The Institute of Chartered Accountants of India (Setup by...

The Institute of Chartered Accountants of India(Setup by an Act of Parliament)

VOLUME - IV 2013l MAY

THE INSTITUTE OF CHARTERED

ACCOUNTANTS OF INDIA

Tel. :

E-mail :

Web :

WESTERN INDIA REGIONAL COUNCIL

Tel. :

Email :

Web :

BARODA BRANCH OF WIRC OF ICAI

Telefax :

E-mail:

Web :

ICAI Bhawan, Post Box No. 7100,

Indraprastha Marg, New Delhi - 110002.

+91 (11) 39893989

[email protected]

www.icai.org

ICAI Bhawan, 27, Cuffe Parade,

P O Box No. 6081, Colaba, Mumbai - 400 005.

+91 (22) 39893989

[email protected]

www.wirc-icai.org

“ICAI Bhawan”, Kalali-Tandalja Road,

Atladra, Vadodara - 390 012.

+91 (265) 2681115 / 2680593

[email protected]

www.baroda-icai.org

Chairman's Message

Managing Committee

CA. Ashish Parikh CA. Kejal Pandya

CA. Vishal Doshi CA. Ashok Thakkar

CA. Bimal Bhatt CA. Neena Patel

CA. Tejal Parikh

CA. Ashish Parikh

CA. Nayan Kothari

CA. Pradeep Agrawal

CA. Yash Bhatt

CA. Viral Shah

CA. Abhishek Nagori

98252 31545

98244 33445

98985 60967

99243 88339

98243 62211

94260 75397

CA. Arpan Dodia 98983 83530

CA. Dhiren Parikh 93762 11099

CA. Kejal Pandya 98259 77220

Chairman

Vice Chairman

Immediate Past Chairman

Secretary

Treasurer

Ex-officio

Members

Editorial Team

` 20/- COPY

Index

Anand Mahindra, celebrating his birthday in the month of May, is the Chairman and Managing

Director of Mahindra & Mahindra. He graduated from Harvard College, Cambridge, and

completed his MBA from Harvard Business School,Boston. He spearheaded Mahindra’s growth

and diversification into new business areas like real estate and hospitality management. Under

Anand Mahindra's leadership, the Mahindra group has grown rapidly through both acquisitions

and greenfield business development with several high-profile mergers in the past few years,

including the acquisition of Satyam Computer Services.

Baroda Branch of Western India Regional Council of The Institute of Chartered Accountants of India

BARODA BRANCH OF WIRC OF ICAI

Respected Members,

In taking the pride being a Chairman of the most

vibrant and one of best branches of Institute of Chartered Accountants

of India, me and my team members believe and envision a bright

future for our fraternity, and strive hard to fulfill all requisites to achieve

the same through innovation and hard work.

The branch is instrumental in evolving technical inputs for its members

by conducting various seminars, workshops, lecture meeting etc. .

Major planks of our activities during the month of April’13 include Real

Estate Conclave (Legal, Accounting & Taxation Aspects), lecture

meeting on Cyber Crime and Security, lecture meeting on revised

reporting requirements, teleconferences, study circle meetings and

the Senior Citizen’s Cricket Match- the most energetic activity.

Dear members, it gives me an immense pleasure to share that the

programme of “Real Estate Conclave- Jointly with CREDAI” was a

grand success. The most attention-grabbing session was the

Interactive Session with the panel of experts from the department of

Income Tax, Excise and Customs (for Service tax) and Commercial Tax

(for G-VAT). The audiences were fully involved in the discussion of the

pre –drafted issues and the comments of the experts on the same. I, on

behalf of Baroda Branch of WIRC of ICAI , owe a special gratitude to the

Chief Commissioner – Income Tax, Vadodara, Chief Commissioner –

Excise & Customs, Vadodara, and Commissioner –Commercial Tax,

Ahmadabad for deputing commissioners & Jt. Commissioners from

their respective departments.

Baroda Branch has got again a chance to become a facilitator for

process of recruiting fresh Chartered Accountants for Madhya Gujarat

Vij Company Limited, Vadodara and Kaneria Granito Limited, Dahej,

Bharuch.

The most energetic activity of the month was Senior Citizen’s Cricket

Match and where our senior members returned with a grand victory.

In the coming month we have planned to participate the first ever

Regional Volleyball Tournament at Surat, Full Day Seminar on Audit of

Urban Co-operative Society and International RRC.

Well ,Summer has set at its peak and we dislike the sweltering summer

heat but the it comes with vacation time - time to take holidays and

enjoy the family life.

With cool regards,

Chairman

"Growth is never by mere chance; it is the result

of forces working together." ……..

Wishing a very happy summer holidays!

CA. Ashish Parikh

Pg.

Forthcoming Events ... 02

Income Tax Updates ... 03

Service Tax Updates ... 04

No Penalty for ... 05

fied Error

FAQs on IAS - 8 ... 06

Self Start and ... 07

Procurement-to-Pay Cycle ... 07

Self Dedication

Publisher elsewhere .... 09

Photo Flash ... 11

Due Date Planner ... 10

Bona

Baroda Branch of WIRC of ICAI

If you tell the truth, you don't have to remember anything - Mark Twain

2

Forthcoming Events

Seminar on Audit of Urban Co-operative Bank

Organised and Hosted by Baroda Branch of WIRC of ICAI

Day & Date :

Time :

Topic Speaker

Saturday, 11.05.2013

09.00 am to 05.30 pm

Inaugural Session Key note address by

Ms. Rakshadevi, GM, UBD,

Reserve Bank of India

Guests of Honour Shri N. V. Patel, Director,

Gujarat Federation of

Co-operative Banks and

Chairman-VUDA

Shri Ramesh Patel,

Director-Gujarat Federation

of Co-operative Banks and

Chairman-Baroda

Federation of Co-operative

Banks

Management of credit -

exposure norms,

sanction,

charge over securities,

monitoring NPA recovery

etc - Observation based

on earlier inspection /

audit reports

Compliance with rules

regulations applicable to

a) Investments

b) Prevention of money

laundering

c) Banking Regulation Act

d) Audit etc.

