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BOOK REVIEW

“CRASH –
Lessons from the entry and exit of CEOs” by Shri R. Gopalkrishnan

 

Shri R. Gopalkrishnan is a
well known Corporate Leader and Management Author and Advisor and needs no
Introduction. However, a few words of Introduction will be useful to a Young
reader.

 

He studied physics at
University of Kolkata, Engineering at IIT Kharagpur. He has attended advanced
Management Program at Harvard Business School. He has served as the Chairman of
“Unilever Arabia, M.D. of Brooke Bond Lipton, Vice Chairman of Hindustan Lever,
and as the Executive Director of Tata Sons and several Tata Group Companies.
Presently, he is a Corporate Advisor. He is actively engaged in both
Instructional and Inspirational Speaking. He is the author of bestselling books
such as The Case of the Bonsai Manager, When the Penny Drops: Learning
What’s Not Taught, and A Biography of Innovations: From Birth to Maturity.

 

While many people talk
about the path to the top of organisations, very few are honest about how
difficult it is to stay at that position. Shri R. Gopalakrishnan
analyses the ‘software’ challenges, which leaders confront every day, and
shares the insights he has gained developing, managing, investing in and
supervising a variety of companies. The author shows that great leaders
continue to excel not just because of their skills and intelligence but also by
connecting with others using emotional competencies like empathy and
self-awareness.

 

The book is divided into 2
parts- Part One has 5 chapters and Part 2 has 15 Chapters.

 

In part One of the book,
the Author explores many pertinent questions: Is company performance a
surrogate for leadership and CEO Performance? If a company falters, is it
purely related to CEO performance? Conversely, if a company does well, is it a
definite credit to the leader?

 

The Author observes that to
be successful, a CEO requires cognitive intelligence as well as an intuitive
emotional intelligence – which means he or she must have a responsive sense of
empathy for the views of various stakeholders. In his experience, once a person
gets into a leadership role, there are forces that cause his or her emotional
intelligence or sense of empathy to shrink, This poses the real and hidden
challenge to the leader, a challenge he or she is unprepared for. The power of
a leader damages his/her brain. The damage cannot be totally avoided, but its
pernicious effects can be mitigated.

 

The Author then goes to
examine why power causes brain damage. He examines: What brings out the
best in a person? Perhaps a need to challenge one’s capability?
He
opines: when leaders feel that their intelligence is being tested rather than
being merely incentivised through money their motivation is triggered. Money
helps, but ambition is aroused of internal drives and challenges. This is what
people in Leadership positions experience when they assume a bigger
responsibility.

 

The Author observes that
power causes a significant behavioural change in leaders. Leaders tend to be
self assured, they need to be so if they have to lead their people and the line
that divides self-assuredness and over confidence is a thin one. The leader’s
confidence can be rooted in logic and data, or it can be rooted in feelings and
emotions. If his /her confidence is based on the best available data, then the
leader comes across as authentic. It is a positive form of self confidence. If
the leader’s confidence is not data based, the leader may seem impetuous or
someone who is not rooted in reality. This is negative form of self confidence.

 

The author
goes on to examine how and why power damages the leader’s brain. What happens
in cases of behavioural change? Does the person change because of power or
because of being placed in a radically different context? Or do the people
around the new leader view him/her through a separate set of lenses?

The Author puts it simply, and shorn of jargon, that Leaders loose a bit of
their emotional capacities, those very emotional capacities that were essential
to their rise. That holding power change the way leaders process their world.
They became impulsive, less risk–aware and less adept at seeing things from
other people’s perspective. That power blinds the leader to others’
perspectives, power turned the leader into an abstract thinker, power leads to
unrealistic optimism about goals and power leads to the view of the world in
terms of goals already set.

 

The Author concludes that
power intoxicates and it impairs human judgement-in short the acquisition of
power causes brain damage. Every leader whether in politics or society or
business is vulnerable to this danger. Several leaders learn to cope with the
inevitable threats and dangers, but many fail. They become victims of
the affliction.

 

Thus, in Part One of the
Book the Author examines the above questions and issues on the basis of his
extensive study and review of the available literature on the subject, and his
long years in business in leadership positions.



In part Two of the book,
divided into 15 chapters, it tells similar stories of various well known
business leaders who exited from their CEO positions for one reason or
another
: Carly Fiorina HP at HP, Jamie Dimon at Citibank, Vikram Pandit at
Citigroup, John R. Walter at AT&T, Lee Iacocca & Mark Fields at Ford
Motors, Michael Ovitz at Walt Disney Company, G.Richard Thoman at Xerox, Jim
Donald at Starbucks, Travis Kalanick at Uber, Chris Viehbacher at Sanofi,
Ramesh Sarin at Voltas India, Klaus Kleinfeld at Arconic, Anshu Jain at
Deutsche Bank, Vishal Sikka at Infosys. It is pertinent to note that none of
the aforesaid leaders had to exit either due to moral turpitude or financial
misdemeanour.

 

The Author narrates an
incident involving a heated exchange between J.R.D. Tata and a Senior Director,
A.D. Shroff, who sent his resignation from the Tata Group. The matter was
patched up by J.R.D with a great sense of egalitarianism and humility,
in his letter to A.D. Shroff, dated 23.08.1951:

 

I was surprised and
upset at receiving your letter. I do not remember exactly the words I used
during the somewhat heated exchange at the agents’ meeting but my complaint to
you was merely that an argument you used to score a debating point over me was
not an honest one. That is surely a far cry from questioning your honesty and I
am surprised that you interpreted it in that way.

 

You have a
right to resent my speaking angrily or showing your discourtesy as a result,
and for that I sincerely apologize, but if friends and associates decided to
part every time they had an argument, life would become
very difficult
.

 

In the
Epilogue, the Author quotes Thomas Middelhoff, a top–notch and famous executive
in Germany, CEO of the German media giant- Bertelsmann, later on found guilty
of misusing corporate funds and sentenced to 3 years in jail on charges of
embezzlement and related tax frauds, after his release from the jail from an
interview by Financial Times in May 2018, “I was out of touch with reality and
thought that certain rules did not apply to me. Ability brings you to the
top, but character keeps you there.
” He admitted that a key flaw in his
character was constantly craving public attention and affirmation. Over the
years, he felt that he had been carried away by narcissism and hedonism.

 

The book is based on the
Author’s extensively study and research on the subject, which is borne out by
copious notes at the end of the book running in about 30 pages wherein he has
given references to all his sources.

 

Filled with anecdotes,
analysis of various situations CEOs may find themselves in and unconventional
advice to help them, Crash: Lessons from the Entry and Exit of CEOs
is for veteran leaders as well as for those who aspire to start their own
ventures. This book is useful not only to CEOs and other Senior Management
Executives but also to every person who is running even a small or medium size
Organisation.

 

SOCIETY NEWS

Full Day Seminar on “GAAR and Anti-avoidance Provisions” held on 16th November 2018

The International Taxation Committee organised a one-day Seminar on GAAR and other Anti-Avoidance Provisions at St. Regis, Parel. The seminar was aimed at appraising the participants of the intricacies and issues coming out of these provisions through panel discussions on burning topics related to the subject.

CA. Pinakin Desai provided a thought-provoking Key Note Address which set the tone for the remainder of the day. The session was chaired by CA. Dilip Thakkar who also released the latest publication by BCAS on “GAAR (Including other Anti-Avoidance Provisions) – A Compendium”. The Compendium comprises of 30 articles spread over 2 volumes authored by some of the best minds in the profession.

The book launch was followed by a panel discussion amongst CA. Geeta Jani, CA. Padamchand Khincha and Mr. Kamlesh Varshney which was chaired by CA. Kishor Karia. The panel dealt with various issues related to GAAR, SAAR, JAAR, PPT and their interplay. Mr. Varshney made insightful remarks in to what could be the Revenue’s approach in applying these provisions.

The second panel was chaired by CA. Rashmin Sanghvi and the panellists – CA. Sushil Lakhani, CA. Yogesh Thar and CA. Karishma Phaterphekar who took up various issues surrounding recent domestic anti-avoidance provisions of POEM, Section 56(2) and Section 94B respectively.

The final panel of the day took up Case Studies on a diverse set of topics which would be impacted by GAAR. The panel was chaired by CA T P Ostwal. CA. Pranav Sayta provided insights on Structuring of inbound investments while CA. Ketal Dalal took up issues related to Holding Company Structures. CA Anup Shah provided his views on issues which would affect Restructuring of companies.

All the panellists ably brought out that GAAR and other anti-avoidance provisions are something that every professional dealing with taxation will need to reckon with; and drove home the point that a fresh look will be required – not only for new structures, but even for existing ones. The Chairman, CA. Mayur Nayak ended the day’s proceedings by thanking the faculty and encouraging the participants to take benefit from BCAS’ publication on GAAR. The meeting was a huge takeaway for the participants.

Full Day Seminar on “Burning Issues in Real Estate” held jointly with IMC Chamber of Commerce and Industry on 17th November, 2018

Corporate & Allied Laws Committee of BCAS organised a Full Day Seminar on Burning Issues in Real Estate, jointly with IMC Chamber of Commerce and Industry, on 17th November, 2018 at IMC, Churchgate wherein the key topics on Direct Tax, RERA, Issues and Opportunities in Funding, GST and JV/JD Structuring were discussed by the eminent speakers and Panellists as under:

Direct Tax: Moderated by CA. Chetan Shah and Panelists: CA. Pinakin Desai, CA. Gautam Nayak, CA Uday Ved and Mr. Yasin Virani of K Raheja Corp.

RERA: Moderated by Advocate Sudip Mullick of Khaitan & Co and Panalists: Advocate Parimal Shroff of Parimal K Shroff & Co, Rajan Bandelkar (Naredco) and Mr. Ravi Sinha (Track2Realty)

Issues and Opportunities in Funding: Moderator Amit Goenka (Nisus) and Panelists: Ram Yadav (Edelwiess), Shobhit Agrawal (Anarock) and Sharad Mittal (Motilal Oswal).

GST: Moderated by CA. Sunil Gabhawalla and Panelists: CA. Parind Mehta, Mr. Sajal Gupta (Rustomjee) and Advocate Vikram Nankani.

JV/JD Structuring: Moderator CA. Ketan Dalal and Panelists: CA. Bhairav Dalal, CA. (Dr) Anup Shah, Mr Piyush Vora (Lodha Developers) and CA. Naushad Panjwani.

The meeting was attended by 110 participants who learnt a lot from the rich experience of the speakers and panelists.

“Half Day Workshop on GST Audit” held on 23rd November, 2018 at BCAS Conference Hall

 

BCAS, as a NACIN accredited training partner has been in the forefront in creating awareness about GST and supported the Government in ushering this reform by organising various lecture meetings, seminars and workshops related to GST. As a part of this endeavour, Indirect Taxation Committee organised a Half Day Workshop on GST Audit on 23rd November, 2018 at BCAS Conference Hall. The workshop was divided into two sessions. The 1st session on “Overview of GST Audit Process, Various Reconciliations involved in GST Audit & Overview of Annual Return and its contents” which was taken up by CA. Udayan Choksi and the 2nd session on “GSTR-9C, Audit Checklist and Issues involved in GST Audit” which was taken up by CA. Jigar Doshi.

 

On this occasion, BCAS Publication “Concept of Supply under GST Law” was also released. The workshop was very well received and the participants took benefit of the same.

Full day programme on “Accounting and Auditing in SAP – Issues in Process and Controls” held on 24th November, 2018 at BCAS Conference Hall

Technology Initiatives Committee conducted a full day programme on “Accounting and Auditing in SAP – Issues in Process and Controls” on 24th November, 2018 at BCAS Conference Hall. The program was jointly led by CA. Jairam Motwani (who has domain experience in Novereof in solutioning, architecting, customizing, execution and coordinating SAP projects and audits) and CA. Mahesh Ahuja, having extensive experience in Internal Audits, Risk & Controls review, SAP Role based controls and GRC implementation and review.

Both the speakers dealt with the topic by providing a step by step process for Accounting and Auditing in SAP. They also discussed various issues and Control points to mitigate the issues while using the SAP.

The session was very interactive and the participants got enlightened a lot from the discussion.
Training Session for CA Article Students on “GST Annual Return’ and ‘GST Audit from Article’s Perspective” held on 30th November, 2018 at BCAS Conference Hall

The Students Forum under the auspices of HRD Committee organised a Training Session for CA Article Students on the above-mentioned topics on 30th November, 2018 at BCAS Conference Hall.

The first session on GST Annual Return was taken by Student Speaker Ms. Neelam Soneja under the mentorship of CA. Raj Khona followed by a session on GST Audit by CA. Jigar Shah. Mr. Jason Joseph, the student co-ordinator introduced the mentor and speakers for the session. CA. Anand Kothari, the convenor of the HRD Committee spoke about various activities conducted by BCAS Students Forum.

CA. Raj Khona in his opening remarks highlighted few key areas which article students should keep in mind while filing the annual returns. Ms. Neelam Soneja then explained the entire Form GSTR-9 clause by clause and dealt with the various issues / complexities involved in the annual return form. In the 2nd session, CA. Jigar Shah gave a brief insight on various aspects of GST Audit with useful tips on how to effectively conduct GST Audit. The training session was attended by 175+ students. Both the sessions were interactive whereby the speakers answered all the queries raised by the participants.

Suburban Study Circle Meeting on “GST Annual Return – GSTR 9 – Detailed Analysis and Issues in Filing” held on 1st December, 2018

The Suburban Study Circle organised a meeting on “GST Annual Return – GSTR 9 – Detailed Analysis and Issues in Filing” on 1st December, 2018 at Bathiya & Associates, Andheri which was addressed by CA. Chirag Mehta.
The Speaker started the session with statutory background and legal provisions regarding the GST Annual Return – GSTR – 9. He explained in detail the various clauses of GSTR 1 and GSTR 3B and the specific clauses to be considered while consolidating the annual figures. He further explained the structure of GSTR – 9 Annual return and what is expected from the registered dealers in each section.

The detailed analysis of each clause of the GSTR – 9 was done along with explanation on the data to be entered under each clause. CA. Chirag Mehta raised very important issues which the dealers may face while preparing the annual return and also provided his views on the said issues. The speaker highlighted the importance of self study and practical exposure to be the key factors in successful filing of annual returns.

The participants got enlightened from the presentation shared by the speaker.

TECHNOLOGY INITIATIVES STUDY CIRCLE

Technology Initiative Study Circle on “Productivity Apps for Workplaces-Part III” held on 4th December, 2018 at BCAS Conference Hall

Technology Initiatives Committee conducted a Study Circle Meeting on Productivity Apps for Workplaces Part III on 4th December, 2018 at BCAS Conference Hall which was led by CA. Rajesh Pabari who is an HR Consultant by Profession and aspiring management consultant by Passion.

It was the third session on Productivity Apps for Workplaces followed by sessions held on 23rd August 2018 and 21st September 2018. CA. Rajesh Pabari covered effective use of few more Google Chrome Extensions which are extremely helpful but were not covered in earlier sessions. He also demonstrated few tips for more effective Google searches syntax which will help to refine search results like search in title of pages, date wise, file type and specific website etc. He also explained some extremely useful tips for enabling to save time while using laptops/desktop shortcuts on day to day basis.

At this session, the Committee tried to experiment Live session online on Youtube for participants to go online through their Desktop and Smartphones. The video is available on Youtube.
The session was followed by Q&A session where the Speaker thoroughly addressed all the queries of the participants. The study circle was truly enthralling, and the participants appreciated the in-depth insight given by the learned speaker.

Intensive Study Course on “Data Analytics for Internal Audit” held on 7th & 8th December, 2018

The GRC subgroup of the Accounting and Auditing Committee organised a 2-day hands-on workshop on “Data Analytics for Internal Audit – using IDEA”: the workshop, anchored by CA. Deepjee Singhal, was divided into 1-day of seminar sessions, followed by 1-day of hands on training on the IDEA data analytics tool, for which each of the participants was provided a limited period IDEA licence along with data sets to get a feel of different IDEA features that can be effectively used for Internal Audit.

The workshop, inaugurated by president CA. Sunil Gabhawalla, had participants from the CA profession as also from the industry. CA. Deepjee Singhal provided a crisp overview of the Current Trends in Use of Data Analytics, with specific reference to internal Audit. A panel discussion with CA. Amit Pandit, CA. Jyotin Mehta and CA. Satish Shenoy provided insights to the participants as to the way in which data analytics has been integrated with the Governance-Risk-Compliance Advisory over the past decade and what the future may hold.

Mr Jairam Rajshekhar and Mr Saurabh Patkar demonstrated the various features of IDEA tool on day-1 and on day-2, they led the hands-on sessions where the participants got an opportunity to actually use these features on their own computers.

The case study based teaching method adopted for the workshop, with real data, enabled the participants to gain a first-hand experience of using the IDEA tool for data analytics.

The participants expressed deep appreciation for the in-depth and hands-on training provided in the upcoming field of data analytics with a special focus on Internal Audit.

INTENSIVE STUDY GROUP ON GST

Intensive Study Group Meeting on “Goods and Services Tax – Clause by Clause Study and Analysis of GST Act” held on 20th & 21st July, 24th & 25th August, 26th & 27th October, 16th November & 7th December, 2018 at BCAS Conference Hall

After the successful in-depth study and response in Batch-I held during March and April 2018, it was decided to further extend the study for few more months specially for some of the uncovered topics during Batch-I. The Batch-II was planned with 8 sessions (During July to December 2018) on Fridays and Saturdays by Bombay Chartered Accountant’s Society wherein section-wise study of the GST Act was held. There was an in-depth study and all the sessions were quite interactive. Each session was held under the guidance of 2 to 3 mentors who have a great expertise on the subject.

Each session was attended by more than 25 participants. It was highly appreciated by the members who shared their practical experience and got benefited as the coverage of the subject was detailed one.

HUMAN DEVELOPMENT AND TECHNOLOGY INITIATIVES COMMITTEE

Human Development Study Circle on the topic “Building Civic Leaders” held on 11th December, 2018 at BCAS Conference Hall

Human Development Study Circle organised a meeting on the topic “Building Civic Leaders” on 11th December, 2018 at BCAS Conference Hall which was addressed by Ms. Sapna Karim. The Speaker explained that we generally face difficulties in the quality of life in our neighbourhoods, clean surroundings in public places, enough water supply and good roads. She explained that Janaagraha is pursuing efforts to ensure that we as citizens are able to have a good quality of life in our cities through improvements in infrastructure and city administration and importantly demonstrate active citizenship. Janaagraha lives by the principle ‘urgent patience’ which would mean – be patient for change, but make urgent efforts to affect it. Quality of citizenship is not just a means to an end, but an end in itself. She emphasised that citizens must meet regularly to see how they can contribute. ChangeMyCity.com is a site that works for this and also powers the Swachhata app for the national government under the Swachh Bharath Mission. The Speaker mentioned that we do not want sporadic solutions but systematic solutions that take time as it involves changing or evolving new laws, policies, practices within government and enabling good citizenship values and behaviours.
The meeting was very participative and was a huge takeaway for the participants.

FEMA STUDY CIRCLE

FEMA Study Circle Meeting on “Current and Capital Account Transactions-Part II” held on 13th December, 2018 at BCAS Conference Hall

A FEMA Study Circle Meeting was held on 13th December, 2018 at BCAS Conference Hall where CA. Manoj Shah led the discussion on the topic of “Current and Capital Account Transactions-Part II”. He did an in-depth analysis of Section 3 – Dealings in Foreign Exchange and dissected clause (a), (b) and (c) of section 3. He deliberated upon the meaning of “dealing” and discussed when a resident can pay on behalf of non-resident. He also explained couple of high court judgements on the subject of payment by resident on behalf of non-resident. He also pointed out that in one compounding matter, amount of FDI proceeds were received from third party intermediary instead of Authorised Person and penalty was levied therein. The members appreciated the efforts put in by the group leader and benefitted a lot from the session.

The Sixteenth Nani A. Palkhivala Memorial Lecture on “Guardian Angel of Fundamental Rights” held by Nani A. Palkhivala Memorial Trust on 15th December, 2018

The Sixteenth Nani A. Palkhivala Memorial Lecture on the topic “Guardian Angel of Fundamental Rights” was held by Nani A. Palkhivala Memorial Trust on 15th December, 2018, in association with Bombay Bar Association, Bombay Chartered Accountants’ Society, The Bombay Incorporated Law Society and Forum of Free Enterprises, at the Tata Theatre, NCPA, Nariman Point, Mumbai. The proceedings commenced with the performance by students of NCPA Special Music Training Programme. The lecture was delivered by Hon’ble Mr. Justice Rohinton F. Nariman, Judge, Supreme Court of India. The lecture meeting was presided over by Mr. Y. H. Malegam, Chairman, Board of Trustees. The Speaker talked about the achievements of Late Palkhivala in the field of legal profession as well as several publications authored by him. He also discussed about the accolades Mr. Palkhivala earned in the domestic and international sphere and his memorable stint with Tata Group and as President, Forum of Free Enterprise and Founder Chairman, The A. D. Shroff Memorial Trust.
On this occasion, The Nani A. Palkhivala Civil Liberties Awards were also presented.

The meeting was attended by over 145 participants who got inspired and enthused with the well explained facts by the learned Speaker. The meeting concluded with a vote of thanks by the Trustee Mr. Deepak S. Parekh.

Lecture Meeting on “Right to Information vs Privacy” held on 17th December, 2018 at BCAS Conference Hall

A Samvad was organised at the Bombay Chartered Accountants’ Society under auspices of BCAS Foundation on the subject ‘Right to Information (RTI) vs. Privacy’ on 17th December, 2018. Panellists invited were Shri Shailesh Gandhi, Former Central Chief RTI Commissioner, Justice Shri Abhay Thipsay (Retired Judge, Bombay High Court) and Shri V. A. Thorat, former Advocate General Maharashtra. Past President CA. Raman Jokhakar acted as a moderator.

President CA. Sunil Gabhawalla in his opening remarks stressed the need to have such debates and dialogue to bring clarity and consensus on the matters relating to the RTI. This he said was needed to bring transparency in the dealings between government and people to achieve true spirit of democracy.

Shri Shailesh Gandhi said that Right to Information is a fundamental right of citizens under Article 8(1) (a) of the constitution which guarantees freedom of speech and expression subject to Article 19 (2) which restricts it only in the interest of sovereignty, integrity and security of the state, public order, decency or morality, friendly relations with foreign state or in relation to contempt of court or defamation.

He further said that there is an adequate safeguard also prescribed under Section 8 (1) (j) of the RTI Act which exempts only that information which relates to personal information, the disclosure of which has no relationship to any public activity or interest and which would cause unwarranted invasion of the privacy of the individual unless the information officer is satisfied that larger public interest justifies disclosure of such information. However, the proviso under the section amply clarifies the intent that only the information which cannot be denied to Parliament or the State Legislature shall not be denied to any person. “Despite this, information is often denied to people mistakenly classifying it as personal information” said Shailesh Gandhi. He lamented that increasingly some Supreme Court judgments were being cited to call every information as private and having no public interest and thus being denied. Among them were details related to service records and asset records labelling them as information between the employers and employees. “This has effect of completely diluting the fundamental right of RTI given to citizens of India under the constitution by misinterpretation of Section 8(1) (j) of the RTI Act, because they could always qualify for disclosure to the Parliament or State Legislature” he concluded.

Justice Thipsay said that when it comes to assets and service records of public servants, they should be provided under the RTI Act. He however cautioned that one needs to maintain a delicate balance to harmonise the conflict between the RTI and Privacy. He said that good society is not guaranteed by the information alone; one also has to keep check on whether this right is exploited to settle personal score. He opined that this was not a fight to finish but a process of evolution.

Shri V. A. Thorat said that information should be given on case-to-case basis when it comes to assets and details of service records. “Even if the provision for disclosing information exists, it cannot be applied universally without applying mind as to whether it will qualify under Article 19)(2). One has to draw the line between information that is necessary having regard to the facts and one what could be abused for personal gain with no public interest. However, he also said that judgements can’t be read as statutes and one needs to distinguish between public information sought in public interest and use of RTI for frivolous queries.

The two speakers while disagreeing with Shri Shailesh Gandhi about disclosure of information opined that use of discretion on the facts and circumstances of each case was necessary in protecting the right of privacy. However, all agreed that constitution is sovereign and not the provision of legislation. It would be ideal that within the ambit of restrictions laid down by Article 19 (2), the spirit of RTI is truly observed.

The debate was mind churning and intellectually enlightening. CA. Raman Jokhakar asked some poignant questions on the tendency of government officers to shirk their obligation cast under RTI Act and questioned logic of creating controversy. These were appropriately answered by the panellists. A lot many questions from enlightened audience augmented the ethos. Widely attended by cross section of people, it engaged the audience completely and prompted lot of spontaneous responses from them sharing their experiences.

Joint Secretary CA. Mihir Sheth gave a deserving vote of thanks to the panellists.

ITF STUDY CIRCLE

Study Circle Meeting on “Taxation of Profits from Shipping and Aircraft (for Non Residents) under DTAA (Part 2)” held on 18th December, 2018 at BCAS Conference Hall

ITF Study Circle organised a meeting on the captioned subject on 18th December, 2018 at BCAS Conference Hall. The Study circle was led by CA. Sonia Agrawal who explained briefly about Part 1 where the Shipping Business Taxation comes under the purview of Domestic Tax Laws. Various issues with regards to Inland Waterways and Water Transport on the coastal ways, inside India and outside India, High Sea Shipping Cargo were also discussed.

There was a detailed discussion on Article 8 of the Treaty. Case laws on recent amendments were also taken up. The participants could resolve their queries with the group leader. The members of the Study Circle shared their experiences on above mentioned issues and all participants benefitted from the discussion on the subject.

Study Circle Meeting on “Contentious Issues under GST “held on 19th December, 2018 at BCAS Conference Hall

A study circle meeting on the topic Contentious Issues under GST was held under the aegis of Indirect Taxation Committee on 19th December, 2018 at BCAS Conference Hall which was addressed by Sr. Advocate P. K. Sahu, who delivered an in-depth analysis of the issues with reasoning. The meeting was very interactive and the learned speaker dealt with all the issues posted before him in detail.

The meeting was a huge takeaway for the participants.

BOOK REVIEW

‘PRINCIPLES’ – by Ray Dalio

 

Ray Dalio, one
of the world’s most successful investors and entrepreneurs, shares the
unconventional principles that he has developed, refined and used over the past
40 years to create unique results in both life and business – and which any
person or organisation can adopt to achieve their goals.

 

In 1975 he
founded an investment firm, Bridgewater Associates. Forty years later,
Bridgewater has made more money for its clients than any other hedge fund in
history and grown into the fifth most important private company in the US,
according to Fortune magazine. Dalio has been named in Time
magazine’s list of the 100 most influential people in the world. Along the way,
he discovered a set of unique principles that have led to Bridgewater’s
exceptionally effective culture, which he describes as ‘an idea meritocracy
that strives to achieve meaningful work and meaningful relationships through
radical transparency.’ It is these principles, and not anything special about
Dalio, that he believes are the reason behind his success.

 

In the book,
Dalio shares what he has learned over the course of his remarkable career. He
argues that life, management, economics and investing can all be systemised
into rules and understood like machines. The book has hundreds of practical
lessons built around his cornerstones of ‘radical truth’ and ‘radical
transparency’; these include the most effective ways for individuals and
organisations to make decisions, approach challenges and build strong teams. He
also describes the innovative tools the firm uses to bring an ‘idea
meritocracy’ to life, such as creating ‘baseball cards’ for all employees that
distil their strengths and weaknesses and employing computerised
decision-making systems to make believability-weighted decisions. While the
book brims with novel ideas for organisations and institutions, Principles
also offers a clear, straightforward approach to decision-making that Dalio
believes anyone can apply, no matter what they’re seeking to achieve.

 

Here, from a
man who has been called both ‘the Steve Jobs of investing’ and ‘the philosopher
king of the financial universe’ (CIO magazine), is a rare opportunity to
gain proven advice unlike anything you’ll find in the conventional business
press. He kicks off by explaining that ‘Good principles are effective ways of
dealing with reality’ and that ‘To learn my own, I spend a lot of time
reflecting.’

 

The book
consists of three parts. In the first, titled ‘Where I’m coming from’, Dalio
looks back at his career and the founding of Bridgewater. ‘Life Principles’ is
the name of the second part and covers Dalio’s approach to life’s challenges
and opportunities. And part three covers Dalio’s ‘Work Principles’.

 

Let me share my
key takeaways from Principles, starting with Dalio’s Life
Principles:

 

Embrace reality
and deal with it

Dalio shares an important equation which in his view makes for a successful
life: Dreams + Reality + Determination = A Successful Life. For the
‘reality’ component of this equation to work, Dalio encourages readers to be
radically open-minded and radically transparent.

 

Pain +
Reflection = Progress

– One can see how someone like Dalio has gone through his own share of pain to
get to where he has reached.

 

Using the
5-step process to get what you want out of life
– Start with having clear goals (step 1),
followed by identifying but not tolerating the problems that stand in
the way of your achieving those goals (step 2), then you accurately diagnose
the problems to get at their root causes (step 3), design plans that
will get you around them (step 4) and, finally, do what’s necessary to
push these designs through to results (step 5). Dalio depicts this as a
continuous process and readers can benefit from applying this model to achieve
their goals.

 

Understand
that people are wired very differently
– Dalio stresses the fact that all people are
wired differently and zooms in on the differences between left and
right-brained thinking.

 

Dalio’s Work
Principles
are dominated by the concept of an Idea Meritocracy
i.e., a system that brings together smart, independent thinkers and has them
productively disagree to come up with the best possible collective thinking and
resolve their disagreements in a believability-weighted way. He successfully
implemented an ‘Idea Meritocracy’ at Bridgewater and shares the components of
such a system in his book:

 

Idea
Meritocracy = Radical Truth + Radical Transparency + Believability – Weighted
Decision-Making

 

Radical
Truth
– Talking openly
about our issues and have paths for working through them.

 

Radical Transparency – Giving everyone the ability to see
everything. Radical transparency reduces harmful office politics and the risks
of bad behaviour because bad behaviour is more likely to take place behind
closed doors than out in the open.

 

Believability – Dalio defines believable people as
‘those who have repeatedly and successfully accomplished the thing in question
– who have a strong track record with at least three successes – and have great
explanations of their approach when probed.’

 

Thoughtful
Disagreement
– The
concept of Believability is closely linked to the art of Thoughtful
Disagreement; the process of having a quality back-and-forth in an open-minded
and assertive way to see things through each other’s eyes.

 

Weighted
Decision-Making
– At
Bridgewater, employees have different believability weightings for
different qualities, like expertise in a particular subject, creativity,
ability to synthesise, etc. Dalio explains that in order to have a true Idea
Meritocracy one needs to understand the merit of each person’s ideas.

 

Prerequisites
for an Idea Meritocracy

– To have an Idea Meritocracy three conditions need to be in place.
Firstly, put your honest thoughts on the table. Secondly, have thoughtful
disagreement. Thirdly, abide by agreed-upon ways of getting past disagreement.

 

Mistakes are
part of the game

Dalio has a refreshing outlook on the role and value of mistakes, which he
treats as ‘a natural part of the evolutionary process’. It’s important in this
respect to assess whether people recognise and learn from their mistakes. Dalio
distinguishes between people who make mistakes and who are self-reflective and
open to learning from their mistakes, and those who are unable to embrace their
mistakes and learn from them.

 

Get people
to focus on problems and outcomes
– Assign people the job of perceiving problems, give them time to
investigate and make sure they have independent reporting lines so that they
can convey problems without any fear of recrimination. To perceive problems,
compare how the outcomes are lining up with your goals. Dalio also offers some
valuable tips on how to best diagnose problems.

 

Avoid the
‘Frog in the boiling water’ syndrome
– Apparently, if you throw a frog into a pot of
boiling water it will jump out immediately, but if you put it in water at room
temperature and gradually bring it to a boil, it will stay in the pot until it
dies. If one uses this syndrome as a metaphor for professional life, it
signifies people’s tendency to slowly get used to unacceptable things that would
shock them if they see them with fresh eyes.

 

Don’t just
pay attention to your job
– Instead, pay attention to how your job will be done if you’re no
longer around. Dalio talks about the ‘ninja manager’ as ‘somebody who can sit
back and watch beauty happen, i.e., an orchestrator. If you’re always trying to
hire somebody who’s as good as or better than you at your job, that will both
free you up to go on to other things and build your succession pipeline.’

 

I feel that
Dalio’s principles can provide great direction for all people working in
organisations big or small. His reflections on things such as transparency and
decision-making will be valuable to anyone reading this great book.

 

The book is
aesthetically beautiful in the design and typography, making it a real treat to
read. I really appreciate the biography section of the book that solely focuses
on Ray Dalio’s life and journey towards where he is today. It offers you a
brief insight into what made him the person he is today. Even very humbling experiences,
such as being the only person left in the company that he built and having to
start all over again.

 

In Principles: Life and Work,
Dalio shares the principles that have led to his success. Told with honesty and
enlightening examples, Principles is a fascinating look at how
Dalio has created the largest and most successful hedge fund in the world. You
need only read the first few pages to discover the uniqueness of his approach;
he encourages readers to doubt everything, suggesting that radical open-mindedness
is the best way to learn.

Society News

SECOND BCAS LONG-DURATION COURSE ON GST

 

The second BCAS Long-Duration Course
on GST was conducted at the BCAS Hall from 4th to 19th
October, 2019. It was held over three consecutive Fridays and Saturdays with
six sessions per day and a total of 36 technical sessions on important areas
under GST. Each technical session was conducted by experienced faculty having
vast experience and knowledge in the area of indirect taxation. The course was
aimed at imparting basic and middle-level knowledge on conceptual aspects of
GST law and procedures which were explained in interactive sessions along with
talks, practical examples and case studies. The last two sessions were combined
and designed as a ‘Brain Trust’ session, moderated by BCAS Immediate
Past President and present Co-Chairman of the IDT Committee, Sunil
Gabhawalla
, along with renowned faculties S.S. Gupta and Parind
Mehta
as ‘brain trustees’ who answered innumerable questions put to them by
the participants and highlighted various issues in GST.

 

The course
received very good response. A total of 71 participants enrolled for it; they
came from 12 different cities. The participants were all praise for the course.

 

Those who
attended at least 75% of the course were presented with participation
certificates by the Society. The overall verdict from the feedback forms
received was encouraging, as almost all participants appreciated the design,
structure, timing, faculties and so on.

 

HUMAN RESOURCES DEVELOPMENT COMMITTEE

 

‘Non-violence
is the greatest force at the disposal of mankind. It is mightier than the
mightiest weapon of destruction’,
said Mahatma Gandhi.

 

The HRD Study
Circle organised a talk on ‘Non-Violent Communication’ (NVC) by Ms Leonie
D’Mello at the BCAS Hall on 10th October, 2019. (Earlier, in
memory of the Mahatma, BCAS organised a special programme ‘Bapu@150’ on
2nd October, 2019 in its Conference Hall.)

 

The speaker
made several key points while delivering her talk. Among them were the
following:

 

‘Non-Violent Communication is a simple
tool to defuse arguments and create compassionate communication with family,
friends, etc. It is an amazingly effective language for saying what is on your
mind and in your heart. It is simple on the surface, challenging to use in the
heat of the moment and powerful in its results.

 

Non-Violent
Communication is a way of getting things done in the right way with both sides
willing to dialogue and resolve conflicts.

 

It involves expressing honestly and
receiving emphatically. When we learn to connect our needs with our feelings,
we empathise with ourselves and others. We learn to be compassionate with
ourselves and with others.

 

NVC shows us
to focus on what we truly want, rather than on what is wrong with others or
ourselves. It gives the tools and understanding to create a more peaceful state
of mind.

 

NVC is a very interesting way to
communicate effectively.’

 

Those who attended the talk expressed a
desire to learn even more about non-violent communication – so that they could
communicate with others successfully and more effectively.

 

LECTURE
MEETING ON ‘RECENT DEVELOPMENTS IN GST’

 

A lecture meeting on ’Recent Developments in
GST’ was held on 11th October, 2019 at Bhatia Wadi, near Savarkar
Garden, Borivali (West), on 11th October, 2019.

 

Well over a hundred professionals and others
attended this first-of-its-kind meeting. BCAS President Manish Sampat,
in his opening remarks, underlined the objective of this particular lecture. He
said this was the first initiative to reach out to the suburbs for the benefit
of scores of members and others living and / or working in Borivali and nearby
areas.

 

Immediate Past President Sunil Gabhawalla
explained the various important developments which had taken place due to the
change in the law and also through various notifications and circulars after
its enactment. In a sense, the members were taken on a ‘GST journey’ starting
from inception to execution, the hurdles and hindrances along the way and so
on. The speakers answered all the queries raised from the floor of the house.

 

The interactive meeting ended with
announcements about future BCAS events and a vote of thanks proposed by Dushyant
Bhatt.

 

FEMA STUDY CIRCLE MEETING

 

FEMA Study Circle Conveners Kirit P.
Dedhia
, Niki Shah and Parag Kotak joined hands to organise a
very interesting discussion on ‘ODI Contraventions: Reporting and Regulations’
at the BCAS Conference Hall on 15th October, 2019.

 

The choice of Ms Aarti Karwande as
Group Leader proved to be a good decision. For, in the course of her
presentation she covered various case laws pertaining to ODI contraventions.
This paved the way for a lively and thought-provoking discussion on the
applicable FEMA regulations. The topic of discussion being so interesting, the
room was packed with professionals with a sprinkling of students.

 

Ms Karwande pointed out that Overseas Direct
Investment had rapidly evolved over the years. Therefore, it was important to
understand the regulations and the reporting pertaining to the subject –
because any contravention could have several adverse ramifications.

 

The Study Circle meeting served to clarify
matters and set the professionals on the right track to tackle this key subject
(Overseas Direct Investment).

 

‘ESTATE
DUTY – A TRIGGER FOR SUCCESSION PLANNING’

 

The BCAS organised a lecture meeting
addressed by Mr. Ketan Dalal on ‘Estate Duty – a Trigger for Succession
Planning’ on 16th October, 2019 in the BCAS Conference Hall.

 

Introducing the subject, President Manish
Sampat
pointed out the importance of estate / succession planning all over
the world and in India, too. He stated that in recent times, the focus on
succession planning had increased amongst high net-worth Indian business
families so as to minimise the loss in value while transferring assets /
businesses from one generation to another.

 

In the last few years, especially during the
time of the presentation of the Union Budget, there had been a great deal of hype
about the re-introduction of estate duty (which had been abolished in 1985).
That had triggered the need for succession planning. People had started looking
beyond wills and probates and were approaching lawyers, chartered accountants
and attorneys for succession planning, the President pointed out.

 

Mr. Ketan Dalal started the session with a brief history of estate planning all
over the world, especially in countries like the USA where estate duty laws
have been in force for many years. He then explained the earlier estate duty
law in India and its main features, the challenges it faced and the reasons why it was abolished. He gave an overview
of succession planning and how it was a much wider concept than mere mitigation
of estate duty issues.

 

He stated that succession planning was very
important in India even without any estate duty law being in place. Various
structures were used by people for succession planning; they faced several
issues in doing so and were being made aware of the timelines involved in the
whole succession planning process.

 

Mr. Dalal
described the integrated approach to be adopted for structuring such planning
and shared his experience on the issues that arose, on the basis of the
innumerable cases handled by him.

 

He also explained some of the key issues
that one could come up against under various laws in India dealing with trusts,
family settlements and restructuring. He then answered a plethora of questions
from the eager participants on gifts, nominations, wills, probate, etc.

 

The meeting was
well appreciated as the speaker articulated several aspects of succession
planning very well.

 

President Manish introduced the
speaker, Vice-President Suhas Paranjpe presented a memento to him and
Convener Hardik Mehta proposed the vote of thanks.

 

SUBURBAN STUDY CIRCLE

 

The Suburban Study Circle organised a
meeting on ‘Amendments to Income-tax Act, 1961’ vide an ordinance, the Taxation
Laws (Amendment) Ordinance, 2019, on 18th October, 2019 which was
addressed by Mr. Milin Bakhai.

 

The speaker made a detailed presentation on
the amendments and explained each change clause by clause. The group had a
detailed discussion on the possible outcomes of selecting the option u/s
115BAA.

 

He walked the participants through a
comparison of companies under different tax rates and the various pros and cons
for selection of the new tax rates. He also examined section 115BAB in detail
and the various references which were drawn from different judicial precedents
to explain the same. He gave examples to describe which arrangements would be
considered as reconstruction and / or splitting.

 

The participants lauded the speaker for his
erudition and his easy-to-understand presentation.

 

INTERNATIONAL
ECONOMICS STUDY GROUP

 

The International Economics Study Group held
its meeting on 5th November, 2019 to discuss ‘Issues &
Implications of Banking & Financial Crisis in India’. CA Harshad Shah
and CA Paresh Budhdev led the discussions and presented their thoughts
on the subject.

 

They pointed out that Indian banks (mostly
PSUs and some private banks) had been facing serious NPA crises for the last
five years. Besides, many well-known promoters had been facing huge liquidity
challenges and a few of them had filed for bankruptcy themselves or their
lenders had done so. This got further aggravated and spread to NBFCs and
private banks with problems at some well-known ones. Many more lenders were
likely to be added to the list due to stress in the real estate, automobiles,
MSME sectors and the rural and agricultural economy. At the same time, there
were governance issues in small savings funds, EPF and LIC, too.

 

As per RBI data, the aggregate gross
advances of PSU banks increased from Rs. 11.33 lakh crores as on 31st
March, 2008 to Rs. 34.03 lakh crores as on 31st March, 2014 (a
three-fold increase in six years). The primary reasons for the spurt in
stressed assets had been aggressive lending practices, including phone banking,
directed lendings, wilful default / loan frauds / corruption in some cases and
overall economic slowdown.

 

India’s banks were grappling with roughly $150
billion in stressed assets (Rs. 10 lakh crores)
; about 85% of these NPAs
were from the loans and advances of PSU banks. In the last decade, the gross
NPAs of banks had increased from 2.3% of total loans (2008) to 9.5% (in 2019),
indicating that an increasing proportion of a bank’s assets had ceased to
generate income for the banks, lowering their profitability and ability to
grant further credit. Bank NPAs were expected to shrink 350 bps over two years
to 8% by March, 2020, compared with the peak of 11.5% in March, 2018.

 

The International Economics Study Group also
discussed the NBFC crisis and its domino effect on the Indian economy. There
were 11,400+ shadow banking companies (NBFCs) with a combined balance sheet
worth around Rs. 22.1 trillion ($304 billion) and their loan portfolios had
grown at nearly twice the pace of banks. According to RBI data, gross NPAs
(non-performing assets) or bad loans of NBFCs stood at 6.6% at the end of
March, 2019 against 5.3% a year ago. On the other hand, bank lending to NBFCs
had also seen a substantial rise. NBFCs owed an outstanding amount of Rs. 6.4
lakh crores at the end of March, 2019. This was a 22% increase compared with
the previous year when the debt was Rs. 4.9 lakh crores. NBFCs and HFCs had a
balance sheet of Rs. 36 lakh crores as of March, 2019. If the extent of
under-reporting was around 5% of advances, there could be Rs. 1.8 lakh crores
of more bad news yet to be recognised.

 

The risks of contagion were rising in the
Indian financial sector and any failure of a large shadow lender could lead to
a ‘solvency shock’ to banks. India’s shadow lenders got a substantial part of
their funding from banks – the weaker ones had seen a sharp rise in their
borrowing costs, and a big drop in their equity values. High business risk is
inherent in NBFC business models that rely on short-term market borrowings for
long-term loans. The resulting risk aversion by lenders had landed NBFCs and
HFCs with high asset-liability mismatches in hot water.

 

The way forward suggested was: (1) Regulators and investors need to recognise that both the ALM
(asset liability mismatch) and liquidity crises are restricted to a handful of
NBFCs / HFCs which require closer regulatory supervision, along with the firms
accessing public deposits or retail NCDs requiring close scrutiny. (2) With
default and the string of credit rating downgrades, which undermined market
confidence in credit ratings and the accounting practices of NBFCs, regulator/s
need to undertake special audits. This is essential to shore up market
confidence in the sector. (3) NBFCs / HFCs with retail participation and good
quality books may need a liquidity lifeline to ward off solvency issues. (4) It
is not the absence of regulations but ineffectual supervision by the regulators
that has left the doors open for the NBFC crises to play out. Hence, instead of
adding to their voluminous regulations, regulators need to deploy additional
manpower and acquire forensic capabilities to more closely monitor the frequent
statutory filings of these firms.

STATISTICALLY SPEAKING

1.    Pendency
of time-barring
e-assessments

 

Jurisdiction

Pending %

Delhi

92

Mumbai

89

Gujarat

87

Madhya Pradesh and Chhattisgarh

87

Pune

84

 

Source: Income Tax
Department – MIS Report

 

2.    Ease of doing business

 

Particulars

Score
2019

Score 2020

Rank 2019

Rank
2020

Starting a business

81

81.6

137

136

Dealing with construction permits

72.1

78.7

52

27

Getting electricity

89.2

89.4

24

22

Registering property

47.9

47.6

166

154

Getting credit

80.0

80.0

22

25

Protecting minority investors

80.0

80.0

7

13

Paying taxes

65.4

67.6

121

115

Trading across borders

77.5

82.5

80

68

Enforcing contracts

41.2

41.2

163

163

Resolving insolvency

40.8

62.0

108

52

Overall

67.5

71.0

77

63

 

Source: World Bank

 

 

3.    GDP Growth 2019

 

Country

GDP growth %

India

7.3%

China

6.3%

Indonesia

5.2%

Pakistan

2.9%

US

2.3%

Brazil

2.1%

Spain

2.1%

Nigeria

2.1%

Netherlands

1.8%

Saudi

1.8%

Russia

1.6%

Canada

1.5%

France

1.3%

UK

1.2%

South Africa

1.2%

Germany

0.8%

Italy

0.1%

Japan

1%

Turkey

-2.5%

Iran

-6%

 

Source: IndiaStatistics
twitter – IMF

 

4.    Highlights of e-filing

Source: Income Tax India
e-filing website

5.  ITR filing growth between previous FY and
current FY

 

 

Source: Income Tax India
e-filing website

 

6. Share of informal employment
in total employment (%)

 

Source: International Labour
Organisation

 

SOCIETY NEWS

“Long Duration Course on Goods and Services Tax Act” held on 5th, 6th, 12th, 13th, 19th and 20th October, 2018 at BCAS Conference Hall

BCAS, as a NACIN accredited training partner has been at the forefront of creating awareness about GST and supported the Government in ushering this reform by organising various lecture meetings, seminars and workshops related to GST. As a part of this endeavour, Indirect Taxation Committee of BCAS organised a Long Duration Course on Goods and Services Tax Act at BCAS Conference Hall, spread over 4 weeks in the month of October, 2018 on Fridays and Saturdays. The course consisted of 36 sessions of 1hr 15 min each. It was conducted by 34 domain experts in GST who covered various theoretical as well as practical aspects of the GST law.

The Course was attended by 97 participants including outstation participants as under:

The profile of participants consisted of practising chartered accountants, chartered accounts in employment as well as accounts and finance staff of various entities. The course was interactive and participants discussed various issues such as deemed supply, cross charge/ISD, ineligible ITC under the Act, issues concerning valuations, place of supply including zero rated supplies/deemed exports and imports related provisions, computational provisions, penal provisions, assessment provisions and procedural provisions like accounts and documents, payments, E-way bill, returns and Audit.

With the backup of excellent faculties, participants enriched their knowledge and experience in this collective learning process. The course facilitated GST learning of 45 hours per participants.

Students Study Circle on ‘’Benchmarking under Transfer Pricing” held on 23rd October, 2018 at BCAS Conference Hall

The Students Forum under the auspices of HRD Committee organised a Students’ Study Circle on the topic “Benchmarking under Transfer Pricing” on Tuesday, 23rd October, 2018 BCAS Conference Hall which was led by group leaders Mr. Rishabh Jain and Mr. Piyush Randad under the mentorship of CA. Jitendra Gupta. Ms. Neelam Soneja, the student co-ordinator introduced the mentor and group leaders. CA. Jitendra Gupta, the mentor for the session gave his opening remarks and briefly explained the topic.

Both the group leaders discussed the topic with the help of case studies and shared their practical experience in conducting transfer pricing audit. The study circle was very interactive. Overall, it gave a brief insight on various aspects that should be kept in mind while conducting transfer pricing audit.

The mentor CA. Jitendra Gupta then presented the certificates to the Group Leaders and appreciated the meticulous presentation made by them. Mr. Jason Joseph, the student co-ordinator thanked the group leaders and mentor for sharing their knowledge on the subject and briefed the participants about the forthcoming events which will be organised by the Students Forum.

The participants benefitted a lot from the session.

INTERNATIONAL ECONOMICS STUDY GROUP

Meeting on “21 Lessons for the 21st Century & Clean Disruption” held on 24th October, 2018 at BCAS Conference Hall

International Economics Study Group conducted a meeting on 24th October, 2018 at BCAS Conference Hall to discuss the topic “21 Lessons for the 21st Century & Clean Disruption” which was addressed by CA. Abhay Bhagat.

The Speaker presented the findings from the books: (1) Prof. Yuval Noah Harari’s bestselling books: Sapiens- A Brief History of Humankind (2) Homo Deus- A Brief History of Tomorrow and (3) 21 Lessons for the 21st Century. The book 21 Lessons from the 21st Century brings out that in a world deluged by irrelevant information, clarity is power. The Speaker explained that 21 Lessons for the 21st Century cuts through the muddy waters and confronts some of the most urgent questions on today’s global agenda. Some of the main learnings are: Whoever owns the data wins, which is why everyone struggles for it. Education must show us how to navigate information and not give us more of it.

CA. Abhay Bhagat also presented his findings on Tony Saba’s book – Clean Disruption Technology, Mega Trends Disrupting Public & Private transportation wherein the author brings out Technology based disruption – A disruption happens when a new product or service helps create a new market and significantly weakens, transforms or destroys existing market.

The author explains that the key technologies that are disrupting transportation are Self Driving vehicles, Electric Vehicles, Energy Storage, Mobile Internet/Cloud, Sensors /IoT & Big Data. The self-driving cars are disruptive as these would be 5 times more efficient than existing cars, cheaper fuel (10 times), life cycle of car (from currently 1.5 lakh km to 5.0 lakh km), present car has 2000 moving parts and EV has 18 to 20 moving parts and EV is computer tablet on wheel.

The author brings out the case for Self-driving vehicles because (1) Millions of people die from road accident and main cause of the accident is driver’s mistake 2) No parking space required as these Self-driving cars can run 24 hours (3) all cars will talk to one another and decide fastest route and giving direction to nearest car.
The meeting was quite interactive and had a huge takeaway for the participants.

A D Shroff Memorial Lecture on “The Importance of Independent Regulatory Institution The Case of Central Bank” held jointly by Forum of Free Enterprise, A. D. Shroff Memorial Trust, Bombay Chartered Accountants’ Society and Indian Merchants’ Chamber on 26th October, 2018

The A D Shroff Memorial lecture meeting on The Importance of Independent Regulatory Institution ‘The Case of Central Bank’ was held jointly by Forum of Free Enterprise, A. D. Shroff Memorial Trust, BCAS and Indian Merchants’ Chamber on 26th October, 2018 at IMC Hall. The meeting was addressed by Dr Viral V. Acharya, Deputy Governor, Reserve Bank of India.

The Speaker explained that a central bank performs several important functions for the economy. It controls the money supply, sets the rate of interest on borrowing and lending money, manages the external sector including the exchange rate, supervises and regulates the financial sector notably banks, often regulates credit and foreign exchange markets and seeks to ensure financial stability, domestic as well as on the external front.

He also elaborated as to why is the central bank separate from the Government? He mentioned that the world over, the central bank is set up as an institution separate from the Government. Its powers are enshrined as being separate through relevant legislation. Its tasks being somewhat complex and technical, Central Banks are ideally headed and manned by technocrats or field experts–typically economists, academics, commercial bankers and occasionally private sector representatives, appointed by the Government but not elected to the office and they exercise their powers independently.

He also elucidated the role of Reserve Bank in regulating Monetary Policy, Debt Management and Exchange Rate Management and ongoing challenges in maintaining independence of Reserve Bank i.e. regulation of Public Sector Banks, RBI’s Balance Sheet strength and Regulatory Scope.

In his concluding remarks, the Speaker thanked Mr. Malegam for inviting him to address the lecture meeting and extended his warm gratitudes to late A. D. Shroff for his contribution to the economy and in co-founding of Free Forum Enterprise Think Tank in the year 1954. The meeting was a huge takeaway for the participants who got enlightened from the lecture delivered by the learned Speaker.

DIRECT TAX LAWS STUDY CIRCLE

Meeting on ‘E-Assessments” held on 30th October 2018 at BCAS Conference Hall

Direct Tax Laws Study Circle conducted a meeting on E-Assessments Proceedings under the Income Tax Act on 30th October, 2018 at BCAS Conference Hall. The Chairman of the session, CA. Ameet Patel gave his opening remarks and pointed out to various initiatives taken by the Government and Income Tax Department regarding digitalisation and e-governance of various compliances, reporting and proceedings.

The Group leader CA. Romil Jain gave a brief background regarding the rationale of introduction of e-proceedings which has been a part of E-governance initiative, to facilitate ease of communication between the taxpayer and the Tax Authorities through electronic means. He educated as to how the concept of e-assessments was inserted and integrated in the provisions of the Income tax Act. He pointed that currently there are 3 branches of e-proceedings which are in operation – (1) E-return processing (2) E-assessment and (3) E-issue of refund.

CA. Romil Jain also took the group through step-by-step method for making submissions though e-assessment tab available on the income tax website. He pointed out to certain key points which one needs to keep in mind:

  • Considering the auto-closure of e-filing window 7 days before the time barring date, assessee must act vigilantly and avoid keeping submissions till the last date.
  • Considering the fact that e-filing portal has idle session time of 15 minutes, assessee should be ready till all the attachments to be uploaded in 1 folder, before login to e-filing website.
  • Retain exclusive email address and mobile number of the authorised person for communication with Tax authorities.
  • Any proceedings conducted manually (in case of exceptions, as listed in CBDT Instructions) shall be kept on record by way of mentioning about the same in subsequent online submission.
  • In the absence of personal hearing, legal issues and commercial rationale should be drafted very clearly and concisely, to avoid any incorrect interpretation.

The meeting was very fruitful for the participants experiencing rich knowledge sharing by the learned Speaker.

BEPS STUDY GROUP

Meeting on “Continuation of Action Plans 8 to 10 – Aligning Transfer Pricing Outcomes with Value Creation” held on 2nd November, 2018 at BCAS Conference Hall.

BEPS Study Group organised the captioned meeting on 2nd November, 2018 at BCAS Conference Hall wherein CA. Ganesh Rajgopalan and CA. Shreyas Shah led the discussion. The Speakers put forth several examples and case studies and explained concepts relating to intangibles and their ownership and also to whom returns from intangibles to be allocated. A short presentation on the concept of risk, the principles of control over risk and capacity to assume risk were also deliberated. Some aspects of hard to value intangibles were explained by the group leaders.

The meeting was very interactive and the participants benefitted a lot from the sessions.

HUMAN RESOURCE DEVELOPMENT STUDY CIRCLE

Meeting on “Eye Health and Eye Vision” held on 13th November, 2018 at BCAS Conference Hall by Presenter: Viram Agrawal of Vision Yoga

Human Resource Development Study Circle organised a meeting on the captioned subject at BCAS Conference Hall which was presented by Mr. Viram Agrawal of Vision Yoga who is working to spread awareness about “better eyesight at any age”.

The Speaker provided some useful insights on the subject as listed below:

(1) Preservation of good eyesight is almost impossible without proper eye education and mental relaxation (2) Keep your eyelids half closed, while reading or watching a distant object (3) Shift your glance constantly from one point to another (4) All errors of refraction are functional and therefore curable (5) Mental strain creates an error of refraction and mental relaxation can cure it (6) Eyewash tones up the eye muscles (7) Vision Yoga is a holistic method of treating eye disorders which is a part of the Vedic tradition as given in the Chakshushopanishad and Netra Dwayam – Upanishads of the eyes (8) This Yoga course benefits all eye disorders like myopia, hypermetropia, presbyopia, squint, cataract, nystagmus, etc.

The Speaker believes that exercises can help to avoid Glasses, Lasik Surgery and improve eye vision and also explained some eye treatments for eye ailments.

The participants were hugely benefitted from the presentation by the learned Speaker.

Intensive Study Course on “Data Analytics for Internal Audit” held on 16th and 17th November, 2018

The GRC subgroup of the Accounting and Auditing Committee organised a 2-day hands-on workshop on “Data Analytics for Internal Audit – using Microsoft Excel at Hotel Parle International, Parle East. The Speaker for the entire 2-day workshop was CA. Nikunj Shah.

This workshop was an immersive learning experience that enabled participants to understand, appreciate and experience the power of MS Excel for performing data analytics for Internal Audit. CA. Nikunj Shah captivated the audiences in his multi-lingual style, narrating anecdotes and stories, spinning a magical web for the spell-bound audiences. The case study based teaching method adopted by the Speaker with real data, enabled the participants to gain a first-hand experience of using data analytics with confidence.

His depth of knowledge, his mastery of MS Excel and his love for teaching together made for a workshop that was insightful, entertaining and educating. Nikunj successfully ignited the fire in the participants to explore and integrate Data Analytics to deliver superior internal audits. The meeting was quite participative and was a huge takeaway for the participants.

FEMA STUDY CIRCLE

Meeting on “Current and Capital Account Transactions” held on 22nd November, 2018 at BCAS Conference Hall

A FEMA Study Circle Meeting was held on 22nd Novemeber, 2018 where CA. Manoj Shah led the discussion on the topic of “Current and Capital Account Transactions”. He deliberated upon the concept of current and capital account transaction which draws its importance from “Balance of Payment”. The members present discussed the definition of the Capital Account Transactions at length and raised various issues arising out of inbound and outbound contingent liabilities. The group leader and members discussed at length an issue as to whether indemnity given by Resident to Non Resident can be treated same as guarantee? The group leader also discussed implications under FEMA in relation to the gift of money, foreign security and immovable property by resident to the non-resident and vice-versa. The discussion also took place on setting up of a Trust where beneficiaries are non-resident Indians. The discussion also took place about trade payable outstanding for more than six months and few compounding orders on the same subject were discussed. The members appreciated the efforts put in by the group leader and requested him to take up the balance slides in the next study circle meeting.

HERITAGE WALK 2018 AT LONAVALA

Heritage Walk 2018 jointly with NGO “SAMPARC (Social Action for Manpower Creation)” held on 25th November, 2018 at Lonavala

A heritage walk was organised by the HRD Committee in association with NGO SAMPARC (Social Action for Manpower Creation) with a vision of enlisting heritage monuments – Bhaje, Karla, Bedse Caves and Visapur & Lohagad Fort in UNESCO heritage list.

Apart from supporting a cause, the walk gave all the participants an opportunity to meet new people from different walks of life and interact with them. The walk was enhanced by folk culture such as cultural events and traditional cuisines.

The aim and vision of SAMPARC Heritage Walk 2018 enshrined:

(1) Spreading awareness about the cleanliness and care requirements of heritage monuments. (2) Enabling citizens and tourists to relate to our varied culture and mesmerising history. (3) Attracting tourists and people from urban areas towards a historical heritage of our country. (4) Encouraging and inspiring people to preserve the precious heritage and help enlist Bhaje, Karla, Bedse Caves and Lohagad, Visapur fort in UNESCO Heritage list. (5) Motivating people from different communities to come together for protecting and supporting underprivileged children.

The walk commenced from footsteps of Bhaje Caves up to Lohagad Fort, which is 3,389 feet above the sea level. Total climb uphill and the same route downhill was approx. 7.2 kms. Along the walk the participants savoured the traditional Maharashtrian delicacies such as pithala-bhakari, thecha, vada pav, corn, etc., and enjoyed the undiscovered panoramic views. They also got an opportunity to feel traditional elegance and view various cultural performances including lavani, bhajan, potraj, tulsi vrundavan, Mallakhamb, etc.

The Heritage Walk was indeed a very pleasant and inspiring experience for the participants to preserve the beauty and identity of our ancient heritage.

INTERNATIONAL ECONOMICS STUDY GROUP

Meeting on “Fear: Trump in the White House” and Current Economic Developments held on 28th November, 2018 at BCAS Conference Hall

International Economics Study Group organised the captioned meeting on 28th November, 2018 at BCAS Conference Hall, to discuss Bob Woodward’s book “Fear: Trump in the White House” and Current Economic Developments. CA Harshad Shah led the discussion and presented his findings of the book. He explained that Bob Woodward is an American journalist and author who reported on the Watergate scandal for The Washington Post which led to Nixon’s resignation. The book chronicles initial years of Trump’s presidency and portrays the Trump White House as chaotic and disloyal to the president. The book’s title is derived from a remark that then-candidate Trump made in an interview with Woodward in 2016, “Real power is Fear”. Woodward has a reputation for meticulous note-taking and interviewing, combined with recording nearly all of his interviews.

The main focus of the book is national security, economic policy, North Korea, Trade, Afghanistan, Syria & the Mueller investigation. Probably the most significant and worrying claims are about Trump’s foreign policy impulses and his not understanding the way the US government debt cycle & balance sheet worked, confused of the federal debt and US monetary policy and trade. The Book brings out that Trump was clueless that orders were removed from his desk. Trump ran a campaign and promised to eliminate the entire federal debt during his presidency and offered a solution “Just run the presses – print money” which would be detrimental to the fiscal and economic health of the US.

The Group also discussed 32 % slide in oil prices over past two months in which Brent crude dropped from $86.70 a barrel to a low of $58.41, lowest levels in over a year (Since October 2017) and this decline happened due to increased supply, lower demand forecast, dilution of American sanctions against Iran, Trump`s prompting to Saudi Arabia & massive unwinding of positions by hedge funds. This would bring relief to India in terms of lower energy prices, inflation, current account deficit & currency.
The Group also deliberated on emerging geo political situations in our neighbourhood such as Pakistan & Afghanistan which might have long term impact on our security concerns.

The meeting was a good learning experience and participants benefitted a lot from the session.

Book Review

Title: Bond to Baba – Successful
Strategies

Author: Ninad Karpe, Chartered Accountant


James Bond, Formula 1 racing, Alexander the Great and Baba Ramdev – what do
these have in common? If I were asked this question two weeks ago, I would
admit that I don’t see anything in common. If, however, I were asked this
question today, I would say ‘Strategy lessons for business’. Bond to Baba is
the latest book on business strategy by Ninad Karpe, who is a Chartered
Accountant and has led Aptech, one of India’s largest education
companies.

 

Before you frown on the subject of ‘business
strategy’ due to its perception as a subject meant exclusively for thinkers,
senior executives and management gurus; Bond to Baba is one book that has
simplified strategy to make sense to a 12 year – old while exploring enough
depth to add value to a seasoned business executive. The book addresses success
stories from films, sports, history and politics; explores the causes of
success in each of these stories, bridges it to what businesses can learn from
them and summarises them into timeless lessons for business.

