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Year: 2011

REPRESENTATION

Bombay Chartered Accountants’ Society

7, Jolly Bhavan No. 2,

New Marine Lines, Mumbai-400020.

Tel. : 61377600 to 05 / Fax : 61377666
E-mail : bca@bcasonline.org;

Website : www.bcasonline.org

WebTV : www.bcasonline.tv

September 27, 2011

Shri Shobhit Jain
OSD (TRU)
Central Board of Excise and Customs (CBEC)
Government of India, North Block,
Parliamentary Street, New Delhi-110001.
Respected Sir,

Subject: Representation of our Views on the Concept Paper for
Public Debate Taxation of Services based on a Negative List of Services

We have seen with interest the Concept Paper for Public Debate and on behalf of the Bombay Chartered Accountants’ Society, and would like to humbly submit our representation on various aspects.

We hope that our representation will receive due consideration. We would be most willing to put forward our views in person should this be required. Thanking you,

We remain,

Yours truly,
For Bombay Chartered Accountants’ Society

Pradip K. Thanawala

President

Govind G. Goyal

Chairman,

Indirect Taxes & Allied Laws Committee

Representation of our Views on the Concept Paper for Public Debate Taxation of Services based on a Negative List of Services

1.0 Background Pursuant to the announcement made by the Honourable Finance Minister while presenting the Union Budget 2011, a concept paper on taxation of services based on negative list of services has been issued for public debate and views are solicited from all stakeholders before 30-9-2011. Accordingly, we present our views on the said concept paper.

2.0 Recommendations in brief The concept paper introduces the justification for the negative list on the grounds of administrative challenge, stability and comprehensiveness and proceeds to place certain questions for public debate and feedback. The questions placed and our summarised feedback on those questions is tabulated below:


3.0 The country should not adopt a negative list
The concept paper in paras 2, 3 and 4 highlights in detail the issues surrounding the positive and negative lists. While it does accept that the currently existing positive list has certain advantages in terms of definitiveness, it seeks to justify the introduction of the negative list by citing certain limitations of the current mechanism of positive list. We are of the view that most of the said limitations can be either removed even in positive list approach or are so inherent that they would exist even in the negative list approach. The following table explains the same :

On a perusal of the above table, it is evident that the reasons cited in favour of the transition appear to be more a mirage. The same issues can be addressed in the positive list or would likely to be continued in the negative list as well.

It may be noted that though the consolidated Excise Act was enacted in 1944, the residuary entry under Excise Law (converting the law from the negative list to positive list) was introduced only in 1975 i.e., more than 30 years after the introduction of the law. As compared to that time frame, the service tax law is merely 17 years old. Further, it is much easier to provide a comprehensive definition of ‘goods’ as compared to ‘services’. Therefore, the challenges of introducing a negative list in services can be compounded.

4.0    Even if it is felt that we need to adopt the negative list, the same should be adopted only at the time of GST and not earlier than that

The nation is on the verge of introducing a major indirect tax reform by introduction of comprehensive Goods and Service Tax (GST). The introduction of GST will obviate the need to classify transactions between goods and services to a great extent. Further, the Constitutional Amendments required for introducing GST will obviate many of the challenges faced currently in defining the scope of services. Therefore, it is felt that even if we need to adopt the negative list, the same should be adopted only at the time of GST and not earlier than that.

5.0    If the negative list is introduced prior to the introduction of the GST, the definition as recommended below should be adopted Service means any obligation undertaken by the assessee for a monetary consideration pursuant to a contract or agreement, whether written or not, (other than a contract or agreement for supply of goods, money or immoveable property) between two or more consenting parties and includes:

A.    right to use an immovable property;

B.    construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a competent authority;

C.    temporary transfer or permitting the use or enjoyment of any intellectual property right;

D.    obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;

E.    service in relation to lease or hire of goods; and

F.    right to enter any premises

But excludes a supply —

A.    by an employee to an employer in the course of or in relation to the employment of the person;

B.    by a constitutional authority under the Indian Constitution or a member of an Indian Legislature or a local self-government in that capacity;

C.    that amounts to manufacture of excisable goods or is chargeable as part of the value of goods to a duty in terms of the provisions of Central Excise Act, 1944;

The above amended definition is preferable since the proposed definition states that service means ‘anything’. The word ‘anything’ does not convey any meaning. No statute defines the charging provision to be ‘anything’. There needs to be a certainty to what is proposed to be taxed. Anything conveys vagueness rather than certainty or definitiveness. Further, generally the term ‘thing’ is used for tangible products like book, CD, etc. However, a lecture delivered by a professor or song performed by a singer (some examples of services) cannot be said to be ‘things’ in general parlance. Therefore, in trying to define service as ‘anything’, the soul of service is missed out.