Provisions of Chapter X-B

of Gujarat Co-operative

Societies Act-Regulations

relating to appropriation of

profits, waiver/write off of

bad debts etc., effect of

97th amendment of the

constitution and the

amendment of state Act

Notes on Accounts,

Accounting Standards,

Rules relating to different

types of taxes payable by

UCB

(Breakfast from 08.30 am)

Shri K. V. Lakum, Director,

appraisal, National Institute

documentation, of Co-operative Mgmt.

and

Guest Speaker from

National Institute of

Co-operative Management

CA. B. K. Patel,

Ahmedabad

relative

CA. Samir Parikh, Vadodara

Branch Events

Fees :

Venue :

1000/-

ICAI Bhawan, Vadodara

`

CPE 06

INTERNATIONAL RESIDENTIAL REFRESHER COURSE (RRC)HONGKONG – -MACAU SHENZHEN@

From 24th May ’13 to 31st May ’13 (Friday to Friday)

WIRCSUB-REGIONAL CONFERENCE

Day & Date :

Venue :

21-22.06.2013

Hotel Surya Palace, Vadodara

CPE 12

WICASA Events

NATIONAL CONVENTION FORCA STUDENTS

Day & Date :

Venue :

11-12.07.2013, Thursday and Friday

Sir Sayajirao Nagar Gruh, Akota

MEGA EVENTS

DETAILS ANNOUNCE IN NEXT NEWSLETTER

CPE10

Certificate Course on International Taxation

Day & Date :

Fees :

Venue :

Starting from 01.06.2013, Saturday,

100 Hours training, every Saturday-

Sunday

25,000/-


`

CPE 100

Study Circle

Domestic Transfer Pricing Issues

Day & Date :

Time :

Faculty :

Fees :

Venue :

14.05.2013, Tuesday

06.00 pm to 08.00 pm

CA. Abhijit Kotecha

200/- for non members


`.

CPT Mock Test (Paper Set by Board of Studies of ICAI)

Day & Date :

First Session (Morning)

Time :

Subject :

Second Session (Afternoon)

Time :

Subject :

Fees :

Venue :

For Registration contact Baroda Branch

02.06.2013, Sunday

10.00 am to 12.30 pm

Section - A Fundamentals of

Accounting

Section - B Mercantile Laws

02.00 pm to 04.00 pm

Section - C General Economics

Section - D Quantitative Aptitude

200/-


Reporting time 10.00 am

`.


An error does not become truth by reason of multiplied propagation, nor does truth become error because nobody sees it - Mahatma Gandhi

3

Income Tax JudgementsCompiled by CA. Narendra Hindocha

1. Assessment in consequence of search in case of

related parties

2. New material required for reassessment

3. Valuation of shares for section 56

Section 153C requires reassessment in case of assesses

other than assesses who are searched, if Assessing

Officer is satisfied that assets/books or documents

found belong to such other assessee. Assessment in

consequence of this provision was held void when the

Assessing Officer did not show copy of reasons which led

him to the satisfaction contemplated in the provision.

Such was the order in case of ACIT vs. M/s. Global Estate

(ITAT Agra). Such reasons were not furnished by the AO

on the ground that there was no requirement in the Act

which required such reasons to be furnished. The ITAT

held that S. 153C is analogous to s. 158BD. In the context

of s. 158BD, the Supreme Court held in Manish

Maheshwari 289 ITR 341 that the recording of

satisfaction is a condition precedent. This principle

applies to s. 153C as well. The burden is on the Revenue

to show that the necessary ingredients of s. 153C have

been complied with. Decisions in case of Vijaybhai N.

Chandrani 333 ITR 436 (Guj) and other judgements were

also followed.

In earlier years, Courts held that an assessment under

section 147 cannot be made merely on the basis of

reappraisal of materials already on record or based on

change of opinion and unless the Assessing Officer

receives some new material to indicate escapement of

income, he cannot make assessment under section 147.

After amendments in the provisions also the Courts held

that assessment under section 147 cannot be made

merely on the basis of change in opinion. However,

some of the issues that arose were whether the

provisions can be pressed into service, when either no

assessment was made (returns were accepted under

section 143(1) or when the issue was not at all considered

during assessment under section 143(3) as no details

relating thereto were called for or when details were

called for and also submitted but the Assessing Officer

had accepted these details without dealing with them in

the order and possibly considering them logically in the

context of relevant facts and law.

In case of Delta Air Lines Inc vs. ITO, ITAT Mumbai held

that assessment under section 147 cannot be made in

absence of “new material” even when original return was

accepted under section 143(1) without being assessed

under section 143(3). The same view has been taken in

HV Transmissions Ltd (ITAT Mum) & Aipita Marketing 21

SOT 302

To curtail issue of shares at excessive premiums with a

view to camouflage unlawful transactions, Section

56(2)(viib) provide, with effect from A.Y. 2013-14, that in

case of issue of shares by a company(not one in which

public have substantial interest), for consideration

exceeding fair market value, the excess will be construed

as income in the hands of the company. For this purpose,

fair market value is required to be determined under

Rule 11UA.Such determination was required to be based

on book value. Considering that the book value may not

necessarily represent fair market value, the Rule is

amended from 29th November, 2012 so as to allow such

determination also by Discounted Free Cash Flow

method, at the option of the assessee, such value to be

determined by a merchant banker or Chartered

Accountant other than the Company’s auditor or tax

auditor

This sounds more like miscarriage of justice to me.