 

Bond to Baba has been published in 2018 by Popular
Prakashan
, one of India’s leading publication houses, and retails at INR
250. It is also available on Amazon in paperback and Kindle editions. As of
August 2018, this book has been rated 4.5 out of 5 stars by more than 66
reviewers and has swiftly made its way to the list of ‘Memorable business books
of 2018’ by Amazon.

 

The book begins with exploring the James
Bond movies and the factors that have caused the franchise to appeal to
generation after generation. If you think you are a Bond fanatic, think twice!
Ninad has picked up a surgeon’s knife to analyse scenes from Bond movies in
minute detail and linked them to lessons for business. He addresses how the
James Bond brand has been reinvented and represented through the past decades
to keep it updated to evolving expectations of the audience. I am browsing
through Netflix archives as I type this to watch Spectre and Skyfall once again
to experience Ninad’s observations.

 

The book then moves on to explore what
businesses can learn from Formula 1 races. Ninad is a Formula 1 enthusiast for
more that 20 years and amalgamates his depth in the sport as well as business
to produce business lessons. He explains that businesses can learn about
agility, efficiency and exploiting data from Formula 1. “If it takes less than
two seconds for a (pit stop) crew to change four tyres, can we justify a delay
beyond 24 hours in responding to an email?” This is a statement in the book
which is worth pasting on the walls of every office in the world.

 

The book has also elucidated lessons from
history which can be applied even in a contemporary business scenario. The
description of the Battle of Gaugamela, where Alexander’s forces go head to
head with King Darius, was so picturesque that I was transported to that
battlefield in 331 BC and forgot that I was reading a book on business
strategy. In this section, the reader learns that the right strategy, agility
and understanding the opponent can help win the war even with a deficiency in
resources.

 

Ninad has sought inspiration for this book
not just in James Bond, but also in movies like Bahubali and Sairat. In fact,
the lessons that this book presents from these moves are analogous but yet, in
sync. Bahubali can teach businesses to think big, quite literally; while Sairat
can teach businesses to think local. A large vision and local thinking are both
sine-qua-non for any business to flourish in the long run.

 

The book educates the reader about the art
of brand extension by exploring the story of none other than Baba Ramdev. He
maintains that companies must be clear about and enhance their core competency
which is yoga for Baba Ramdev while high quality beverages is the core
competency of Starbucks. This section deliberates on other tools like high
visibility and brand extension that helped Baba Ramdev and his pet company,
Patanjali touch revenues of INR 105,610 million.

 

After business lessons from movies, sports,
food, history, and godmen; perhaps the only gamut remaining untouched was
business lessons from politics. The readers will not be disappointed to find
that the book also dwells on the political stints of Hardik Patel and Arvind
Kejriwal. Ninad explains how Hardik did not evolve his strategy as he gained
more political mileage and hence faded into oblivion not soon after he rose.
Through Arvind Kejriwal’s rapid rise to popularity, he explains the important
and forgotten essence of simplicity. By focussing on something as simple and
relatable as ‘corruption’, Kejriwal could swing the masses in his favour and go
on to become the Chief Minister of Delhi.

 

I enjoyed the classic and contemporary
examples and every section provoked me to think how it is linked to business
lessons and strategy. As a reader, I was also looking forward to the author’s
experience in applying these business lessons in his professional life owing to
his rich experience of running an international company. I am hopeful that the
readers will have the opportunity to read about them in one of his future
books. This book, meanwhile, can be described as a fun to read, informative
document which will leave you thinking long after you have devoured it and
parked it on your shelf.

 

Today, books don’t command the monopoly they
once did for being the only sources of knowledge. They face competition for
attention from videos, audiobooks, podcasts and high quality blogs. Bond to
Baba delivers content in bite sized capsules with the right blend of stories
and analysis. It avoids unnecessary management jargon or excess beating around
the bush. In these aspects, it is one of the easiest to read books I have come
across and the kind of book we need today.
 

 

Representations

Date:  12th
July 2018

 

To

 

Mr. Upender Gupta,

Commissioner GST,

Department of Revenue, Government of India,

GST Policy Wing, North Block,

New Delhi.

 

Respected Sir,

 

Sub:
Recommended Draft Reconciliation Form 9-C for Audit under section 35(5) of CGST
Act.

 

With reference to the above subject, we take this
opportunity to present to you our recommendations on simplified format of GST
Audit Report. The preliminary draft format of audit report was discussed with
the Commissioner Goods and Service Tax, (Maharashtra State) and some of the
State Department Officers. After incorporating their inputs, on 4th
July 2018, a detailed discussion was held on the said draft report with your
goodselves, Mr. Siddharth Jain and your two other team members for your inputs.

Based on the above interactions and inputs, we are
enclosing herewith the revised draft after incorporating your suggestions. Our
attempt is to devise a simple yet a complete report which serves the purpose of
all the stakeholders. As discussed, though the main report has been kept
simple, various fields in the said report may be explained to the tax payers
and tax professionals to facilitate the effective and complete reporting
through a detailed instruction/guidance sheet to facilitate the filling of main
form. We are in the process of preparing the same and it will be submitted to
your office based on your feedback on the contents of the form. We reiterate
the philosophy and principles underlying our recommendations as below

We refer to the following provisions of the Goods and
Services Act, 2017

1. Section 35(5) of the CGST Act, 2017 (The Act)
prescribes certain obligations for every registered person whose turnover
during a financial year exceeds the prescribed limit  of Rs. 2,00,00,000 (specified registered
persons/auditee). The obligations are to get his accounts audited by a
chartered accountant or a cost accountant (auditor) and to submit a copy of the
audited annual accounts along with the reconciliation statement under section
44(2) of the Act and such other documents in such form and manner as may be
prescribed. Rule 80(3) requires the reconciliation statement to be duly
certified.  The said section 44(2)
further provides that the annual return along with a copy of the audited annual
accounts and a reconciliation statement reconciling the value of supplies declared
in the return be furnished for the financial year with the audited annual
financial statement and such other particulars as may be prescribed.

2. On a conjoint reading of the above provisions, it
appears that specified registered persons are required to undertake two
distinct obligations:

a. Get his accounts audited by a chartered accountant
or a cost accountant (auditor) and submit a copy of the audited annual accounts

b. Submit a reconciliation statement reconciling the
value of supplies declared in the return furnished for the financial year with
the audited annual financial statement, and such other particulars as may be
prescribed.

3. In connection with the above, we would like to
highlight that in most of the cases, the accounts of the auditee would be
audited under some other Statute, the most common being Companies Act, 2013 and
Income Tax Act, 1961. It is therefore recommended that the audit under the
relevant statute and the submission of the said audited annual accounts should
be considered as sufficient compliance with the first obligation mentioned
above. Currently also, this is an accepted practice under all the VAT
Legislations and also under the Income Tax Act, 1961. Considering the fact that
the only benchmark for the obligation to get the accounts audited is turnover
above Rs. 2 crores, it appears that in most of the cases, there will be audited
annual accounts under relevant statute available for submission to the GST
Authorities.  If the said audited annual
accounts are accepted by the GST Authorities, the additional obligation on the
auditee would be to submit a reconciliation statement in Form 9C duly
certified by the auditor
. Till date, the contents of Form 9C are not
prescribed and no draft format is placed in public domain for their comments.

4. In this connection, Bombay Chartered Accountants’
Society being the largest voluntary body of chartered accountants (with a
membership of around 9000 members) in India, we wish to recommend a format of
the reconciliation statement, for your kind perusal. The same is enclosed as Annexure
“A” to this communication. The broad parameters underlying the said format are
explained hereunder.

(i) On a reading of Section 44(2) it is evident that
the primary emphasis of the certification of the reconciliation statement
appears to be the reconciliation between the value of supplies declared in the
return furnished for the financial year with the audited annual financial
statement. We have therefore suggested a detailed reconciliation between the
turnover as reflected in the return with the turnover as reflected in audited
financial statements. The said reconciliation statement will be handy to the
Department authorities in clearly explaining the reasons for any variation in
the turnover and will assist them in identifying consequent leakages if any in
output taxes.

(ii) We believe that the elaborate transaction level
uploads and matching requirements on the GSTN Portal has provided the
Department with more than sufficient details on many of the other parameters
for a correct assessment. Such parameters were not available under the earlier
regimes where the data upload was not at a transaction level. Our
recommendation as regards additional particulars to be provided in Form 9C
therefore considers this aspect and avoids duplication of efforts and any
ambiguity. Simultaneously a conscious attempt is made to keep the format simple
for the auditee to compile and the auditor to certify at the threshold of the
new legislation.  Nevertheless,
information necessary for the GST Authorities to identify cases of non-payment
of taxes and wrong claim of credits is included in the additional particulars
in Form 9C.

5.In the backdrop of
the above objectives, the recommended format of reconciliation statement under
Form 9C includes the following:

a. Statement of Reconciliation
between return turnover and turnover in audited financial statements for entity
as a whole

b. Statement of
Calculation of Outward Tax Liability and the manner of discharge of the
said  tax liability & Statement of
Liability under Reverse Charge Mechanism for Inward Supplies specified under
Section 9(3) & 9(4) – to be prepared for each GSTIN

c. Reconciliation of Input Tax Credit as per Books and
as per GST Returns along with detailed breakup of blocked and apportioned
credits under Section 17 and reversals and reclaims of credits – to be prepared
for each GSTIN

6. We believe that the above format is simple,
utilitarian and sure to serve the purpose of the revenue to check leakages. In
our view, any reconciliation format which extends beyond 4 to 5 pages can be
surely cumbersome and onerous for the auditee to compile given the challenges
of the implementation of the GST law.  It
may also increase the costs of small and medium sized auditees and may result in
undue hardship and avoidable duplication. We therefore strongly recommend that
redundant additional information requiring elaborate certification and
verification of documents (especially on the side of inward supplies) should be
avoided especially in view of the nascent stage of the law, various other
difficulties faced in basic implementation of the law and also the fact that
GST was introduced in the middle of the year and many transition provisions
were not suitably aligned. The above along with a plethora of notifications,
periodic clarifications and systems related issues in the initial months of
implementation may compound the challenges of the auditee. Therefore, the
format recommended by us may be considered with or without modifications as
felt appropriate at this initial stage.

7. We would also like to highlight that it is very
common for any law to start with baby steps and then bring in additional
obligations after the law stabilises and the industry matures and also based on
experiences of the initial years. The mention of a few precedents may not be
out of place:

a. The initial format of the tax audit report under the
Income Tax Act consisted of only a few pages (4-5) and it was only after 10 to
12 years that the format was made more elaborate. Even today, the tax audit
report under the Income Tax Act, 1961 does not require a certification of
computation of income nor a certification/compilation of payment of taxes.

b. Many States have simple VAT Audit Reports running
into 3 to 4 pages.

We therefore believe that it would be more appropriate
for the Government to notify a simple but functional reconciliation certificate
and then gradually build upon the same in subsequent years rather than start
with an ambitious document running into dozens of pages.

We are sure the
above recommendation having practical applicability would be considered while
drafting and notifying Form 9C. We would be more than happy to meet you in
person to explain and discuss the detailed format.

 

Thanking You

 

Yours truly,

 

 

CA. Sunil Gabhawalla                                                       CA.
Deepak Shah

President,                                                               
              Chairman,

Bombay Chartered
Accountants’ Society                   Indirect Taxation Committee

 

Note:
For full representation, visit our website www.bcasonline.org


 Representation

                                                                                                                                  
             Date: 15th
July 2018

 

To

 

Mr.
Upender Gupta,

Commissioner
GST,

Department
of Revenue, Government of India,

GST
Policy Wing, North Block,

New
Delhi.

 

Respected
Sir,

 

Sub: Recommendations on the
Proposed Draft Amendments in the GST Act.

 

We have read with detail the draft of the 46
amendments proposed to be carried out in the GST Act and are happy to note that
many of the said amendments are in the right direction. However, we believe
that a few amendments (notably, those proposed at Sr. 29 & 30 dealing with
the manner of cross-utilisation of credits and at Sr.37 dealing with denial of
transition credit for accumulated balances of cess) could be avoided since they
conflict with the basic philosophy of free flow of credits. We also would like
to highlight that in certain amendments, there are certain further
recommendations from our side, which we have tried to incorporate in a tabular
format.

 

In addition to the proposed amendments, we
believe that there are certain pressing issues facing the industry which also
require immediate attention and legislative amendment. We shall send you a
separate comprehensive representation on all such issues in due course.

 

In the meantime, we request you to kindly
consider our representations made above favourably and oblige. If need be, we
would be more than happy to meet you in person to discuss the above
recommendations

 

Thanking You

 

Yours truly,

 

                                                                                                                                                        

CA. Sunil Gabhawalla                                                   CA.
Deepak Shah

President,                                                                   
Chairman,

Bombay Chartered Accountants’
Society                      Indirect Taxation Committee

 

Note:
For full representation, visit our website www.bcasonline.org


Representation

 

                                                                                                                                           Date: 16th July, 2018

 

The Chief General Manager-in-charge,

Reserve Bank of India,

Foreign Exchange Department,

Foreign Investment Division,

Mumbai – 400 001

 

Subject:
Issues relating to filing of Entity Master File

 

We appreciate Reserve Bank
of India’s (RBI’s) effort to simplify reporting under Foreign Exchange and
Management Act, 1999 (FEMA). However, in the process of simplifying the
compliance procedures, technical impediments and procedural hitches have
cropped up in filing the Entity Master Form (EMF). The most pressing issues
which need to be addressed immediately by the RBI are as follows:

 

Key technical impediments:

1. A company is required to
report inflow from the inception of the company. Moreover, the RBI has also
mentioned that if there is no Foreign Direct Investment (FDI) currently, then
FDI has to be reported as NIL. However, the RBI needs to provide clarity on two
aspects:

 

“Whether foreign investments received under
Foreign Exchange Regulation Act, 1973 (FERA) regime are required to be
reported?”

“If a company has NIL FDI today, whether
previous foreign investments received needs to be reported?”

It is pertinent to note that obtaining such
historic data may be arduous. Also it is not possible to collate data for an
indefinite past.

2. Provide guidance on companies in the
process of liquidation:

Whether an entity with FDI is required to
file EMF even if it is under liquidation?”

It
is important to recognize that it is difficult to obtain such data as an
official Liquidator.

3.
Provide clarity in the cases of companies undergoing a scheme of amalgamation /
de-merger :

“Whether separate reporting is required for
the merged or demerged entity or the resulting company should prepare a
consolidated report?”

 4.
Provide guidance on reporting venture capital from foreign investors:

“How to report investment by Foreign Venture
Capital Investor (FVCI) and whether investment by FVCI needs to be reported
even for those cases where Form FC-GPR has not been filed earlier?”

Key procedural hindrances:

1. The website1 for filing EMF is
functioning slowly. The website keeps crashing and it takes at-least 30 minutes
before the website starts responding again. The signing up procedure which
requires validation of an entity user by the RBI consumes valuable time. The
sign up procedure can be streamlined by allowing the Directors of the company
to be the entity user for filing of EMF.

2. The EMF website does not provide for “Save
as Draft” option i.e. all the information is required to be submitted at one
go. The only solution is a “Reset” button which is available to reset the wrong
inputs. Additionally, there is no “timer” for letting the entity user know when
the session expires. The EMF was available only a week before and therefore it
is a herculean task for any client to collate the data immediately and submit
all the data in one go. It is recommended that a “Save as Draft” option be
immediately implemented to ensure unencumbered reporting.

In view of the above mentioned hardships, we
request your good selves to extend the deadline to submit the EMF to 31st
August, 2018
.

We
would be glad to meet in person to explain the above points and some other
relevant issues which will help RBI to implement the new requirement seamlessly.
We request for an appointment at any convenient time to your good selves.

 

 

Thanking You,

 

CA Hinesh
Doshi
                                                                 CA
Sunil Gabhawalla

President                                                                               President

For The Chamber of Tax
Consultants
                                              For
Bombay Chartered Accountants’ Society

 

________________________________________________________________________________________________

1   https://firms.rbi.org.in/firms/faces/pages/login.xhtml                                                                                                      
                            



Representation

Date: 21st July, 2018

 

The Chairman

Central Board of Direct Taxes,

Ministry of Finance,
Government of India,

North Block,

New Delhi-110001.

 

Respected Sir,

 

Subject:
Representation and request for relaxation in levy of fee under section 234F of
the Income-tax Act

 

Vide the Finance Act, 2017, a new section 234F has been
made applicable whereby a fee is mandatorily levied for failure to furnish the
income tax return u/s. 139(1) in respect of income tax returns required to be
filed for A.Y. 2018-19 and onwards.

The above provision for levying of fees is a genuine
hardship and cause of worry and great concern for the non-corporate assessees.
In this respect we have to represent as under:

1. Section 234F has been introduced with a view to
ensure that returns are filed within the due dates specified in section 139(1).
However, fees proposed under section 234F will be leviable on all assessees who
have furnished return beyond the due date specified under section 139(1)
irrespective of the reason for such delay and whether all the taxes have been
paid through TDS or advance tax. The earlier provisions of section 271F
provided for discretionary levy of penalty of Rs. 5,000/- by the Assessing
Officer but the fee u/s. 234F is a compulsory fees to be paid without
considering any reasonable cause of the assessees.

Also, the assessee can not justiy his cause of delay
under any appeal.

2. The time period for filing of ITR has also been
reduced from 2 years to 1 year and the interest u/s. 234-A, 234-B and 234-C
continue to be levied. When the interest for late filing of ITR u/s. 234-A is
already being levied, the fee u/s. 234F is a double whammy and is an injustice
to the assessee.

3. Unfortunately, this new section 234F does not give
you any opportunity to justify the reason for late filing of returns. Whatever
may be the practical difficulties, calamities, medical emergencies, if one is
late in filing the income tax returns, one has to bear the brunt of it.

4. As per the present TDS provisions under the Act ,
the TDS payable as on 31/03/2018 is to be paid by 30/04/2018, the relevant
quarterly e-TDS statement for Q4 is required to be filed by 31/05/2018 and the
TDS certificates are to be issued by 15/06/2018. Once the assessee receives the
TDS certificates by 15/06/2018 he is practically left with only one and a half
months to file his income tax return that becomes due by 31/07/2018. Besides it
is often seen that a TDS deductor either does not file his quarterly e-TDS
statements, or files it late or files a wrong statement, consequently making
the innocent deductee suffer for his TDS credit. This in turn causes forcible
delay in filing his personal returns.

5. For A.Y. 2018-19, The Schema for the online return
filing for ITR 2 and ITR 3 have been updated and changed as late as on 7th
July, 2018 and for ITR 5 the same have been updated and changed as late as on
13th July, 2018 making it difficult for the assessees and tax
professionals to file the ITRs within the due date.

6. Further, the due date of filing of ITR u/s. 139(1),
in the present case by 31/07/2018, gives the time for filing of ITR for 4
months i.e. from 1st April, 2018 to 31st July, 2018.
However, the new online tax filing utility was not available as on 1st April,
2018 and also considering the various other contradictory provisions such as
the TDS certificate receipt due date of 15th June, 2018 and the
amendment and updation of Schema till as late as 13th July, 2018,
for all practical purposes, the ITR filing available time is limited to less
than a month.

7. The small and SME businessmen are also presently
coping up with the GST filing difficulties and hence, may not be able to cope
up with the ITR filings by 31st July, 2018.

8. Of late there has been heavy rainfall since the
first week of July in most parts of the country and hence it is also becoming
administratively difficult for the assessees to comply with the various
statutory deadlines including the ITR filing deadline by 31st July,
2018.

Though we respect and acknowledge the Income Tax Laws
and the levying of the fees u/s. 234F, considering all the above difficulties
faced by small assessees, we humbly request to not levy the fees u/s. 234F for
returns filed for A.Y. 2018-19 and give necessary instructions/issue circular
in this regards. If our humble request is accepted, then necessary amendments
should also be made in the CPC’s return processing software so that at the time
of processing of the returns u/s. 143(1) wherever there is a delay in filing
the return, the fee u/s. 234F is not automatically levied.

We humbly request you to kindly take into consideration
all the facts and circumstances mentioned above and accede to our request in
the larger interest of thousands of tax payers of the country.

 

Thanking you,

 

Yours sincerely

 

Sunil Gabhawalla                            Chintan Doshi                                       Raghavendra
T.N.                       Gyanesh Verma

President, Bombay Chartered                                                                       President,
Ahmedabad Chartered            President,
Karnataka State                                      President,

Accountants’ Society                    Accountants’Association                   Chartered Accountants’            LucknowChartered Accountants’

                                                                                       Association                                                                               Society

Representation

Date:  24th July 2018

 

To

 

The
Chairman

Central
Board of Direct Taxes

Task
Force on New Direct Tax Law

Department
of Revenue

Ministry
of Finance, Govt. of India

North
Block,

New Delhi
– 110001

 

Sir,

 

Sub: Representation on Important
issues/provisions in the Proposed New Direct Tax Law

               

We are pleased to submit herewith our
considered suggestions on important issues that may be addressed in the
proposed new Direct Tax Law.

 

We have made suggestions on following lines:

 

1) Path breaking suggestions for making the
law more taxpayer friendly by rewarding and encouraging compliances;

2) Suggestions for reducing litigations by
providing clarity;

3) Suggestions for “Ease of Doing Business
in India”.

 

We hope that these suggestions will find
your favour.

 

We would be glad to meet you in person and
explain/discuss various points arising from this representation or otherwise,
therefore we request you to grant an opportunity for the same.

 

Thanking you,

 

Yours truly,

 

For Bombay Chartered Accountants’ Society

 

 

 

CA Sunil
Gabhawalla                                 CA
Mayur Nayak                                              CA
Ameet Patel,

President                                                  Chairman
                                                        Chairman

                                                                International
Taxation Committee                       Taxation
Committee

 

Note: For the full representation, visit
our website www.bcasonline.org

 

Representation

                                                                                                                     
            
                                                                                                                                                         Date: 24th
July, 2018

To

 

Mr. Rajiv Jalota

Commissioner SGST,

Government of Maharashtra

Mumbai

 

Respected Sir,

 

Sub:
Recommendations for Simplification of GST for Small and Medium Enterprises
(SME).

 

We have read with detail the recommendations of the 28th GST
Council Meeting and we are happy to note the efforts taken by the Council to
simplify business processes especially for the Small and Medium Enterprises
(SMEs). In particular, we appreciate the following steps, which we believe are
steps in the right direction:

 

1.   Recommendation of a new
process requiring the filing of a single return.

2.   Increase in the Eligibility
Limit for Composition Scheme upto Rs. 1.5 crores and permission to opt for
composition even in cases where there are insignificant value of services
rendered.

3.   Eligibility to issue single
debit/credit note against multiple invoices.

4.   Reopening of the GST Migration
Window in certain cases.

 

While the above steps clearly suggest the intent of the Government to
resolve possible issues and usher in a tax-payer friendly regime, there are
certain issues which continue to bother the tax payers, more particularly the
small and medium enterprises (SME).

 

Accordingly, we
would like to make recommendations, which, if carried out, will significantly
ease the compliance burden at the SME level, bring in certainty and clarity of
provisions and reduce the cost of doing business.

 

In addition to the recommendations, we
believe that there are certain pressing issues facing the SME Sector in terms
of challenges on the GSTN Portal which also require immediate attention and
process amendment. We shall send you a separate comprehensive representation on
all such issues in due course.

 

In the meantime, we request you to kindly
consider our representations made above favourably and oblige. If need be, we
would be more than happy to meet you in person to discuss the above recommendations.

 

Thanking You

Yours truly,

 

CA. Sunil Gabhawalla                                                       CA.
Deepak Shah

President,                                                                 
            Chairman,

Bombay Chartered
Accountants’ Society
                  Indirect
Taxation Committee

 

Note: For full
representation, visit our website www.bcasonline.org

 

 



 

Society News

57TH EDITION OF ‘BCAS REFERENCER’ RELEASED

The BCAS Referencer, one of the eagerly-awaited, landmark publications of the Bombay Chartered Accountants Society, entered its 57th year of continuous publication this year – and also the 22nd year of theme-based issues.

The release programme was organised at the M.C. Ghia Hall on 2nd August, 2019 by the Seminar, Public Relations & Membership Development (SPR&MD) Committee. Following the lighting of the auspicious lamp, there was a selection of short glimpses of India’s classical dance forms which is the theme of this year’s Referencer.

CA Toral Mehta compered the event and introduced the chief guests of the evening, Mr. Sameer and Ms Arsh Tanna, eminent Bollywood choreographers, and the sponsor, CA Kamal Poddar of Choice Connect.

BCAS President CA Manish Sampat noted in his remarks that the publication, which is recognised as the most dependable knowledge resource and an unparalleled repository of various laws, had been the hallmark of BCAS for the last six decades. He acknowledged all the contributors, specially the youth, and the tremendous efforts put in by the Committee for the release of the Referencer immediately after the Union Budget.

The various Indian classical dance forms – whether Bharat Natyam, Odissi, Kucchipudi, Kathakali, Kathak or Manipuri – were performed by the artists who were actually the members and students of the BCAS. They were led by CA Manori Shah under the choreography of Nita Shah and Vishrut Doshi. Other artists who performed included Chirag Bohra, Jitesh Kakad, Hrudyesh Pankhania, Rishikesh Joshi, Vidisha Shah, Disha Unadkat, Tanvi Parekh, Kinjal Bhuta, Rishita Shah, Richa Agrawal and Vidhi Parekh. The rapt audience appreciated and enjoyed all the dances.

In his address, Committee Chairman CA Narayan Pasari appreciated the efforts of all the contributors, editors, proof-readers, and specially CA Pranay Marfatia who had been instrumental in the publication of the Referencer for several years and for organising the release event. The Referencer was released in the presence of a galaxy of personalities, including the contributors, editors and others and was unveiled by the chief guests.

Chief guest Ms Arsh Tanna said she was amazed by the performances of the artists of the BCAS fraternity and expressed her delight at attending the event which was brilliantly correlated with the theme – Indian classical dance and the contents of the Referencer.

Convener CA Manmohan Sharma proposed a hearty vote of thanks to all present, especially to Choice Connect, the sponsors of the Referencer, Finesse, the printers, the BCAS Events staff and the organising team of the Committee who had put in a lot of hard work.

SUBURBAN STUDY CIRCLE

The Suburban Study Circle organised two meetings on ‘15CB Certification – Who, What, When and How?’, on 16th July and 13th August, 2019, which were addressed by CA Rutvik Sanghvi who made a detailed presentation on the following Rules and Regulations:

(i) Who all are covered under the provisions of section 195?
(ii) What transactions are covered?
(iii) When is the taxation to a non-resident applicable?
(iv) How is it to be applied?

Rutvik explained the nuisances and complexities involved in payments to non-residents in a lucid manner. He explained the importance and requirement of tax residency certificate and taxability of various kinds of payments to non-residents like fees for technical services, royalty, etc. It required two sessions to cover the topic in detail.

The participants benefited from the presentation made by him.

HRD STUDY CIRCLE

The HRD Study Circle met on 13th August, 2019 to discuss ‘Modern Techniques in Physiotherapy.’

The presentation was made by Dr. Rupa Mehta and Dr. Kritika Poddar. Dr. Rupa Mehta and her team run Healthspace clinic at Opera House and have 30 years of experience. They have kept themselves updated with the latest techniques in physiotherapy.

The presentation covered:
(a) Diagnosis and treatment of spine (neck and back), shoulder, elbow, hip, knee and ankle joint pains. (Through her presentation, Dr. Rupa Mehta gave members a detailed explanation for the possible reasons for pain in the joints. She showed simple exercises to address the pain in the initial stages and explained that neglecting it can cause further damage and addressing it early can help avoid surgery);
(b) Bad posture can have a deleterious effect on the body;
(c) It is necessary to improve the core muscles.

The latest techniques used in Healthspace are as follows:
(I) The McKenzie Protocol of exercises
(II) The Mulligan Protocol
(III) Neurodynamic solutions
(IV) Taping
(V) Dry needling
(VI) Core muscle strengthening
(VII) Pilates on the reformer and customised exercise.

Dr. Kritika Poddar highlighted the benefits of pilates. She projected ergonomics with visual inputs and stressed on the need for the right posture. Work life ergonomics and exercises shown by her could be beneficial for all chartered accountants and professionals.

However, the most important point was to spread awareness so that people do not injure themselves and adopt a better lifestyle.

INTERNATIONAL ECONOMICS STUDY GROUP

The group held its meeting on 16th August, 2019 to discuss ‘Economic Slowdown and Global Flash Points’. CA Harshad Shah led the discussions and presented his thoughts on the subject.

He said that based on the definition of slowdown and recession, the Indian economy had slowed down and might have entered into a recessionary phase as the GDP had come down from the high of 8.2% in Q1 FY19 to 7.2% in Q2 and in the last quarter dropped to 5.8%. This fulfilled the technical definition of a recession of two consecutive quarters of negative economic growth.

At the macro level, the automobile sector was facing its worst crisis in 20 years with the malaise spreading across much of the industry, both in terms of vehicle type and components as well as geographically in the country’s manufacturing hubs, along with the structural reform of pushing for electric vehicles. The real estate sector had been on a downturn since the demonetisation period, with India’s top 30 cities having 1.28 million unsold housing units as of March, 2019. The health of real estate was a major indicator of the state of the economy. It had links with about 250 ancillary industries – bricks, cement, steel, furniture, electrical products, paints, etc., and affected all of them whether there was a boom or gloom in the sector.

FMCG companies had reported a decline in volume growth due to sluggish rural demand which, in turn, indicated less availability of money in villages. All these factors impacted the unemployment rate which had risen to a 45-year high.

India’s household-sector savings, the biggest source of investment for the economy, had ‘worryingly’ come down to 30.5% (as % to GDP) in 2018 compared to nearly 37% in 2008. Poor savings had been a largely ‘unaddressed’ reason for the country’s continuing slowdown. Retail loans to the sector were growing annually in double digits, pointing to profligate consumption by households with a youthful population (70% of the working-age population being aged between 20 and 40 years) that liked to spend. Many economists widely held that a country’s economic growth should be investment-led rather than being driven by consumption, as had been the case with India.

The NITI Aayog CEO attributed the downshift to a spate of measures (structural reforms) such as GST, RERA and IBC that had led to the current slowdown in the country.

The global economy was bracing for a probable recession in 2020 as nearly half (48%) of CFOs in USA and some prominent economists were also predicting this. One of the indicators, the Yield Curve inversion, had already occurred. An inverted yield curve meant that interest rates had flipped on the US. Treasury with short-term bonds paying more than long-term bonds. This was generally regarded as a warning sign for the economy and the markets.

The global economy was also facing some serious headwinds such as Hard Brexit; US vs. China: From Tariff War to Currency War to Economic War, with USA labelling China as a ‘Currency Manipulator’ for the first time; Argentina’s historic market crash with fears of another default; the Hong Kong protests and probable retaliation by Chinese security forces; and the Iran issue. CA Milan Sanghani and many participants expressed their views on all these issues.

FEMA STUDY CIRCLE

The FEMA Study Circle meeting held on 19th August, 2019 covered the issue of ‘FDI in Trading Sector’.

CA Chintan Shah delved into various facets of the subject, viz., Cash and Carry Wholesale Trading, E-commerce, Single Brand Product Retail Trading, Multi-Brand Product Retail Trading and Duty-Free Shops. The FDI in the above activities was covered from scratch, beginning with sectoral caps applicable to each of them and ending with a healthy discussion on understanding the nuances of their respective definitions, the conditions attached thereto and understanding the manner in which businesses were structured in India. It was indeed a very interesting session given the current business environment in the country in which various multinational companies across the globe were exploring business models to expand their markets here.

4TH NARAYAN VARMA LECTURE

The 4th Narayan Varma Memorial Lecture (and the Narayan Varma Memorial Awards) was organised by the Public Concern for Governance Trust, the Bombay Chartered Accountants Society, the Dharma Bharathi Mission and the Chamber of Tax Consultants at the Indian Merchants Chamber on 23rd August, 2019.

The programme was organised in memory of Narayan Bhai who was closely associated with these organisations, held various posts in them and mentored and nurtured them with his values, ideology and hard work. He left behind an enduring legacy as a great professional, a philanthropist and, above all, a great human being.

The memorial lecture was delivered by Mr. Y.H. Malegam, the well-known CA and a legend in the financial sector who has been honoured with the Padma Shri.

Three distinguished persons from Mumbai were also recognised for their humanitarian service. The DBM NV Memorial Award was given to the Adhyayan Sanstha, the BCAS Narayan Varma Memorial Award went to Mr. Vishwas Gore and the PCGT NV Memorial Award was bestowed on Mr. Shailesh Gandhi.

The programme was very well attended with all top CAs, auditors and people associated with the social sector in attendance. Kudos to all the four other partner organisations for coordinating their efforts to organise the memorable event.

TAXATION COMMITTEE

The Taxation Committee organised a full-day seminar on ‘Tax Audit’ at the BCAS Conference Hall on 23rd
August, 2019.

President Manish Sampat gave the opening remarks. Chairman of the Taxation Committee Ameet Patel gave a brief overview of the seminar and explained the importance of tax audit in the current scenario. He also informed the participants about the onerous responsibility cast on the tax auditor, given that the selection as well as the assessment is now going to be online.

The following topics were taken up by the learned speakers:

Programme Speakers
Audit aspect of Tax Audit – overview of Tax Audit provisions, reporting requirements, audit quality, verification of documents, documentation in light of ICDS, obtaining and relying on management representation, reliance on test checks, etc. CA Himanshu Kishnadwala
Issues arising with tax audit of companies following Ind AS reporting in clauses 13 to 17, clause 19 and clause 24 CA Manish Shah
Reporting in Form 3CD – Certain clauses (namely, clauses 20 to 23, clauses 25 to 27, clauses 30A to 30B and clauses 42 to 44) CA Sonalee Godbole
Reporting in Form 3CD – Certain clauses (namely, clauses 28 to 29B, clause 31, clause 32, clause 34, clause 36 and clause 36A) CA Jagdish Punjabi

Himanshu Kishnadwala set the ball rolling by highlighting various audit aspects that one should keep in mind while conducting a tax audit. He gave his practical insights pertaining to some of the clauses and stressed on the importance of documentation in tax audit.

Next came Manish Shah who described the impact of ICDS through case studies. He also took the audience through various case studies to explain the impact of Ind AS on various clauses in a tax audit report. Apart from the discussion on ICDS and Ind AS, he also dealt with clauses dealing with presumptive taxation.

Sonalee Godbole made a detailed presentation on clauses relating to secondary adjustment, thin capitalisation, GAAR and CBCR. She explained the concepts in a lucid manner with the help of examples and case studies. She also discussed the requirement of reporting the filing in Form 61A and Form 61B.

The last session was addressed by Jagdish Punjabi who covered a large number of clauses, including those related to TDS. He also discussed the impact of section 56(2) on hybrid instruments issued by the company and its reporting requirement in Form 3CD. Apart from this, he explained the applicability of sections 269SS and 269T to loans by book entry and their reporting requirement in Form 3CD.

All the sessions were interactive, with the speakers sharing their insights on their respective subjects. The participants benefited immensely with the guidance and practical views on various issues.

DIRECT TAX LAWS STUDY CIRCLE

The Direct Tax Laws Study Circle meeting on ‘Income Computation and Disclosure Standards (ICDS)’ was held on 6th September, 2019 at the BCAS Conference Hall. Group leader CA Darshak Shah gave a brief overview of the applicability of ICDS provisions and the corresponding sections in the Income-tax Act, 1961 (Act). He also explained the general approach to resolve conflicts between the provisions of the Act and ICDS.Thereafter, he discussed in detail the ten ICDS with various examples and relevant case laws. The group leader took questions from the participants with respect to the relevant examples. Besides, he touched upon the possibility of double taxation in case of ICDS – X relating to ‘Provisions, Contingent Assets and Contingent Liabilities’ in a certain scenario.The session concluded with a vote of thanks to the speaker, Darshak Shah.

FELICITATION OF FRESH, YOUNG CAS

Talk on ‘Career Planning & Interview Skills for Fresh CAs’ held on 13th September, 2019 at BCAS Conference Hall

Yet another programme organised by the Seminar, Public Relations and Membership Development (SPR&MD) Committee was the felicitation programme for the newly-qualified chartered accountants who had cleared the June, 2019 examination. In fact, within hours of the announcement, the online enrolments crossed the record figure of 300, forcing BCAS to close registrations for this crucial programme.

There was a full house of 160+ participants, including some walk-ins. They were greeted at the registration desk with a copy of the BCA Journal and a membership form.

The evening started with Coordinator CA Preeti Cherian welcoming the participants and giving an overview of the purpose of the event. She was followed by President CA Manish Sampat who took the opportunity to walk down memory lane and recall his early days as a qualified chartered accountant, the sound advice that he had received from his seniors to associate himself with the BCAS, to the present when he had taken over as its President. He described the various initiatives of the Society and particularly dwelt on the 5G Annual Plan.
Chairman CA Narayan Pasari candidly admitted that the Youth or Yuva Shakti was an integral part of the numerous activities organised by the BCAS. He also appealed to the new CAs to become members and play an active role in its various activities. While speaking about the Committee’s initiatives, he talked about the Referencer, the annual RRC and other programmes. He proudly shared that the BCAS was very active on social media and its handle @BCASGlobal had recently crossed the 30K mark.

The speaker for the evening was CA Himani Shah who spoke at length on the various jobs available in the finance industry for chartered accountants. She shared tips on interview skills, including first impressions, what to do before the interview, what to wear, how to prepare, guidelines to answer questions, asking the right questions, etc. She also elaborated on the power of visual communication, business etiquette and communication. That her talk was well received could be judged from the fact that many participants had numerous questions to ask of her in the interactive session that followed.
As part of the felicitation programme, each of the participants was presented a pen with BCAS and the word ‘Achiever’ inscribed on it. The event showcased the vibrancy of the participants, many of whom showed great interest in signing up to be members of the BCAS.
A unique feature of the evening was when one of the participants thanked the speaker for clearing the many doubts that she and her fellow participants harboured. The evening ended with a vote of thanks by Convener CA Mrinal Mehta.

MISCELLANEA

I. Economy

 

1.      
Sweeping and slashing to trap
investments

 

Finance Minister
Nirmala Sitharaman’s sweeping reforms slashing corporate tax rates to bring
them at par with most South Asian and Southeast Asian nations are expected to
trap investments headed even to low-tax destinations like Bangladesh and
Vietnam.

 

While markets
saluted the Minister’s sweeping reforms of the corporate tax rates on Friday,
the best is yet to come, according to experts. The tax rates have become
competitive when compared to most other South Asian and even Southeast Asian
investment destinations.

 

A competitive
environment should help India trap some of the capital fleeing China fearing a
worsening of the US-China trade war and imposition of stiffer sanctions on
Beijing. The tariff war touched off by US President Donald Trump has only
worsened with Chinese President Xi Jinping in no mood to relent. India is
eyeing a major share of the capital moving out of China to boost Prime Minister
Narendra Modi’s ‘Make in India’ initiative, say reports.

 

India’s effective
rate of 25.17% compares well against China’s 25%. The new rates will make India
a good bargain when compared to Pakistan’s 31%, Sri Lanka’s 28% and even
Bangladesh’s 25%. Among the Southeast Asian economies, India can easily steal a
march over the Philippines which has a 30% rate and Indonesia and South Korea
who maintain a 25% rate and Malaysia with 24%. Thailand and Vietnam offer 20%,
but India could score in terms of technically skilled labour and better
infrastructure. Only Taiwan and Singapore with 17% still have a clear advantage
over India.

 

The Finance
Ministry, in consultation with the Ministry of Commerce, has been evolving a
strategy to compete with South Asian neighbours like Bangladesh which have
attracted investors because of the cheaper labour and more conducive land
acquisition laws. Indian officials think the country’s reforms will enhance its
ease of doing business rating and make it capable of taking on even Southeast
Asian competitors. Vietnam, which is drawing a lot of investment fleeing
Mainland China, has been on the Indian crosshairs for some time.

 

Government slashed
the corporate tax rate to 22% from 30% for domestic companies – and proposed a
competitive 15% rate for new investment in manufacturing. The cumulative fiscal
boost emanating from the tax law changes would amount to Rs. 1.45 lakh crores, which
sends a strong signal of the government resolve to revive economic growth, a
report on the The Economic Times website said. To be eligible for the
new concessional tax rates, companies need to forego the existing incentives
and exemptions in force. Even those opting for the status quo, the
minimum alternate tax (MAT) shrinks to 15% from 18.5%. Companies will have the
option of the lower tax rate after the expiry of the tax holidays and
concessions that they enjoy now. Once they choose the new tax rate, they can’t
revert to the concessional regime.

 

Prime Minister
Modi, bound for the US to address the historic ‘Howdy Modi!’ event along with
President Trump, termed the step to cut corporate tax rate ‘historic’, saying
it ‘will give a great stimulus to “Make in India”, attract private investment
from across the globe and help create more jobs.’

 

(Source:
International Business Times – By Prathapan Bhaskaran, 21st
September, 2019)

 

2.      
Recruitment may counter the
slowdown gloom

 

India’s
second-largest employer, Coal India Limited (CIL), is offering 9,000 openings;
4,000 people will be recruited to fill up executive posts and the rest will be
technical and non-technical staff.

 

The massive
recruitment drive to fill up about 9,000 openings in the parent company and
subsidiaries amid the gloom of a general economic slowdown and talk of stiff
divestment targets is cheering up the country’s job market, reports say. Of the
vacancies announced, 4,000 will be of executives in the parent company while
the technical hands will be taken in by the company’s eight subsidiaries, said
a report in the Economic Times. CIL sources say this would be the
biggest recruitment drive of the group in a decade.

 

CIL and its subsidiaries employ about 2,80,000 people, second only to
the Indian Railways, including nearly 18,000 at the executive level. CIL is one
of the public sector undertakings (PSU) that Finance Minister Nirmala
Sitharaman has identified for raising Rs. 3.25 lakh crores through divestment
in the next five years of Prime Minister Narendra Modi’s second stint in
office. The target for the 2019-20 financial year is an estimated Rs. 1.05 lakh
crores.

 

‘Coal India is
recruiting so many executives in a single year in almost a decade in an effort
to fill up all the vacancies that have been pending for several years. Last
year, we recruited only about 1,200 people,’ the report quotes an unidentified
senior Coal India executive as saying.

 

‘Of the 4,000
executives Coal India plans to recruit, 900 would be through advertisements and
interviews in the junior category, another 400 would be recruited from campuses
and some 100 would be miscellaneous, such as medical officers, etc. We have
already recruited 400 executives most of whom are doctors. Another 75 have been
recruited and would be joining soon. The company will recruit around 2,200
additional executives through competitive examinations.’

 

The company’s coal-producing subsidiaries will recruit 5,000 workers and
technical hands, including about 2,300 who will be recruited as part of a
policy of offering jobs to families whose land was acquired for various
projects. Another 2,350 people will be hired on compassionate grounds as part
of the company’s policy of offering a job to one family member of a deceased
employee. About 400 openings will be of a non-technical nature, the report
said.

 

Set up in 1975, CIL
has been seeing mass retirement of a large number of employees at
superannuation in recent years. The number of employees who have left this way
in the last three years is pegged at more than 12,300. The posts have remained
unfilled because of a general recruitment ban in the government. While not all
posts will be filled up, the group companies need large-scale recruitment over
the next few years to ensure adequate workforce strength, the reports say.

 

(Source:
International Business Times – By Prathapan Bhaskaran, 18th September,
2019)

 

II. 
Finance

 

3.      
Credit fairs aka ‘loan melas

 

Credit fairs by
public sector banks will bring early festival cheer to consumers as the
corporate tax bonanza will put on steroids PM Modi’s FDI push after ‘Howdy
Modi!’

 

Finance Minister
Nirmala Sitharaman’s big-ticket reforms are focused on a demand boost for the
revival of the domestic economy. For this, the Ministry has set rolling a
series of steps, apart from the headline reform of corporate tax rates that put
the stock market on steroids. The corporate tax reduction that will entail a
revenue loss of Rs. 1.45 lakh crores to the government is expected to help
Prime Minister Narendra Modi make a big splash at the ‘Howdy Modi!’ event after
which he would be meeting top executives of 16 big US corporate houses in his
foreign direct investments (FDI) campaign.

 

The major takeaways
from the series of announcements Sitharaman made were:

 

(i) Credit fairs (loan melas): The public
sector banks (PSBs) will organise fairs for potential borrowers in 400
districts, boosting liquidity and driving demand in the retail sector across
the country. The rural economy survives on retail demand and the increased
liquidity will help drive demand and spending, thus helping the rural revival,
experts believe;

(ii) NBFC role: Sitharaman’s directive to the PSBs
to ensure the participation of NBFCs in the credit fairs will help improve the
liquidity status of the NBFCs. This is particularly important because the
ailing NBFCs have been shown to be behind the economy’s illiquidity, according
to reports;

(iii) Relief for
MSMEs: The injunction on lenders to desist from declaring loans to micro,
medium and small enterprises (MSMEs) as non-performing assets (NPAs) during
this financial year ending on 31st March, 2020, will help reduce
morbidity in a vital segment of the economy, according to experts. With over 60
million units, the MSME segment is second only to the agriculture sector in
employment generation;

(iv)  MSMEs loan restructuring: Banks have been
directed to use the special dispensation that the RBI circular, ‘MSME sector –
Restructuring of Advances’, dated 1st January, 2019, has made
available. ‘We have also requested that at the branch level banks should make
efforts to sit with such stressed asset accounts of MSMEs to get them out of
the situation,’ Sitharaman said. MSMEs that are unable to repay loans within 90
days of the due date will not be stamped with the NPA tag. The facility will be
available to MSMEs whose aggregate exposure, including non-fund-based
facilities, of banks and NBFCs to the borrower does not exceed Rs. 25 crores as
on 1st January, 2019;

(v)        Spreading liquidity: The Reserve Bank of
India (RBI) has said that there is enough liquidity in the economy after its
fifth successive repo rate cuts. Sitharaman says the credit fairs will ensure
that the liquidity reaches the lowest layer of the economy, driving up
consumption;

(vi) All types of
loans: The credit fairs will be organised as public meetings to be monitored by
Minister of State for Finance Anurag Thakur to ensure that the needy get the
loans;

(vii) The reform
announcements ahead of Prime Minister Modi’s meetings in the US will serve to
send a loud message to industrialists across the world to consider India as a
friendly investment destination, especially when the US-China trade wars are
threatening FDI flow to China.

 

(Source:
International Business Times – By Prathapan Bhaskaran, 20th September,
2019)

 

4.      
Just a face to defy the law?

 

PwC India has been fined more than Rs. 230 crores (£ 26.37 m) by the
Indian Enforcement Department for breaches of the Foreign Exchange Management
Act (FEMA).

 

The ‘Big Four’ firm
had been accused of receiving large foreign investments from Netherlands-based
PricewaterhouseCoopers Services BV, which allegedly had been disguised as
‘grants’ to avoid FEMA. The legislation requires foreign investments in
financial services to be approved by the Reserve Bank of India.

 

The Directorate of
Enforcement was brought in by the Indian Supreme Court to investigate PwC’s
affairs following a public interest petition brought by the Centre for Public
Interest Litigation (CPIL), a non-governmental organisation, in 2013.

 

At the time, CPIL
called for a ruling on whether the ‘Big Four’ in general were operating in
India ‘in violation of law in force in a clandestine manner’, whether effective
steps were being taken to enforce the law and, if this was not happening, what
orders were required to ensure proper enforcement. The Indian government later
backed up the original public interest litigation with a second,
similarly-worded petition.

 

PwC was used as an example to illustrate in the petitions how global
firms were exploiting the law to build up their presence in India and gain
access to lucrative audit markets.

 

In February last
year, the Supreme Court ruled that PwC Services BV Netherlands had enabled its
Indian partners to acquire Dalal & Shah, a chartered accountancy firm based
in Mumbai and Kolkata, through a series of interest-free loans to them. This
‘circuitous route’, the judge said, was in violation of the law.

 

The Dutch firm had also shared profits in the form of licence fees and
network charges and made further investments through grants for enhancement of
skills, he said.

 

The judge concluded
that while the court could not involve itself with policy-making, it was
entitled to look at the policy framework to find out whether safeguards for
enforcement of fundamental rights had been maintained. ‘In the present context,
having regard to the statutory framework… it may prima facie appear that
there is violation of statutory provisions and policy framework, effective
enforcement of which has to be ensured’.

 

‘Statutory
regulatory provisions intended to advance the object of law have to be enforced
meaningfully,’ he continued. ‘No vested interest can flout the same by
manifesting compliance only in form. Compliance has to be in substance. The
law-enforcing agencies are expected to see the real situation.’

 

He said that the
large multinational firms’ compliance was in form, not in substance. ‘Having
got registered partnership firms with the Indian partners, the real
beneficiaries of transacting the business of chartered accountancy remain the
companies of the foreign entities. The partnership firms are merely a face to
defy the law.’

 

According to
reports, the Enforcement Department found that PwC had received the equivalent
of Rs. 229 crores in US dollars. The agency said that they were received as
grants and used ‘for various business purposes, including acquisition of other
Indian companies and paying non-compete fee’.

 

(Source:economia.icaew.com/news/september-2019/pwc-india-breached-indian-foreign-exchange-rules)
  

LETTER TO THE EDITOR

Dear Sir,

 

Thanks for continuing to bring interesting,
timely, topical and thought-provoking articles month on month.

 

I write this email regarding the article Banning
the Auditors
published in the August, 2019 issue of BCAJ. The
article covered the topical issue exhaustively and I thank the author for
sharing his valuable views and the intricate legal aspects involved.

 

In Para 1, page 16, he writes,

‘Post-IFRS and Ind AS implementation and
the use of fair values, the “cushion” that was available in
historical cost regime no longer exists. Regulators and other stakeholders need
to accept the fact that these errors in estimates are inherent to the adoption
of fair value accounting.’

 

While I completely agree that there is more
estimation uncertainty involved under Ind AS, is it a valid expectation  to expect regulators/stakeholders to accept
errors in estimates inherent in fair value? If possible, it would be
interesting to understand further the author’s point of view from the legal
defence point, too.

 

Regards,

Vinayak Pai V.

 

 

MISCELLANEA

I. Technology

 

5. Opposition
to data localisation may come down after international tax law

 

Opposition
to India’s data localisation move from overseas companies may go down once a
globally accepted framework of taxing big technology and digital companies
comes into existence, a senior IT Ministry official has said.

 

Mr. S.
Gopalakrishnan, Joint Secretary in the Ministry of Electronics and IT, said
that he was referring to a recent proposal by the Organisation for Economic
Co-operation and Development (OECD) to expand government rights to tax
multinationals, especially big internet firms, by releasing a methodology for
such taxation.

 

He said
that according to the draft personal data protection (PDP) bill, the law would
only set up the framework regarding necessarily localising ‘critical data’ only
in India without a copy of it being elsewhere.

 

But ‘there
will be a lag between the coming of the law and the implementation since the
regulator would then work out the nitty-gritty of what comprises critical data
and thus needs to be stored only in the country,’ he said, adding that the
entire process would take all the stakeholders into consideration.

 

The
officer further clarified that even then, the law would allow the Indian
government in the meanwhile to strike bilateral data treaties with other
countries wherein companies from the partner countries could even store the
critical data overseas.

 

Mr.
Gopalakrishnan was chairing a session on ‘Data Localisation and Global India’.
His comments came during a panel discussion on how some big technology giants
were opposed to the Indian government’s proposed data localisation rules as
outlined in the draft PDP bill which, he said, could soon be tabled in the
Parliament.

 

Speaking
on the opposition from big technology firms on proposed Indian laws around
privacy and security, he added ‘the global tech companies have so far operated
in a regime without specific privacy laws in the U.S. but are now facing a
situation where there are six states that have come out with privacy laws and a
Federal privacy law is expected. Under such circumstances, legislation of a
privacy law in India should not come as a surprise or a shock to them’.

 

(Source:
economictimes.indiatimes.com)

 

6. Now,
ask Alexa to pay utility bills as Amazon adds voice-based feature

 

In yet
another step towards making online buying and other services completely
voice-based and hinged on its virtual assistant Alexa, Amazon announced that
users in India can now pay their utility bills with Amazon Pay just by voice
commands.

 

This new
Alexa feature supports payment of bills across categories such as electricity,
water, post-paid mobile, cooking gas, broadband and DTH among others. ‘Users of
Amazon Echo, Fire TV Stick and other devices with Alexa built-in can just say
commands such as “Alexa, pay my mobile bill” or “Alexa, pay my electricity
bill” to get started,’ the company said.

 

‘This new
integration of Amazon Pay with Alexa will help reduce both time and effort for
customers who use Amazon Pay for bill payments and repeat similar transactions
every month. We are also excited to share that this is an India-first feature
which Alexa customers in India can enjoy before any other international
customers,’ Puneesh Kumar, Country Manager for Alexa Experiences and Devices,
Amazon India, said.

 

The
company last month announced that Alexa can now speak in Hindi. Going forward,
it is planning to launch its voice assistant in a host of other Indian
languages. Taking the competition to Google Assistant, Amazon is ramping up the
usage of Alexa in India by tying up with speaker manufacturers and mobile phone
companies to make Alexa the primary voice assistant on devices. At the moment
Alexa knows 500 skills in Hindi. In English, Alexa can perform over 30,000
tasks.

 

(Source:
www.business-standard.com)

 

II.  world news

 

7. Ex-PCAOB
leader gets prison time for role in KPMG scandal

 

Former
Public Company Accounting Oversight Board Inspections Leader Jeffrey Wada has
been sentenced to nine months in prison for his role central to the
long-running KPMG inspections scandal.

 

Wada was
convicted of one count of conspiracy to commit wire fraud and two counts of
wire fraud in March, 2019 for providing KPMG employees with confidential
information on certain of the PCAOB’s 2016 inspection selections in an effort
to cheat the system. In addition to his jail time, he received a three-year
sentence of supervised release.

 

‘Jeffrey
Wada violated not just the terms of his employment with the PCAOB but also the
law when he provided confidential information about upcoming audit reviews to
co-conspirators at KPMG,’ said U.S. Attorney Geoffrey Berman in a statement.
‘Wada hoped to secure a job at KPMG. What he got was a nine-month prison
sentence.’

 

Wada is
the third figure in the KPMG scandal to receive jail time for his actions. In
September, David Middendorf, former national managing partner for audit quality
and professional practice at KPMG and the individual found by Berman to be ‘at
the top of a chain of corruption,’ was sentenced to one year and one day in
Federal prison and three years of supervised release. Cynthia Holder, another
ex-KPMG and PCAOB employee to whom Wada provided the confidential information,
was sentenced to eight months in Federal prison and two years of supervised
release in August.

 

Wada
joined the scheme in the fall of 2015 when he first provided confidential
information to Holder and repeated the crime in January, 2017 after being
passed over for a promotion at the PCAOB. Referring to the confidential
information as the ‘grocery list’ in a voicemail, he again went to Holder in
2017, but this time provided his resume and asked for assistance in gaining
employment at KPMG.

 

Prior to
the scheme, KPMG fared poorly in PCAOB inspections and in 2014 received
approximately twice as many comments as its competitor firms. The cheating
scandal is documented as having taken place from 2015 to 2017.

 

In June,
the SEC settled charges related to the scandal with KPMG for $50 million, in addition
to revealing allegations of cheating on internal exams that were also covered
in the settlement.

 

(Source:
www.complianceweek.com)

 

8. Can
a new apple take over the world?

 

When you hear that a new variety of apple is being launched with a
multi-million-dollar marketing campaign, you might wonder if you weren’t
listening properly and that the product is actually an Apple iPhone.

 

But now, starting to hit grocery shelves in the U.S. and then overseas
early in 2020, is a new American-born apple that its backers are convinced will
become the new global bestseller – the ‘Cosmic Crisp’.

 

‘The stars are aligning for this apple,’ says Kathryn Grandy, Marketing
Director of U.S. fruit firm Proprietary Variety Management (PVM), the company
handling the $10m (£7.9m) launch of the new variety.

 

A cross-breed between two existing varieties (the Honeycrisp and the
Enterprise), advocates of the Crisp describe it as some sort of apple holy
grail. It is said to be sweet, crisp and juicy. But as importantly, it is said
to have a previously unheralded shelf life, staying fresh for up to a year if
kept chilled.

 

You might think that this all sounds like hyperbole, but hundreds of
apple growers in the Crisp’s home state have bet $40m that it is going to be a
hit.

 

The story of the Crisp began back in 1987 when its breeding programme
started at Washington State University. The idea was to develop a new variety
of apple to help Washington’s then beleaguered apple farmers.

 

First made available for commercial planting in 2017, Washington’s apple
farmers had long heard of just how good the new variety was supposed to be. So
much so that demand for the Crisp was so high that farmers had to enter a
lottery to be able to get their hands on the first seedlings. Their names were
randomly drawn by a computer programme. Sales of Crisp seedlings subsequently
boomed. Today, more than 12 million Crisp trees are growing across Washington,
with orchards covering some 12,000 acres.

 

With the first apples now on the shelves, it is estimated that this
giant planting scheme – said to be the biggest and fastest in world apple
history – has cost the growers a combined $30m.

 

In return for this confidence, the Washington farmers have been given the
exclusive rights to grow and sell the Crisp worldwide until 2027. And as the
Crisp is being marketed as a premium variety, its price reflects this.

 

The first apples are now on sale in the U.S. for $5 per pound (454
grams), which is more than three times the cost of standard varieties. For
every 40-lb box sold, a royalty of 4.75% is shared between Washington State
University and its commercial partner, the previously mentioned PVM.

 

More than 467,000 40-lb boxes are now projected to be shipped before the
end of this year, rising to two million in 2020 and 5.6 million by 2021. The
apple even has a trademarked slogan – ‘Imagine the possibilities’.

 

‘The rate at which Cosmic Crisp is poised to come into the US market in
the next five to eight years is unprecedented,’ says James Luby, a Professor of
Horticultural Science at the University of Minnesota-Twin Cities. ‘If you look
at the past 30 years of apple consumption in the U.S., it’s all flat. And the
profit margins are thin,’ says Prof. Rickard who is an expert in the
agricultural and food sectors. ‘The Cosmic Crisp could increase per capita
consumption of apples in the U.S.’

 

(Source:
www.bbc.com)

 

III. Health

 

9. Kids
and sugary drinks: How clever packaging can deceive parents

 

Though science has shown that sugary drinks are not healthy for
children, fruit drinks and similar beverages accounted for more than half of
all children’s drink sales in 2018, according to a new report.

Fruit drinks and flavoured waters with added sugars made up 62% of the
year’s $2.2 billion children’s drink sales. Healthier drinks, such as water or
juices made from 100% juice, made up 38% of sales during the same year. Many
sweetened drinks have packaging that highlight fresh fruit, when they only
contain 5% actual fruit juice. Experts say children should mainly be given milk
and water to avoid too much sugar.

 

And plenty of money was spent on advertising these beverages. Companies
spent $20.7 million to advertise children’s drinks that contained added sugars.
Children aged 2 to 11 saw more than twice as many TV ads for sweetened drinks
than for drinks without added sweeteners.

 

‘Beverage
companies have said they want to be part of the solution to childhood obesity,
but they continue to market sugar-sweetened children’s drinks directly to young
children on TV and through packages designed to get their attention in the
store,’ said Jennifer L. Harris, PhD, MBA, lead study author and the Rudd
Center’s Director of Marketing Initiatives. ‘Parents may be surprised to know
that paediatricians, dentists and other nutrition experts recommend against
serving any of these drinks to children.’

 

Dr.
Harris’s team evaluated 67 drinks to see the differences between sweetened
drinks and beverages without added sweeteners.

 

Experts say that juice and water blends without added sweeteners have
started to hit the market, but the nutrition claims and images can make it
difficult for parents to pinpoint which drinks are healthier.

 

Sugar-sweetened
fruit drinks marketed to children typically included 5% juice or less, but 80%
of those packages portrayed images of fruit and 60% claimed to have ‘less’ or
‘low’ sugar or ‘no high fructose corn syrup,’ the report said.

(Source:
www.healthline.com)
 

 

REPRESENTATION

1.  Dated: 12th
November, 2019

     To:The Tax policy
and Statistics Division Centre for Tax Policy and Administration OECD

     Subject: Comments
and Suggestions for the Unified Approach under Pillar One – Secretariat
proposal

     Representation by:
International Taxation Committee of Bombay Chartered Accountants Society

 

Note: For full Text of the above
Representation, visit our website www.bcasonline.org

MISCELLANEA

1. Technology

 

25.  Apple contractors ‘regularly
hear confidential details’ on Siri recordings

 

Apple contractors regularly hear confidential medical information, drug
deals and recordings of couples having conversations as part of their job
providing quality control, or ‘grading’, to the company’s Siri voice assistant.

 

Although Apple does not explicitly disclose it in its consumer-facing
privacy documentation, a small proportion of Siri recordings are passed on to
contractors working for the company around the world. They are tasked with
grading the responses on a variety of factors, including whether the activation
of the voice assistant was deliberate or accidental, whether the query was
something Siri could be expected to help with and whether Siri’s response was
appropriate.

 

Apple says the data ‘is used to help Siri and dictation… understand you
better and recognise what you say’. But the company does not explicitly state
that that work is undertaken by humans who listen to the ‘pseudonymoused’
recordings.

 

Apple told the Guardian: ‘A small portion of Siri requests are
analysed to improve Siri and dictation. User requests are not associated with
the user’s Apple ID. Siri responses are analysed in secure facilities and all
reviewers are under the obligation to adhere to Apple’s strict confidentiality
requirements.’ The company added that a very small random subset, less than 1%
of daily Siri activations, are used for grading and those used are typically
only a few seconds long.

 

A whistleblower working for the firm, who asked to remain anonymous due
to fears over his job, expressed concern about this lack of disclosure,
particularly given the frequency with which accidental activations pick up extremely
sensitive personal information.

 

The whistleblower said: ‘There have been countless instances of
recordings featuring private discussions between doctors and patients, business
deals, seemingly criminal dealings, sexual encounters and so on. These recordings
are accompanied by user data showing location, contact details and app data.’

 

Apple is not alone in employing human oversight of its automatic voice
assistants. In April, Amazon was revealed to employ staff to listen to some
Alexa recordings and earlier this month Google workers were found to be doing
the same with Google Assistant.

 

(Source: www.theguardian.com)

 

26.  I found your data. It’s for
sale

 

I’ve watched you check in for a flight and seen your doctor refilling a
prescription.

 

I’ve peeked inside corporate networks at reports on faulty rockets. If I
wanted, I could’ve even opened a tax return you only shared with your
accountant.

 

I found your data because it’s for sale online. Even more terrifying:
It’s happening because of software you probably installed yourself.

 

My latest investigation into the secret life of our data is not a fire
drill. Working with an independent security researcher, I found as many as four
million people have been leaking personal and corporate secrets through Chrome
and Firefox. Even a colleague in The Washington Post’s newsroom got
caught up. When we told browser makers Google and Mozilla, they shut these
leaks immediately – but we probably identified only a fraction of the problem.

 

The root of this privacy train wreck is browser extensions. Also known
as add-ons and plug-ins, they’re little programmes used by nearly half of all
desktop web surfers to make browsing better, such as finding coupons or
remembering passwords. People install them assuming that any software offered
in a store run by Chrome or Firefox has got to be legitimate.

