The ICAI requires the students to clear 10 papers to secure the eligibility but does not restrict them from writing more. A student can write as many papers as he wishes to. This will add to his or her confidence. The student should take the eligibility tests seriously. This will help you know your pitfalls.
The final charge
Generally, the pressure valve is turned on only after the candidate pays the examination fees. There is a lot anxiety, nervousness, and tension. If a candidate is well prepared, last minute blues can be avoided. The candidates should learn how to tackle each subject and perform accordingly. One should know which accounts need to be opened and how to reach the goal in the shortest possible route and quickly. Saying that you should pass 36 journal entries for amalgamation, 16 entries for issue of shares, etc., is unjustified. You should learn to play according to the wicket. Passing the CA examination should become a routine, much like other examinations. Passing in the first attempt should be the rule and not an exception.
By M V Kali Prasad at Hindu
By Dr N.K. agrawal
Notes:
Undertake mock tests-Try doing practical problems in examination conditions
Try practical problems (solved illustrations) without seeing solutions and then compare answers to evaluate your performance and take steps to remove shortcomings.
Note the important catch points which you think are important on a separate paper to revise at the final revision time before the exams.
Identify some problems which you want to practice on the last day before exam because it is not possible to revise all the problems on the last day
List out what you want to revise on the last day and make sure to revise them
For clarifications you may refer to Cost Accounting Text and problems by Dr N.K. Agrawal and study material of the Institute of Chartered Accountants of India.
General Guidelines while attempting the paper to get better results.
Read full question paper before attempting the answers.
Identify & attempt the question which in your opnion can be done comfortably as your first answer which should be your best attempt.. This will give you confidence and good impression to the examiner.
Divide your time for the questions as per the marks scheme say if the time allotted is 3 hours (i.e 180 minutes) for 100 marks. You need 5-10 minutes to read full question paper, 5-10 minutes to check the answer at the end when you have finished. So time available is say 170-160 minutes for the full paper. So for each mark you have only 1.70 to 1.60 minutes i.e. for 20 marks you have only 34 to 32 minutes. So plan your answers as per time schedule and take care to give each mark its due time. In case you are able to save time on some questions that can be used in other