6.0 In addition to the negative list of services, another list of services eligible for zero rating should also be introduced
The concept paper includes a negative list of services. However, it does not include services which should be zero- rated. It is therefore important that another list consisting of zero-rated services (i.e. services which are not liable for tax on the output but at the same time eligible for input credit) should be included. The said list should include exports and supplies to SEZ units and developers.

Lecture Meetings

Subject : Taxation of Real Estate — Some Important Aspects including PCM, Development & Redevelopment, S. 50C and S. 80IB(10)

Speaker : Pradip Kapasi, Chartered Accountant

Date    : 20-10-2010

After a brief introduction of the topic for the evening, the learned speaker took up the Completed Contract Method (CCM) as the first issue to be discussed. The Supreme Court in the case of Bilahari Investment (299 ITR 1) held that the CCM which was acceptable in accountancy was also acceptable in the case of income tax. The propositions laid down by the Supreme Court in this decision were that the CCM was an accepted method of accounting, it was an objective method and it was a revenue-neutral method. Based on the observations of the Supreme Court, the speaker opined that the CCM would be acceptable provided that there was no accounting standard in force prohibiting use of the CCM.

The speaker then proceeded to discuss certain recent developments in accountancy which have a bearing on the topic. It was noted that AS-7 was revised to provide that the revenue for all contracts entered into on or after 1-4-2003 would have to be recognised for on a Percentage Completion Method (PCM) only?: the option to use CCM has been withdrawn. Further, the revised AS-7 is not applicable to builders and developers but only to contractors. The speaker referred to the opinion of the Expert Advisory Committee of ICAI which has opined that the revenue recognition of builders and developers would be in accordance with AS-9 read with AS-2. Reference was made to the Exposure Draft of ASI which had clarified that the revenue was required to be recognised in cases of builders and developers only at the time of parting with the possession of the premises and not at the time of mere execution of the agreement for sale. However, the Draft was not finalised and instead, the Guidance Note 23 was issued, which states that it would be reasonable to assume that the property in goods passes on the execution of agreement and therefore, revenue recognition should occur at that stage provided work had commenced. Attention was drawn to the GN which provided that in cases where substantial work is yet to be performed at the time of execution of the agreement, one would have to recognise the revenue in stages by reverting to AS-7 for following the PCM. Thereafter, the speaker discussed some important aspects of relevant IFRS on this topic, viz., IAS 11, IAS 18, IAS 40 and IFRIC 15.

Thereafter, the learned speaker addressed the issue of how the taxation of real estate industry would be affected by the various accounting changes that have or will take place. The speaker opined that given all the accounting changes, in view of S. 145 and S. 145A and the tribunal decisions in the case of Greater Ashoka LDC. (P) Ltd. (89 TTJ 281) and Growth Techno Projects Ltd. (29 SOT 59), following the CCM would not be difficult.

The speaker then highlighted that the cost of acquisition of land is to be ignored in considering the value of the work completed and also in determining the stage of completion of work. He explained that the base unit for computing the work completion can be w.r.t. — area, cost, time or sales value. He expressed that the time of passing the effective control and management by the builder-developer was crucial in deciding the time for recognition of revenue. The speaker opined that the revenue may be recognised once the stage of completion of work reached 25% of the total work to be done. He also referred to some pertinent issues arising in valuation of stock/land/WIP.

The next point of discussion was whether the borrowing cost incurred (being in the nature of period cost) was allowable as deduction in computing the income for tax purposes?? It was explained that the Bombay High Court in the case of Lokhandwala Constructions (260 ITR 579) held that the interest should be allowed as a deduction as it was in the nature of business expense u/s. 36(1)(iii). On the topic of ‘Borrowing Cost’, the speaker also discussed the cases of Wallstreet Constructions [101 ITD 156 (Mum.) (SB)], K. Raheja [102 ITD 414 (Mum.)], Thakkar Developers [115 TTJ 841 (Pune)].

