Society News

The Indirect Tax Committee of the Society conducted a workshop on 12th September 2015 on “How to assess the impact of proposed GST law” on two major business sectors. Mr. Divyesh Lapsiwala dealt with possible impact on pharmaceutical sector. He explained in a very lucid manner and citing various examples as to how the new concepts in GST are likely to impact business processes and distribution models of pharma companies. Parind Mehta demonstrated before members the likely impact of GST on construction sector by discussing a case study. Participants also discussed various legal issues which may crop up while solving the case study.

The workshop was attended by more than 80 participants including members from industry, each of whom gained around 180 minutes of professional learning experience.

Lecture Meeting – ICDS: Overview and Challenges in Application on 4th September 2015

Mr. Yogesh Thar addressed the august gathering on “ICDS: Overview and Challenges in Application”. The highlights of his talk are summarised below:

ICDS Notified u/s. 145(2) –

ICDS drafted by a Committee constituted in 2010 by the CBDT and not by the Government or the Parliament.

ICDS applies to all assesses without any minimum threshold.

Adjusted income as per ICDS is the starting point for making adjustments under the various provisions of the Act. Can ICDS modify the basis of taxation hitherto upheld by the SC? The Speaker believed ICDS is a delegated legislation and cannot override the statute. ICDS cannot bring to charge any item which is not income as per the provisions of the Act. This is borne out by the Notification which states that if there is anything in the ICDS that is inconsistent with the Act, the Act shall prevail.

A delegated legislation is to be limited by controlling consideration and legislative policy. Section 145(2) does not contain any such policy or parameter or guideline which is another reason ICDS may not pass the test of constitutionality.

ICDS does not apply for MAT computation or for computing turnover/gross receipts for presumptive taxation. ICDS will not affect financial accounts except AS 22 –Accounting for Taxes.

Principle of “prudence” done away with in ICDS. Mark to market expected losses not to be recognised unless allowed specifically by any ICDS.

Principle of “Materiality” not specifically adopted though may be implied from the requirement for “true and fair” (and not “true and correct”) result of accounting policies.

Specific ICDS – discussion
ICDS I – appears to be a legislative misfire. Talks about accounts and accounting policy though ICDS is not for maintaining accounts.

ICDS II – Valuation of Inventories
• Distribution costs to be excluded under AS-2. Though not specifically excluded under ICDS II, there is no difference.

• Inventory not wide enough to cover WIP of service providers.
• Inventory to be valued at Net Realisable Value (NRV) in case of dissolution of firm under ICDS. AS2 is silent on the issue

ICDS VIII – Securities
• Valuation to be category-wise not asset-wise as required by AS-2.

• Section 145A begins with the non-obstante clause and overrides section 145(2) under which ICDS is notified.
• Valuation of goods as per method of accounting regularly followed by the assessee and subject to further adjustments in section 145A

ICDS III – Construction contracts
• Does not apply to real-estate developers
• Retention monies not accrual under AS 7; ICDS III specifically includes the same as income overriding rulings by some High Courts.

2nd Workshop on Impact Analysis Under Proposed GST Regime held on 10th October 2015

The 2nd Series of the Workshop on “How to assess the impact of proposed GST law” was held by the indirect tax committee of society on 10th October 2015. In this workshop the impact of GST on Entertainment and Retail were the topic of discussion. Mr. Nishant Shah explored the impact on Entertainment sector. He compared the existing provisions under various Indirect tax laws applicable to the industry with the probable effects under GST regime. Mr. Kirti Oswal discussed and elaborated the likely impact of GST on Retail sector. He covered the subject with very relevant presentation. Both the sessions were interactive. The workshop was attended by more than 65 participants including members from the industry.

