Bank Audit: Minimise bank audit risk by maintaining documentation

Bank Audit: Minimise bank audit risk by maintaining documentation: Train ur staffs to Identify NPAs: By CA Nitesh More

1) Our audit risk is minimized If:

a)    We are able to identify & recognize the NPAs properly,

b)    We maintain proper documentation of our audit.

Otherwise if subsequently, RBI inspector detect additional NPAs & on that basis , if RBI complain to ICAI, one may be in trouble.

2) TRAIN YOUR STAFFS TO IDENTIFY NPAs: Identification of the NPAs is one of the major Task in Bank Branch audit. If your article clerks & other staffs are able to identify the NPAs than you will be able to implement proper income recognition & provisioning norms as per RBI guidelines. So train your article clerk to indentify the NPAs.  

3) Non performing Assets : An asset, including a leased asset, becomes non performing when it ceases to generate income for the bank. A non performing asset (NPA) is a loan or an advance where;

i. Interest and/ or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan,

ii. The account remains ‘out of order’ as indicated at paragraph 5 below, in respect of an Overdraft/Cash Credit (OD/CC),

iii. The bill remains “overdue” at paragraph 6 below for a period of more than 90 days in the case of bills purchased and discounted,

iv. The instalment of principal or interest thereon remains overdue for two crop seasons for short duration crops,

v. The instalment of principal or interest thereon remains overdue for one crop season for long duration crops,

vi. The amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitization transaction undertaken in terms of guidelines onsecuritization dated February 1, 2006.

vii. In respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment.

4) In case of interest payments, banks should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter. In addition, an account may also be classified as NPA in terms of paragraph 4.2.4 of this Master Circular.

5) ‘Out of Order’ status:An account should be treated as 'out of order' if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as 'out of order'.

6)  ‘Overdue’ :Any amount due to the bank under any credit facility is ‘overdue’ if it is not paid on the due date fixed by the bank.

7)  INCOME RECOGNITION

7.1 Income Recognition Policy

7.1.1 The policy of income recognition has to be objective and based on the record of recovery. Internationally income from non-performing assets (NPA) is not recognised on accrual basis but is booked as income only when it is actually received. Therefore, the banks should not charge and take to income account interest on any NPA. This will apply to Government guaranteed accounts also.

7.1.3 Fees and commissions earned by the banks as a result of renegotiations or rescheduling of outstanding debts should be recognised on an accrual basis over the period of time covered by the renegotiated or rescheduled extension of credit.

7.2 Reversal of income

7.2.1 If any advance, including bills purchased and discounted, becomes NPA, the entire interest accrued and credited to income account in the past periods, should be reversed if the same is not realised. This will apply to Government guaranteed accounts also.

7.2.2 In respect of NPAs, fees, commission and similar income that have accrued should cease to accrue in the current period and should be reversed with respect to past periods, if uncollected.

 CA NITESH MORE

 Depreciation on Fixed Assets in Banks 

After reading Accounting policy of different banks it has been noted that they refer to "Guidelines of RBI" as regard to Depreciation on computers, but no such guidelines available. The Expert panel for Bank Audit of ICAI also failed to furnish any such guidelines so far.

Besides this some banks are providing depreciation on computers for full year irrespective of date of addition. For other assets some are applying rates of companies act, some are using Income Tax 1961 rates. Some are using 182 days, some are using 180 days and some are using 30th Sep as the period for providing half depreciation. When Each and every bank is having different set of policy as regard to Depreciation how it can be said that they are providing depreciation as per RBI Guidelines or their results are comparable.

Following are extracted from Accounting Policy (schedule-17) of the banks:

Central Bank of India 

·  Fixed Assets (other than computers which are depreciated on Straight Line Method) are depreciated under 'Written Down Value Method’ 

·  Depreciation on additions to assets, made upto 30^th September is provided for the full year and on additions made thereafter, is provided for the half year. No depreciation is provided on assets sold before 30^th  September and depreciation is provided for the half year for assets sold after 30^th  September.

State Bank of India

·        In respect of assets acquired during the year for domestic operations, depreciation is charged for half a year in respect of assets used for upto 180 days and for the full year in respect of assets used for more than 180 days, except depreciation on computers and software, which is charged for the full year irrespective of the period for which the asset was put to use.

Punjab & Sind Bank

·        Depreciation is provided for on Computers at 33.33%, on straight-line method; additions are depreciated for the full year irrespective of the date of addition as per RBI guidelines. 

·        Other Fixed assets on written down value method at the rates prescribed by the Income Tax Act 1961; additions effected before 30th September are depreciated for full year and additions effected thereafter are depreciated for half year. 

·        No depreciation is provided on assets sold/disposed of during the year.