The next question was whether sharing of land or real estate of any kind, in any manner, would by default lead to formation of a joint venture?? If yes, another question would be whether this JV would then be an AOP and taxable as a separate entity?? He highlighted the acute controversy prevailing on account of the conflicting decisions of the AAR in the cases of Van Ord 248 ITR 399, and Geo Consult GmbH (304 ITR 283). In the opinion of the speaker, the arrangement of land sharing without sharing the profit does not amount to joint venture.

In the area of indirect taxation and allied laws, the speaker discussed the developments in the following areas?:

  •   Service tax on sale of flats — Harekrishna Developers AIT, 2008 128 (AAR), Magus Constructions P. Ltd., 2008 TIOL 321 (Gau.).
  •     Consumer Protection Act — Fakirchand Gulati v. Uppal, (SC), ITAT Online.
  •     VAT on sale of flats — Review of K. Raheja’s decision by larger Bench of SC in L&T’s case, Amendment of 2006 w.e.f. 20-6-2006, Trade Cir-cular dated 7-2-2007 and Amendment of 2010.
  •     Stamp Duty — Development agreements and tenancy transfers.

Thereafter, the speaker discussed whether a development agreement results into a transfer in the hands of the landlord and if yes, at what point of time does the liability to pay tax arise?? The decision of Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia (260 ITR 491) was discussed and debated and the serious consequences following this decision were highlighted.

Next, in the cases redevelopment of tenanted properties, the speaker said that in case the land-lord himself develops the property, there would be no transfer in his hands. However, in case the landlord does not develop the property himself, in such cases, the above decision of the Bombay High Court would be applicable.

Other situations and alternatives arising from the decision of Chaturbhuj Dwarkadas Kapadia such as development pending the approval, willingness to perform, deferred possessions, piecemeal transfers, partial retention, need for written agreement, etc. were discussed.

Next point was redevelopment. In case of redevelopment of tenanted property, there could be three situations in respect of the tenant on redevelopment?:

  •   The tenant of old property becomes tenant of new property after the redevelopment — Would this result in capital gains in the hands of the tenant?? There is a transfer, however, capital gains would arise only if there is a full value of consideration.
  •     Tenant remains a tenant immediately after the redevelopment, but after a while, he becomes the owner — There are two views on transfer when tenancy is converted to ownership. One view, to which the speaker subscribed, is that there is a new right in place of the old right and thus, there is transfer. The other view is that tenancy provides an occupancy right and upon conversion to ownership, there is a merger of an inferior interest to superior interest but no transfer.
  •     Tenancy is converted to ownership immediately on redevelopment — Whether when such ownership property is transferred shortly after conversion to ownership, would it be long-term or short-term?? Courts have held that this is short-term capital asset as what was transferred was the ownership right which was acquired only in the short term.

In case of redevelopment of society property, issue is whether there is any liability to tax when the society and owners transfer the development rights to developers. If yes, the issue would be that since the transferable development rights (TDR) have no cost of acquisition, there would be no capital gains tax. In this regard, the decision in the case of Shakti Insulated Wires Ltd. (87 ITD 56), should be noted which stated that the cost of acquisition was to be determined by pro-rating the cost of acquisition of the land. However, later there were decisions in the cases of Jethalal D. Mehta (2 SOT 422) and Om Shanti CHS Ltd. (41-B BCAJ 265) which held that since TDR and additional FSI have no cost of acquisition, there was no capital gains tax. However, in case of transfer of unutilised FSI, there would be capital gains tax.

Another issue in this case would be whether taxability would be in the hands of the society or members. In case of Auroville CHS Ltd., the Mumbai Tribunal has taken a view that the taxability should be in the hands of the members. However, at present, this issue has not been examined in detail by any court of law.

The meeting ended with the vote of thanks.

Subject : Important Practical and Legal Issues arising out of first and second appeal and relevant amendments related to appeals in DTC

Speaker : Dr. K. Shivram, Advocate

Date    : 24-11-2010

Dr. K. Shivram, Advocate, addressed the members on the subject of “Important Practical and Legal Issues arising out of first and second appeal and relevant amendments related to appeals in DTC” on November 24, 2010 at IMC. The speaker in his exhaustive style covered various issues with regard to procedures and legal concepts in relation to appeals. He discussed not only the main legal and procedural issues in relation to appeals, but also the practical issues in representation and documentation which can cause damage unless not observed diligently.

