SOCIETY NEWS

BEPS STUDY CIRCLE

Study Circle meetings held on 2^nd May, 2019 and 11^th
May, 2019 at BCAS Conference Hall

The BEPS Study Circle
meeting was held on 2^nd May, 2019 to discuss “Article 7 of MLI with
reference to Principal Purpose Test – Analysis of provisions using case
studies”. The discussion was led by Ms Sonia Agarwal and Mr. Rutvik Sanghvi.
They gave a well-prepared analytical presentation which was followed by an
interesting discussion between members.

Meanwhile, CBDT has come
out with a draft report for public consultation on amendments to the Rules for
Profit Attribution to Permanent Establishment. The report outlined the formula
for calculating “profits attributable to operations in India” giving weightage
to sales revenue, employees, wages paid and assets deployed. To understand the
implication of the draft report at a very short notice, a study meeting was
held on 11^th May, 2019 at the BCAS Conference Hall. Mr. Ganesh
Rajgopalan analysed the report in his masterly way. Thereafter, Mr. Rashminbhai
Sanghvi explained the background and implications of the draft report. The
meeting was very interactive and the participants benefited tremendously from the
discussion.

ITF STUDY CIRCLE

Meeting on Taxation of
Agency PE in the light of OECD Commentary (BEPS Action Plan) – Part II &
III held on 9^th May, 2019 and 23^rd May, 2019 at BCAS
Conference Hall

The discussion was led by
Mr. Kartik Badiani.

At the Part II meeting on 9^th
May, 2019 a brief recap of the earlier session was given to summarise the
discussions. The group leader took the members through the various provisions
of article 12 of the Multilateral Instrument relating to the measures for
preventing avoidance of a permanent establishment. He explained the
commissionaire arrangement and why it is not very relevant in the Indian
context. He also described the expanded scope of the Agency PE arising out of
the new provisions, especially regarding activities of dependent agents in
respect of contracts for the transfer of the ownership of, or for the granting
of the right to use, property owned by that enterprise, or that the enterprise
has the right to use for the provision of services by it.

Then, he compared the MLI
provisions with the newly-substituted Explanation 2(a) to section 9(1)(i) of
the Income-tax Act. The scope of the substituted Explanation and its
applicability to purchasing activities for export or otherwise was also
discussed.

Mr. Badiani explained
Articles 5(4), 5(5) and 5(6) of the existing treaty along with the OECD
commentary. He also took the gathering through the proposed changes vis-a-vis
the existing treaty provisions.

In Part III, which was held
on 23^rd May, 2019 the group leader, after giving a recap of the
previous sessions, deliberated on nuances of the MLI and BEPS action plan on
Agency PE. Apart from a case study on low risk distributor, treaty shopping and
liaison office, an in-depth deliberation on the latest judicial precedence in
the case of General Electric and Daikin was also taken up by the Speaker, Mr.
Badiani.

DIRECT TAX STUDY CIRCLE

Discussion on ‘Issues
relating to Re-assessment’ held on 21^st May, 2019 at BCAS Conference
Hall

The Chairman of the
session, CA Sanjeev Pandit,  in his
opening remarks pointed out that the number of notices issued u/s. 148 by the
Income-tax department had been increasing over the years due to various
reasons.

Later, Group Leader CA
Navin Gandhi analysed section 147 along with provisos and the explanation to
the section. The group discussed concepts such as “Reasons to believe”, “Income
chargeable to tax”, “May assess or re-assess” which are crucial for the
application of section 147. He then referred to the conditions to be fulfilled
by the AO for issuance of notice u/s. 148 after four years from the end of the
relevant assessment year and the distinguishing factors about issuance within a
period of four years from the end of the relevant assessment year. The Supreme
Court decision in GKN Driveshafts (India) Ltd vs. ITO (2003) 259 ITR 19
(SC), a landmark ruling on the issue, was also briefly touched upon by
CA Navin Gandhi.