State Bank of Hyderabad

·        In respect of assets acquired during the year, depreciation is charged for half year in respect of assets used for up to 182 days and for the full year in respectof assets used for more than 182 days, except depreciation on computers/ATMs and software, which is charged for the full year irrespective of the period for which the asset was put to use

·        The rates of depreciation and method of charging depreciation are as under : 

·        Computers/ATMs                              SLM                                         33.33% every year 

·        Computer software forming an integral part of hardware                     WDV                                        60%

·        Computer Software which does not form an integral part of hardware                                           100%, in the year of acquisition

Oriental Bank of commerce

·        Depreciation on assets (including revalued assets), is charged on the Written Down Value at the rates prescribed by the Income Tax Rules, 1962; except in respect of computers on which depreciation is provided on Straight Line Method @ 33.33% as per RBI guidelines

·        Depreciation is not provided in the year of sale/disposal of asset;

Bank of Baroda

·        Depreciation on Fixed Assets, other than on computers, is provided under the written down value basis at the rates prescribed in Schedule XIV to the Companies Act, 1956. 

·        Depreciation on computers is provided on Straight Line Method at the rate of 33.33% in line with theguidelines of Reserve Bank of India 

·        While depreciation on additions is provided for full year, no depreciation is provided in the year of sale/disposal.

Dena Bank

·        Depreciation is charged on Written Down Value (W.D.V.) method at the rates prescribed under the Income Tax Rules, 1962 except Computer hardware purchased before 01.04.2000 are depreciated @ 25% p.a. on W.D.V. method and purchased on or after 01.04.2000 are depreciated @ 33.33% on Straight Line Method.

United Bank of India

·        Software are capitalized with computers

·        Depreciation on assets other than computers, ATMs and Software is provided for under written down value method, in the manner and as per the rates prescribed under Schedule XIV to the Companies Act, 1956. The rate is rounded off to next absolute number. Depreciation on the revalued portion of the assets is adjusted from Revaluation Reserve. 

·        Depreciation on computers, Automatic Teller Mahchine (ATM) and software are provided on straight-line method @ 33.33% on pro-rata basis from the date of acquisition as per RBI guidelines.

Canara Bank

·        Fixed Assets excluding Computers are depreciated under Written Down Value Method at the rates determined by the management on the basis of estimated useful life of the respective assets. As per theguidelines of Reserve Bank of India, depreciation on Computers is charged at 33.33% on Straight-Line Method. 

·        Depreciation on additions to fixed/leased assets is charged for the full year irrespective of the date of acquisition.  No depreciation is provided in the year of sale/disposal.

What is changed from CA, 56 to CA, 13

What is changed from CA, 56 to CA, 13... An observation

CA, 56 was like girlfriend... We knew since we born(started working) a liberal (act) n very good friend... Hardly getting serious about misbehavior (non compliance) always friendly n many tried and tested formula (drafts) were available in market to fulfill wish(compliance)...

CA,13 is like same girlfriend became wife... Now same action will draw different n strict reaction (huge penalty)
tired and not tested formula..
It thinks that u (company) is always cheating...
though we know the subject matter since years... Its ever changing and infinite rules that will make life more miserable

N best of all... Though change was inevitable and known since years but transformation period is hardly a 4-5 days
����

Companies Act-Rules - Article on NPA

MCA notifies rules for additional chapters

MCA vide its notification dated 28^th & 31^st March 2014 issued rules for additional 4 chapters under the Companies Act 2013. Till now the rules have issued for 14 chapters

New rules issued are :

· Chapter XXVI - Nidhi Rules 2014

· Chapter XXIX - Companies (Adjudication of Penalties ) Rules 2014

· Chapter XXIX - Companies (Miscellaneous ) Rules 2014

· Chapter V - The Companies (Acceptance of Deposits) Rules, 2014.

· Chapter X - The Companies (Audit and Auditors) Rules, 2014.

Please take note that rules for Chapter II has been re-issued on 30th March 2014

 

ARTICLE ON NPA PUBLISHED IN BUSINESS TODAY  

Extension of date for filing Audit Report in form 704 for 2012-13 by developers

Extension of date for filing Audit Report in form 704 for 2012-13 by developers.

Trade Circular 10T dated 29/3/2014

31st March 2014 important date to remember

31st March 2014 important date for following

1. Last date of payment of advance income tax for Financial Year 2013-14.

2.Submission of income tax and wealth tax for the financial year 2012-13.

3. Submission of revised return of income for financial year 2011-12, if required.

4.Payment of Income tax and wealth tax for the undisclosed income and wealth for FY 2006 07 to 2011 12, if return not filed.

5.Payment of due TDS on interest and other payments

6.Phyiscal Stock taking.

7.Cash balance tally.

8.Minimum balance in the asset where income is tax free to minimise disallowance under section 14A of the Income Tax Act.

9.Investment under section 80 C. 80 and others.

Company Identification Number (CIN) Mandatory

CIN is mandatory on company documents such as letter heads, invoices etc.:

Section 12(3)(c) of CA 2013, which will be effective from 1.4.2014, provides that every company shall get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications. Pl ensure compliance.

39 new forms notified effective from 14/04/2014.

39 new forms notified effective from 14/04/2014.