The speaker started with appeals at the first appellate stage. He covered in detail the fundamental procedural requirements of grounds of appeal and the statement of facts required for every appeal. He stressed on the importance of each document and the ramifications if irregularities crop up in the same. He also dealt with reassessment proceedings and instances where an assessee can ask for squashing of the proceedings.

The speaker ably covered significant issues including that of making a claim in the course of assessment proceedings, inclusion of additional grounds for the first time before the appellate authority, raising of the jurisdictional issue at a later point of time, production of additional evidence, etc.

In the same vein, he brought out the finer points in germane topics like who can file or sign an appeal by alerting the participants to the risk of an assessment by consent, the consultant’s limited role, etc. He briefly covered the powers of the CIT(Appeals) as also the rights available with the appellant including those with respect to stay of recovery proceedings.

For the benefit of participants, he listed out various instances in which defects in an appeal can be cured under the maxim of judicial propriety. He also gave a list of judicial precedents to support each instance.

  •     In the later part of his speech, Dr. K. Shivram elaborated on the various issues regarding appeals to the Income-tax Appellate Tribunal.

He highlighted specific points in relation to filing of appeal, service of order, etc. He detailed various rules in relation to rights of respondent, rectification of mistake, presentation of paper book, filing fees, etc.

  •     For each major issue, he provided anecdotes from his vast personal experience to drive home the point. Further, his speech was bolstered by a gamut of legal precedents which found immense favour with all participants. He also gave an insight on important aspects of the Direct Tax Code wherever relvant.
  •     At the end, he provided a detailed referencer on various guidelines and regulations. It is said that for every legal argument, the presentation of the argument is as important as the content. To that end, Dr. K. Shivram capped his exhaustive presentation by providing resources for the participants on the art of representation.
  •     The participants also got a chance to get their queries answered from the learned speaker. His enthusiasm coupled with his deep knowledge of the subject was well appreciated by all the participants.

Subject : Recent Developments in IFRS – Globally and in India

Speaker : Mr. N. P. Sarda, Chartered Accountant

Date    : 08-12-2010

Mr. N.P. Sarda, started his lecture by briefing about the journey of the formation of Accounting Standards. In 1977, India had to decide whether to adopt the International Accounting Standards in totality or to formulate its own Accounting Standards. The Accounting Standards Committee decided to formulate its own standards; accordingly Indian Accounting Standards came into existence. The Indian Accounting Standards are being followed since last three decades.

In 2007, again a debate arose whether to follow the International Financial Reporting Standards (IFRS) and adopt the same in totality or to bridge the gap between Indian Accounting Standards and IFRS by converging the standards. The decision was taken to adopt the convergence process.

The journey of IFRS was explained. Initially, there were 41 International Accounting Standards (IAS) as they were termed prior to being termed as IFRS. Out of these 41 IAS, 12 standards were withdrawn or superseded by new standards, leaving 29 IAS. Presently, there are nine IFRS and 16 interpretations on IFRS known as IFRICs. Finally there are 11 interpretations on IAS also. To sum up, at present IFRS has total of 65 documents to be referred.

To be at the level where all the accounting standards are accepted by the world at large, a country has to pass through three stages, namely:

  •     Harmonisation;
  •     Convergence; and
  •    Adoption

India, has successfully harmonised its Accounting Standards to suit the local needs of stakeholders. It has decided not to directly adopt the IFRS, but will be passing through the second stage of convergence of Indian Accounting Standards with the IFRS. In convergence, there is right to ‘carve out’ i.e. right to differ from IFRS.

Section 211 of the Companies Act, 1956 will have to deal with two categories of Financial Statements.

  •     Financial Statements prepared as per IFRS Converged Accounting Standards for the entities where the adoption of IFRS Converged Accounting Standards is mandatory; and
  •     Financial Statements prepared by other entities, where they will continue to prepare them as per the Indian Accounting Standards.

The two main challenges for convergence are:

  •     Fair Value; and
  •     Tax Implications.

The above two challenges are of a very great concern and they are considered to be major barriers to the smooth implementation of IFRS.

