F ull Day W orkshop Capacity Buildingon ... -...

Baroda Branch of Western Indian Regional Council ofThe Institute of Chartered Accountants of India

NewsLetterThe Institute of Chartered Accountants of India(Setup by an Act of Parliament) VOL. X NOVEMBER 2011 l

SUCCESS

SAVE

EARTH

GREENGO

SAVE

SAVE

E RTHE RTHA

GREENGRE NEGOGO

Half Day

Seminar on

Service Tax

on

10.12.2011

INDEX

Full Day

Workshop

on

Capacity Building

on

26.11.2011

Full Day

Joint Seminar on

Charitable Truston

03.12.2011

Chairman Communication ............. 2

Forthcoming Events ...................... 3

Income Tax Updates ...................... 4

Lessons from Jamie Dimon ........... 4

Service Tax & Cenvat Tax Updates.. 6

RBI Credit Policy Oct 2011 ............ 6

RBI liberalises Forex Facilities for Individuals ................................... 6

Prior Environment Clearance (EC) – the Process ............................... 7

Photoflash .................................... 11

Baroda Branch of WIRC of The Institute of Chartered Accountants of India

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VOL. X NOVEMBER 2011l

CA. Rahul ParikhImmediate Past Chairman 98253 29995

CA. Rajesh ShahEx-officio 98250 41142

CA. Nayan KothariTreasurer 98244 33445

CA. Yash BhattMember 99243 88339

CA. Viral ShahMember 98243 62211

MANAGING COMMITTEE

CA. M J ParsiyaChairman 98251 10620

CA. Pradeep AgrawalVice Chairman 98985 60967

CA. Ashish ParikhSecretary 98252 31545

DISCLAIMER

The ICAI and the Baroda Branch of WIRC of ICAI is not in any way responsible for the result of any action taken on the basis of the advertisement published in the Newsletter. The members, however, may bear in mind the provisions of the Code of Ethics while responding to the advertisements.

The views and opinion expressed or implied in the Newsletter are those of the authors / contributors and do not necessarily reflect those of ICAI. Unsolicited articles and transparencies are sent at the owner's risk and the publisher accepts no liability for loss or damage. Material in this publication may not be reproduced, whether in part or in whole, without the consent of ICAI.

Members are requested to kindly send article / paper of professional interest to [email protected]. The same may be published in the newsletter subject to availability of space & editorial editing.

EDITORIAL BOARDCA. Manilal ParsiyaCA. Arpan DodiaCA. Vihang BakshiCA. Vishal DoshiCA. Narendra HindochaCA. Bimal BhattCA. Ashok ThakkarCA. Neena PatelCA. Rachana ParikhCA. Chandrika Parsiya

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIAICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi - 110002. Tel. : +91 (11) 39893989 E-mail : [email protected] Web : www.icai.org

WESTERN INDIA REGIONAL COUNCILICAI Bhawan, 27, Cuffe Parade, Post Box No. 6081, Colaba, Mumbai - 400 005. Tel. : +91 (22) 39893989 Email : [email protected] Web : www.wirc-icai.org

BARODA BRANCH OF WIRC OF ICAI“ICAI Bhawan”, Kalali-Tandalja Road, Atladra, Vadodara - 390 012. Telefax : +91 (265) 2681115 / 2680593 E-mail: [email protected] Web : www.baroda-icai.org

DECENTRALISED OFFICE - VADODARA“ICAI Bhawan”, Kalali-Tandalja Road, Atladra, Vadodara - 390 012. Tel. : +91 (265) 2681115 / 2680593 E-mail: [email protected] Web : www.baroda-icai.org

CA. Arpan DodiaMember 98983 83530

Dear Members,

Wish you all Happy and Prosperous New Year! We have been back in

our seats after a relaxed and recreational Diwali Vacation. Vacations

invigorate us and provide the much needed ammunition to work

passionately in year ahead for our professional and personal growth

as well as betterment of the society. Diwali vacations also bring the sacred hours of spiritual

and holy practices, which give us time to rethink our journey forward in the New Year with

new resolutions to achieve higher levels of excellence. We all have a huge responsibility on

our shoulders to blaze a trail for the future generations to follow.

Month of October have seen two very successful programs. Members got the rare

opportunity to learn various aspects of GVAT by experts of the subject through two half days’

Intensive Course on GVAT. ICAI National Convention on Corporate Laws was blessed with

presence of Shri S. N. Misra, Registrar of Companies, Ahmedabad. It was well attended and

members appreciated the valuable content delivered by eminent faculties including CA.

Nilesh Vikamsey, CCM, ICAI.

Several interesting programs have been lined up for next two months. Professional

opportunities in Indirect Taxes are now emerging as a lucrative area for Chartered

Accountants. To revisit the subject and to study the new development, Baroda Branch is

hosting ICAI National Convention on Indirect Taxes organised by Committee on Indirect

Taxes of the ICAI. With melting boundaries due to globalization and challenges posed by the

liberalization process taking place worldwide, a need is felt for strengthening the

competencies of CA firms and small practitioners. To focus on the issues and impediments

related to capacity building and highlighting the emerging issues of profession, Branch is

hosting a Full Day Workshop on Capacity Building to be organized by the Committee on

Capacity Building of the ICAI.