1.       INC-1 Application for reservation of name – old form  1A

2.       INC-2 OPC- Application for Incorporation - New form

3.       INC-3 OPC- Nominee consent form - New form

4.       INC-4 OPC- Change in Member/Nominee - New form

5.       INC-5 OPC- Intimation of cessation - New form

6.       INC-6 OPC- Application for Conversion - New form

7.       INC-7 Incorporation of Co. (Other than OPC) 1

8.       INC-18 Application to Regional director for conversion of section 8 co.

into any other kind of co. - New form

9.       INC-20 Intimation to Registrar of revocation/surrender of license issued u/s 8  - New form

10.   INC.21 Application for commencement of business old form  19, 20

11.   INC-22 Notice for situation or change of situation of registered office old form 18

12.   INC-23 Application to Regional director for approval to shift the registered office from one state to another state or from jurisdiction of one registrar to another within the state - old form 1AD,24AAA

13.   INC-24 Application for change of name old form -  1B

14.   INC-27 Conversion form Pvt. To public or vice-versa old forms -  1B, 62

15.   INC-28 Notice of order of the Court or Tribunal or any other competent authority - old form 21

16.   PAS-3 Return of allotment - old form 2

17.   SH-7 Notice to Registrar for alteration of share capital - old form 5

18.   SH-8 letter of offer - New form

19.   SH-11 Return in respect of buy back of securities - old form 4C

20.   CHG-1 Application for registration of creation or modification of charge (other than debentures) - old form 8

21.   CHG.4 Particulars of satisfaction of charge - old form 17

22.   CHG-6 Notice of appointment or cessation of receiver or manager - old form 15

23.   CHG-9 Application for registration of creation or modification of charge in case of debentures - old form 10

24.   MGT-14 Filing of Resolutions and agreements to the Registrar under section 117 - old form 23

25.   DIR-3 Application for allotment of Director Identification Number - old form  DIN 1

26.   DIR-5 Intimation of change in particulars of Director to be given to the Central Government  - old form DIN 4

27.   DIR-7 Notice of resignation of a director to the Registrar - NEW FORM

28.   DIR-8 Particulars of appointment of directors and the key managerial personnel and the changes among them - Form 32, 32AD

29.   MR-1 Return of appointment of managing director or whole time director or manager - Form 25C

30.   MR-2 Form of application to the Central Government for approval of appointment or reappointment and remuneration or increase in remuneration or waiver for excess or over payment to managing director or whole time director or manager and commission or remuneration to directors - old form 25A

31.   URC-1 Application by a company for registration under section 366 - Old Form 37, 39

32.   FC-1 Information to be filed by foreign company - old form  44

33.   FC.2 Return of alteration in the documents filed for registration by foreign company - old form 49, 52

34.   FC.3 List of all principal places of business in India established by foreign company - old form 52

35.   FC.4 Annual Return - old form  PTII

36.   ADJ Memorandum of Appeal New form  - new form

37.   MSC-1 Application to ROC for obtaining the status of dormant company - new form

38.   MSC-3 Return of dormant companies -  New form

39.   MSC-4 Application for seeking status of active company - new form

MCA notifies Rules under Companies Act, 2013

March 29, 2014

LIST OF RULES UNDER COMPANIES ACT, 2013

1.	Companies (Specification of definitions details) Rules, 2014.
2.	Companies (Incorporation) Rules, 2014.
3.	Companies (Prospectus and Allotment of Securities) Rules, 2014.
4.	Companies (Share Capital and Debentures) Rules, 2014.
5.	Companies (Registration of Charges) Rules, 2014.
6.	Companies (Management and Administration) Rules, 2014.
7.	Companies (Declaration and Payment of Dividend) Rules, 2014.
8.	Companies (Accounts) Rules, 2014.
9.	Companies (Appointment and Qualification of Directors) Rules, 2014.
10.	Companies (Meetings of Board and its Powers) Rules, 2014.
11.	Companies 1st (Removal of Difficulties) Order, 2014.
12.	Companies 2nd (Removal of Difficulties) Order, 2014.
13.	Amendment in schedule II

Companies Act Rules notified

Companies Act Rules notified.

http://www.mca.gov.in/MinistryV2/companiesact.html

MCA - 167 sections

For professionals -MCA is notifying 167 sections, before 31st march rules  for these sections they will notify

Tentative Checklist for immediate actions.