Thereafter, the group
discussed the following issues along with relevant case laws relating to
reassessment proceedings:

•      Issuance of notice u/s. 143(2) during
  the course of reassessment proceedings;

•      Reopening of proceedings based on
  change of opinion;

•      Reopening on ground of
  “oversight, inadvertence or mistake”;

•      Before issuing notice u/s. 148, the AO
  must have reasons to believe that the income has escaped the assessment;

•      Time limit u/s. 149(1)(a) / (c);

•      Retraction of the statement on which
  reassessment is based;

•      Right to make inquiry of unrelated
  issues;

•      Sharing of evidence during the course
  of proceedings;

•         Right to cross-examination; and

•      Notice issued u/s. 148 on a deceased
  person.

Lastly, the decision of the
Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. (2011) 331
ITR 236 was discussed wherein it was held that where the ground on
which reassessment notice u/s. 148 was issued was dropped while passing
reassessment order, the AO could not reassess or assess any other income which
had escaped assessment.

Lecture meeting on ‘AI,
ML and Future of Internal Auditing’ held on 24^th May, 2019 at BCAS
Conference Hall

BCAS and IIA Bombay Chapter jointly organised a lecture
meeting on “AI, ML and Future of Internal Auditing”. The speaker was Mr.
Shailesh Haribhakti who said that in today’s hyper-connected world, the
expectation from internal audit had undergone a sea change. The new rules of
the game were: More from less, Faster, No waste, No damage to Environment,
Continuous auditing and Continuous improvement for process excellence.

Mr. Haribhakti insisted
that internal auditors need to have pride in what they are doing; they need to
be determined and have integrity and ambition, too. Today, data flows were
creating and generating accounting. Everything and everyone was working through
portals, such as tax portals, legal portals, operations portals, etc. By
integrating accounting at the time of data generation, errors and wastages
could be avoided.

Internal audit had to be
ready 24×7 and with due diligence. It had to be ready to do and face forensic
audit.

They needed to be online
with all their documentation every day; offer solutions and not ideas; stay on
course every single day; demand more from themselves and others and make
winning a habit; establish morality of processes; make themselves relevant;
contribute and promote values continuously; have a dashboard to monitor
themselves and the organisation, continuously upskill themselves. Transparency,
trust and technology had to be the key drivers.

Internal auditors also had
to get themselves upgraded with the latest trends such as Robotic Process
Automation, Artificial Intelligence and Data Science. Today, an internal
auditor had to be a data scientist as well. This was because expectation had
moved from insight to foresight. Data was all about pattern and trends; for example,
can the past data be back-tested to check the current findings?

Mr. Haribhakti said that in
today’s world, primarily, financial risks were being assessed, but technology
risks, environment, social and governance (ESG) risks were ignored. The
approach wherein one just ticked a box would not do. AI tools could help assess
every component in the audit and risk universe. They could also help find
patterns.

His key takeaways were as
follows: Create a vigil mechanism; power it with AI / ML; create dashboards to
monitor the pulse of the organisation, including KPIs / KRIs; continuously
challenge the status quo; evolve rapidly and be ahead of the trends.

INTERNATIONAL ECONOMICS STUDY GROUP

Meeting on ‘Economic
Impact of Modi 2.0’ held on 28^th May, 2019 at BCAS Conference Hall

The International Economics
Study Group held its meeting on 28^th May, 2019 to discuss “Economic
Impact of Modi 2.0“. CA Shalin Divetia led the discussion presenting
key differences between the mandates of 2014 and 2019, such as enhanced moral
authority due to the stronger second mandate, better grip over administration,
better relationship with the RBI, key challenges identified and fundamental
changes implemented – GST and IBC. Prime Minister Modi is facing challenges
such as past excesses of the financial / banking sector, creation of jobs
amidst automation / protectionism, the aspirational burgeoning population,
farm-sector woes, judicial activism and NGO-led foreign interference.

CA Shalin Divetia also
threw light on the “circle” of national economy – ultimate objectives of
welfare state and national security funded mostly by tax revenues which will
generate consumption – which should come from domestic production – which
ideally requires increased capex and efficient infrastructure – which, in turn,
will impact monetary liquidity – which results from low-cost funding arising
out of low inflation – which is impacted by low CAD and low fiscal deficit
impacted by tax revenues!