 

Not. At. All. Some extensions have a side hustle in spying. From a
privileged perch in your browser, they pass information about where you surf
and what you view into a murky data economy. Think about everything you do in
your browser at work and home – it’s a digital proxy for your brain. Now
imagine those clicks beaming out of your computer to be harvested for
marketers, data brokers or hackers.

 

Some extensions make surveillance sound like a sweet deal: Amazon was
offering people $10 to install its Assistant extension. In the fine print,
Amazon said the extension collects your browsing history and what’s on the
pages you view, though all that data stays inside the giant company. (Amazon
CEO Jeff Bezos owns The Washington Post.) Academic researchers say there
are thousands of extensions that gather browsing data – many with loose or
downright deceptive data practices – lurking in the online stores of Google and
even the more privacy-friendly Mozilla.

 

The extensions we found selling your data show just how dangerous
browser surveillance can be. What’s unusual about this leak is that we got to
watch it taking place. Large swathes of the tech industry treat tracking as an
acceptable way to make money, whether (or not) most of us realise what’s really
going on. Amazon will give you a $10 coupon for it. Google tracks your searches
and even your activity in Chrome to build out a lucrative dossier on you. Facebook
does the same with your activity in its apps and off.

 

Of course, those companies don’t usually leave your personal information
hanging out on the open internet for sale. But just because it’s hidden doesn’t
make it any less scary.

 

(Source: www.washingtonpost.com)

 

27.  UPI is world class and it’s
time to take it international

 

Cryptocurrencies are peer-to-peer electronic cash systems that are
governed not by the authority of a central bank but by digital code.
Transactions are only added to the common distributed ledger if they can be
validated in accordance with the rules stipulated by the code, ensuring that
digital currency once spent cannot be re-spent. For everyone who uses the same
blockchain, its distributed ledger becomes a common source of truth that allows
them to carry out peer-to-peer transactions without the need for validation by
a central entity.

 

Bitcoin is one such cryptocurrency. It uses a decentralised,
permissionless system that allows anyone to validate a transaction, so long as
they meet the technical requirements for operating a node. However, Bitcoin
prioritises decentralisation over speed and scalability. As a result, it is
incapable of processing transactions at the velocity or volume that modern
financial systems demand. As there is a finite limit to the total number of
Bitcoins that will ever be minted, its value fluctuates wildly, resulting in
the sort of volatility that is undesirable in a currency.

 

Facebook recently announced the launch of a new cryptocurrency called
Libra which, it claims, will address the many failings of Bitcoin. Libra has
been designed to operate on a bespoke blockchain running on at least 29 nodes
and backed by a basket of bank deposits and government securities to ensure low
volatility. For the foreseeable future, Libra will function as a permissioned
cryptocurrency to achieve the high transaction throughput and low latency
functionality expected of a global
payment system.

 

Libra will be most useful for underdeveloped countries that lack a
digital financial infrastructure. It will offer them a safe and cost-effective
mechanism for making payments that will scale effortlessly in places where the
use of Facebook and WhatsApp is already widespread. When combined with social
media data, it will allow developers to come up with innovative new products
that incumbent financial sector players will be hard-pressed to match. As the
value of a Libra today is designed to always be close to its value tomorrow and
in the future, it will operate as a currency hedge in countries where exchange
fluctuations are high.

 

I read the Libra White Paper with interest, keen to understand how this
new cryptocurrency would change things for us in India. We are Facebook’s
second largest market outside the US and any financial product it launches is
bound to have an impact on us. However, the more I read, the less convinced I
was that Libra was going to give India anything that it did not already have.

 

In Unified Payments Interface (UPI), India has a robust digital payments
infrastructure that, within just three years of its launch, already
effortlessly processes more than 750 million transactions a month. We have a
network of business correspondents throughout the country who integrate our
online and offline payment systems by converting digital payments into cash and
vice versa. While we may not yet have the data advantage that Libra promises to
bring, once the Data Empowerment and Protection Architecture is fully
implemented, it will give us an entirely new way to build financial products
using its digital consent infrastructure. Admittedly, UPI isn’t decentralised,
but given how difficult it is going to be to migrate away from a permissioned
architecture, it’s not as if Libra really offers much better.

 

That said, there is at least one thing Libra has going for it that UPI
does not – the ability to radically transform how cross-border transfers are
effected. India receives more inward remittances from its diaspora than any
other country in the world ($79 billion in 2018). At present, all the
mechanisms for international transfer of funds are costly, cumbersome and
highly inefficient. A digital currency like Libra, pegged as it is to a basket
of stable currencies, and transferable anywhere in the world, will offer overseas
Indians a cheap, digital way to move money to relatives back home at a fraction
of the cost that they currently spend.

 

In its report on deepening digital payments, the Nandan Nilekani
Committee has recommended that it is time to take UPI global. Several different
options have been proposed, including amending UPI protocols to include
currency conversion support and directly connecting UPI to global payments
systems to allow immediate, low-cost remittances to take place over the UPI
system. There was also a suggestion that UPI specifications and technologies
should be licensed to operators around the world to allow the protocol to
spread outside India. This must be accompanied by amendments in Indian
regulations, so that Indians can use UPI from abroad in much the same way as
Chinese citizens use WeChat from wherever they are in the world.

 

Cryptocurrency-based payment systems are slow and computationally
intensive. While the technology can be optimised, we will keep running up against
its inherent limitations that make it hard to scale to population size. UPI may
not be decentralised, but we know it works well at scale even over the
sometimes patchy mobile networks in India.

 

There is no need to optimise blockchain technologies to meet the needs
of developing markets when we already have a proven, world-class digital
payments protocol in India that can easily be internationalised. Let’s back
ourselves and just do it.

 

(Source: www.livemint.com)

 

2. Health

 

28.  ‘My Guru told me that as long
as I have good health, I should continue to serve society’, says Metro Man
Sreedharan

 

E. Sreedharan, who is revered as the ‘Metro Man’ of India, shared that
his Guru, Poojya Shri Swami BhoomanandaTirthaji, told him that as long as he
has good health he should continue to serve the society with the attitude that
it is an offering to God.

 

A recipient of the prestigious Padma Vibhushan in 2008,
Sreedharan also said, ‘When the assignment is for the good of society, I don’t
pull back. It is job satisfaction which excites me.’

 

Answering what keeps him going at 88, he said, ‘I
was very religious in my early years – shaped by my parents that way. And I
moved to spirituality particularly after the association with my guru. I like austerity
and simplicity.’ His habit of waking up and sleeping on time and a disciplined
life kept him fit. ‘I am fastidious about exercise, be it in the open air or
regular yoga. I was a sportsman in my young days, was captain of the college
football team. This addiction to regular exercise has remained with me,’ he
said.

 

At present Sreedharan is directly in charge of the Kochi Metro, while he
is also serving the Jammu and Kashmir government for light metro projects to be
implemented in Jammu and Srinagar cities.

 

He is also serving as a consultant to the Uttar Pradesh government for
the Lucknow, Kanpur and Meerut metro projects. Though he had tendered his
resignation from the post last month because of time constraints, it was not
accepted by the State Government led by Chief Minister Yogi Adityanath.

 

(Source: www.swarajyamag.com)

 

29.  Passive use of social media
may increase depression

 

Great holiday, fantastic party and incredible food, everyone shows their
life in the best light on social networking apps like Facebook and Twitter, but
researchers have found that people who use these apps passively are in danger
of developing depressive symptoms.

 

‘Being confronted by social information on the Internet – which is
selective and only positive and favourable – leads to lower self-esteem,’ says
study lead author Phillip Ozimek from the Ruhr University Bochum.

 

As low self-esteem is closely related to depressive symptoms,
researchers consider this short-term effect to be a potential source of danger.

 

For the study, published in the journal Behaviour and Information
Technology
, the researchers interviewed over 800 people about their use of
Facebook, their tendency to compare themselves with others, their level of
self-esteem and the occurrence of depressive symptoms.

 

They found a positive correlation between passive Facebook use – not
posting pictures – and depressive symptoms when subjects have an increased need
to make social comparisons of their abilities.

 

‘So, when I have a strong need to compare and keep seeing in my News
Feed that other people are having great holidays, making great deals and buying
great, expensive things while everything I see out of my office window is grey
and overcast, it lowers my self-esteem,’ Ozimek said.

 

(Source:
www.gadgetsnow.com)

 

LETTER TO THE EDITOR

Dear Editor,


I, Mr.
Dineshkumar Sitaram Agarwal, am a member of the Bombay Chartered Accountants’
Society & also a regular reader of Bombay Chartered Accountants’ Society
Journal. With reference to the December 2018 Edition, it is my pleasure to tell
you that content in the BCAJ is very well-written and useful.

 

I would like to
make one suggestion. Case laws on Chartered Accountants who happen to be
Ordinary Directors/ Individual Directors/ Non – Executive Directors of a
Company & face criminal/ civil liability under Labour Law or any other law
can be inserted under your “ALLIED LAWS” Column.

 

For example: We
enclose herewith one case law of Kerala High Court where a Chartered Accountant
defended
himself successfully in a prosecution case launched against him under PF Act.

 

We hereby suggest
that similar case laws are included as it would be useful for members at large
& hope that you will consider my suggestion.

 

 

Thanks,

 

Mr. Dineshkumar
Sitaram Agarwal.

B. C. A. M. No.: LA – 000048.  

ETHICS AND U

Arjun (A) — O’ Lord, you have always been telling me the importance of
ethics; but ………

 

Shrikrishna — ‘But what, Arjun?

 

A — In practice, it is very difficult.  I will have to close down my practice.  Whatever I do, there is some misconduct or
the other.  Just not possible to escape.

 

S — (smiles). What you say is largely true.  But ultimately, it is in your own interest to
follow the rules of ethics.

 

A How? 
Many times it is a burden.

 

S You are mistaken.  Yours is not only a profession; but a
mission!

 

A This is very philosophical and idealistic.

 

S Listen, the very foundation of any
profession is credibility.  If that is
lost, not only that individual member but the entire profession suffers.

 

A It’s really a challenge.  Just think, we as chartered accountants are
answerable to so many authorities – MCA, SEBI, Tax authorities, Bankers, RBI,
FEMA, Labour law authorities, authorities under many economic laws and most
importantly, our client!  This is very
unfair!

 

S I appreciate this.  But often when a few members commit
misconduct, the society perceives the entire profession as unethical. Then your
professional brothers also suffer for no reason.

 

A True, we do slog in updating our
knowledge, delivering the quality.  But
one factor is beyond our control.   We
became helpless.

 

S What is that?

 

A Corruption!  Wherever we go, corruption gives frustration
to us.

 

S It is difficult to disagree with
you.  But what do you mean by corruption?

 

A Bribery! 
Even if a case is hundred per cent perfect, it does not reach finality
without some greesing. Professionals are made helpless.

 

S What if you refuse?

 

A The authorities have tremendous nuisance
value.  They can make one’s life
miserable if their demand is not ‘satisfied’, and client gets scared as his
business is disrupted.  In spite of
representing the case perfectly, the client gets an impression that the case
gets ‘settled’ by money and not by merits of our presentation!

 

S Do you feel bribery is the only form of
corruption?  Any compromise on principles
for a personal gain is corruption.

 

A What do you mean?

 

S Have there been times when you sign a accounts
without diligently verifying its correctness, or sometimes even knowing the
deficiencies in the accounts?  And you
take fees.  Is it not corruption?

 

A It is a point worth thinking about!

 

S Arjun, corruption is of thoughts
also.  Tell me, you CAs are perceived to
be those who can ‘manage’ things!  Many a
time it is perceived that, you people help find loopholes in the laws. .

 

A Yes. 
I have also experienced that.  It
is very painful as most of us are not of that sort.

 

S So, you need to introspect.  Just think, you people manage even your ‘CPE’
hours!  Some pay the seminar fees; but
often not remain present.  Even if you
are physically present, you enjoy your ‘siesta’.  Is it not ‘corruption’?

 

A Lord, now don’t give me any more
instances!  I feel more and more guilty;
if not ashamed!  We are burdened by so
much unnecessary and useless matters and are surrounded by such imperfections
of the society such as complicated legal systems. Tell me what is the solution?

 

S Unity amongst yourselves and strong
leadership.  Don’t allow it to be a
spineless profession.  You need courage
to stand up and fight.  After all you are
financial ‘police’.  You cannot help or
ignore the thieves!

 

A We also need strong leaders.

 

S How can you expect strong
leadership?  Even your elections are
fought on the basis of caste, community, language and such irrelevant factors
whereas merit and motivation to serve should be the sole criteria.  This, I say, is corruption of ‘thoughts’.

 

A I agree that we can bring about the
change only by united action with strong leadership.  It will be my ‘New Year Resolution” for 2019!

 

S New Year Resolutions are never acted
upon.  Take it as life mission!  Then only you will get ‘Divine Support and
blessings’!

 

A Yes Bhagwan.

 

Om Shanti

This dialogue is meant for reinforcing the
importance of ethics and the need for unity to achieve the triumph of
righteousness over evil.

Book Review

Title: Indian Taxation Decoded – An MNC
perspective

Author: Ketan Dalal, Chartered Accountant

 

Of late, newer business models have been
transforming conventional ones and increasing industry competitiveness, while
digital economy has taken over traditional brick and mortar enterprises. India,
along with the other emerging markets, is at the centre stage of this
disruption.

 

With the Indian government’s focus on
reforms through schemes such as ‘Ease of Doing Business’ and ‘Make in India’,
and FDI liberalisation (including in retail), the country is becoming an even
more important investment destination for global MNCs.The traditional image of
India is changing from that of a cost saving location (cheap processing and
outsourcing work) to that of a digital technology hub.

 

The government’s efforts to convert the
informal sector into formal, through regulatory and tax reforms have been noted
and recognised by the international business community and various fora.

 

In such a scenario, it is important for tax
professionals dealing with MNCs to be well versed with various tax and
regulatory issues in India. A lot of material is available on the said topic,
but it is spread out and not inter-linked. This book, titled “Indian Taxation
Decoded – An MNC perspective” by Ketan Dalal, is a welcome guide on the topic
providing a comprehensive framework of tax and regulatory aspects, laid out
briefly and yet methodically.

 

The book covers tax and regulatory aspects
for MNCs operating in India under the following chapters:


1.   Chapters I to IV – Introduction,
Residential Status, Taxation of foreign companies, India’s Treaty Network &
Key issues

The chapters cover
the basics of taxation (encompassing residential status, various heads of
income, India’s tax landscape, determining the residential status, presumptive
tax regimes, GAAR etc.) which could be a helpful read for an individual with
limited understanding of MNC taxation issues. These chapters contain the key
issues, setting the tone to what follows in the book.

 

2.   Chapters V & VI – Business Connection,
Permanent Establishment, Business income, Royalty and FTS

 

The key issues for an MNC operating in India
revolve around the aforesaid topics. The chapters discuss the concepts in
detail covering the relevant landmark and recent judgements, the tax
implications, quantum of taxability (i.e. attribution of income) etc. The
impact of changing business models on taxability as Royalty and FTS, has also
been touched upon.

 

3.   Chapter VII – Transfer Pricing – The India
Landscape

 

While some
parts of Transfer Pricing implications are covered in other chapters, this
portion covers the basics of Transfer Pricing regulations in India, spanning
from adoption of the regulations in India, definition of ‘international
transaction’ and ‘associated enterprises’, the various methods prescribed for a
benchmarking analysis and determination of the most appropriate method. The
chapter goes on to throw light on the concept of Specified Domestic
Transactions, Dispute Resolution Mechanism. The chapter endeavours to also
cover the more recent topic of OECD Base Erosion and Profit Shifting (BEPS)
Action Plan (AP) 13. The chapter also covers some landmark rulings and judicial
precedents, which are good to have in hand for any new reader.

 

The chapter starts at the very basic and
gradually builds up to give the reader an all-encompassing synopsis of the
Transfer Pricing environment in India.

 

4.   Chapters VIII & IX – Taxation of
Expatriates and Foreign-Held Domestic Entities

 

With a significant increase in movement of
human capital in and out of India, the topic has greater significance in
today’s times. The chapter provides a detailed commentary on various tax
provisions impacting the inbound and outbound expatriates as well as the
employer.

 

The chapter on foreign held entities deals
with tax and regulatory issues impacting corporates and LLPs of foreign MNCs in
India. The chapter is broadly divided into (i) Tax regime for domestic entities
(ii) Computation of taxable income (including general and specific deductions
available, thin capitalisation rules, ICDS, etc.) and (iii) Tax rates.

 

5.   Chapter X – Mergers and Acquisitions

 

With an increase in
M&A activity, this chapter covers the key tax and regulatory provisions
impacting the said activity (encapsulating Mergers, Demergers, Share
acquisitions, Business acquisitions) of MNCs in India. The fact that this
covers cross border MnA as also by the Indian arms of MNCs makes it
particularly useful.

 

6.   Chapter XI – Sectoral Issues

 

In this chapter,
the author has discussed direct tax aspects involving certain nuances and
peculiarities relevant for sectors such as Shipping, Aviation, Media and
Entertainment, BPOs and KPOs, E-commerce, Infrastructure and Financial
services.

 

7.   Chapters XII & XIII – Procedures and
Compliances, Non-tax Regulations

 

The chapters
encapsulate the procedures and compliances as laid down in income-tax law and
cover certain relevant non-tax laws (such as Companies Act, LLP Act, SEBI Act,
Stamp duty regulations, FEMA and the Competition Act) which may be relevant for
a preliminary understanding by the personnel of an MNC operating/ looking to
setting up operations in India.



8.   Chapter XIV – Tax Management in India

 

The chapter covers
the practical aspects from a tax and regulatory perspective that an MNC should
take cognisance of, while operating in India. This chapter throws light on
certain softer nuances of business, such as practical issues of facing tax
litigation in India, beefing up an in-house tax team and the considerations to
be paid heed to, while choosing a tax advisor for the MNC.

 

9.   Chapter XV – Goods and Services Tax

 

The chapter covers
the basic provisions of the newly introduced GST law from the perspective of
MNCs and their India presence, at a broad and conceptual level.

 

Holistically, the book helps provide an
understanding of all tax and related laws from a bird’s eye view. By
interlinking the various tax and regulatory provisions impacting an MNC in
India, the book offers a fresh perspective of tax and regulatory issues in
India from an MNC standpoint.

 

The summary provided at the beginning of
each chapter and the key takeaways at the end of each chapter explain the
content of the topic in brief. The Appendices provided by the author are
reader-friendly and helpful for references at any point of time. What makes the
book truly unique from what otherwise is available in the market, is the
summary coverage of pertinent rulings, relevant to the topics covered. However,
certain repetitions of topics / judgements could have been avoided by the
author or covered in a focused manner. Having said this, the book serves as a
one-stop reference guide for anyone, whether with a well-read tax background or
not, who would like to get an understanding of dealing with MNCs’ tax and
regulatory issues in India. The book would serve as a ready reckoner to
students as well.


The author, who has vast and long experience
in this field, has dedicated the book to his father, thanking the latter for
“giving me the wings to fly”. The book probably just does the same, to someone
who wants to understand the complex world of the Indian tax regimen in a
simplified and lucid manner.
 

 




Ethics and You

Arjun
(A) — (chanting bhajan) Ram Krishna Hari ! Ram Krishna Hari ! (opens his
eyes and looks around in despair)

 

A — O
Lord ! Where are you? Please save me ! Please save me ! Ram Krishna Hari !

 

Shrikrishna
(S) — (appears with a smiling face) Re Arjun, you are chanting my bhajan
today. Anything special?

 

A — What else can we do?

 

S — Why? You said, in July you don’t have time even to
think about me. I avoided meeting you in July. You remembered me. So I had to
come.

 

A —This time there is a penalty for late filing of tax
returns. But clients did not turn up with data. They take it casually.

 

S — Yes. All of them must have flocked in during last
week of July.

 

A — Yes. As if each one of them is our only client !

 

S — But this is your annual ritual to keep crying !
Nothing new about it. I think, you are afraid of something else.

 

A — You are right ! Truly, you are ‘antargyani’.
You can read our minds. Many of my friends wanted to fall on your feet. They
want to surrender before you !

 

S — Surrender what? Certificate of practice?

 

A — May be, you can’t rule it out !

 

S — How can you run away from your profession? It’s your
mission !

 

A — But this mission has become ‘bheeshan’
horrifying !

 

S — What happened? Some new draconian law has come?

 

A — No Lord ! Same law; but new approach. Full of
prejudice and negativity.

 

Really, don’t understand what to do. ‘To practice or not
to practice’ —— that is the question.

 

S — Oh ! you are talking like Hamlet. But why this
dilemma after so many years? I remember, you were in a similar dilemma before
Mahabharata War.

 

A — Absolutely true. The regulation is so much that we
cannot cope up with it.

 

S — If you are a small practitioner, all this will always
keep on frightening you. Grow Big, Arjun, you must think Big !

 

A — Bhagwan, I am talking about ‘Big’ CAs only.
Many of the big CA firms have left the audit assignments of big corporates which
they were doing for number of years !

 

S — Surprising ! What made them do so?

 

A — Fear ! Every CA is now finding the profession very
risky. Whatever you do, there is some flaw or the other. And now it is becoming
fatal.

 

S — But why such sudden change?

 

A — It is change of attitude of Government. Change of
approach of regulators. All these years, we were watchdogs, but now they want
us to be blood-hounds.

 

S — So, all of you need to be ‘Duryodhana’ and not
‘Yudhishthira’. You need to be always suspicious; smelling some foul.

 

A — You said it ! We can’t afford to remain as mere
auditors; but need to act as investigators. Businessmen – our clients – are
never hundred percent honest. They cannot survive with honesty. Government
forces them to be dishonest.

 

S — And they pay you fees to audit their accounts ! And
Government wants you to be ‘independent’ ! Interesting !

 

A — And real problem is that the businessmen will never
mend their ways. They have to commit irregularities. So all those
irregularities, these auditors have tolerated for years ! Now, it is difficult
to continue the audits knowing the irregularities. At the same time, you cannot
discontinue by stating this reason ! Then you are fully exposed ! Very
difficult situation. Catch 22 !

 

S — So you need to be more diligent; more organised; more
pro-active; and more bold.

 

A—But if we start doing the audit in this ‘ideal’
fashion, we will land up completing only one year’s audit over a period of 2 to
3 years ! !

 

S — I think, we need to discuss it more; but not now. I
am busy in regulating the monsoon, it has started behaving strangely !

 

A — The ship of our profession is in the troubled waters.
YOU ALONE can steer it through!

 

NOTE: The above
dialogue is describing the current scenario and the dilemma faced by audit
profession.
 

 

SOCIETY NEWS

BEPS STUDY CIRCLE

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

 

The BEPS Study Circle
meeting was held on 2nd 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 11th 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 9th May, 2019 and 23rd May, 2019 at BCAS
Conference Hall

 

The discussion was led by
Mr. Kartik Badiani.

 

At the Part II meeting on 9th
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 23rd 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 21st 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 24th 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 28th May, 2019 at BCAS Conference Hall

 

The International Economics
Study Group held its meeting on 28th 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 30th 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 31st 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 07th 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 7th 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.

 

With the due dates for
Income-tax returns fast approaching and every CA firm wanting its articles to
be well-informed and well–equipped, the training session saw eager
participation by more than 70 students. The session ended with Convener CA
Anand Kothari proposing the vote of thanks to the speakers and to the audience
for their participation.

STATISTICALLY SPEAKING

1. The average cost of 1GB of mobile data in 2019

 

Country

Average Cost

India

$0.2

Russia

$0.9

Malaysia

$1.1

Pakistan

$1.8

Nigeria

$2.2

Brazil

$3.5

Spain

$3.7

UK

$6.6

Germany

$6.9

China

$9.8

Canada

$12

US

$12.3

South Korea

$15.1

Switzerland

$20.2

 

Source: cable.co.uk

 

2. Four-fold surge in online payments in rural and semi-urban India

 

Particulars

2014

2015

2016

2017

2018

Transactions*

4.57

10.10

13.72

17.37

17.38

Value**

1,558.1

3,717.3

7,120.6

23,795.5

28,243.2

Electricity Bills

Transactions*

0.24

0.32

0.49

0.56

1.00

Value**

108.7

138.7

239.5

308.4

1,198.4

Insurance Premiums

Transactions*

0.02

0.04

0.08

0.11

0.17

Value**

2.1

9.1

23.9

48.7

77.3

 

*Crore; **Rs. In crores

 

Source: Common services
centres data

 

3. Market size of the music industry across India (in billion rupees)

 

Source: Statista 2019

 

 

4. Retail inflation eases marginally

 

Source: Economic Times

5.  Electricity Consumption
(in kWh per capita)

 

Source: The Spectator Index

 

6. GST Returns filing summary for financial year 2019-20

Source:
www.gstcouncil.gov.in

 

 

7. Only 15% of taxpayers have filed GST returns (as of 9th August,
2019)

Source: ET Online Aug 9,
2019; at 11.12 am IST

 

Society News

TECHNOLOGY INITIATIVE STUDY CIRCLE

Meeting on ‘Simplify Accounting with QuickBook’ held on 19th July, 2019 at BCAS Conference Hall

The Technology Initiatives Study Circle of the Technology Initiative Committee of the BCAS organised a meeting styled ‘Simplify Accounting with QuickBook’ by CA Paresh Panchal on 19th July 2019.

Paresh explained how to set up QuickBooks online and introduced implementation aspects of QuickBooks that fellow Chartered Accountants could apply for small and mid-sized businesses. A brief overview of various aspects of the software was provided, namely, invoicing, taxing, expenses tracking with payment due dates, cash flow, bank integration and on-time balance along with cash flow movement. The session was followed by questions and answers.

Participants enjoyed the talk and the Q&A session that followed. All queries were answered by the speaker. The session was telecast live for the benefit of outstation members.

TECHNOLOGY INITIATIVE COMMITTEE

Meeting on ‘Hands-on Workshop on Dashboard Reporting with Advance Excel’ held on 2nd August, 2019 at BCAS Conference Hall

Another programme organised by the Technology Committee of the Society was a half-day programme called ‘Hands-on Workshop on Dashboard Reporting with Advance Excel’ at the BCAS Conference Hall on Friday, 2nd August, 2019.

The session was led by CA Nikunj Shah. He explained that Microsoft Power BI is a business intelligence platform that offers a business analytics toolset designed to assist businesses in their efforts to systematically analyse data and share insights.
Nikunj introduced several features on how to use external data to create a pivot table, thereby converting data into information and further into insight by creating a dashboard. He conducted the demonstration of various features of Excel such as creating interactive charts, updating charts with live data and linking charts with the data source for automatic update of charts; he shared his in-depth knowledge with the participants.

The session was highly interactive, and the speaker demonstrated:
(i) New functions of Excel 2013
(ii) Interactive controls to make the dashboard more useful
(iii) Dos & Don’ts of Dashboard
(iv) Dashboard FAQs

In short, participants learned new ways of working more effectively in a business environment. Nikunj answered all the questions raised by the participants who appreciated the efforts put in by the speaker and the group leaders.

TREE PLANTATION AND EYE CAMP BY HRD COMMITTEE

BCAS Tree Plantation Drive and Eye Camp 2019 – Visit to Dharampur-Vansda, Gujarat, on 3rd – 4th August, 2019

The Human Resource Development Committee of the BCAS, jointly with the BCAS Foundation, in the constant pursuit of contributing to the socio-economic development of tribals in the remote interiors of Dharampur district, organised an ambitious social cause visit on 3rd and 4th August, 2019. The visit was for two purposes – tree plantation as part of the mission the ‘Grow Green Drive’, along with captive plantation on farmers’ land at Khadki-Dharampur (at Sarvodaya Parivar Trust – SPT), and an eye camp for cataract surgery at Vansda, Gujarat (at Dhanvantari Trust – DT).

A team of 44 enthusiastic volunteers from BCAS collected over Rs. 5 lakhs as a contribution towards the twin noble causes and set off to visit Dharampur to personally fuel the mission with their active participation. The journey started on a morning when it rained very heavily, all the way from Mumbai to Valsad; this was followed by a bus journey to the little village of Khadki.

The Sarvodaya Parivar Trust is involved in empowering the tribals and making them self-reliant. It engages in various welfare activities in the fields of education / health / agriculture / water management / environment / public awareness programmes and so on.

With the help of local farmers, the enthusiastic BCAS members assisted in planting various saplings of custard apple, mahogany, ambli, kher and bamboo on the outskirts of village Pindval-Khadki. They also distributed and planted mango saplings on the farmers’ land. The team then visited the nursery developed and nurtured by Trustee Sujataben, who has dedicated her entire life to the SPT.
The BCAS Foundation has committed itself to the plantation of 10,000 trees and has already made a contribution of Rs. 3,00,001 received through generous donations from several donors.
The BCAS team was overwhelmed to meet a villager, Pandu, who donated his entire holding of three acres of land to the SPT for carrying out its activities. He has been associated with the SPT ever since then, giving
his selfless service for the noble cause of benefiting the tribal villagers.

The team also visited the residential school run by SPT at Pindval-Khadki and distributed various educational games / stationery / chocolates to the children. It was a pleasure to see the commendable developments that had taken place over the last few years, thanks to the earlier projects done by BCAS with the help of SPT’s selfless team, which has certainly made a difference to the quality and standard of living of tribals at such a remote, interior village.

The team expressed its gratitude and affection for fellow respected CA Virendrabhai and Ashaben Virendra Shah, a lovely, jovial couple dedicated to SPT, living life as per the Gandhian philosophy; they took charge of all the arrangements for the project and treated the visitors from Mumbai like family.
The night halt at Tithal energised all the participants for their visit the next day to the Dhanvantri Trust at Vansda where they organised an eye camp for cataract surgery of the tribal people. The DT trustees were delighted to take the team through the hospital ward to meet and interact with patients and discuss the selfless activities carried out by them.

The Dhanvantri Trust was founded by the Late Dr. Kirtikumar Vaidya, a doctor who left Mumbai at a young age and dedicated his life for the socio-economic development of tribal villages of South Gujarat. With divine blessings and inspiration from his Guru Sant Shri Ranchhod Dasji Bapu, he started the eye hospital in Vansda. Till date, it has performed more than 42,000 successful cataract surgeries and has expanded to a multi-specialty ward.

The BCAS Foundation has committed to help perform 200 cataract surgeries and has made a contribution of Rs. 2,00,001 received through generous donors.

The team departed with a heavy heart and innumerable memories to board the train back to Mumbai. The youth team that participated in the event was deeply moved with the deliberations of the senior members and the interactions with the trustees of the NGOs, inculcating in them values of life and inspiring them for selfless service to society. In turn, the senior members got enthused with the zeal of the young participants and their new and dynamic ideas. The bonding that was shared amongst them was indescribable and all felt truly blessed at the end of the journey.

Indeed this soulful trip was an elevating and enlightening experience for everybody to feel a bit of a shift within from sympathy to empathy.

DIRECT TAX STUDY CIRCLE

Meeting on ‘Angel Taxation’ on 5th August, 2019 at BCAS Conference Hall

The group leader, CA Mahesh Nayak, gave a brief overview of the introduction of section 56(2)(viib) of the Income-tax Act, 1961. The provision was then analysed in detail. The group leader next dwelt on the meaning of ‘company in which the public are substantially interested’, with illustrations.

Thereafter, the group discussed the exemptions in the case of investments by certain AIFs, the exemption for investment in startups and the investment restrictions applicable to them. The consequences of non-compliance of investment restrictions were discussed by way of an illustration.

Finally, the valuation methodology to be adopted as per Rule 11UA was discussed along with relevant case laws and the interaction of section 56(2)(viib) and section 56(2)(x) of the Act.

SOCIETY NEWS

CORPORATE AND ALLIED LAWS COMMITTEE

“Company Law Conclave – 2019” held on 15th & 16th March, 2019

A two-day Company Law Conclave – 2019 was organised by the Corporate & Allied Laws Committee on 15th & 16th March, 2019 at Hotel Orchid, Mumbai, with distinguished speakers and panellists sharing their in-depth knowledge and experience on the subject. President CA. Sunil Gabhawalla gave the inaugural remarks, followed by opening comments from the Chairman of the Corporate and Allied Laws Committee, CA. Chetan Shah.

CA. Nilesh Vikamsey, Past President of ICAI, delivered the keynote address and highlighted the journey of various amendments in the short period since the enactment of the Companies Act, 2013 including a statistical analysis thereof; he also highlighted the challenges faced, especially by professionals, in various compliances thereunder.

The first technical session was taken up by CA. Bhavesh Vora who dealt with the topic Significant Beneficial Ownership (SBO). He explained the difference between registered owner and beneficial owner, stages of Money-laundering leading to the rationale behind the introduction of SBO declarations, the applicability and non-applicability of SBO declarations, etc. He also gave valuable insights on provisions of the Companies Act, 2013 relating to Acceptance of Deposits and Dematerialisation of Shares and touched upon the Banning of Unregulated Deposit Schemes Ordinance, 2019 which was promulgated on 21st February, 2019.

The second session was a panel discussion on Recent Trends of actions from Regulators such as SEBI, Stock Exchanges and MCA with respect to Audit Committees, Auditors and Directors, including Independent Directors. The esteemed panellists were CA. Shailesh Haribhakti, CA. Dolphy D’Souza and CA. Bhavesh Vora. The session was ably moderated by CA. Sandeep Shah who made the proceedings informative and interesting.

In the third session, CA. Manish Sampat, Vice President, BCAS, explained the relevant provisions of the Companies Act, 2013 relating to Loans and Investments, Borrowings, Related Party Transactions and Foreign Companies – establishing liaison/project/branch office in India and shared his practical experience. He also gave a brief overview of FEMA provisions.

Thereafter, Mr. Amit Tandon apprised the participants about the Dawn of proxy/voting advisory firms in India and corporate governance trends evolving in India. He expressed the view that shareholder engagement had been increasing in India in the recent past and shared specific examples of how effective shareholders’ engagement had resulted in not allowing the Board to have its own way.

In the last session on Day 1, CA. Avil Menezes dealt with Corporate Insolvency (winding up) in IBC Era. He explained the liquidation process under the IBC and responded to several queries of the participants in this regard.

Day 2 began with the session on Accounts, Audit and CSR’ under the Companies Act, 2013 by CA. Himanshu Kishnadwala. He elaborated the financial statements – AS and Ind AS, reopening of financial statements, declaration of dividend, NFRA and CSR provisions applicable to the companies, and shared insights on audit and auditors’ responsibilities and other services that can be rendered by the auditor/its affiliate or associate.

This was followed by a panel discussion on Role & Responsibilities of Directors, Conflicts of Interest other than related party transactions and Directors’ Potential Liabilities in Insolvency. The distinguished panellists, viz., CS. Shailesh Rajadhyaksha, CA. Uday Chitale and Adv. Bharat Vasani, shared their views and rich experience. Adv. Bharat Vasani, with his legal background, threw light on the Directors’ responsibilities and liabilities under the Companies Act as well as some other laws. The session was ably moderated by CA. Nawshir Mirza who made the interaction more educative and effective.

Thereafter, the session on Schemes of Compromises, Arrangements and Amalgamations – Procedural aspects was taken up by Adv. Bhumika Batra. She, inter alia, covered the benefits, governing statutes and various stages of schemes of compromise and arrangements. The concluding session on Day 2 was taken up by CS B. Renganathan on Schemes of Compromises, Arrangements and Amalgamations – Some Peculiar Illustrations. He discussed some of the path-breaking schemes of compromises and arrangements.

The event garnered good response and saw attendance from outstation participants from various cities. Overall, the Company Law Conclave was an enriching experience for the participants.

Training Session on “Practical Aspects of Bank Audit from Article’s Perspective” held on 22nd March 2019 at BCAS Conference Hall

The Students’ Forum under the auspices of the HRD Committee organised a training session on the above-mentioned topic on 22nd March, 2019 in the BCAS Conference Hall which was led by CA. Pankaj Tiwari, a proficient speaker on the subject. Ms. Divya Jadav, the student co-ordinator, introduced him to the participants. She was followed by CA. Jigar Shah, HRD Committee member, who also addressed the students.

CA Pankaj Tiwari spoke about the current banking scenario and briefed the students on various recent circulars issued by the RBI. He covered several issues and aspects which needed to be looked into by the article students while conducting a bank audit. He meticulously explained the issues involved through case studies and practical examples; he gave useful tips to the article students on how to effectively conduct Bank Audit and provided a checklist of the critical areas to be focused upon.

The training session ended with Mr. Jason Joseph, student co-ordinator, proposing the vote of thanks to the speaker for sparing his valuable time and the audience for participating in huge numbers. With the “Bank Audit season” round the corner, the topic had its own importance which could be easily seen by the tremendous response received from the students. Overall, the session was very informative and the participants benefited a lot from it.

ITF STUDY CIRCLE

Study Circle on “Agency PE – Analysis of Amendment under the Act and MLI” held on 25th March, 2019 at BCAS Conference Hall

The ITF Study Circle organised a meeting on Agency PE – Analysis of Amendment under the Act and MLI on 25th March, 2019 in the BCAS Conference Hall. It was led by the Group Leader, CA. Kartik Badiani who 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.

CA. Kartik Badiani 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 that enterprise.

He then 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.

The meeting was very interactive and presented a huge takeaway for the participants.

Lecture Meeting on “The Banning of Unregulated Deposit Schemes Ordinance, 2019” held on 28th March, 2019 at BCAS Conference Hall

The Bombay Chartered Accountants’ Society organised a lecture meeting on ‘The Banning of Unregulated Deposit Schemes Ordinance, 2019’ on 28th March, 2019 in the BCAS Conference Hall which was addressed by CA. Sandeep Shah.

CA. Sandeep discussed the background of the Ordinance and its applicability and then covered key definitions, the genesis, salient features, administration and challenges and confusion, as also the offences under it. He touched upon the Reserve Bank of India Act, 1934 and the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 to put forth his views. He also talked about the types of schemes such as “Ponzy” and “Pyramid Schemes” and explained the applicability and the exemptions under the Ordinance. He described the characteristics of regulated and unregulated deposit schemes and the offences covered by the Ordinance, i.e., inducement and punishment, etc., thereof.

Thereafter, the speaker described the challenges and confusions faced in implementing the Ordinance and the administrative aspects and penalties imposed for indulging in contravention of the Ordinance, including imprisonment, fines, etc. He also outlined and emphasised the role of an auditor in stricter compliance of the Ordinance and the consequences of non-compliance with laws and regulations of the Ordinance.

The lecture was followed by a Q&A session in which the participants raised queries which were emphatically answered by the learned speaker. The participants were enlightened with the interesting and important developments in the financial domain which were effectively explained by the speaker, CA. Sandeep Shah.

“Blood Donation Drive” organised on 29th March, 2019 at BCAS Conference Hall

BCAS continues with its initiative of connecting with and contributing to the society at large for a non-professional cause. Its blood donation drive encourages a sense of “Personal Social Responsibility” (PSR) among its members, their relatives and friends.

The BCAS Foundation, along with the Seminar and Membership Development (SMD) Committee, organised its 3rd Blood Donation Drive on 29th March, 2019 at BCAS Conference Hall in collaboration with Tata Memorial Hospital (TMH), one of the renowned hospitals in Mumbai with its sophisticated blood bank facilities. TMH also provided a knowledge desk for platelet donation for the benefit of members and for creating awareness about the basics of platelet donation.

Awareness and messages were widely spread by the BCAS team for the drive, especially in all the offices, educational institutions and government offices in and around the New Marine Lines area. CA. Sunil Gabhawalla, President, BCAS, and CA. Narayan Pasari, Chairman, SMD Committee, led the drive along with some committee members and encouraged and inspired many people to become donors.

For the blood donation, the donors had to follow a step-by-step procedure covering various parameters before actually donating blood. The specialised team of doctors and supervisors from TMH was very careful with regard to the health and physical condition of the donors to ensure that he/she was fit for donating blood and also completely fit and fine after donating blood.

The donors were given Blood Donation Certificates by TMH and BCAS along with a token gift in appreciation of their participation. BCAS received an overwhelming response to the drive and TMH officials were very happy with the units of blood collected.
It was a great team effort by the 12 volunteers from TMH, the coordinators of the event from the SMD Committee, CA. Sohail Kapasi, CA. Maitri Ahuja and CA. Yogesh Patel, along with other members of the BCAS and the BCAS staff who actively extended their support. It was indeed a memorable experience through which BCAS gave an opportunity to inculcate/nurture a sense of PSR amongst members as well as non-members.

(Note: PSR can be called a “twin sister” of CSR which stands for “Corporate Social Responsibility”.)

BCAS TECH SUMMIT 2019 HELD ON 30th MARCH, 2019

The Technology Initiatives Committee of the BCAS organised the 1st BCAS Tech Summit 2019 on 30th March, 2019 at Courtyard by Marriott. The event commenced with an inaugural address by President CA. Sunil Gabhawalla, followed by the opening address by CA. Nitin Shingala, the Chairman of the Committee.

The keynote address was delivered by CA. Deepak Ghaisas, Chairman and Chief Mentor, Gencoval Group, and Vice-Chairman, i-flex Solutions. He highlighted the technological trends affecting different sectors and how each trend is an enabler for a chartered accountant to expand his practice.

The panel discussion on Accounting Softwares was led by the moderator, CA. Shariq Contractor. The participants included Ms. Aditi Puri Batra, Intuit, CA. Harsh Vardhan Dawar and CA. Prashant Gupta. The panel discussed the current requirements of the clients and ways to identify accounting software that meets a client’s needs. They also discussed the tools integrated with accounting software that would enable customisation of information. In addition, the panel highlighted transformation in the accounting software with cloud-based accounting applications.

CA. Ameet Patel led the panel discussion on Tax & Compliance Software. The panellists were CA. Raj Mullick, Reliance Industries, CA. Harit Gandhi, TCS, Mr. Rakesh Dube and Mr. Vijaya Mankaragod. While CA. Raj Mullick shared his journey of adapting to technologies to manage GST compliance, CA. Harit Gandhi spoke about developing technologies for GST and VAT compliance and offered his insights into the proposed changes in GST compliance.
Mr. Vijaya Mankaragod highlighted the practices adopted by developed countries in digitising taxation and how Indian tax administration is adapting to these changes. He described the big data analytics being adapted by tax administrations across the world and shared his views on future trends that would drive the taxation sector. Mr. Rakesh Dube, on the other hand, explained the need for having a tax compliance software that worked well with the ERPs to ensure timely compliance with various tax laws. CA. Ameet Patel made the session lively with his wit and humour.

The panel discussion on HR, Payroll & Labour Law compliance software was led by CA. Nitin Shingala, Chairman of the Technology Initiatives Committee himself, and those who took part in it were Mr. Madhu Damodaran, CA. Harish Chopra and Mr. Girish Rowjee.

CA. Nitin initiated the discussion with the current scenario impacting payroll management as nobody could go without pay day except when grounded. Mr. Madhu Damodaran shared his experiences in administering complex HR processes and ensuring employment law compliance through setting up businesses/processes/vendor management systems. CA. Harish Chopra and Mr. Girish Rowjee highlighted trends in payroll accounting and management, future opportunities available and shared tips on how to grow HR and payroll practices.

Another panel discussion, on Practice Management — Leveraging Digital Technologies for Accelerated Growth, was led by CA. Vaibhav Manek. The panellists included CA. Rajeev Sharma, Mr. Suresh Kumar and Mr. Kris Agarwala, Wolters Kluwer. They discussed the trends driving practice management by CA firms and the use of software and applications to ensure efficiency, productivity and training of the employees, when partners can focus on client management.

The session on Robotics Process Automation (RPA) was jointly led by Mr. Ashish Sharma and Mr. Prasad Godbole. They introduced participants to the future trend of robotic accounting and explained how robots can undertake end-to-end transaction processing. The future opportunities available in such a scenario were also highlighted; the case studies and examples discussed by them kept the audience engrossed.

The venue of the 1st BCAS Tech Summit 2019 also featured an exhibition section with product demonstration by Wolters Kluwer, Intuit — Quickbooks, Reliance Jio, TCS IoN, Clear Tax, Firmway, Greytip, Tax Genie and Kredence Digital, all of which opened new vistas for the participants at the event.

The sharing of insights and experiences by the experts, and also the interactions during the networking breaks brought a sense of wonder and created some unforgettable memories of the 1st BCAS Tech Summit 2019.

HUMAN DEVELOPMENT AND TECHNOLOGY INITIATIVES COMMITTEE

Human Development Study Circle meeting on “Vidur Niti from Mahabharata” held on 9th April, 2019 at BCAS Conference Hall

The Human Development Study Circle organised an interesting discussion on “Vidur Niti (containing the lessons of wisdom narrated by Vidur to Dhrutrashtra before Mahabharta War) on 9th April, 2019 at BCAS Conference Hall which was presented by CA. C. N. Vaze. The Speaker talked about some important teachings in relation to human behaviour i.e. Sandhi (Joining), Vigraha (Disconnect), Yana (Aggression), Asana (Sit on compound – non-aligned) and Dwaidhibhav (create dilemma) and also sources of happiness such as to stay healthy, fearless, debt free, in company of good people, be professional and do justice to the profession etc.

Vidur was one of the most respected gurus in the Kingdom of Hastinapur. He had vowed allegiance to the throne (and not to the person occupying it), as a result of which he had to face a lot of hardships when things started going wrong in the kingdom. Before and during the period of the Mahabharata war, he continued to live in Hastinapur – but he did not eat even a single morsel of food from the King’s kitchen. For his consumption, he grew his own grains, fruits and vegetables because he did not want to be contaminated by consuming food served by the “evil” forces that were ruling the land and the ill wind that was blowing over it. He lived by himself and was always willing to give advice in the court – but there was hardly anyone to listen to him. It was his disciples who noted down his sermons and came up with what is called “Vidur Niti”.

It was an extremely interesting session and the participants learned about several hitherto unknown aspects of the respected sage, seer and guru, Vidur.

HUMAN RESOURCE DEVELOPMENT COMMITTEE

Full-Day Workshopon “Effective Leadership and Executive Presence” held on 13th April, 2019 at the BCAS Conference Hall

The HRD Committee organised a full-day workshop for enhancing executive gravitas and developing better leadership acumen. It was conducted by the young and dynamic CA. Mudit Yadav who is a skilled and internationally-certified success coach.

He stressed on the following 4 modules:

(1) How a leader can motivate his team by making subtle changes in his vocabulary and leadership style that will inspire his team and hence get more work done.

(2) How to convey feedback in an effective manner that hurts the least but hits the most and thus being able to identify the strengths of the team and balance them with opportunities and team expectations.

(3) How to influence people like successful political leaders, by learning techniques in interpersonal interactions with the team and clients and making effective presentations, speeches and the use of a power vocabulary.

(4) What to wear, how to walk and ways to talk to enhance your presence and thus building respect and reverence in the minds of your colleagues, further addressing the body language, wardrobe and postures that leaders can apply on themselves to build greater presence.

The session was very interactive and the group activities conducted by CA. Mudit Yadav helped the participants to sharpen their skills and take home a valuable lesson at the end of the workshop.

INTERNATIONAL ECONOMICS STUDY GROUP

International Economics Study Group meeting on “How Foreign-Funded NGOs (Professional Agitators) are Hurting Economic Growth” held on 16th April, 2019 at BCAS Conference Hall

The International Economics Study Group held its meeting on 16th April, 2019 at BCAS Conference Hall to discuss “How Foreign-Funded NGOs (Professional Agitators) are Hurting Economic Growth.”

CA. Deepak Karanth led the discussions and presented his thoughts on the subject, describing how concerted efforts by select foreign-funded NGOs ran “rent-an-agitation” stirs to “take down” mega developmental projects in India in order to adversely impact the economic growth of the country.

Thousands of NGOs were involved in genuine social service and health-related activities; they had become part of a wide variety of activities: aid, development, healthcare, education, feminism, the environment, human rights, conscientisation (sic), organisation, etc. But sometime back, the Intelligence Bureau had submitted a report to the PMO suggesting that many foreign-funded NGOs protesting against coal and mining projects in the country were stalling India’s development and had negatively impacted GDP growth by 2 to 3%.

Many such “Professional Agitators” (funded by well-known philanthropies in western countries) had tried to stall large projects. These NGOs had received funds in the form of “research funding”. Cracking the whip on this trend, approximately 20,000 NGOs in the country had been barred from receiving foreign funds by the government following cancellation of their FCRA registrations, said CA. Deepak.

The Intelligence Bureau report said that among the agitations pursuing ”anti-developmental activities” were those that were against nuclear infrastructure development, coal-fired power plants, genetically-modified organisms; Posco in Orissa, Vedanta in Orissa, the Narmada Bachao Andolan; the agitations against extractive industries in the North East and the agitation against the Kudankulam Nuclear Power Project.

CA. Paresh Budhdev led the discussion on the impact of debt defaults arising out of cases like IL&FS on mutual funds’ debt schemes and provident and pension funds (government as well as privately-run employees’ PFs) and the overall debt market.

The meeting was very interactive and participants benefited a lot from the discussion.

MISCELLANEA

1. Technology

 

5. Amazon workers are listening to what you tell Alexa

 

Tens of millions of people use smart speakers and their voice software
to play games, find music or trawl for trivia. Millions more are reluctant to
invite the devices and their powerful microphones into their homes out of
concern that someone might be listening.

 

Sometimes, someone is.

 

Amazon has employed thousands of people around the world to help improve
the Alexa digital assistant powering its line of Echo speakers. The team
listens to voice recordings captured in Echo owners’ homes and offices. The
recordings are transcribed, annotated and then fed back into the software as
part of an effort to eliminate gaps in Alexa’s understanding of human speech
and help it better respond to commands.

 

The Alexa voice review process, described by seven people who have
worked on the programme, highlights the often-overlooked human role in training
software algorithms. In marketing materials Amazon says Alexa “lives in the
cloud and is always getting smarter.” But like many software tools built to
learn from experience, humans are doing some of the teaching.

 

The team comprises a mix of contractors and full-time Amazon employees
who work in outposts from Boston to Costa Rica and from India to Romania,
according to the people who signed non-disclosure agreements barring them from
speaking publicly about the programme. They work nine hours a day, with each
reviewer parsing as many as 1,000 audio clips per shift, according to two
workers based at Amazon’s Bucharest office, which takes up the top three floors
of the Global Worth building in the Romanian capital’s up-and-coming Pipera
district. The modern facility stands out amid the crumbling infrastructure and
bears no exterior sign advertising Amazon’s presence.

“We have strict technical and operational safeguards and have a zero
tolerance policy for the abuse of our system. Employees do not have direct
access to information that can identify the person or account as part of this
workflow. All information is treated with high confidentiality and we use
multi-factor authentication to restrict access, service encryption and audits
of our control environment to protect it.”

 

Amazon, in its marketing and privacy policy materials, doesn’t
explicitly say humans are listening to recordings of some conversations picked
up by Alexa. “We use your requests to Alexa to train our speech recognition and
natural language understanding systems,” the company says in a list of
frequently asked questions. In Alexa’s privacy settings, Amazon gives users the
option of disabling the use of their voice recordings for the development of
new features.

 

(Source: www.bloomberg.com; 11th April, 2019)

 

6. Huawei can bring 5G to India in 20 days if given the green light

 

At a time when Indian telecom operators are looking to speed up 5G
roll-outs, Huawei India said that it is fully prepared to bring 5G to the
Indian market and can do so in a matter of 20 days once given the green light.
Addressing the India Mobile Conclave, Huawei India CEO Jay Chen said, “We are
committed to the India market and will be happy to work with service providers
and enterprises to bring 5G faster, safer and smarter to this market.”

 

Chen said that India’s rapid pace of digital adoption is being driven by
the government’s commitment towards digitising key aspects of the digital
economy. “In the last couple of years almost every new innovation introduced to
this market is introduced by Huawei. Massive MIMO is a word we first introduced
in India 5 years back.”

 

Elaborating on the potential of 5G for an emerging digital economy like
India, Chen said that “5G is like electricity” which will enable all industries
and help realise the digital mission and the goals set by the National Digital
Communications Policy (NDCP). Huawei is a global leader in 5G and it already
has 30 5G commercial contracts globally,” Chen added.

 

(Source: The Economic Times; 22nd March, 2019)

 

2.  World News

 

7. Executions are falling worldwide

 

By one measure, at least, the world might be getting a bit less grisly.
The number of death sentences carried out worldwide fell by 30%, from 993 in
2017 to 690 last year, according to the latest annual count published by
Amnesty International, a human rights organisation. Those numbers are
consistent with the downward trend since the recent high of 2015 when 1,634
people were executed.

 

A reason to rejoice? Perhaps not. Amnesty’s count includes only known
executions, so it should be treated as the lowest possible estimate of judicial
killings. China, which is considered the most ruthless country when it comes to
capital punishment, has not been included in the total since 2009. Executions
there are thought to be in the thousands.

 

(Source: www.economist.com; 10th April, 2019)

 

8. Uber warns it might never make a profit

 

Uber Technologies has 91 million users, but growth is slowing and it may
never make a profit, the ride-hailing company said in its initial public
offering filing. The document gave the first comprehensive financial picture of
the decade-old company that was started after its founders struggled to get a
cab on a snowy night and has changed the way much of the world travels.

 

The S-1 filing underscores the rapid growth of Uber’s business in the
last three years and also how a string of public scandals and increased
competition from rivals have weighed on its plans to attract and retain riders.
The disclosure also highlighted how far Uber remains from turning a profit,
with the company cautioning that it expects operating expenses to
“increase significantly in the foreseeable future” and it “may
not achieve profitability”. Uber lost $ 3.03 billion ($ 4.25 billion) in
2018 from operations. The filing with the US Securities and Exchange Commission
revealed that Uber had 91 million average monthly active users on its
platforms, including for ride-hailing and Uber Eats, at the end of 2018. This
is up 33.8% from 2017, but growth slowed from 51% a year earlier. Uber in 2018
had revenue of $ 11.3 billion, up around 42% over 2017, again below the 106%
growth the previous year.

 

Uber set a placeholder amount of $ 1 billion but did not specify the
size of the IPO. It was reported this week that Uber plans to sell around $ 10
billion worth of stock at a valuation of between $ 90 billion and $ 100
billion. Investment bankers had previously told Uber it could be worth as much
as $ 120 billion. Uber would be the largest IPO since that of the Chinese
e-commerce company the Alibaba Group in 2014, which raised $ 25 billion.

 

After making the public filing, Uber will begin a roadshow of investor
presentations on April 29. The company is on track to price its IPO and begin
trading on the New York Stock Exchange in early May. Uber faces questions over
how it will navigate any transition towards self-driving vehicles, a technology
seen as potentially dramatically lowering costs but which could also disrupt
its business model.

 

One advantage Uber will likely seek to play up to investors is that it
is the largest player in many of the markets in which it operates. Analysts
consider building scale is crucial for Uber’s business model to become
profitable.




(Source: www.afr.com; 12th April, 2019)

 

9. Will technical factors push Bitcoin to $ 50,000 in the coming years?

 

Veteran trader Peter Brandt recently made a bold prediction, saying that
Bitcoin could reach $ 50,000 in the next two years. Credited with forecasting
Bitcoin’s more than 80% decline in 2018, Brandt cited market history and
technical analysis when providing this estimate.

 

“I believe that charts reflect underlying supply and demand fundamentals
and that’s how we have to look at it,” he stated on Yahoo Finance YFi PM. After
bottoming out in 2015, Bitcoin prices enjoyed a parabolic advance, emphasised
Brandt. Now, he expects crypto currencies will once again enter a parabolic
bull market.

 

While several analysts emphasised that Brandt’s prediction certainly
could materialise, many were understandably sceptical, emphasising their
wariness of price forecasts. “Peter Brandt’s assessment is purely based on
technical indicators and market history,” noted Joe DiPasquale, CEO of crypto
currency fund of hedge funds, BitBull Capital. “While technical analysis has a
place in all markets, past performance is no guarantee for future results,” he
stated.

 

“Meanwhile, however, the current rally is consolidating nicely and we
can expect further price appreciation if the trend continues,” added
DiPasquale. Several analysts emphasised the key importance of Bitcoin expanding
its user base, noting that if the digital currency makes enough progress on
this front, it could hit $ 50,000.

 

(Source: www.forbes.com; 10th April, 2019)

 

10. Vietnam orders monks to stop profiting from karma rituals

 

Vietnamese authorities have ordered monks at a popular Buddhist pagoda
to stop “soul summoning” and “bad karma eviction” ceremonies after an
investigation found the rituals were a scam.

 

Tens of thousands of worshippers have been paying the 18th
century Ba Vang pagoda in northern Quang Ninh province between one million and
several hundred million dong ($ 45 to $ 13,500) to have their bad karma
vanquished, according to the state-run Lao Dong (Labour) newspaper. The
Committee for Religious Affairs, a government body, issued a statement on its
website on Friday saying “the ritual goes against Buddhist philosophy and
violates Vietnam’s law on religion and folk beliefs.”

 

“It has a negative impact on social order and security,” it added.

 

Three times a month, monks hold a two-day ceremony to “summon wandering
souls” and “remove bad karma,” demanding donations, supposedly representing
good deeds, to help cure bad karma and make up for supposed bad deeds in
previous lives. Such rituals have been going on for years, but the practice has
drawn unfavourable attention as the amounts demanded by the monks soared to the
point where they began taking payments by bank transfers and by instalments.

 

Ba Vang pagoda was built on a mountain slope in Uong Bi district of
Quang Ninh province. It was recently renovated and expanded to become one of
Vietnam’s largest pagoda complexes. Only a minority of Vietnam’s 95 million
people follow Buddhism, but many non-Buddhists go to pagodas and temples and
practise a form of folk religion that includes some Buddhist practices.
Religions that are not registered with the government are prohibited. The Ba
Vang pagoda belongs to a registered Vietnamese Buddhist association.

 

(Source: www.apnews.com; 22nd March, 2019)

 

11. Black hole snapped: How the picture of one of the universe’s most
secretive objects was clicked

 

By definition, a black hole can’t be seen. As a cosmic gobbler of all
matter on its periphery, these sinkholes have gravitational fields so powerful
that even light cannot escape them, rendering their contents invisible. As the
concept of black holes (the cemeteries of spent stars above a certain mass and
massive cosmic objects) followed from Einstein’s theories of general
relativity, scientists have had intricate mathematical descriptions and
speculation on how they look, how many of them exist, how they behave, where
they might be located and their relationship to the universe. Based on this,
there has been a plethora of visual and artistic descriptions of black holes.
However, there has never been visual confirmation of their existence, until
now.

 

On 10th April, 2018 astronomers shared an image, now
christened on Indian Twitter as a “giant medu vada in the sky,” from the
black hole at Messier 87 or M87. It was a blurred, yellowish orange frame
surrounding a black centre. While this wasn’t vastly different from how
astronomers and artists have visualised black holes for decades, it’s still
great to see reality correspond to imagination. The black hole measures 40 billion
km. across – three million times the size of the earth – and is 55 million
light years from earth. (A light year is about 9.46 trillion km.). It is bigger
than our entire solar system and a scientist described it to the BBC as “the
heavyweight champion of black holes in the universe.” The image has been
analysed in six studies co-authored by 200 experts from 60-odd institutions and
published in Astrophysical Journal Letters.

 

Since the 1970s, astronomers have known that there are “super massive”
black holes (about a billion times heavier than the sun) in the Milky Way or
galaxies close to it. While black holes themselves are invisible, the region
around them – the luminous frenzy of charged particles from matter in their
vicinity – is, in theory, “visible”. Since black holes are the result, mostly,
of heavy stars collapsing in on themselves, radiation emitted by particles
within the disc are heated to billions of degrees as they swirl around the
black hole at close to the speed of light, before vanishing into them.

 

The astronomers used a technique known as interferometry, which combines
radiation from eight telescopes from around the world in a way that it appears
as one single telescope capture. What this virtual telescope could capture were
traces – electromagnetic radiation – from jets of particles spewed from the
event horizons of the black hole. This faint radiation, in the form of mostly
radio waves, would have travelled trillions of kilometres and for the telescope
to observe them would be the equivalent of trying to snap a picture of an ant
from the moon.

 

(Source: www.thehindu.com; 13th
April, 2019)
   

 

BOOK REVIEW

“Democracy
on the Road – A 25-Year Journey Through India” by Ruchir Sharma

 

Ruchir
Sharma is the head of the Emerging Markets Equity team at Morgan Stanley and is
responsible for
managing
over $ 25 billion (as AUM or assets under management). He has been with the
firm for 19 years and
is currently a member of the executive committee of Morgan’s investment
management division.

 

The
World Economic Forum in Davos selected him as one of the world’s “Top Young
Leaders” in 2007. In 2012,
he
was named one of the top global thinkers by Foreign Policy magazine. And
Bloomberg said in 2015 that he was one
of the “Top 50 Most Influential” people in the world.

Ruchir Sharma has been
writing for many years, drawing
on
his travels as a global investor. He typically spends one week every month in a
different emerging market where he meets
leading CEOs and top politicians, among others. He writes for the New York
Times, Foreign Affairs, The Wall
Street
Journal, Financial Times
and The Times
of India.

 

His
first two books, Breakout Nations (2012) and The Rise and
Fall of Nations (2016)
, were both international bestsellers.

 

Passionate
about politics, he is part of an informal group of senior editors and writers
who travel extensively before
major
state and national elections; logging over 1,000 miles in 4 to 5 days, they
meet with the nation’s top leaders
to get a first-hand feel of local politics. At times this group calls itself
the “limousine (or Cadillac) liberals”.

 

In
Democracy on the Road, Ruchir takes readers along on his travels
through India. On the eve of the landmark
2019
election, he offers an unrivalled portrait of how India and its democracy work,
drawing from two decades on the
road, chasing election campaigns across every major state, travelling the
equivalent of a lap around the earth.
Democracy takes
readers on a rollicking ride with this merry band of scribes as they talk to
farmers, shopkeepers and
CEOs from Rajasthan to Tamil Nadu and interview leaders from Narendra Modi to
Rahul Gandhi.

 

Few
books have traced the arc of modern India by taking readers so close to the
action. Offering an intimate glimpse
into
the lives and minds of India’s political giants and its people, he explains how
the complex forces of family, caste and community, economics and development, money
and corruption, Bollywood and godmen have conspired to elect and topple leaders
since Indira Gandhi. The most encouraging message from his travels is that while
democracy is retreating in many parts of the world, it is thriving in India.

 

The
book is divided into 6 parts and 40 chapters. Starting from his childhood and
student days, it provides
a
ringside view of Indian elections from 1998 onwards. The concluding part, “Back
in Balance”, deals with the current
political situation in which Ruchir summarises his observations, offers his
conclusions and shares
the
wisdom gained from a close assessment of Indian elections as an international
investor.

 

Here
are some nuggets from the cauldron of Indian electoral politics:

  •  “The odds are
    against Indian politicians holding on to their offices. In theory, the seated
    government has big
    advantages,
    starting with the fund-raising capacity to meet the ever-growing expenses
    involved in fighting an
    election.
    It can dole out favours and contracts…”
  •  “Yet,
    incumbents don’t usually win, challengers do. Voters, though glad to pocket
    expensive campaign gifts,
    still
    vote their own minds.”