Resolutions to be proposed at the ensuing AGM

1)      Increase in borrowing limit and creation of charge - S/180 (I) (c) & 180 (I) (a)

2)      Accepting Public Deposits - S/73 & 76

3)      Change/ Alteration in AOA –Adopt Table F

4)      Invt. in other body Corporates - S/186

5)      Appointment of Branch Auditors

6)      Related Party transactions, if any - S/188

7)      Appointment of Auditors – Within 3yrs of notification S/139 (2)

8)      Issue of Securities on Pvt. Placement - S/42

9)      Appt of CFO & other KMPs - Board approval as 203

10)   Fixing Remuneration of KMPS - Board approval as 203

11)   Appt. of independent directors - S/149(10) to (12)

Actions immediately to be taken on  notification of the Act

1)      Identify related parties – To be notified to accounts department

2)      Print new Business letters, bills etc with CIN no. – s/12(3) (c)

3)      Devise CSR policy & spending – s/135

4)      Adopt new Whistle Blower Policy – Vigil mechanism – 177(10)

5)      File Return on Public Deposits within 3 months – 74(1)

6)      Return on change in Top 10 shareholders – within 15 days -  S/93

7)      To obtain positive consent for receiving documents by email (S/101)

8)      Obtain certificate of Independence from Directors S/149 (7)

9)   Terms of reference of Audit committee –Additional items to be placed before audit committee at each meeting - S/177 (4)

10)   Nomination & Remuneration policy to be approved by Board – S/178 (3) & (2)

11)   Terms of reference of Stakeholder committee – Additional items to be placed before the Committee - S/178 (6)

12)   Devise Code for independent Directors – Schedule IV

13)   Observe Secretarial standards for Board & General meetings S/118 (10)

14)   Reconstitute Board (within 1year)– for (i) appl. of ID’s for 5yrs (ii) not liable to retire by rotation –S/149 (10) to (13)

15)   Maintain Register of KMPs - S/170

16)   Can pay sitting fees upto Rs. 1lakh S/197 (5)

17)   Check the compliance required by unlisted Public companies (if paid-up/networth exceed prescribed limits)

Additional compliances

1)      To attend at least 1 Board Meeting in 12 months or vacate office S/167 (1) (b)

2)      Change in top 10 shareholders S/93

3)      File Board Resolutions passed  U/S 179

4)      File Report on AGM – S/121

5)      Postal Ballot Applicable to Pvt. Cos – S/110

6)      Directors Responsibility Statement – Clause  (e) & (f) of S/134 (5) have laid down adequate “internal financial controls” (defined in the Act) – To devise policy on internal financial controls.

7)      Auditors – Appoint for 5yrs – Existing limit to be considered S/139 (2) – Ratification every year

8)      To inform auditor & ROC about appointment within 15 days – S/139

9)      Relative of auditor not to hold shares in excess of Rs. 1lakh S/141

MCA Notifies 183 New Sections of Companies Act,2013

notifies 183 new sections of Companies Act 2013 in Phase IV

The Ministry of Corporate Affairs has notified 183 new sections of the Companies Act 2013 and some sub- sections of 13 sections which were already notified by notification dated 12th September 2013 and remaining schedule, in the fourth phase today, by way of notification dated 26th March 2014. These sections have been notified to come into effect from 1st April 2014. With the notification of these sections, now a total of 283 sections of the new Act stand notified.

With the notification of aforesaid sections, it can be assumed that relevant rules will also be notified shorlty as most of them are dependent on rules.

The sections remaining to be notified are related to National Financial Reporting Authority, Investor and Education Protection Fund, Compromise and arrangement, oppression and mismanagement, winding up, sick companies ,special courts, national company law tribunal. Majority of these sections are not notified due to pending case in Supreme court with respect to the National Company Law Tribunal.

Status as on date:

Total Section 470 ;

Total Sections notified till date 283

Nos. of Section pending notification 187

The list of sections notified under Phase III along with title is given below:

Chapter 1 - Preliminary

• Section 2 – Definitions
• Clause (2) - Accounting Standards
• Clause (7) - Auditing Standards
• Clause (13) - Books of Accounts
• Clause (31) - Deposits
• Clause (41) - Financial year
• Clause (42) - Foreign company
• Clause (47) - Independent Director
• Clause (48) - Indian Depository Receipt
• Clause (62) - One Person Company
• Clause (83) - Serious Fraud Investigation Office
• Clause (85) - Small Company
Explanation (d) of clause (87)

 

MCA issues clarification with regard to section 180 of the Companies Act, 2013.

MCA vide circular no 04/2014 dated 25th March 2014 has clarified that the resolution passed under section 293 (Restrictions on powers of Board ) of the Companies Act, 1956 prior to 12.09.2013 with reference to borrowings (subject to the limits prescribed) and / or creation of security on assets of the company will be regarded as sufficient compliance of the requirements of section 180 (Restrictions on powers of Board) of the Companies Act, 2013 for a period of one year from the date of notification of section 180 of the Act.

The clarification has been issued since Ministry has received many representations regarding various difficulties arising out of implementation of section 180 of the Companies Act, 2013 with reference to borrowings and/or creation of security, based on the basis of ordinary resolution.