Therefore, he highlighted
the Modi government’s focus on increasing tax revenues for which he presented
data of buoyancy in tax collection over the last three years which had been
showing in an improved tax-to-GDP ratio. He also presented data on fiscal
deficit, inflation, cost of funds for businesses, monetary liquidity,
government spending on infrastructure and encouragement to domestic
manufacturing which would result in control of CAD and fiscal deficit.

Members also discussed “Modi
Sarkar 2.0: What Should We Look Forward to?” wherein they analysed the
reasons for the stupendous success registered by him. They also dwelt on his
long-term vision and the most important aspect of taking India’s current $2.5
trillion economy to a $5 trillion economy by the year 2025 and $10 trillion by
2032. They noted that the BJP’s “Sankalp Patra” (election manifesto) had
indicated investments of $1.44 trillion. The election results in key states in
the Hindi heartland and in Bengal were also discussed.

Indirect Tax Study
Circle meeting held on 30^th May, 2019 at BCAS Conference Hall

CA Janak Vaghani played the
perfect mentor when the Indirect Tax Study Circle held an interesting meeting
on the important topic of “Real Estate-Related Recent Notifications – GST” This
was the second part (Part II) of the series highlighting the crucial issue.

Thanks to Group Leader CA
Adit Shah, who conducted the proceedings admirably well, the members took part
in a detailed interaction at which they exchanged views on the case studies and
issues that had been forwarded to all the participants in advance. As a result, most of them
came well prepared for the meeting and were able to make their reasoned points
in detail.

Apart from this, a few
other points were identified and set aside for future representation to the
government bodies concerned.

Mentor Janak Vaghani and
Group Leader Adit Shah formed a very good team as they steered the discussions
adeptly and kept the proceedings on track.

The meeting concluded with
a vote of thanks to the duo of Janak and Adit.

Training Session for CA
article students on ‘GST Audit from Article’s Perspective’ and ‘Filing of
Annual Return’ held on 31^st May, 2019 at BCAS Conference Hall

The Students Forum under
the auspices of the HRD Committee organised this training session for CA
article students on the above-mentioned topics.

The first session on GST
Annual Return was conducted by CA Jigar Shah; it was followed by the session on
GST Audit by CA Raj Khona. Ms Devyani Choksi, the student co-ordinator,
introduced the speakers and described the upcoming events for students. CA
Anand Kothari, Convener of the HRD Committee, welcomed both speakers with a
memento.

CA Jigar Shah explained the
entire Form GSTR-9 clause by clause and dealt with the various issues /
complexities involved in the annual return form by giving practical examples.
He highlighted a few key areas which article students should keep in mind while
filing the annual returns.

In the second session, CA
Raj Khona gave a brief insight into various aspects of GST Audit and thoroughly
explained the entire form GSTR-9C. He also gave useful tips to the article
students on how to effectively conduct GST Audit and highlighted the key
challenges. Both the sessions were highly interactive and the speakers answered
all the queries raised by the participants.

With the due dates for GST
Audit fast approaching and every CA firm wanting its articles to be well
equipped with the nitty-gritty’s of GST Annual return and GST Audit, the
training session saw a record participation by over 100 students. The session
ended with the Convener, CA  Anand
Kothari, proposing the vote of thanks to the speakers for sparing their
valuable time and to the audience for participating in huge numbers.

Training Session for CA
Article Students on ‘Preparation and Filing of Income Tax Returns for July,
2019’ held on 07^th June, 2019 at BCAS Conference Hall

The Students’ Forum, under
the auspices of the HRD Committee, organised this training session for CA
Article Students from 6 pm on 7^th June at the BCAS Conference Hall.

The session was conducted
by CA Divya Jokhakar. The Student Co-ordinator, Mr. Aniruddh Parthsarthy,
introduced the speaker for the session and spoke about the upcoming events for
students.

CA Divya Jokhakar first
highlighted the new amendments pertaining to A.Y. 2019-20. She then spoke
briefly about the applicability of various forms to certain categories of
assessees. She also gave useful tips to the article students on how to
effectively prepare and fill the ITR Forms and highlighted the key challenges.
The session was highly interactive.