  •  “Ultimately,
    power resides not with the candidates or their moneybags but with the Indian
    voter.”
  •  “Small shifts
    in the vote, or the allegiance of one small alliance partner, can make or break
    state or national
    governments.
    It all looks like a recipe for instability.”

  •  “But minority
    governments, built on compromises among rival parties, are not a special
    problem of Indian
    democracy.
    They are a standard feature of parliamentary democracy.”

  •  “A multi-party
    parliamentary democracy can produceserial political and economic crises, as in
    Italy, but also
    long-term
    success, as in Germany.”

  •  “Have weak
    minority governments hurt India’s development? History suggests not. The
    economy limped along at the so-called ‘Hindu rate of growth’ under mostly
    strong Congress governments until the 1980s, then started to reform and pick up
    speed under the weak coalition governments that followed.”
  •  “India has so
    many parties because it has so many different communities, separated by caste,
    religion, tribe
    or
    language and each one wants its own representative.”

  •  “While in some
    opinion polls Indians express a growing desire for a strong leader, unshackled
    from an
    often
    gridlocked parliament, the electoral reality is that the country rebels against
    domineering political bosses.”

  •  “Ever since
    Indira Gandhi imposed the Emergency and fell in the backlash, no Prime Minister
    has been able
    to
    gain political momentum without triggering fears that they were growing
    dangerously strong and inspiring the
    fragmented
    opposition parties to unite…Modi may face a similar obstacle.”
  •  “Supporters
    praise Modi for raising India’s stature in the world. But more than once we
    have seen Indian
    leaders
    lionised by the global elite from Mumbai to New York, only to be thrown out by
    the Indian voters who care
    more
    about the government’s impact on their daily lives.”
  •  “Voters express
    impatience with the pace of progress and at unresponsive democracy, but not all
    take it out on
    politicians
    with the same intensity.”

  •  “When do seated
    leaders buck the odds? While single factors such as high inflation, spiralling
    corruption
    scandals,
    or a united opposition can bring down the incumbent, winning is more
    complicated;….to win,
    political
    parties have to pass a series of tests.”
  •  “A shortlist
    culled from my years on the road would include tests of community, family,
    inflation, welfare,
    development,
    corruption and money. They are not equally weighted. For all the social
    progress that India has made,
    community
    identity is still the key to politics.”
  •  “Understanding
    the dynamics of caste and religion down to the local and personal level is the
    necessary
    condition
    for winning, but it is often not sufficient.”

  •  “Family
    dynasties pervade our politics. Though it is bitterly critical of the Gandhi
    dynasty, the BJP has many
    leaders
    with children active in politics.”

  •  “More and more
    single politicians are rising to power on the argument that freedom from family
    ties protects
    them
    from the temptation to profit from office. The cultural winds suggest single
    candidates will maintain their
    advantage
    going forward…”
  •  “The point is,
    there is no consistent formula: Candidates can pursue any mix of development
    and welfare models,
    but…the
    elections will remain as unpredictable as a ‘cat on the wall, which way will it
    jump’?”

  •  “Alongside
    inflation, corruption is the other big incumbent killer, though it works in
    strange ways…one of
    the
    supreme ironies of Indian politics is that corruption charges seem to hurt more
    than convictions.”

  •  “In other
    emerging countries politicians may come back after a jail term, but rarely does
    time in the lock-up
    provide
    a career boost the way it does in India.”

  •  “Winning
    campaigns need to understand the ties that bind Indian voters to community and
    family, their
    frustration
    with government and the slow pace of economic progress, the pain of rising
    prices, and their
    sense
    of disgust with both corruption and the justice system…Often, challengers
    prevail by simply watching
    the
    incumbent fail one or more of these tests.”

 

The
author concludes on a positive note. He opines that the bigger lesson is that
there are many reasons for optimism.
India’s
political DNA is fundamentally socialist and statist. The same socialist DNA
runs through the veins of all the leading parties.
There is no real support for systematic free-market reform, either amongst the
voters or the political elite, and no
sign
of what is generally considered good economics will ever become a consistent
election-winning strategy. The more powerful
a politician gets, the more voters expect, and the more frustrated they get
when those expectations are not met.
India
does not grow as one economy, it grows as many, less like the United States
more like the European Union. It is less a
country than a continent, more diverse in its communities and languages than
Europe or the Middle East.

 

The
real strength of our democracy – both economic and political – lies in its
diversity. In no country are the
community
and the family roots of political battles more complex or intense, or the
behind-the-scenes battles to build
winning alliances more fierce.

 

Finally,
Ruchir says the 2019 election is being cast as a nationwide showdown between
Modi and the rest, a
referendum
on India’s appetite for a strong man’s rule and commitment to democracy…and
the outcome will depend on whether
the opposition parties work together to unseat him.

The 2019 ballot will offer
a choice between two different
political
visions, one celebrating the reality of many Indias and the other aspiring to
build One India. Clearly, when democracy
is in retreat worldwide, it is thriving in India.

Society News

WORKSHOP BY ACCOUNTING AND AUDITING COMMITTEE

 

On 6th September, 2019, the Accounting and Auditing Committee organised a full-day workshop on ‘Changes Relevant for Preparation of Financial Statements and Audit Reporting thereon for 2018-19’ (with focus on private limited companies and public companies other than to whom Ind AS applies). The workshop, held at the BCAS Conference Hall, began with opening remarks by President Manish Sampat. He was followed by Accounting and Auditing Committee Chairman Himanshu Kishnadwala who briefed the participants on the need for the workshop and the relevance of the topics selected.

 

The following topics were taken up at the workshop by the various speakers:
(i) Audit of SMEs – Some important aspects: Nikhil Patel;
(ii) Important provisions of the Companies Act, 2013 (as relevant for audit of financial statements for the F.Y. 2018-19): Paresh Clerk;
(iii) Critical FRRB observations on financial statements and audit reporting (with focus on items applicable to private limited companies for 2018-19): Abhay Mehta;
(iv) Audit reporting requirements (including CARO and ICFR reporting; with focus on audit of private limited companies): Zubin Billimoria.

 

Nikhil Patel, who set the ball rolling, highlighted the important aspects involved in the audit of SMEs. He took up various case studies regarding rotation of auditors, applicability of Ind AS and important aspects of the existing Accounting Standards as applicable to SMEs and recent changes in disclosure requirements of Schedule III and their impact on financial statements.

 

Taking up the second session, Paresh Clerk dealt with important provisions of the Companies Act, 2013 as relevant for the audit of financial statements for the financial year 2018-19. He discussed the interplay between various definitions under the Companies Act, 2013 and those under the relevant Accounting Standards. He also covered important sections of the Companies Act, 2013 which included deposit rules, managerial remuneration, loans to directors, dividend and CSR (Corporate Social Responsibility) which are relevant for the financial year 2018-19.

 

In the penultimate session,  Abhay Mehta took the participants through critical observations made by the Financial Reporting Review Board (FRRB) based on the reviews of the financial statements conducted by the Board and stressed upon the need for course correction in auditing the financial statements for the financial year 2018-19. His presentation covered critical observations in the areas of accounting standards, auditing standards and company law compliances.

 

Last but not the least, Zubin Billimoria took up audit reporting requirements, including ICFR and CARO reporting and recent changes in audit reporting requirements as applicable for the reporting period 2018-19. His presentation included important aspects such as evaluating ‘Going Concern’ assumption, ‘Emphasis of Matter’ (EOM) paragraph, modified report, qualified report and disclaimer of opinion.

 

All the sessions were very interactive and the speakers shared their experience and insights on their respective subjects.
The workshop was well appreciated and the participants benefited from the guidance and practical views expressed by the experts.

 

FULL-DAY SEMINAR ON ‘CHARITABLE TRUSTS – CRITICAL ASPECTS’
The Corporate and Allied Laws Committee organised a day-long seminar on ‘Charitable Trusts – Critical Aspects’ jointly with the Chamber of Tax Consultants on 14th September, 2019 at the BCAS Conference Hall.

 

The seminar, at which recent developments and critical aspects in the sector were debated, was opened by President Manish Sampat who briefed participants about recent developments in the non-profit organisation sector. He also highlighted the challenges as well as the opportunities available to the practising chartered accountants in this field. Vipul Choksi, President of the Chamber of Tax Consultants, appreciated the initiative taken by BCAS in organising such an event and shared his views on compliance and other related issues of charitable trusts.

 

The seminar was inaugurated by the Hon. Charity Commissioner of Maharashtra, Mr. Sanjay Mehare. He addressed the first session on ‘Important Procedural Aspects for Trustees and Professionals’ wherein he shared his views on the recent changes in the Bombay Public Trust Act, FCRA, etc., and various other procedural aspects relating to the formation and compliance requirements for charitable trusts. His past experience and the examples he gave held the audience spell-bound.

 

The second session was addressed by Gautam Shah who spoke about various advantages and disadvantages of charitable institutions vis-a-vis private trusts. The new concept regarding Social Stock Exchange as announced by the Finance Minister, Mrs. Nirmala Sitharaman, during her Budget speech was covered in detail by him. He also addressed some issues related to formation of minority status trusts.

 

Gautam Nayak, in the third session, discussed various issues regarding taxation of charitable trusts, including the issues arising out of the rejection of the registration of charitable organisations. He also spoke briefly on dissolution of charitable trusts and gave an insight into the implications of section 115TD of the Income-tax Act. The participants in the seminar appreciated the discussion on the recent controversial decisions in direct tax for trusts.

 

The next session was conducted by advocate Rakesh Pandey on the hardships faced in the Office of the Charity Commissioner. The requirements specified in some of the sections of the Maharashtra Public Trust Act and their intricacies, the difficulties in complying with such requirements in the current environment at the Charity Commissioner’s office were also addressed.

 

Next, Sunil Gabhawalla took the podium for the much-awaited session on issues under Goods and Services Tax (GST) for NGOs. The participants had several queries regarding the applicability and liability of GST which were addressed by him in detail. He cleared most of their doubts regarding the applicability of GST. He also explained the reverse charge mechanism and whether it was applicable to trusts.

 

Taking up the sixth session, Anil Sathe enlightened the participants about issues relating to the registration and renewal of FCRA licence. He also discussed the common issues relating to separate bank accounts, administrative expenses and other important aspects to be considered during the filing of FCRA returns. He then deliberated on the issues arising from the changes which are to be submitted online; these attracted a lot of questions by the participants. Anil Sathe also briefly touched upon the issues arising out of CSR donations in relation to unspent amounts and penalty for non-compliance.

 

Mr. Mallikarjun Utture, Additional Commissioner of Income Tax, took the mike for the next session and addressed issues of charitable institutions from the income tax point of view. It was very essential to understand their problems so that these institutions did not have to face tax liabilities when they were eligible for exemptions. He engaged the audience by presenting landmark judgements and necessary elements for getting 12AA registrations and the basis on which these can be rejected.

 

At the end of the seminar, there was a panel discussion moderated by Chetan Shah. Mr. Mallikarjun Utture, Gautan Nayak, Sunil Gabhawalla and Anil Sathe discussed various issues relating to charitable trusts. Finally, the floor was opened for a Q&A session when the panellists answered all the queries of the participants.

 

The interactive seminar was full of insights into charitable trusts and the participants were truly enriched with the presentations and the in-depth analysis offered by the speakers. It received overwhelming response from the industry as well as practising chartered accountants in the field of non-profit organisations.

 

INDIRECT TAX LAW STUDY CIRCLE

 

The Indirect Tax Law Study Circle organised a meeting on ‘Practical implication of RULE 42 & RULE 43 of GST Act’ on 16th September, 2019 at the BCAS Conference Hall.

 

Over 50 persons attended the detailed interaction, discussion and exchange of views with the Group Leader and Mentor on the issues that had been forwarded in advance. There was an in-depth analysis of all the issues at the meeting.

 

The Group Leader was Darshan Ranawat while the Mentor was Mandar Telang.

 

Nearly 50 members were present for the detailed interaction and discussion, and to hear the views of the Group Leader and Mentor on the issues that had been forwarded in advance. It was an in-depth analysis of all the issues with reasoning. The Group Leader dealt with all the issues placed before him in the allotted time. The meeting concluded with a vote of thanks to Group Leader Darshan Ranawat and Mentor Mandar Telang.

 

Study Circle Conveners Chirag Mehta, Dushyant Bhatt and Suresh Choudhary stated later that the participants in the Study Circle meeting had several genuine queries and all of them were answered in great detail.

 

‘SABKA VISHWAS – LEGACY DISPUTE RESOLUTION SCHEME 2019’

 

The BCAS organised a lecture meeting on ‘Sabka Vishwas – Legacy Dispute Resolution Scheme, 2019’ on 17th September, 2019 which was addressed by Advocate Rohit Jain. It was held in the BCAS Conference Hall.

 

Introducing the topic, BCAS President Manish Sampat pointed out that the scheme was a one-time opportunity for resolving disputes related to Central Excise, Service Tax and 26 other indirect tax legislations. Eligible persons opting for the scheme could declare their unpaid tax dues and discharge the same. Declarants under the scheme would be granted immunity, including from interest, penalty and prosecution. He also introduced the speaker. BCAS Vice-President Suhas Paranjpe presented a memento to the speaker.

 

Mr. Jain started the session with a brief history of indirect tax litigations pending with various judicial forums, past amnesty schemes and the constitutional validity of such schemes. He took up the following major areas of
the ‘Sabka Vishwas – Legacy Dispute Resolution Scheme, 2019’:

 

(i) Coverage of various indirect tax acts and cesses under the scheme;
(ii) Relief granted under various case scenarios;
(a) SCN or one or more appeals arising out of such notice,
(b) SCN for late fee or penalty only,
(c) Amount in arrears,
(d) Inquiry or investigation or audit,
(e) Voluntary disclosure.
(iii) Benefits, waivers and eligibility. The relief under the scheme includes waiver of tax ranging from 40% to 70%, 100% relief of interest and penalty;
(iv) Relevant clarifications issued in circulars;
(v) Detailed process for application under the scheme;
(vi) Discharge certificate.

 

Mr. Jain also highlighted some key aspects of the scheme such as ineligibility of convicted assessees, payment under the scheme being allowed only through cash, non-availability of tax paid under the scheme as input tax credit, declaration not treated as admission of tax liability and so on.

 

INTERNAL AUDIT 101: LET’S START AT THE VERY BEGINNING

 

The newly-formed Internal Audit Committee organised a two-day Foundation Course on Internal Audit styled ‘Internal Audit 101’ at the Orchid Hotel on 19th and 20th September, 2019. With 103 participants, the course witnessed a full house, with participants both from the profession as also from the industry. This unique foundation course was curated and designed last year to provide a strong foundation to internal audit professionals. The Committee plans to host this programme annually in Mumbai and other locations as a ‘foundation course on Internal Audit’.

 

The course attracted 73 non-members for many of whom this was their first introduction to a BCAS event. This helped in spreading awareness about the Society amongst non-members, some of whom will become members in the coming months.

 

Interestingly, the course lived up to its promise of delivering sessions in a ‘story-telling’ style with anecdotes, real-life incidents and practical insights to make it a unique and interesting experience for the participants.

 

President Manish Sampat’s welcome address and opening remarks by Chairman Uday Sathaye set the tone for the event. Co-Chairperson Nandita Parekh welcomed the participants and explained the structure of the event and the proposed future events of the Committee.

 

Satish Shenoy’s first session unfolded the ‘lifecycle of an Internal Audit’ by narrating various anecdotes and experiences that educated the audience and also kept it entertained.

 

The second to speak was Jyotin Mehta who provided an overview of Internal Audit and the regulatory framework within which it operates, giving useful insights to help participants understand the larger framework within which Internal Audit operates.

 

Next up was Deepjee Singhal who focused on the meeting point of technology and Internal Audit and covered the entire gamut of areas where the use of technology would be a game-changer. He also covered key considerations for an IT Systems Audit and the crucial need to understand the IT system architecture to conduct a meaningful and efficient Internal Audit.

 

It was then the turn of Himanshu Vasa who engaged and enthralled the participants as he conducted a session on ‘The Art of Telling a Good Story’. He not only shared his thoughts on what it takes to write a good report, but also covered areas of personal presentation, soft skills and oral communication, including the importance of posture and gestures. His marathon session and his expressions left a good impression on the participants.

 

Atul Shah in his presentation took participants through the tools and tricks of the trade, sharing audit techniques deployed at each stage of audit.

 

Talking about specific cycle audits was Ashutosh Pednekar who spoke of covering several audit cycles. He threw light on recent developments, the use of technology and the understanding of process risks. His real-life examples and interesting stories captivated the audience.

 

Nandita Parekh took everyone back to the drawing board on the basics of risks and controls – the simplicity of her talk, along with a vivid presentation, reinforced the core concepts that form the heart of Internal Audit. She explained the concept of risks and controls with reference to everyday experiences and anecdotes; this helped demystify the area of risks and controls and the jargon that has developed around the subject.

 

The two-day session ended with closing remarks by Chairman Uday Sathaye and a few light moments presented by Vice-President Suhas Paranjpe.

 

INTERNATIONAL ECONOMICS STUDY GROUP

 

The International Economics Study Group held its meeting on 20th September, 2019 when it discussed the ‘Emerging Economic Situation – Global and Indian Economy’.

 

Harshad Shah stated that fears of another global economic slowdown are rising as reliable data (endorsed by many economists and CFOs of U.S. Corporations) indicates that the USA – the world’s largest economy – may be headed for another recession. That’s bad enough for global markets, but what’s worse is that many of the world’s other top economies may also be headed for troubling downturns. Japan faces a recession and it has recently entered into a nasty trade dispute with South Korea. South Korea is encountering woes with growth, with a negative first quarter and is embroiled in a trade war with Japan.

 

Months of protests in Hong Kong have brought the financial hub’s economy to a standstill with the looming threat of a possible Chinese military intervention. Singapore is also on the brink of recession. Eurozone faces Category 5 economic storms (double shock of impending global recession and a no-deal Brexit). Growth has essentially stopped in Italy and a political crisis there doesn’t inspire much confidence; it is already in a recession since 2018.

 

Germany’s economy declined in the last quarter with a slump in the export of cars. Europe is stuck between the United States and Russia (gas pipelines and sanctions), China (trade war) and Iran (oil and tankers). Argentina just went through one of the worst stock market crashes. Brazil and Mexico, two leaders of Central and South America’s economies, are expected to perform poorly this year due to slumping commodity prices. On top of it all, China’s growth rate has slowed down due in large part to the trade war launched by President Donald Trump. China’s economy grew by 4.8% in July, the lowest rate since 2002.

 

Put it all together and the world’s economic outlook looks pretty bleak. The IMF, a world body that helps keep the global economy stable, also sees it that way. Last month, it cut its projection for global growth to 3.2 %, the lowest rate since 2009.

 

Why are so many countries headed for recession / slowdown? First, Trump’s deeply misguided trade war. The effects of this go beyond just the US and China’s bilateral trade relationship. Too many nations are facing immense political turmoil at home.

 

Is the USA bracing for a recession in 2020? The American and global economies will experience challenging times ahead with indicators like:

 

Inverted yield curve: The inversion of the yield curve (has already happened), a historical precursor of a recession, has forced the markets to wake up and take stock of the situation. The yield curve is considered inverted when long-term bonds, traditionally those with higher yields, show certain trends.

 

Negative interest in many developed economies: During economic downturns, central banks often lower interest rates to stimulate growth which can go negative also. The notion is that negative rates will provide even more incentive for commercial banks to make loans. There is currently more than $17 trillion in negative yielding debt around the world.

 

A leveraged-asset bubble is building up as the effect that artificially low interest rate has on an economy is pernicious. For corporates, borrowing becomes preferable instead of issuing equity.

 

Trade war turning into an economic cold war over technology as China and America are vying for dominance over the industries of the future – artificial intelligence (AI), robotics, 5G, etc.

 

The Indian economy is experiencing turbulence with the latest GDP at 5.0% (25 quarter low), with slump in growth in various key sectors and the global growth environment gloomy. Many believe that four major disruptions (demonetisation, RERA, trade war and the IL&FS and NBFC crises) and three key economic reforms (GST, IBC and inflation targeting by RBI) led to a drift down in the Indian economy. Stress in NBFCs percolates faster owing to greater interconnectedness (to MFs, banks and the corporate sector), leading to sharp decline in auto and auto-ancillary, manufacturing and MSME, real estate and construction, exports (effect of trade war) and FMCG. There is visible stress in rural areas and agriculture due to drop in income arising out of low food inflation, the weather and the cow crisis. Unemployment is at a 45-year high, income is falling and the savings rate has slumped to 30.5% (37% in 2008), all of which suggest that we in India are in continuing slowdown mode.

 

Milan Sanghani stated that this slowdown could be handled by addressing the ‘demand’ side of the economy, whereas the government has so far brought in measures to address supply-side issues.

 

As regards the USA, he explained that the economy is growing at reasonable pace with unemployment at a 49-year low. Negative rates aren’t fully reflected in actual borrowing and lending rates. Regulations require banks to maintain customer deposit bases. The fear of losing customers dissuades those banks from cutting deposit rates too far. In Europe, only large corporations have faced negative rates. As net interest rate margins (difference between lending and borrowing rates) contract and profits are squeezed, banks raise fees or turn to other revenue measures to boost earnings. This keeps actual borrowing costs relatively high, undercutting the whole point of a negative rate policy. As the economy continues to sputter, central bankers keep on further reducing rates. Government bond yields grow increasingly negative and the yield curve flattens. Banks, which hold substantial amounts of government debt, see their profits decline even further.

 

Rashmin Sanghvi said that government was showing lower fiscal deficit by shifting many items to National Savings (funds of Rs. 16.85 lakh crores) and LIC (assets of Rs. 31.11 lakh crores [US $450 billion], 29 crore policy holders) putting the money of small savers at risk. The main reason for the Indian GDP growth rate falling may be the fear psychosis created by government.

 

LECTURE MEETING ON ‘PARADISE REGAINED…’

 

A lecture meeting was organised by the Society jointly with the Indian Merchants’ Chamber (IMC) and the Indo-American Chambers of Commerce (IACC) on 24th September, 2019 at the Babubhai Chinai Hall, IMC. The guest speaker, Lieutenant-General Syed Ata Hasnain, delivered a talk on ‘Paradise Regained – The Impact of the Momentous Decision of 5th August, 2019’ in light of the resolution passed by the Indian Parliament to abrogate Article 370.

 

Introduction of both the topic and the speaker was done by IMC President Ashish Vaid and IACC President Naushad Panjwani, who also thanked the sponsors of the event, the royal family of Abu Dhabi.

 

Lt.-Gen. Ata Hasnain stressed the need to see the sensitive issue in the historical perspective to understand why mistakes made in the past needed to be corrected to spare India from bleeding. He pointed out that after losing three conventional wars with India, Pakistan which said that for it Kashmir was its ‘existential core’, started engaging in proxy war under the guise of religion. This strategic initiative was launched in 1989 to gain maximum advantage when India was politically unstable, financially weak and socially insurgent. Pakistan, on the other hand, had successfully helped America win the Afghan war against the USSR by providing logistic and strategic support. It had mastered guerrilla warfare and had access to sophisticated weapons which had no state ownership on record. It had the geo-political advantage as it was bordering five different cultures where it could boast of its importance.

 

This proxy war to tire out India and force her to the negotiation table was also backed by psychological propaganda to project alleged violation of human rights of the religious minority in J&K that was aimed at creating a religious chain-link from the Middle East to Kashmir with Pakistan as a central, moderate state. The first phase of what was called terrorism started with mass killings and the subsequent exodus of Kashmiri Pandits from the valley and converting the Sufi culture of Kashmir into a Wahabi culture by bringing hard-core maulanas from UP and Bihar to impart fundamentalist religious training. Thus started a jihadi movement, resulting in several killings that virtually deprived the valley of its moniker of ‘Paradise’ that it so proudly deserved till then.

 

Lt.-Gen. Ata Hasnain then explained how the traditional Indian response over the years was passive, with the country failing to see the larger design by the enemy. India only focussed on killing incoming terrorists and not the system that bred them. It failed to differentiate between terrorists and terrorism. While the terrorist was only a by-product, terrorism was an eco-system that bred, nurtured and supported terror. It involved human resources, logistics, finances and the ideological propaganda machinery. What India needed to do was to target terrorism, the eco-system that was nurtured to inflict damage on India.

 

He also explained how Pakistan had smartly colluded with China by entering into an agreement giving them land in Pakistan-occupied Kashmir for building an economic corridor. This made China also an interested party to the claim for Kashmir. India was getting pushed into an impossible situation and would have lost Kashmir if the historic decision to abrogate Article 370 had not been taken. This action, therefore, was a correction of
past mistakes.

 

However, before this action there had been a lot of strategic planning and several actions had taken place. India, over the last three years, had started attacking the terrorist eco-system and also started a hybrid war to counter Pakistani propaganda. It engaged its army in winning the goodwill of the locals and fortified its borders with increased surveillance. It took the right political pitch by cultivating excellent relations with world leaders and made its economy strong enough to attract the world to her large market. All these actions had won India some brownie points and she had definitely scored some short-term gains evidenced by the fact that there was no major opposition from the world on its action on Article 370. However, in order to convert this into a permanent advantage, what was needed, in the speaker’s opinion, was action on the following points:

 

(1) Stabilise the secular environment by understanding the cultural terrain and by integrating Jammu and
Kashmir valley;
(2) Promote intra-state integration;
(3) Enable effective governance by ensuring that welfare funds and schemes’ benefits reach the lowest section of the people across the terrain; and
(4) Engagement with the hearts of the people, bringing harmony by tactical, strategic and operational support.

 

It is these measures that will make the resurgence of terrorism difficult and ensure long-term gains of the decision taken.

 

Lt.-Gen. Ata Hasnain’s talk was heard attentively by the assembled gathering. After all, he has had vast working experience in Kashmir as a commissioned officer at various levels. In the course of his talk, he also touched upon the way the Indian Army operates and how religion does not come in the way in the working and camaraderie of its troops. While sharing his experiences, he also described different nomenclatures such as Line of Control, Line of Actual Control, International Border, Actual Ground of Line of Control and so on.

 

The meeting attracted a large audience which heard the speaker in rapt attention. The talk was followed by a question and answer session. President Manish Sampat proposed the vote of thanks.

 

‘BAPU@150’ ON 2nd OCTOBER, 2019 AT BCAS CONFERENCE HALL

 

The H.R. Committee of the Society organised a programme on 2nd October, 2019 to commemorate the 150th birth anniversary of Mahatma Gandhi, the Father of the Nation and ‘Bapu’ to everyone. It was styled ‘Bapu@150’.

 

After the National Anthem and the invocation prayer, some members sang bhajans selected from Ashram Bhajanavali (the book regularly used at Bapu’s Ashram) and a few other books. It was truly a ‘recollection’ of Bapu’s personality, faith and values.

 

Music was arranged by Vijay Bhatt, with assistance on the tabla by Mr. Kiran. Members Toral Mehta, Ryan D’Sa, Kartik Srinivasan and Tej Bhatt gave voice to the bhajans and Mukesh Trivedi anchored the programme.

 

After the bhajans, young CA members performed a skit which aimed to connect the younger generation with Bapu’s ideology. It sought to depict how the young generation, with very little or no knowledge about Bapu and his values, often talk about him in a sarcastic tone and without any respect; it went on to show how they were enlightened about Bapu’s virtues and values by two elderly gentlemen sitting nearby and overhearing their conversation.

 

Young members Jigar Shah and Pankaj Singhal wrote, directed and acted in the play. Other actors were Harshal Shah, Raj Mehta, Jekin Dedhia, Jagat Mehta, Tej Bhatt, Dyanesh, Chirag Mehta and Utsav Shah. Nidhi Shah helped them in the backstage and lighting arrangements and Tej Bhatt was responsible for the music. The young members’ creative way to pay respect to Bapu was heartening.

 

In the second half of the programme, keynote speaker Mr. Dinkar Joshi (a well-known Gujarati writer and scholar) shared many anecdotes from Bapu’s life. He highlighted Bapu’s unique qualities of putting into practice what he preached, inspiring others to do the same. He stated that Bapu’s entire life was transparent and that he was one of the greatest thinkers.

 

Welcoming the guests before the keynote address, President Manish Sampat and Chairman Rajesh Muni shared some thoughts on Bapu.

 

The BCAS Journal specially commemorating Bapu’s 150th anniversary on 2nd October was released by the keynote speaker. Editor and past president Raman Jokhakar described in brief the articles covered in the Journal. He also shared Bapu’s inspiring values.
Past Presidents Pradip Kapasi, Shariq Contractor and Mayur Nayak also remembered Bapu with reverence, sharing his inspiring values. Snehal Muzoomdar highlighted that one of the most important contributions of Bapu was to revive music in Gujarat. Mihir Sheth anchored this part of the programme and Krishna Kumar Jhunjhunwala proposed the vote of thanks.

 

The programme concluded with the national song Vande Mataram.

 

INDIRECT STUDY CIRCLE

 

The Hon’ble Bombay High Court recently delivered a very important judgement dealing with the applicability of GST on compensation received for the illegal use of premises. The decision went into the fundamentals of what could be regarded as ‘supply’ under the GST law.

 

Mr. V. Sridharan, Senior Advocate, who was amicus curiae in the said matter, chaired the session. A large number of members and others attended the meeting held at the BCAS Conference Hall on 3rd October, 2019.

 

The subject under discussion was quite elaborate, viz., Bai Mumbai Trust and Ors. vs. Suchitra w/o Sadhu K. Shetty‘Implications under GST’.

 

Those interested in the topic had been requested in advance to come prepared in order to ensure active participation. The idea behind the chosen topic was to deliberate and discuss in depth certain important aspects of the subject under GST.

 

Both Group Leader Somesh Jain (Advocate) and Mentor V. Sridharan (Senior Advocate), made interesting presentations and also answered several questions from the floor of the house.

 

The meeting concluded with a vote of thanks to the Group Leader and the Mentor.

 

The Study Circle Conveners are Suresh Choudhary, Chirag Mehta and Dushyant Bhatt.

MISCELLANEA

1.   
Technology

17 Google made $4.7 billion from the news
industry in 2018

 

It’s more than the
combined ticket sales of the last two “Avengers” movies. It’s more than what
virtually any professional sports team is worth. And it’s the amount that
Google made from the work of news publishers in 2018 via search and Google
News, according to a study by the News Media Alliance.

 

The journalists who create that content deserve a cut of that
$4.7 billion, said David Chavern, the president and chief executive of the
alliance which represents more than 2,000 newspapers across the country,
including The New York Times. “They make money off this arrangement,” Mr.
Chavern said, “and there needs to be a better outcome for news publishers.”

 

That $4.7 billion is nearly as much as the $5.1 billion
brought in by the United States news industry as a whole from digital
advertising last year – and the News Media Alliance cautioned that its estimate
for Google’s income was conservative. For one thing, it does not count the
value of the personal data the company collects on consumers every time they
click on an article like this one.

 

(Source:
www.nytimes.com)


18 Facebook will launch its new
cryptocurrency soon

 

Facebook is preparing to
launch its own cryptocurrency sooner than you expect. The company plans to hand
over control of the currency system to outside backers as part of a move to
reassure financial regulators. Facebook has reportedly been in discussions with
dozens of financial institutions and tech companies that will oversee the new
cryptocurrency and contribute capital to the programme. The payment system
would be free of transition fees and is designed to be used all over the world,
especially in developed nations.

The digital token is
reportedly designed to serve as a global currency – one that Facebook hopes
will facilitate peer-to-peer payments among its more than two billion users.
Zuckerberg hinted at Facebook’s crypto ambitions during the company’s developer
conference in May. “When I think about all the different ways that people
interact privately, I think payments is one of the areas where we have an
opportunity to make it a lot easier,” Zuckerberg said.

 

In recent weeks, several
news outlets have reported that Facebook is planning to launch its own
payments-focused cryptocurrency. People will be able to use the currency to
transfer funds and make purchases on Facebook messaging platforms such as
WhatsApp and Messenger.

 

The news has caused quite
a stir in the crypto world – and on Wall Street. Anthony Pompliano, founder and
partner at blockchain-focused investment firm Morgan Creek Digital, believes
Facebook’s cryptocurrency could quickly become the “most used product in
crypto.”

 

(Source: www.wsj.com
and www.finance.yahoo.com)

 

19 Hottest cryptocurrency is up by
360% this year and its name isn’t Bitcoin

 

Litecoin, which has gained
more than 330% since the beginning of the year, is outpacing all its crypto
peers, including Ether and XRP, as well as the best-known and largest token
Bitcoin. It has a market cap of about $8.4 billion, making it the
seventh-largest digital asset, according to data compiled by Mosaic Research
Ltd.

 

The rally can partly be
attributed to Litecoin’s upcoming halving (also known as halvening), whereby
the number of coins awarded to so-called miners is slashed by 50%. The idea is
that a cut in supply will not only drive up its price but will also prevent an
erosion of value. Miners currently receive 25 new Litecoins per block, but
following the halving – which is expected to fall on August 6 – they will
receive 12.5.

Halving typically happens
roughly every four years and the run-up to it has, in the past, coincided with
a rally in the underlying tokens. Four years ago, when the last Litecoin
halving occurred, the coin gained about 60% in the three months beforehand
according to data from CoinMarketCap.com. And the phenomenon isn’t isolated to
Litecoin, either – Bitcoin is set to undergo its next halving in May, 2020 and
its biggest proponents are already seizing on the drop in supply as a catalyst
for further gains.

 

“Every time we’ve seen a
halving event in Bitcoin or Litecoin, the price has risen astronomically,” said
Mati Greenspan, senior market analyst at trading platform eToro, in a phone
interview. “So if that pattern continues, what we’ve seen so far is small
potatoes in comparison,” he said. “This is quite normal for the crypto market.”

 

These developments, among
others, have pushed up the price of Bitcoin by 120% since the beginning of the
year. Ether, too, has gained close to 100%. Litecoin, which was trading below
$30 at the end of last year, is now worth $130.

 

(Source:
www.hindustantimes.com)

 

20 Coding & App-making just a
child’s play for these school kids

 

Vyom Bagrecha loves to
read, draw and play computer games. Just like any other nine-year-old, albeit
with one exception. Vyom also does software coding and has already created a
health app that is now available on Google Play Store for mobile users on the
Android platform.

 

“I’m now working on a
parking-related application, and when I’m older I want to be able to code
robots to save the environment,” said the 4th grade student of Nahar
International School in Mumbai. Vyom’s curiosity about how games work made his
mother enrol him for an online coding programme. Very few schools taught
mathematics during the Industrial Revolution and there was widespread
unemployment till schools added it to the curriculum. I see that happening with
coding and think it should be a part of the curriculum, says his mother.

 

Vyom’s app is a basic
health tool which, for example, converts the number of glasses of water one has
had into litres, and such like. Children are creating all kinds of things
online, including simple drawings to games developed by children as young as
ten.

 

Schools, too, are starting
to impart coding skills to kids, making the shift from teaching traditional
computer programmes. Some schools are setting up coding clubs, while some are
even adopting such programmes over the traditional computer science textbooks

 

Manju Rana, Principal at
Seth Anandram Jaipuria School in Ghaziabad, says the school started a coding
club about a year ago to foster logical reasoning and encourage kids to find
their own ways and methods of learning. Since most children are taking to this
as a hobby, it takes away the pressure associated with learning something as
part of their core curriculum. Corporates, too, have started school-level
initiatives to expose kids to coding.

 

(Source:
tech.economictimes.indiatimes.com)

 

2. World news

 

21 PwC’s $5.8 mn UK fine strengthens
demand to break up big-four audit firms

 

PricewaterhouseCoopers was
fined 4.55 million pounds ($5.8 million) by the U.K.’s accounting watchdog over
failings in its handling of technology firm Redcentric Plc, giving fresh
ammunition to critics calling for a breakup of the so-called “Big-Four”
auditing firms.

 

The penalty was reduced
from 6.5 million pounds after the company admitted its wrongdoing ahead of a
final decision by the Financial Reporting Council. Two PwC partners, Jaskamal
Sarai and Arif Ahmad, were each fined a reduced 140,000 pounds after admitting
breaches in the standards of their work and were also given a “severe
reprimand.”

 

The breaches were
“numerous and in certain cases were of a basic and / or fundamental nature,
evidencing a serious lack of competence in conducting the statutory audit
work,” according to an FRC statement.

 

This latest transgression
adds to the scrutiny of PricewaterhouseCoopers, Deloitte, EY and KPMG, which
together control more than 90% of UK audits for large companies. The
Competition and Markets Authority has urged a split of their operations amid
allegations of conflicts of interest and a failure to spot a series of
high-profile corporate failures, including the wake of building contractor
Carillion Plc.

 

The FRC’s sanctions follow
an investigation that began more than two years ago into PwC’s handling of
Redcentric’s financial statements for 2015 and 2016 after an initial review
showed that Redcentric had overstated its net assets and profits after tax by
20.8 million pounds.

“We are sorry that our
work fell below the professional standards expected of us,” PwC said in an
emailed statement. The firm said it has taken numerous steps to strengthen
processes and is investing 30 million pounds “to provide greater focus on the
quality and public interest responsibilities of PwC’s statutory audit
services.” An outside spokesman for Redcentric declined to comment.

 (Source:
www.business-standard.com)

 

22 US wants to stall digital tax,
hoping to wear down allies

 

The Trump administration is deep in talks with 129 other
countries on implementing a new standard for taxing digital companies,
including Alphabet Inc’s Google, Facebook Inc and Amazon.com Inc – but its
heart lies elsewhere in the discussions. Rather than usher in with allies a new
era of technology taxation, the United States’ goal is to fend off foreign
taxes aimed at American companies.

 

The strategy: String out
the negotiations for as long as possible to delay the pain and hold out for an
agreement with softer edges, say people involved with and briefed on the talks
at the Organization for Economic Cooperation and Development (OECD). By
slow-walking the discussions, American officials hope they can reach a global
agreement that amounts to a small-scale tax increase on global companies, but
averts a massive tax increase by foreign countries that see US companies as
sources of revenue.

 

It is in the interest of the
US to prevent a proliferation of unilateral digital services taxes, said Jeff
Vander Wolk, an international tax lawyer at Squire Patton Boggs LLP and an OECD
official until last year. The way to get them to back off is to get them into a
multilateral agreement. Any future pact would likely create a whole new set of
rules governing which countries have the right to tax the companies, which
corporate profits were taxable and how to resolve the inevitable disputes that
would arise.

 

Deciding where profits should
be taxed is no easy feat in a digital economy. Corporations can have their
headquarters in the US, intellectual property stored in Ireland, engineers
developing some of the algorithms in India and users all over the world. The US
is hoping to harness this complexity and use the power of roadblock, according
to lawyers and tax experts who have discussed the project with Treasury
Department officials.

 

Striking a deal could mean
that American companies pay more in taxes, but the US could lose out on tax
revenue. Yet, the absence of the deal could be even worse. If talks break down,
every country is likely to pass its own laws. That could mean American
companies are taxed multiple times on the same profits from a number of
countries.

 

The new tax rules would
mean that taxes are paid based on where users are located. That would allocate
tax revenue away from countries containing lots of headquarters – such as the
US, Sweden, Ireland and other European countries – and to populous nations.

 (Source: www.thehindubusinessline.com)

 

3. Health

23 Why spending just two hours a week
in nature is good for you

 

Anyone who’s watched a
child run free in a forest or play in a stream doesn’t need a research study to
tell them that spending time in nature is good for kids’ health. It’s something
that most parents know intuitively. When kids have the chance to play free in
nature, they’re happier, better behaved and more connected socially.

 

Most adults know that
nature is good for them, too – that’s why we often leave behind the stress of
work to vacation in beautiful, natural places. But how much time in nature do
we need to be healthier? A group led by researchers in the United Kingdom tried
to answer that question, in what they describe as a first step towards coming up
with a nature version of national physical activity guidelines.

 

In the study published
recently, researchers surveyed more than 19,000 people in the United Kingdom
about the recreational time they spent in nature during the past week, along
with their self-reported health and well-being. They found that people who
spent at least 120 minutes a week in nature saw a boost in their mental and
physical health, compared to people who didn’t spend any time in nature.

 

The researchers say the
size of the health benefits was similar to what people would get by meeting the
guidelines for physical activity. However, it didn’t matter how or where people
racked up the 120 minutes – many short walks near home were just as effective
as a longer hike on the weekend at a park. The researchers point out that this
is just a first step towards being able to recommend that people spend a
certain amount of time each week in nature.

 (Source:
www.healthline.com)

 

24 For the third time, WHO declines to
declare the Ebola outbreak an emergency

 

Even with more than 1,400
dead, the World Health Organization says the risk of the disease spreading
beyond the region remains low and declaring an emergency could have backfired.
For the third time, WHO has declined to declare the Ebola outbreak in the
Democratic Republic of Congo a public health emergency, though the outbreak has
spread into neighbouring Uganda and ranks as the second deadliest in history.

 

An expert panel advised
WHO against it because the risk of the disease spreading beyond the region
remained low and declaring an emergency could have backfired. Other countries
might have reacted by stopping flights to the region, closing borders or
restricting travel, steps that could have damaged Congo’s economy.

 

Dr. Preben Aavitsland, a Norwegian
public health expert who served as the acting chairman of the emergency
committee advising WHO, said there was “not much to be gained but potentially a
lot to lose.”

At the same time, the
committee of ten infectious disease experts said in a statement that it was
“deeply disappointed” that donor nations have not given as much money as needed
by WHO and affected nations to battle the outbreak.

But some global health
experts have argued in recent months that WHO should declare an emergency to
bring the world’s attention to the Ebola crisis. Dr. Jeremy Farrar, director of
the Wellcome Trust, a health foundation based in London, said that such a
declaration would have strengthened efforts to control the outbreak. “It would
have raised the levels of international political support and enhanced
diplomatic, public health, security and logistic efforts,” he said. WHO
Director-General Dr. Tedros Adhanom Gebreyesus accepted the committee’s
recommendation, saying that even if the outbreak did not meet the criteria for
an emergency declaration, “for the affected families this is very much an
emergency.”

 

WHO has requested $98 million for its response and has
received only $44 million so far. In an interview before the announcement, Dr.
Tedros said it had recently received commitments from Britain, the United
States and Germany.

 

“We’ve never seen an
outbreak like this,” he said. “It happened in a chronic war zone and overlapped
with an election that politicised the whole situation. Militia attacks kept
interrupting the operations, and when that happens, the virus gets a free
ride.”

 

(Source: www.nytimes.com)

BOOK REVIEW

“Indian
Accounting Standards (Ind AS) – Interpretation, Issues & Practical
Application” by Dolphy D’Souza, Chartered Accountant

 

Many years ago
the author had published two small pocket-edition books on accounting
standards. From those days till now, we have seen the ever-widening scope of
accounting standards. These two volumes, and they are voluminous, contain
exhaustive guidance to help understand the principles and practices prescribed
by these ‘principle-based’ accounting standards. It goes without saying that
Ind AS has made accounting not just complex but also complicated and
treacherous.

 

The author has
been an eminent writer and contributor to the BCAJ on a monthly basis
for more than 16 years. He has been involved in the standard-setting process at
the ICAI as well as at the IASB. Hence his ‘word’, to be fair, carries both
weight and value.

 

Coming to the
book under review, it is structured to cover all Ind AS’s. Specifically, it
contains a special segment of about 350 pages on the new Ind AS 115/116. It
handles these with illustrations, examples, issues as well as the author’s
response and that, too, industry wise. A section that covers the
differentiation between IFRS and Ind AS is of particular academic interest
especially for first-time users. The book is replete with numerous
illustrations and examples. Some of the examples feature actual working cases
and solutions with comments.

 

Ind AS’s are
particularly complicated when one comes to Financial Instruments (FI). The book
devotes 250 pages to FIs. Business combination draws particular attention.
Charts, explanations of definitions, accounting, group re-organisation issues
and more offer the clarity that one seeks. The book also covers MAT aspects
under Ind AS.

 

The book
reproduces the text of both Ind AS and ICDS. A handy illustrative financial
statement blending Schedule III and Ind AS in the accompanying CD makes it
especially beneficial for preparers. The last part of the book consists of some
useful analytical articles on perennial themes such as acquisition date vs.
appointed date, demerger accounting, FAQ on PPE, consolidation of trusts, GST
accounting and more.

 

Although there
is enormous literature on IFRS and quite a bit on Ind AS, this book carries it
in two volumes and a CD loaded with practical resources. The author deserves a
pat on the back for writing on a subject which is in a constant state of flux
(changing, blurry and ephemeral). I am sure that this book, like Dolphy’s
previous works, will remain a handy tool for both practitioners and preparers
.

SOCIETY NEWS

Three-day Workshop, the ‘9th Intensive Study
Course on Advanced Transfer Pricing’, held from
18th to 20th April, 2019 at the BCAS Conference Hall

The 9th Intensive Study Course on Advanced Transfer
Pricing was conducted at the BCAS Conference Hall
from 18th to 20th April, 2019 where nine eminent faculties
conducted the sessions.

The course was aimed at imparting advanced
knowledge on the practical aspects of understanding
and implementing the benchmarking study.
The sessions began with the theoretical aspect
of benchmarking and thereafter delved deep into
identifying the functions performed, assets utilised
and risks assumed by the comparable companies.
They also touched upon the importance of designing
an efficient and effective transfer pricing system and
as to when and how to apply various transfer pricing
adjustments that are defensible before tax authorities
and in court.

The sessions focused on data mining for fact
determination and correct application of adjustments
wherever applicable. All the topics were explained
along with presentations, practical examples and case
studies. International and Indian court rulings were also
discussed. The speakers gave different perspectives
on the current theme – tackling challenges arising
from the benchmarking exercise. The participants were
presented with a hands-on and thought-provoking
approach for determining the right set of comparables
and for making right economic adjustments to arrive at
arm’s length margin. BCAS also arranged for course
play facility that had two participants attending the
course online.

The course was very well received and appreciated by
the participants who felt enriched with the knowledge
shared by the learned speakers.

Lecture Meeting on ‘Important Amendments
Relevant for Audits of FY 2018-19 (Companies
Act, 2013, Accounting and Auditing Standards)’
held on 24th April, 2019 at the BCAS Conference
Hall

A lecture meeting was organised at the BCAS
Conference Hall on 24th April, 2019 covering various key
amendments of the Companies (Amendment) Act, 2017
which need to be addressed for audits of FY 2018-19,
the format of the audit report for audits of the financial
year 2018-19, the impact on revenue recognition under
Ind AS 115, presentation of going concern in the audit
reports, key audit matters and requirements of UDIN.

The learned speaker, CA. Himanshu
Kishnadwala, shared his knowledge
and experience in the most practical
manner on various amendments to
the Companies Act, changes in
accounting standards, intricacies of
reporting requirements and
expectations from auditors and
preparers of financial statements which were well covered and explained with practical examples, to
better explain the complexities of the various changes
in the simplest way.

The lecture meeting was attended by more than 120
participants from various industries and the practice
arena. The interaction between the participants and the
speaker was commendable and the participants said
that they had benefited immensely from the lecture by
CA. Himanshu Kishnadwala.

Full-day seminar on ‘Tax Deducted at Source
(TDS)’ held on 27th April, 2019 at the BCAS
Conference Hall

The Taxation Committee organised a full-day seminar
on TDS on 27th April, 2019 at the BCAS Conference
Hall. The event attracted a full house with an attendance
of about 100 eager participants, including some who
came from outside the city. President Sunil Gabhawalla
made the opening remarks.

The following topics were taken up at the seminar by the
speakers:

CA. Nilesh Kapadia started the
session by highlighting some
practical and important aspects of
TDS. He gave various examples and
case studies to explain and guide the
participants in selecting the best
practical approach in a given situation wherein there are diverse views; he stated that litigation is
not free from doubt. He also provided insights on the
recent changes and the ‘Do’s and Don’ts’ that one should
keep in mind for clients.

Next, CA. Rutvik Sanghvi explained
the provisions of section 195 in depth
and threw light on the checklist to
follow while making remittances
outside India. He also gave his views
on some burning issues and the
approach to take in such situations.

He was followed by CA. Divya
Jokhakar who spoke on specific
issues and a few landmark
judgements. She also explained the
importance of relevant provisions
and circulars impacting real-life
scenarios.

CA. Yogesh Thar dwelt on a different
and new topic under the TDS
mechanism. He spoke about how the
AIF/REITS/INVTS operate and the
applicable tax provisions on them, as
well as in the hands of contributors.
He discussed the background,
advantages and operational challenges with a case study
and summarised the tax impact on the same.

Listing some of the precautions while
E-filing TDS statements, CA. Avinash
Rawani came up with practical
solutions for common inquiries
leading to high-pitched demands. His
approach was to follow the three
“Ds”, that is, Deduct, Deposit and
Declare to avoid any further litigation.
He gave his views on the rights and duties of the taxpayers
for appropriate compliance of TDS provisions and
E-filing. He also highlighted precautions to be taken while
complying with the procedure in each quarter.

The final session was conducted by
Advocate K. Gopal on the penal and
prosecution provisions related to
TDS and some of the recent
measures taken by the government
in this regard. He shared his
experience while dealing with various complex issues and the expectations from the
tax-payers on provisions related to TDS and guidelines
for compounding of offences under direct tax laws.
All the sessions were highly interactive and the speakers
shared their insights on their respective subjects. They
also answered the queries raised by the participants who
benefited immensely from the guidance and practical
views of the faculty.

SUBURBAN STUDY CIRCLE

Meeting on ‘GST – Practical Issues on GST Annual
Return and GST Audit’ held on 4th May, 2019

The Suburban Study Circle organised a meeting on
“GST – Practical Issues on GST Annual Return
and GST Audit” on 4th May, 2019 at Bathiya &
Associates, Andheri East. It was addressed by CA.
Prerana Shah.

The speaker made a detailed presentation on the GST
Annual Return form GSTR-9 and GST Audit Reconciliation
and Certificate in GSTR-9C which was recently released
on the GST portal. Since there were many unresolved
issues and the participants had several practical queries,
the speaker made an effort to address each and every
one of them and explained the form clause-wise and in a
detailed manner.

Apart from this, a discussion was also held on GST audit
where the speaker CA. Prerana Shah deliberated on the
requirements for such an audit. She explained the various
points to be kept in mind (as this is the first year of GST audit) while finalising the GST audit in a time-bound
manner.

The practical examples explaining the form clause-wise
helped the participants in understanding the requirements.

HUMAN RESOURCE DEVELOPMENT COMMITTEE

Study Circle Meeting on ‘Stress Management,
an Art to Healthy Living’ held on 14th May, 2019
at the BCAS Conference Hall

The HRD Study Circle organised this much-needed
meeting on stress management on 14th May, 2019. It was
addressed by Ms Jacqueline Vales.

The speaker explained that of late stress had become part
of our lives. Sometimes, stress could result in a fight, or
in flight, or a person may just freeze, with the energy flow
being blocked. But there are “tapping” techniques that
help release the blockages that cause stress. A majority of
our diseases are psychosomatic. Stress releases certain
chemicals which are harmful for us, making it difficult to
function normally.

Ms Vales also suggested some techniques to relieve
stress that can help to get rid of fear, negativity, anxiety
and depression.

Overall, it was an interesting and enriching experience
for the participants who received some tips on healing
through “tapping” a few points on the body to release
negative energy.

MISCELLANEA

1. Economy

12

Govt
to soon come out with format to lodge complaints with Lokpal

 

The Central Government will
soon come out with a format for lodging a complaint with anti-corruption
ombudsman Lokpal, officials said on 16th May. As per norms, a
complaint shall be filed in the prescribed form to be notified by the
Government. “The form will be made public soon,” said a senior
Personnel Ministry official. Although the form for filing a complaint has not
yet been notified, the Lokpal decided to scrutinise all the complaints received
in its office till 16th April, 2019 in whatever form they were sent,
according to the anti-corruption ombudsman’s website.

 

“After scrutiny, complaints that did not fall within the
mandate of the Lokpal were disposed of and complainants are being informed
accordingly,” it said, without giving details of the complaints.

 

Lokpal Chairperson Justice Pinaki Chandra Ghose inaugurated
the website – www.lokpal.gov.in – in the presence of all the eight members of
the anti-corruption ombudsman. As per the website, the office of Lokpal is at
“The Ashok” Hotel in Chanakyapuri in the national capital.

 

President Ram Nath Kovind had administered the oath of office
to Justice Ghose as the Chairperson of Lokpal on 23rd March. Justice
Ghose, 66, had retired as a Supreme Court judge in May, 2017. He had last
served as a member of the National Human Rights Commission (NHRC).

 

Eight members of the Lokpal panel were administered the oath
by Justice Ghose on 27th March. Former Chief Justices of different
high courts – Justices Dilip B. Bhosale, Pradip Kumar Mohanty, Abhilasha Kumari
and Ajay Kumar Tripathi – took the oath as judicial members of the Lokpal.

 

Along with them, the first (former) woman chief of the
Sashastra Seema Bal (SSB) Archana Ramasundaram, ex-Maharashtra Chief Secretary
Dinesh Kumar Jain, former IRS officer Mahender Singh and Gujarat cadre ex-IAS
officer Indrajeet Prasad Gautam were sworn in as the Lokpal’s non-judicial
members.

 

According to the rules, there is a provision for a
Chairperson and a maximum of eight members in the Lokpal panel. Of these, four
need to be judicial members. The Lokpal Act, which envisages appointment of a
Lokpal at the Centre and Lokayuktas in States to look into cases of corruption
against certain categories of public servants, was passed in 2013.

(Source: Business Today
– PTI, New Delhi, 16th May, 2019)

 

13

RBI
releases ‘Vision 2021’ for payment system to increase digital transactions

 

The RBI said the payment systems landscape will continue to
change with further innovation and entry of more players which is expected to
ensure optimal cost to the customers and freer access to multiple payment
system options.

 

Aiming at a ‘cash-lite’ society, the Reserve Bank of India on
15th May, 2019 released a vision document for ensuring a safe,
secure, convenient, quick and affordable e-payment system as it expects the
number of digital transactions to increase more than four times to 8,707 crores
in December, 2021.

 

The ‘Payment and Settlement Systems in India: Vision
2019-2021’, with its core theme of ‘Empowering Exceptional (E)payment
Experience’, envisages to achieve ‘a highly digital and cash-lite society’
through the goalposts of competition, cost effectiveness, convenience and
confidence (4Cs).

 

The RBI said the payment systems landscape will continue to
change with further innovation and entry of more players which is expected to
ensure optimal cost to the customers and freer access to multiple payment
system options.

“The Reserve Bank of India will implement the approach
outlined in this ‘vision’ during the period 2019-2021,” it said. The
previous ‘vision document’ covered the period 2016 to 2018. The latest document
said payment systems like UPI / IMPS are likely to register average annualised
growth of over 100% and NEFT at 40% over the ‘vision’ period (up to December,
2021). The number of digital transactions is expected to increase more than
four times from 2,069 crores in December, 2018 to 8,707 crores in December,
2021.

 

“While the approach of the RBI will continue to be of
minimal intervention in the pricing of charges to customers for digital
payments, all efforts will be made towards facilitating the operation of
payment systems which are efficient and price-attractive,” it said.

 

The basis shall have to be that pricing is reasonable to
encourage usage and also pass on to the customer the benefit of cost saved on
managing cash in the system, it added. The document talks about creating
customer awareness, setting up a 24X7 helpline and a self-regulatory
organisation for system operators and service providers, among others.

 

In all, the ‘Payment
Systems Vision 2021’ has 36 specific action points and 12 specific outcomes.
The aim is to enhance customer experience, empower payment system operators and
service providers, enable the payments ecosystem and infrastructure, put in
place forward-looking regulations and undertake risk-focused supervision.

 

The ‘no-compromise’ approach towards safety and security of
payment systems remains a hallmark of the ‘vision’, the RBI added.

 (Source: Business Today
– PTI, New Delhi, 16th May, 2019)

 

2. Corporate

14

Corporate
Affairs Ministry amends rules related to incorporation of companiess

 

The Corporate Affairs
Ministry has amended the rules pertaining to incorporation of companies to
provide more clarity and uniformity in choosing names for companies, according
to an official. The Ministry has brought in amendments to the Companies
(Incorporation) Rules, 2014.

 

The move comes against the backdrop of instances where
applications by companies for registering their names have been rejected due to
various reasons, including trademark issues and proposed names being too
general.

 

The official said the changes have been made to ensure more
clarity, uniformity and transparency in approving the names for companies at
the time of incorporation. He also noted that the rules have been updated so
that there is clarity for people to apply, as well as for officers to process
the requests appropriately.

 

Among others things, the Ministry has now provided
illustrations regarding applicability of various names.

 

(Source: Business Today, PTI, New Delhi 16th
May, 2019)

 

3. Science

15

NASA’s
asteroid warning: Gigantic rogue body heading towards earth at 93,000 kmph

 

This rogue asteroid is more than 1,280 feet long and it is
heading towards earth at a breathtaking speed of 93,000 kilometres per hour
(kmph). NASA has confirmed this development.

 

Asteroid trackers of the US space agency revealed that this
massive space body will make a close fly-by to planet earth in the early hours
of 20th May, 2019.

 

As per NASA, 2019 JB1 is a near-earth object (NEO). NASA
considers all asteroids and comets in an orbit of the sun at a distance of 1.3
astronomical units as near-earth objects. It should be noted that one
astronomical unit is equal to about 92.95 million miles and is actually the
distance between the earth and the sun.

 

On 20th May, 2019, JB1 may come as close as 6.4
million km. to earth. A distance of 6.4 million km. may seem too huge in human
terms, but considering the depth and vastness of the universe, this distance is
quite small in astronomical terms. Even though the chances of 2019 JB1 hitting
the earth are very few, NASA believes that any impact from such gigantic space
bodies could bring about cataclysmic effects in the affected area.

 

“If a rocky meteoroid
larger than 25 metres but smaller than one kilometre (a little more than half a
mile) were to hit earth, it would likely cause local damage to the impact area.
We believe anything larger than one to two kilometres (one kilometre is a
little more than one-half mile) could have worldwide effects,” wrote NASA
on its website.

In the meantime, NASA is busy developing its planetary
defence weapon to protect the earth from dreaded asteroid hits which may happen
in the future. NASA scientists believe that this weapon, which is basically a
spacecraft, can deviate rogue space bodies from its trajectory.

 

A few weeks back, NASA administrator Jim Bridenstine also
revealed that the possibilities of an apocalyptic asteroid hit are not
something reserved for Hollywood disaster movies. In a recent speech at the
Planetary Defence Conference, Bridenstine predicted that life-threatening
asteroid hits could happen in the future.

(Source: International Business Times, By Nirmal
Narayanan, 16th May, 2019)

 

4. Technology

16

Google
is fixing the most annoying thing about internet browsing

 

Google is rolling out a new feature that will let you delete
your location and web activities automatically.

 

Privacy is one of the biggest concerns in our modern society.
Everybody wants to hide their web habits, app usage and location data. But
Google aims to make its product helpful to the users. And for that, Google
needs to know about your web habits and the location where you love to go. So,
if you are concerned about your privacy and also want a helpful Android, then
you just need to delete your activity manually. This is a very painful and
time-consuming task. That changes now.

 

In an official blog post from Google, the internet search
titan is talking about a new privacy feature that all the users are going to
love. After receiving feedback, Google is going to launch a new privacy feature
that will help you to auto-delete your location and web activities.

 

Google has confirmed the feature will roll out in the coming
weeks. Currently, you just have a feature to control off / on your location and
activity history and you can delete your history manually.

 

Google’s new auto-delete feature works on a timed system and
users can set the time duration to delete the data. You have two options: 3
months or 18 months. Google will automatically delete your location and activity
from your account after the selected time duration.

 

It’s certainly a positive step for Google towards privacy.
The blog post also hints that the feature will also come soon to other aspects
of your Google experience, but it’s coming first to location history and your
web and app activity.

 

Prior to this, an AP investigation revealed that Google was
still steering and storing the location history of users who had turned off the
history and the search giant used this data for target ads.

 

This month is very important for Google as the I/O annual
conference is going to commence on 7th May and Google is going to launch its
budget Pixel 3a and 3a XL devices in the conference. With these devices, Google
is going to foray into a mid-budget smart phone. The new pixel series is also
coming to India on the same day of launch. Apart from the Pixel 3a, Google will
also do some innovative announcements during the annual conference. So, stay
tuned for more updates

 

(Source: International Business Times, By
Ratnesh Kumar, 3rd May, 2019)

BOOK REVIEW

“Advice & Dissent – My Life in Public Service” by Y.V.
Reddy

 

Dr. Y.V. Reddy is well
known as an economist and the 21st Governor of the Reserve Bank of
India (2003-08). In 2010, the President awarded India’s second highest civilian
honour, the Padma Vibhushan, to him. At present he is Honorary
Professor, Centre for Economic and Social Studies (CESS), Hyderabad. After
completing his M.A. in Economics from Madras University, he obtained a Ph.D.
from Osmania University, Hyderabad. Joining the Indian Administrative Service
in 1964, he rose to the position of Secretary (Banking) in the Ministry of
Finance in 1995. He moved to the Reserve Bank of India in 1996 as Deputy
Governor and then to the International Monetary Fund in 2002 as Executive
Director on the Board. He was also the Chairman of the 14th Finance
Commission of India.

 

Looking back at his long
career in public service, he says that he was firm and unafraid to speak his
mind but avoided open discord. He writes about decision-making at several
levels and gives an account of the debate and thinking behind some landmark
events and some remarkable initiatives of his own whose benefits reached the
man on the street.

 

Reading between the
lines, one recognises controversies on key policy decisions which reverberate
even now. The book provides a ringside view of the licence permit raj, drought,
bonded labour, draconian forex controls, the balance of payments crisis,
liberalisation, high finance and the emergence of India as a key player in the
global economy.

 

As RBI Governor from 2003
to 2008, he presided over a period of high growth-low inflation, a stable rupee
and ample foreign exchange reserves – a far cry from the 1991 crisis he lived
through and describes in vivid detail, when the country had to mortgage its
gold to meet its debt obligations. He is credited with saving the Indian
banking system from the sub-prime and liquidity crises of 2008 that erupted
shortly after his term at RBI ended. Dr Reddy provides insight into the
post-crisis reflection undertaken by several global institutions on the
international monetary system and the financial architecture. In addition, he
describes the preparation of the 14th Finance Commission report,
which he chaired, and which is considered a game changer.

 

During his time as RBI
Governor, his cautious approach to markets was often at loggerheads with the
eternal market optimism of Mr. P. Chidambaram. The author presents a
fascinating narrative of his last five years in government, covering the
foreign exchange crisis of 1991 and the liberalisation initiated by the late
Mr. P.V. Narasimha Rao. However, he does not seem to sense the concomitant rise
in economic crime, hawala dealings and export earnings falsifications.
He was an early supporter of gold import liberalisation.

 

In essence, he believed
that the RBI must always counter the Finance Minister’s large fiscal deficit
with a tight monetary policy so that the nation does not face inflation. The
tension between the FM and the RBI is eternal and systemic. No government has
yet won an election on promises or achievement of economic growth and sound
money. The political belief is that only economic populism can win elections.