ICAI has made amendments to the Auditors Report format

ICAI has made amendments to the Auditors Report format as under

- Announcement 1 : Manner of Reporting on Section 227(3)(bb) of the
Companies Act, 1956. <http://220.227.161.86/32148aasb22246-1.pdf>

- Announcement 2 : Reference to the Accounting Standards Applicable to
the Companies in the Auditor's Report and Limited Review Reports and
various Engagement Standards.<http://220.227.161.86/32149aasb22246-2.pdf>

- Announcement 3 : Amendment to the "Auditor's Responsibility" Paragraph
Included in the Independent Auditor's
Report.<http://220.227.161.86/32150aasb22246-3.pdf>

- Announcement 4 : Use of the Term "Profit and Loss Account" or
"Statement of Profit and Loss" in the Statutory Audit Reports of
Companies.<http://220.227.161.86/32151aasb22246-4.pdf>

- Announcement 5 : Manner of Reporting In Respect of Such Clauses of the
Companies (Auditor's Report) Order, 2003 Which Are Not Applicable to the
Auditee Company. <http://220.227.161.86/32152aasb22246-5.pdf>

Banks to remain open on weekend to facilitate tax collection

NEW DELHI: Bank branches will remain open for full day on March 29, 30 and 31 to facilitate tax collection.

While March 29 is a Saturday, March 30 is Sunday and March 31 is the last year of financial year and is a public holiday in some parts of the country.

CBEC to keep its offices open on last three days of this Month

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

Subject:  Opening of offices during the week beginning 24th March, 2014 – reg.As you are aware, the bulk of the revenue is received at the end of the month.  However, last week of March 2014 does not have full working days. 29^th March is a Saturday, 30^th March is a Sunday and 31^st March is a public holiday in some parts of the country.  Incidentally, this week also happens to be the last week of the financial year.

2.         The Chairperson, CBEC has also requested the Secretary Financial Services to issue instructions to have the banks open for full day on 29^th, 30^th and 31^st March 2014 so that the efforts made for collections of revenue are reflected appropriately.

3.         I am, therefore, directed to request you to immediately issue trade notices for the information of the trade and also keep your offices, as a special measure, opened on 29^th, 30^th & 31^st March, 2014.  You may also contact the local banks to ensure that the assesses can make their payments electronically and these are uploaded to reflect the actual revenue collections for the financial year.

Yours faithfully,

(Surendra Singh)

Under Secretary to the Govt. of India

ICAI exam site

Check on icai exam site der is a new window called correction window opened wer details of ur online form r der.. confirm dat they r correct. Dis correction window is open from 19th to 25 mar only. Check it n confirm wit icai dat its correct..pass d mssge to your friends as well...

Amendment to CE and Cenvat Rules

Amendment to Central Excise Rules/CENVAT Credit Rules

Central Govt notifies Central Excise (Second Amendment) Rules 2014 and CENVAT Credit (Fifth Amendment) Rules 2014 w.e.f. date of publication in Official Gazette; Empowers Chief Commissioner of Central Excise to impose restrictions including suspension of registration in case of first / second stage dealers, against duty evasion / default in duty payment or misutilisation of CENVAT Credit;

 

Further, notifies procedure to be followed in terms of amended Rules 12CCC of Central Excise Rules and 12AAA of CENVAT Credit Rules; Accordingly, Chief Commissioner shall afford opportunity of being heard to delinquent assessee before issuing order against proposal to impose restriction; Rescinds earlier Notification No. 5/2012-CE (N.T), clarifying that proposals pending before authorised officer of CBEC / DGCEI shall be transferred to Chief Commissioner : Finance Ministry Notifications.

Bank audit allotment

FYI - Till date as per  info following banks allotment finalised: Please update this list by your  comments:
PNB
UCO
BOI
BOB.
Dena Bank
Allahabad Bank
IOB
SBI
CBI

Compliances of Service Tax in Banking Sector

Dear Members,
As you may be aware Service tax on Banking and other financial services was imposed w.e.f.16-07-2001. The taxation of services has also undergone a paradigm shift from positive list to negative list in the year 2012. Post implementation of taxation of services based on negative list, service tax compliance has now become an integral part of the banking Sector. Being auditors, it's our responsibility to ensure that provisions of a particular law are duly complied with. While conducting an audit it sometimes becomes difficult to look into all the aspects of various laws. For example, Service Tax compliance while conducting an audit may pose to be a bit difficult area.

Indirect Taxes Committee has taken an initiative in this respect in order to help the auditors in complying with service tax law. It gives me immense pleasure to introduce you to the newly launched publication on "Compliances of Service Tax in Banking Sector" which provides us with a detailed Questionnaire for Service Tax Audit of Banks, answering which will ensure compliance with various service tax regulations. In addition to questionnaire there are annexure(s) wherein information can be asked for from the banks and appendix which help as ready references of law while conducting an audit.

You can download the entire booklet from Knowledge Portal of ICAI, which is available on the following link

http://www.icaiknowledgegateway.org/media/k2/attachments/Final_PDF_Filepdf13.03.2014.lnk_1.pdf

Hope the same will assist you in your professional endeavors

Website:  http://www.icai.org for help please visit:http://help.icai.org 

S. 56(2)(vii) does not apply to bonus & rights shares offered

Sudhir Menon HUF vs. ACIT (ITAT Mumbai)
March 17th, 2014
S. 56(2)(vii) does not apply to bonus & rights shares offered on a proportionate basis even if the offer price is less than the FMV of the shares

Date of advance tax payment extended

Date of payment of final installment of advance tax if income tax extended to 18th March 2014

PF Rate Increased

Government of India  has declared a rate of interest of 8.75 per cent on deposits in Employees’ Provident Fund Scheme for the Financial Year 2013-14

New ITR utilities

New ITR utilities using latest JAVA technology is launched. Visit the Itax efiling website for details.