The prime object of every professional association is to regulate the profession and allow it

to thrive through healthy practices and strong communication channels in an environment

conducive for render excellent services to our cliental. To deliver our professional

commitments, we also need to interact with various Government Departments, institutions

and organisations. Baroda branch has always been actively strengthening ties between

different arms of professional bodies and Government bodies.

To strengthen the working of the Managing Committee of Baroda Branch, support of

members is needed in the form of constructive suggestions, opinions, and ideas for the

betterment of CA profession which can be carried to the Government agencies as well. As

the branch seeks members’ involvement from time to time, I urge the members to come

forward and enrich the branch efforts with their experienced inputs. I request you all to

devote a part of your valuable time to submit your queries and issues to be dealt with in

technical seminars and to express your concerns, grievances, difficulties, suggestions,

points etc. to be represented to the concerned department, institution or organisation.

I am confident that with your active involvement, CA profession and Baroda Branch will be

able to play a key role in bringing the change and attain the next level of excellence.

Sincerely Yours,

CA. Manilal Parsiya

Chairman's Communication


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VOL. X NOVEMBER 2011 l

FORTHCOMING EVENTS

ICAI National Convention on Indirect Taxes

Day & Date : Saturday, 19.11.2011Time : 09:00 a.m. to 05.30 p.m. (Breakfast at 08:30 a.m.)

Fees : `. 700 up to 17.11.2011 and ̀ . 800 thereafterVenue : Auditorium, ICAI Bhawan, Baroda

Topics Faculty

Inaugural Session

Chief Guest Shri Deepak Kumar,Chief Commissioner Excise & Custom, Baroda

1st Technical Session

Classification and Valuation of CA. Rajiv Luthia, MumbaiServices

Issues in CENVAT Credit - CA. S. S. Gupta, MumbaiService Tax & Excise

2nd Technical Session

Works Contract under CA. Sunil Gabhawalla,Service Tax and VAT Mumbai

Panel Discussion – CA. Anirudh Sonpal, Issues in Service Tax Panel Moderator

When we have expert faculties in the program to satisfy queries, members are requested to send their issues well in advance on the Service Tax Subject to CA. Anirudh Sonpal on his e-mail ID: [email protected]

CPE HRS06

Full Day Workshop on Capacity Building Measures for Practitioners and CA Firms

Day & Date : Saturday, 26.11.2011Time : 09:00 a.m. to 05.30 p.m.(Breakfast at 08:30 a.m.)


Topics Faculty


Capacity Building Measures - CA. Atul Bheda, CCM, ICAINetworking, Merger & De-Merger and Corporate Form of Practice

Emerging Opportunities for CA. Rahul Parikh,Chartered Accountants Baroda


Professional Opportunities in Shri Rakesh Narula,Valuation Areas Baroda

How to Maximize Shri Animesh Bhatt, Social Networking Baroda

CPE HRS06

Members can avail drop-box facility by dropping their cheques for registration in Drop Box at 2-B Ramkrishna Chambers, BPC Road, Baroda. Kindly mention your name, membership number and the program for which registration is sought, on the backside of the Cheque.

DROP BOX FACILITY FOR REGISTRATION

Not receiving Branch Updates via SMS? To start receiving updates

SMS ICAIBRD to 9220092200 today

Full Day Joint Seminar on Charitable Trust

Day & Date : Saturday, 03.12.2011Time : 09:00 a.m. to 05.30 p.m.(Breakfast at 08:30 a.m.)


Topics Faculty

Inaugural Session

Key Note Speaker Shri Amarish Upadhyay, Joint Charity Commissioner, Ahmedabad


Formation of Trust (Trust Deed / Shri Amarish Upadhyay, MOA, Rules & Regulations with Joint Charity Commissioner,C.C. under Gujarat Public AhmedabadTrust Act & Societies Registration Act). Statutory formalities before Charity Commissioner & Contribution Payable.

Registration under Income Tax CA. Samir Parikh, BarodaAct and Other Income Tax Provisions Applicable to Trust


Foreign Contribution CA. Brijesh Shah, AnandRegulation Act

Assessment Proceeding CA. Anil Sathe, Mumbaifor Charitable Trust

CPE HRS06

Half Day Seminar on Service Tax

Day & Date : Saturday, 10.12.2011Time : 3:00 pm to 6:30 pmFees : `. 300 up to 08.12.2011 and ̀ . 350 thereafterVenue : Conference Hall, ICAI Bhawan, Vadodara

Topics Faculty

E-filing of Returns & Online CA. Rashmin Vaja, Registration under Service Tax Ahmedabad

Controversies in Export and CA. Amish Khandhar,Import of Services, Renting of AhmedabadImmoveable Property Serviceand other area of Service Tax

CPE HRS03

Baroda Branch is Launching

Members' Directory 2011Very Soon


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INCOME TAX UPDATES : CA. Narendra HindochaCompiled by

1. New procedure for obtaining Permanent Account Number

Vide Notification dated 17-10-11, new forms and procedure are prescribed with effect from 1st November, 2011 for obtaining Permanent Account Number. Now there will be separate Form 49AA for obtaining PA No. in case of individuals who are not citizens as also firms / companies / associations registered outside India.