 

Dr. Reddy’s crowning
achievement, of course, was keeping India out of the global financial storm of
2008. His correct reading of the global economic situation was aided by his
innate market scepticism and he was able to take early steps against the
overheating of the economy even in the face of political opposition. The nation
must remain ever grateful to him for this. However, his cautious approach to
markets was destined to face resistance from the eternal market optimism of Mr.
Chidambaram. After several cat-and-mouse encounters, the then FM and the
political class lost faith in him and denied him further extensions.

 

He offers explicit
counsel in his book:

(1) “Never compromise
long-term professional credibility while pursuing advocacy that the compulsions
of immediate circumstances demand.”

(2) “This idea of
drawing from various beliefs and ideologies and arriving at what appears to be
an appropriate solution to the context became the guiding principle for me.”

(3) “Respect for people
without reference to hierarchy.”

(4) Speaking a local
language introduced a level of informality and personal connect in discourse.

(5) Economists often
advocate the desirable. Bureaucrats focus on what is feasible. It is possible
to begin with the search for the desirable, then move towards the feasible,
while at the same time assessing the costs and benefits of the distance between
the two. This is a way of reconciling and balancing the feasible and desirable,
always keeping the desirable in view. Similarly, starting from international
best practices, one can assess how the Indian situation is different. The goal
should be to move towards policies that are tailored for our requirements while
being consistent with international best practices. Or, to put it another way,
match the international best practice, but in our context.

(6) At the end of the
day, a key to realising reform is to make the powerful feel the pain of the
status quo.

 

POLICY LESSONS – Dr. Reddy offers a very useful primer for prudent
liberalisation of the external account for any country. Recognising and
establishing the hierarchy of capital flows is very important for ensuring
financial stability.

 

“Low inflation, low
non-performing assets of the banking sector, and low fiscal deficit are key to
fuller convertibility.” Again, he is quite right and hence, on this basis,
India is a long way off from capital account convertibility.

 

Further, Indian imports
are related more to the level of economic activity rather than the exchange
rate. Policy makers should make a note of this. A weaker exchange rate might
push up the import price without discouraging it and encouraging domestic
production.

 

India’s dalliance with
high growth rates has always ended in tears – in the Eighties, in the
mid-Nineties and between 2003 and 2008. Frankly, the economy is not ready. As
to why this is so, read his comments on the features of the Indian society and
economy mentioned earlier.

 

Dr. Reddy is rather forthright on the farm loan waiver that
the UPA government announced in 2007. He thinks it was against the financial
reforms. He felt that reform of the domestic banking system was a pre-condition
for liberalisation of the banking sector for foreign ownership.

 

Thanks to his experience at
the IMF and from his keen observations, he had become increasingly wary of
financial liberalisation and the role of international financial conglomerates.
It is not hard to imagine the sources of pressure that were brought to bear on
the Indian Finance Ministry.

 

Reform of the domestic banking system is an unfinished task
for him. He feels that several public sector banks did not come under the
Banking Regulation Act and hence RBI could not regulate them effectively. He
also did not want RBI nominees on the Board as it would mean conflict of
interest. His recommendations on the procedures for the appointment of members
to the Boards of Public Sector Banks and to the positions of Chief Executive
Officers have not been heeded by governments. Unfortunately, this is still the
case. The Bank Boards Bureau has been dormant and ineffective. Governance of
Indian public sector banking leaves a lot to be desired and yet, many still
want to preserve it as it is, without any reform!

 

ON CENTRAL BANK INDEPENDENCE – Government ownership of
the banking system is one of the reasons why he feels that the so-called
independence of the Central Bank is constrained. He dedicates several pages to
the subject, dividing it into three aspects: operational, policy and
structural:

  • Operational independence for the Central Bank:
    He favours it.

  • Policy matters: In consultation with the
    government.
  • Structural matters: In close coordination with
    the government.

 

He admits that he was
prepared to ‘irritate’ and ‘frustrate’ the sovereign but not defy it. As a
legal construct of the government, without a constitutional authority, he is
clear that RBI cannot be equal to its creator.

 

Dr. Reddy ends the book on a high note with a chapter on his
stewardship of the 14th Finance Commission. He points out that the
former President, Mr. Pranab Mukherjee, had praised him for addressing many
fundamental issues with his work on the Commission. That is quite an apt note
to end the book by a man who has indeed addressed many fundamental issues on
monetary policy, too – hierarchy of capital flows, capital account
liberalisation, financial sector liberalisation, etc.

 

Leavened with his irrepressible sense of humour,
Advice
and Dissent
is a warm, engaging account of a life that
moves easily from a career in the districts as a young IAS officer to the
higher echelons of policy making, in a trajectory that follows the changes in
the country itself. To the reader’s delight, the narrative is interspersed with
often deeply ironic vignettes and humorous tales of encounters with the high
and mighty.

STATISTICALLY SPEAKING

1. Category and Income Range wise filing count for current financial year (Updated till October 2018)

Source: www.incometaxindiaefiling.gov.in

2. State wise filing count for the current Financial Year

Source: www.incometaxindiaefiling.gov.in
Note: States considered above are the one in which more than 5,00,000 returns have been filed during the period 1st April 2018 to 31st October 2018.

3. ITR wise receipt of e-Return (October 2018)


Source: www.incometaxindiaefiling.gov.in

4. Highlights of e-Filing


Source: www.incometaxindiaefiling.gov.in

5. Cash growth during Diwali week highest ever


Source: Economic times

STATISTICALLY SPEAKING

1. A. Direct tax collection up to 2017-2018
B. Direct tax collection for 2018-2019

3.         Pre-Assessment and Post-Assessment collections
4.         Cost of Collection


5.  Drop in income tax e-filings

ETHICS AND U

Shrikrishna
— Arrey Arjun, I am waiting for you for a long time. Why so much delay?

 

Arjun
— What to tell you, Bhagwan! A most disorganised client who has no
discipline at all was with me.

 

Shrikrishna
— He must be in financial stress.

 

Arjun
— Exactly. He wants to apply for some loan and wanted his balance sheet of 31st
March, 2019 instantly!

 

Shrikrishna
— But are the accounts ready?

 

Arjun
— That’s the main problem. Somehow, he has got it done. Volume is not much and
it is a private limited company.

 

Shrikrishna
— Have you signed his balance sheet?

 

Arjun
— Yes, I was helpless.

 

Shrikrishna
— Did you obtain signatures of at least two directors?

 

Arjun
— It was a fire-fighting situation. I have signed in good faith. One of the
directors has signed. The other one will sign it later.

 

Shrikrishna
— This good faith is very dangerous. There are cases where the other director
refused to sign due to dispute between them. Result – the auditor was held
guilty.

 

Arjun
— Oh my God! But these are nice people. They won’t ditch me.

 

Shrikrishna
— Don’t be overconfident. Don’t take things for granted. This is kaliyug
and anything can happen. What about the other directors of the private company?

 

Arjun
— Actually, there are four directors. But only two are active.

 

Shrikrishna
— That is an additional risk. What is important is the approval of accounts in
the board meeting. Signing by two or three directors is consequential. The
board approves the accounts and authorises two or three of them to sign the
accounts on behalf of the company. This is extremely important. You must obtain
a confirmation that the board has approved the accounts.

 

Arjun
— Oh, really? We have never obtained such confirmations.

 

Shrikrishna
— It has been held to be a misconduct. Another important thing, have you issued
the audit report?

 

Arjun
— Yes, they wanted it. My assistant just changed the year in last year’s
report. It was a copy-paste as there was virtually no activity.

 

Shrikrishna
— Are you sure that no change was required?

 

Arjun
— Overall, I saw facts and figures were practically the same.

 

Shrikrishna
— My dear Arjun, are you aware that the format of company audit report
has been changed?

 

Arjun
— No. When was it changed? Is the change applicable to accounts for the year
ended on 31st March, 2019?

 

Shrikrishna
— It is very much applicable to accounts for the year ended on 31st
March, 2019. The changes are not very significant. Three standards have been
revised and one is newly introduced. Go rush and hold that report before it is
released. Arjun, I never expected you to be so negligent.

 

Arjun
— What to do? My colleagues are enjoying their vacation. Senior articles are on
exam leave. Exams were postponed due to Lok Sabha elections. I am fighting all
alone.

 

Shrikrishna
— You must now gear up for the audits for the year ended on 31st
March, 2019. Please try to implement all those things which you have so far
taken very lightly.

 

Arjun
— Like what?

 

Shrikrishna
— Writing for independent confirmations of balances of debtors, creditors,
loans, banks and so on. Also you need to carefully maintain the working papers.
Moreover, also ask the companies to update their registers of directors,
shareholders; and also minutes of meetings.

 

Arjun
— I agree. We have been taking these things lightly. But now we cannot afford
to continue to do so. Audit is becoming more demanding. We need to change.
Thank you for opening my eyes.

Shrikrishna
— Take care.

 

!!Om Shanti!!  

 

[This dialogue is in the
context of the recent changes in company audit reports; new SAs and general
preparation for ensuring audits. Standard on Auditing 700, 705 and 706 have
been revised and Standard on Auditing 701 is newly introduced.
]

REPRESENTATIONS

 

1.  Dated: 28th March, 2019

     To: Prime Minister and Finance
Minister of India.

     Subject: In the interest of
taxpayers of the country.

     Representation by: Bombay Chartered
Accountant Society; Chartered Accountants Association, Ahmedabad;  Chartered Accountants Association, Surat;
Karnataka State Chartered Accountants’ Association; Lucknow Chartered
Accountants’ Society.

 

2.  Dated: 30th April, 2019

     To: Revenue Secretary, Ministry of
Finance, Govt. of India; Commissioner GST, Govt. of Maharashtra; Commissioner
GST, New Delhi.

     Subject: Representation on certain
issues in GST.

     Representation by: Indirect Taxation
Committee of the Bombay Chartered Accountants’ Society.

 

3.  Dated: 17th May, 2019

     To: Secretary (FT&TR)-I (1),
Central Board of Direct Taxes, Ministry of Finance

     Subject: Comments and Suggestions
with regard to Amendment of Income-tax rules relating to Profit Attribution to
Permanent Establishment as per Rule 10 of the Income-tax Rules, 1962.

     Representation by: International
Taxation Committee of the Bombay Chartered Accountants’ Society.

 

4.  Dated: 24th May, 2019

     To: Joint Secretary TPL, Central Board
of Direct Taxes, Ministry of Finance

     Subject: Suggestions for amendments
in the Income Tax Act.

     Representation by: Taxation
Committee of the Bombay Chartered Accountants’ Society.

 

Note: For full Text of the
above Representations, visit our website www.bcasonline.org

RIGHT TO INFORMATION (r2i)

part A I DECISIONS OF THE SUPREME COURT

  • Parties under RTI: Supreme Court notice to Centre,
    Election Commission

The Supreme Court on 15th April, 2019 issued
notice to the Centre, the Election Commission and six national political
parties – the BJP, the Indian National Congress, NCP, CPI, CPI(M) and BSP – on
a writ petition that political parties be brought under the ambit of the Right
to Information Act. The petitioner submitted that political parties held
significant power and hold over the legislature and the executive as well as
their own candidates. And this hold had been made absolute because of the power
of political parties to disqualify elected MPs and MLAs under the Constitution
(anti-defection law). He also submitted that political parties received huge
sums of money from the public as donations and were not liable to pay any taxes
and must, therefore, be made accountable to the public.

 

The
petitioner pointed out that the political parties had defied the CIC order for
several years and sought greater transparency and accountability in the
functioning of all recognised national and regional political parties in the
country. Great harm was being caused to public interest due to lack of
transparency in the political system and the political parties; the electoral
system was generating huge amounts of black money and large sums were being
spent on every election, thus leading to violation of the citizen’s rights
under Article 14, 19(1)(a) and 21 of the Constitution.

 

(Source:https://www.deccanchronicle.com/nation/current-affairs/160419/parties-under-rti-supreme-court-notice-to-centre-election-commission.html)

 

  • Centre can’t withhold docs under RTI citing national
    security, says Supreme Court

The
Supreme Court on 10th April, 2019 said the Centre cannot withhold
documents from disclosure under the RTI Act citing national security if it is
established that retention of such information produces greater harm than
disclosing it.

 

The
observation was made by Justice K.M. Joseph in his 38-page separate but
concurring judgement in which the Supreme Court allowed the plea relying on
leaked documents for seeking review of its judgement on the Rafale fighter jet
deal with France. It dismissed the government’s preliminary objections claiming
“privilege” over them.

 

Justice
Joseph said the RTI Act through section 8(2) has conferred upon the citizens a
“priceless right by clothing them” with the right to demand information even in
respect of such matters as security of the country and matters relating to
relations with a foreign state.

 

“No
doubt, information is not to be given for the mere asking. The applicant must
establish that withholding of such information produces greater harm than
disclosing it,” Justice Joseph said.

 

He
said the premise for disclosure in a matter relating to security and
relationship with a foreign state is public interest.

 

“Right
to justice is immutable. It is inalienable. The demands it has made over other
interests has been so overwhelming that it forms the foundation of all
civilised nations. The evolution of law itself is founded upon the recognition
of right to justice as an indispensable hallmark of a fully evolved nation.

 

“The
Preamble to the Constitution proclaims justice – social, economic or political,
as the goal to be achieved. It is the duty of every State to provide for a fair
and effective system of administration of justice. Judicial review is, in fact,
recognised as a basic feature of the Constitution,” he added.

 

“The
most important aspect in a justice delivery system is the ability of a party to
successfully establish the case based on materials. Subject to exceptions, it
is settled beyond doubt that any person can set the criminal law into motion.
It is equally indisputable, however, that among the seemingly insuperable
obstacles a litigant faces are limitations on the ability to prove the case
with evidence and, more importantly, relevant evidence.

 

“Ability
to secure evidence thus forms the most important aspect in ensuring the triumph
of truth and justice. It is imperative therefore that section 8(2) must be
viewed in the said context. Its impact on the operation on the shield of
privilege is unmistakable,” he said.

 

Justice
Joseph said that a citizen can get a certified copy of a document under the RTI
Act even if the matter pertains to security or relationship with a foreign
nation if a case is made out. If such a document is produced before the Court,
then surely a claim for privilege cannot be made by the government.

 

“It is
clear that under the Right to Information Act, a citizen can get a certified
copy of a document under section 8(2) of the RTI Act even if the matter
pertains to security or relationship with a foreign nation, if a case is made
out thereunder. If such a document is produced surely a claim for privilege
could not lie,” he said.

 

(Source:https://www.ptcnews.tv/centre-cant-withhold-docs-under-rti-citing-national-security-says-supreme-court/)

 

part b I RTI ACT, 2005

  • RTI Act supersedes Official Secrets Act

Delivering
a separate judgement in the Rafale case, Justice K.M. Joseph has made the
following observations:

  • The Right to Information Act confers on ordinary citizens
    the ‘priceless right’ to demand information even in matters affecting national
    security and relations with a foreign state;
  • Justice Joseph’s
    judgement countered the claim made by the government for privilege over Rafale
    purchase documents under the Official Secrets Act (OSA), saying it affected
    national security and relations with France;
  • The Right to
    Information (RTI) Act overawes the OSA. Under section 8(2) of the RTI Act, the
    government cannot refuse information if disclosure in public interest
    overshadows certain ‘protected interests.’

 

Justice
Joseph in his judgement has stated that through section 8(2) of the RTI Act,
Parliament has appreciated that it may be necessary to pit one interest against
another and to compare the relative harm and then decide either to disclose or
to decline information. If higher public interest is established, it is the
will of Parliament that the greater good should prevail though at the cost of
lesser harm being still occasioned.

 

(Source:https://currentaffairs.gktoday.in/tags/right-to-information-act)

 

part c I INFORMATION ON
& AROUND

  • Only 24% government vacancies filled in
    past 5 years: RTI

Only 8,23,107 positions (about 24%) have got filled out of
more than 33 lakh job vacancies in the State over the last five years,
according to a Right to Information (RTI) query.

 

The query was sought specifically for various agencies and
institutions run by the State government. It was also stated that more than 35
lakh persons have registered themselves as ‘unemployed’, according to the Directorate
of Skill Development, Employment and Entrepreneurship of the State government.

 

The information revealed that 2014 had the least percentage
of job positions filled at 10. However, in the succeeding years positions were
filled at only 22%, 25%, 54% and 25% in the years 2015, 2016, 2017 and 2018,
respectively.

For the year 2019, 48,292 positions had been filled out of
1,16,281 vacancies. Meanwhile, 7,26,982 persons had been registered as
unemployed in 2018.

 

(Source:https://www.asianage.com/metros/mumbai/
210419/only-24-per-cent-govt-vacancies-filled-in-past-5-years-rti.html)

 

  • No record of pathology labs in city: BMC’s reply to RTI
    query

The Brihanmumbai Municipal Corporation’s (BMC) Public Health
Department does not have a record of the number of pathology laboratories in
the city, its response to a Right to Information (RTI) application has
revealed.

 

Responding to the plea seeking a list of pathology
laboratories, their owners, staff pathologists and contact details in the city,
officials said since the laboratories are not registered under BMC, the
information is not maintained by them.

 

The civic body’s failure to collect this information is in
contravention of a 2018 directive by the Directorate?of Medical Education and
Research (DMER), which asked all civic bodies in the State to submit a detailed
report of pathology laboratories in order to keep a check on illegal clinics.

 

(Source:https://www.hindustantimes.com/mumbai-news/no-record-of-pathology-labs-in-city-bmc-s-reply-to-rti-query/story-UIxySSakkKot51UGIXj96H.html)

 

  • Electoral bonds of Rs. 10 lakhs, Rs. 1 crore dominate
    donations: RTI application

Almost 99% of donations received by political parties between
March, 2018 and January, 2019 were as electoral bonds of Rs. 10 lakhs and Rs. 1
crore, a social worker has reportedly found through an RTI application.

 

Donors purchased bonds worth Rs. 1,407.09 crores of which Rs.
1,403.90 crores were in the highest denominations of  Rs. 10 lakhs and Rs 1 crore, said Chandrashekhar Goud, who got the data from
the State Bank of India through an RTI query.

 

The donors bought 1,459 electoral bonds of the denomination
of Rs. 10 lakhs and 1,258 bonds of Rs. 1 crore denomination. They purchased 318
bonds of Rs. 1 lakh, 12 bonds of Rs. 10,000 and 24 bonds of Rs. 1,000
denomination.

Parties redeemed electoral bonds worth Rs. 1,395.89 crores.

 

(Source:https://www.business-standard.com/article/current-affairs/electoral-bonds-of-rs-10-lakh-rs-1-cr-dominate-donations-rti-application-119041400559_1.html)

 

  • Can’t deny AI
    disinvestment info under RTI: CIC

The Central Information Commission (CIC) has directed the
Civil Aviation Ministry to provide Lucknow-based activist Nutan Thakur
information regarding the disinvestment of Air India (AI).

 

The Public Information Officer (PIO) of the Ministry had,
under section 8(1)(i) of the RTI Act, denied Thakur information related to the
records of the deliberations of the Cabinet.

 

According to the PIO, the Cabinet had in principle approved
the proposed disinvestment of the national carrier, though the process had not
been completed.

 

Information Commissioner Divya Prakash
Sinha said that the Ministry had grossly erred in invoking section 8(1)(i) of
the RTI Act to deny information to Thakur, despite the PIO himself admitting to
the Cabinet decision in this regard.

 

The Commission directed the PIO to provide Thakur within 15
days the information available with the Ministry and send it a compliance
report.

 

(Source:https://www.moneylife.in/article/cant-deny-ai-disinvestment-info-under-rti-cic/56732.html)

 

part D I RTI CLINIC –
SUCCESS STORY

The BCAS RTI Clinic was approached by Capt. R. Khadiwal
(Retd.) whose tenure of service was miscalculated as 26 years instead of the
correct tenure of 37 years for purposes of calculation of retirement benefits.
The matter was escalated to a second appeal with the CIC. Air India’s CPIO was
penalised on grounds of delay in providing information; besides, the
Appellant’s claim for compensation of expenses for attending the hearings were
accepted by the CIC’s order.

RTI Clinics in June, 2019, on the 2nd,
3rd, 4th and 5th Saturdays, that is, on 8th,
15th, 22nd and 29th of June.


Time: 11 am to 1 pm at the BCAS premises

LETTERS FROM THE READERS

Dear Nitin,

 

At the outset, wish you a great year ahead.

 

I just read through your article in the BCAJ
(Dec edition) in ‘Top books of Professional Service Management ‘.

Really incisive and practical.


One of my goal setting this year would be to
read and try implement some learnings from the books you have recommended.

 

CA. Krishnan Parameshwaran.

SOCIETY NEWS

INDIRECT TAX STUDY CIRCLE
Indirect Tax Study Circle Meetings on 6th, 24th and
27th December, 2018 at BCAS Conference Hall.

Indirect Tax Study Circle organised three Study Circle
Meetings on 6th, 24th and 27th December, 2018 in which
participants discussed practical approach and various
aspects that need to be kept in mind in GST Audit and
documentation thereof. The discussion was done based
on contents of Annual Return (GSTR-9) and members
broadly covered Part II of GSTR-9C i.e. audit of B2B, B2C
supplies, Exports and Supply to SEZ, Stock Transfers,
Advances, Credit notes and Debit notes etc., for taxable
and exempt outward supplies. The extent of checking and
auditors’ responsibility was also discussed.

The benefit of meeting was also extended to outstation
members by live streaming the sessions. All the sessions
were very interactive and informative and members
participated in large numbers.

“Workshop on Data Analytics for Business and
Audit with Power BI” held on 14th December, 2018
at BCAS Conference Hall.

Technology Initiatives Committee of the Society conducted
a half day workshop on Data Analytics for Business and
Audit with Power BI on 14th December, 2018 at BCAS
Conference Hall.

The session was led by CA. Nikunj
Shah having rich experience in
training and consulting on Data
Analytics for Business Decision
making, Audit and Investigation. He
explained that Microsoft Power BI is
a business intelligence platform that
offers business analytics toolset. It is designed to assist
businesses in their efforts to systematically analyse data.

The Speaker highlighted current limitations of excel
usage and thereby deliberated on the features of Power
BI. He discussed key reasons for shifting to Power BI
applications and gave the demo of Power BI features and
also shared his in depth knowledge on the issues such as
(a) How to analyse data from single and multiple sources
(b) How to create your individual dataset based on
multiple sources and transform your results into beautiful
and easy-to-make visualisations (c) How to share your
results with your colleagues or collaborate on your project
(d) How to make best use of Cloud based features of
Power BI (e) How to generate reports.
The session was highly interactive and the Speaker
resolved all the queries raised by the participants who
benefited a lot and appreciated the efforts put in by the
speaker and group leaders.

Full day seminar on “Estate Planning, Wills &
Family Arrangement/Settlement – Critical Aspects”
held on 15th December, 2018.

The Full day seminar on
Estate Planning, Wills & Family
Arrangement/Settlement – Critical
Aspects was held by the Corporate
and Allied Laws Committee at Indian
Merchants Chamber, Churchgate.
The event was attended by over
85 participants
including more than 10 outstation
participants. President CA. Sunil
Gabhawalla gave the opening
remarks followed by introductory
words from the Chairman of
the Corporate and Allied Laws
Committee, CA. Chetan Shah.

Mr. Nishith Desai gave keynote address explaining
the basic principles of estate planning and how the mechanism to put the same into
effect is changing with increase of
global mobility.

CA (Dr.) Anup Shah explained the
succession laws for Hindus, the
developments in the laws relating
to succession, practical aspects of
creating a will and essential do’s
and don’ts that one should keep in
mind before choosing an appropriate
vehicle for succession planning. He
briefly dwelled upon the FEMA and
other issues that would also merit
consideration in picking the right
vehicle.

Ms. Shipra Padhi gave an insight on
documentation aspects and spoke on
the intricacies of various documents
covered in Estate planning, Family
settlement/arrangements including
Wills.

CA. Pradip Kapasi enlightened
on the taxation aspects of family
arrangements with the help of various
relevant case laws. He discussed
various taxation issues arising out
of family arrangements including
partitions of families, validity of family
arrangements as upheld by Courts
and position taken by the courts in issues arising from
the same. He also touched upon stamp duty implications
arising in such transactions.

CA. Yogesh Thar explained the tax
implications of Trusts and Estate. He
deliberated upon the tax principles
on trusts, HUF taxation and filing of
returns of income of the deceased,
returns of the executors of estate as
also the practical issues arising in
such cases.

With the interactive session and their insights on the
subject shared by the speakers, the participants benefited
immensely. On this occassion BCAS Publications: “Changing
Paradigms of Corporate Social Responsibility in India” and
“Securities Laws-An Introduction” were also released.

TECHNOLOGY INITIATIVES STUDY CIRCLE
Technology Initiatives Study Circle Meeting on
“Zoho Project Management” held on 18th December,
2018 at BCAS Conference Hall.

Technology Initiatives Committee of the Society conducted
a Study Circle Meeting on “Zoho Project Management”
on 18th December, 2018 at BCAS Conference Hall. The
study circle was led by Mr. Eshank Shah, Chartered
Accountant and Chartered Financial Analyst (USA) and
Head of Startup and Transaction Advisory at Banshi Jain
and Associates (BJAA).

CA. Eshank Shah discussed Zoho application and shared
his in depth knowledge with the participants. He also
explained Zoho Application from Planning and execution
stage to capture details of engagements stage including
the benefit of Zoho Application and how to use more
effectively in a business environment. He further resolved
all the queries raised by the participants during the session.
The session was a huge takeaway for the participants
who appreciated the efforts put in by the speaker and
group leader.

Workshop on NBFCs (including IND AS
Implementation Challenges and Regulatory
Updates) held on 21st and 22nd December, 2018.

Accounting and Auditing Committee organised a
workshop on NBFCs on 21st and 22nd December, 2018 at
Orchid Hotel, Vile Parle (East), Mumbai.

The NBFC sector is of late facing several challenges.
Besides the business and regulatory challenges, the
sector is also facing Ind AS implementation (for companies in the 1st implementation phase) challenges and other
compliance challenges of GST etc. Further NBFC sector
is growing at a substantial pace but it is RBI’s endeavour
to ensure prudential growth of the sector, keeping in view
the multiple objectives of financial stability, consumer and
depositor protection and need for more players in the
financial market, addressing regulatory arbitrage concerns
while not forgetting the uniqueness of the NBFC sector.

In view of regulatory norms being notified on a frequent
basis, including Ind AS implementation challenges for
NBFCs and there being changes in Statutory Audit
requirements and various developments in the Taxation
arena, BCAS conducted a Two days’ Workshop on
NBFCs. The Workshop was structured into five sessions
which dealt with important aspects of key regulatory
updates, Issues in IND AS applicability in respect of
Financial Instruments and ECL model applicability,
Statutory Audit Aspects under the Companies Act, 2013,
Disclosure requirement under revised Schedule III and
Taxation Development and issues in
the Direct taxes and GST for NBFCs.

The Workshop started with the
inaugural address by BCAS President
CA. Sunil Gabhawalla, who provided
his view points on the importance of
NBFCs in the overall development
of the financial sector in India. CA.
Himanshu Kishnadwala, Chairman
of the Accounting & Auditing
Committee introduced the structure
of the Workshop.

The first session was commenced
by CA. Bhavesh Vora who lucidly
dealt with the important aspects of
key regulations. While dealing with
the same, he also took participants
through the overall maturing of the
NBFC sector over last three decades
and gave valuable insights on
the regulatory impacts on various
categories of NBFCs.

The second session was dealt
with by CA. Viren Mehta on the
implementation issues of Ind AS
with respect to classification of
Financial Instruments based on the business models and measurement of various Financial
Instruments.

Another session was by CA. Rukshad
Daruvala, who dealt with the important
topic of key issues and requirement
in respect of applying the Expected
Credit Loss Model which deals with
provisioning requirement of Advances
of NBFCs by way of various examples.

Concluding session on Day 1 was
by CA. Sumit Seth, who appraised
the participants with the new
requirements of the schedule III
disclosures including various critical
disclosures required under the Ind
AS regime.

On Day 2, the first session dealing
with Statutory Audit aspects under
the Companies Act, 2013 was
addressed by speaker CA. V. Venkat.
He dealt elaborately with the unique
requirements while conducting
audit of NBFCs and shared his vast
experience with the participants and
explained the importance of Audit
under the current economic scenario.

The second session was taken
up by two speakers: explaining
in detail the nuances of Direct
taxes by CA. Yogesh Thar and
GST requirement by CA. Parind
Mehta. They made the session very
interactive and shared their practical
experience of tax applicability to the
NBFC sector.

   

Before the concluding session,
participants were shown a 45 mins video on practical
Fraud in the industry and had a short discussion on the
same.

Overall the Workshop was an enriching experience for
the participants.

Training Session for CA Article Students on ‘GST
Annual Return’ and ‘GST Audit from Article’s

Perspective’ held on 4th January, 2019 at BCAS
Conference Hall.
The Students Forum under the auspices of HRD
Committee organised a Training Session for CA Article
Students on the above-mentioned topics on 4th January,
2019 at BCAS Conference Hall.

The first session on GST Annual
Return was taken by CA. Raj Khona
followed by a session on GST Audit
by student Speaker Mr. Dynanesh
Patade and CA. Jigar Shah. Ms.
Neelam Soneja, the student coordinator
introduced the speakers for
the session and spoke about various
activities conducted by BCAS Students Forum.

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

In the second session, CA. Jigar
Shah in his opening remarks briefly
introduced the topic and gave a brief
insight on various aspects of GST
Audit. Mr. Dynanesh Patade, the
student speaker thoroughly explained
the entire form GSTR-9C and shared
his meticulous detailing in conducting
GST Audit. He also gave useful tips to the article students
on how to effectively conduct GST Audit. The mentor for
the session CA. Jigar Shah then presented the certificate
of appreciation to Mr. Dynanesh Patade and applauded
the meticulous presentation made by him.

With the due dates for GST Audit fast approaching and
every CA firm wanting its articles to be well equipped
with the nitty-gritties of GST Annual return and GST
Audit, the training session saw a record participation
by 150+ students. The session ended with student coordinator
Ms. Neelam Soneja proposing vote of thanks
to the speakers for sparing their valuable time and also
thanked the audience for participating in huge numbers.
Both the sessions were interactive whereby the speakers
answered all the queries raised by the participants.

HDTI STUDY CIRCLE
Study Circle Meeting on “Achieving Cohesiveness
(Like Mindedness) amidst diversity of beliefs
and opinions” held on 8th January, 2019 at BCAS
Conference Hall

Human Development and Technology Initiatives
Committee organised a study circle meeting on the topic
“Achieving Cohesiveness (Like Mindedness) amidst
diversity of beliefs and opinions” on 8th January, 2019
at BCAS Conference Hall which was addressed by Ms.
Amrita Singh having 16+ years of hands on Designing,
Training, and Coaching experience. She explained that
at office or at home, we come across situations where
our opinions and beliefs are diverse and we have varied
goals based on this. We need to align our individual goals
to the organisational goals or like the family as a whole to
successfully work together.

The Speaker took the participants through various
situations and discussed how to deal with the same
successfully. She also mentioned about the types of
personalities and the four quadrants like Kool Blue,
Green Earth, Fiery Red and Sunshine Yellow wherein
each person fall into. Each of these personalities have
typical characteristics and each may also have some
characteristics in the other quadrants as well. One can
judge what quadrant one belongs to and improve to
adjust in order to be successful. The participants found
the topic very interesting and relevant in the day to day
personal and professional life and got hugely enlightened
on the subject.

Lecture Meeting on “Changing Risk Landscape
for Audit Profession with special emphasis on
NFRA and other recent developments” held on 9th
January, 2019 at BCAS Conference Hall.

BCAS organised a lecture meeting on
the captioned subject on 9th January,
2019 at BCAS Conference Hall which
was addressed by CA. Narendra P.
Sarda.
The Speaker discussed about the
‘Changing Risk Landscape for
Audit Profession with special emphasis on NFRA and
other recent developments’ i.e. (i) Increasing Risk and
Challenges, (ii) Specific Scam, (iii) Fraud and Failures,

(iv) National Financial Reporting Authority (NFRA), (v) CA
Institutes’ roles in the new regime and Members response
to the recent developments, (vi) Other regulatory changes
impacting the Audit Profession. Various changes and
increasing uncertainties in the audit profession, increasing
use of Fair values, increasing internal and external risk,
regulatory issue, intricacies of reporting requirements and
expectations from Auditors were also well covered and
explained by way of practical examples well designed
to understand the complexities of the Changing Risk
Landscape for the Audit Profession. On this occassion
BCAS Publication “Tax Deduction at Source- Law and
Procedure” was released.

He also explained the various functions and Powers
of NFRA, companies to whom NFRA applies, NFRA
rules, 2018 and various pros and cons of NFRA. He
further elaborated the role of ICAI and response of the
auditors to this new regulatory authority. The lecture
meeting was attended by more than 100 participants
from various Industries and Practice arena. The meeting
was very interactive and the participants got enlightened
immensely.

FEMA STUDY CIRCLE
FEMA Study Circle Meeting on “Critical issues under
Export/Import of Goods and Services” held on
15th January, 2019 at BCAS Conference Hall

A FEMA Study Circle Meeting was held on 15th January,
2019 at BCAS Conference Hall where CA. Kirit Dedhia
and CA. Parag Kotak led the discussion on the topic of “Critical issues under Export/Import of Goods and
Services”. The Group leaders discussed meaning of
the term “Export” and “Import” in relation to the goods,
software and services. Discussion was also on services
other than software where SOFTEX form is to be filed.
The Group leaders discussed agency commission,
setting off and netting off of export receivables against
import payables, export claims, period of realisation,
reduction of invoice value, write off of export receivables
and few compounding orders. The members appreciated
the efforts put in by the group leaders and learnt a lot from
the rich experience of speakers.

INTERNATIONAL ECONOMICS STUDY
GROUP
International Economic Study Group Meeting on
“Road to 2019 Elections and a Nayi Disha for India”
held on 16th January, 2019 at BCAS Conference Hall

International Economics Study Group had their meeting
on 16th January, 2019 to discuss “Road to 2019 Elections
and a Nayi Disha for India” at BCAS Conference Hall. Shri
Rajesh Jain (studied at IIT, Mumbai & Columbia University,
USA, runs India’s largest digital marketing company,
Netcore) led the discussions and presented his thoughts
on the subject. He presented various scenarios for the
2019 elections, implications of each of the scenarios;
options available to BJP etc.

Mr. Jain also expressed concern about India’s economy
post-election due to atmosphere of uncertainty, voters
opting to change rulers rather than rules to solve
our ‘Hamesha’ problems of poverty, unemployment,
corruption, farm distress, SMEs distress etc. He also
suggested consumption-led growth to propel economy,
employment, reduce poverty, reduce over dependence of
rural population on agriculture etc., by monetising surplus
public assets by returning to the people (rightful owners),
a concept of “Dhan Vapasi”. He also suggested an idea of
relooking at our 70+ years old Constitution.

The meeting was very informative and interactive and the
Speaker resolved all the queries raised by the participants.
The participants learnt a lot from the rich experience of
the Speaker.

REPRESENTATIONS

1.  Dated: 10th
December, 2018

     To: Director General of
Goods & Service Tax, Western Zonal Unit, Mumbai

     Subject:
Representation for non-review of refund orders

   Representation by:
Indirect Taxation Committee of the Bombay Chartered Accountants’ Society.

 

2.  Dated: 8th
January, 2019

      To: The Task Force for
Revamping Maharashtra Public Trust Act, 1950

     Subject: Setting Up
Task Force for Revamping the Charity Commissioner Office and its Functioning in
Maharashtra as Per Directives of The Honourable Chief Minister, Maharashtra

    Representation by:
Corporate and Allied Laws Committee of the Bombay Chartered Accountants’
Society.

 

3.  Dated: 11th
January, 2019

     To: Secretary
(Revenue), Ministry of Finance, Govt. of India

     Subject:
Representation on mechanical issue of prosecution notices by the Income-tax
department

     Representation by:
IMC Chamber of Commerce and Industry, Bombay Chartered Accountants’ Society;
Chartered Accountants’ Association, Ahmedabad; Chartered Accountants’
Association, Surat; Karnataka State Chartered Accountants’ Association; Lucknow
Chartered Accountants’ Association. 

 

Note: For full Text of the above
Representations, visit our website www.bcasonline.org
  

ETHICS AND U

CA and Social Conduct

 

Arjun (A) — Oh Lord, It
is now becoming too much!  Simply
unbearable!

 

Shrikrishna — Arjun,
What are you talking about? Heat?

 

A — No.

 

S Then,
compliances? Corruption?.

 

A
No Bhagwan. I am talking about Supreme Court decision. There is no logic
only.

 

S
But this is the case with many decisions of the Courts.  Why are you wasting your time and energy in
finding out any logic in the decisions?

 

A
They do give some logic. But quite often, it is hard to agree with it.

 

S So,
you always can use the expression ‘with due respect…………..’.

 

A
Jokes apart.  I am referring to a Supreme
Court decision in the case of Council of the Institute of Chartered Accountants
of India vs. Shri Gurvinder Singh & ANR
delivered on November 16, 2018.

 

S
What does it say?

 

A
It says even the personal or private behaviour of a CA is subjected to
disciplinary mechanism! It need not be a misconduct committed in the course of
carrying out the profession.

 

S
Then, what is wrong about it?

 

A
How do you say so? How is ICAI concerned with our private affairs? I may do
anything in my personal life. So long as I am discharging my professional
duties diligently, who can be aggrieved?

 

S
You are mistaken, Paarth! Have you ever read your Chartered Accountants’
Act?

 

A
I read it at the time of my exam 25 years ago! Why? Is there any amendment?

 

S
Yes. To some extent there is an effect of Amendment in the year 2006. But this
particular provision was there right since the beginning.

 

A
I never noticed it.

 

S
Paarth, you know that the term ‘misconduct’ is defined in section 22
of the Act.
The heading itself says ‘professional or other misconduct
defined’.

 

A
Let me see. Oh! But I will have to hunt for the Act.  I may have lost my copy. Ever since I
qualified, I have never seen it!

 

S
Ironical but that’s the case with almost all the CAs.

 

A
True. Ok, tell me what it says?

 

S
It says – professional or other misconduct includes any act or omission listed
in the 2 schedules of the Act.  Over and
above this, it also gives wide powers to the Director Discipline to inquire
into the conduct of any member under any other circumstances.

 

A
Oh! That means it is all pervasive. But why so?

 

S
Arjun, it is very simple. If you misbehave anywhere, how is it reported in the
news? ‘CA caught red-handed in doing ______’ Is it not?

 

A
Yes. Like bribery, money laundering, falsification of documents; and even other
crimes.

 

S Doesn’t
it bring disrepute to the profession? By your professional misconduct, normally
a few clients or revenue authorities or banks may be aggrieved. But by such other
misconduct, entire profession’s image is tarnished.

 

A
So, what kind of misconduct is covered under this expression?

 

S
Many items! It includes even the case of dowry, breaking other laws,
violence, cheating, issuing cheques without adequate balance,
misrepresentation, so on and so forth!

 

A
Even traffic rules?

 

S
Of course, yes. If it is recurring affair! Even quarrelling in public
places, obscene behaviour
– and what not! Of course, it will depend on
facts.

 

A But
then, what was the amendment?

 

S
Previously, other misconduct was a general term – meaning – behaviour
unbecoming of a professional! As a professional, you are expected to maintain
certain standards of behaviour in personal as well as public life. Only then
the credibility and respectability can remain.

 

A
Agreed. But what is the amendment?

 

S
They have now codified it by adding clause (2) in Part IV of first schedule. It says the act of a CA that brings disrepute to
the profession or the Institute by his action, whether or not related to his
professional work.

 

A
Oh! So, it is clear.

 

S
Further, if a CA is held guilty by any civil or criminal court for any offence
which is punishable with imprisonment, that is also a misconduct.

 

A
Bhagwan, now I have understood. So, the Apex Court was right, since the law is
clear. I am also convinced about the logic behind it. Thank you Lord.

 

S
So, take care in all your personal affairs too!

 

A
Yes, I will.

 

Om Shanti!

 

This dialogue is based on the following:-

 

i)     Supreme Court decision in the case of Council of the
Institute of Chartered Accountants of India vs. Shri Gurvinder Singh & ANR
delivered
on November 16, 2018


ii)    Section 22 of CA Act – Professional or
other misconduct defined

 

For the purpose of this
Act, the expression ‘professional or other misconduct’ shall be deemed to
include any act or mission provided in any of the Schedules. But nothing in
this Section shall be construed to limit or abridge in any way the power
conferred or duty cast on the Director (Discipline) under sub-section (1) of
section 21 to enquire into the conduct of any member of the Institute under any
other circumstances’.

 

iii)    Other misconduct in relation to members of the Institute
generally:


Items (91) and (2) of Part
IV of First Schedule.


1.    Is held guilty by any civil or criminal court for an offence
which is punishable with imprisonment for a term not exceeding six months;


2.    In the opinion or the Council, brings disrepute to the
profession or the Institute as a result of his action whether or not related to
his professional work.

 

iv)   Part III of Second Schedule

 

A member of the Institute,
whether in practice or not, shall be deemed to be guilty or other misconduct, if
he is held guilty by any civil or criminal court for an offence which is
punishable with imprisonment for a term exceeding six months.

STATISTICALLY SPEAKING

REGULATORY REFERENCER

(BCAJ
earlier carried a feature called SPOTLIGHT for several years. Ever since
updates became nearly instant from several sources, it was stopped. However,
today the problem is of too many regulatory changes too frequently. Keeping
track of important updates is becoming increasingly difficult. This feature, in
this new avatar, seeks to bring a curated set of changes in Tax, Accounting and
Audit, and FEMA at one place every month)

 

DIRECT TAX

 

1.   Employees, who have donated to PM CARES Fund,
can claim deduction u/s 80G based on the Form 16 issued by employer, since one
consolidated donation receipt will be issued by PM CARES Fund in the name of
the employer [F. No. 178/7/2020 – ITA – 1 dated 9th April, 2020].

 

2.   Clarification regarding short deduction of TDS
/ TCS due to increase in rates of surcharge by Finance (No. 2) Act, 20l9
[Circular No. 8/2020 dated 13th April, 2020].

 

3.   Clarification for employers for deduction of
tax from salary
paid to employees, in respect of option u/s
115BAC of the Income-tax Act, 1961 [Circular No. C1/2020 dated 13th
April, 2020].

 

4.   In view of the prevailing situation due to the
Covid-19 pandemic across the country, reporting under clause 30C and
clause 44 of the Tax Audit
Report kept in abeyance till 31st
March, 2021 [Circular No. 10 /2020 dated 24th April, 2020].

 

5.   Clarification on provisions of Direct Tax Vivad
se Vishwas
Act, 2020
– Circular No. 9/2020 dated 22nd April,
2020 [Corrigendum to Circular No. 9/2020 – dated 27th April,
2020].

 

6.   Clarification in respect of exclusion of
number of days of stay in India
for the purpose of determining residency
u/s 6 of the Act [Circular No. 11/2020 dated 8th May, 2020].

7.   The rates of Tax Deduction at Source (TDS) for
the non-salaried specified payments made to residents

have been reduced by 25% for the period from 14th May, 2020 to 31st
March, 2021 [Press Release dated 13th May, 2020].

 

ACCOUNTS AND AUDIT

 

A. Extension
of the last date of filing of Form NFRA-2
– The time
limit for filing of Form NFRA-2 for FY 2018-19 will be 210 days from the date
of deployment of the form on the NFRA Website. [MCA General Circular No.
19/2020 dated 30th April, 2020.]

 

B.
Communication with Retiring Auditor through E-mail
– During
the lockdown period, members may communicate with the retiring auditor vide
e-mail. Acknowledgement must be received from the retiring auditor’s
Institute-registered / official e-mail address in which case the same would be
deemed to be valid evidence of positive delivery of communication. [ICAI’s
Decision dated 1st May, 2020.]

 

C. Going
Concern – Key Considerations for Auditors amid Covid-19
– Auditing guidance
that focuses on implications of the pandemic for the auditor’s work related to
going concern and includes specific FAQs to deal with various situations in the
current environment. [ICAI’s Guidance dated 10th May, 2020.]

 

D.
Relaxation from publishing quarterly consolidated financial results under Reg
33(3)(b) of SEBI LODR
– Listed entities that are banking
/ insurance companies or having subsidiaries that are banking / insurance
companies may submit consolidated financial results for the quarter ending 30th
June, 2020 on a voluntary basis. However, they shall continue to submit the
standalone results. If such listed entities choose to publish only standalone
financial results, they shall give reasons for the same. [SEBI Circular No.
SEBI/HO/CFD/CMD1/CIR/P/2020/79 dated 12th May, 2020.]

 

E.  Physical Inventory Verification – Key Audit
Considerations amid Covid-19
– Auditing guidance covering
alternative audit procedures where it is impracticable for auditors to attend
physical inventory counting and related implications for the Auditor’s Report. [ICAI’s
Guidance dated 13th May, 2020.]

 

F. Auditor’s Reporting – Key Audit Considerations
amid Covid-19
– Auditing Guidance covering impact of
Covid-19 pandemic on (i) the auditor’s report, (ii) reporting under CARO 2016,
and (iii) reporting on Internal Financial Controls with reference to Financial
Statements. [ICAI’s Guidance dated 17th May,  2020.]

 

G. Advisory on disclosure of material impact of
Covid-19 pandemic on listed entities under SEBI (LODR) Regulations

– Listed entities encouraged to disclose impact of the pandemic on their
business, performance and financials. Illustrative list of disclosures
includes, estimation of the future impact of Covid-19 on operations; details of
impact on capital and financial resources; profitability; liquidity; debt
servicing ability; internal financial reporting and control; etc. [SEBI
Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/84 dated 20th
May, 2020.]

 

FEMA

 

(I) In view of the Covid-19 pandemic, the period
of realisation and repatriation of the full export value of goods or software
or services for exports made up to 31st July, 2020
has been
increased by the Reserve Bank of India from nine months to 15 months. The
similar period for exports to warehouses, however, remains unchanged at 15
months. [A.P. (DIR Series) Circular No. 27 dated
1st April, 2020.]
The FEM (Export of Goods and Services)
Amendment Regulations, 2020 enabled the Reserve Bank to specify the period of
realisation and repatriation in the above cases in consultation with the
Government [FEMA 23(R)/(3)/2020-RB dated 31st March, 2020].

 

(II) As per the announcement made in Union
Budget  2020-21, certain specified
categories of Central Government Securities (G-Secs) were to be opened up fully
for non-resident investors without any restrictions. RBI has now introduced
a separate route – ‘Fully Accessible Route’ (FAR) for such investment by
non-residents in G-Secs
from 1st April, 2020. Its main features
are the following:

 

(a) FAR is available to eligible investors which
are defined as any ‘person resident outside India’ as per section 2(w) of FEMA.

(b) Investment can be made in all securities as
periodically notified by the RBI. The securities covered for this purpose, with
effect from 1st April, 2020 are notified vide Circular No.
FMRD.FMSD.No.25/14.01.006/2019-20 dated 30th March, 2020.

(c) There shall be no quantitative limit on
investment. The minimum residual maturity requirement, security-wise limit and
concentration limit would also not apply to investors under FAR.

(d) Existing investments by eligible investors in
specified securities shall be considered under FAR.

(e) FPIs have been provided one year to readjust
their investments to comply with the revised requirements under the Medium Term
Framework (MTF). Further, the MTF itself has been revised for FY 2020-21 vide
A.P. (DIR Series) Circular No. 30 dated 15th April, 2020.

[FAR
Directions – A.P. (DIR Series) Circular No. 25 dated 30th March,
2020.]

 

(III) Existing facilities for
non-residents and residents to hedge their foreign exchange risk on account of
transactions permitted under FEMA have been revised
following the
announcement in the Statement on Developmental and Regulatory Policies dated
5th December, 2019. The revised facilities broadly provide for:

 

(a) A User Classification Framework has now been
provided and authorised dealers shall offer derivative contracts to a user as
this framework. The framework classifies users as retail and non-retail users.
Non-retail users are all entities regulated by a financial sector regulator;
EXIM Bank, NABARD, NHB and SIDBI; companies with minimum net worth of Rs. 500
crores; and persons resident outside India other than individuals. All other users
are classified as retail users. Complex derivative contracts are not available
to retail users.

(b) Amongst other conditions, users may undertake
over the counter (OTC) currency derivative transactions for derivative
contracts involving Indian rupees up to US$ 10 million without the need to
evidence underlying exposure.

(c) Banks shall be provided with the discretion, in
exceptional circumstances, to pass on net gains on hedge transactions booked on
anticipated exposures in case specified conditions are met.

[A.P. (DIR
Series) Circular No. 29 dated 7th April, 2020.]

 

The revised
directions were supposed to come into effect from 1st June, 2020,
but have been postponed to 1st September, 2020 in view of the
pandemic. Directions on the participation of banks in Offshore Non-deliverable
Rupee Derivative Markets issued vide A.P. (DIR Series) Circular No. 23
dated 27th March, 2020 will come into effect from 1st June,
2020 as hitherto [A.P. (DIR Series) Circular No. 31 dated 18th
May, 2020].

 

(IV) To counter opportunistic
takeovers / acquisitions of Indian companies during the current pandemic by
China, Regulation 6(a) of Non-Debt Instrument Rules has been amended to
provide that investment into India under Schedule I (Foreign Direct Investment)
will be allowed only with Government approval in the following cases:

 

(a) By an entity from a country which shares a land
border with India;

(b) Where the beneficial owner of an investment into
India is situated in a country which shares a land border with India, or is a
citizen of such a country;

(c) By a citizen of Pakistan or an entity
incorporated in Pakistan in sectors or activities other than defence, space,
atomic energy and such other sectors or activities prohibited for foreign
investment;

(d) Where transfer of ownership of any existing or
future FDI in an entity results in beneficial ownership of such entity falling
within restricted categories as per all the provisos mentioned in points
(a) to (c) above.

[Notification No. S.O. 1278 (E)
dated 22nd April, 2020. Similar
amendment made to Para 3.1.1 of Consolidated FDI Policy 2017
vide Press Note No. 3 dated 17th
April, 2020.]

ETHICS AND U

Arjun: Hari
Om Hari! Hari Om Hari! Hey
Bhagwan, when is this lockdown going to
end? When will this Corona go away?

 

Shrikrishna:
Arjun, open your eyes. You are chanting my bhajan and murmuring
something. Hope everything is fine at home?

 

Arjun:
At home? I am fed up of this house arrest. Both Draupadi and Subhadra are
making me do all the household work. Sweeping the floor, cleaning the utensils,
helping in cooking…

 

Shrikrishna:
But you are familiar with all this!

 

Arjun:
What do you mean?

 

Shrikrishna:
You yourself keep saying – in office, you have to clean up the mess in the
clients’ accounts, you have to window-dress them and make them presentable…

 

Arjun:
Ha! Ha! True. But tell me, when are our offices going to restart functioning?

 

Shrikrishna:
Why? Do you think that you cannot function from home? You people talk of Work
from Home, don’t you?

 

Arjun:
Yes, but there is a limit to that. Work cannot be completed sitting at home.
Our staff is not available, clients’ data is not coming since their accountants
are also not attending work. Everything is paralysed.

 

Shrikrishna:
But in your management studies, you talk of converting problems into
opportunities. Now why don’t you implement those great ideas?

 

Arjun: All
that is all right in seminars in posh hotels. In practical life, it is
difficult.

 

Shrikrishna:
But have you even applied your mind to what fruitful things could be done?
There are many new things coming up in the field of ethics. Those are all very
essential for you to understand.

Arjun:
Really? How can I know them? Tell me some highlights at least.

 

Shrikrishna:
Arjun, during this lockdown, I have been meeting people almost every day and
telling them the principles of ethics.

 

Arjun: Don’t tell me! Then why
didn’t you come to my house?

 

Shrikrishna:
Arjun, on your television sets I am coming so frequently in different forms and
characters, Vishnu, Ram, Krishna, Yudhishthira, Bhishma through all those
serials. There I teach nothing but ethics.

 

Arjun: Yes.
But those serials are meant for children and retired people. Practical life
mein uska koi fayda nahi!

 

Shrikrishna:
You are mistaken, Paarth. Now, even internationally your ethics are
getting strengthened. Finance field mein paap bahut badh gaya hai. It
was you peoples’ job to control it, but instead you encouraged it. In
Mahabharata you Pandavas fought against the Kauravas; but now you are acting
hand-in-glove with them.

 

Arjun: Just
as you preached me the Geeta in the Mahabharata war, please explain to
me what is the new Geeta in our Code of Ethics.

 

Shrikrishna:
For this, you should know that your Institute has come out with three new
volumes of books on New Code of Ethics. The First Volume covers the
International Ethical Standards adapted by the Institute. It was earlier known
as Part A.

 

Arjun:
And the other two volumes?

 

Shrikrishna:
The Second Volume is the old Part B, but significantly revised. It contains
your CA Act, Rules, Regulations, ICAI pronouncements, notifications, guidelines
and so on, on ethics. And Volume 3 is the compilation of case laws.

 

Arjun:
Oh! So much new literature! But tell me any single item which is very
important.

Shrikrishna: One point
directly relevant to you is that now you can communicate with the previous
auditor on email. Earlier, only registered post was allowed or recommended.

 

Arjun:
But which email ID?

 

Shrikrishna:
The ID which is registered with the ICAI. In case you mail on his
ID known to you, but the previous auditor does not respond to your email, you
can get the ID from the ICAI.

 

Arjun:
Anything more important on this formality?

 

Shrikrishna:
This is not a mere formality. It is to protect your own interest. Further, if
the incoming auditor inquires about any negative findings in the audit, the
previous auditor is duty-bound to supply the important points to the incoming
auditor.

 

Arjun: Oh!

 

Shrikrishna:
Are you aware that during the lockdown the focus of all your
webinars has been on Ethics and Standards on Auditing (SAs). This has become
mandatory in your CPE hours.

 

Arjun:
I heard of this. But who has time to listen to all these things!

 

Shrikrishna:
Arrey!
Just now you were saying you are sitting idle at home. Then why
don’t you listen to these useful presentations? You people ‘manage’ even your
CPE hours by just joining the webinars but never seriously listening.

 

Arjun:
Yes, Lord. What you say is right. But in our next few meetings please tell me
the highlights of this new Code of Ethics.

 

Shrikrishna:
Yes, Paarth. It will be my pleasure to do so.

 

Om Shanti

This
dialogue is based on the basic idea of the New Code of Ethics which is expected
to be effective from 1st July, 2020. The next few write-ups will be
on important contents of the New Code.
 

 

SOCIETY NEWS

HOLISTIC HEALTHY LIVING…

The Human Resource Development Committee organised
a Study Circle meeting on ‘Holistic Healthy Living
(Emotional Upliftment Through Healthy Mind)’ on 10th
December, 2019 at the BCAS Hall. The presentation was
made by Dr. Viral Thakkar, MBBS, MD.

Key takeaways from the talk were as follows: A holistic
and healthy life entails harmony between the mental,
emotional and physical states of an individual. Recent
research has started accepting what our ancient scriptures
had proved – that physical health depends on what and
how we think and feel. Hence, maintaining equilibrium
and balance in one’s mental, emotional and physical
constitution leads to an ideal life. If everyone can learn
how to manage stress gracefully, most of the diseases
would not exist. Dr. Thakkar emphasised: ‘Everyone is
capable of achieving optimum health by becoming one’s
own physician.’

The speaker also covered the following concepts:
(i) Psychosomatic fundamentals;
(ii) R ole of emotions and thoughts in maintaining healthy
physiology;
(iii) Brief introduction to Bach Flower Remedies and
handling emotional health;
(iv) A dvance technologies to diagnose emotional and
thought patterns like aura videography;
(v) Lifestyle tips; and
(vi) M editation.

The meeting was well attended and the participants said
they would welcome more such discussions.
Maximising yourself

The HRD Committee organised another Study Circle
meeting on ‘Maximising Yourself by Living a Holistic
Life: Let 2020 be the Beginning of a Defining Decade’
on 14th January, 2020 at the BCAS Hall. The presentation
was made by Mr. Shyam Lata.

The talk provoked the members present to think about
whether they were leveraging the physical, intellectual,
emotional and spiritual fronts of their lives to the maximum
level.

He went on to explain the following:
(a) Physically, some of the essential aspects of life are
exercise, diet and rest; a balance of these helps maximise
our potential;
(b) For intellectual balance, an important aspect is to
filter the information received continuously before arriving
at conclusions. This requires a carefully considered gap
between listening and responding to make the right
decisions;
(c) For emotional balance, an important aspect is to be
assertive – but not aggressive;
(d) For spiritual balance, one needs to practice ethics in
dealings with others.

The speaker summarised these concepts by explaining
Maslow’s Hierarchy of Needs.

ACHIEVING $5 TRILLION ECONOMY

BCAS, along with experts from CCI, organised ‘Experts’
Chat’ on ‘Current Economic Scenario – How India can
achieve US $5 Trillion Economy Target’ at the C.K.
Nayudu Hall, CCI, on 29th January.
Those who participated in the discussion were:
Dr. Ajit Ranade – Group Executive President and Chief
Economist, Aditya Birla Group; Mr. Shyam Srinivasan
– CEO and Managing Director, Federal Bank Ltd.; and
Mr. Dipan Mehta – Stock Market Analyst. BCAS Past
President Shariq Contractor was the Moderator.

At the outset, BCAS President Manish Sampat thanked
the President of the CCI and its Executive Committee
for their co-operation in organising the joint event. He
welcomed the members of both organisations and gave
a brief idea about the activities of the BCAS. He set the
tone for the meeting by narrating the difficult times that
the Indian economy was passing through and hoped that
the experts would enlighten those present about the path
to take to achieve the desired target.

Manish Sampat formally introduced Moderator Shariq
Contractor and then requested Treasurer Abhay Mehta
to do the honours for the experts. After the introduction
of the experts and presentation of mementoes to them, it
was time for the Moderator to take over.

Shariq Contractor set the ball rolling
by first describing the headwinds
and challenges facing the economy
and then said that at the current rate
of growth, in order to achieve a $5
trillion economy India would have to
grow at 11% a year. Was it possible
to achieve this in five years in the
opinion of the panellists? He also wondered whether
the yardstick of consumption-driven growth, which was
the model adopted by the western countries till now,
was valid in view of the changing paradigms in ecology,
environmental concerns and the need for consideration of
the ‘index of human values’.

The panellists were unanimous in their opinion that despite
challenges, it was good to have a goal to propel India in
the desired direction. The challenges of low growth across
the world, the falling Indian agricultural sector putting
pressure on the manufacturing and services sectors and
the depreciating rupee were indeed matters of concern
and could act as a roadblock. However, if there was a
goal followed by action, it could yield the desired result,
if not in the targeted period then at some later time. But
the panellists negated the thought that liquidity was a
roadblock in achieving growth.

According to Mr. Shyam Srinivasan,
the real problem was that investments
were not happening. It was not
a supply problem but a demand
problem that was ailing the economy.
Changing patterns of consumption
and behaviour of the millennials also
needed to be given due consideration
as they did not believe in permanent ownership but useand-
throw, renting and bartering. This was putting a drag
on the economy and the growth rate needed to factor in
this major change.

Mr. Dipan Mehta said that globally, as in India, demand
for institutional finance was reducing as there were many
more avenues of financing available through VC and PE
funding. Besides, orbit-changing business enterprises
were created by ideas that had the potential of catapulting the economy to a very high growth
rate with low seed funding. And there
was enough funding available to
back such ideas.

Shariq Contractor asked whether
chasing the coveted growth rate
posed a risk for India and whether it
could lead to more inequality in the system.

Dr. Ajit Ranade opined that this was
inevitable in the pursuit of growth
because gains from successful
business always went first to the top
order. Besides, some social ills like
pollution, ecological disorders and
environmental hazards were bound
to come as a package along with
growth. However, the wisest thing would be to balance
these factors.

Answering a question on building human capital to
leverage the demographic advantage, Dr. Ranade said
that skill development was indeed a problem and massive
resources were needed to build up the required skill to
achieve the target. In fact, according to the panellists,
more investments would be necessary for investing in
skill-building than plant and machinery or buildings. Mr.
Shyam Srinivasan said that 2% of CSR funds could be
mandatorily made to be spent on skill-building. However,
all panellists agreed that the current level of CSR funds at
Rs. 3 billion might be insufficient to meet the requirements.

To specific questions whether India could afford to follow
a growth model that could potentially compromise the
environment, the panellists were unanimous that it could
only be possible with due balance and ensuring that the
model was financially and economically viable.

One of the critical factors for success in achieving the
desired growth rate and measuring the performance was
the availability of reliable statistical data. The Moderator
asked whether the panellists were convinced about the
reliability of data. They replied that India had a healthy
tradition of maintaining data and the advantage of a wellbuilt
system. They affirmed that GDP metrics did not
leave out any major data in all three sectors. In fact, the
government was consistently trying to improve methods
of data capturing and sampling methods to extrapolate
data in real time for the right decision and direction.

Mr. Dipan Mehta said that the auditors deserved special praise from society for ensuring that corporates presented
their figures accurately. All agreed that India was indeed
following global standards on most parameters for
measuring its progress.

Answering a question about what should one expect from
the forthcoming budget to act as a catalyst for growth,
the response was that no further taxes and greater
transparency by government would be the key.

The chat on targeted issues was followed by a rapid-fire
question round which was well fielded by the panellists.
Overall, the tone was both positive and optimistic about
having a target and working towards achieving it.

INTERNATIONAL ECONOMICS STUDY GROUP

The International Economics Study Group held its meeting
on 10th February on ‘Analysis of Economic Aspect of
Budget 2020’. Shalin Divatia led the discussions and
presented his considered views on the subject.

He first highlighted a few prominent themes of Budget
2020, how the past few years had shaped the budget
(‘Why we are where we are today’) and then dwelt on
some critical highlights of the (then forthcoming) budget.

Clearly, he said, this budget was a continuity of the
approach of the Modi government over the past five
years. During the ten years from 2004-05 to 2013-14,
India consumed by ‘importing’ and Indian corporates
resorted to high leveraging. Heavy external borrowings,
coupled with high fiscal deficit and very high bank credit
growth, had pumped the economy which reflected in the
GDP growth. However, this also resulted in ballooning
inflation and unsustainable PSU bank NPAs, in addition
to the depreciation of the rupee in the forex market.

The Modi government had gone on a systematic and
sustained course-correction to put the economy back on
track with the focus on measures relating to governance
(IBC, use of technology and DBT), strengthing the
economy (review of import duties and rules of origin
under FTA , increase in import duties to protect MSME
and the scheme to encourage electronics goods
manufacturing) and tax reforms (GST had resulted in
lowering of the total indirect taxes). The endeavour
had been to put purchasing power back in the hands of
the common man, promoting ‘Make in India’ for Indian
consumption, to protect / attract manufacturing in India and promote the sustainable competitiveness of the
Indian economy.

Among the prominent themes of the budget were
governance, ease of living (through ‘Aspirational India’,
economic development and a caring society) and the
financial sector. Speaker Shalin Divatia also presented
details of major infra projects announced by the
government to achieve a $5 trillion economy and how the
fiscal deficit is planned to be kept in control in a holistic
manner, including pushing of specific disinvestment cases.