The ideal decision is to have the applicability of IFRS only for the Consolidated Financial Statements (CFS) and allowing individual subsidiaries and also holding company to continue to follow Indian Accounting Standards. This will mitigate the issues relating to tax, Schedule VI, Schedule XIV and other corporate compliances. In fact, listed companies of 27 countries of Europe have only CFS prepared as per IFRS.

There will have to be legislative changes to the provisions of Sections 78, 100, 205, etc, taking into consideration the treatment given under IFRS. For example:

  •     Redeemable Preference Capital which is part of Equity as per Indian AS, will have to be treated as debt as per IFRS;
  •    Fully Convertible Debentures, which till the time of conversion is treated as debt, will have to be segregated and the element of Equity will have to be shown under Equity.

There will have to be a separate Schedule VI for Financial Statements under IFRS. Even Schedule XIV will also have to be amended for IFRS compliant Financial Statements, in view of the fact that as per IFRS, depreciation on assets has to be pro-vided as per the actual useful life of the asset. The existing Schedule XIV prescribes standard rates of depreciation for various categories of fixed assets, irrespective of its useful life.

There have to be rules of the game for convergence, which are covered in IFRS 1 – First Time Adoption of IFRS.

There are five items where the effect of the changes due to adoption of IFRS is to be ignored for the past years and the effect has to be considered from the year of adoption only. It means there will not be retrospective changes required to be made to the Financial Statements in such cases.

There are 17 items, wherein an option is given to the entity to apply treatment prescribed under IFRS with effect from a particular date in past on adoption of IFRS.

Regarding the change in Accounting Policy, as per the Indian AS, the difference due to the change is taken to the current year’s profit and loss account and the impact on the profit/loss of the current year due to such change is quantified.

As per the IFRS, instead of working on the current year for the impact, the change has to be carried out in the previous year figures, which are part of the comparative figures with the current year.

Further, there is an additional statement in IFRS known as Other Comprehensive Income (OCI) Statement, which deals with the unrealised gains/ losses on fair valuing the assets and liabilities. As IFRS follows a Balance Sheet approach to the Financial Statements, it requires that all the assets and liabilities are reflected at their fair values. In view of the same, wherever there are adjustments to the assets and liabilities, which are only on account of fair valuing the same, such adjustments are taken to OCI.

A conceptual difference between IFRS and Indian GAAPs is that the IFRS follows Fair Value Accounting which is relevant in today’s context, whereas Indian GAAPs follows Historical Cost concept which is a reliable concept but may not be relevant in today’s context.

Another Conceptual difference between IFRS and Indian GAAPs is that of Substance over Form.

  •     Indian GAAP gives more importance to the legal aspect of the transaction than the beneficial aspect;
  •     IFRS believes in beneficial aspect than the legal aspect and hence judgment plays a vital role in the preparation of accounts under IFRS.

Mr. Sarda concluded by stating that the User should know from the Financial Statements what the Pre-parer of Financial Statements knows.

The learned speaker thereafter replied questions raised by audience.

The meeting terminated with a vote of thanks to the speaker.

Society News

Seminar on Direct Tax Code

The Taxation Committee of BCAS had conducted a Seminar on Direct Tax Code on 26th & 27th November, 2010 at Y. B. Chavan Pratishthan, Nariman Point. The seminar received very good response. The total enrolment was more than 450 participants which included members from the industry and from different parts of the country. The Seminar was addressed by prominent speakers namely; Mr. Pinakin Desai, Mr. Kishor Karia, Mr. Gautam Doshi, Mr. Rajan Vora, Mr. Gautam Nayak, Mr. Hitesh Gajaria. The speakers highlighted important aspects of the Direct Tax Code and gave suggestions for making proper representations to the Government on certain contentious and far reaching consequences that the DTC may have.

Accounting and Auditing Committee Careers in Internal Audit – An Exploratory Programme

The regulatory framework on one hand and the accelerated pace of the economy on the other hand has made it imperative for progressive enterprises to set up effective Internal Audit systems to aid the management and to enable the enterprise to achieve its objectives. Chartered accountants now have the opportunity to either become a part of the in-house Internal Audit team of large companies, banks, financial institutions, etc. or to join the Internal Audit practice of a professional firm.

To create awareness about the potential careers that await chartered accountants in the area of internal audit, the Accounting and Auditing Committee held a half day exploratory programme entitled “Careers in Internal Audit” on December 11, 2010 at BCAS premises.