2. Tax Accounting Standards

Discussion paper on proposed Tax Accounting Standards is released in October 2011 inviting comments by 11th November, 2011. These Standards deal with Tax Accounting for Construction Contracts and Tax Accounting For Government Grants. The standards do not require maintaining separate set of books of accounts. However from prima facie reading it appears that they may substantially increase tax liability on account of tax liability also on capital subsidies as also not allowing the accounting of profits from construction contracts on completion basis and possibly disallowance of anticipated losses on completion of contracts.

3. Income from portfolio management scheme

Investors often engage portfolio managers to manage their investments. Normally lumpsum amount is given to portfolio manager who invests the amount in various securities. There is often frequent reshuffling of investments and there may be hundreds of transactions done by the Portfolio manager without involvement of the investor who has given power of attorney for such reshuffling. There are two possible views regarding the Head under which profit or loss on reshuffling of the investments would be assessed, one being that the profit is business profit and the other being that it is in the nature of capital gains. In case of Ara Trading and Investments Private Limited , Pune Bench of ITAT held that such profits are assessable as capital gains and not as profits of business. One of the many reasons for the conclusion was that the assessee was not directly involved in the individual transactions.

However bad news is decision of Mumbai Bench of ITAT in case of Shri Homi K.Bhabha V. Income Tax Officer in ITA No.3287/Mum/2009 : Asst.Year 2006-2007. Here the ITAT held that Management fees and Profit sharing fees paid to portfolio manager was not deductible in computing Capital gains. The arguments were that such fees ought to be considered as cost of acquisition or expenses in connection with transfer of shares; or diversion of income. None of the arguments are upheld. The reason is that the fees are not related to individual instances of acquisition or sale. Possibly fees can be structured in a manner which would become eligible to be considered cost of acquisition or transfer and then the fees would become allowable.

4. Disallowance under section 40(a)

In case there is failure to deduct tax at source, can you claim

that there should not be disallowance under section 40(a) on the ground that in another case, there was excess deduction of tax at source ? Logically yes but not as per law as held by ITAT in case of ITO vs Nisha Saraf

5. Accrual of liability

Decision of Delhi High Court in case of National Agricultural Coop. Marketing Federation V. CIT (338 ITR 36) appears to be one more decision to add to the confusion as to the point of time when liability accrues. In that case, the assessee, after having agreed to export groundnuts in 1980, was not able to do so on account of ban imposed by Government of India. Consequently, the other party to the contract invoked arbitration and obtained an award of damages amounting to US $ 4526000 along with interest at 11.25% from 1981 to the date of award in 1990. The award was made Rule of the High Court in India in 2000. It was held that deduction of neither the liabilitiiy for damage nor interest thereon was allowable until the year 2000 when the High Court made the Arbitration Award enforceable. This decision appears contrary to decision of Gujarat High Court in case of Navjivan Roller Flour and Pulse Mills Ltd.(315 ITR 190).

6. Replacement of parts of machinery

In another case which appears to add to the confusion, the Punjab and Haryana High Court in case of Punjab Alkalies and Chemicals Limited V. CIT (338 ITR 86) held that expenditure on replacement of membranes used to separate anode and cathode compartments in electrolyser represents capital expenditure. While this confusion was shocking enough, the High Court further held that one third of the expenditure would be revenue expenditure as the membrane has a life of three years. Now I have not replaced my car tyres for last 5 years. If I replace a tyre, possible argument could be made that 1/5th of the expenditure would be revenue expenditure and balance would be capital expenditure.

Lessons from Jamie Dimon, Chairman and Chief Executive Officer J P Morgan Chase & Co, USA Compiled by : CA. Bimal Bhatt

Acknowledging and Fixing Mistakes :

Principles:

(I) Senior Management should actively be on the lookout for problems :

At all times, senior management must be vigilant about errors made across the firm-we ask lots of questions, read customer complaints and make sure our own people are allowed to question our products and services. Generally, we all know how we would want to be treated and management should strive to treat our customers this way.

This particularly applies to long-standing practices. Just because something always has been done a certain way does not mean that it is still right.

(II) We need to acknowledge mistakes to ourselves :


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We cannot fix problems if we deny them. Acknowledging an error, however, isn’t enough. We need to figure out why it happened. Was it isolated or embedded in one of our systems? Was it the result of poor training of our people? Or, perhaps, in our desire to keep up with the competition, did we start doing things with which we were uncomfortable?

There is one error, in particular, from our recent past that I would like to highlight: the mistakes we made in servicing mortgaged held by U.S. military families. Our firm has a great history of honoring our military and veterans and the errors we made on these loans, including foreclosures, were a painful aberration from that track record. We deeply regret this, we have apologized to our military customers and their families and we have tried to rectify these mistakes as best we can. I want to reiterate that apology here and now.

We recently have announced a new program for the military and veteran community that includes many initiatives, from recruiting veterans into our firm, with our corporate partners, to providing enhanced products and services for the military and their families. As a company, we aim to serve members of our armed services with the respect and special benefits they deserve because we recognize the sacrifice and hardships they bear to protect our nation and our freedoms.