He explained that the Indian economy being very diverse
and with vast inequalities, initiatives that are good from the
larger perspective may negatively impact certain sectors
in the short term. He described how the era of ‘making’
money was over and that with many opportunities, money
would now have to be ‘earned’.

DIGITAL TAXATION

A lecture meeting on ‘Digital Taxation’ was held at the
BCAS Hall on 12th February. Mr. Rashmin Sanghvi, was
the faculty.

He started with an explanation on
how BlockChain has changed the
banking system in India and the
world. He then went on to explain
how the big MNCs of the West such
as Apple and so on are engaged in a
tax war.

The difference between ‘Country of Source’ and ‘Country
of Residence’ was explained with the example of Google
Inc. That, in turn, led to a discussion on how the concept
of PE (Permanent Establishment) is outdated and what
are the current changes that the OECD has brought in.
What happens when the OECD brings in changes and
how do these impact India?

Mr. Sanghvi also elaborated the principles of Base Erosion
Profit Shifting – Action Plans and how these would affect
domestic laws when they were implemented by the nations
accepting them. He described how the term ‘equalisation
levy’ came into the picture and how nations like India and
France had implemented a tax on the digital advertisements
of digital marketing companies which, without a presence
in India, used these to evade taxes.

The erudite speaker explained the changes in the Finance Bill, 2020 which addressed significant economic presence
and also the digital economy, which would bring a change
in the way finance and taxes would work.

It was an upbeat and informative meeting, with the
participants benefiting enormously from the discussions
and the insights provided.

ITF STUDY CIRCLE MEETING

The ITF Study Circle meeting on ‘Amendments of
International Taxation – Finance Bill 2020’ was held on
14th February.

The International Taxation Committee Study Circle
organised this meeting at the BCAS Hall. It was addressed
by Ms Divya Jokhakar.

She began by sharing her personal views on how the
Finance Bill has its pros and cons. She then explained
the reasons for the change in the existing provisions
of section 6 – Residential Status; section 206C – TCS;
and section 94B – Interest Limitation. She led the group
discussion by throwing in several interesting questions,
leading finally to the conclusion that there were still many
doubts and queries which the Finance Bill would be able
to answer when it was made into an Act.

Divya Johkakar’s Excel workings on how to claim tax
credit in the event of an individual turning into a deemed
resident of India, and also the workings of disallowance
u/s 94B, were well received.

‘10X SUCCESS AND PRO SPERITY MINDSET’

The Human Resources Development Committee
organised a Study Circle meeting on 17th February at
the BCAS Hall to discuss the subject ‘10X Success
and Prosperity Mindset’ which was conducted by
Mr. Arunaagiri Mudaaliar.

He explained that what a human being achieves in life
depends on his mindset. And mindset comprises of
beliefs and attitudes that can be fine-tuned for success
through effective training. Dr. Arunaagiri is a master in
helping individuals convert their beliefs and attitudes into
liberating, empowering beliefs and mindset to achieve
holistic prosperity in life.

In the ‘10X Success and Prosperity Mindset’ seminar,
the participants got first-hand information on the subject.  Some of them claimed that they had experienced an
uplifting and positive feeling and enhanced energy at the
end of the seminar.

ANAL YTICS & AI – A GLO BAL PERSPECTIVE

A lecture meeting on ‘Analytics and AI – Global
Perspective and India Story’ was held on 20th February
at the BCAS Hall.

President Manish Sampat gave the opening remarks
and presented an overview of the seminar by explaining
the importance of Artificial Intelligence (AI). He also
introduced both the speakers, Mr. Jeffery Sorensen and
Deepjee Singhal.

Mr. Jeff Sorensen started the
session by highlighting various
points to be kept in mind at the time
of auditing and briefly described the
global perspective on audit analytics
and AI by listing the following points:
(i) Artificial Intelligence definition
(ii) Global development
(iii) T he audit perspective
(iv) A udit AI in practice
(v) H ow you can get started

‘AI is the branch of computer science concerned
with the automation of intelligent behaviour. AI is the
computational ability to achieve goals in the world,’
he said, before going on to describe some common
AI terms and concepts. He then explained Machine
Learning – which is a subset of AI – and a mathematical
model based on sample data.

He also described some key challenges for AI and global
development, which is a combination of faster computers
and smarter techniques. He described the global progress
on AI with examples from the fields of finance, healthcare,
automotive, retail, airlines / travel, security, lifestyle and
so on.

Further, he explained Audit Perspective, which applies
to audit – Automation and Robotic Process Automation
(RPA); audit apps; machine learning / deep learning for
auditors; goals of RPA; features of RPA and tasks for
RPAs; standardised, rule-based repetitive and machinereadable
inputs; and so on.

Considering the time limitation,
Deepjee Singhal, a member of the
BCAS Core Group, gave more time to
Mr. Sorensen to share his
experience.

In the limited time available to him,
Deepjee Singhal provided a brief
update on ‘the India Story’ and on Analytics and AI in the
context of internal audit.

He explained the future of Analytics and AI in India
and asserted that AI had a bright and promising future.
Further, he described, with examples, the presence of
AI in government, automotive, finance, restaurants,
etc. He also explained some key points of AI such as
the development of AI in India through auditing, audit
analytics, etc.

Both sessions were interesting and interactive. The
meeting was well attended and attracted a full house.

WOR KSHOP ON UNDERSTANDING MLI

A two-day workshop on ‘Understanding the MLI’
(Multilateral Instrument) was organised by the BCAS
at Hotel Orchid in Mumbai on 21st and 22nd February. The
objective of the workshop was to offer participants indepth
understanding of the MLI and its impact on Indian
tax treaties going forward.

The seminar received tremendous response with 112
participants of all generations, both members and nonmembers,
as also outstation participants from 16 cities
across India.

Manish Sampat, BCAS President, welcomed the
gathering and made the opening remarks. Dr. Mayur Nayak, Chairman of the International Tax Committee,
introduced the subject.

In the first session on Day 1, Mukesh Butani lucidly
explained the architecture of the MLI along with its basic
concepts, terminology and nuances in light of the BEPS
project of the OECD and its ‘Action Report 15’. His
presentation provided an insight into Part I of the MLI,
i.e., Article 1 (Scope of MLI) and Article 2 (Interpretation
of Terms). The session was chaired by BCAS Past
President Kishor Karia.

On the conclusion of the first session, the BCAS
publication, ‘Multilateral Instruments [MLI] (including an
overview of BEPS) – A Compendium,’ was launched by
BCAS Past President Pinakin Desai.

The day’s second session saw
Vishal Gada providing insights
into Part II of the MLI dealing with
hybrid mismatches. The case studies
presented by him provided practical
understanding to the participants
of the issues which are sought to
be tackled by the MLI and also the
issues that could possibly arise from its interpretation.
His presentation covered Article 3 (Transparent Entities),
Article 4 (Dual Resident Entities) and Article 5 (Application
of Methods for Elimination of Double Taxation) of the MLI.
This session was chaired by Dr. Mayur Nayak.

In the third session of
Day 1, Radhakishan
Rawal provided insights
on Part VII of the MLI
(Final Provisions), dealing
with how the MLI will be
interpreted, implemented,
amended, will enter into force, will enter into effect, relate to the protocols, etc.
His presentation covered Articles 27 to 39 of the MLI. The
session was chaired by Nilesh Kapadia.

The last session
of the day had H.
Padamchand Khincha
dealing with Articles
12 to 15 of the MLI,
which pertain to artificial
avoidance of Permanent
Establishment (PE)
status in light of BEPS
Action Report 7. He also enlightened the participants on
the amendments to the concept of ‘business connection’
proposed by the Finance Bill, 2020 and its impact on the
taxation of foreign enterprises operating in India through
digital means. Daksha Baxi chaired this session.

On Day 2, the first
session saw Geeta
Jani taking the stage
and enlightening the
participants about the
intricacies and nuances
of Articles 6 to 11 of the
MLI dealing with Treaty
Abuse in the backdrop
of BEPS Action Report 6. The case studies covered in
her presentation inter alia not only highlighted the various
issues that are expected to arise under Article 6 (Purpose
of a Covered Tax Agreement) and Article 7 (Prevention
of Treaty Abuse) of the MLI, but also provided possible
solutions and interpretations to deal with these issues.
This session was chaired by Tarunkumar Singhal.

In the second session on Day 2, Dr. Vinay Kumar Singh,
IRS dealt with the very important topic of synthesised texts of Indian tax treaties (post-MLI) issued by the Indian
tax authorities. His presentation provided insights into
the approach of Indian tax authorities to the MLI, the
non-binding nature of the synthesised texts and how the
same are expected to enhance the ease of interpreting
the MLI, which can otherwise be a daunting task. This
particular session was chaired by Anish Thacker.

The two-day workshop concluded
with a panel discussion on case
studies under MLI featuring Dr. Vinay
Kumar Singh, IRS, Sushil Lakhani
and Vispi Patel acted as panellist
and Moderator, respectively. Thanks
to their expert knowledge and rich
practical experience, they dealt with
the complicated issues arising in
the case studies and provided allround
inputs and arguments from
the perspective of both the taxpayer
and the tax authorities. The case
studies were prepared by Ganesh
Rajagopalan, Bhaumik Goda and
Karnik Gulati. They were guided and provided with
valuable inputs by Vispi Patel.

All the sessions were interactive, with the speakers
sharing their insights on their respective subjects and
issues. The participants benefited immensely from their
guidance and practical views. The Coordinators for the
workshop were Namrata Dedhia, Tarunkumar Singhal
and Abbas Jaorawala.

INTERACTIVE SESSION WITH STUDENTS

The BCAS Students’ Forum, an initiative of the HRD
Committee, organised an interactive session with
students on the subject ‘“Success in CA Exams’” on 23rd
February at RVG Hostel, Andheri (West), Mumbai.

The event was attended by Mr. Lalchand Choudhary (President, RVG Hostel), Mr. Rajesh Muni (Chairman, HRD Committee – BCAS), Mihir Sheth (Hon. Joint Secretary – BCAS), Narayan Pasari (Past President – BCAS) and Anand Kothari (Convener, HRD Committee – BCAS).

Ms Azvi Khalid (student co-ordinator) introduced the speakers, Dr. Mayur Nayak and Ashutosh Rathi, and shared brief details about the BCAS Students’ Forum. Rajesh Muni addressed the students and encouraged them to actively participate in the events organised by the Students’ Forum. Mr. Lalchand Choudhary was delighted to share students’ activities at RVG and said that he would be very happy to conduct more such programmes jointly with the BCAS for the benefit of the CA students’ community. Mihir Sheth and Narayan Pasari also motivated the students with words of encouragement.

Dr. Mayur Nayak shared his own inspiring journey as a CA student who failed to crack the final exams in the first attempt and thereafter secured an All-India Rank with his sheer determination, hard work and positive attitude. He focused on the ways to mentally prepare for the exams and how to accept failure. He gave tips to calm the mind while attempting the papers; and, while studying for the exams, learning a few deep breathing techniques. He explained that the biggest danger faced by students was not in setting their aim too high and falling short, but in setting their aim too low and achieving their mark.

Ms Drishti Bajaj (student co-ordinator) urged students to participate in the forthcoming Jal Erach Dastur CA Students’ Annual Day event, popularly known as ‘Tarang’ which offered an excellent platform to CA students to showcase their talent.

The second speaker of the day, Ashutosh Rathi, who has vast teaching experience, emphasised the importance of staying time-conscious; to ensure that they did not get distracted; he suggested maintaining a ‘Mission Chartered Diary’ creating a plan for the next day before going to sleep and logging hourly performance marks.

At the end of every day, the student needs to do selfanalysis and ask three Golden Questions to himself:
1) What worked?
2) What did not work?
3) What is the improvement plan for things that did not work?

Planning and time management played a crucial role in getting the best ROI on the time invested. A good and realistic plan kept the student focused, sorted and in charge. He also shared a six-step approach:

Step 1: A sk the Golden Question
Step 2: Zero-Based Budgeting – Subject-wise and
Chapter-wise Time Estimates
Step 3: Subject Scheduling (Macro)
Step 4: Week Scheduling
Step 5: D ay Scheduling
Step 6: Fortnightly Refinement

Ashutosh Rathi pointed out that planning was a dynamic process. Often, the target may not be accomplished for various reasons and it would require the student to refine his plans to make up for the lost time; for this it was best for the students to spend 30 minutes every two weeks to refine their strategy.

At the end of the session, he shared the inspiring story of Ms Rajani Gopala, India’s first visually impaired woman who achieved the milestone of becoming a CA by transforming her weaknesses into strengths and sympathy into empathy by sheer determination, hard work, planning, focus and perseverance. He also offered practical tips and tricks to be implemented to qualify as a CA and provided students with powerful affirmations to stay self-motivated.

Finally, Mr. Vedant Satya (student co-ordinator) briefed the participants about the forthcoming BCAS events and thanked the speakers for sharing their knowledge.

VIVAD SE VISHWAS

BCAS Past President Gautam Nayak chaired the Direct Tax Laws Study Circle meeting on the ‘Vivad se Vishwas’ Bill, 2020, at the BCAS Hall on 24th February. Advocate Devendra Jain was the Group Leader.

Devendra Jain gave a brief overview of the objects of the Bill and the reasons for its enactment. The cases in which the scheme will be applicable, along with important definitions, were discussed in detail. Cases wherein the declaration would be considered inapplicable were highlighted.

All the aforesaid points were discussed in light of the amendments to the Bill, which were passed on the day of the meeting.

Chairman Gautam Nayak gave practical insights on various issues from time to time in the course of the meeting. Both he and the Group Leader took questions from the floor throughout the session.

INDIRECT TAX STUDY CIRCLE

The Indirect Tax Law Study Circle held its meeting on ‘Issues concerning the applicability of section 50, rule 86A and section 43A of the CGST Act’ at the BCAS Conference Hall on 2nd March. More than 40 members attended the meeting.

The Group Leader and session chairman provided insights on the topic with wide coverage and gave a detailed analysis on it. He also answered many of the doubts raised by members. It was an interesting and interactive meeting which concluded with a vote of thanks to the Group Leader and the Mentor. On a demand from the members, it was decided to hold a continuation of the same meeting at a later date.

MISCELLANEA

I. Technology

 

1.      
Blockchain can protect privacy during
coronavirus crisis

 

Citizens the world over typically
demand their governments respond to catastrophes by reaching out and helping
people when they are most in need. The coronavirus pandemic is no different –
and political leaders know they must step up. But when institutions stretch out
a hand, should we blindly accept the way governments take so much new control
over our lives in exchange for their help?

 

It is clear there must be some
restrictions on normal life to fight a pandemic. But we risk the crisis
response becoming an overreach and imposing limits on personal freedoms that
could last long after the virus is defeated.

 

How much privacy are we willing
to sacrifice to protect populations from the virus? In Israel, the government
has authorised its security service to track mobile phone location data of
people suspected to have coronavirus using techniques originally deployed for
anti-terrorism surveillance. China took advantage of facial-recognition systems
to trace people’s movements in its anti-virus fight. And the United States is
engaging in public-private partnerships with the likes of Palantir, a
data-scraping company known for its predictive policing tools.

 

These emergency measures risk
normalising monitoring mechanisms in much the same way that the 9/11 terror
attacks triggered legislation enabling broad spying on citizens. That
ostensibly temporary legislation remains largely unchecked almost two decades
later.

 

But just as technology empowers
governments to ratchet up their surveillance, so can technology unleash
opportunities to protect people’s privacy – and help keep them safe. The
solution lies with Blockchain, a decentralised technology offering data
sovereignty that facilitates individuals choosing what data they are willing to
share and with whom.

By combining Blockchain and
secure hardware, smart devices can achieve their intended purpose while also
preserving privacy. For example, residents in an apartment building or a gated
neighbourhood can use a Blockchain-powered security camera and choose which
agencies receive the data generated by the camera. This is ‘privacy-by-design’
built to protect individuals.

 

It avoids data being held in any
central point such as a government or corporation, where all too often leaks
and hacks or profit-driven data-selling deprive people of any chance of
privacy. With Blockchain’s unique ability to store information in a decentralised
way, the data has no such vulnerability.

 

2.       Human-centred
privacy protection

 

There is an
emerging philosophy in privacy spheres, which is ‘bring the code to the data,
not data to the code’. One technology that employs this is confidential computing
which combines encrypted data from users and open-source algorithms from
companies in a trusted, neutral hardware environment to run privacy-preserving
computations. This human-centred approach protects users’ privacy while still
providing the insights that governments need. It also ensures user data is only
used for its intended purpose, as the algorithms applied to the data can be
verified.

 

Blockchain
also plays an important role here. In these privacy-preserving computations,
Blockchain technology coordinates the activity – such as uploading or deleting
data – for various stakeholders in the decentralised process. Blockchain
ensures the data can always be audited, meaning the consumer who provided the
information will always be able to tell if their data has been used for the
purpose they intended it, and for that purpose alone.

 

3.       Keep
safe and keep your privacy

 

Protecting data privacy in the
ongoing coronavirus crisis is a bigger concern than many people might realise.
Just as people have come over time to understand how important it is to wash
their hands with soap, so will people increasingly learn to practice data
hygiene to keep ownership of their own data.

 

People need to be aware that once
data is out there, it is impossible to fully rein it back in. Scraping data
that users voluntarily put on the internet is one thing. But leveraging fears
in a crisis to incentivise them to upload highly sensitive data that they never
intended to share is dangerous and permanent.

 

For example, U.S. President
Donald Trump directed anxious Americans to Google’s Project Baseline, citing
that it would help with coronavirus. But its Terms and Conditions state: ‘If
you withdraw your consent, information that has already been gathered will be
retained. Once you join, your membership could last indefinitely, or could be
ended at any time without your permission.’ Talk about giving up any rights to
your own data!

 

These kinds of crises initiatives
highlight how vulnerable we all are to surveillance and losing control of our
data. Still, the good news is that Blockchain means we do not have to trust a
government or a Google. Instead, we can rely on Blockchain to enable us to
share only what we want to share. In short, we can help keep ourselves safe –
and keep our privacy, too.

 

(Source: International Business
Times – Opinion by Raullen Chai, 26th March, 2020

Raullen Chai is the co-founder
and CEO of IoTeX, a technology company that uses Blockchain to secure hardware
devices and data storage to build end-to-end encrypted device ecosystems for
the Internet of Trusted Things)

 

4.      
E-commerce faring better now, issues
being resolved, says DPIIT Secretary

 

Secretary in the Department for
Promotion of Industry and Internal Trade (DPIIT) Guruprasad Mohapatra has said
that thanks to several follow-ups, relaxations have been given to e-commerce
players by the Home Ministry. The government has held several meetings with
them to resolve issues arising due to the lockdown and the situation is now
improving on a daily basis. ‘The e-commerce position is much better now than
what it was on Day One of the lockdown’.

 

E-commerce representatives had
shared the problems faced by them in the movement of essential goods by
delivery boys due to the lockdown.

 

Traders and e-commerce companies
had raised concerns over police beating up delivery boys in various states
while they were doing their duty.

 

Commerce and Industry Minister
Piyush Goyal had earlier said the government was committed to ensuring that
essential goods reached people in the most safe and convenient manner.

 

Home Secretary Ajay Bhalla and
the DPIIT Secretary also held detailed meetings with traders and e-commerce
firms in this regard.

 

The DPIIT has set up a control
room to monitor the real-time status of transportation and delivery of
essential commodities amid the coronavirus lockdown. It is also monitoring
difficulties being faced by various stakeholders.

 

(Source: Business Standard –
Press Trust of India, 4th April, 2020)

 

II. Markets

 

5.      
Coronavirus outbreak eats into stock
valuations, market plunges 34%

 

The Indian
stock market has plunged 34% from its record high. As a result, the
price-to-earnings (P/E) ratio for the Nifty50 Index has declined to 12.3 from
18 at the start of the year. The Nifty’s valuation is still slightly above the
2008-09 global financial crisis trough level, when it had fallen to 11.

 

However, a
record 50% of the Nifty stocks are currently trading at a single-digit P/E
ratio. So, is this a good time for bargain-hunting? Experts say such low valuations
are a signal that the market is pricing in huge disappointment in earnings due
to the demand shock created by the lockdowns to contain Covid-19.

 

Stocks whose
outlook is better haven’t got much cheaper. For example, Nestle India,
Hindustan Unilever, Asian Paints and Britannia still quote at valuations of
more than 40 times.

 

(Source: Business Standard – By
Samie Modak, 4th April, 2020)

 

III.  Business

 

6.       Coronavirus
pandemic delivers a major blow to struggling shipping industry

 

The developing Covid-19-related
scene brings to light once again the symbiosis between the global shipping
industry and world economic growth.

 

The furious speed at which
Covid-19 has spread from the most populous of all continents, Asia, to Europe
and then to the US killing thousands of people, is sending the global economy
reeling. As country after country, including India is enforcing a comprehensive
lockdown of life the economic cost of which remains anybody’s guess, all
stakeholders of shipping and ports across the globe are scurrying for cover.
The possibility of a repeat of lockdowns in India and elsewhere cannot be
dismissed at this stage. Thanks to Covid-19, maritime operators are likely to
contend with a crisis bigger than what they faced in the wake of the economic
meltdown of 2008-09.

 

The developing Covid-19-related
scene brings to light once again the symbiosis between the global shipping
industry and world economic growth that, in turn, leaves a major impact on
merchandise and services trade among nations. International Monetary Fund (IMF)
Managing Director Kristalina Georgieva warns that the damage being wrought by
the Covid-19 pandemic could be the ‘gravest threat’ to the global economy since
the financial crisis more than a decade ago. Describing Covid-19 as the ‘No. 1
risk for the world economy with multidimensional ramifications’, ratings and
research organisation CRISIL has drastically cut the gross domestic product
(GDP) growth forecast for India for 2021 fiscal to 3.5% from the earlier 5.2%.

 

To the horror of maritime
operators, who are facing the greatest existential challenge in decades as
Covid-19 deals a major blow to trade, the Organisation for Economic
Co-operation and Development (OECD) says global growth this year could sink to
1.5% from 2.9% forecast ahead of the virus outbreak.

 

The World Trade Organisation
(WTO) goods trade barometer published on 17th February showed the
real-time measure of trade trends at 95.5, down from 96.6 recorded in November,
2019, well below the baseline value of 100. This suggests below-trend growth in
goods trade. In WTO’s reckoning, services trade will remain under growing pressure
as well. What the two WTO readings, however, say only partly captures the
likely economic impact of Covid-19. The next couple of WTO barometer readings
of goods and services trade will invariably show further declines with their
consequential impact on shipping, ports and related services.

 

London-based analytics group, IHS
Markit, said in an early January report, well before coronavirus started
spreading its fangs across the globe and lockdowns in major trading
nations,  that after global trade grew by
a disappointingly low 0.6% in 2018 and 0.3% in 2019, the ‘world merchandise
trade volume is forecast to grow 2.7% in 2020.’ If this happens, global
merchandise trade volume this year would reach 14.175 billion tonnes (bt) from
13.804 bt in 2019. But the IHS Markit forecast was based on world real GDP
growth of 2.5% in the current year, so trade growth prediction will also fall
on its face. Shipping is, therefore, destined to bear the brunt as around 90%
of world trade is carried by sea.

 

Headwinds buffeted global dry
bulk trade through most of last year. Trade tensions between the US and China
left in their trail collateral damage on many other trading nations. Major
mining disasters in Brazil and then weather-related disruptions in prominent
Australian mining regions upset iron ore and coal shipments. A toxic
combination of geopolitical tensions, trade restrictions and low GDP rise
restricted global trade growth to around 1% in 2019. As a result, points out
New York-based maritime consulting Seabury, global container cargo volume last
year amounted to around 152 million twenty-foot equivalent unit (TEU), a
piffling growth of 0.8% on 2018.

 

For both global shipping and
logistics giants Maersk and Hapag-Lloyd, India is an important centre for
delivery and receipt of cargoes in containers. What will be the precise impact
of the still unfolding pandemic on the shipping industry and ports is a subject
of speculation. Maersk of Denmark, which made a 2019 earnings forecast of $5.5
billion in February, has now decided to ‘suspend’ it. It says in a statement:
‘The current situation gives great uncertainties about global demand for
containers as a result of Covid-19 pandemic and the measures taken by
governments to contain the outbreak.’ Incidentally, several seafarers of Maersk
vessels suspected of coronavirus infection had to be evacuated for treatment in
the Chinese city of Ningbo.

 

In a tone similar to Maersk,
Germany headquartered Hapag-Lloyd says: ‘The year 2020 will be very unusual,
after we have seen that conditions in many markets have changed very rapidly in
recent weeks as a result of the coronavirus.’ China, on which the rest of the
world has become heavily dependent for supply of components and semi-finished
and finished products, claims to have controlled Covid-19. But the global
shipping crisis was progressively spawned by Chinese ports becoming
non-operational January onwards as logistics support, including movement of
goods-carrying trucks and wagons, came to a standstill due to the nationwide
lockdown. China is an important trading partner of India – our 2019 imports
from China were $74.72 billion and exports to that country $17.95 billion – and
major disruptions in sailings between the two countries upset the production
schedules of many companies here.

 

Hapag-Lloyd says China returning
to normal is ‘positive news’ for the shipping industry. But this is
‘considerably overshadowed’ by all the major economies of the West standing in
the throes of ‘collapse’. Such developments can only have serious consequences
for the shipping industry. Indian port operators are experiencing a drop in
cargo volumes since February and no one is certain about the turnaround time.
Container shipping lines are idling vessels at a record pace, resulting in
growing numbers of boxes being removed from the trade network, as they go on
cutting sailings on all major trade lanes.

 

Only a few
very large shipping lines with plenty of cash such as Cosco of China, Maersk
and Hapag-Lloyd will be able to weather the current storm, albeit
with profits taking a hit. But how will smaller Indian companies, forced to
cancel sailings generate cash to pay for chartered ships, ship maintenance and
staff salaries? In the current situation, New Delhi is left with no option but
to shelve the disinvestment of Shipping Corporation of India whose performance
has been uninspiring for a long time.

 

(Source:
Business Standard – By Kunal Bose, 2nd April, 2020)

STATISTICALLY SPEAKING

1.    Key
India Fdi Sources In Top 10
Jurisdictions (April 2000 to September 2019)

 

Source: Economic Times

 

2. Big payouts
declared in February, 2020 post the Finance Bill, 2020 which proposes to
abolish Dividend Distribution Tax (DDT)

 

Source: Capitaline

3.  Stock movements between 12th
February and 12th March, 2020

 Source: The Spectator Index

 

4.  Operational
airports

 

Source: Airport Authority

 

 5.  Financial
Secrecy Index 2020

 

Jurisdiction

Secrecy Score

FDI rank*

FDI inflows in crores (Rs.) #

Cayman Islands

76

11

32,617

US

63

5

1,61,399

Switzerland

74

12

26,806

Hong Kong

66

13

25,041

Singapore

65

2

5,61,933

Luxembourg

55

16

17,768

Japan

63

3

1,85,787

The
Netherlands

67

4

1,78,365

British Virgin Islands

71

22

8,727

UAE

78

10

40,455

*ranked on secrecy score plus share in global
financial
services market

# April, 2000 to September, 2019

Source: Economic
Times, 20th February 2020 and Tax justice Network

ETHICS AND U

Arjun: Oh my
Lord, please save me! Please save me! I totally surrender to Thee!

           

Shrikrishna: (Smiling);
Arrey Arjun, what happened? What is your panic about?

           

Arjun: Last time
you mentioned something about NOCLAR and I asked you whether it was some
disease. It really made me uneasy.

           

Shrikrishna: You are
talking about disease. Today, the only disease the world over is Corona!

           

Arjun: I am not
afraid of Corona. It will come and go but NOCLAR will stay forever on our
heads. Or even if Corona comes to me, I will myself go. So, no worries!

           

Shrikrishna: Ha! Ha!
Ha!

           

Arjun: Since you
have mentioned about Corona, tell me, how long will it stay? Can it be a good
excuse for seeking extension of time for payment of taxes?

           

Shrikrishna: (laughs)
Wah, Arjun! You are constantly thinking of extension of deadlines only. When
are you going to improve?

           

Arjun: Anyway,
tell me something more about NOCLAR.

           

Shrikrishna: See, this
is basically connected with the fundamental principles of integrity and
professional behaviour.

           

Arjun: But
reporting on non-compliances is dangerous. Both the entity as well as the
‘auditor’ will get into trouble.

           

Shrikrishna: Why? If
an accountant or auditor takes cognisance of it and acts accordingly, then
there is no problem for him.

           

Arjun: Agreed.
But the same non-compliances could be there in earlier years, too. And the CA
may not have reported on it.

           

Shrikrishna: But
Arjun, you need to start somewhere. Better late than never.

           

Arjun: But the
company will be ruined.

           

Shrikrishna: No,
Arjun, don’t jump to conclusions. Actually, it is meant for the betterment of
the company. It can take timely steps to set things right. Non-compliances
cannot continue perpetually. Some defaults, if continued, can cause serious
damage. They may lead to huge losses and penal consequences.

           

Arjun: True. We
are required to report on ‘going concern’. The non-compliances will soon make
the company itself ‘go away’.

           

Shrikrishna: You said
it! It’s like your health. Early detection of disease increases the chances of
cure – including diseases like cancer. For that matter, even Corona.

           

Arjun: But tell
me, what exactly are we supposed to do if we come across such non-compliance?

           

Shrikrishna: Look, if
you give early signals to the management, the serious damage can be avoided.
This will enhance the reputation of your profession. Look at the positive
aspect, my dear.

           

Arjun: Yes, I
agree. But tell me, how to tackle the situation?

           

Shrikrishna: In a few
situations NOCLAR may not apply – like where the default is minor and
inconsequential, more like a simple traffic offence or personal misbehaviour of
an employee.

           

Arjun: Yes. But
should we always qualify our report?

           

Shrikrishna: Not
necessarily. First, remember that it is not your duty to seek or search for
non-compliances. It should be the ones which you come across in the course of
your work.

           

Arjun: Good.

 

Shrikrishna: Then you
need to understand the matter well. Discuss it with the management or you may
seek legal opinion. Discuss and then decide whether any further action is
required.

           

Arjun: But what
if the management does not listen?

           

Shrikrishna: That is
more likely. Then create the evidence that you have drawn their attention. If
it is serious, then decide whether to report it to the appropriate authority.
But for all this, keep your documents perfectly in order in terms of the
relevant standard of auditing.

Arjun: Okay.
Understood. So, we need to tackle it tactfully, with a cool-head. We need not
panic nor rush to take further steps.

           

Shrikrishna: And in an
extreme situation you may even withdraw from the assignment.

           

Arjun: That’s a
good piece of advice! Thank you for enlightening me as usual.

 

Om Shanti

This
dialogue is a continuation of the concept of NOCLAR

   

     


REPRESENTATION

1.  Dated: 16th March, 2020

     To:Honourable Finance Minister
Ministry of Finance, Government of India, 128-A North Block, New Delhi

     Subject: Representation for
extension of time-line of 31st March 2020 for Vivad Se Vishwas
Scheme, 2020 (‘VSVS’)

     Representation by: IMC Chamber of
Commerce and Industry; Bombay Chartered Accountants Society; Chartered
Accountants Association, Ahmedabad; Chartered Accountants Association, Surat,
Karnataka State Chartered Accountants Association; Lucknow Chartered
Accountants Society

 

Note: For full Text of the above Representation, visit
our website www.bcasonline.org

ETHICS AND U

Shrikrishna: Arjun, are you reading something? Shall we meet later?

Arjun: Bhagwan, please don’t say so. There is nothing more important in
my life than meeting you! Good that you came.

Shrikrishna: Why? What are you reading? I rarely see you referring to any book. Oh!
It’s a dictionary!

Arjun: Yes. Looking for a very strange word. I referred to three dictionaries,
but did not find it. It is an English word NOCLAR.

Shrikrishna: Where did you come across it?

Arjun: Yesterday, in some CPE seminar everybody around was talking about it.
They said it is very serious. Something like a disease.

Shrikrishna: (laughs) It is not a disease, but it will certainly make one Un-easy.

Arjun: What is it about? Is it going to add to our thankless burdens?

Shrikrishna: Yes, to some extent. It depends on how you take it.

Arjun: But why is that word not there in any dictionary?

Shrikrishna: Dear Paarth, it is only an acronym like your CARO. It means your
response to ‘Non-Compliances with Laws and Regulations’.

Arjun: Oh! Interesting. But wherever we go for audit, we see nothing but
non-compliance only. Anyway, what are we supposed to do then?

Shrikrishna: See, you know IESBA?

Arjun: Who is this ‘Yesba’?

Shrikrishna: (smiles) He is not a
person but a body – called International Ethics Standards Board for
Accountants. They issue guidelines for the Public Accountants (PA’s).

Arjun: Yes, our ICAI also has an ESB. What next?

Shrikrishna: While doing the audit or any other work of a company, if you come
across any non-compliance with any law or regulation which is of a very serious
nature, or which is illegal, then the question is how does a PA respond to it?
Whether he should act as a whistle-blower and expose the illegalities, or just
keep quiet?

Arjun: To tell you the truth, all these years, we CA’s have been keeping quiet
only. We never had the courage to speak out. That is why we are taken for a
ride.

Shrikrishna: I understand. You have a fear that you will lose your client. There is
a feeling of insecurity among the practising accountants like you. But remember
that NOCLAR applies not only to practising CAs, but it also covers the
accountants in employment.

Arjun: Baap-re! This is even more dangerous. Many accountants will have
to quit their jobs.

Shrikrishna: As an enlightened citizen and professional you cannot turn a blind eye
to the illegalities.

Arjun: That is exactly what Dhrutarashtra Uncle did in Mahabharata. If
he had done his duty conscientiously, the entire war and disaster could have
been avoided.

Shrikrishna: Wah, Arjun. What an apt example! That means you have understood
what NOCLAR is… I don’t have to explain it to you any further.

Arjun: No, Bhagwan, you can’t leave just like that. Please tell me what
exactly we are supposed to do? Since when will it be applicable? Where is it to
be reported? Does it cover fraud, corruption and bribery? Does it also include
money laundering? You need to tell me all this.

Shrikrishna: (smiles) Yes, dear. We need to discuss it in detail. All accountants
are now worried as to how they should tackle this. It will be very embarrassing
for anyone to expose the illegalities of the clients. It will be a serious threat
to the client as well as to the accountant.

Arjun: If it is so damaging then why bring this regulation at all.

Shrikrishna: Remember, Arjun, your
client as well as you yourself are a part of the society and the country. A company may have its vested self-interest in doing illegal acts. You as
auditors or service providers are indirect beneficiaries of the client’s business. But one must see whether such
illegal or irregular acts can be sustained by a client for a long time. Some
day or the other, the irregularities are bound to get exposed. Such acts cause
irreparable damage to the society and the country. If educated professionals
like you overlook or ignore these things, then you are breaching the trust
reposed in you. If such things continue, the social atmosphere will continue to
worsen.

Arjun: I agree. Is this the reason why some big firms are giving up a few
audit assignments? This is all very interesting. Tell me further.

Shrikrishna: I’m in a hurry. You please read it yourself. We will discuss it again
next time.

Om Shanti

 

This dialogue
is based on the new concept emerging in the profession – NOCLAR.

 

            

 

SOCIETY NEWS

TALK ON ‘ACHIEVING SUCCESS – LIVING VALUES’

The H.R. Committee, along with the RVG Educational Foundation, organised a talk for the benefit of students and young members on 24th November, 2019 at the RVG Hostel Auditorium. Mr. M.K. Ramanujam addressed the gathering on ‘Achieving Success – Living Values’ in his eloquent style and in an interactive session.

He started his talk by explaining the difference between success and happiness. Success, he said, invariably refers to targets, milestones, goals, etc. But happiness is born out of love, abundance and inspiration. Therefore, one ought to choose to do something out of inspiration and love for a subject, for a career, for one’s dreams and so on. ‘Success’ is a challenge because it is short-lived. One often postpones happiness till one achieves success. Happiness, on the other hand, flows from inspiration during the process of achieving it; and despite the challenges, one remains cheerful.

Mr. Ramanujam explained the acronym ‘PREMA’ and the most important concept of ‘Purpose’.

P’ Stands for positive emotions. One must venture out with positive emotions. Negative emotions are like Velcro that gets fixed to us easily. We should not be like Velcro but like a Teflon coating so that we are not stuck to negative emotions. For a daily practice of positive emotions it would be best to remember and note down at least three nice things that happened during the day and objectively assessing why these felt like positive happenings.

R’ Stands for Relationships. One must invest time, effort, energy and willingness in building relationships with nature, friends, teachers, seniors, the environment and everything around. They are the best support systems.

E’ stands for Engagement. Give your best. Introspect and ask yourself, why are you doing what you are doing? Put all your energy into whatever you are doing. Even if you are compelled to do certain things that you do not want to do (e.g., due to parents’ pressure), put in your best. Love what you do and do what you love. Put your 100% and think beyond your own self. Think what contributes to your happiness… Expand your horizon.

M’ stands for Meaning. In all that you do, you ought to have meaning for the self and for all those concerned
with it.

A’ stands for Achieving. You must complete what
you have begun. There is joy in finishing and
achieving things.

Purpose: Everything in the universe is driven by purpose. Align your work with the purpose. Clarity of ‘Why’ lightens the burden of ‘How’ and ‘What’. Purpose can be understood with deep introspection with ’Why’ and values can be understood by questioning ‘How’. Success is what others measure in you and happiness is what you measure in yourself.

One hundred and ten participants, including more than 80 students, attended and enjoyed the talk.

President Manish Sampat welcomed the participants and gave information about the Society and also shared its vision. Chairman Rajesh Muni provided a broad outline of the activities of the H.R. Committee, especially those carried out for the benefit of students. He invited and encouraged students to register and participate in the Study Circle and the Students’ annual programmes which enable students to showcase their talents.

Mr. Lalchand Chaudhari, President of the RVG Foundation, shared information about the number of chartered accountants who had benefited as alumni of the hostel. He also shared the ‘Vision 2024’ plan set out for RVG. Mukesh Trivedi proposed the vote of thanks.

WORKSHOP ON NBFCS

The NBFC sector has been facing several challenges of late. Apart from business and regulatory challenges, it is also confronted with challenges in Ind AS implementation and other compliances of ECL provisioning and disclosure, etc. Further, regulatory norms are also being notified on a frequent basis.

The Accounting and Auditing Committee of the BCAS has always been at the forefront in planning programmes for NBFCs in order to bolster them and to equip professionals to deal with challenges. Accordingly, the Committee conducted a ‘Workshop on NBFCs’ on 13th December, 2019 at Hotel Orchid, Mumbai to have an in-depth discussion on the current developments in the field from the regulatory perspective and various issues arising from first-time Ind AS implementation.

It was structured into five sessions followed by a panel discussion. The technical sessions dealt with a variety of topics such as Key regulatory updates in the NBFC Sector, Financial Instruments, Applying the ECL Model and related disclosure requirements, Disclosure requirements under Schedule III of the Companies Act, 2013, Statutory audit aspects, followed by an interesting panel discussion on Challenges of first-time adoption of Ind AS.

The Workshop was attended by more than 80 persons, with increased participation from the industry.

The Workshop started with an inaugural address by Samir Kapadia, BCAS Hon. Joint Secretary, who stressed the importance of NBFCs in the overall development of the financial sector in India. Himanshu Kishnadwala, Chairman of the Committee, introduced the structure of the Workshop to the participants, the thought process behind its design and the need for such a Workshop.

The first session was conducted by Bhavesh Vora who dealt with the important aspects of key regulations surrounding NBFCs and the recent changes therein. While dealing with these, he also took participants on a journey of the NBFC sector over a period of time and gave valuable insights into the regulatory impact on various categories of NBFCs.

In the second session, Santosh Maller dealt with Financial Instruments, Classification of Financial Instruments based on the business models and the measurement of various Financial Instruments with several examples for ease of understanding.

Rukshad Daruvala, who conducted the third session, took up the key issues and requirements in applying the Expected Credit Loss (ECL) model dealing with the provisioning requirements of Advances of NBFCs.

Post lunch, Rukshad Daruvala was once again at the helm, at the session on Disclosure Requirements under Schedule III, including various critical disclosures required under the Ind AS regime.

The subject of Statutory Audit aspects was dealt with in the fifth session by Jayesh Gandhi. He discussed in detail the requirements while conducting audit of NBFCs and shared his vast experience with the participants as
he explained the importance of Audit in the current economic scenario.

In the final session, the challenges of first-time adoption of Ind AS were discussed by a panel comprising Govind Jain, Jayesh Gandhi and Haren Parekh. The discussion was ably moderated by Ashutosh Pednekar. It revolved around the first-time adoption challenges faced by the NBFC industry and the auditors’ perspective on the same. The panellists shared their practical experience on the subject for the benefit of all participants.

TRAINING SESSION FOR CA ARTICLE STUDENTS

The Students’ Forum under the auspices of the H.R.D. Committee organised a training session for CA article students on ‘Recent Developments in Income Tax’ on 10th January, 2020 at the BCAS Hall.

It was conducted by Jayna Shah. Ms Dhristhti Bajaj, the student coordinator, introduced the speakers and described the upcoming events for students.
Anand Kothari, Convener of the H.R.D. Committee, welcomed the speakers and presented them with a memento each.

Jayna Shah explained the various amendments in income tax such as the change in the corporate tax rate, introduction of faceless assessment, changes to boost cashless economy, new provisions and amendments in TDS provisions and so on. It was an interactive session and the speakers answered all the queries raised by the participants.

The training session ended with Student Study Circle Coordinator Dnyanesh Patade proposing the vote of thanks to the speakers and also to the participants.

NANI PALKHIWALA MEMORIAL LECTURE

The Nani Palkhiwala Memorial lecture meeting was organised jointly with the Forum of Free Enterprises at NCPA Tata Theatre on 16th January, 2020.
Mr. N. Chandrasekaran, Chairman of Tata Sons Ltd., who was the guest speaker, dwelt on the subject ‘Building India for the Future’. Mr. Y.H. Malegam presided over the proceedings.

A documentary film, ‘Nani the Crusader’, was screened at the start of the meeting. It was based on the life of the late Mr. Nani Palkhiwala and showed glimpses of his life, his rise in the legal fraternity and the accolades that he won from all quarters on account of his brilliance. It also threw light on some of the major cases on Constitutional matters that he had won and that saved India’s democracy and shaped the country’s future.

The film screening was followed by the release of a book, ‘Essays & Reminiscences’ in honour of Mr. Palkhiwala. Mr. Arvind P. Datar, the general editor of the book, fondly recalled his vivid memories of the late stalwart.

Mr. Chandrasekaran spoke of suspicions and ‘micro-management’ of the economy as the impediments faced by businesses in India. He stressed on the need for creating a harmonious atmosphere by trusting and treating business as an essential pillar for
nation-building. The Tata group was an excellent example of how business can contribute to nation-building. Mr. Palkhiwala had set an example of how businesses, by maintaining their core values, could co-exist in a competitive economy and had helped government to build the present-day India. This happened because even his strictest criticism was taken in a positive spirit and with implicit trust by the government.

The core thrust of Mr. Chandrasekaran’s speech was how, with the co-operation of business and government, the vast potential of India could be tapped and the benefits of growth could reach the poorest segment of people to build a strong India, making its future
extremely bright.

Mr. Deepak Parekh, HDFC Bank Chairman, while proposing the vote of thanks, called for maintaining the values of the Indian Constitution. Pointing out that ‘while times and circumstances change, strong values and principles do not’, he said that while we should hold on to the learnings that Mr. Palkhiwala had left behind, it was important not to be consumed by ‘pessimism and doom-mongering’. Admitting that he was an optimist, he said he was confident about the future of India and that ‘our youth will see India’s best days’.

SEMINAR ON PRESUMPTIVE TAXATION

The Taxation Committee organised a seminar on ‘Presumptive Taxation’ with several distinguished speakers sharing their deep knowledge on the subject. It was held at the Walchand Hirachand Hall of the IMC on 18th January, 2020. The event attracted overwhelming response and saw an attendance of 111 participants, including outstation participants from five different cities / towns. President Manish Sampat welcomed the attendees and gave the opening remarks.

The following topics were taken up for discussion by the speakers:

Sections 44AD and 44ADA: – • Purpose of the provision • How is it different from section 28 – 43CA • Assessee to offer business income under this section • Assessees who cannot offer income under presumptive taxation • Maintenance of books of accounts• Calculations of gross receipts• Determination of GR without BOA and case studies Bhadresh Doshi
Sections 44AE, 44AF, 44BB, 44BBA, 44BBB – Purpose of the sections, applicabiltity, issues, recent jurisprudence – Interplay of tax audit – Case studies Mehul Shah
Brain trust questions – Presumptive taxation issues –Issues concerning return of income, books of accounts, tax audit, assessments, penalties, ICDS, etc. Gautam Nayak,
Anil Sathe and Kinjal Bhuta

In the first session, Bhadresh Doshi highlighted the technical aspects of sections 44AD and 44ADA. He concentrated on various issues arising right from the time of the introduction of the presumptive taxation scheme under these two sections. He gave his views and insights on multiple issues and explained the jurisprudence affecting them. He advised participants to read and understand the section and scheme and not to rely on general perceptions.

On his part, Mehul Shah dwelt on the presumptive basis of taxation under sections 44AE, 44AF, 44BB, 44BBA and 44BBB. He explained sections with the help of case studies. It was a highly interactive session and the speaker answered all the questions posed by the participants.

Gautam Nayak, Anil Sathe and Kinjal Bhuta were the ‘brain trustees’ for the last session that was moderated by Ameet Patel. The ‘brain trustees’ were allotted specific questions based on various issues raised by BCAS members from time to time.

Starting the session, Gautam Nayak gave his views on whether presumptive taxation provisions under sections 44AD and 44ADA are qua assessee or qua income. He also responded to various issues raised by the participants pertaining to sections 44AD and 44ADA.

Anil Sathe gave his views on fundamental issues concerning the presumptive basis of taxation and responded to questions based on real examples. He also gave his views on issues concerning sections 44AE and 44BB.

Finally, Kinjal Bhuta shared her insights while addressing questions relating to important definitions such as eligible business, etc. under the presumptive basis of taxation. She also elaborated on the overall scheme and answered queries related to return of income for assessees adopting the presumptive basis of taxation.

All the sessions were interactive and the speakers shared their insightful views. The participants benefited immensely from the guidance and practical views on various issues offered by the faculties.

NFRA AND PCAOB – DISSECTING

PERFORMANCE EVALUATION OF AUDITS

A lecture meeting was organised on 22nd January, 2020 in the BCAS Conference Hall to deal with the above topic. It was addressed by Chirag Doshi who went through the process of inspection by the Public Company Accounting Oversight Board (PCAOB) of a firm’s quality controls and review of audit assignments carried out by that firm.

He provided an overview of the functioning of the PCAOB with its top areas of focus during the exercise of a firm’s quality review process. The major focus areas were:

(i)   System of quality control in firms;

(ii)   Independence;

(iii) Recurring audit deficiencies relating to ICFR, Revenue Recognition, Allowance for loan losses, Other Accounting Estimates and ROMMs.

The review process is split into two parts, viz., Quality Control Review and Audit Engagement Review. The major focus is on compliance with auditing standards and not the accounting standards.

Chirag Doshi dwelt on the on-field procedure for review as well as the procedure after field reviews and highlighted the thorough professionalism and independence involved in the whole review process.

He then dealt with the National Financial Reporting Authority (NFRA) which has been constituted on the lines of the PCAOB with the objective of monitoring and enforcing compliance with auditing standards. For achieving this objective, the NFRA would be reviewing the working papers of the audit firms and other communication related to the audits to evaluate the sufficiency of the quality control system of the auditor.

Chirag Doshi went on to deal with the first report of NFRA in the form of an Audit Quality Review (AQR) Report in the case of the auditee, ‘IL&FS Financial Services Limited’ for the F.Y. 2017-18. The purpose of discussing the findings was to make the members aware of the necessity to document and to put on record the findings during the audit process in such a manner that it goes on to prove the independence of the auditor as well as displaying adequate professional scepticism during the conduct of the audit process.

He provided inputs for creating an in-house audit manual by small and medium-size firms for the efficient conduct of audit.

The meeting was well attended and attracted a full house.

FEMA STUDY CIRCLE

Here is a brief report on the FEMA Study Circle meeting held at the BCAS Conference Hall on 23rd January, 2020.

Ms Mitali Pakle’s presentation was comprehensive and lucid in nature and covered a variety of case laws that made it easy for everyone to grasp the subject matter being discussed. In the course of her brief talk, the speaker managed to cover various aspects of the ECB Guidelines and made it quite interesting.

The discussion was further enriched by some thought-provoking questions that the participants posed and the answers provided by the speaker.

DTAA COURSE 2019-20

The 20th Study Course on Double Taxation Avoidance Agreement was conducted at the BCAS Hall over nine days – 13th, 14th, 20th  and 21st December, 2019 and 4th, 5th, 11th, 12th and 25th January, 2020.

Thanks to regular feedback and continuous refinement, the Study Course was re-designed and covered all BEPS and MLIs along with the Articles of DTAA, FEMA / GAAR, Transfer Pricing, Source Rules under the Income-tax Act, 1961, TDS u/s 195, Substance vs. Form and other relevant provisions.

All the lectures delivered by 31 eminent faculties were very well received. The faculties were generous in sharing their experience by way of case studies on critical topics such as residence and PE, as well as the amendments sought to be made through the MLI.

The Study Course was attended by 73 participants from diverse backgrounds such as senior professionals, practising CAs, young professionals associated with big and SME accounting firms and so on. Apart from Mumbai, there were registrations from other cities such as Ahmedabad, Baroda, Chennai, Jaipur and Delhi. All of them contributed to making the course a huge success.

For those who came in late, the Study Course is an eagerly-awaited event amongst the practitioners of international taxation from all over the country and was well received and appreciated. It was coordinated by Maitri Ahuja and Mahesh Nayak.

‘INDIAN PRIVATE TRUSTS – TAX AND FEMA ASPECTS’

The International Taxation Committee arranged a meeting on ‘Indian Private Trusts – Tax and FEMA Aspects’ on 28th January, 2020 at the BCAS Conference Hall. The meeting was led by Group Leader Naresh Ajwani who explained the far-reaching income tax and FEMA implications in case of trusts.

The speaker walked the audience through the provisions of income tax and FEMA on trusts and explained various basic terms, the genesis of trusts, kinds of trusts, ownership of trust property, AOP / BOI taxation, beneficial interest, beneficial ownership and other provisions. With the help of some simple illustrations, he explained various concepts and particulars – including terms that do not exist in Indian law such as ‘Trust is not a person’, ‘Grantor Trust’, ‘Trustee taxable as Representative Assessee’ and so on.

Naresh Ajwani also dealt with and answered queries raised by members of the audience. The meeting was interactive and the participants received enormous benefit from the discussion and the insights provided.

Acknowledging the importance of the subject, the Committee plans to host another meeting on trust provisions, details of which will be shared with members very soon.

FELICITATION OF YOUNG CAS AND ‘VISION 2020 – SHAPING THE FUTURE’ FOR NEWLY-QUALIFIED CAS

A special programme was organised for the newly-qualified Chartered Accountants (emerging successful from the November, 2019 examination) under the aegis of the Seminar, Public Relations and Membership Development (SPR&MD) Committee. But within a few days of the announcement, the online enrolments crossed the record figure of 300, forcing BCAS to close registrations!

The event was held at the BCAS Hall on Friday, 31st January, 2020. It attracted a full house of over 190 participants, including some walk-ins. They were greeted at the registration desk with a few BCAS publications – ‘Changing Paradigms for CSR in India’, a ‘Monograph Series’ containing five booklets on various laws, a copy of the BCAJ Journal of the last two months and BCAS membership forms.

The evening started with a one-on-one interactive session focussed on mentoring with eminent mentors, Nandita Parekh and Robin Banerjee. The participants were divided into two groups between the speakers so that they could interact and take help from them on all their queries, including guidance for future careers. These sessions were appreciated by all the newly-qualified CAs.

This was followed by an address by President Manish Sampat who talked about his early days as a qualified Chartered Accountant, the sound advice that he had received from his seniors to associate himself with the BCAS, the positive impact that the Society had had on his career as a CA – and to the present day when he heads the Society as President. He also briefed the new CAs on the various initiatives of the Society.

Narayan Pasari, Chairman of the SPR&MD Committee, pointed out that the youth or ‘yuva shakti’ is an integral part of the numerous activities organised by the BCAS. He appealed to the new CAs to become members of BCAS, benefit from it and play an active role in its innumerable activities. He pointed to the BCAS Referencer, the Annual RRC and the other programmes conducted in the last few months and said that youth had contributed significantly in all these events.

He proudly revealed that the BCAS is very active on social media and its handle @BCASGlobal has recently crossed the 33K mark; it also has 11K followers each on LinkedIn and YouTube.

The ‘Thought Leader’ for the evening, Nilesh Vikamsey, then took the floor and offered valuable advice to young CAs from the variegated learnings of his own life. He spoke at length on upcoming fields for CAs and stated that he believes ‘ABCD is the future’ – that is, Artificial Intelligence, Block Chains, Cyber Security and Data Analytics.

He also answered all the questions posed to him by the newly-minted CAs. He advised them to join the nearest Study Circles and pointed out that at an association like BCAS, the process of learning never stopped.

This was followed by a felicitation ceremony, with all the participants being presented with a memento by ‘Team BCAS’. The event showcased the vibrancy of the participants, many of whom showed great interest in signing up to become members of the Society.

Interestingly, some of the participants were eager to ask even more questions to their Mentors. The proceedings ended with a vote of thanks proposed by the coordinator, Rimple Dedhia.

18TH RESIDENTIAL LEADERSHIP RETREAT

The 18th Residential Retreat programme was held on 7th and 8th February, 2020 on the theme ‘Future Begins Now’. Twenty-nine participants, including ten newcomers, had registered for the programme. The trainer, Mr. Deepak Shinde (a disciple of Shri Mahatria), had flown in from Bengaluru for the event.

A cool winter breeze flowing over the green, serene and spacious campus, amidst the shade of swaying trees and the chirping of birds, set the perfect tone for the Retreat, which was held at the Rambhau Mhalgi Prabodhini, Essel World Road, Uttan.

The programme commenced with the invocation prayer. President Manish Sampat welcomed the participants and shared information about the activities of the BCAS. He proudly narrated his journey at the Society which had begun many years ago as Convener of the Human Resource Committee. He complimented the participants and the organising team for devising such an interesting workshop.

Trainer Deepak Shinde discussed several important concepts and pointers of life with the participants over the two-day Retreat.

He opened with the story of Alexander the Great King and the Saint Diogene, driving home the point that to become king or to achieve something, one has to put in huge efforts. But to be like Saint Diogene (and in permanent bliss) one need not depend on external things. One can be in that state quite naturally. To be happy, one must adhere to right values. One can be an achiever, become successful and also remain blissful like a saint.

His advice was to always begin the day with the greeting ‘Happy Morning’. Doing this all 365 days of the year would turn it into a habit. And one would not need to depend on people, places, objects, time, or seasons to be happy. If one was dependent on such external factors, the happiness would be temporary and external factors would make one subservient and vulnerable to them.

‘We have a tendency to judge people with our own biased and limited vision. In doing so we miss to be in touch with people and miss happiness. One’s life must be full of happiness and love, such that the epithet on one’s grave describes one’s life with apt, inspiring and happy words.’

In the second session, Trainer Deepak Shinde spoke about perfect balance and alignment of the laws of nature and man’s tendency to interfere. He used the simile of a Rubik’s Cube. At the beginning it is perfectly balanced with each of six sides uniformly reflecting one colour. The moment one turns, twists and revolves the cube, the entire symmetry of colour and pattern gets disturbed. The learning from this is not to interfere with the well-aligned laws of nature.

He then moved to thoughts and words. One becomes as one thinks; similarly, as one feels, so one attracts. He discussed at length the power of positive words and prayers and said that cheerfulness, abundance, gratitude, appreciation, encouragement and inspiration bring happiness and energy.

The third, evening session, was conducted in the open amphitheatre area, in the lap of nature, and the Trainer discussed peace vs. prosperity. He emphasised that one must clearly define what one wants in life. To earn peace and goodwill, one may come under pressure to sacrifice one’s own space. On the other hand, to enjoy material wealth one may have to compromise with values, goodwill and peace. The question was how to balance both, peace and prosperity? By using positive words and feelings, one can be in harmony and have perfect balance, he stressed.

Practising grace. Grace is one’s ability to carry out an act without disturbing the environment. ‘With grace, accept the outcome of action, inaction and efforts as a gift of the Lord (prasad buddhi).’

Late in the evening on the first day, the participants enjoyed a brilliant campfire. Some of them took to singing and dancing to music. The relaxed participants appeared charged up for the next morning’s session.

The first session on the second day began quite early, at 7 o’clock, in an open area witnessing the rising sun and its golden glow. The discussion turned to ‘Faith’ and ‘Energy’. Faith is something invisible with strong conviction of its presence. Trainer Deepak Shinde called faith the thread of a kite flying high in the sky. It is the connection with the thread that keeps the kite (symbolising life) flying high in the sky.

He explained the ‘God concept’ with cause and effect principles. One draws energy from the effulgence of the sun and knowledge; exercise and sattvik food for the body, positive words and prayer for the mind; and reflection, contemplation and meditation for the intellect. Energy charges the sub-conscious mind. ‘Therefore, live with grace and align with nature with faith and receive energy’.

Narrating a conversation between Lord Rama and Hanuman, he shared the view that our faith in the Lord is much more powerful than the Lord. ‘God is the symbol of love. One need not have fear of the Lord.’

In the third session, the discussion focused on relations, expectations and situations. In life sometimes one may need to take a U-turn from one’s position. One ought to understand the people around, understand that man expects happiness and woman, love. But both love and happiness are complementary. Learn to say no without guilt and not to please others.

The two-day programme concluded with a vote of thanks.

MISCELLANEA

I.
T
echnology

 

18. Amazon, Flipkart
challenge new Indian tax on online sellers

 

Amazon and Walmart’s Flipkart are among
online retailers demanding that India scale back a proposed tax on third-party
sellers on their platforms, saying the burden of compliance will hurt the
fledgling industry. The online retail industry is braced for a possible 1% tax
on each sale made by sellers on their platforms from April if the proposal is
approved by Parliament next month.

 

The move is part of a broader plan by
the government to increase tax revenues and counter a sharp economic slowdown
due to weakening consumer demand. But the tax will hurt the country’s fledgling
e-commerce sector, according to a presentation prepared by the Federation of
Indian Chambers of Commerce and Industry (FICCI) for the government.

 

The Finance Ministry declined to
comment. Some third-party sellers are also pushing back against the tax,
arguing that it would negatively impact their working capital, adding that they
already contribute to a nationwide sales tax.

 

This tax will be ‘extremely detrimental
to the growth and sustenance’ of small online sellers and make the model
‘unviable’, Unexo Life Sciences, a seller of healthcare products on Amazon’s
India website, said in an email to the Central Board of Direct Taxes. Online
vendors, or sellers with revenue of less than half a million rupees in the previous
year, as well as brick-and-mortar retailers, will be exempted from the new tax,
although they are subject to the nationwide sales tax.

 

The tax would apply to the income of
drivers on ride hailing firms, such Uber and Ola, as well as sales on restaurant
aggregators, including Zomato and Swiggy.

 

(Source:
in.reuters.com)

 

II. World News

 

19. Coronavirus could
damage global growth in 2020: IMF

 

The coronavirus epidemic could damage
global economic growth this year, the IMF Head said on Sunday, but a sharp and
rapid economic rebound could follow. ‘There may be a cut that we are still
hoping would be in the 0.1-0.2 percentage space,’ the MD of the International Monetary
Fund, Kristalina Georgieva, told the Global Women’s Forum in Dubai.

 

The full impact of the spreading disease
that has already killed more than 1,700 people would depend on how quickly it
was contained. ‘I advise everybody not to jump to premature conclusions. There
is still a great deal of uncertainty. We operate with scenarios, not yet with
projections, ask me in 10 days,’ Georgieva said.

 

In its January update to the World
Economic Outlook, the IMF lowered the global economic growth forecast in 2020
by 0.1 percentage point to 3.3%, following a 2.9% growth the previous year, the
lowest in a decade. The MD said it was ‘too early’ to assess the full impact of
the epidemic but acknowledged that it had already affected sectors such as
tourism and transportation.

 

‘It is too early to say because we don’t
yet quite know the nature of this virus. We don’t know how quickly China will
be able to contain it. We don’t know whether it will spread to the rest of the
world.’ If the disease is ‘contained rapidly, there can be a sharp drop and a
very rapid rebound’, in what is known as a V-shaped impact, she said.

 

Compared to the impact of the Severe
Acute Respiratory Syndrome (SARS) in 2002, she pointed out that China’s economy
then made up just 8.0% of the global economy. Now, that figure was 19%. The
trade agreement between the United States and China, the world’s first and
second economies, had reduced the disease’s impact on the global economy.

 

But the world should be concerned ‘about
sluggish growth’ impacted by uncertainty. 
‘We are now stuck with low productivity growth, low economic growth, low
interest rates and low inflation,’ the IMF chief told the Dubai forum.

 

(Source:
www.business-standard.com)

 

III. Health

 

20. Coronavirus
disease advice for the public – Basic protective measures suggested by WHO

 

Wash your hands
frequently

Wash your hands frequently with soap and
water or use an alcohol-based hand-rub if your hands are not visibly dirty.

 

Why? Washing your hands with soap and
water or using alcohol-based hand-rub eliminates the virus if it is on your
hands.

 

Practice respiratory
hygiene

When coughing and sneezing, cover mouth
and nose with flexed elbow or tissue – discard tissue immediately into a closed
bin and clean your hands with alcohol-based hand-rub or soap and water.

 

Why? Covering your mouth and nose when
coughing and sneezing prevent the spread of germs and viruses. If you sneeze or
cough into your hands, you may contaminate objects or people that you touch.

 

Maintain social distancing

Maintain at least 1 metre (3 feet)
distance between yourself and other people, particularly those who are
coughing, sneezing and have a fever.

 

Why? When someone who is infected with a
respiratory disease like 2019-nCoV coughs or sneezes, that person projects
(ejects) small droplets containing the virus. If you are too close, you may
breathe in the virus.

 

Avoid touching eyes,
nose and mouth

Why? Your hands touch many surfaces
which may be contaminated with the virus. If you touch your eyes, nose or mouth
with your contaminated hands, you may transfer the virus from the surface to
yourself.

 

If you have fever,
cough and difficulty breathing, seek medical care early

Tell your health care provider if you
have travelled in an area in China where 2019-nCoV has been reported, or if you
have been in close contact with someone who has travelled from China and has
respiratory symptoms.

 

Why? Whenever you have fever, cough and
difficulty in breathing, it’s important to seek medical attention promptly as
this may be due to a respiratory infection, or any other serious condition.
Respiratory symptoms with fever can have a range of causes, and depending on
your personal travel history and circumstances, 2019-nCoV could be one of them.

 

If you have mild
respiratory symptoms and no travel history to or within China

In such a case, carefully practice basic
respiratory and hand hygiene and stay at home until you have recovered.