Supreme Court on ST on Chit Fund

Chit funds business constituted 'transactions in money' and isn't liable to service-tax; SC dismisses SLP

January 28, 2014[2014] 42 taxmann.com 52 (SC)/[2014] 43 GST 524 (SC)

Service Tax : SC dismisses SLP against judgment of Delhi High Court whereby Chit fund business (including business chit funds), which are 'transactions in money' were held not liable to service tax and Entry 8 of Notification No. 26/2012-ST, providing from partial exemption/abatement in relation thereto, was quashed  

Circular on Sec 234E

CBDT CIRCULAR ON TDS RETURNS OF GOVT DEDUCTORS

THE Central Board of Direct Taxes (CBDT) has received several petitions from deductors/collectors, being an office of the Government ('Government deductors'), regarding delay in filing of TDS/TCS statements due to late furnishing of the Book Identification Number (BIN) by the Principal Accounts Officers (PAO) / District Treasury Office (DTO) / Cheque Drawing and Disbursing Office (CDDO). This has resulted in consequential levy of fees under section 234E of the Income-Tax Act, 1961.

Board has decided to ex-post facto, extend the due date of filing of the TDS/TCS statement prescribed under sub- section (3) of section 200 /proviso to sub-section (3) of section 206C of the Act read with rule 31A/31AA of the Income-tax Rules, 1962.

However Board has clarified that any fee under section 234E of the Act already paid by a Government deductor shall not be refunded. Further this extension is only a one-time exception in view of the special circumstances.

Board states that timely filing of TDS/TCS statements is essential to ensure timely reconciliation of Government accounts and for providing tax credit to the assessees while processing their Income-tax Returns.

Board suggests that since the Government deductor and the associated PAO/ DTO/ CDDO belong to the same administrative setup that regulates the clearance of expenditure, the deductors/collectors may be advised to co-ordinate with the respective PAO/DTO/CDDO to ensure timely receipt of BIN/filing of TDS/TCS statements.

This Circular is addressed to all Chief Commissioners and Directors General of Income Tax. They are supposed to inform all the officers for compliance.

CBDT Circular No. 7/2014 in F. No. 275/27/2013-IT(B), Dated: March 04 2014-PFA

New CBDT Chairman

R.K. Tewari appointed as CBDT Chairman
Date : March 03 2014
R.K. Tewari appointed as CBDT Chairman.

The Government of India has appointed Mr. R K Tewari as new Chairperson of Central Board of Direct Taxes (CBDT). Mr Tewari is a 1976-batch Indian Revenue Service officer. Before his elevation as Chairman, he was posted as the Member (Legislation & Computerization) at CBDT.

Pre 2005 currency notes

RBI extends last date of exchanging Pre 2005 currency notes to 1 January 2015.
http://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/IEPR1735RE0314.pdf

ICAI to have TV channel

ICAI have signed an MOU today with MHRD for launching a new TV channel -ICAI TV on 15th August 2014.

Message of CBDT Chief

Be Humane With Tax Payers And Avoid Bad Tendencies: CBDT Chief

March 1st, 2014

The CBDT Chairperson, Dr. Sudha Sharma, has, on the occasion of her retirement, pointed out that her endeavour always has been to foster highest standards of ethics and morality and to guard against tendencies which could bring a bad name to the Department. She stated that upholding ethical values and human dignity have remained her guiding principles.

Dr. Sudha Sharma pointed out that as tax collectors, the department had a pivotal role to play and that there was a huge target of collection that had to be met.

The Chairperson also emphasized that the department had to adopt a transparent and humane approach and provide hassle-free service to honest taxpayers as part of the policy.

The Chairperson also listed out all the achievements of the department during her tenure. It may be recalled that Dr. Sudha Sharma has taken charge of the office with the promise that India Will Have The Best Tax Regime In The World.

We wish Dr. Sudha Sharma good luck in her new endeavors after retirement.

Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant

CE Registration & Quarterly Return

Note on Amendment to Application for Central Excise Registration & Quarterly Return for Importers

CBEC amends Annexure-1 in Form A-1 (Application for Central Excise Registration); Includes 'importer' under Part I (Identification of business requiring registration) and also as a separate category under Serial No. 3; Further, notifies quarterly return form for registered importers w.e.f April 1, 2014; Amends Notification No. 35/2001 CE (N.T) dated June 26, 2001 and supercedes Notification No. 73/2003 CE(N.T) dated September 15, 2003: Finance Ministry Notifications.