Mr. Pradip Thanawala, Vice president, welcomed the participants and shared his thoughts on the changing role of internal audit in present times.

The panel of speakers comprised of – Ms. Neesha Samant, Mr. Nischal Shah and Mr. Shailin Desai, Chartered Accountants. Mr. Nischal Shah was part of the Corporate Internal Audit team of a large IT company prior to pursuing his MBA and thereafter joined a well-known credit rating agency. He elaborated on the advantages of starting one’s professional career with a stint in Internal Audit. Through sharing of his personal experiences, he explained that internal audit provides exposure to the key functional areas of the entity audited and thereby creates ample opportunities of cross-functional interactions.

Ms. Neesha Samant shared her experience as a senior member of the Internal Audit Department of a large group of entities engaged in Banking and Financial Services sector. She drew comparisons between working in industry as in house internal auditor vis-à-vis working in CA firm as an outsourced internal auditor. She convinced the participants that switching between CA firm and the industry is not at all difficult for those pursuing career in internal audit. She also briefed participants on the skill sets and competencies needed to pursue a career in Internal Audit and provided the list of Professional Certification courses that may be taken up by candidates interested in pursuing a career in Internal Audit.

Mr. Shailin Desai, who specialises in Internal Audit and Risk Advisory Services for the Telecom Industry, in a large accounting/consulting firm, gave altogether new insights for pursuing a career in Business & Risk Advisory services with large accounting/consulting firms. Through lucid example of a large corporate house where the Internal Audit Head was asked to take over as the acting-CEO during the absence of the latter, he drove home the organisation-wide role of the Internal Auditor. He also shared his experience of developing industry specialisation within internal audit and the edge that such specialisation creates in present times. His passionate rendering of “the Art of Internal Audit” stirred a lot of interest amongst the young participants.

The programme concluded with a question/answer session that gave the participants a chance to clarify their doubts and address their concerns. The panel of speakers was joined by Ms. Nandita Parekh & Mr. Atul Shah, Course Coordinators in the concluding session. The participants were encouraged to attend the six day Foundation Course on Internal Audit that is scheduled to be conducted by BCAS in the month of February, 2010 as well as to take up membership of BCAS Students’ Forum & Internal Audit Study Circle for ongoing learning in the area of Internal Audit.

The program received an overwhelming response with an enrolment of 78 participants – and for many young participants, it was their first introduction to the BCAS.

Society News

Dt.23/12/2010 2nd Residential Study Course on IFRS

Accounting & Auditing Committee
The second Residential Study Course on IFRS 2010 was jointly organised by BCAS with IMC. It was held at Hotel Gateway Nashik on Thursday 23rd, Friday 24th, & Saturday 25th December. The winter cold and Christmas mood set the perfect tone for the study course.

There were 82 participants (including 21 from industry) for the RSC and were divided into 3 groups.

Day 1: At the commencement of programme, the President extended welcome to the participants, Paper writers, Group Leaders and members of accounting and auditing committee. He shared the vision statement and exhorted that BCAS shall harness talent and disseminate knowledge to members, build skills and network amongst them. He also expressed that sharpening the knowledge on IFRS is the need of the hour. He complimented the accounting and auditing committee for organising this event.

Chairman Himanshu Kishnadwala, briefly gave information about IFRS and explained the course, and the structure of the current programme.

1st Technical Session:
In the first session the Paper Writer Mr. Ramesh Lakshman made an initial presentation on the topic ‘Introduction and concept of Fair Value methodologies and Applicability’.

In his presentation covering the subject Mr. Ramesh touched upon, various important concepts.

He explained that there are different approaches of determining fair value viz.

a.    Market approach, Income approach, and Cost Valuation approach. He suggested to refer to Level 1,2 & 3 of US GAAP.

b.    He explained different applicable inputs to be referred to
At Level 1 The quoted prices in active markets, At Level 2 quoted prices of similar assets (in-terest rate, yield curve prepayment Etc.) At Level 3 Inobservable inputs should be referred to e. g. He suggested to follow guidelines covered in Para AG 69 to 82 of IAS 39.

Post Lunch Group Leaders Ashutosh Pednekar, Anagha Thatte and Jayesh Gandhi discussed actual case studies on Forex and commodity derivatives.