(III) We should acknowledge our mistakes to our customers :

Customers know that any company can make mistakes. What they hate is when the company denies it. If we make a mistake with a customer, we should acknowledge it and take the proper remedial action.

(IV) When we find mistakes, we should fully disclose them to those who should know :

When we make mistakes, we self-report them, as appropriate, to our regulators and to our Board of Directors as appropriate.

(V) We also take appropriate and timely action with those involved :

This can mean fixing an error-prone system, retaining our people, or modifying products or services. Unfortunately, this sometimes means firing an individual or replacing management, but only if such action is warranted due to bad behavior or real incompetence.

HOW WE VIEW THE AMERICAN ECONOMY :

Short Term and Long Term

Five years ago, very few people seemed to worry about outsized risk, black swans and fat tails. Today, people see a black swan with a fat tail behind every rock.

The U.S. economy was, is and will remain for the foreseeable future the mightiest economic machine on this planet. America is home to many of the best universities and companies in the world. It still is one of the greatest innovators. The volume and variation of our inventions created in America are extraordinary – from bold new technologies, like the Internet, to thousands of small, incremental improvements in processes and products that, in

aggregate, dramatically improve productivity. America also has an exceptional legal system (notwithstanding my many reservations about the class-action and tort system) and the best and deepest capital markets. The American people have a great work ethic, from farmers and factory workers to engineers and businessmen (even bankers and CEOs). And it still has the most entrepreneurial population on earth. American ingenuity is alive and well.

I mention all this because we need to put our current problems – and they are real – into proper context. Our problems may be daunting, but they also are resolvable. As a nation, we have overcome far worse challenges, from the Civil War to the Great Depression to World War II. Even amid our current challenges, we have begun to see clear signs of stability and growth returning to the capital markets and the U.S. economy. Almost everything is better than it was a year or two ago. It’s conceivable that we are at the beginning of a self-sustaining recovery that could power through many of the negatives we’ve been focusing on recently. Consumers are getting stronger, spending at levels similar to those two-and-a-half years ago, but, instead of spending more than their income, they now are saving 5% of their income. And consumer debt service costs, i.e., how much they spend of their income to service their debt, have returned to levels seen in the 1990s (due to debt repayment, charge-offs and debt forgiveness, lower interest rates, etc.).

Businesses, large and small, are getting stronger. Large companies have plenty of cash. Medium sized and small businesses are in better financial condition and are starting to borrow again. Global trade is growing – U.S. exports were up 16% in 2010. Job growth seems to have begun. Financial markets are wide open – and banks are lending more freely. U.S. businesses, large and small, are investing more than $2 trillion a year in capital expenditures and research and development. They have the ability to do more, and, at the end of the day, the growth in the economy ultimately is driven by increased capital investment.

The biggest negative that people point to is that home prices are continuing to decline, new home sales are at record lows and foreclosures are on the rise. Our data indicates that the rate of foreclosures will start to come down later this year. Approximately 30% of the homes in America do not have mortgages – and of those that do, approximately 90% of mortgage-holding homeowners are paying their loans on time. Housing affordability is at an all-time high. The U.S. population is growing at over 3 million a year, and those people eventually will need housing. Additionally, the fact that fewer homes are being built means that supply and demand will come into balance sooner than it otherwise would have. That said, housing prices likely will continue to go down modestly because of the continuous high levels of homes for sale. The ultimate recovery of the housing market and housing prices likely will follow job growth and a general recovery in the economy.

Yes, America still is facing headwinds and uncertainties – including abnormal monetary policy and looming fiscal deficits. And while we can’t really predict what the economy will do in the next year or two (though we think it is getting stronger), we are


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confident that the world’s greatest economy will regain its footing and grow over the ensuing decade.

But we must take serious action to ensure our success in the decades ahead

While our confidence in the next decade is high, for America to thrive after that, it soon must confront some of the serious issues facing it. We need to redouble our efforts to develop an immigration policy and a real, sustainable energy policy; protect our environment; improve our education and health systems; rebuild our infrastructure for the future; and find solutions for our still-unbalanced trade and capital flows.

The sooner we address these issues, the better – America does not have a divine right to success, and it can’t rely on wishful thinking and its great heritage alone to get the country where it needs to go. But I remain, perhaps naively, optimistic. As Winston Churchill once said, “You can always count on Americans to do the right thing – after they’ve tried everything else.”

(Source: Annual Report)

RBI Credit Policy Oct 2011Compiled By CA. Nayan Kothari

Key Highlights:

• Repo rate raised by 25bps to 8.5% with immediate effect.

• Reverse Repo and Marginal Standing Facility (MSF) stand automatically adjusted to 7.5% and 9.5% respectively.

• Baseline projection for GDP growth for 2011-12 revised downwards to 7.6%, from 8%.

• Savings bank deposits interest rates deregulated with immediate effect.

Policy Stance:

The RBI in its second quarter review of monetary policy has raised the repo rate by 25bps to 8.5%. Post the hike in repo rate, the reverse repo rate stands at 7.5% and the marginal standing facility rate at 9.5%. The rate hike by RBI has been in line with market expectations, given the sticky nature of inflation. With this hike, the RBI has raised the rates by a record 13 times in the current tightening cycle.