FEMA Study Circle held on 6th October 2015

The Study Circle meeting on “Overview and Issues – External Commercial Borrowing (ECB)” was held on 6th October 2015. The Group Leader was Ms. Mitali Pakle. She took the participants through the basics of the ECB such as Statutory Framework , key concepts. She highlighted certain issues such as, whether LLP/Partnership Firm are eligible to borrow, what software sector means where ECB is now permitted, whether purchase of business on slump-sale basis is permitted end use and many other relevant issues. She explained at length how to calculate ECB Liability Equity Ratio taking various illustrations and also discussed ambiguity in interpreting certain components therein. The meeting generated lot of discussion and it was decided to hold one more meeting on 6th November 2015.

Company Law, Accounting and Auditing Study Circle series on Indian Accounting Standard (IN D-AS)

The second Study Circle meeting as a part of series of meetings on IND-AS was held on 7th October, 2015. The meeting was addressed by Mr. Sanjay Chauhan. He covered discussions on the following IND-ASs:

(I) IAS / IND AS 16 – Property Plant & Equipment;
(II) IAS / IND AS 38 – Intangible Assets; and
(III) IAS / IND AS 40 – Investment Property

Sanjay Chauhan initiated the discussion regarding the scope of above IND-ASs. He briefed the members on the comparison of these IND-ASs with the present Accounting Standards on the subject. He covered all the important elements of these IND-ASs with the practical examples and Case Studies. The meeting was very interactive and level of participation and deliberation was good.

The third Study Circle meeting as a part of series of meetings on IND-AS was held on 15th October, 2015. The meeting was addressed by Mr. Abuali Darukhanawala. He covered the discussion on the following IND-ASs:

(i) IAS/IND AS 17- Leases and
(ii) IAS/IND AS 23- Borrowing Costs

The discussion on IAS/IND AS 17 (Leases) started off by discussing the definition and indicators of Finance and Operating Lease. The speaker further covered accounting treatment with examples and discussed the disclosure requirements under the standard. He also covered special transaction of sale and leasebacks. The session concluded by discussing carve outs in IND AS 17 and its key differences with IAS 17 and AS 19.

The discussion on IND AS 23 (Borrowing Cost) covered scope, meaning and discussion on Qualifying Asset. The speaker further covered recognition, measurement and disclosure requirements of borrowing costs with suitable example. The session concluded with a Q & A round.

Overall, the meeting was fruitful and of value to the participants.

Lecture Meeting – Is Commodities Going to Bring Down Global Economics” held on 21st October, 2015

He then went on to define the word ‘to invest’ as, to place money in any commercial venture with inclination to make profits.Commodities are not only linked with Equity Markets but all Equity Stocks have a base with Commodity. If one followed the commodities movement then a person would be able to identify the related company and have a head start in predicting the price movement and invest accordingly. It was necessary that along with Annual Audit Reports and Financials of Companies, subsequent quarterly reports needed to be tabulated and analysed. For better understanding of a Company, in-depth research needed to be done by visiting its website, company visit, analysis of related companies, management integrity, etc. Also the Government policies played an important role in selecting the right commodity/company to invest. He said that there is never a zero sum game. He spoke about being bearish and bullish depending on the research and analysis on various aspects of the commodities.

He gave a detailed analysis on one of the most important commodity-Crude Oil and spoke about the Current value of Crude Oil and expectation of the future value. According to him nearly 30% of the listed equities are either directly or indirectly affected by the crude oil prices. The world was going to be less and less dependent on crude oil with substitutes like gas and lithium attaining prominence.

The audience was bubbling with questions that made the discussion interesting and useful. The speaker answered all questions precisely creating a thirst for more from him. There was demand to arrange a sequel.

Students Study Circle held on 9th October, 2015 on Black Money Law

The Students Forum of the Society organised a study circle on the topic “Black Money Law” on Friday, 9th Octo-ber, 2015 from 6.30 pm at the Society Office.

The study circle was led by student speaker and co-convenor Mr. Viren Doshi under the guidance of an expert on the topic Mr. Hardik Mehta.

The motive of organising this study circle was to make the future Chartered Accountants proactive and aware of fresh piece of legislation. The study circle was well at-tended by 20 students and it was a great learning experience for the student members.

The chairman of the session Mr. Hardik Mehta ignited the students with his deliberate talk and deep knowledge on the subject. The speaker Mr. Viren Doshi covered the topic and gave an insight of the act.