Assessee kept paying lumpsums to contractor debiting

a running account. At the yearend, entry for tax

deductible at source is passed and tax is paid to

Government before due date for filing return. The

disallowance under section 40(a)(ia) was confirmed by

The ITAT Rajkot Bench in case of Income-tax Officer –

Ward 1(4) vs. Bhoomi Construction in IT APPEAL NO. 601

(RJT.) OF 2012 by order dated 08.02.2013 holding that

there was failure to deduct tax as debit to the running

account of the payee does not amount to deduction. I

remember a case in which Notice Board at the entrance

to a temple required leaving shoes near the Board and a

person trying to enter barefooted was stopped for not

leaving shoes near the Board.

Generally, logically when an assessee is entitled to

exemption or deduction with reference to his income,

and during assessment, such income increases due to

additions, the assessee is entitled to exemption /

deduction with reference to the enhanced income. I find

it difficult to comprehend the reason for the same, but

section 92C(4) prohibits deduction under sections

10A/10AA/10B or Chapter VIA in respect of such

additions. During assessment proceedings, an assessee

entitled to deduction under section 10A, apparently

smelled the additions and revised the return to make

such addition in the return itself and then claim

deduction under section 10A with reference to the

higher income. However, not only the Income-tax

Department, by even judicial forums held that this was

too late. The decision : Deloitte Consulting India Pvt. Ltd.

Mumbai versus The Assistant Commissioner of Income-

Tax, Circle 2(2), Mumbai and others 2013 (2) TMI 241 -

BOMBAY HIGH COURT

4. Obligation to deduct tax not fulfilled by debiting

account of payee

5. Transfer pricing adjustment in case of assessee

entitled to deduction/exemption


Truth can be stated in a thousand different ways, yet each one can be true - Swami Vivekananda

4

Service Tax - Case LawsCompiled by CA M. J. Parsiya

1 Where Chartered Accountant's services were

provided and bills were raised prior to 1-4-2012, the

rate of service tax applicable thereon would be 10

per cent and not 12 per cent.

2 Commissioner (Appeals)/ Department cannot take

different stand for different assessees in respect of

same issue.

3 Services in relation to erection, commissioning and

installation of storage tank facility for storage of

imported inputs/ammonia outside factory are

eligible as input services.

It has happened many Chartered Accountants have

provided Chartered Accountant's services and raised

invoices thereof before 1-4-2012 but payment against

those invoices have been received on or after 1.4.2012.

Rate of service tax was increased from 10 per cent to 12

per cent from 1-4-2012. Relying on Rule 7(c) of the

Point of Taxation Rules, 2011, department demanded

service tax at 12 per cent, as payment was received on

or after 1-4-2012. It is held on account of deletion of

reference to Chartered Accountant's services in rule 7(c)

with effect from 1-4-2012, chartered accountant's

services ceased to be covered by rule 7 ibid.

Accordingly, said rule 7 was inapplicable to services

provided and invoices raised before 1-4-2012 even if

payment was received on or after 1-4-2012. Such

contingency was covered by rule 4(a)(ii) ibid and point

of taxation would be date of raising of invoice.

Accordingly, rate of service tax applicable was 10 per

cent - CBEC Circulars to the contrary were quashed. -

Delhi Chartered Accountants Society (Regd.) v. UOI, 30

taxmann 95 (Delhi High Court)

On very same issue and in case of different assessees,

Commissioner (Appeals) passed two separate orders,

one favouring assessee and another against assessee. It

is held Commissioner (Appeals) is not justified in taking

different stand for different assessees in respect of

same issue. Certainly there must be some consistency.

They are entitled to take a different view or stand only

when there is change of law or any other binding

decision of superior forum warranting such change of

view.

Revenue cannot pick and choose between assessees of

same nature to file appeal in respect of very same issue.

When a judgment of Tribunal favouring another

assessee had become final and conclusive, Revenue

cannot contest very same issue in respect of another

assessee. If an issue is decided in favour of any party

and had attained finality and accepted by parties, said

affected party in that case is certainly precluded from

questioning its correctness in another case. - CCE v. EID

Parry (I) Ltd, 32 taxmann 112 (Madras High Court).

Assessee took credit of services used in relation to

erection, commissioning and installation of storage

tank for storage of inputs viz. imported ammonia

outside factory. It is held as per rule 3(1) of CENVAT

Credit Rules, 2004, input services may be received

anywhere and credit is available if they are received by

manufacturer. Hence, credit could not be denied on

ground that services were received outside factory.

Further, since storage and use of imported ammonia

was an intrinsic part of process of manufacture of final

products, services in question were used directly or

indirectly in relation to manufacture of final product.

Accordingly, assessee was eligible for credit. – Deepak

Fertilizers and Petrochemicals Corpn. Ltd. v. CCE, 32

taxmann 135 (Bombay High Court).

However, writ petition alleges that tax liability has been

wrongly calculated by including non-taxable sums in

value of services and penalty has been wrongly levied,

which are matters of merit, such matter can be looked

into by appellate authority only. In such cases, writ

petition is not maintainable in view of effective

alternate remedy available under Act. - Salem

Municipal Corpn. v. CCE, 32 taxmann 167 (Madras High

Court)

Department sought to initiate recovery proceedings, in

pursuance of Circular No. 967/01/2013-CX, dated 1-1-

2013, pending stay applications even though such

applications, in some cases, were pending because of

vacancy in posts of appellate authorities. It is held said

Circular had not legal sanction/backing. Even section

37B of Central Excise Act, 1944 does not permit

issuance of impugned circular for purpose conveyed by

it. Valuable right of appeal granted by statute was

sought to be trivialized or annihilated by any

administrative means, which was impermissible, as such

right can be circumscribed only by and upto extent

ordained by statute itself. Since posts of appellate

authorities were lying vacant in some cases, it would be

grossly unfair, unjust and unreasonable to allow

recovery pending disposal of stay applications and

would amount to allowing department to take

advantage of their own lapses and failings. - Mangalam

Cement Ltd. v. SCE, 32 taxmann 52 (Rajasthan High

Court)

4 Writ is maintainable if an order is passed by an

authority without jurisdiction in this behalf, but, no

writ can be filed against wrong calculation of tax

liability, which are matters of merit and can be gone

into by Appellate Authority only.