PFA

Fin Min notifies Central Excise (Amendment) Rules, 2014 and CENVAT Credit (Fourth Amendment) Rules, 2014 w.e.f April 1, 2014; Requires importers issuing invoices eligible for CENVAT credit to mandatorily register with Central Excise Authorities; Such registered importers to submit quarterly return electronically within fifteen days from close of each quarter of a year to the Superintendent of Central Excise; Amends Rules 9(1) of Central Excise Rules, 2002 and Rule 9(8) of CENVAT Credit Rules, 2004 : Finance Ministry Notifications 

---

Note: 

Finance Ministry vide. Notification No. 17 / 18 of 2013-C.E.(N.T.) included importer as 'first stage dealer', requiring Central Excise registration which were to come into effect from March 1, 2014. However, the said notifications were rescinded by Finance Ministry vide. Notification No. 5 / 6 of 2014 - C.E. (N.T.).

By: CA VMV S RAO

2014 Guidance Note on Audit of Banks released by Auditing and Assurance Standards Board.

The Auditing and Assurance Standards Board of the Institute of Chartered Accountants of India has today issued Guidance Note on Audit of Banks 2014 edition. For the benefit of members, complete text of the Guidance Note along with the accompanying appendices etc. can be downloaded at:

Guidance Note on Audit of Banks (2014 Edition)

Contents of accompanying CD

Please note that the soft copy of the accompanying CD as uploaded on the website contains only list and link of Master and other relevant Circulars of RBI. However, the CD that will come with the book will contain complete text of Master Circulars as well as General Circulars.

Secretary, AASB

ICAI.ORG

Karnataka HC gives interim stay on Sec 234E demand recovery

Karnataka HC gives interim stay on Sec 234E demand recovery

 

High court's relief for employers, businessmen from paying penal fees for not filing TDS

 In a big relief for several employers and businessmen, the Karnataka high court has stayed for four weeks the operation of series of demand notices sent by the Income Tax department asking them to pay penal fees in relation to non-filing of TDS statements. 

Justice Jawad Rahim passed an interim order to this affect while asking Income Tax department and ministry of finance to file their replies. 

Several employers as well as assessees under TAN have moved the court challenging the penal provisions under newly inserted section 234E of the Income Tax Act , 1961 connected to filing of TDS returns by employers. 

"The incorporation of Section 234E to the IT Act with effect from July 1,2012 has at one stroke ,deleted all the favorable and beneficial sections- an appeal under section 246(1)(l)(ii) of the Act and also waiver of penalty under section 273B itself .Now it is mandatory and compulsory on the deductees to pay fee at Rs.200 per day till the date of filing/submitting the TDS statement to TDS reconciliation analysis and correction enabling system, Ghaziabad. Failing which, the deductor/s will be totally debarred from filing their TDS statement itself and as a further consequence , they will not be competent to issue Form No.16 or 16A as stipulated under section203 of the IT Act to the dedctee/s." the petitioners have stated. 

"If they continue defaulting section 234E of the Act, then they would be further subjected rigorous penal provisions of having to shell out penalty at Rs.100 per day, as set out in Section 272A(2)(g), in case recipient/deductee claims credit of the TDS in his return of income tax" the petitioners have claimed. 

The petitioners have stated that levy of fee is against the scheme of the Income Tax Act and the word 'fee' is an alien word by itself vis-a-vis the Income Tax Act. 

Regards,

VMV S RAO                                                                                                            26/02/2014                                                                                                                           Source: Times of India

Amendment to CENVAT Credit Rules

Central Govt Notifies

CENVAT Credit (Third Amendment) Rules, 2014 w.e.f April 1, 2014

Amends Rule 7 pertaining to credit distribution by input service distributor; Accordingly, service tax credit attributable to service used by one or more units exclusively engaged in exempted goods manufacture / exempted service rendition, shall be barred from distribution; Further, credit of service used wholly by a unit shall be distributed only to that unit; Pro rata distribution of service tax credit shall be based on turnover of units using said service during relevant period to total turnover of all its units operational in current year, during said relevant period; As per new Explanation 3, "relevant period" means (i) preceding financial year, where assessee's turnover available for that year, or (ii) where such details unavailable for some / all units , last quarter for which turnover details of all units available (previous to month / quarter for which credit distributed) : Finance Ministry Notification

WIRC OFFICE BEARERS FOR 2014-15

WIRC OFFICE BEARERS FOR 2014-15

CA ANIL BHANDARI - CHAIRMAN

CA. JULFESH SHAH - VICE CHAIRMAN

CA. SHRUTI SHAH - SECRETARY

CA. GIRISH KULKARNI - TREASURER

Case Law on Gold to Daughter

IN THE INCOME TAX APP ELLATE TRIBUNAL,

KOLKATA 'B' BENCH, KOLKATA

Coram : Shri Abraham P. George (Accountant Member)

and Shri George Mathan (Judicial Member)

I.T .A. No. : 1400/Kol./ 2011

Assessment year : 2007-2008

Shri Harish Kumar Manikant Goda Vs Income Tax Officer

Appearances by:

Shri Subash Agarwal, Advocate, for the assessee

Shri P.B. Pramanick, JCIT, Sr. D.R, for the Department

Date of concluding the hearing : February 14, 2014

Date of pronouncing the order : February 19, 2014

ORDER

Per Abraham P. Geroge :

1. In this appeal, assessee assails an addition of Rs.3,62,100/- which was scaled down by ld. Commissioner of Income Tax (Appeals)-XIX, Kolkata to Rs.2,68,150/-.