The convenor of the Students Study Circle Mr. Viren Doshi encouraged students to participate actively in the activities of the Students Forum and come forward to lead study circles.

Lecture Meeting – Life at Google, Innovation and Silicon Valley held on 14th October 2015

President Raman Jokhakar, welcomed the speaker Mr. Bradley Horowitz, VP, Google Inc. USA who joined us over a web call through Skype from California. President Raman Jokhakar introduced Mr. Horowitz by sketching his life journey from the time he received a Bachelors in computer science from the University of Michigan in 1989. He pursued his graduate studies at the MIT Media Lab, in the Vision and Modeling Group, under Professor Sandy Pentland and received a Masters in Media Science in 1991. In short, the journey from where he started his graduation to Yahoo then Google and where he is today. After the well-defined welcome, Mr. Horowitz started his conversation of how he started his life at work from Michi-gan in 1989 where he studied and moved on to start his own company. Mr. Horowitz was CTO and a co-founder (with Jeff Bach, Chiao-feShu and Ramesh Jain) of Virage, Inc. He shared his experience on how he started and worked towards building this company. Finally, Virage went public on the NASDAQ in 2000, and was acquired by Autonomy in 2003.

Mr. Horowitz moved to Yahoo in 2004 where he joined as Director of Media Search. Gradually he was promoted to Vice President of Advanced Development, and his team created both Yahoo Research Berkeley and the Brickhouse incubator.

On this journey so far, he shared his experiences and the learning he build on with the people and areas around him. He left Yahoo and joined Google in 2008 as Vice President of product for consumer applications, eventually leading the product management organisations for Gmail, Google Docs, Calendar, Google Talk, Google Voice, Picasa, Orkut and Blogger.

Life at Google, he mentioned, was an experience totally different. He detailed the recruitment process at Google and how the entire appraisal process worked. The immediate superior does not rate the employee however it is decided by a panel of different teams. The immediate superior can only facilitate the process with the employee in submission of the content for the work done. He mentioned about the great food that Google provides to its staff and how the entire culture is an employee motivating one. Further he went to add that this does not mean that they do not face iterations however employee satisfaction plays an important role in the great work that they do.

He shared his experiences on how the Google Search Engine generates high revenues.

In 2011, Mr. Horowitz and Mr.Vic Gundotra conceived of and led the Google+ Project. In March 2015, he became the lead for the Google Photos and Streams products.

Finally the session was left open for questions from the audience. The enthralled audience had lots on mind. As questions came up the entire session became an interactive one. People asked various questions including the failure of Orkut, the number of employee iteration at Google, what if the Google Search Engine did not work as it does today. The audience were eager to know about India and the Google growth in India. What sort of investment will Google do in India and what Indians have in store for them. All were well addressed by the speaker.

Finally, the session concluded with a formal vote of thanks given by President Raman Jokhakar and a huge round of applause.

International Economic Study Circle, GEO Politics Implication For Indian Economy held on 8th & 12th October 2015

GEOPOLITICS evolved around its two parts, “geo” and “politics.”, “geo” can denote various geographic aspects, such as space, soil, or territory “Politics” generally concerns factors that are related to power, such as foreign policy, international relations, and military strategy. Global Risks arising from the Accelerated Interplay between Geopolitics and Economics.

The relative decline of the West, the process of globalisation, and the emergence of new powers is creating a world with several interconnected poles. In the international arena, the universal values and capabilities of the old powers are competing with emerging economies and their various idiosyncrasies. The process of economic convergence or catching up – whose future is not assured – has up to now relied on the tacit support of the emerging powers for the current system of global governance. These emerging powers believe that the current regime is in their interests, but with regard to free trade, rule of law, or human rights, their support is not guaranteed in the future. Mr. Bill Gross of Janus Capital says that one of the trigger to the looming financial crisis is “Geopolitical risks—too numerous to mention and too sensitive to print”.

The group discussed Geopolitics Risks in various countries and the impact it has on Global Economics. The Group had a very interactive session.