5 Circular No. 967/01/2013-CX, dated 1-1-2013 is

void upto extent it provides for recovery of dues

during pendency of stay applications even though

such pendency is not attributable in any manner

whatsoever to assessees.


Truth will ultimately prevail where there is pain to bring it to light - George Washington

5

6 Input services used in manufacture of exempted

intermediate product is eligible for credit, if such

intermediate product is used in manufacture of

dutiable final product.

Assessee was engaged in manufacture of exempted

crude oil/natural gas at Mumbai Offshore and also in

manufacture of dutiable refined oil, etc. at Uran plant

out of use of crude oil/natural gas. Assessee took credit

of input services at Mumbai Offshore facility, which was

engaged in manufacture of crude oil/natural gas.

Department denied credit relying on rule 6(1). It is held

merely because assessee manufactures exempted

goods, it cannot be denied benefit of availing of credit

on that quantity of input service which is utilised in or in

relation to manufacture of dutiable final products.

Manufacture of dutiable final products at Uran Plant

could not take place without process in question.

However, Cenvat Credit would not be available on that

quantity of input services, which were used in

manufacture of exempted crude oil/natural gas sold to

purchasers directly from Mumbai Offshore – ONGC v.

CCE, 32 taxmann 141 (Bombay High Court).

No Penalty for Bona fide ErrorCompiled by CA Abbas Gulamhusainwala

The penalty under the Income-tax Act is the major concern for

us. As it is the normal trend, the assessing authorities initiate

and impose the penalty under section 271(1) (c) of The

Income-Tax Act, 1961 (Act) for almost all the adjustments. As

per the provisions of the Income tax, the penalty cannot be

imposed if the error committed by the assessee is a bona fide

mistake. However, the assessee has to go for the long battle to

get the relief for the bona fide mistake committed by him.

In recent past, few judgments have come up in which the

appellate authorities have considered various mistakes even

committed by the professional or corporate assessee as bona

fide mistakes and dropped the penalty proceedings under

section 271(1)©. The few important cases are discussed

hereunder.

In the recent judgment of Price Waterhouse Cooper (P) Ltd,

the Hon’ble Supreme Court has provided the relief to the

appellant. The appellant company is a worldwide leading

management consultancy firm. At the time of filing of return

of income, the company missed to disallow the Gratuity

Payment under the section 40A (7), though it was disclosed in

the tax audit report. On receipt of notice under section 148 of

the Act, the company accepted the mistake and offered the

amount for tax. The AO charged the penalty at 300 percent of

the tax amount.

The CIT (A) and the ITAT confirmed the penalty on the ground

that the reputed firm was not expected to commit such

mistake. The High Court affirmed the decision of on the

Price Waterhouse Cooper (P) Ltd – 26 September 2012

ground that being the civil liability element of mens rea is not

necessary.

The Supreme Court has deleted the penalty as it was a bona

fide and inadvertent error. The Supreme Court has held “The

caliber and expertise of the assessee has little or nothing to do

with the inadvertent error. That the assessee should have

been careful cannot be doubted, but the absence of due care,

in a case such as the present, does not mean that the assessee

is guilty of either furnishing inaccurate particulars or

attempting to conceal its income.”

The case is of Sania Mirza, the assessee, a renowned

professional international tennis player, received an award of

Rs. 30 lakhs. The amount was not disclosed for tax but was

disclosed in the statement of affairs filed with the ROI. In the

reassessment under section 147, the assessee offered the said

amount to tax. The AO levied penalty u/s 271(1)(c) which was

confirmed by the CIT(A) on the ground that the assessee had

furnished inaccurate particulars of her income and concealed

her income. However, the Tribunal cancelled the penalty on

the ground that a “bona fide mistake” had been made on her

behalf by her Advocate/Chartered Accountant and there was

neither concealment of income nor a furnishing of inaccurate

particulars.

The Andhra Pradesh High Court has affirmed the decision of

the ITAT and held that as the amount was shown by her in the

return, it cannot be said that there was any concealment. As

the amount was correctly mentioned, there is also nothing

inaccurate in the particulars furnished by her. The only error

that seems to have been committed was that it was not shown

as a capital receipt. But as soon as this was pointed out, the

error was accepted and the amount was surrendered to tax.

This is not a fit case for imposition of penalty.

The another recent judgment is of Somany Evergreen Knits

Ltd, one of the fastest growing company in the field of textiles

for the knitted wear at Solapur, had committed two mistakes

(i) higher amount of depreciation (ii) claimed capital loss

arisen out of sale of plant as revenue expenses. During the

course of assessment, the assessee released the mistake. The

AO charged the penalty which was confirmed by the CIT (A).

The Tribunal held that both mistakes had occurred due to a

mistake/ wrong advice given by the Chartered Accountant

and that there was a “bona fide mistake”. It was also held that

“the bonafide of the assessee is established from the fact that

the assessee accepted the mistake and did not prefer any

appeal against the order of the AO”.

The High Court held that in any event, even the revenue does

not dispute that it was a bonafiide mistake on the part of the

assessee, imposition of penalty upon the assessee is not

warranted

Sania Mirza – Andhra Pradesh High Court – 5 January

2013

Somany Evergreen Knits Ltd, -Bombay High Court – 1

April 2013


Seek not greatness, but seek truth and you will find both - Horace Mann

6

The above discussed case laws have opened entire new line of

interpretation of section 271(1) (c) as every mistake does not

mean that the assessee is guilty of either furnishing inaccurate

particulars or attempting to conceal its income. The mistake is

bona fide, no penalty could be imposed. This view is

completely contrary to the declaration of law in Dharamendra

Textiles Processors’ case that being the civil liability the

element of mens rea is not necessary for income-tax penalty.