The policy has been declared in a complicated environment of high inflation and falling growth, the RBI has specifically highlighted its concerns with regard to moderation in investment demand. Some slowdown in GDP growth rates was expected in the wake of continuously rising interest rates to control inflation and anchor inflationary expectations, but the fall in investment demand can jeopardize the long term growth trajectory. Not only have the GDP rates shown declining trend for the last two quarters but are also expected to continue to remain weak for FY12. The RBI has revised downwards the FY12 GDP growth forecasts from 8% to 7.6%.

Though the RBI has raised rates to maintain an anti-inflationary focus, the overall tone of the RBI policy has been dovish. The RBI in the policy statement has signaled at an end to rate tightening cycle, with immediate indication of no rate hikes till December 2011. The worsening global and domestic investment environment has been one of the major factors behind RBI signaling a wait and watch policy for the coming quarter.

SERVICE TAX AND CENVAT TAX UPDATE Compiled By CA. Anirudh Sonpal

I. EXTENSION IN DUE DATE OF FILING RETURN

Order No.1/2011-Service Tax dated 20-10-2011 has

extended the date of submission of half yearly return for the

period April 2011-September 2011 from 25-10-2011 to 26-

12-2011.

II. IMPORT OF SERVICES

Instruction F. No. 276/8/2009-CX8A dated 28-9-2011 has

set to rest the controversy regarding effective date for levy of

service tax on import of services. The instruction has

clarified that service tax will be applicable with effect from

18-4-2006 on taxable services provided by a non-resident or

a person located outside India to a recipient in India.

III. EXEMPTION OF RESEARCH & DEVELOPMENT CESS

Notification 46/2011 dated 19-9-2011 has incorporated the

condition of payment of such R&D cess for the purpose of

exemption under service tax vide Notification 18/2002 dated

16-12-2002.

IV. SUB-CONTRACT OF WORKS CONTRACT SERVICES

Circular 147/16/2011 dated 21-10-2011 has clarified the

issues of exemption to sub-contractors in respect of

specified exempt projects executed under Works Contract

services.

V. AMENDMENT IN SERVICE TAX RETURN

Notification 48/2011 dated 19-10-2011 has given

clarification in General Instructions so as to give meaning to

specified value declared in terms of Point of Taxation Rules.

RBI liberalises Forex Facilities for Individuals Compiled by : CA. Ashok Thakkar

The Reserve Bank of India has further liberalised foreign exchange facilities for individuals under the Foreign Exchange Management Act, (FEMA) 1999. The facilities are:

1. NRIs can be Joint Holders in Resident's SB/EEFC/RFC Accounts

Individual residents in India are now permitted to include non-resident close relative(s) as joint holder(s) in their resident bank accounts, namely, savings(SB), Exporter Earners’ Foreign Currency (EEFC) and Residents’ Foreign Currency (RFC) accounts, on ‘former or survivor’ basis.

2. Residents can be Joint Holders in NRE/FCNR Accounts

Non-Resident Indians (NRIs)/ Person of Indian Origin (PIO) ,


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are now permitted to open Non-Resident (External) (NRE) Rupee Account Scheme/Foreign Currency (Non-Resident) (FCNR) Account (Banks) Scheme with their resident close relative(s) as joint holder(s) on ‘former or survivor’ basis.

3. Residents can gift Shares/Debentures upto USD 50,000 Value

A person resident in India can now give to a person resident outside India, by way of gift, any security/shares/debentures of value upto USD 50,000 in value per financial year subject to certain conditions. Earlier, a person resident in India could give to a person resident outside India, by way of gift, any security/shares/debentures of value upto USD 25,000 per calendar year.

4. Sale Proceeds of FDIs can be credited to NRE/FCNR (B) Account

Sale proceeds of Foreign Direct Investment (FDI) can be credited to Non-Resident (External) Rupee (NRE) Account Scheme/Foreign Currency (Non-Resident) Account FCNR (Banks) Scheme provided the original acquisition was by way of inward remittance or funds held in their NRE/FCNR (B) accounts.

5. Gifts to NRIs can be credited to NRO Accounts in Rupees

Resident individuals are now permitted to make rupee gifts within the overall limit of USD 200,000 per financial year as permitted under the Liberalised Remittance Scheme (LRS) to an NRI/PIO who is a close relative by way of crossed cheque/electronic transfer to the Non-Resident (Ordinary) Rupee Account (NRO) of the NRI/PIO.

6. Loans to NRI Close Relatives can be given in Rupees

Similarly, Resident individuals are now permitted to lend in Rupees within the overall limit under the Liberalised Remittance Scheme of USD 200,000 per financial year to a Non Resident Indian (NRI)/ Person of Indian Origin (PIO) close relative by way of crossed cheque/electronic transfer, subject to certain conditions.

7. Residents can repay the loans given to NRI Close Relatives

Resident individuals are now granted general permission to repay loans availed of in Rupees from banks in India by their NRI close relatives. Earlier, repayment of loans by close relative in respect of Rupee loan availed by NRIs was restricted only to housing loans.