 

Practice general
hygiene measures when visiting live animal markets, wet markets or animal
product markets

Ensure regular hand washing with soap
and potable water after touching animals and animal products; avoid touching
eyes, nose or mouth with hands; and avoid contact with sick animals or spoiled
animal products. Strictly avoid any contact with other animals in the market
(such as stray cats and dogs, rodents, birds, bats). Avoid contact with
potentially contaminated animal waste or fluids on the soil or structures of
shops and market facilities.

 

Avoid consumption of
raw or undercooked animal products

Handle raw meat, milk or animal organs
with care to avoid cross-contamination with uncooked foods, as per good food
safety practices.

 

(Source: www.who.int)

 

21. Over 1 lakh
deaths in 29 cities due to air pollution: Study

 

While Environment Minister Prakash
Javadekar is often heard claiming that there is no correlation between air
pollution levels and premature deaths, the latest Indian study published in a
leading international journal suggests a close correlation.

 

In fact, over one lakh deaths in 29
Indian cities may be attributed to the rising PM 2.5 levels. According to a
study by two IIT Kanpur experts, published in the latest edition of the
environmental journal ‘Science of the Total Environment’, the national capital heads
the pack. Kolkata, Mumbai, Chennai and Ahmedabad are not far behind. Delhi tops
the list of 29 cities with a million plus population.

 

The study adds that Ischemic Heart
Disease (IHD) is the leading cause of death accounting for 58% of the PM
2.5-related premature deaths. The most affected are children under the age of
five and the ‘productive age group’ of 25-50 years, suggests the study titled
‘Cause and Age, Specific Premature Mortality Attributable to PM 2.5 Exposure:
An Analysis for Million Plus Cities’. This paper has used the 2016 data for the
29 cities as that is the latest year for which the registered all-cause death
data is available from the Civil Registration System. It is modelled on the
basis of the 2015 Global Burden of Disease report.

 

The study has been authored by air
pollution expert Mukesh Kumar of IIT Kanpur along with Prateik Saini. Kumar
also authored the 2015 report on sources of air pollution in Delhi. ‘While
studies have also been done earlier, this one is based on Ischemic Heart
Disease and actual measured data on PM 2.5-related mortality. The data is
age-specific and cause-specific and therefore helps us interpret and show the
clear correlation between pollution levels and death rate,” Kumar stated.

 

(Source: www.economictimes.com)   

 


 

LETTER TO THE EDITOR

   12th February, 2020

The Editor                                                                                                                        

The Bombay
Chartered Accountant Journal

Jolly Bhavan
No. 2

New Marine
Lines

Mumbai 400
020

 

Dear Sir,

 

Re:
Article titled “Case study: Section 36(1)(iii) of the I.T. Act, 1961 with special reference to Proviso” in the January 2020
issue of the BCAJ

 

This has
reference to the above article published in your January, 2020 issue on page
Nos. 15 to 18.

 

I am not on the
subject of the article nor am I on the correctness or otherwise of the
conclusion of the article. I am writing this letter only on the narrow issue of
interpretation of the term “acquisition” discussed in this article on page 16
since it could be of general importance. If I am not mistaken, it is tried to
canvass in the article that the word “acquisition” used in the proviso
to clause (iii) of sub-section (1) of section 36 of the Income-tax Act, 1961
connotes acquisition of an asset from a third party and it does not
include an asset which is “self-created” or “self-constructed” or
“self-acquired”. This interpretation would apply irrespective of whether the
asset is work-in-progress (which is the subject of this article) or a capital asset, because the word employed in the proviso is “asset”.

 

If this interpretation
is applied to a capital asset like, say, a plant, it would lead to a strange
situation. For example, if a power generation company erects on its own a power
plant by buying various components, machines, spares, etc. from various third
parties and by utilising the services of outside technical consultants as well
as its own technicians, workers and employees, going by the interpretation
placed on the term “acquisition” in this article, the plant as a whole cannot
be called “acquired”, because the plant as a whole did not already exist (as is
stated in this article) over which the power generation company gains
possession; the plant is its own creation. It is therefore submitted that the
word “acquisition” used in the proviso would mean not merely a thing
acquired from a third party, but also a thing which is “self-created”,
“self-constructed” or “self-acquired”. The following observations of the
Gujarat High Court on the interpretation of the term “acquire” [though in the
context of the term “acquisition” used in section 48(ii)] in CIT vs.
Mohanbhai Pamabhai [1973] 91 ITR 393, 408-409 (Guj.)
[later affirmed by
the Supreme Court in [1987] 165 ITR 166 (SC)] would throw light
on this issue:


“The word
‘acquire’, according to its plain natural meaning, is a word of very wide
import. It is not confined to obtaining of a thing from a third party.
When an assessee gains a thing by his own exertions or comes to own it or have
it by any recognised mode which would doubtless include the mode of
creation
, he can be said to have acquired the thing. There
are various modes of acquisition by which a thing may be acquired by an
assessee and creation is one of them.
When an assessee creates a
painting, sculpture or a building, he gains it, he comes to have
it or own it. He acquires the painting, sculpture or building
by creating it. When a capital asset is created by an assessee, it becomes his
property, he comes to own it and, therefore, he acquires it the moment it is
created. Creation or production of a capital asset is not foreign to the
concept of acquisition…” (Emphasis supplied)

 

Before making
the above observations, the Court took cognisance of the following meaning of
the term “acquire” given in Black’s Law Dictionary:

“To gain
by any means, usually by one’s own exertions;
to get as one’s own; to obtain by search,
endeavour, practice, or purchase; receive or gain in whatever manner; come to
have.”1  (Emphasis supplied)

 

 

With regards,

Yours truly,

 

Jignesh R. Shah

Advocate, High
Court
 


____________________________________________________

1   See also Advanced Law Lexicon by P. Ramanatha
Aiyar, 3rd edition, 2005, page 73.

SOCIETY NEWS

7TH YOUTH RESIDENTIAL REFRESHER COURSE

The 7th YRRC was organised by the Human Resource Development Committee of the Bombay Chartered Accountants’ Society from 29th to 31st May, 2020. Considering the unusual circumstances of the nationwide lockdown due to the Covid-19 pandemic, a unique online RRC was conceptualised, wherein a wide variety of topics was organised across five sessions and ten hours over a three-day refresher course – all this from the comfort of the participants’ homes.

‘Seven Chakras of the Professional World’, the theme of the event, was meant to cover seven different aspects of the profession – World, Nation, Business, Network, Me, Mind and Soul. A perfect blend of knowledge, the YRRC provided a great opportunity to all the participants to expand their horizons. It sought to present different online networking activities for interaction amongst the global participants.

A glimpse into the events of the YRRC.

The YRRC covered 14 different topics addressed by a stellar line-up of speakers from across the world as under:

Topic Speaker
1 Leadership Niranjan Hiranandani, Mumbai
2 Entrepreneurship David Wittenberg, Mumbai
3 The world has tipped: Are you prepared? Raj Nair, Mumbai
4 Story of a shy boy from Gujarat to senior position in BCAS Kanu Doshi, Mumbai
5 World economics H.E. Zulfiquar Ghadiali, Abu Dhabi
6 Indian economics Dr. Shubhda Rao, Mumbai
7 The role of development finance institutions and how to access funding for projects in emerging markets Jeffery Stoddard, Washington D.C.
8 Networking from home Manoj Gurshahani, Mumbai
9 Is work your identity? Avatar Lila, Mumbai
10 Image management Mihika Bhanot, Pune
11 Voice improvement & modulation Dr. Manisha Soni, Mumbai
12 Sustainability of happiness Padma Shri T.N. Manoharan, Chennai
13 Building resilience Shubhika Bilkha, Mumbai
14 Living with the unknown – Anecdotal renderings from a lifetime experience of the unknown Lt.-Gen. Syed Ata Hasnain, New Delhi

The content and the presentations by the speakers were clearly a class apart. They delivered their points and ideas with great clarity. They got the participants thinking on whether to be an entrepreneur or do a job in an industry or become an ‘intrapreneur’ (a new concept well explained). The participants obtained a better understanding of what skills one must possess to be a leader and how world economies play their role in shaping one’s life. We are all now at least aware of how to be ready for the world that has already tipped. One of the key learnings for the participants was ‘How to Network Digitally’, especially in the times of Covid and in our lives thereafter. They also got a glimpse into the concepts of voice modulation and image management as well as their importance in our personal and professional lives. The participants were given deep insights into and made aware of the importance of being prepared for any unforeseen situation, be it a war-room or a boardroom.

Their sensitivities tickled, the participants came up with interesting questions that were addressed extensively by the speakers, and yet left everyone wanting more. In fact, all the scheduled breaks between speakers were invariably used in extracting even more out of the knowledgeable speakers.

The event had over 150 participants from 26 cities across the world, with technology diminishing the distance between their locations.

Agra Bhilwara Jaipur Mumbai Porbandar
Ahmedabad Birganj (Nepal) Jamnagar Nagpur Pune
Aurangabad Chennai Nairobi Nashik Thane
Bangalore Coimbatore Lucknow Navi Mumbai Vadodara
Bareilly Hyderabad Margao Navsari Varanasi

The participants also took active part in the after-hours sessions like the ‘People Tambola’; ‘Lost on the Island’ – a strategy game; and a Relay Video challenge called ‘YRRC’s Got Talent’. Though there was no physical interaction between the people, all these activities ensured optimum networking. At the end of the YRRC, everyone had made some new friends in the profession whose support they could draw upon at any time. For participation in these networking activities, the participants were divided into six teams and points were awarded to the teams for the different activities.

At the closing session, participants were already asking about the next YRRC! They truly appreciated the concept and execution of the event. It was an event that was truly ‘By the Youth, Of the Youth and For the Youth’. The participants bid farewell to one another and promised to stay connected digitally.

The Team – Behind the Scenes

Top L-R: Ankit Gudhka, Prajit Gandhi, Namrata Dedhia, Anand Kothari

Middle L-R: Namrata Shah, Virag Shah, Dhruv Shah, Kinjal Bhuta

Bottom L-R: Sneh Bhuta, Naushad Panjwani

In Circle: Gaurav Save

DEEPAK PAREKH DELIVERS FOUNDING DAY LECTURE

For the first time in the history of the Bombay Chartered Accountants’ Society, the Founding Day lecture was delivered online before a virtual audience. It was the 72nd Founding Day and the programme lined up for the evening was a mouth-watering one – a talk by the inimitable Mr. Deepak Parekh, Chairman of HDFC and a qualified Chartered Accountant.

Organised with the help of the software called ZOOM, the meeting was held on 6th July and was witnessed by 135 online viewers – plus another 2,500 enthusiasts who watched it on YouTube.

The subject itself was intriguing, ‘CAs in Uncharted Times’, and the speaker was a stalwart in every sense of the term.

President Manish Sampat performed three functions. He welcomed the speaker, gave the viewers a brief background of the activities of the BCAS and also introduced the speaker.

Mr. Parekh started his talk by complimenting the Society on its leadership in the profession and said that 72 years was indeed a very long time for an institution to sustain its reputation and retain its values. He also lauded BCAS for the illustrious speakers that it had invited for its Founding Day lectures in previous years.

He pointed out that the world was going through unprecedented times with no past model against which to benchmark it. In such times, decision-making was difficult because the future was just not predictable. Therefore, the need of the hour was ‘inclusive leadership’ which could help institutions to sail through. This would be possible only through collaboration and the free flow of information between individuals and institutions rather than by working in silos.

Recalling an oft-repeated dictum, he said that there were decades when nothing happened and then there were weeks when decades happened. Therefore it was imperative to understand that the time had come to reset skills. At the same time, there was a silver lining in the current situation – it was time to accept the reality of staying at home and using that as an opportunity to develop patience and to spend quality time with near and dear ones.

In such unchartered times, CAs, especially auditors, would have to be willing to meet the challenges in respect of internal controls and possibly redefine their work so that scams do not get uncovered later. Several recent experiences of large-scale frauds had pointed to the need for auditors to become more intuitive and ensure that valuations are conservative and the concept of ‘going concern’ in the changed paradigm is not compromised. This would go a long way to help protect the interests of all stakeholders. India, despite its much acclaimed developments on many fronts, had not made much progress on human health economy to tackle crises of such enormity and scale as posed by the coronavirus pandemic.

Mr. Parekh said that India was seeing its fourth recession in recent times. But unlike the previous recessions which were due to agricultural failure, the current recession was of a different dimension. The fiscal deficit was high, corporate performance was subdued and the realty sector was saddled with stock that was difficult to liquidate. However, the positive aspect was that India could see some green shoots thanks to the bumper crop, current account surplus, and maintenance of investment grade status by credit rating agencies, low interest rates and increased FII inflows resulting in a robust foreign exchange reserve balance.

He lamented the fact that rating agencies were being unfair to India in not giving due credence to these facts. Liquidity was returning to NBFCs, global crude rates were at their lowest and GST collections were showing steady signs of returning to normal levels. Under these circumstances, there were sufficient new opportunities such as Environment Social Governance (ESG) and technology-oriented new areas such as Data Analytics, IT Audit, Artificial Intelligence and Big Data for small and medium CA firms and the CAs must make efforts to adopt them. The vast data collected and available will need analysis and none better than CAs would be able to do justice to it. He firmly believed that there was enough room for the SME sector to co-exist with the ‘Big 4’. He, however, agreed that there was need to improve the compensation standards for CAs to ensure better quality work and to justify the responsibilities, risks and liabilities that they undertake.

Overall, Mr. Parekh exuded an aura of positivity, asserting that India and its CAs had a very bright future. A significant difference would be made by the resilience of the Indian people and the strength and ability of domestic consumption to help the economy to bounce back.

The vote of thanks was proposed by Hon Jt. Secretary Mihir Sheth.

 

VIRTUAL TALK ON ‘INSPIRED LIVING’

Dr. Mayur B. Nayak conducted an inspiring virtual session ‘Inspired Living’ for the Study Circle of the Human Resource Development Committee on 14th July.

He started by pointing out that the human body is made up of five basic elements of nature, namely, earth, water, fire, air and space known as Panch Mahabhutas in Sanskrit. These exist in different proportions. For example, our body consists 72% of water.

Balancing these five elements is of utmost importance for good health. Such a balance can be attained by the practice of yoga / exercises, mudras, pranayama, through natural sources, diet variations and meditation.

Drawing an analogy, Dr. Mayur pointed out that the five elements could be said to be related to five different aspects of the human personality, namely, (i) Physical, (ii) Mental and Emotional, (iii) Intellectual – Personal and Professional, (iv) Social, and (v) Spiritual.

Earth element was linked to the physical dimension of one’s personality. Hence it was important to remain grounded and physically fit for taking a major leap in life. Emphasis was placed on the three key Pranayamas, viz., Anulom Vilom, Bhastrika (followed by Sheetali) and Kapal Bhati to increase one’s immunity to fight the current corona pandemic. By chanting the ‘Omkar’ mantra properly, one can control the movement of energy in one’s body. Participants were taught the correct way of deep breathing to reduce stress and tension.

The second element water was linked to the mental and emotional dimensions of one’s personality. One must replace fear with faith, hatred with love, and shame with freedom to attain emotional maturity. A unique 3A constitution of ‘Accept, Adjust and Appreciate’ was shared with the participants to help improve the inter-personal relationships. ‘Respond and not react’ was given as the mantra to control anger.

Fire element was linked to the intellectual dimension of one’s personality, leading to personal and professional growth. One must ignite the fire of passion to succeed in life. The first step is to do a SWOT analysis, followed by developing a right attitude in life. Self-belief is the key to success. One must try and explore the hidden potential within, Dr. Mayur said.

Air element was linked to the social dimension of one’s personality. The emphasis was on spreading one’s fragrance through good deeds. Giving is the nature of the Divine. It was revealed that one can give many things apart from money, such as smile, love,
hope, blessings, support, hugs, moral support, education, time, appreciation, happiness and so on. Covid-19
had offered a lot of opportunities to give. And for giving one must develop love and compassion in one’s heart.

Finally, the space element is linked to spiritual growth. The difference between spirituality and science / religion was explained. Eight steps of Astang Yoga to attain nirvana were highlighted. Spirituality as a way of life was explained with a detailed elaboration of the spiritual values of life. Emphasis was placed on meditation as a panacea for balanced growth in all dimensions of the personality to live an inspired life.

The talk comprised of an audio-visual presentation, followed by a Q&A session.

The speaker, Dr. Mayur Nayak, also gave some lessons to be practised at home for ‘Inspired Living’. The Study Circle was well attended by over 70 participants. The presentation is available on the YouTube Channel of the BCAS.

REGULATORY REFERENCER

DIRECT TAX


1. CBDT further extends
tax compliance,
other due dates under the Taxation and Other Laws
(Relaxation of Certain Provisions) Ordinance, 2020. [Notification No. 35 of 2020
dated 24th June, 2020.]

 

2. Income-tax (13th
Amendment) Rules, 2020
– Rule 2BB amended to prescribe exemptions which
can continue to be claimed by an assessee opting for the new taxation regime
prescribed u/s 115BAC of
the Act. [Notification No. 38 of 2020 dated 26th June, 2020.]

 

3. Income-tax (16th
Amendment) Rules, 2020
– Rule 31A amended. It notifies amendments in
TDS statement under Form 26Q with respect to sections 194A, 194J, 194K, 194LBA,
194N, 194-O,
197A and 200. [Notification No. 43 of 2020 dated 3rd July, 2020.]

 

4. CBDT further relaxes
the time frame
prescribed under second proviso to section 143(1) and
directs that all validly-filed returns up to A.Y. 2017-18 with refund claims,
which could not be processed u/s 143(1) and have become time-barred, subject to
the exceptions, can be processed now with prior administrative approval of Pr.
CCIT/CCIT by 31st October, 2020.
[F No. 225/98/2020ITA-II dated 10th July, 2020.]

 

5. One-time relaxation
granted
for verification of returns for A.Ys. 2015-16, 2016-17, 2017-18,
2018-19 and 2019-20, which were uploaded electronically by the taxpayer within
the time allowed u/s 139 of the Act and which have remained incomplete due to
non-submission of ITR-V Form for verification. Such returns can be verified by
sending a duly signed physical copy of ITR-V to CPC, Bengaluru through speed
post or through EVC/OTP modes. Such verification process must be completed by
30th September, 2020. CBDT further directs that such returns shall
be processed by 31st December, 2020 and intimation of processing of
such returns shall be sent to the taxpayer. [Circular No. 13/2020 dated 13th
July, 2020.]

 

ACCOUNTS AND AUDIT

 

A. The timeline for
submission of financial results for the quarter / half-year / financial year
ending 31st March, 2020 by listed entities
(Regulation 33 of the
LODR Regulations) has been further extended by a month to 31st July,
2020 on account of the pandemic. [SEBI Circular No.
SEBI/HO/CFD/CMD1/CIR/P/2020/106 dated 24th June, 2020.]

 

B. Guidance Note on The
Companies (Auditor’s Report) Order, 2020
– The ICAI has issued a Guidance
Note on CARO, 2020
(applicable for audits of F.Y. 2020-21 and onwards) to
enable auditors to comply with its reporting requirements. [ICAI Guidance
Note issued on 1st July, 2020.]

 

C. Applicability of the
revised edition of Code of Ethics
– The following provisions of Volume – I
of Code of Ethics, 2020 is deferred till further notification: (a)
Responding to NOCLAR; (b) Fees – relative size; and (c) Taxation services to
audit clients. [ICAI announcement dated 1st July, 2020.]

 

D. Extension of timeline for finalisation of audited accounts by
applicable NBFCs
– Applicable
NBFCs shall finalise their balance sheet within a period of three months from
the date to which it pertains, or any date as notified by SEBI for submission
of financial results by listed entities. [RBI Notification No.
RBI/2020-21/11 dated 6th July, 2020.]

 

E. Guidance on Accounting
for expenditure on CSR Activities
– The ICAI has issued a Technical
Guide on Accounting for Expenditure on Corporate Social Responsibility
Activities
with the objective of providing guidance on related recognition,
measurement, accounting, presentation and disclosures aspects. [ICAI
Technical Guide issued on 6th July, 2020.]

 

F. Extension of the last date of filing Form
NFRA-2
– The time limit for
filing Form NFRA-2 for F.Y. 2018-19 will now be 270 days from the date of
deployment of the form on the NFRA Website. [MCA General Circular No.
26/2020 dated 6th July, 2020.]

MISCELLANEA

I.
Business News

19. An emoji is worth a thousand words

On the day dedicated to the little pictures that save a
thousand characters on phone and computer keypads – 17th July –
hopefully, people remembered that thanks to emojis the world is going back to
the days of unfettered, unlettered visual communication. Language has come full
circle from our most ancient ancestors’ parietal art to the graphic novels and
emojis of our times, obviating the need for letters, numbers and punctuation
marks. As emojis make further inroads into our written communication, the only
people who may have reason to grumble are grammarians and pedants, as this mode
disregards all rules and, indeed, language itself.

 

The purists could conceivably have retained some clout if
emoticons had prevailed as they use letters, numbers and punctuation marks. But
they are now increasingly irrelevant as in the expanding emoji world there is
simply no need to know words such
as hippopotomonstrosesquippedaliophobia or its correct spelling, much less
devise a pictographic equivalent for it.

 

Esperanto has been trying for 133 years to become the world’s
preferred auxiliary language, but in one-eighth of that time – especially since
2010 – emojis have already found their way into well over 90% of online
communication. With its ability to express emotions as well as an idea, emojis
are clearly the text-best thing to verbal conversation.

 

(Source: ET Bureau – 18th
July, 2020)

 

II.
Business

20. Global real estate
investment plunged by 33% in first half of the year

 

KEY POINTS

(1) The largest decline was
seen in the Asia Pacific region, down 45%,

(2) By sector, investments
in hotels suffered the steepest drop, down 59% on a global basis,

(3) Industrial properties
showed the most resilience, with investments slipping by only 4%.

 

Cross-border investments in
global real estate plunged by 33% in the first half of the year compared to the
first half of 2019, according to a report released by Savills, the London-based
global real estate services provider.

 

The largest declines were
seen in the Asia Pacific region, down 45%, and the Americas, down 36%.

 

By sector, investments in
hotels suffered the steepest drop, down 59% on a global basis. Investments in
retail properties and office spaces plunged 41% and 40%, respectively.

 

Industrial properties
showed the most resilience, with investments slipping by only 4%.

 

Interestingly, investments
in residential properties in Asia Pacific actually surged by 105% – partly
boosted by the purchase of a Japanese apartment portfolio by Blackstone Group
for about $3 billion in February, 2020.

 

‘Overall, the global 33%
fall in real estate investment activity so far this year is less than the decrease
at the start of the global financial crisis in the first half of 2008, when
real estate investment volumes across the world fell by 49% and continued
falling until mid-2009,’ said Sophie Chick, Director of Savills World Research
team. ‘Unsurprisingly, those asset classes that have been most [affected] by
social distancing measures have been hit hardest, while industrial and
residential, which is a long-term income play, have been impacted least.’

 

By region, Europe, the
Middle East and Africa, or EMEA, saw only a 19% decline in investments.

 

‘The huge increase in
entity-level deals in EMEA has helped insulate that market from the biggest
falls as some buyers have used this period for opportunistic M&A or equity
deals,’ Chick explained.

 

Simon Hope, Savills’s head
of global capital markets, added, ‘Volumes are expected to remain well below
pre-pandemic levels for the rest of 2020 as investors wait for market clarity.
However, certain sectors are expected to outperform as investors focus on
secure assets, namely logistics, residential and life sciences.’

 

Hope also noted that
looking ahead, ‘there seems to be general consensus across G8 governments
around the world to build their way out of this downturn, turning on a tap of
capital for infrastructure projects. This generally bodes well for the real
estate industry as it potentially creates more assets to invest in as well as
reducing unemployment rates.’

 

(Source:
International Business Times – By Palash Ghosh, 20th July, 2020)

 

III.
Financial accounting news

21. How U.K. audit scandals pushed Big Four toward
split: QuickTake

 

A spate of scandals has put accounting firms in the U.K. on
the back foot. The collapse of Carillion Plc and subsequently Thomas Cook Group
Plc, have been among cases that raised questions about auditing standards at
the so-called Big Four firms. In response, Deloitte, Ernst & Young, KPMG
and PricewaterhouseCoopers have agreed to separate their auditing and
consulting departments by 2024 to avert possible conflicts of interest, a move
that critics say does not go far enough.

 

1. How bad have things got?

Bad enough that the U.K. government promised to reform the
audit industry after a Parliamentary report two years ago into the collapse of
Carillion, a major outsourcing company. The report panned Carillion’s
accounting methods, KPMG’s soft audits and weak accounting regulation.
Sidetracked by Brexit, a general election and the coronavirus pandemic, the
government has yet to follow through. In the meantime, the accounting firms
have taken action along with the regulator, the Financial Reporting Council,
partly to pre-empt government moves.

 

2. What have they agreed to?

The plan, announced on 6th July, to split
consultants from auditors aims to ensure the Big Four won’t baulk at tough
audits so as not to jeopardise lucrative consulting contracts at the same
companies. In the regulator’s words, the firms need to do a better job of
backing ‘auditors making tough decisions.’ The deal is a significant concession
by the Big Four, which fiercely opposed splitting auditing functions. However,
it doesn’t convincingly address conflicts of interest between supposedly
independent auditors selling consulting work to their clients. Under the deal,
the auditors can still earn close to half of their revenues from consulting,
staff can switch between audit and consulting positions, and auditors are under
the control of the firm’s chief executive officer who also oversees the
consulting divisions.

 

3. Will it work?

Unlikely. Richard Murphy, an accountant and economics
professor at City University in London, says this is a cosmetic exercise
designed to make the Big Four look more independent but ignores the lack of
independence and competition that have blighted audit quality in the U.K.
Critics say the voluntary agreement lacks regulatory muscle and will not be
enforceable. Some groups have said that it will fail to stimulate competition
from smaller firms or make auditors more independent of their clients.

 

4. What about the regulator?

The FRC has powers to sanction firms and individual
accountants for deficient auditing, and does so. Without legislation, however,
the agreement isn’t legally enforceable and has been criticised for allowing
the big firms to continue offering consulting services. The move was taken
partially to pre-empt lawmakers from weighing in with their own, likely
tougher, solution.

 

5. Why the need for reform?

The Carillion collapse in 2018 that shocked lawmakers into
action came after the government refused to bail it out, costing almost 3,000
jobs and leaving 30,000 suppliers and sub-contractors with 2 billion pounds
($2.5 billion) in unpaid bills. Administrators liquidating its assets believe
KPMG’s auditing was negligent in relation to its long-term construction
contracts and goodwill. Thomas Cook collapsed in September, 2019, leading to
9,000 job losses in the U.K. and leaving 150,000 tourists stuck overseas. That
also sparked an investigation by the FRC into auditor Ernst & Young.

 

6. Have things improved since then?

No. Middle Eastern hospital operator NMC Health Plc, listed
in London, started unravelling this year after unearthing undisclosed debt amid
allegations of fraud, leading to the departure of top executives. The FRC
opened a probe into Ernst & Young’s auditing of NMC’s financial statements.
And in Germany the admission by payments company Wirecard AG in June that 1.9
billion euros ($2.2 billion) it had reported as assets probably never existed
led to the resignation of Chief Executive Officer Markus Braun and his
subsequent arrest, with the company filing for court protection from creditors.
Ernst & Young’s refusal to greenlight Wirecard’s long-delayed 2019
financial report followed reports by the Financial Times raising
questions about Wirecard’s accounting practices. Ernst & Young called it an
‘elaborate’ fraud that even a very rigorous probe may not have discovered.

 

7. What will the government do?

The U.K. government has promised to replace the FRC with a
new regulator, the Audit, Reporting and Governance Authority, as recommended by
an independent report in 2018. Unlike the FRC, this will be a statutory body
with legal powers granted by Parliament to regulate the big accounting firms
directly. The government still says it will act on the findings of three
reports it commissioned after Carillion’s collapse. Beyond the
accounting-consulting split, the recommendations included requiring large listed
companies on the FTSE 350, such as Aviva Plc and Tesco Plc, to use joint
auditors to help bring other firms into the market and creating a distinct
auditing, as opposed to accounting, profession. All these moves would require
legislation, however, and Parliament may not have the time to pass the
necessary laws.

 

8. Does this sound familiar?

Yes, it’s reminiscent of regulatory action taken in
Washington almost two decades ago. Since 2002, auditors of publicly-traded
companies in the U.S. operate under strict rules that bar them from providing
most consulting services to their audit clients. The Sarbanes-Oxley Act was
part of Congress’s response to accounting scandals that brought down Arthur
Andersen LLP and its clients Enron Corp. and WorldCom Inc. It also imposed
audit regulations and created the Public Company Accounting Oversight Board,
which enforces standards and annually inspects the largest firms. U.S.
regulators are increasingly concerned about the patchwork of regulations in
force around the world. Securities and Exchange Commission chief Jay Clayton
said in December that he wants more financial reporting and audit uniformity
worldwide.

 

9. What’s next in the U.K.?

The Big Four have promised to submit plans to the FRC by
October next year, before a split effective in 2024. That gives the government
time to pass legislation and audit reform proposals may be released in the
coming months. Though legislation would supersede the agreement, there is
speculation the government could use this pact as a reason to put audit reform
on the back burner.

 

(Source: Bloomberg Tax – By Guy
Collins, Hugo Miller, 17th July, 2020)

BOOK REVIEW

BRIDGITAL NATION: SOLVING TECHNOLOGY’S
PEOPLE PROBLEM – By N. Chandrasekaran and Roopa Purushothaman

 

The authors of this book are as
illustrious as they come. While Mr. N. Chandrasekaran is the Chairman of the
Board, Tata Sons Pvt. Ltd., Ms Roopa Purushothaman is Chief Economist and Head
of Policy Advocacy at the Tata Group.

 

Its theme is India @ 2030 and the
probable situation is best described as follows: India is among the top three
economies of the world. All Indians use advanced technology to do their work,
or to get their job done. All Indians have access to quality jobs, better
healthcare and skill-based education. Technology and human beings co-exist in a
mutually-beneficial ecosystem.

 

This reality is possible. It is within
reach. With Bridgital.

 

The book provides an interesting
perspective on what might be an effective means of tapping India’s vast
underutilised human resource base. It advocates three transformational
requirements, Technology, Talent and Vision as important
foundations to help solve people’s problems with major technological
transformation.

 

It is also an attempt to understand how
technology could help India navigate this crucial transition period. It is
apparent that there are two primary challenges that need urgent attention: Jobs
and access to vital services. Whether in education, healthcare, the
judiciary or any other field, the problems remain the same – both resources and
skilled people are scarce. And this is what holds India back from reaching its
full potential. The authors say these issues can be labelled India’s Twin
Challenges: Jobs and Access.

 

JOBS


India has a massive jobs challenge on
its hands. It is expected that 90 million people will come of working age
between 2020 and 2030. In other words, the number of Indians reaching working
age will be four times that of the US, Brazil and Indonesia combined. India’s
particular challenge is the existing levels of skill and education. For
example, only one in around 50 workers has any kind of formal vocational
training.

 

ACCESS

But jobs are only one half of the
problem. The other is a critical shortage of access to vital services. We may
not know it by name, but we are living witnesses to the access challenge – the
overcrowded classrooms and doctors’ waiting rooms; the legal cases that go on
for decades; and countless middlemen and agencies that help make sense of it
all.

 

The access challenge puts services such
as quality healthcare and education out of the reach of millions, a situation
that has arisen in large part because there aren’t enough qualified people.

 

Addressing this challenge will bear
fruit almost immediately. It will mean shorter wait times. It will mean faster
justice. It will mean better quality healthcare and education. It will make
people feel less like a crowd, more like they matter. It will improve the
quality of life.

 

According to the authors, the twin
challenges can be addressed with the help of two strategies to be
complemented with a Bridgital approach:

 

(1) Bringing women to the workforce
(the ‘XX’ factor)


The authors observe that in India a
woman’s path from education to work is often permanently interrupted – by
marriage, family wishes, children, societal pressures. According to the data,
nearly 120 million women in India have at least a secondary education but do
not participate in the workforce.

 

Women will form an important part of
the pool of Bridgital workers. What will it take to bring them to work?
Smart policies focused on childcare provision and parental leave, and promoting
attitudinal shifts in society around working women are good places to begin.
The last decade of experience and research has brought this opportunity to the
fore. India now needs to shift gears and understand better how to make paid
work available to and worthwhile for women. With a more balanced educational
profile, the country can address a key part of the skills gap it faces. For
this to happen, the access barriers to women’s employment need a serious
overhaul.

 

(2) Entrepreneurs everywhere:
Preparing the ground for thriving entrepreneurship throughout the country


Capturing India’s entrepreneurial
spirit means a transformation of vision away from the culture of
micro-management. The fact is that the country must embrace SME growth. Growth
will come not from pushing hard, but from removing the obstacles that confront
SMEs.

 

A certain level of judicious
risk-taking accompanies this growth mindset. SMEs require supervision, not
suspicion.
Smart risk management doesn’t force more control, more rules and
more policies, but improves oversight of existing rules while simplifying them.

 

Entrepreneurship can flourish
everywhere through the development of Bridgital clusters that integrate
and extend a range of digital business services to which many SMEs lack access.
Bridgital clusters, coupled with greater use of digital governance to
transform the relationship between SMEs and the bureaucracy can positively
channel the entrepreneurial spirit inherent throughout the nation.

 

‘BRIDGITAL’
NATION


India needs a new approach that views Artificial
Intelligence (AI) and automation as a human aid, not a replacement for human
intervention.
If this is done, automation in India will look nothing like
it does anywhere else and it is this approach that is called ‘Bridgital’.
By turning a challenge into an opportunity, by seeing India’s access
challenge as the engine of employment generation
, it builds a
technology-based bridge between the dual parts of the Indian economy.

 

The authors very aptly suggest that
technology alone isn’t the answer; it has to be configured and adapted to the
demands of the situation. Bridgital works best when roles and services
are deconstructed and re-imagined and when the delivery of the tasks they
contain is redesigned.

 

In the Bridgital world,
technology does not disrupt an existing market as much as it creates an
entirely new one. When services are re-imagined through twenty first century
technological advances, an additional layer of workers emerges who can
intermediate both technology and existing resources for larger numbers of
people.

 

The authors again and again reiterate
that the future will be one of humans and technology working together. It’s
this future India will have to anticipate, design and prepare for, keeping its
young workforce, limited infrastructure and linguistic and cultural differences
in mind.

 

Bridgital provides the unprecedented ‘bridge’
between jobs and access, while the ‘XX’ factor and ‘Everywhere
Entrepreneurship’ bolster both sides of the scale, thus multiplying the impact
on jobs and access. India needs to solve the twin challenges for hundreds of
millions, but the beauty of a technology-driven approach is that scale can take
hold.

 

Bridgital will provide new opportunities to meet
the needs of small and medium businesses.

 

ROLE OF
EDUCATION


A combination of education and exposure
can improve awareness and acceptance of entrepreneurship as a viable career
path. The goal of entrepreneurship education isn’t simply to make it more
appealing, but to change the way the students think. The right curriculum can
improve non-academic skills such as creativity, persistence and teamwork and
can encourage comfort with risk-taking. These skills are crucial to success in
a future of work that is likely to be deeply entrepreneurial in spirit.

 

Entrepreneurship education is different
from core school subjects which are traditionally teacher-led and tested with
exams. With entrepreneurship education, the focus is not as much on learning
concepts as it is about building skills such as the ability to collaborate and
communicate. These skills cannot be taught and tested like core subjects but
can be developed through a learning-by-doing approach.

 

DATA PRIVACY


The authors recognise that data
privacy
, the foundation of any Bridgital approach, is a necessity.
India is in the process of recognising individuals’ rights over their personal
data. As it does so, it needs to ensure that data can be accessed only by
people who are authorised to do so, but without stifling researchers who need
it. At the same time, India requires an authority that can provide redress for
unauthorised access to data.

 

To summarise, this book is a perfect
combination of an expert in technology sitting with an economist to write
digital solutions to India’s economic problems.

 

One felt, while
hearing the 2020 Budget speech of the Finance Minister, that she was deeply
impressed by the book, especially the boost to the concept of ‘entrepreneurs
everywhere’.

 

The book has narrated real-life
situations (with names changed) to show how digital solutions have successfully
tackled several challenges, such as the transformations at AIIMS and Kolar
which prove that the principles that underpin Bridgital can be applied
anywhere and by anyone, whether in the fields of agriculture, logistics, judiciary,
education or financial services.

 

Finally, let’s recall the Prime Minister’s statement while releasing the
book: ‘Technology is the bridge between aspiration and achievement. When
technology becomes a bridge, it leads to transparency and targeted delivery’.

 

ETHICS AND U

Arjun: Hey Bhagwan, you have a habit of staying too close to your Bhaktas
(devotees). But I request you to please keep yourself a little away from me.

 

Shrikrishna (smiling): Why? Anything wrong with me? Or with you?

 

Arjun: No. But better to maintain social distancing in this corona pandemic.

 

Shrikrishna: Arrey Arjun, this pandemic has occurred only because you people
have kept ME at a distance. Come close to ME and you will be free from all
worries.

 

Arjun: Really? But you keep on causing headaches to us by talking about this Code
of Ethics. You were telling me about the New Code of Ethics. Good that the New
Code has come now.

 

Shrikrishna: Oh, surprising! You were always cursing the Code of Ethics and how is it
that even without knowing about the New Code, you say it is good?

 

Arjun: Yes. As it is we never studied the old code seriously. Whatever we learnt
at the time of the exam, we have forgotten. Now we can directly go for the New
Code.

 

Shrikrishna (smiling): No, Arjun. The New Code is not replacing the old code. It is in
addition to the existing code, with some changes.

 

Arjun: Oh my God! Actually, I am fed up with these virtual meetings of study
circles. Every alternate day they are boring us with this New Code.

 

Shrikrishna: Last time I had started telling you about the New Code, and you wanted to
know more.

 

Arjun: Yes. Instead of listening to those lectures, it is better that you tell me
about it. I register there just to
get CPE.

 

Shrikrishna: That is unethical, Paarth. You are not truthful to yourself!

 

Arjun: Anyway, tell me, the New Code has become effective from 1st of
July, right?

 

Shrikrishna: Yes. But the good news for you is that some of the aspects have been
deferred.

 

Arjun: Arrey
waah!
Very good. So no need to know about them!
What are those topics?

 

Shrikrishna:
Last time I told you about NOCLAR.

 

Arjun: Yes, non-compliance of Laws and Regulations.

 

Shrikrishna: Yes. Basically it was applicable only to the listed companies. But it has
been deferred.

 

Arjun: What next?

 

Shrikrishna: The one of your interest is about the taxation services to audit clients.

 

Arjun: Good. And what was that 15% fees point?

 

Shrikrishna: If out of your total
fees, more than 15% is received from one single audit client for two
successive years, then you need to communicate it to that client.

 

Arjun: And what will the client do? Will he remove us? What is the logic?

 

Shrikrishna: See, you should not be independent but appear to be
independent. If you are heavily depending on one single client, you are likely
to compromise on the quality of audit. It is a self-interest threat.

 

Arjun: True. You need to broad-base your practice.

 

Shrikrishna: So, for example, your major fee, say 60 to 70%, is from one audit client,
you are supposed to tell this to that client and demonstrate that you are truly
independent.

 

Arjun: What else is postponed?

 

Shrikrishna: The non-audit services like management consultancy services to the audit
client. Similarly, under Indian circumstances, auditors are commonly rendering
taxation services. So that is also deferred.

 

Arjun: Any more postponement so that we don’t need to bother about it?

 

Shrikrishna: The independence standards which were adapted from the International
Ethical Standards have also been deferred.

 

Arjun: Good. Now next time please tell me what is immediately implemented. We
will keep that in mind while doing this year’s audit.

 

Shrikrishna: Yes, dear. Surely, I will.

 

Om Shanti!

 

Note: This
dialogue is based on implementation of the New Code of Ethics w.e.f. 1st
July, 2020.




One who is bent on courting his death will not take kindly to
sage counsel given by his well-wishers
  (Valmiki Raamaayan 3.53.17)

MISCELLANEA

I. Technology

 

14. Apple claims ‘half a trillion dollars’
App Store economy

 

Apple has said that more than
85% of that figure occurred via transactions from which it did not take a
commission. The announcement comes at a time when Apple and other US tech
giants are facing increased anti-competition scrutiny. A leading developer has
also called on the iPhone-maker to lower the fees it charges, ahead of its
annual developers’ conference next week.

 

The study was commissioned by
Apple but carried out by economists at the Boston-based consultancy Analysis
Group. It surveyed billings and sales related to apps running on the tech
firm’s iOS, Mac, Watch and Apple TV platforms.

 

These included:

  •     in-app advertising via
    apps such as Twitter and Pinterest,
  •     the sale of physical
    goods via apps such as Asos and Amazon,
  •     the sale of digital goods
    and services via apps including Mario Kart Tour and Tinder,
  •     travel bookings via apps
    such as Uber and British Airways,
  •     food deliveries via apps
    including Just Eat and Deliveroo,
  •     subscriptions to media
    apps including The Times newspaper and Netflix, and
  •     subscriptions to work
    apps including Zoom and Slack.

 

The report attempted to
account for spending that occurred externally but led to content being used
within an app – for example, a direct payment to Spotify, whose songs were then
listened to via its iPhone app. Likewise, it subtracted a proportion of the
charge of in-app purchases whose content was used elsewhere – for example, a
Now TV subscription taken out via Sky’s app, if most of the shows were then
watched directly on a TV’s own app.

 

In total, the economists said
$519 billion (£406 billion) had been generated via Apple’s software eco-system.
The figure excludes sales generated by the Android and Windows versions of the
same products. Physical goods and offline services accounted for the biggest
share of the sum – $413 billion. By contrast, digital goods and services, from
which Apple typically takes a 30% cut, accounted for $61 billion.

 

(Source:
bbc.com)

 

15. How Elon Musk aims to revolutionise
battery technology

 

Elon Musk has perhaps the
most exciting portfolio of businesses on the planet. There’s SpaceX with its
mission to Mars and Tesla with its super-fast hi-tech electric cars. He claims
his Hyperloop concept could revolutionise public transport. And even his Boring
Company is kind of interesting – it aims to find new ways to dig tunnels. So
which one will end up changing the world most? His battery business is also in
contention. But the compact, lightweight lithium batteries that mean you can
now stream movies on wafer-thin phones, will soon be powering much more of your
life. Yet the market certainly seems to reckon that they are the future. Just
look at the Tesla’s share price. Last week, it briefly nudged ahead of Toyota
to become the world’s most valuable car firm, even though the Japanese giant
sold 30 times as many vehicles last year.

 

One reason is that Elon Musk
has been teasing investors and rivals with the promise of ‘battery day’
sometime soon, at which he will announce a series of advancements in battery
tech. And cars are not the only vast new battery market. You might have seen a
story about how the world is slowly weaning itself off coal. Well, gigantic
batteries connected to our electricity grids are going to be central to the
great renewable energy revolution, too.

 

The first of these was
announced just last week when the Chinese battery-maker that supplies most of
the major car makers, including Tesla, revealed it had produced the first
‘million mile battery’. Contemporary Amperex Technology (CATL) says its new battery
is capable of powering a vehicle for more than a million miles (1.2 million, to
be precise – or 1.9 million km.) over a 16-year lifespan. Most car batteries
offer warranties for 60,000-150,000 miles over a three-to-eight-year period.
This is a huge improvement in battery life, but will cost just 10% more than
existing products.

 

Having a
battery you never need to change is obviously good news for the electric car
industry. But longer-lasting batteries are also essential for what’s known as
‘stationary’ storage, too. These are the batteries we can attach to wind
turbines or solar panels so that renewable energy is available when the sun
isn’t shining or the wind isn’t blowing. Fairly soon, you might even want a
stationary battery in your home to store cheap off-peak electricity, or to
collect the power your own solar panels generate.

 

(Source:
bbc.com)

 

II. World News

 

16. US
cities are losing 36 million trees a year

 

If you’re looking for a
reason to care about tree loss, this summer’s record-breaking heat waves might
be it. Trees can lower summer daytime temperatures by as much as 10 degrees
Fahrenheit, according to a recent study.

 

But tree cover in US cities
is shrinking. A study published last year by the US Forest Service found that
we lost 36 million trees annually from urban and rural communities over a
five-year period. That’s a 1% drop from 2009 to 2014.

 

If we continue on this path,
‘cities will become warmer, more polluted and generally more unhealthy for
inhabitants,’ said David Nowak, a senior US Forest Service scientist and
co-author of the study.

 

Nowak says there are many
reasons our tree canopy is declining, including hurricanes, tornadoes, fires,
insects and disease. But the one reason for tree loss that humans can control
is sensible development.

 

‘We see the tree cover being
swapped out for impervious cover, which means when we look at the photographs,
what was there is now replaced with a parking lot or a building,’ Nowak said.
More than 80% of the US population lives in urban areas, and most Americans
live in forested regions along the East and West coasts,’ Nowak says.

‘Every time we put a road
down, we put a building and we cut a tree or add a tree, it not only affects
that site, it affects the region.’ The study placed a value on tree loss based
on trees’ role in air pollution removal and energy conservation. The lost value
amounted to $96 million a year.

 

(Source:
cnn.com)

 

17. STEC
bags Rs. 1,126-crore civil contract Package 4 of Delhi-Meerut RRTS Line

 

Chinese multinational civil construction
firm Shanghai Tunnel Engineering Co. Ltd. (STEC) has emerged as the lowest
bidder among five for the construction of the 5.6 km. underground section
between New Ashok Nagar and Sahibabad of the Delhi-Meerut RRTS corridor.

 

When the National Capital
Region Transport Corporation Limited (NCRTC) opened financial bids for the
Delhi-Ghaziabad-Meerut RRTS corridor, a total of five national and
multinational bidders participated in the tender process. As per the results of
the financial bids disclosed by NCRTC, the position of the bidders is as under:

  •     Shanghai Tunnel
    Engineering Co. Ltd. (STEC): Rs. 1,126 crores (L-1);
  •     Larsen & Toubro Ltd.
    (L&T): Rs. 1,170 crores (L-2);
  •     Gulermak Agir Sanayi
    Insaatve Taahhut AS (Gulermak): Rs. 1, 326 crores (L-3);
  •     Tata Projects Ltd. – SKEC
    JV: Rs. 1.346 crores (CL-4);
  •     Afcons Infrastructure
    Ltd.: Rs. 1,400 crores (L-5).

 

NCRTC had invited global bids
for the first underground civil construction package (CDM/CN/COR-OF/086) in
November last year and the technical bids for this contract package were opened
recently.

 

The scope of work includes
design and construction of tunnels by TBM from near New Ashok Nagar DN Ramp to
Sahibabad UP Ramp and One Underground station at Anand Vihar by Cut and Cover
Method (including architectural finishing and design, supply, installation,
testing and commissioning of electrical and mechanical systems, including fire
detection and suppression systems and hydraulic systems) on the
Delhi-Ghaziabad-Meerut RRTS Corridor.

 

After issuance of the letter
of acceptance (LoA) by NCRTC, STEC has to complete the tunnelling work by TBM
through the cut-and-cover method. This is the first underground contract
package issued by the NCRTC.

(Source:
urbantransportnews.com)

 

18. 57% investors say Big-4 auditors have
no credibility: IIAS survey

 

In more trouble for the
auditing fraternity, an investor survey has found that 57% of large investors
and sell-side analysts do not have any faith in the Big-4 audit firms as they
have lost credibility.

 

According to the survey by
Institutional Investor Advisory Services of 63 large investors and sell-side
analysts numbering 89, conducted online from 13th to 21st
April, as many as 57% of each of them have found ‘the Big-4 audit firms having
lost their credibility with investors and are therefore open to move beyond
them if they were banned’.

 

Between qualified and
unqualified accounts, 73% support qualified accounts because they feel that at
least they got to hear auditor concerns and if they asked for lean accounts,
the risk was that the auditors would be muzzled. It can be noted that ever
since the Satyam Computers scandal came out in January, 2009, the audit world,
especially the Big-4, have been under fire from the regulators.

 

While market watchdog
Securities and Exchange Board had banned PwC in 2018 from auditing listed
companies for two years in the Satyam scam, the Securities Appellate Tribunal
quashed the ban and SEBI challenged it. In June, 2019 the Reserve Bank of India
barred S.R. Batliboi & Company, an affiliate of EY, from carrying out
statutory audit of commercial banks for a year after it found several lapses in
the books of Yes Bank.

 

In the CG Power fraud, the
NCLT had thrown out the report prepared by Viash Associates, terming it as
unprofessional and full of ifs and buts. On top of these, there have been
frequent resignations of auditors, creating doubts on the quality of the audits
that are being presented to investors and also many instances of divergent audit
reports.

 

This is despite 77% believing
that ‘only unqualified accounts are true and fair’ as one gets to hear auditor
concerns. Meanwhile, the survey also found that 78% of the investors, who
normally clamour for dividends, in the poll preferred companies retaining cash
and fortifying their balance sheet this year as the economy is in shambles.

 

Similarly, 57% also see
promoters subscribing to warrants as a sign of confidence in the company and
its operations. However, equity dilution remains a concern for investors with
46% being uncomfortable if dilution exceeded 5% without disclosure regarding
how funds will be used and 30% putting this threshold at 10%.

 

(Source: Economictimes.com)

LETTER TO THE EDITOR

Dear Sir,

 

The
article MAKING A WILL WHEN UNDER LOCKDOWN,
by Dr. Anup Shah (appearing under the feature LAWS AND
BUSINESS on Page 125 in the BCAJ issue of May, 2020), was timely,
informative and useful.

 

I
refer to the statement ‘It is important to note that the attesting witnesses
need not know the contents of the Will. All that they attest is the testator’s
signature and nothing more.’

 

My
request: Can the duties and liabilities of witnesses (in general for all deeds)
be covered by the author in a future issue of the BCAJ? That would be
very helpful.

 

Thanks,

Vinayak Pai 

STATISTICALLY SPEAKING

1.     Cities where libraries are
thriving

 

        Source:
World Cities Culture Forum

 

2.    Countries with biggest decrease of carbon emission (in million
tonnes – 2015 compared with 2000)

 

 

 

 

Source: US Energy
Information Administration

 

3.  Indian APA report for 2018-19

 

 

 

 

 

Source: CBDT’s third APA
Annual Report (2018-19)

 

4. Changing trend in boards of
companies

 

 

Source: nseinfobase.com

 

5. Increase in resignations of
independent directors

 

 

 

Source: nseinfobase.com

 

SOCIETY NEWS

TAXATION ON MUTUALITY PRE- AND POST-GST

In the light of the
Hon’ble Supreme Court’s decision in the case of ‘State of West Bengal vs.
Calcutta Club Ltd. and others’, the Indirect Tax Committee organised a lecture
meeting on ‘Taxation on Mutuality – Pre- and Post-GST’ at the BCAS Conference
Hall on Wednesday, 6th November, 2019. In the bespoke case the Court
decided upon applicability of mutuality in VAT and Service Tax laws in the
light of Article 366(29-A)(e) and the ratio of the Young Men’s
Indian Association
case (considering its applicability after the 46th
Amendment).

 

Advocate
Vipin Jain delivers an outstanding talk on ‘Taxation on Mutuality – Pre
and Post GST’ His talk was very well received by full house of
participants.


Advocate Vipin
Jain
was the principal speaker who explained the judgment in detail,
covering all significant aspects and threw light on how the Court has
interpreted the provisions under VAT and Service Tax laws at different times.
He also highlighted other landmark decisions of the Apex Court on the issue of
mutuality and English cases in which various aspects of mutuality have time and
again been tested.

 

In a session that
continued over 100 minutes, the learned speaker also gave his views on how the
said decision will impact the transactions of mutual association in the GST
regime and what would be the fate of taxes already paid by mutual organisations
in the pre-GST regime.

 

The meeting was
extremely interactive and attracted a full house with more than 100
participants attending in person and over 40 online viewers following the
lecture through a live audio / video stream.

 

INTENSIVE STUDY
GROUP ON GST

 

The Intensive Study
Group’s third batch meeting on ‘Goods and Services Tax – Clause by Clause Study
and Analysis of the GST Act’ was organised from 8th November to 7th
December, 2019 at the BCAS Conference Hall.

After the
enthusiastic response to the previous batches, it was decided to further extend
the study for even more participants. Batch-III was planned over eight sessions
of four hours each on Fridays and Saturdays. This was motivated by the
appreciation received for the first two sessions wherein section-wise study of
the GST Act was organised. There was in-depth study of all the sections and the
sessions were found to be very interactive by the participants. Each session
was held under the guidance of a mentor who had studied the law in great detail
and had a great deal of expertise on the subject. The discussions were led by a
group leader from amongst the participants.

 Participation in
the event was by invitation and each session was attended by more than 20
participants who appreciated this initiative of the Bombay Chartered
Accountants’ Society
. Most of the members shared their practical experience
which was found to be of tremendous benefit by those attending the sessions.

 

INTERNATIONAL
ECONOMICS STUDY GROUP

 

The International
Economics Study Group organised a meeting on 12th December, 2019 to
discuss ‘Industrial Automation (Industry 4.0) and its Macroeconomic Impact’.

 

Mr. Kartik Shah, a young technocrat working in the Silicon Valley in the area of
industrial automation, led the discussion and presented his thoughts on the
subject. He dwelt on issues such as, ‘What is Industrial Automation and
Industry 4.0? What is its impact on companies? What is its overall impact on
the economy?’ He pointed out that Industry 4.0 represented cyber physical
systems, the Internet of Things (IoT) and Networks. GDP had spiked
post-Industry 3.0.

 

He presented case studies of the latest trends in technology that make Industrial Automation a reality and the maturity level of
various technologies, the Internet of Things (Low), Cloud Computing (High),
Artificial Intelligence (Medium) and Robotics (Low to Medium).
The microeconomic impact would be cost savings, improvement in labour
productivity, achieving safety, security and compliances and carbon savings.

 

Mr. Shah pointed out that automation impacts low-wage and low-skill labour
much more than anything else and differs from sector to sector. While the USA,
Germany and Japan would note a significant adverse impact on jobs, it would
have a low to medium adverse impact on China (also facing an ageing population)
and low on India. India could make significant progress in the area of
construction and infrastructure with the use of automation.

 

In short,
automation is a necessary evil but will boost global productivity and lead to
rise in GDP.

 

The key takeaway
was that Industrial Automation was no longer just hype – it was reality.
Companies could see the impact of automation and had begun investing in it, but
the adoption rate was slower than expected. Jobs would be impacted by
automation but there were other factors at play that would offset the impact of
automation.

 

SEMINAR ON ESTATE / SUCCESSION PLANNING

 

A full-day seminar
on ‘Estate Planning, Wills and Family Arrangement / Settlement – Critical
Aspects’ was organised at the BCAS Hall on 13th December,
2019. It was organised with the aim of emphasising the importance of estate /
succession planning and to create awareness about some of the critical aspects
thereof.

 

The seminar
received tremendous response with more than 150 participants of all
generations, members and non-members and also outstation participants from 14
cities across India.

 

BCAS
Vice- President Suhas Paranjpe presents a memento to Ashok Shah, who
presented several case studies on estate planning and so on.


Suhas Paranjpe, BCAS Vice-President, welcomed the gathering and made the
opening remarks. Chetan Shah, Chairman of the Corporate and Allied Laws
Committee, introduced the subject.

 

Ashok Shah inter alia highlighted the emerging need and the parameters
for Estate Planning and Family Settlement / Family Arrangements (through trusts
/ companies). The case studies that he presented made various structuring
options easier to understand. He also touched upon the role of a CA in a family
office. The session was chaired by Suhas Paranjpe.

 

Dr.Anup
Shah, a key speaker at the seminar provides members with insights into
various succession laws in the country, with special focus on intestate
law and domicile.


In the second
session, Dr. Anup Shah provided the members with ‘Insights of Succession
Law’ such as the Hindu Succession Law and the Indian Succession Law, with focus
on Intestate Law and Domicile. He also touched upon the relevant provisions of
the Special Marriage Act, the Adoption and Guardianship Act, the Maintenance
and Welfare of Parents Act and the Senior Citizens Act. This session was
chaired by Past President Raman Jokhakar.

 

Gautam Doshi gives his expert opinion at the seminar on Estate and Succession Planning.


In the next session, Gautam Doshi dealt with Taxation and FEMA
issues in Family Partitions and Succession Planning comprising of inheritance
tax, trust taxation, family arrangement taxation, FEMA and other issues. The session was chaired by Past President Ameet Patel.

 

Dr.
Rashmi Oza, well- known advocate, threw light on the key nuances of
drafting of wills and also on stamp duty, registration and documentation
aspects.


In the last
technical session, Advocate Dr. Rashmi Oza enlightened the participants
with the nuances of drafting of wills as well as stamp duty, registration and
documentation aspects. This session was chaired by Chetan Shah, Chairman
of the Corporate and Allied Laws Committee.

 

The seminar
concluded with a joint question-and-answer session featuring Dr. Anup Shah
and Dr. Rashmi Oza and moderated by Chetan Shah and Gautam Shah.
Thanks to their expert knowledge and rich practical experience, they addressed
all the queries posed to them.

 

TRAINING SESSION FOR
CA ARTICLE STUDENTS

The Students’ Forum
under the auspices of the HRD Committee organised a training session for CA
article students on ‘Significant Changes in GST in Last One Year’ and ‘Recent
Changes in Form GSTR9 and 9C’ on 14th December, 2019 in the BCAS
Conference Hall.

Interestingly, the
session was broadly divided into two parts: Changes in GSTR9 and 9C; and
Significant Changes in GST in the Last One Year. Student speaker Mr. Sachin
Mittal
and Jigar Shah were in charge of the sessions.

 

Anand Kothari, Convener of the HRD Committee, spoke about the various activities
conducted by the BCAS Students’ Forum, while Dnyanesh Patade,
Student Co-ordinator, introduced the speakers for the respective sessions.

 

The GST law is
still in the process of stabilising and the GST Council has issued various
notifications, circulars and amendment acts.

 

Mr. Sachin
Mittal
, the student speaker, started off with
statistics of the number of notifications, circulars and orders issued. He
covered significant changes such as notifications, amendments, circulars and so
on, exhibiting his meticulous study. He also highlighted the various issues /
complexities involved. A clause-by-clause analysis of the changes in GSTR9 and
9C was done by him. And he gave useful tips to the article students on various
clauses of GSTR9 and 9C.

 

The mentor for the
session, Jigar Shah, presented a Certificate of Appreciation to Mr.
Sachin Mittal
and applauded his outstanding presentation.

 

Anand Kothari, the Convener of the HRD Committee, proposed the vote of thanks.
More than 40 students participated in the interactive session and their
feedback was very positive.

 

FEMA STUDY CIRCLE
MEETING

 

The FEMA Study
Circle meeting was held on Monday, 16th December, 2019 at the BCAS
Conference Hall.

 

The speaker on the
occasion, Ms Niki Shah, highlighted the differences between the old FDI
Regulations and the new Non-Debt Rules, viz. placement of various schedules in
the new regulations, classification of different types of instruments and the
various schedules.

 

Following her presentation, the discussion continued on the same
interesting tract as the other participants discussed and debated various
issues based on their personal experiences. This also brought to the fore the
changes made and those that needed further clarification from the authorities
concerned. In short, it set the stage for other professionals to advise their
clients going forward.

 

CASE STUDY ON THE TAKEOVER OF ABN AMRO

 

A lecture meeting
on the above subject was organised on 23rd December, 2019 at the BCAS
Conference Hall. It was addressed by Mr. Prakash Advani, who was part of
the team which dealt with the takeover of ABN AMRO.

 

Prakash
Advani, who was part of the team experts that dealt with the team of
experts that dealt with the battle for the takeover of ABN AMRO, giving a
master class on Mergers and Acquisitions (M&A).

He shared insights
about the largest takeover deal in the financial sector till date. The takeover
battle had begun just before the financial meltdown of 2007-08. The reasons for
the initiation of the takeover by a consortium of three banks, Fortis, RBS and
Santander, was the announcement of the merger of ABN AMRO with Barclays to
create a European leader in retail and commercial banking. The consortium
brought on the table an offer worth Euro 71.1 bn.

There was a counter
bid by Barclays with other international financial players roped in to have a
pie of the lucrative deal. Barclays received the financial muscle to raise its
bid through investment in it by China Development Bank (CDB), Temasek, Qatar
and Abu Dhabi. Their bid, though an improved one, was still substantially short
on the cash component in the overall deal.

 

The consortium
sweetened its deal further by increasing the cash component in the overall deal
to 93%, though it offered the same price as was offered in its initial bid,
that is, Euro 71.1 bn. This provided greater certainty of the value than
Barclays’s proposed offer.

 

The events which
unfolded after the takeover, which was highly leveraged and in the times of
financial meltdown, has key learnings for the financial sector.

 

Due to high leverage,
the operations at RBS, Fortis and Santander were affected seriously. The
governments in the UK, the Netherlands and Belgium had to step in to bail out
the operations of RBS and Fortis. Santander had some strategic standalone
operations in LATAM and Italy which assisted it in integrating parts of the
operations acquired through the ABN AMRO deal and swapping some of its business
with GE Money.

 

As per Mr.
Prakash Advani
, the key learnings for M&A professionals are as follows:

  •      There is never a merger of
    equals.
  •      Revenue synergies never
    exist, though this may be highlighted as a great rationale for the merger /
    acquisition.
  •      Buying a perpetual
    instrument (equity) by raising debt is an avoidable sin.
  •      Never love the assets and
    try to offload the risks.
  •      Winning is about losing
    less.
  •      We always remember what
    happened but do not remember what could have happened.

 

He also provided an
acquirer’s and seller’s perspective during the M&A.

 

From the
perspective of an acquirer, the following points should be kept in mind:

  •      There should be thorough
    due diligence, understanding of the culture and motivations of the sell side.
  •      A valuation model is a
    tool and not the gospel truth.
  •      Structuring purchase price
    payment and acquisition funding (tenor long vs. short) is important.
  •      Understand the incentive
    structure to selling company key executives and its value exclusivity.
  •      Fee structure to the
    advisers and investment bankers.

 

From the
perspective of a seller / target, the following points should be kept in mind:

  •      Thorough preparation –
    preparation is 90% success.
  •      A highly motivated team
    with full alignment of goals and incentives.
  •      Test the appetite
    informally pre-launch. Once sale launched, go all out to close. A deal that
    launches but doesn’t close gets tainted.
  •      Disclose more; the more
    one discloses the lesser is the chance of a call on warranties.
  •      Exit clauses / guarantees
    to minority investors.

 

Mr. Prakash
Advani
also briefly touched upon the Indian
diaspora in M&A and provided insights into the major cause of the NBFC
crisis which, in his opinion, is more of an asset-liability mismatch and not
the intent of the management to defraud the investors. He opined that the
Indian NBFC sector is highly geared and has a lot of dependency on wholesale funding
which, again, is short-term in nature and the activities of lending carried out
by them is for the medium to long term which creates pressure in repayment of
the borrowed funds.

 

He gave thorough insights into the art of deal-making and the 80 odd participants
received several valuable inputs in the course of the exemplary exposition presented by him.