FAQs on IAS – 8:Accounting Policies, changes inaccounting estimates and errors(Ind – AS 8)Compiled by CA. Prashant K. Upadhyay

1. What are the items, comprising accounting

estimates?

2. In case of change in accounting estimate, does the

same require prospective application or

retrospective restatement?

3. Changes in accounting policies should be applied

prospective or retrospective effect?

4. Can inappropriate accounting policies be rectified

either by disclosure of the accounting policies used

or by notes or explanatory material?

5. When it is difficult to distinguish between a change

of estimate and a change in accounting policy then

which course the entity should adopt?

Followings are the items on which accounting estimates

are made:

a) Bad debts

b) Inventory obsolescence

c) Fair Value of financial assets or financial liabilities

d) The useful lives of or expected consumption of, the

benefits embodied in depreciable assets

e) Warranty obligation

As per Para 36 the same should be recognized

prospectively by including in profit or loss in a) the

period of change, if the change affects that period only;

or b) the period of the change and future period, if the

change affects both.

In terms of Para 19(a) & (b) read with Para 23, the

changes in accounting policies should be applied

retrospectively.

In terms of Para 7 read with IASB framework, the same

cannot be rectified either by disclosure of the accounting

policies used or by notes or explanatory material. Hence,

In terms of Para 19(a) & (b) read with Para 23, the

changes in accounting policies should be applied

retrospectively.

As per Para 35, treat the entire change as a change in

estimate (Prospective application) with appropriate

disclosure.

6. Whether retrospective application can be used on

the basis of information that was available when

accounts were approved or as on the balance sheet

date?

7. What is provision in the standard if it is impracticable

to make a retrospective application of a particular

policy or estimate or item?

8. Gain recorded on the outcome of a contingency such

as a lawsuit is correction of an error or change in

estimate?

9. What treatment should be given for prior period

errors like fraud?

10. What are the disclosure requirements as to prior

period errors:

In terms of Para 23 to 26, the same can be used on the

basis of information that was available as on balance

sheet date.

In terms of Para 24, when it is impracticable to determine

the period-specific effects of changing an accounting

policy on comparative information for one or more prior

periods presented, then the entity should apply the new

accounting policy to the carrying amounts of assets and

liabilities as at the beginning of the earliest period for

which retrospective application is practicable, which may

be the current period, and should make a corresponding

adjustment to the opening balance of each affected

component of equity for that period.

In terms of Para 48, Corrections of errors are

distinguished from changes in accounting estimates.

Account ing est imates by thei r nature are

approximations that may need revision as additional

information becomes known. Hence, the gain or loss

recognized on the outcome of a contingency is not the

correction of an error.

In terms of Para 42, an entity should correct material

prior-period errors retrospectively in the first set of

financial statements authorized for issue after their

discovery by a) restating the comparative amounts for

the prior period(s) presented in which the error occurred

or b) if the error occurred before the earliest prior period

presented, restating the opening balances of assets or

liabilities and equity for the earliest prior period

presented.

An entity needs to disclose:

Nature of Prior-period error;

For each prior period presented, to the extent

practicable, the amount of the correction:

a) For each financial statement line item affected, and

b) For basic and diluted earnings per share (only if the

entity is applying IAS 33 – EPS)

Financial statements of subsequent periods need not

repeat these disclosures.

The amount of the correction at the beginning of the

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It is error alone which needs the support of government. Truth can stand by itself - Thomas Jefferson

7

Self Start and Self DedicationCompiled by CA. Bimal R. Bhatt

Self Start :

Self Dedication :

Self-start is taking the initiative. It is the spark that ignites

the engine of progress in the journey of life. Initiative is the

signal of self. Do not wait for somebody else to push you

into action. Act by your-self. Great ‘Birtruhari’ has said that

there are people who do not undertake tasks being afraid

of failure. There are others who start the works but

abandon them when obstructions are faced. There are

some others who not only undertake the worthy

assignments but conclude them inspite of difficulties,

problems and obstructions. These are called “Dhiras” (the

daring). You be that start the worthy works by your own

self. Do not wait for instructions for making A.O.P. (Annual

Operating Plans), Performance review, etc. Take initiative,

start little advance. Anticipate the things to come. Gain the

time. Do not wait for the year end to come to evaluate your

unit’s performance. Continuously evaluate by year, month,

week and day. When an assignment is given, do not be

satisfied when you complete what is asked for. Think what

is the next step. What more can be done? By doing what

little more the value of what you have done will increase?

When you complete the assignments and even when you

could not complete do not wait for the follow up. Give

feedback about situation, progress or non-progress on

your own.

Start every year something new regarding your processes,

plants, products, projects and people.

When you meet a person be first to smile and greet.

Rama was

Be “first to talk, talk kindly and be a pleasant

person”. Ram or Shyam, each one can adopt this simple

pleasant way. Be first to accept your own short comings. Be

first to recognize other’s contributions.

Come on! Be first, take initiative, be a self starter and be on

road to self.

Self dedication is offering of one’s body, mind, intellect and

spirit to one’s own chosen goals, objectives, principles,

values and programmes. Dedication is complete devotion.

“Prathama bhashi, Mathura bhashi,

Priyamvada”.

Self Start is the spark That ignites the engine of progress in

the journey of life.

Our ancient Rishish said “ Uttishtal! Jagrita!—“Arise!

Awake!”

While self start is the signal of self, dedication is the

foundation of self. Dedication means offering one’s

services and energy with unwavering sincerity, integrity

and honesty.

One can dedicate oneself to a cause, an organization or

another person or his own ideals.