Mr. Simarjeet from Reuters who was accompanying the paper writer in his presentation showed live data of cross currency and curves through internet connections and explained how these data can be useful for Level 2 and Level 3 assumptions. In his concluding presentation, the Paper writer Ramesh Lakshman dealt with the uncertainties and peculiaritiesattached with Fair Valuation.

On Day 2: Group Leader Paresh Clerk, Bharat Jain and Anand Paurana led the discussion paper by Sudhir Soni on IFRS 1 “First time adoption of IFRS”. The Group Leaders with their own power point presentations explained the actual accounting enteries and also covered reference para of IFRS, IFRIC and IAS.

The Group Leaders also covered the case studies on consolidation IAS 27. They explained each case studies and made an interactive presentation and shared reference points from IAS 27.

The total discussion time allotted for the above was 4 hours.

In the Post Lunch Session, the Paper writer Sudhir Soni explained the concepts and responded to the queries and posers raised by each groups.

In the evening CA Vaibhav Manek made an interesting presentation on “Leadership in Professional Service” presentation covering people, process, knowledge base, competence mapping, unique identity of professional practice firms etc. He emphasised need of networking, capacity building, amongst professional firms and grooming and mentoring Leadership.

After the presentation participants had sumptuous dinner at Pool side enjoying cold weather and music.

On Day 3: The group leaders Manish Sampat and Vijay Mehta, Gautam Shah and Hasmukh Dedia, Murtuza Vajihi and Nitesh Dedia respectively led the discussion on paper on Revenue recognition. (with focus on Infrastructure and real estate sector) written by Khozema Anajwalla and Atul Deshmukh.

Both paper writers and six group leaders emphasised that to understand standards, first the same have to be read, facts studied and then applied.

In the concluding session participants expressed their satisfaction. The Chairman complimented the convenors and the BCAS staff led by the GM for the excellent co-ordination and arrangements for the RSC.

Dt. 4/01/2011 Book Release (Service Tax)
The revised and updated edition of Service Tax Books were released on 4th January 2011 at the hands of CA. Mayur Nayak, President, CA. Pradip Thanawala, Vice President, CA. Govind Goyal, Chairman – Indirect Taxes and Allied Laws Committee and CA. Suhas Paranjpe, Convenor – Indirect Taxes and Allied Laws Committee. Four books namely, Service Tax – Basic Concepts and Procedures, Service Tax Goods Transport Agency Services, Service Tax – Business Auxiliary Services and Business Support Services and Service Tax – Construction Related Services.

BCAS Foundation Jointly with PCGT, IMC, PCaW
A talk on Whistleblowing was organised by Public Concern for Governance Trust, AntiCorruption Cell of the Indian Merchants’ Chamber (IMC) and BCAS Foundation(Bombay Chartered Accountants’ Society) at the Babubhai Chinai Committee Room,IMC on January 7, 2011.

BCAS Foundation Jointly with PCGT, IMC, PCaW : Gathering listening to the talk

Mr. Julio F. Ribeiro, Chairman, Anti Corruption Cell, welcomed the participants. He spoke about the importance of Whistleblowing. He added that the name ‘Public Concern for Governance Trust’ was taken from ‘Public Concern at Work’ (PCaW) UK.Dr. Dhananjay Samant, Chief Economist, represented IMC and was seated on the dais Mr. Narayan Varma, Trustee, PCGT, explained the concept of Whistleblowing to the participants. He also discussed the recent attacks on RTI activists in Mumbai.Ms. Sukaina Esmail, Program Director, PCGT, introduced Ms. Shonali Routray, Client Services Manager, PCaW. Ms Routray introduced the topic of Whistleblowing in the new cyber age with the Wikileaks story. She spoke about the scope and process of Whistleblower protection in the UK. She discussed the mechanism and scope of Public Interest Disclosure Act,UK and presented statistics on the cases received and the judgments made. Ms Routray discussed Indian law with respect to Whistleblowing and highlighted some of its mechanisms and the protections it offers. Mr. Yeshwant Gawand narrated his own experiences as a whistleblower. He spoke about how he was beaten up for taking on a Shiv Sena corporator over alleged encroachments and undeclared assets. Mr. Ribeiro assured him of support from PCGT. Mr. Nitin Shinghala, Joint Secretary, Bombay Chartered Accountants’ Society thanked Ms. Shonali Routray, the IMC and all the participants for attending the meeting.