8. Residents can bear Medical Expenses of NRIs

Residents will now be allowed to bear the medical expenses of visiting NRIs/PIOs close relatives. Earlier, residents were allowed to make payment in rupees towards meeting expenses on account of boarding, lodging and services related to it or travel to and from and within India of a person resident outside India and who is on a visit to India.

(RBI Press Release : 2011-2012/455)

Prior Environment Clearance (EC) – the Process :

Prior Environment Clearance (EC) – the Process : Compiled by CA & Valuer Bharat Gajjar

Requirements of PRIOR Environmental Clearance (EC) :

There are about 39 kinds of projects or activities, including Construction Project/Activity; that is required prior environmental clearance from the concerned regulatory authority. The authority means (a) Central Government in the Ministry of Environment and Forests (MOEF) for the projects or activities falling under Category “A? in the Schedule and (b) the State level, the State Environment Impact Assessment Authority (SEIAA) for the projects or activities falling under Category “B? in the said Schedule.

The EC is required to be obtained before any construction work or preparation of land by the project management except for securing the land. The EC is required categorically to

(i) All new projects or activities listed in the Schedule to the notification No. S.O.1533, dtd. 14.09.2011 of MOEF;

(ii) Expansion and modernization of existing projects or activities listed in the Schedule to this notification with addition of capacity beyond the limits specified for the concerned sector, that is, projects or activities which cross the threshold limits given in the Schedule, after expansion or modernization;

(iii) Any change in product-mix in an existing manufacturing unit included in Schedule beyond the specified range.

The Environmental Clearance Process

The environmental clearance process covers aspects like screening, scoping and evaluation of the upcoming project, as steps tabulated below. The main purpose is to assess impact of the planned project on the environment and people and to try to abate/minimise the same.

The process consists of following steps:

wProject proponent identifies the location of proposed plant after ensuring compliance with existing siting guidelines. If project site does not agree with the siting guideline, the proponent has to identify other alternative site for the project

wThe project proponent then assesses if the proposed activity/project falls under the purview of environmental clearance. If it is mentioned in schedule of the notification, the proponent conducts an Environment Impact Assessment (shortly referred to as ‘EIA’) study either directly or through a consultant. If the project falls in B category, the project goes to state government for clearance which further categorise into B1 and B2 projects. B2 projects does not require preparation of EIA reports.

wAfter the EIA report is ready, the investor approaches the concerned State Pollution Control Board (SPCB) and the State Forest Department (if the location involves use of forestland). The SPCB evaluates and assesses the quantity and quality of effluents likely to be generated by the proposed unit as well as the efficacy of the control measures proposed by the investor to meet the prescribed standards. If the SPCB is satisfied that the proposed unit will meet all the prescribed effluent and emissions standards, it issues Consent To


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Establish - CTE (popularly known as NOC), which is valid for 15 years.

wThe public hearing is a mandatory step in the process of environmental clearance for certain developmental projects. This provides a legal space for people of an area to come face-to-face with the project proponent and the government and express their concerns.

The process of public hearing is conducted prior to the issue of NOC from SPCB. The District Collector is the chairperson of the public hearing committee. Other members of the committee includes the official from the district development body, SPCB, Department of Environment and Forest, Taluka and Gram Panchayat representative, and senior citizen of the district, etc. The hearing committee hears the objections/suggestions from the public and after inserting certain clauses it is passed on to the next stage of approval (Ministry of Forest and Environment).

wThe project proponent submits an application for environmental clearance with the Ministry of Environment and Forests (MoEF) if it falls under Project A category or the state government if it falls under project B category. The application form is submitted with EIA report, EMP, details of public hearing and NOC granted by the state regulators.

wEnvironmental appraisal: The documents submitted by an investor are first scrutinised by a multi-disciplinary staff functioning in the MoEF who may also undertake site-visits wherever required, interact with the investors and hold consultations with experts on specific issues as and when necessary. After this preliminary scrutiny, the proposals are placed before specially constituted committees of experts whose composition is specified in the EIA Notification. Such committees, known as Environmental Appraisal Committees have been constituted for each sector such as River Valley, Industries, Mining etc. and these committees meet regularly to appraise the proposals received in the Ministry. In case of certain very special/controversial projects, which have aroused considerable public interest, the committee may also decide to arrange for public hearings on those projects to ensure public participation in developmental decisions. Announcements for such public hearing shall be made atleast 30 days before through newspapers. On the basis of the exercise described in the foregoing paragraphs, the Appraisal Committees make their recommendations for approval or rejection of particular projects. The recommendations of the Committees are then processed in the Ministry of Environment and Forests for approval or rejection.

wIssues of clearance or rejection letter: When a project requires both environmental clearance as well as approval under the Forest (Conservation) Act, 1980. Proposals for both are required to be given simultaneously to the concerned divisions of the ministry. The processing is done simultaneously for clearance/rejection, although separate letters may be issued. If the project does not involve diversion of forest land, the case is processed only for environmental clearance.