Only that person who is dedicated to first to his own ideas

can dedicate himself to a cause, organization or another

person.

Skills can be acquired, will can be developed but

dedication is to be inculcated. It has to come from within.

An exemplary dedication means not body, mind, intellect

and spirit but every atom of the dedicated person is filled

with the objective to which he is dedicated.

When you undertake your own chosen and committed

project or assignment, be dedicated in unwavering

manner and unshakable way.

But it must be noted that dedication does not mean

becoming sub servant.

It can be seen one becomes tall and greater through his

dedication. Be dedicated and set an example in dedicated

leadership. When a person is dedicated, he gets love and

care in return, dedicated son-loving mother. Dedicated

workmen-caring management. Dedicated student-loving

teacher. Dedicated husband-loving wife. Dedicated wife-

loving husband.

Dedication and love are two facets of same relationship. Be

dedicated and Be loved. Be dedicated to your own self.

Only than you can like your own self.

the intensive intentions, are the starting

points for dedication. Make ‘Sankalpam’ to be on the

doors of self dedication.

“Sankalpam”,

(Source: “Gateways to Self Realisation” by “Guruji” G. Narayana)

earliest prior period presented.

If retrospective restatement is impracticable, an

explanation and description of how the error has been

corrected.

�

Procurement-to-Pay Cycle -Optimization of Process ControlContributed by CA. Sanjay Dudhoria

The procurement-to-pay cycle, which includes all activities from

the procurement of goods and services to receiving invoices

and paying vendors, is one of the key business processes in any

organization. It involves significant risks if complete cycle is not

managed effectively. Hence it is imperative to have optimal

checks and balances to ensure sufficient internal controls.

• Lack of integration and collaboration with preferred

vendors

• High purchase order and invoice-processing error rates

• High cost per transaction

• Lengthy reconciliation and payment cycles

An inefficient procure-to-pay process can rob an enterprise

of available capital through:


There is no God higher than truth - Mahatma Gandhi

8

• High cost of problem resolution

• Promote orderly, economical, efficient and effective

operations

• Produce quality products and services consistent with the

organization’s mission

• Safeguard resources against loss due to waste,

mismanagement, errors and fraud

• Promote adherence to Statutory Requirement fulfillment,

regulations, and procedures

• Develop and maintain reliable financial and management

data, and accurately report that data in a timely manner

• Vendor Master – Creation of duplicate and unauthorized

vendors, Unauthorized modifications in vendor master

data etc

• Purchase requisitions – Unauthorized requisitions,

Inventory build-up

• Purchase Orders – Unauthorized purchases, quantity,

price, returns, authorization matrix etc

• Accounts Payable – Incorrect payments, Duplicate

payments, Unauthorized invoice booking and credit notes

etc

• Statutory Compliances – Incorrect tax codes etc

One of the key reasons organizations have difficulty

managing and monitoring their procurement-to-pay cycle

process effectively is an over-reliance on manual controls,

which are prone to errors and can easily be changed. To

make better use of automated controls and optimize their

overall control environment, organizations need suitable

ERP solutions such as SAP.

In any standard ERP, following basis steps should generally

be mapped carefully to ensure effective control system in

place.

• Requisitions can be generated automatically through MRP

Process

• Manual PRs with proper authorization rights

• Important information like Plant, Cost Center, Internal

Order etc

• User should be able to view the history of the requisition

for better planning and inventory management

• Once the Requisition is approved then it can be converted

into a Purchase Order and the same should be sent to the

vendor.

• Purchase Group may be created for various types of

Purchases & Services, for categorisation.

• Various types of Purchase Orders are supported based on

Requisition as well as not based on Requisition (for

example Purchase Contracts , Make to Order).

Effective control system helps an organization to :

Following are the five major steps of the procurement-to-

pay cycle and some common risks organizations face in

each area due to lack of effective controls –

Create Requisitions

Creating Purchase Order

• Purchase Order is Authorized at various levels depending

upon the value of Purchase Order.

• Once the Goods are received against Purchase Order then

nothing can be changed in Purchase Order.

• Similarly once Purchase Order is fully released then key

information like Quantity, Rate and Tax Information can

not be changed without the management approvals.

• Change History of Purchase Order is available which keeps

track of who has changed what and when.

• Complete information like Basic rate, Tax information,

carrying & forwarding charges, freight, other charges are

defined as Conditions while creating Purchase order, such

that nothing can be added later, any deviations from

defined values, will be clearly highlighted.

• In cases such as Imports, where the Clearing agent, the

freight vendor, the Customs clearing agents are defined &

linked to the respective Conditions.

• The review of Purchase history gives the details of posted

invoices & advance settlement.

• Provision of expenses is done at the time of placing the

Purchase or Service Order.

• Payment Terms details are maintained.

• It automatically extracts and links key data from the

Purchase Order into Receipt to minimize manual data

entry so fully integrated with Purchase Order.

• Quality Checks are performed while receiving the goods

then only Stocks are updated.

• Excise Registers are updated automatically at the time of

Posting Goods Receipt.

• It updates Assets related information and Capital Stocks.

• The Goods Receipt & Invoice Receipt is routed through a

clearing account, which is hit, while Goods receipt is

posted & gets knocked-off while the Invoice against it, is

posted, hence review of this Clearing account gives the

status of un-posted Invoices.

• It processes PO related and Non-PO related Invoices.

• It automatically performs a three-way match (Invoice

Receipt/PO) to ensure that only matched invoices are

eligible for payment while automatically routing

mismatches to the appropriate users for review and

resolution (In case of Po related invoice Process).

• Any approved deviation from the Conditions defined in

the Purchase Order, is clearly seen such that the entry gets

posted as Price difference or to the respective expense, but

can be clearly highlighted.

• Control is put such that same invoice for the vendor cannot

be posted in that particular Financial Year.

• Review invoices for compliance with business rules.