Dt. 7/01/2011 Study Tour to Bangalore

Seminar Committee:
Seminar Committee of BCAS organised a Study Tour to Bangalore and Mysore from 7th January, 2011 to 9th January, 2011. 67 participants (including 16 participants from Bangalore) participated. On 7th January, participants visited General Assembly Plant of Toyota Kirloskar Motor Company and then visited campuses of Wipro and Infosys at Bangalore. The company officials at the 3 locations also made detailed presentations. Next day, the participants visited Infosys Technology’s Training Centre and Leadership Facility at Mysore, spread over 344 acres. Participants were amazed to see World Class facilities to train 10,000 trainees at a time at one location with facilities for lodging and boarding. The campus was impeccably maintained. One felt proud as an Indian that an Indian Company could create such a World Class facilities which other leading companies in the world would aspire to have. One was left wondering about the systems and processes at work behind such a large and beautiful facility working with such a clock – work like precision. This is a result of one man’s vision and dedication.

VISIBLE BENEFITS TO THE PARTICIPANTS OF VISITING GROUP OUT OF OBSERVATIONS & PRESENTATIONS AT WIPRO & INFOSYS:

  • Driven by values and highest adherence to those values, is the ultimate mantra.
  • Clarity of vision, goals and mission is paramount.
  • Skills of implementing the large projects are essentials.
  • Leaders can be groomed and trained.
  • Excellent infrastructure and energetic working environment are essentials.
  • Human capital is the most valuable asset class.
  • World class and excellent training facilities are must for sustainable and impressive growth.
  • There is no substitute for honesty, integrity, hard work and conducive environment.
  • Quality….Quality….Quality in every area and everywhere.
  • Excellent township to house employees is indispensable.
  • Grit, focused approach and passionate working make the work enjoyable, as well as successful.

The Study Tour held ended with half – day conference jointly with Karnataka State Chartered Accountants’ Association. The following presentations were made:

1.    IFRS-Traditional Issues & Implementation Challenges by CA. Vinayak Pai, Bangalore. The session was chaired by CA Krishna Swamy.

2.    International Taxation – Recent Developments by Ms. Bijal Ajinkya, Advocate, Mumbai. The session was chaired by CA Padamchand Khincha.

The study tour was organised in cooperation with the Karnataka State Chartered Accountants’ Association. BCAS appreciates efforts of CA H. Padamchand Khincha, CA Prabhu Allama, CA Ganapath Raj, Mr. Laxman and other Office Bearers of KSCAA, who played an active role in the success of the tour.

15th January 2011 Half-Day Workshop on MVAT Audit and Levy of VAT on Builders & Developers

Indirect Taxes and Allied Laws Committee:
BCAS had organised a Half-Day Workshop on MVAT Audit and Levy of VAT on Builders & Developers on 15th January 2011. The faculty for the first session on levy of VAT on Builders and Developers was CA. Rajat Talati. After touching upon the history of levy of VAT on Builders and Developers, the speaker outlined the whole scheme and the different Schemes for taxation under the MVAT Act and the issues and controversies under each scheme. The speaker indicated in a detailed manner how different dates were critical to determine the scope, extent and manner of coverage. The speaker also touched upon Practical Issues relating to the same and explained how in practical scenario even minute details can change the manner of levy.

In the concluding part, the speaker touched upon VAT implications relating to Redevelopment of societies and also guided the participants on their queries. The meeting ended with a vote of thanks to the Speaker.

The faculty for the second session on Revised Form 704 relating to VAT audit, Mr. Kiran Garkar started with a brief outline of Form 704. He then took up Annexure-wise detailed coverage of the revisions made in Form 704 beginning with Annexure J and moving on from Annexure G to I. Lastly, he touched upon the Annexure F pertaining to ratios and explained how the ratios, were in effect partly verifying the same details in different way. He also explained how the ratios had newly added the details pertaining to opening and closing inventory. There were a lot of questions relating to how the data should be input including purchases where set-off was not availed. The speaker clarified on each of them and explained how one would need to use their judgment and at the same time, clearly disclose the manner of arriving at reported figures. The meeting ended with a vote of thanks to the Speaker.

10th January 2011 Lecture Meeting by Sis. Shivani (Brahmakumari) on Unlocking the Treasures of Life