Once all the requisite documents and data from the project authorities are received and public hearings (where required) have been held, assessment and evaluation of the project from the environment angle is completed within 90 days and the decision of the ministry shall be conveyed within 30 days thereafter. The clearance granted shall be valid for a period of five years for commencements of the construction or operation of the project.

The process is summarised in following Figure.

Industrial projects located in any of the following notified ecologically fragile/sensitive areas would require environmental clearance irrespective of the type of project:

FReligious and historic places

FArchaeological monuments

FScenic areas

FHill resorts

FBeach resorts

FCoastal areas rich in mangroves, corals, breeding grounds of specific species

FEstuaries

FGulf areas

FBiosphere reserves

FNational parks and sanctuaries

FNational lakes and swamps

FSeismic zones

FTribal settlements

FAreas of scientific and geological interest

FDefence installations, especially those of security importance and sensitive to pollution

FBorder areas (international)

FAirports


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Requirements of PRIOR Environmental Clearance (EC) :

There are about 39 kinds of projects or activities, including Construction Project/Activity; that is required prior environmental clearance (EC) from the concerned regulatory authority. The authority means (a) Central Government in the Ministry of Environment and Forests (MOEF) for the projects or activities falling under Category “A” in the Schedule and (b) the State level, the State Environment Impact Assessment Authority (SEIAA) for the projects or activities falling under Category “B” in the said Schedule.

The EC is required to be obtained before any construction work or preparation of land by the project management except for securing the land. The EC is required categorically to

(i) All new projects or activities listed in the Schedule to the notification No. S.O.1533, dtd. 14.09.2011 of MOEF;

(ii) Expansion and modernization of existing projects or activities listed in the Schedule to this notification with addition of capacity beyond the limits specified for the concerned sector, that is, projects or activities which cross the threshold limits given in the Schedule, after expansion or modernization;

(iii) Any change in product-mix in an existing manufacturing unit included in Schedule beyond the specified range.

List/Summary of projects or activities that is required prior EC

The prior environmental clearance is required to be obtained from the Concerned Authority, either State Level or Central, if that project falls under any of the following categories and having condition/situation that is being notified in the provisions of this requirement by Government.

Following is the List/Summary of kinds of projects or activities that is required prior environmental clearance (EC).

1 Mining, extraction of natural resources and power generation (for a specified production capacity)

1(a) Mining of Minerals

1(b) Offshore and onshore oil and gas exploration, development & production

1(c) River Valley projects

1(d) Thermal Power Plants

1(e) Nuclear power projects and processing of nuclear fuel

2 Primary Processing

2(a) Coal washeries

2(b) Mineral beneficiation

3 Materials Production

3(a) Metallurgical Industries (ferrous &Non Ferrous)

3(b) Cement plants

4 Materials Processing

4(a) Petroleum refining industry

4(b) Coke oven plants

4(c ) Asbestos milling and asbestos based products

4(d) Chlor-alkali industry

4(e) Soda ash Industry

4(f) Leather/skin/hide processing industry

5 Manufacturing/Fabrication

5(a) Chemical fertilizers

5(b) Pesticides industry and pesticide specific intermediates (excluding formulations)

5(c) Petro-chemical complexes (industries based on processing of petroleum fractions & natural gas and/or reforming to aromatics)

5(d) Manmade fibres manufacturing

5(e) Petrochemical based processing (processes other than cracking & reformation and not covered under the complexes)

5(f) Synthetic organic chemicals industry (dyes & dye intermediates; bulk drugs and intermediates excluding drug formulations; synthetic rubbers; basic organic chemicals, other synthetic organic chemicals and chemical intermediates)

5(g) Distilleries

5(h) Integrated paint industry

5(i) Pulp & paper industry excluding manufacturing of paper from waste paper and manufacture of paper from ready pulp without bleaching

5(j) Sugar Industry

5(k) Induction/arc furnaces/cupola furnaces 5TPH or more

6 Service Sectors

6(a) Oil & gas transportation pipe line (crude and refinery/ petrochemical products), passing through national parks /sanctuaries/coral reefs /ecologically sensitive areas including LNG Terminal

6(b) Isolated storage & handling of hazardous chemicals (As per threshold planning quantity indicated in column 3 of schedule 2 & 3 of MSIHC Rules 1989 amended 2000)

7 Physical Infrastructure including Environmental Services

7(a) Air ports

7(b) All ship breaking yards including ship breaking units

7(c) Industrial estates/ parks/ complexes/ areas, export processing Zones (EPZs), Special Economic Zones (SEZs), Biotech Parks, Leather Complexes.

7(d) Common hazardous waste treatment, storage and disposal facilities (TSDFs)

7(e) Ports, Harbours

7(f) Highways

7(g) Aerial ropeways

7(h) Common Effluent Treatment Plants (CETPs)

7(i) Common Municipal Solid Waste Management Facility (CMSWMF)

8 Building /Construction projects/Area Development projects and Townships

8(a) Building and Construction projects

8(b) Townships and Area Development projects.

Hereinafter, in continuation & series of this paper, it is an attempt to discuss one by one kind of projects or activities, as tabulated afore, that is required prior environmental clearance (EC).