• It does not allow to pass the bill for the amount, more than

mentioned in Purchase Order and for quantity more than

the Receipt quantity

Receive Goods

Process Invoices


Without faith there is no truth, for that is all the truth is or ever was - Robert Brault

9

• It caters Advance Settlement against Advance Paid to a

vendor, the system prompts for settlement of advance

while posting Invoices.

• The Invoice can be posted only with the Tax structure

maintained at the PO level, it cannot be changed at the

Invoice Posting level.

• In case of Foreign Currency transactions, the Invoice is

posted with the Values maintained in the Foreign Currency

exchange data maintained in the system.

• If required, the Invoices can be blocked-for-payment after

posting of Invoice is done.

• In cases such as Imports, where the Clearing agent, the

freight vendor, the Customs clearing agents are defined &

linked to the respective Conditions, the respective Invoices

may be posted against the respective conditions & vendor

defined in the Purchase order.

• Payments for approved invoices are generated in a secure,

controlled environment using one of several payment

methods. It maintains payment visibility for all involved in

the Procure to Payment cycle.

• Review of Accounts Payable Checks.

• Sales Tax Compliance.

• It allows to Pay Advances to Vendor mentioned in

Purchase Order with a control on Amount and Payment

Terms mentioned in Purchase Order.

• The Advance payment is routed through Authorisation

Matrix.

• During the payment process, system prompts if any

vendor has un-settled advance.

• In case of Partial advance, the clearing process clearly gives

details of settled & balance amount.

• Control may be put, such that payment should not be

allowed, if there are un-settled balance with any vendor

• Order tracking, vendor, and item histories are easily

accessible, giving fast and reliable information when

required.

• It facilitates various kinds of Ledgers (Creditors , Debtors

etc. ) so that Payment history of a Vendor & Customer can

be tracked at any given point of time with the facility of

Drill Down which can take the user to the particular

transaction.

• Vendor & Customer Outstanding Reports , Trial Balacnes

etc..

• It provides vendor performance evaluation and statistics

based on:

• Actual Delivery and Promised Delivery Dates

• Rejected/Returned Goods

• Price Performance Statistics are maintained by Vendor,

Item, or a

• Combination of the two.

• Quality Parameters of Materials Supplied.

Generate Payments

Inquiry and Analysis

Vendor and Catalogue Management

Published elsewhere…How NRIs can invest inMutual FundsSource: Live Mint.. 01.04.2013

Asset management companies (AMCs) in India have been

increasing their focus to attract non-resident Indians (NRIs) to

invest in mutual funds (MFs) in India in the past few years. MF

industry says that official statistics available with them which

registrar and transfer agents provide, close to 6% of the

overall MF assets belong to NRIs. This figure, say experts, is

much higher if you just take into account only equity funds.

From launching and marketing offshore funds to setting up

shop abroad to attract the Indian investor settled abroad,

fund houses are keen to get you to invest in the India story.

“There is a strong appetite for Indian debt and equity

products in the overseas market. Sovereign wealth funds,

pension funds, institutional and high net worth individuals

have invested through our funds. We have set up branches

across various locations and expect to double our AUMs

(assets under management) over the next three years”, says

Sundeep Sikka, chief executive officer, Reliance Capital Asset

Management Co. Ltd.

One of the first things you need to do is to set up a bank

account in India to facilitate movement of your money.

Investors can either set up non-resident (external) rupee

account (NRE) or a non-resident ordinary rupee account

(NRO) with a bank. “An NRE account is preferable because it

gives you the flexibility of repatriating your proceeds out of

India without any restriction”, says Anil Rego, a Bangalore-

based financial planner. In other words, if you wish to invest in

India from your overseas earnings, you need an NRE account.

Financial planners also recommend NRE accounts for those

who are not sure of how long they’ll stay overseas and where

chances of them settling abroad, eventually, are high.

However, you need an NRO account if you are an NRI, and get

receipts in India, like rent.

NRIs from most countries can invest in India through MFs

available here. For US-based NRIs though, it gets a bit tricky.

Most US-headquartered fund houses that operate in India do

not accept money from a US-based NRI because there is a

rule laid out by the US securities market regulator, Securities

and Exchange Commission (SEC), which says only those fund

houses, globally or locally, registered with SEC can accept US

NRI or citizen’s money.

“In light of that, lot of AMCs in India have chosen to not accept

funds from investors residing in the US”, says Anthony

Heredia, chief executive officer, Morgan Stanley Investment

Management Ltd. This also means that US-based fund houses

that operate in India such as Franklin Templeton Asset

Management (India) Ltd, Morgan Stanley Investment

Management Ltd and so on also don’t accept NRI money that

come from those in the US.

Bank accounts

Are there any restrictions?


Don't keep searching for the truth, just let go of your opinions

10

DATES COMPLIANCE PERIOD

05.05.2013 Payment of Service Tax - Monthly Cases / Excise Duty (for NON SSI) April'13

06.05.2013 E-Payment of Service Tax / Excise Duty (for NON SSI) April'13

07.05.2013 TDS Payment / E-payment April'13

09.05.2013 VAT / CST E-return - Monthly (For VAT or CST > ` 5,000/-) February' 13

10.05.2013 Excise Returns - ( Monthly Return by Large Units / Return by EOU / Monthly return

of receipt & consumption of each of Principal Inputs, assessees required to submit

ER-5 return)

12.05.2013 ESIC Return Oct. ’12 – March’13

15.05.2013 Payment of Professional Tax / PF / Excise Duty (for SSI) April '13

15.05.2013 TDS / E-TDS Return – Quarterly Qtr 4 (F. Y.: 2012-13)

15.05.2013 Unaudited Financial Results - filing with Stock Exchange – by Listed Companies Qtr 4 (F. Y.: 2012-13)

16.05.2013 Excise Duty E-Payment (for SSI) April '13

21.05.2013 ESIC Payment April '13

22.05.2013 VAT / CST payment / E-payment - Monthly April '13

25.05.2013 PF Return (Monthly) April' 13

30.05.2013 VAT /CST E-Return - Monthly (with Jan. '13 to Mar. '13 Stock Details)

(For VAT or CST <= ` 5,000/-)