2. Facts apropos are that assessee is an individual , had filed his return for the impugned assessment year declaring income of Rs.1,69,635/-. It seems that return was originally subject only to a processing under section 143(1) of the Act. The assessment was reopened under section 147 of the Act. Reason for reopening is not available in the assessment order. During the course of reassessment proceedings, Assessing Officer based on certain documents came to a finding that jewellery worth Rs.5.5 lakhs was handed over by the assessee to the in-laws of his daughter. As per Assessing Officer, said jewellery was not shown in assessee's balance- sheet. No return of wealth was filed by the assessee. According to the Assessing Officer, the maximum gold jewellery that can be possessed by a married man, who has not filed any wealth-tax return, can be only 200 grams. Taking per gram rate of Rs.939.5, Assessing Officer reached a figure of Rs.1,87,900/-, as the maximum value of gold jewellery that can be possessed by the assessee. The difference of Rs.3,62,100/- was added as unaccounted income.

3. In its appeal before ld. CIT(A ppeals), argument of the assessee was that only 400 grams of jewellery was handed over to the in-laws of his daughter at the time of marriage and on various occasions. As per the assessee, such jewellery was purchased over a large number of years out of savings. Assessee further submitted that there were regular withdrawals made by him from his accounts and, therefore, surplus money was available with him for purchasing small quantities of gold ornaments over a long period of time. As per the assessee, the total amount spent by him for the marriage of his daughter was Rs.12.32 lakhs and the jewellery given to the in-laws of his daughter was only 400 grams.

4. Ld. CIT(Appeals) partly accepted the claim of assessee. According to him, withdrawals were made by the assessee over a number of years from his accounts and, therefore, the cl aim that some of jewellery was purchased in the earlier years out of savings, could not be brushed aside.

He was of the opinion that credit to the extent of 300 grams of jewellery coul d be allowed to the assessee. He, therefore, held that at the rate of Rs.939.5 per gram the maximum value of jewellery that could be held by the assessee was only Rs.2,81,850/-. He, therefore, directed the Assessing Officer to restrict the addition to Rs.2,68,150/-.

5. Now before us, l d. A.R. strongly assailing the order of ld. CIT(Appeals) submitted that 400 grams of jewellery was not a huge holding and not something which was not achievable for a common man.

According to him, reopening of assessment was based on complaint given by the son-in-law of the assessee who was trying for a divorce from assessee's daughter. As per l d. A.R. when withdrawals were found sufficient for more than 400 grams, ld. CIT(A ppeals) erred in coming to a conclusion that assessee could at the best hold onl y 300 grams of jewellery.

6. Per contra, ld. D.R. supported the order of ld. CIT(Appeals).

7. We have heard the rival contentions and perused the material available on record. Ld. CIT(Appeals) has not disputed the claim of assessee that he was having drawings from his accounts in the earlier years. Admittedly assessee was having only 400 grams of jewellery, which was given by him to the in-laws of his daughter at the time of marriage.

Assessee who was regularl y filing return of income claimed that he had acquired such jewellery over a number of years. Since he was having a daughter to marry off, this is not an unbelievable version. Endeavour of every Indian is to accumulate some jewellery which can be used at the time of marriage of his/her daughter. At the best, assessee can only be considered as a doting father. It is not required for an assessee to file personal balance-sheet along with the return of income. Hence, the question of jewellery not appearing in the balance-sheet, in our opinion, is irrelevant. The reopening, as well as assessment, in our opinion, was an aftermath of family disputes between the daughter of the assesese and her husband. This is not a case where undisclosed income or unaccounted income could have been assessed. The addition made is deleted in full.

8. In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 19th day of February, 2014.

CBDT on Promotions

CBDT Order Promoting CsIT/ DsIT to Chief Commissioners of Income-tax

Vide Order No. 36 of 2014 dated 20.02.2014 the CBDT has promoted officers in the grade of Commissioner / Director of Income Tax to the grade of Chief Commissioner of Income Tax (CCIT) in the Pay Band of Rs. 67,000 – 79,000with immediate effect and actually from the date of assumption of charge of the post and until further orders. The CBDT has also directed the postings of the said promotees

CBDT Order Promoting Addl. CsIT/ DsIT to Commissioners of Income-tax

Vide Order No. 32 of 2014 dated 20.02.2014 the CBDT has promoted several officers in the grade of Additional Commissioner / Additional Director of Income Tax are hereby promoted to the grade of Commissioner of Income Tax (CIT) in the Pay Band 4 – Rs. 37,400-67,000 + Grade Pay of Rs. 10,000/- with immediate effect and actually from the date of assumption of charge of the post and until further orders