..... To be continued in series


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Intensive Course on GVAT – 8th & 15th October 2011

ICAI National Convention on Corporate Laws

Inauguration of the Convention by Lighting of LampChief Guest, Shri S. N. Misra, ROC, A’bad

Addressing the Gathering CA. Arpit Patel, Ahmedabad

CA. Nilesh Vikamsey, Central Council Member, ICAI CS. Ashok Mehta, Mumbai CA. Pritesh Amin, Baroda

Industrial Visit to Jointly with Surat BranchPhilips Elec. Ltd.

Adv. Nayan Seth, AhmedabadCA. Deepak Thakkar, MumbaiCA. Parkash Thakkar, BarodaCA. Pardeep Shah, Ahmedabad

Baroda CPE Study Circle Meetings

CA. Sanjay Joshi, Baroda – Speaking on IFRS for SMEs vis a vis Ind AS Mr. Kaza Subrahmanyam, Baroda – Speaking on Service Tax Credit Rules, Practical Issues

CA. Abhishek Nagori, Past Chairman, Baroda Branch imparting training on Branch Management to Staff

Directory Committee Team Members are doing final proof reading of Baroda Branch Members’ Directory 2011

WICASA Event Other Activities


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“ICAI Bhawan”, Kalali-Tandalja Road, Atladra, Vadodara - 390 012. Telefax : +91 265 2681115 / 2680593 E-mail: [email protected] WIRC : www.wirc-icai.org ICAI: www.icai.in l l

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The Baroda Branch of WIRC of ICAI is pleased to announce The Baroda Branch of WIRC of ICAI is pleased to announce

About Ranthambhore Forest Resort

W e l c o m H e r i t a g e Ranthambhore Forest Resort (A Joint Venture of ITC) is the ultimate in comfor t and hospitality. Spread over five acres, the resort borders the lush green forest, behind which mountains provide a unique backdrop. On all sides it offers a spectacular view of untamed nature in all its manifestations of flora and fauna. Migratory and local birds can be both seen and heard around the Resort. The unsurpassed diversity of the wildlife consists of a number of animals such as deer, hyenas, foxes, sloth bears, jungle cats and many others. And, of course, the major attraction is the tiger.

Ranthambhore Wildl i fe Sanctuary

Ranthambhore National park is spread over an area of 392 sq. km. punctuated with w a t e r f a l l s , l a k e s a n d numerous streams. The characteristic ruggedness of the topography of this region comprises a delightful mix of cliffs, narrow valleys and plateaus. Way back in 1955, Ranthambhore was declared a wildlife sanctuary by the Government of India.

DETAILED ITINERARY

05/01/2012 Thursday Departure from Baroda by Jaipur Superfast (12979) at 22.24 hrs by III Tier AC

06/01/2012 Friday Arrival at Sawaimadhopur Railway Station at 8.27 hrs and depart by Canters for WelcomHeritage Ranthambhore Forest Resort (3 km from station)

06/01/2012 Friday Breakfast and Check in to the Resort at 9:00 hrs

06/01/2012 Friday Inauguration and First Technical Session (11:00 hrs to 13:30 hrs)

06/01/2012 Friday 19:30 hrs onwards Evening Party along with Folk Dance

07/01/2012 Saturday Group Discussion & Technical Session (9:00 hrs to 13:00 hrs)

07/01/2012 Saturday Jungle Safari in Ranthambhore National Park (14:30 hrs to 18:30 hrs)

07/01/2012 Saturday Evening Party along with DJ (19:00 hrs onwards)

08/01/2012 Sunday Brain Trust Session (9:00 hrs to 13:00)

08/01/2012 Sunday Site Seeing at Sawai Madhopur Forte & Ganeshji Temple (14:00 hrs to 18:00 hrs)

08/01/2012 Sunday Departure for Baroda by August Kranit Rajdhai (12954) at 20.36 hrs

09/01/2012 Monday Arrival at Baroda at 4:23 hrs

Baroda Branch appreciates overwhelming response of members for Residential Refresher Course every year. Baroda Branch has organized 21st RRC at WelcomHeritage Ranthambhore Forest Resort at Sawai Madhopur, Rajasthan a beautiful scenic location. Vadodara to Sawai Madhopur is very comfortable overnight journey in train.

Baroda Branch requests to members to register their name in advance to avoid last minute disappointment. Your timely registration would help us to book railway tickets well in advance. Register your name with Mr. Ketan Kharva on 2680593, 2681115, mobile: 9825718576.

Fees:

Rs. 10,300/- per member on triple sharing basis on or before 15.12.2011 Rs. 10,900/- thereafter

Rs. 10,900/- per member on double sharing basis on or before 15.12.2011 Rs. 11,500/- thereafter

Rs. 15,000/- per member on single sharing basis on or before 15.12.2011 Rs. 15,500/- thereafter

Above fees is inclusive of to and fro Vadodara to Sawai Madhopur travel by Train in III Tier AC. Cheques / DDs payable at Vadodara are to be drawn on “Baroda Branch of WIRC of ICAI”

www.ranthambhoreforestresort.in

WelcomHeritage Ranthambhore Forest Resortth th 6 (Friday) to 8 (Sunday) January, 2012

CPEHrs

21st Residential Refresher Course (2012)

Registration

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