30.05.2013 Audited Yearly Financial Results - filing with Stock Exchange -

by Listed Companies (if Co. opts for publishing unaudited financial result for

Q4_Fin. Yr.:12-13)

30.05.2013 TDS Certificate issuance – Form 16A (for other than Salary cases) Qtr 4 (Fin. Yr.: 2012-13)

31.05.2013 TDS Certificate issuance – Form – 16 (Salary cases) Fin. Yr.: 2012-13

April'13

March'13

Fin. Yr.: 2012-13

Due Date Planner Compiled by CA. Abhijit Kotecha

Some Indian fund houses, though, still accept money from US

NRIs, but they are essentially those that don’t have any

business interests in the US and therefore don’t need to

interact with SEC. Says a Mumbai-based financial planner who

requested anonymity: “This is not an Indian rule, but is a US

government rule. That is why we invest our NRI clients’

investments in pure Indian-domiciled fund houses.”

Most other NRIs can invest in any MF schemes available in

India.

If you are a US-based NRI, there are tons of options available

for you as well. Lots of MFs based in the US have India-

dedicated MF schemes, even those who have Indian

subsidiaries. Often, these MFs fall back on the research that

their Indian subsidiary provides. For instance, Franklin India

Growth Fund, a MF scheme available for the US citizens in the

US, invests in companies that are based in India. “Such

schemes are managed in the US and are actively managed.

But they use the experience and research inputs that their

Indian offices give because local talent always helps”, said the

Mumbai-based financial planner quoted earlier.

Apart from international fund houses available in the country

where you stay, that invests in India, you can use your NRE or

NRO accounts to invest in MF schemes domiciled in India.

For NRIs staying in other countries, Indian fund houses have

either opened branches abroad or hawk their own offshore

funds there. Fund houses such as UTI Asset Management Co.

Your options

Ltd, Kotak Mahindra Asset Management Co. Ltd, Reliance

Capital Asset Management Ltd and Birla Sun Life Asset

Management Co. Ltd have offshore funds to attract NRI

investors. Most Indian fund houses have opened shops in the

Gulf region and southeast Asian countries such as Singapore.

PAYMENT OPTIONS FOR PROGRAM REGISTRATION

Drop Box at 2-B, Ramkrishna Chambers,

BPC Road, Baroda. Kindly mention your

name, membership number and

program for which registration is

sought, on back side of the Cheque

Members are requested to register themselves in advance

by using above options and avoid spot registration to help

us to serve you better.

e-payment

In an era of increasing usage of

‘plastic money’ & Inernet - with

an objective of better services

to members & students, Baroda

Branch is having facilities of Registrations for seminar &

conference by paying through credit/debit card at ICAI

Bhawan orvisit www.baroda-icai.org foronline payment.

Join us on groupFacebook


Exchange views and news. Be updated aboutforthcoming events of Baroda Branch


We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable - Alexander Solzhenitsyn

11

PHOTOFLASH

Managing Committee of Baroda Branch at Orientation Programmeat Mumbai on 12 & 13.04.2013

ISA Course by CA. Farhad Wadia on 13.04.2013

Study Circle on Auditing Tools & Techniques under SAPby CA. Archit Shah, Vadodara on 16.04.2013

Cyber Crime and Cyber Security by CA. Manish Gokani on 20.04.2013

ISA Course by CA. Atul Gupta on 20.04.2013 ISA Course by CA. Manish Dafria on 27.04.2013

Senior Citizen Cricket with Jamadars Association on 28.04.2013Audit of Financial Statements 2012-13- Revised ReportingRequirements and other Development

CONGRATULATIONS

CA. Ashok Thakkar

Hearty congratulations for

being nominated as co-opted

member of Co-operative

Society (Gujarat) Committee

of WIRC

CA. Rahul Parikh



member of CPE Committee of

WIRC

CA. Bhupesh Porwal



member of Public Finance &

Government Account ing

Committee of WIRC

DISCLAIMER :

[email protected]/[email protected]

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 Baroda Branch. Unsolicited matters are sent at the owner's risk and the publisher accepts no liability for loss or

damage. Material in this publication may not be reproduced, whether in part or in whole, without the consent of Baroda Branch. Members are requested to kindly send material of

professional interest to . The same may be published in the newsletter subject to availability of space & editorial editing.

If undelivered, please return to :

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Telefax : +91 265 2681115 / 2680593


If a thousand old beliefs were ruined in our march to truth we must still march on - Stopford Brooke

12

Real Estate Conclave on 27.04.2013

Mr. Anand Kumar Gupta,Gen Secretary, Builders Associationof India

CA. Tarun Ghia, Mumbai. CCM Mr. Vipul Thakkar, President,CREDAI, Vadodara

CA. Ashish Parikh,Chairman, Baroda Branch

Shri Rajat Bansal,Commissioner, Income Tax,Vadodara

Shri D.D.Rishi,Commissioner,Central Excise and Customs,Vadodara

Shri Bhargav Mankad,Jt. Commissioner, VAT,Vadodara

CA. Natwar Thakrar, Mumbai CA. Puloma Dalal, Mumbai CA. Prakash Thakkar, Vadodara

Inauguaral Session Felicitation of CA. Abhishek Nagori, RCM Penal Discussion with Government Authorities

WICASA EVENTS on 01.04.2013

CA Jignesh Chheda on Full Day Revisionary on IT CA. Pradeep Agrawal on How to face CA ExamCA. Parin Shah, Vadodara, 30.04.2013on

Study Circle - Revised Schedule VI

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