 

DIRECT TAX
LAWS STUDY CIRCLE MEETING

 

The Direct Tax Laws
Study Circle meeting was held on 24th December, 2019 at the BCAS
Conference Hall.

 

The Chairman of the
Study Circle Devendra Jain, and the Group Leader Dipan Agte
anchored the meeting.

 

Dipan Agte covered the four major issues mentioned below:

(i)    Withholding tax and prosecution: wherein the
new prosecution guidelines were discussed. Various judgements in this regard
were taken up and practical implementation by the tax officers was discussed.

(ii)   Disallowance u/s 14A: A brief background of
the provision and related rule was debated. Various issues arising from section
14A such as investment in subsidiaries, investments held as stock-in-trade,
etc. were taken up, including references to applicable case laws.

(iii)   Depreciation on goodwill: Judgements relating
to depreciation on goodwill on amalgamation and depreciation of goodwill on
acquisition saw detailed discussions.

(iv)  Deemed dividend: A practical
illustration to understand the applicability of provisions relating to deemed
dividend in various scenarios was discussed. Further, three recent judgements
on deemed dividend and the distinguishing facts in each case were taken up in
depth.

 

Chairman Devendra Jain, on the other hand, gave practical insights
on various issues and their impact. Both the Chairman and the Group Leader took questions from the
participants throughout the highly interactive session.

 

The session concluded with a vote of
thanks.

MISCELLANEA

I. Technology

 

13. Now all you
need is TEN minutes to charge e-cars

 

Engineers have
discovered a way to recharge electric cars in just ten minutes, overcoming one
of the biggest obstacles with electric vehicles. Electric cars currently take
longer than an hour to fully recharge, with the original Tesla Model S taking
75 minutes to achieve a full charge. Researchers at Pennsylvania State
University developed a lithium-ion battery capable of adding 200 to 300 miles
(320 km. to 480 km.) of driving range to an electric car in ten minutes by
charging it at an elevated temperature.

 

What this does
is ‘limit the battery’s exposure to the elevated charge temperature, thus
generating a very long cycle life,’ said senior author Chao-Yang Wang, a
mechanical engineer at the Pennsylvania State University. ‘In addition to fast
charging, this design allows us to limit the battery’s exposure time to the
elevated charge temperature, thus generating a very long cycle life,’ said
Wang.

 

‘The key is to
realise rapid heating; otherwise, the battery will stay at elevated
temperatures for too long, causing severe degradation… The ten-minute trend
is for the future and is essential for adoption of electric vehicles because it
solves the range anxiety problem.’ The extremely fast charging process could be
carried out without causing significant damage to the battery, meaning it could
sustain 2,500 charging cycles – the equivalent of half a million miles of
travel. Typical lithium-ion batteries would only last around 60 charges using
the new method.

 

The discovery
comes just weeks after the inventors of the first lithium-ion battery were
awarded the 2019 Nobel Prize in Chemistry. The combined work of John
Goodenough, Stanley Whittingham and Akira Yoshino led to the first commercially
viable lithium-ion battery being produced in 1985. They are now used in
everything from mobile phones to laptops, as well as the rapidly growing
electric vehicle industry. The researchers now hope to improve this charge time
to just five minutes.

‘We are working
to charge an energy-dense electric vehicle battery in five minutes without
damaging it,’ Wang said. ‘This will require highly stable electrolytes and
active materials in addition to the self-heating structure we have invented.’

 

(Source:
www.timesofindia.com)

 

14. Average
Indian spends over 1,800 hours a year on smartphone

 

With
smartphones entering every facet of our lives, a new survey to understand how
mobile devices are altering lives and relationships of users found that 75% of
the respondents agreed to have owned a smartphone in their teens and of them,
41% were hooked to phones even before graduating from high school.

 

From showcasing
the benefits to the depth of addiction, the Vivo and CMR study tried to look at
the behavioural changes pertaining to smartphone usage. The study, styled
‘Smartphones and their impact on Human Relationships’, looks into the influence
of mobile devices on the consumers and their social interactions.

 

According to
the study, the average Indians spend 1/3rd  of their waking hours on their phones, which
translates to 1,800 hours a year. About 30% fewer people meet family and loved
ones multiple times a month now (vs. ten years ago). One in three people felt
that they can’t even have a five-minute conversation with friends and family
without checking their phones. About 73% agree that if smartphone usage
continues at the current rate or grows, then it is likely to impact mental and
/ or physical health.

 

The report is
based on a survey conducted online as well as face-to-face across top eight
cities in India. It cuts across age groups and demographics: youth, working
professionals and housewives, spanning the age group 18 to 45. The total number
of respondents was 2,000, of whom 36% were females and 64% males.

 

According to
Mr. Nipun Marya, Director, Brand Strategy, Vivo India, ‘Smartphones are
ubiquitous in our lives today, be it connecting with friends, family,
entertainment, eating out or even travel and entertainment. As the “born in the
net” generation grows up as digital natives, there is a fundamental change
underway within society – redefining relationships, interactions and the very
fabric of human emotions and exchanges. This transformation is also an
opportunity to harness and drive positive change, reinforce balance and
responsible proliferation of technology and its usage amongst consumers.’

 

Commenting on
the survey findings, Mr. Prabhu Ram, Head, Industry Intelligence Group of CMR,
said, ‘While the explosive surge in smartphones in India has enabled Indians
not just communicating with loved ones, but with myriad other uses, including
in consuming entertainment and in expressing themselves, our survey results
demonstrate that the dependency on smartphones has increased. While the
smartphones will continue to be the primary go-to device, smartphone users have
realised that periodically switching-off would help benefit their personal
health.’

 

(Source:
www.thehindubusinessline.com)

 

15. Now Twitter
warns Indians of data breach

 

In a very
stressful year for social media users who have been bugged several times,
Twitter recently admitted a malicious code was inserted into its app by a ‘bad
actor’ that could have compromised several Android users’ information
worldwide, including in India.

 

Some users in India woke up to an email from Twitter, warning them to
update the app for Android and immediately change their password. The
vulnerability within Twitter for Android could allow the ‘bad actor’ to see
non-public account information or to control your account (send tweets or
direct messages), said an apologetic Twitter.

 

‘Prior to the
fix, through a complicated process involving the insertion of malicious code
into restricted storage areas of the Twitter app, it may have been possible for
a “bad actor” to access information (direct messages, protected tweets) from
the app,’ Twitter said.

 

It added that
it does not have direct evidence that malicious code was inserted into the app
or that this vulnerability was exploited, but it can’t be fully sure.

 

(Source: www.freepressjournal.in)

 

II. World News

 

16. Trump
unveils America’s sixth military branch: Space Force

 

The United States
has met a mounting 21st century strategic challenge from Russia and
China with the creation of a full-fledged US space force within the Department
of Defence. Acting on the ‘ambition’ of President Donald Trump that had met
with resistance at first, the White House signalled its determination to not
cede superiority in a Star Wars-like future of killer satellites and
satellite-killer weapons.

 

President Trump made the Space Force’s creation real with the signing of
the 2020 National Defence Authorisation Act, which set the initial budget for a
Pentagon force that will stand equally with the military’s five other branches.

 

‘Going to be a lot of things happening in space, because space is the
world’s newest war-fighting domain, Trump told members of the military gathered
for the signing. The Space Force will be the sixth formal force of the US
military after the Army, Air Force, Navy, Marines and Coast Guard. “Our
reliance on space-based capabilities has grown dramatically and today outer
space has evolved into a war-fighting domain of its own,” said Secretary of
Defence Mark Esper. Maintaining American dominance in that domain is now the
mission of the US Space Force.’

 

The Defence
Intelligence Agency warned in a report early this year (2019) that China and
Russia have both developed ‘robust and capable’ space services for
intelligence, surveillance and reconnaissance. ‘China and Russia, in
particular, are developing a variety of means to exploit perceived US reliance
on space-based systems and challenge the US position in space,’ it said.

 

China already
demonstrated that it could shoot down a satellite with a ground-based missile
in 2007. ‘Both states are developing jamming and cyberspace capabilities, directed
energy weapons, on-orbit capabilities and ground-based anti-satellite missiles
that can achieve a range of reversible to non-reversible effects,’ it said.

 

Iran and North
Korea, too, are increasingly able to extend their military activities into
space, jamming the communications of adversaries and developing ballistic
missile technologies, it noted.

China and
Russia have the perception ‘that space represents an (American) Achilles’ heel
and that this is an asymmetric advantage for them to then take on the United
States’ power,’ Steve Kitay, Deputy Assistant Secretary of Defence for Space
Policy, said in August. ‘Space will not be an Achilles’ heel’ for the US, he
said.

 

The new
organisation builds on the US Space Command already operating under the Air
Force following its creation in August. Like the Marines, which operate within
the umbrella of the Navy, the Space Force will continue to be under the Air
Force. The Space Force will be comprised of about 16,000 air force and civilian
personnel, some already taking part in the Space Command, according to Air
Force Secretary Barbara Barrett.

 

(Source:
www.economictimes.com)

 

III. Economy

 

17. Inaccurate
diagnosis, draconian remedy – India’s black money problem was misdiagnosed

 

India’s fight
against foreign black money has returned a whimper. The Government’s intent
cannot be faulted, but since the problem itself was misdiagnosed, the ensuing
legislative measures have been bereft of constitutional and economic common
sense. They relied too little on persuasion and far too much on brow-beating.
The economic results are nothing to rave about.

 

High on
populism, low on constitutional wisdom, the Black Money Act was a draconian law
that was bound to fail. At a minimum tax rate of 60%, it gave marginal incentive
for the hoarders to come clean. Lawmakers overestimated the writ of
international laws and made no economically persuasive case. As a result, as of
May, 2019 the total untaxed foreign assets mined was Rs. 12,500 crores. Wholly
recovered, this wouldn’t even pay Prasar Bharati’s bills for four years. Even
this recovery was aided greatly by international exposes such as the Panama
Papers in which the government’s legislation played no role. In comparison,
Indonesia recovered about Rs. 25 lakh crores under similar schemes. The
government’s initial obsession with brow-beating had an ominous start. But,
instead of doing course correction, it passed an even more confiscatory law, the Fugitive Economic Offenders Act.

 

Existing laws

The intent of
both the laws could have been achieved by a few tweaks in the existing laws.
The Income-tax Act has, since 1989, provided for up to three times penalty on
escaped tax. Similarly, wilful attempts to evade taxes have, since 1975, been
punishable with imprisonment of up to seven years. A protocol for automatic
exchange tax information, under which India is now receiving data from
Switzerland, was signed in 2011, as was the amendment requiring all citizens to
disclose foreign assets with their domestic tax returns.

 

Post-May 2014,
tax control policy is different only in three aspects, all constitutionally
suspect. The first relates to retrospective application of tax and penal laws
that are so confiscatory and brazenly discriminatory that they walk all over a
citizen’s right to life, carry on business and own property. The second is
about shifting the burden of proof onto the citizen to establish that he is not
an offender. Lastly, and this is what makes this new policy rather wicked,
citizens can be subjected to criminal trial without the taxman first proving
that there has been tax evasion. The results of giving such unbridled powers to
agencies have been disastrous.

 

The Enforcement
Directorate, India’s money laundering watchdog, secured conviction in less than
1% of cases but attached assets worth Rs. 29,468 crores. In contrast, the
agency’s equivalents in the U.S. and the U.K. secured conviction in about 50%
cases. The Income tax Department’s records were not inspiring either, hovering
at near 2% conviction rates in Financial Year (FY) 2016-2017. A Comptroller and
Auditor General report showed that in FY 2016-2017 – the demonetisation year –
the number of raids more than doubled as compared to FY 2013-2014, the last
year of UPA-II; but in the same period the undisclosed income detected was less
than one-fourth the amount during the latter period.

 

In medical
sciences, intrusive methods of treatment are generally resorted to when
diagnosis shows evidence that less risky methods may not be restorative. But,
India’s fiscal policy seems to be driven by the opposite logic: intrusion
first, diagnosis later.

 

No clear
estimate of black money owned by Indians and stashed abroad is available.
Between 2008 and 2012, various reports quoted anywhere between $500 billion and
$1.5 trillion, some relying on estimates of a Swiss Bankers’ Association (SBA)
report. These turned out to be false. James Nason, an officer of the SBA, has
said that the SBA had never published any such report. In March, 2019 the National
Institute of Financial Management reported to the Lok Sabha Standing Committee
on Finance that the estimate is about $216 billion to $490 billion. This is
one-seventh the estimate quoted ahead of the 2014 elections. In essence,
India’s foreign black money problem was misdiagnosed and unverified and
exaggerated numbers went into satisfying Parliament that draconian financial
laws are justified.

 

Taking
cognisance

For the
judiciary, one question that arises is: if the conventional wisdom on black
money was based on disinformation, should it take cognisance of it? If yes,
how? For example, should the Supreme Court take a relook at its verdict in Ram
Jethmalani’s case against black money, especially to guide lower courts in
their examination of financial crime allegations?

 

A democratic
state cannot unjustly enrich itself by making citizens pay for what is not
rightly owed. The belief that the government will act on principles of honour
and good faith is an invaluable but fragile national asset, the late Mr. Nani
Palkhivala wrote in an article in 1993. He said that the fiscal system must
have not just legality but also legitimacy. It is denuded of all legitimacy
when there is a breach of faith on the part of the government in its dealings
with the taxpayer.

 

The government
should give up the belief that being an intrusive, brow-beating confiscator
enriches Indians. It doesn’t. This approach is reminiscent of India’s
imperialistic past and, in its current form, is impoverishing us into an
economic depression. The draconian fiscal laws must at once be repealed.
Increased international co-operation, technological advances and banking
penetration implodes black money more than any law or sermon on patriotism.
India’s war on black money can only be won through democratic, persuasive and
economically-sound means.

 

(Source: www.thehindu.com

LETTER TO THE EDITOR

To

The Editor

BCAJ, Mumbai

 

This has reference to the
excellent article on ‘Transition to cash flow based funding’ by Suhas Paranjape
and others on bank lending. In fact it is a very good article and also timely
since I believe that the system of banking and its lending business were flawed
right from the inception of banking in India. The banking in India was a
glorified commercial venture of earlier money lenders. The money lenders had at
least the security of land as a mortgage or of gold given as a security. The
money lender of the yesteryear had therefore zero NPA and his only risk was the
danger of dacoity or robbery as is the new word used in the Indian penal code.
He was required to take care of his gold by having extra guards or some private
security arrangement. This was a minimal cost considering present day insurance
rates.

 

It was more than 100 year ago
that the banks like Central Bank or the Bank of India and the likes of which
were established in India. Their fund based business model was progressively
more comprehensive and refined from time to time as compared to the erstwhile
money lenders and progressively well regulated by the central bank of the
country.

 

However it was and is still an
asset based funding. The erstwhile money lenders did not have difficulty of
realizing the assets in the event of failure of loans but sale of assets is
increasingly a complicated model for the present day banking giving rise to
progressively increased ratio of NPAs. Earlier the money lender essentially
gave a loan to an agriculturalist and on few occasions to artisans. The banks
were more dynamic and started giving loans to increased manufacturing and
trading and service activity. This was however a mere increase in the area of
operation as a result of increased size of the business activity but
conceptually it remained the same with asset base as the principal security.
Such a security is very difficult to realise without closing down the business
and essentially the banking was without any security in real terms.

 

 All the loans given by the banks were and
still are essentially unsecured loans and even today the banking loan portfolio
is really without any security. This according to me is the real reason for
increased NPAs. It prevented the banker from finding out diversion of funds
which in any case was camouflaged and it also did not give early signs of
business failure or slow down and the banks came to know about it only when
things were out of control.

 

Another issue which should gather
further momentum is the relation between the banker and the customer. For the
last about 30 to 40 years, the relationship has become more impersonal, rule
based and rather inflexible. I was once a junior functionary in a well known
bank and the training college of the bank used to conduct sessions on bank
lending. We were constantly told that in banking ‘First class borrower with
second class security should always be preferred to a second class borrower
with first class security’. This sound banking principle has now remained on
paper because there is no time to judge a person who is a borrower.

 

Cash flow statement giving
separately operating cash flow, Investment cash flow and financing cash flow
would be more useful in present day banking and I believe that it should be not
only required from listed companies or the companies of a particular size but
it should be made compulsory for all bank loans to keep under control the
menace of NPAs.

 

It is in this context that the
article in April issue would assume more importance and may require further
elaboration in the months to come.

 

Ashok Dhere

Chartered Accountant  

 

 

 

 

The Editor

The Bombay Chartered Accountant
Journal

Mumbai 400020

 

Dear Sir,

 

Re: My article on Allowability of
Interest u/s 36(1)(iii) published on Page 15 of January, 2020 issue AND

Letter from Advocate Jignesh R.
Shah published on Page 100 of March, 2020 issue of BCAJ

 

At the outset I thank Advocate
Shri Jignesh R Shah for an enlightening letter. Let me say that there is hardly
a word of his letter that I disagree with. Since the point Shri Jignesh R Shah
has raised is valid, I need to offer my explanation.

 

Shri Jignesh R Shah states in his
letter that he is not on the correctness or otherwise of the conclusion of the
article. Then he says, I quote, ‘If I am not mistaken, it is tried to
canvass in the article that the word “acquisition” used in the proviso to
clause (iii) of sub-section (1) of section 36 of the Income-tax Act, 1961
connotes acquisition of an asset from a third party and it does not include an
asset which is “self-created” or “self-constructed” or “self-acquired”. This
interpretation would apply irrespective of whether the asset is
work-in-progress (which is the subject of this article) or a capital asset,
because the word employed in the proviso is “asset”
.
Unquote.
(Emphasis on the words ‘a third party’ is supplied). This inference is based on
the premise that the way I interpret the term ‘acquisition’, it is an act of
acquiring an asset from a third party and that asset should exist at the time
of acquisition, and therefore, it would exclude assets that are self-acquired
from the scope of the Proviso because the assets are not acquired from a third
party and they did not exist earlier. Shri Jignesh Shah gives an example of a
power generation plant which is assembled by the company itself by buying
parts, receiving technical service and using own labour, to show that the proviso
will yet apply to the power generation plant which is not acquired from a third
party and which did not exist when it was acquired.  He says, I quote, ‘Going by the
interpretation placed on the term “acquisition” in this article, the plant as a
whole cannot be called “acquired”, because the plant as a whole did not already
exist (as is stated in this article) over which the power generation company
gains possession; the plant is its own creation.’ Unquote.

 

In response, I first say that I
have nowhere said in the article that an ‘acquisition’ is not an ‘acquisition’
if it does not involve receiving or obtaining something from ‘a third party’.
Though obtaining something from a third party is no doubt an act of
acquisition, I have explained the term ‘acquisition’ in relation to an asset as
an act of acquiring the asset which exists at the time of its acquisition.
Things that do not exist cannot be acquired. After examining a few dictionary
meanings of the term ‘acquisition’ I finally explain the term ‘acquisition’
thus, ‘One can see that the normal meaning of “acquisition” carries in it
a sense of a thing that exists and the act of gaining possession of or control
over that thing is called “acquisition”.’’
I do not say that such possession and control over a thing should be
gained from a third party for it to result in an ‘acquisition’. I agree with
Shri Jignesh Shah that the word ‘acquire’ or ‘acquisition’ is of a very wide
import and can also be used to refer to self -created assets or things, like ‘I
acquired talent to play guitar’. ‘Talent’ in this case did not exist in me
before I worked on its development.

 

This leaves me with the second
aspect of the theory attributed to me, that in order that an asset may be
‘acquired’ the asset should be in existence at the time of its acquisition. The
example of the power generation plant, according to Shri Jignesh Shah, is an
instance of an asset which did not pre-exist. With respect, I say that in this
example and others that Shri Jignesh Shah has given in his letter, the things
are said to have been acquired when they come into their being, not before
that. A power plant is not acquired before it meets with all the
characteristics that a power plant possesses. Even the part quoted by Shri
Jignesh Shah in his letter from CIT vs. Mohanbhai Pamabhai [1973] 91 ITR
393, 408-409 (Guj.)
later affirmed by the Supreme Court in [1987]
165 ITR 166 (SC)
says so in these words, ‘When a capital asset is
created by an assessee, it becomes his property, he comes to own it and,
therefore, he acquires it the moment it is created’ (Emphasis supplied).
This means the person acquires a capital asset the moment it is created, not
before it is created.

 

If the company in the given
example, assembling in-house power plants was assumed to assemble power plants
not as a capital asset but as products for sale, the point I am making would be
clearer. So, let us presume that this very company is engaged in the business
of erecting and selling power plants, and three power plants are at different
stages of progress of work. The stage of erection at any point of time
constitutes WIP or saleable inventory which is the target of acquisition unlike
in the previous scenario where the power plant, a capital asset, as was under
erection was the target of acquisition. The company could say in the case of
erection of a power plant as a capital asset that the company was in the
process of acquiring a capital asset, but would the company engaged in
the business of erection and sale of power plants say, by the same logic, that
it was in the process of ‘acquiring’ WIP or inventory when what it meant was
that it was producing or manufacturing power plants? It is not my case that the
company cannot use this language, it can. But the question is: is such language
natural? My point is this: A company selling power plants is ‘producing’ or
‘manufacturing’ power plants rather than ‘acquiring’ power plants. Interest
paid on borrowing attributable to production of power plants held for sale
should not be disallowed, whereas the same interest, if paid for producing
power plants for own use, will be disallowed.

 

Anyway, I thank Advocate Shri
Jignesh Shah for bringing out a fine facet of the argument.

 

Yours truly,

 

Kirit
S. Sanghvi

Society News

HUMAN RESOURCE
DEVELOPMENT COMMITTEE

The HRD Committee
organised a half-day workshop for senior CAs styled Get the most from your
smart phone!
It was held on Saturday, 14th march, 2020 in the BCAS
hall.

 

Not only senior
chartered accountants but also their spouses were invited to learn how to
benefit more from their smartphones and mobile apps.

 

The participants
were welcomed by Rajesh Muni (HRD Committee Chairman). This was followed
by an introductory note delivered by Anand Kothari (HRD Committee
Convener).

 

The first
session was conducted by the young Rajesh Pabari who narrated the benefits
of various useful mobile applications. the participants were guided to download
‘Zoom  meetings’ and the workshop was
conducted in an interactive manner making the best use of this app. He further
discussed other apps like trello, SwiftKey Keyboard, SMS organiser by
Microsoft, Drupe, etc.

 

In the second
session, conducted by the experienced techie Yazdi Tantra, the benefits
of Google were laid bare before the participants. He gave live training on optimum
use of Google through Voice Search and performing simple arithmetic
calculations, setting reminders and alarms, exploring time / weather in any city,
playing a song or accessing the current news, translation in various languages
and many other benefits of Google.

 

He explained
shortcut keys for using Gmail and some search features. He also helped those
taking part to explore various apps such as M-aadhaar, DigiLocker, Camscanner,
Texpand, Skedit, Fast.com, Web. Whatsapp, WriteOnPdF, Files, DecisionCrafter,
Practo and tripIt.

 

Both sessions were interactive and the
participants were provided hands-on training / experience on the use of various
mobile apps. The faculties were energetic in guiding the participants, some of
whom were surprised to know about the numerous benefits of a smartphone which
they had been using only for making phone calls.

MISCELLANEA

I. Technology

 

7. AI steps up in battle
against Covid-19

 

Oxford-based Exscientia, the
first to put an AI-discovered drug into human trials, is trawling through
15,000 drugs held by the Scripps Research Institute in California. And Healx, a
Cambridge company set up by Viagra co-inventor Dr. David Brown, has repurposed
its AI system developed to find drugs for rare diseases.

 

The system is divided into three
parts that:

(i) trawl through all the current literature relating to the disease,

(ii) study the DNA and structure of the virus,

(iii) consider the suitability of various drugs.

 

Drug discovery has traditionally
been slow. But AI is proving much faster. It is extremely unlikely that one
single drug would be the answer. That means detailed analysis of the eight
million possible pairs and 10.5 billion triple-drug combinations stemming from
the 4,000 approved drugs on the market.

 

AI remains one of our strongest
paths to achieve a perceptible solution but there is a fundamental need for
high-quality, large and clean data sets. To date, much of this information has
been siloed (or cocooned) in individual companies such as big pharma, or
lost in the intellectual property and old lab space within universities. Now
more than ever before, there is a need to unify these disparate drug discovery
data sources to allow AI researchers to apply their novel machine-learning
techniques to generate new treatments for Covid-19 as soon as possible.

 

(Source: bbc.com)

 

8. Freebies from IT vendors
that you can grab right now

 

As CIOs are struggling to support
business continuity while managing their technology budgets, IT vendors are
doing their best to help them in this Covid-19 crisis. From global giants to
mid-scale IT vendors, support is pouring in in the form of free tools,
services, deferred payments, training, 24/7 remote support, zero-cost licensing
and more.

 

Meanwhile, here’s a look at some
of the biggest offers from vendors to help enterprises through the Covid-19
crisis.

 

Cisco’s free deferred payments – Cisco
announced a financing plan that will let customers defer 95% of their payments
for new products until 2021. The move will cost the company $2.5 billion to
cover the financing. By allowing customers to defer payments, Cisco is helping
them preserve cash amid reduced economic activity.

 

IBM supporting businesses with
free offerings in cloud –
IBM is helping enterprises to tackle the
pandemic while maintaining business continuity with free offerings in cloud and
associated tools and software. Big Blue is giving nine free cloud offers to
ease the burden of businesses across the globe. These cloud offers span AI,
data, security, integration, remote learning and more – all via the IBM public
cloud to support their clients and help them maintain business continuity. For
90 days, free of charge, IBM is offering companies the ability to build virtual
server configurations; providing access to their cloud service for high-speed
file sharing and team collaboration; and also offering their event management
solution to help teams prioritise, diagnose and resolve incidents.

 

Oracle offers free HR tool – Oracle
is providing free access to its Workforce Health and Safety solution to current
Oracle Human Capital Management Cloud customers until the pandemic is over. The
module will help customers manage key workplace health and safety issues and
monitor requirements accordingly. Employees can access required information
wherever and however they need it – from mobile to desktop devices.

 

Free
security tools from Micro Focus
– As
businesses in India are transforming and working remotely, Micro Focus is
helping customers with secured digital platforms with free access. Micro Focus
is offering several free-of-cost services so that customers can secure their
users coming in through VPN, RADIUS, web portals, etc. and for other network
and operational requirements. It has announced a Covid-19-specific license
which enables the use of all advanced authentication features till 31st July,
2020.

 

(Source: Economictimes.com)

 

II.  World News

 

9. Ex-EY whistleblower wins
$10.8m in damages

 

Accountancy firm EY has been
ordered to pay $10.8m in damages to a whistleblower who claimed that it covered
up evidence of money laundering. Auditor Amjad Rihan sued EY after being forced
out of his job in 2014. A year earlier, he had led an audit that discovered
Dubai’s biggest gold refiner Kaloti had paid out a total of $5.2 billion (£4
billion) in cash in 2012.

 

Mr. Rihan argued that it was
evidence of money laundering, but EY didn’t report the activity to the
authorities. EY then helped to cover up a crime – the export to Kaloti in Dubai
of gold bars that had been disguised as silver to avoid export limits on gold.

 

A BBC Panorama
investigation last year revealed that the smuggled gold Mr. Rihan uncovered at
Kaloti was owned by a criminal gang that laundered money for British drug
dealers. The gang had collected cash from drug dealers in the UK and other
European countries. They then laundered the dirty money by buying and selling
black market gold. Twenty seven members of the money laundering gang were
jailed in France in 2017. Kaloti denies any wrongdoing.

 

Panorama saw a
number of drafts of a Kaloti compliance report to a Dubai regulator. In the
initial report, Kaloti seemed to admit buying gold coated with silver. It said:
‘We acknowledge an incident… with the bars coated with silver.’ But EY rewrote
the report so that it said: ‘We acknowledge transactions… in which there were
certain documentary irregularities.’ The accountancy firm turned the crime into
a ‘documentary irregularity’.

 

Mr. Justice Kerr ruled that EY’s
behaviour amounted to professional misconduct and that EY bosses were
‘responsible for suggesting to Kaloti that it should draft its compliance
report in a manner that masked the reality of the Morocco gold issue’.

The court found that EY breached
the Code of Ethics for Professional Accountants and that it had a duty of care
to take reasonable steps to protect Mr. Rihan ‘against economic loss, in the
form of loss of future employment opportunity, by providing an ethically safe
work environment, free from professional misconduct’. The court awarded Mr.
Rihan $10,843,941 (in US dollars) and £117,950 in damages.

 

Mr. Rihan said: ‘Almost seven
years of agony for me and my family has come to an end with a total vindication
by the court. My life was turned upside down as I was cruelly and harshly
punished for insisting on doing my job ethically, professionally and lawfully
in relation to the gold audits in Dubai. I really hope EY will use this
judgment as an opportunity to improve – to avoid such events happening again in
the future’.

 

(Source: bbc.com)

 

10. UK accounting industry faces worst crisis in decade

 

The UK
accounting industry was plunged into its worst crisis in more than a decade as
the ‘Big Four’ firms slashed partners’ pay by up to a quarter and their
mid-tier rivals furloughed junior staff to cope with the coronavirus fallout.
London-headquartered KPMG, PwC, Deloitte and EY have reduced the amount of
profits that are distributed to their partners each month by between 20 and 25%
to build up cash reserves and help survive a downturn in work. Partners at the
UK arms of the four firms, which between them employ about 74,000 people,
earned an average of £720,000 last year and undertake activities including
company audits, tax and restructuring advice and consulting on transactions.

 

The economic blow to the
professional services industry follows years of corporate failures and
accounting scandals that have hurt their reputations. Despite this, overall
revenues at the UK firms have soared over the past decade as they have expanded
beyond their roots in audit, resulting in increasingly large sums of money paid
out to their highest earners. EY told its 17,000 UK staff recently that
partners’ pay would be cut by 20% and said that it would ‘do everything
possible’ to navigate the coronavirus crisis without redundancies, furloughs or
reducing employee salaries. Steve Varley, Chairman of EY UK and Ireland, said:
‘Reducing partner profit distributions is a further prudent move in a time of
economic uncertainty and will provide additional flexibility and improve
financial strength.’

 

Deloitte UK Chief Executive
Richard Houston also announced a 20% hit to partner profits for 2020. He said
distributions to partners would be ‘deferred’ and pay rises, bonuses and
promotions would be put on hold. ‘The measures align with our commitment that
the highest earners in our firm, our partners, should shoulder the greater
proportion of the financial burden,’ said Mr. Houston. The measures by EY and
Deloitte follow similar moves by ‘Big Four’ rivals PwC and KPMG, which last
week announced a reduction in partner pay of 20 and 25%, respectively.

 

(Source: ft.com)

 

III. Politics &
Arthashastra

 

11. Vidur Niti
Some useful tips to make life easier

 

The word ‘Vidur’ in Sanskrit
carries the meaning of skilled, intelligent and wise. These were the exact
qualities possessed by the sage Vidur from the Mahabharata which
portrays him as the half-brother of King Dhritarashtra and minister to the
fabled kingdom of Hastinapur.

 

He is celebrated for being a
great scholar who was an epitome of truthfulness, unbiased judgment,
dutifulness and unfaltering faith to Dharma. However, he is more prominently
known for his Nitis, chronicled in the form of conversations with his
brother Dhritarashtra which took place prior to the war of Kurukshetra. While Vidur
Niti
is mainly grounded in politics, it can be widely used even in our
daily lives. Here are some useful tips from Vidur Niti to help you make
your life easier.

 

(1) Characteristics of a wise
person

A wise person does not deviate
from the higher goals of life because his actions are based on qualities like
self-knowledge, endeavour, patience and devotion to dharma.

 

(2) An aware person is unbiased
in action

In order to be wiser one needs to
be unbiased and to lose all emotions, attachments; it is the key for succeeding
in work and in life itself. A wise person’s actions and undertakings are not
affected by cold, heat, love, fear and affluence or poverty.

 

(3) Focus on goals

It is foolish for a person to
long and work for things which are unattainable, as one would be wasting one’s
time and efforts. Similarly, a person who worries and loses his sense in
difficult times cannot achieve his goals because he will lose his vision. A
wise man doesn’t waste his efforts and time after unattainable goals, does not
worry about things he has lost, and does not lose his sense in difficult times.

 

(4) Commitment to task in hand
and time management

A wise person committed to his
endeavours beforehand  does not take long
breaks before completion of the task, does not waste time and has control over
his mind. We all tend to keep making the mistake of running after temporary
goals and end up abandoning them. In order to succeed, we need to take
pre-emptive action of being committed to the task ahead of us. This will help
us to be focused on our ends and goals; likewise, if we waste time and take
long breaks during work, we may forget our short-term goals and halt the work
itself. Thus, we shouldn’t take long breaks and waste time. In order to develop
the aforementioned qualities, we need to have control over our minds. Control
over the mind is the key because we tend to get attracted to ease and leisure.

 

(5) Be good to friends and be
safe from enemies

Only a fool makes an enemy his
friend, hurts and kills his friend and involves himself in misdeeds. Like ants,
we humans are social living beings; we need help from people to succeed. Thus,
we need to be friendly to people and be good to everyone. It will help us make
friends who will help even in difficulty. Likewise, we must learn to be far
from enemies and should not be close to them, as they carry tendencies to hurt
us.

 

(6) Importance of taking in
groups

One should
not think on the substance of matter alone. We are biased towards our ideas and
tend to think that they are good, missing out the flaws in them. Thus, Vidur
Niti
suggests taking important decisions with a group of people.

 

(7) Some good qualities for
success

These six qualities should never
be abandoned – truthfulness, giving, not being lazy, not finding fault even in
something bad, forgiveness, and determination or courage. A person can only be
successful if he is true to everyone; liars are not considered good people.
Similarly, giving and forgiving and a forgiving nature can take a person a long
way because those who give are considered well by people and the quality of
forgiving prevents people from having grudges which give rise to negative emotions.
Positive nature is beneficial, it prevents people from being sadistic and
depressed; thus one should involve oneself in positivism by seeing only the
positive side. One should be determined if one wants to succeed. Determination
is the key to remaining focused on the task in hand, in a world full of
distractions. Laziness makes the mind lethargic and the ability to work
actively and thoughtfully decreases.

 

(8) Keeping emotions under
control

A person who
gets over-excited in joy will suffer from harm; heightened emotion of happiness
often shrouds the senses and undermines the ability to think properly.
Similarly, extreme level of unhappiness also affects the unbiased way of
soaking in things. One needs to develop the ability of doing work and living
life in such a manner that one is not affected by emotions. A wise one is not
too happy when honoured, he does not feel sad when dishonoured, and he is not
affected by emotions even in difficult times.

 

(9) Keep away from envy

Envy is a
negative emotion, and like every other negative emotion, it causes more harm
than good. Envy gives rise to other negative emotions like anger, hate and
over-thinking. A person who envies others’ wealth, beauty, family reputation,
noble birth, happiness, fortune or respect in society, is a sick person; there
is no cure for him.

 

(10) Forgiveness

For a weak person patience
(forgiveness) is a quality; for the strong person patience (forgiveness) is an
invaluable quality. Forgiveness in the current world is a very important value
for a person. It is an act of deciding to let go the feelings of resentment or
vengeance to persons who have harmed us. The health and psychological benefits
of forgiveness are huge. Forgiveness is often associated with a reduction of
anger, anxiety and depression. Further, it is also associated with benefits of
decrease in blood pressure levels, leading to a healthy life.

 

(Source: detechter.com)

 

IV. Good News

 

12. Covid-19 Lockdown: Farmers’ Groups in Akola Earned Rs. 8.50
Crores by Directly Selling Produce to Customers

 

During the lockdown caused by the
corona virus (Covid-19) pandemic, except essential service providers, everyone
is staying at home. Seeing an opportunity in this, farmers in Akola district in
Maharashtra used direct marketing to sell their produce to customers and earned
almost Rs. 8.50 crores.

The farmers from Akola have
worked out an inspiring model of direct marketing in which 69 farmer groups
joined hands and sold crops worth Rs. 8.50 crores directly to customers during
the lockdown period, says a release from the Press Information Bureau (PIB).

 

One of the farmers from the Akola
group says, ?We have already sold 850 metric tonnes of crops including fruits
and vegetables so far. In order to save time and effort, our groups also use
methods like online payments and order-on-phone service’.

 

Under the guidance of the
district agriculture department, the farmers have been selling fresh vegetables
and fruits directly to the customers at reasonable prices through 93 direct
selling outlets. These outlets are located in urban areas of Akola as well as
in nearby districts. Apart from these organised selling outlets, the farmers
have put up small stalls at important spots in the area and are also providing
door-to-door delivery.

 

Since the beginning of the
lockdown period due to the outbreak of Covid-19, the department of agriculture,
co-operation and farmers’ welfare in the Central government has been taking
several measures to facilitate farmers and farming activities at the field
level.

 

The lockdown coincides with the
harvest season of the rabi crops. The department has been making
concerted efforts so that farmers do not face any difficulties in selling their
produce. To assure better returns especially for perishable crops like fruits
and vegetables, the department encourages farmers to engage in ‘direct
marketing’. To promote the concept of direct marketing among farmers, the
department assists farmers, group of farmers, farmer producer organisations and
co-operatives in selling their produce to bulk buyers, big retailers and
processors.

 

Mohan Wagh, project officer,
agricultural technology management agency (ATMA) at Akola says, ?With the
implementation of the model, we have ensured that the farmers do not suffer due
to the lockdown and are able to sell their produce at a decent price. Our
department issues identity cards and passes for the farmers and vehicles for
the smooth management of the system.’

 

To prevent
the spread of Covid-19, the district agriculture department has advised farmers
to use masks, sanitizers and practice social distancing on the farms and in the
mandis.

 

(Source:
www.moneylife.in 29th April, 2020)

BOOK REVIEW

HDFC BANK
2.0:
FROM DAWN TO DIGITAL – By Tamal
Bandyopadhyay

 

Finally,
here is a book that narrates the transformation of HDFC Bank from a startup in
1994 to striding across the Indian banking sector like a colossus in a little
over two decades. The bank celebrated its twenty fifth anniversary in 2019.

 

Tamal
Bandyopadhyay is one of India’s most respected writers and columnists on
finance. He tells the exciting tale of how HDFC Bank has transformed itself
with its digital foray. It chronicles how India’s most valued lender faced its
toughest challenge of turning itself into a digital bank.

 

The author
has made it clear that his objective is not merely to write the bank’s history
but to tell the story of the making of a successful bank, born after economic
liberalisation and reinventing itself continuously to expand its reach and
remain ahead of the competition. It tells the story of HDFC Bank in the context
of the overall banking space in India, which has been changing dramatically
with new products, new ideas and technology and, of course, the pile of bad
loans that is forcing the industry to take a re-look at loan appraisal and risk
management. It is divided into three parts – The Digital Journey, The Flashback
and The Puri Legacy.

 

THE DIGITAL JOURNEY

The strategy
was to provide speed, use technology to do credit and risk management at scale,
improve the consumer experience and apply Artificial Intelligence (AI) to
massive amounts of data for prediction and decision-making. It could provide
far more convenience to customers and it was also believed that with full digitisation
the bank could reduce its operational costs. It was truly a win-win situation.
The digitisation drive has resulted in slashing of documents’ movement, saving
two million sheets of paper every month and shrinking the cost-to-earnings
ratio to 40% from 49% between 2012 and 2018.

 

The HDFC
Bank 2.0 journey began with MD Aditya Puri’s trip to California in September,
2014 to see the developments and innovations in technology and to understand
their impact. He came back convinced that his bank had to move fast and take
advantage of digital disruption. He had seen how the fintech companies, the new
kids on the tech block, were getting into fund transfers, mobile banking and
shopping. They could build products to give quick loans and provide a lot of convenience
and a slick user interface to customers on their phones. Aditya and HDFC
Bank decided that they would rather disrupt themselves than be disrupted.

 

It was also
important that the bank combined global trends in technology like smartphones,
AI, the cloud, etc. with the state-of-the-art infrastructure that India had
built as digital public goods – Aadhaar, e-KYC, Unified Payments Interface
(UPI) and other elements of the India stack.

 

This enabled
the bank to launch new products quickly that could be targeted across the
country, at both urban and rural customers. For example, the 10-second loan is
a genuine innovation based on the principle of ‘paperless, presence-less and
cashless’ banking. It is a great example of combining the traditional strength
of the bank in credit underwriting and risk management with the latest
technology. HDFC Bank has taken this innovative approach to car loans, loans
against securities, loans against mutual funds and, with increased data about
small businesses coming in after the implementation of the Goods and Services
Tax (GST), similar products could well be rolled out for small business lending
as well.

 

As a part of
digitisation, in 2015 the bank introduced a fully integrated marketplace
platform, an aggregator called SmartBuy, hosting links to various sites
catering to shopping, travel, etc., with 3,000 to 4,000 registered merchants.
The first bank in India to do so, HDFC Bank clocked Rs. 40 billion from this in
2018. Clearly, India’s most valued lender has been turning itself into a
digital bank not in a superficial manner but by driving fundamental change. All
this is taking place at warp speed – around 85% of all its transactions were
digital in 2018.

 

THE FLASHBACK

This part
deals with the making of the bank, viz. its conceptualisation, the team
building and the startup fervour of the initial days.

 

The idea of
floating a bank occurred to Mr. Deepak Parekh and the HDFC Board in 1987. The
starting point was to initiate non-mortgage opportunities for HDFC, then engage
in housing financing. In 1993, soon after the liberalisation of India’s economy
in 1991, the Reserve Bank of India issued guidelines on the entry of new
private banks. HDFC Bank was incorporated in August, 1994 and got the banking
licence in January, 1995 along with nine others such as ICICI, IDBI, UTI, Times
Bank, Centurion Bank, IndusInd Bank, etc. In February, 1995, Mr. Manmohan
Singh, the then Finance Minister, inaugurated HDFC Bank’s corporate office at
Worli.

 

Aditya
Puri, ex-Citibank, was appointed as CEO with his first 13 men, the lucky 13,
who shared the same vision of creating a bank with a difference and
believing that they would be working in the best bank in India.
Most of
them, earlier with Citibank and Bank of America, left their lucrative positions
and global opportunities, took pay cuts for this vision and joined the startup
private bank. The first bank to give stock options to its employees, HDFC Bank
used this route to create a balance between short-term rewards and long-term
sustainable value creation. And the money did come their way as the bank and
the stock did phenomenally well. Aditya gave the lucky 13 the freedom to
bring their own people to the bank, people who would share the same dream and
passion. But he had one caveat – not too many people could be hired from
particular banks, as this would make it difficult for HDFC Bank to evolve its
own culture.

 

The book
contains many inside stories of the Natwest misadventure and the two mergers by
HDFC Bank, viz., Times Bank and Centurion Bank of Punjab, with all the minute
details.

 

The author,
with his rich experience in the banking space, makes two critical observations
worth mentioning:

1. When one gauges a bank, there are three key
things to look at – profitability, growth and stability. There is also the
critical component of trust.
One associates the idea of a bank with
something one can trust – that ‘You can bank on somebody’.

2. Globally, banks have never failed because of
lack of technology, or great products or people. What the failed banks
really missed was risk management
– they did not manage the risks well.
Herein comes the understanding of the risk-reward trade-off, or balancing of
business growth with the risk taken in delivering it.

 

THE PURI LEGACY

What makes Aditya, the longest-serving
Managing Director of any bank globally, different from his peers? The author
tries to analyse this by pointing out that Aditya, B.Com. and a qualified
Chartered Accountant
, is a common-sense banker with a strong belief
that common sense and curiosity are far more important than anything else in
banking. One of the most remarkable things about him is his eye for detail. He
and HDFC Bank have been known for spotting trends and then executing plans with
lightning speed, scale and, yet, with proper risk controls. According to
Aditya, HDFC Bank is not a bank anymore but a financial experience.
Under his leadership, from a life-cycle bank, HDFC Bank is transforming itself
into a lifestyle bank.

 

He is good at maintaining
work-life balance by following a principle of doing extraordinary things in an
ordinary way. In spite of heading such a large institution he leaves office by
5.30 pm regularly and spends time with his family. He never delegates. He
empowers.

 

He has always been ahead of the
curve and had foreseen the digital banking revolution and knew a convergence
would happen and people would want everything on the phone. However, it is
pertinent to note that he does not use a mobile phone and email for himself!

 

Under his leadership, the bank
has shown that with an agile leadership which has foresight and flawless
execution at speed and scale, even a giant bank can take on the nimblest of
startups and become a pioneer and market leader. It is an object lesson on how
incumbents in many industries can respond to the digital disruption that is
staring at them.

 

The Puri
legacy is all about an institution which will continue to grow and go to the
next level with the same drive, value, ethos and culture, and with the same
consistency.

 

Book reviewer’s
notes

Mr. Deepak Parekh was never on
the Board of the bank despite being closely involved in creating it, including
lending the brand name ’HDFC’ at no cost! It can be said that it was his
conceptualisation, vision and leadership ability to give space to the CEO to
grow and develop.

 

The key lesson, both from the bank and the book, is
that freedom for professional managers, non-interference by the board and the
promoter, and a passion for success are more important than ownership.

REPRESENTATION

1.  Dated: 30th  March, 2020

To: Honourable Finance Minister
Ministry of Finance, Government of India, 128-A North Block, New Delhi

Subject: Tax Payer Relief: Certain
issues

Representation by: IMC Chamber of
Commerce and Industry; Bombay Chartered Accountants Society; Chartered
Accountants Association, Ahmedabad; Chartered Accountants Association, Surat;
Karnataka State Chartered Accountants Association; Lucknow Chartered
Accountants Society

 

Note: For
full Text of the above Representation, visit our website www.bcasonline.org

 

2.  Dated: 27th April, 2020

To: Honourable Finance Minister
Ministry of Finance, Government of India, 128-A North Block, New Delhi

Subject: Representation for
deferment for applicability of provision of expanded scope of Equalisation Levy
(‘EL’) on ‘E-commerce Supply or Services’ (‘ESS’) made applicable to
Non-residents.

Representation by: IMC Chamber of
Commerce and Industry; Bombay Chartered Accountants Society; Chartered
Accountants Association, Ahmedabad; Chartered Accountants Association, Surat;
Karnataka State Chartered Accountants Association; Lucknow Chartered
Accountants Society

 

Note: For
full Text of the above Representation, visit our website www.bcasonline.org

STATISTICALLY SPEAKING

1.    The biggest private corona virus donations

Source: Forbes

 

2.    Value
of COVID-19 fiscal stimulus packages in G20 countries, as a share of GDP (as of
May, 2020)

 

Source: Statista

 

3.    Majority
of Bitcoin and crypto owners are open to taxation

 

Source: Survey by CHILDLY
(crypto finance start-up)

 

4.    Countries
with highest share of health-related goods from China (2017)

Source: UN COMTRADE data
extracted from Observatory of Economic Complexity

 

 

5.    Countries
with highest export surplus in health-related goods (in billion USD in 2017)

 

                   

Source: UN COMTRADE data
extracted from Observatory of Economic Complexity

 

Society News

DIRECT TAXES HOME REFRESHER COURSE

 

The Taxation
Committee organised the first-ever Direct Taxes Home Refresher Course (DTHRC)
2020 from 20th April to 1st May, 2020. It comprised seven
dynamic sessions on topics which have significant relevance and application in
the current times. The course was crafted under the pressing times of the
Covid-19 pandemic to enable members who are either working from home, or
working at home, to stay connected with the current scenario in direct taxes.

 

Members and
participants were given a kaleidoscopic view of the new taxation regime
effective from F.Y. 2021 onwards, the recent amendments to the provisions of
TDS and TCS, the fundamentals and applications of the Vivad se Vishwas
Scheme and the recent amendments to taxation of charitable trusts.

 

Incidentally,
the sessions on tax implications for banks and NBFCs, penalty provisions and
domestic GAAR went on beyond the time fixed as the speakers shared their vast
knowledge on these subjects.

 

The DTHRC
was organised and conducted on the Zoom app where the participants not only saw
the speaker and the presentation, but they could also post queries to the host
through the chat box. The meetings were also accessible through the BCAS
page on YouTube live. On an average, every meeting saw an attendance of 500
to 700 persons.

 

The queries
were filtered by the hosts and were dealt with by the respective speakers at
the end of the session.

 

The following table
summarises the DTHRC:

 

Date

Topic

Speaker

20.4.2020

New taxation regime u/s
115BAA,115BAC, 115BAD

Bhadresh Doshi

21.4.2020

Vivad se Vishwas scheme

Gautam Nayak

24.4.2020

Recent amendments related to
charitable trusts

Dr. Gautam Shah

27.4.2020

Recent amendments to TDS and
TCS provisions

Sonalee Godbole

28.4.2020

Tax implications for banks
and NBFCs

G.R. Hari

29.4.2020

Penalty u/s 270A/270AA

Jagdish Punjabi

1.5.2020

Domestic GAAR

Pinakin Desai

 

With such
high participation, the sessions were bound to be interactive and the speakers
were equally eager to share their insights on their respective subjects.

 

VIRTUAL ZOOM SESSION ON ‘LOCKED IN LOCKDOWN’

 

The HRD
Committee organised a virtual Zoom session styled ‘Locked in Lockdown’ from
4.30 pm onwards on 11th April.

 

Thanks again
to the lockdown due to Covid-19, the Committee took this commendable initiative
to help members to positively cope up with the forced confinement.
Approximately 90 participants took part in the session.

 

It was
conducted by Dr. Nidhi Thanawala who is a therapist, life coach,
professor recruiter, reality TV expert, all rolled into one. She planned the
session in such a way as to move the focus on creating a positive mindset and
making the best of the lockdown period. She suggested ways to deal with the
social media influence and reduce screen time. She provided tips to schedule
routines, engage in hobbies like drawing and painting and spend time in
learning new things. She also highlighted how we should adjust our home
environment for the smooth functioning of work from home, distribution of
household chores and spending quality time with the family during the lockdown
period.

 

As expected,
the session was interactive and the participants asked a lot of questions
throughout the session. Dr. Thanawalla was equally energetic in
providing her insights and answered all the questions posed by the
participants.

 

The session
concluded with a vote of thanks proposed by Sneh Bhuta (Convener of the
HRD Committee).

 

PRACTISING CA’s SURVIVAL GUIDE

 

In the
backdrop of Covid-19 the leaders of CA firms have faced many new issues /
dilemmas about survival and growth that needed discussion and understanding. To
address these problems, BCAS arranged a unique programme ‘The CA Survival
Guide’ to present options and strategies to address some of them.

 

It was a
one-of-its-kind three-session online paid webinar conducted through the Zoom
platform. The programme received excellent response with enrolments being
received till the last minute and with a final count of 91.

 

The first
session was conducted by Nandita Parikh on ‘People Matters because
People Matter’ on 28th April over a Zoom call. The session was
divided into three parts, namely, ‘Our Partners’, ‘Our People’ and ‘Our Clients’,
followed by a round of questions and answers.

 

Nandita
spoke about partners’ responsibilities in a CA firm and their post-Covid roles
and alignment, provided guidance on ‘must do’ things for partners and
emphasised on the new era of consolidation and collaboration. In the second
part of her presentation, she dwelt on ‘our people’, i.e. the employees,
retainers and associates. She addressed pertinent questions such as salary
deductions, increments and promotions in these difficult times and pointed to
the importance of re-planning and preparations for reopening, post the
lockdown, with special focus on re-skilling, relocation and new ideas for the
employees.

 

In the third
part of her presentation, Nandita Parikh addressed questions on how to
service clients in terms of relocation, revision of fees, scope of work, usage
of digital platforms and new offerings. This was followed by an interesting
Q&A session. And it all concluded with a vote of thanks proposed by Mukesh
Trivedi
(Convener, HRD Committee).

 

The second
session was by Ameet Patel on ‘No Technology, No Future’ on 30th
April over a Zoom call. He began by asking a bold question – Are we aware of
the disruption sweeping the world in general and our profession in particular?
He noted that most CA firms were unable to function during the lockdown on
account of unpreparedness, lack of infrastructure and lack of data. The key
lesson from this was to come out of our comfort zones and focus on upgrading
the use of technology.

 

Ameet
discussed various technology issues faced by CAs and suggested solutions to the
same in the shape of available software and the technologies at one’s disposal.
He placed particular emphasis on the usage of technology in day-to-day
functioning to improve offerings and to be future-ready. The session concluded
with a Q&A round and a vote of thanks by Namrata Dedhia.

 

The third
and the final session of ‘The CA Survival Guide’ series was conducted by Vaibhav
Manek
on ‘Practice Growth Strategy’ on 2nd May, again over a
Zoom call.

 

He began by
focusing on the relevance of growth in the times of Covid-19 and how the
expectations of clients would change. Therefore, it was time to think
differently about growth, strategy and reinventing ourselves. What was the
recipe for sustainable growth and making strategic choices? For this it was
necessary to focus on the pros and cons of providing specialised services,
doing self-diagnosis of the firm, making a 360-degree strategy and elevating
the clients’ experiences.

 

In the third
part of the presentation, Vaibhav emphasised a ‘Call for Action’ and
described how execution was the most important. He spoke about developing and
implementing strategic visions for the firm. The participants asked several
questions and the speaker answered them with elan. The session ended with a
vote of thanks proposed by Sneh Bhuta.

 

The programme ‘The CA Survival Guide’ specifically focused on the small
and medium-sized CA firms who would be required to respond effectively to the
mammoth disruption caused by the pandemic through focussed thinking,
well-defined and dynamic strategy and timely action.

 

VIRTUAL CLASS SERIES ON TECHNOLOGY

 

Amidst the
lockdown due to Covid-19, the HRD Committee took the first initiative to keep
its members and their families engaged sitting in their homes and using their
phones, iPads or PC’s smartly. Their response was very encouraging and it was
decided to keep the momentum going with a series of similar virtual classes.

All the
sessions were conducted on different dates by the senior and experienced techie
Yazdi Tantra.

 

  •     1st
    April, 11:00 am – ‘Use of Google’

Yazdi
listed the innumerable benefits of Google. He gave live training on optimum use
of Google through Voice Search and performing simple arithmetic calculations,
setting reminders and alarms, exploring time / weather in any city, playing a
song or reading the current news, translating in various languages and so on.

 

The session
can be viewed on the BCAS YouTube Channel at the following link:
https://www.youtube.com/watch?v=ActAE4vm6bk

 

  •      9th
    April, 10:30 am – ‘Use of GMail’

The faculty
started by pointing out that Gmail is one of the world’s largest Email
programmes, with up to 26% market share. There were many features hidden under
the hood which made Gmail a very fast, efficient and reliable tool. Yazdi
shared tips, tricks and shortcuts which could make Gmail a versatile and
productive business tool.

 

The session can be viewed on BCAS YouTube Channel at: https://www.youtube.com/watch?v=frzNQM8If40&t=1409s

 

  •            15th
    April, 10:30 am – ‘Use of Google Chrome Extensions’

The session
started with the explanation that extensions are third-party programmes that
add new features to browsers and personalise one’s browsing experience. Chrome
browser was open to accepting the maximum number of extensions. The speaker
explained a few extensions to help maximise productivity and save time when
using Chrome. He also explained extensions that can be used with Gmail, making
the mailing experience easy and more productive.

 

The session can be viewed on BCAS YouTube Channel at: https://www.youtube.com/watch?v=BIn6i8YnGoc

 

  •      24th
    April, 09:30 pm –‘Dictation Apps’

This session
was jointly conducted by the HRD Committee along with the Technology Initiative
Committee. The faculty started by explaining the features of the desktop-based
app https://dictation.io/ which can be used through a web browser without
installing any application. He explained the copy and edit features and the use
of this platform to dictate in various languages. He then explained using
dictation facility in Gmail through a web browser as well as mobile phones.

The session can be viewed on BCAS YouTube Channel at: https://www.youtube.com/watch?v=01ZUIrbop0w

 

‘VIRTUAL’ STUDENTS STUDY CIRCLE

 

The Students
Forum under the auspices of the HRD Committee organised its first ‘Virtual’
Students Study Circle meeting during the lockdown on the key subject of ‘Bank
Audit – Recent Changes and Covid-19 Impact’. It was conducted via Zoom Meetings
on 16th April from 6 to 7.30 pm.

 

The study
circle was led by Pankaj Tiwari who is an expert on the subject. Azvi
Khalid
, the student Co-ordinator, introduced the speaker and spoke about
the activities undertaken by BCAS for students.

 

In his
detailed presentation, Pankaj covered all the major aspects of bank
audits. He explained in brief the relief granted by RBI after assessing the
current situation as a result of the Covid-19 pandemic. He dwelt in detail on
the impact of the relief measures for banks, such as changes in Asset
Classification and Provisioning, Income Recognition, Deferment of EMI on
various loans, and the impact of the same on audit procedure. He also touched
upon the important aspects that need to be taken into consideration while
conducting the audit.

 

The speaker
answered all the questions raised by the participants. The interactive session
ended with Azvi Khalid proposing the vote of thanks to the speaker for
enlightening the students with his expert knowledge.

 

‘RANKERS’ SECRETS – LEARNINGS AND INSPIRATION FOR CA
STUDENTS’

 

The Seminar,
Public Relations and Membership Development Committee organised a talk by
toppers (single-digit rankers) on the above subject on 3rd May over
the Zoom meeting platform.

 

The digital
meeting was addressed by Kushal Lodha [CA Final (AIR 5), CA IPCC (AIR
5), CA CPT (AIR 6)] and Dhruv Kothari [CA Final (AIR 2), CA IPCC (AIR
22)].

 

At the
beginning of the session, President Manish Sampat shared some details of
his journey and experience as a Chartered Accountant with the student
participants.

 

The speakers
themselves shared their thought processes, how they approached the CA exams,
what discipline they followed, which materials they referred to, how many times
they revised their subjects, last-day preparations, analysing exam papers, how
to approach the same and many such questions.

 

After their
address, the Coordinators’ panel asked questions and the speakers answered each
one in detail.

 

The session
was highly motivating and around 540 participants, including on the Zoom
meeting platform and on YouTube, benefited from the experience of the two top
rankers.

 

SAMVID 2020 – MSME’S STEPS TOWARDS
ATMANIRBHARTA

 

The Bombay
Chartered Accountants’ Society
was the knowledge partner for a webinar
organised by the Mahesh Professional Forum, Pune, on ‘SAMVID 2020 – MSME’s
Steps Towards Atmanirbharta’ on 23rd May. The online session
was held between 4 and 6 pm.

 

President Manish
Sampat
set the ball rolling with his introductory speech in which he shared
details about the BCAS, its motto and activities. He also introduced the
topic and its relevance in the current times.

 

The first
speaker was Anand Bathiya who focused on the context, scope and benefits
of registration as Micro, Small and Medium Enterprises (MSMEs). He described
its revised definition, the registration process and the benefits and details
of various schemes for MSMEs. He also explained a few key initiatives like the Atmanirbhar
Scheme and the TReDS platform.

 

The second
session was taken up by Chirag Doshi who spoke on the Standard Operating
Procedures (SOPs) for MSMEs. He also explained the plan of action for revival
of small enterprises after they open up when the Covid-19 lockdown ends.

 

Mrinal Mehta
was at the helm for the third session and explained the tax provisions
applicable to MSMEs. He also discussed the tax incentives and schemes available
under the Direct and Indirect Tax regimes for MSMEs. The reliefs in the
statutory due dates announced by the government because of Covid-19 were also
discussed.

 

After the
key speakers the panel of Coordinators posed the viewers’ questions and the
speakers answered each and every one of them.

 

The session
attracted more than 1,100 participants from all over the country who said that
they had immensely benefited from the knowledge and practical experience shared
by the speakers.

 

The role of BCAS,
which was the knowledge partner, was highly appreciated by the SAMVID committee
for its quality and support.

 

BCAS IDEA ANALYTICS SCHOOL FOR INTERNAL AUDITORS

 

To help develop Data Analytics skills amongst Internal Audit
professionals in a structured and focused manner, the Internal Audit Committee
of the BCAS, in association with SAMA Audit Systems and Softwares Pvt.
Ltd., designed a unique online hands-on course on data analytics using IDEA
tools at two levels – Intermediate (two batches announced) and Expert (one
batch), every course comprising of five online sessions of two and a half hours
each, with the IDEA Analytics software and data files being made available to
each participant for a hands-on experience. The first Intermediate course was
launched in May and the other two courses are scheduled for June, 2020.

 

The course
is being conducted by certified IDEA trainers and includes availability of IDEA
software tools for 45 days and a help-desk for assisting the participants
navigate their way in IDEA for a period of two weeks.

 

10TH Ind AS RESIDENTIAL STUDY
COURSE

 

This year
the BCAS completed a full decade of its Ind AS Residential Study Course
(RSC). The journey of RSCs began at the Rambhau Mhalgi Prabodhini just outside
Bombay city in December, 2009 and marked a new avenue of learning and sharing
knowledge on Ind AS. Over the last nine years, RSC participants got together at
various locations over two nights and three days for discussions on this vital
subject.

Fittingly,
the 10th edition was organised at the Hyatt Alila Diwa Hotel in Goa
from 5th to 8th March. In a departure to mark the 10th
edition of this sought-after and eagerly-awaited study course – and with exotic
Goa being chosen as the venue, spouses were also allowed to join. In another
departure from the norm, the duration of the RSC was also extended by one more
day to three nights and four days. The RSC witnessed a very large number of
participants from all over the country. For the spouses and the participants,
special tours, events and activities were planned, such as a Panjim city tour,
a cruise, beach activities and so on.

 

As usual,
the 10th RSC also followed the format of extensive group discussions
on Case Studies-based papers, presentation papers on subjects of current
topical interest and a panel discussion with experts. The participants were
divided into three groups to have in-depth discussions and a learning and
sharing experience. The group leaders made strenuous efforts to prepare their
presentations for detailed discussions.

 

The list of
topics and the paper writers / presenters is as under:

 

Sr. No.

Paper / Presentation

Faculty

Nature of activity

1.

Case Studies on Business
Combination

and Consolidation and Ind AS
116 – Leases

Raj Mullick

Group Discussion

2.

Case Studies on Financial
Instruments

and Ind AS 115 – Revenue

V. Venkat

Group Discussion

3.

Presentation Paper on
Taxation aspects of

Ind AS (including GST and
MAT)

Gautam B. Doshi         

Presentation

4.

Recent Developments in
Statutory Audit and

Audit Reporting (including
CARO 2020)

Himanshu Kishnadwala

Presentation

5.

Conceptual Framework for Ind
AS and

Recent Developments at IASB

Vidhyadhar Kulkarni

Presentation

6.

Panel Discussion on Utility
of Financial

Statements and Relevance of
Audit

 

Nilesh Vikamsey,
Raj Mullick,

Prashant Jain,
Jigar Shah

Moderator:

Sandeep Shah

 

 

Panel Discussion

 

The RSC
started on Thursday, 5th March with the inaugural session at which
President Manish Sampat; Himanshu Kishnadwala, Chairman of the
Accounting and Auditing Committee; Chirag Doshi, Managing Committee
Member and Convener; Amit Purohit and Nikhil Patel, Conveners,
were present. In his opening remarks, the President wished the participants a
great learning experience. He also spoke briefly about the activities
undertaken by BCAS and invited non-members to join it and gain
uninterrupted knowledge. Himanshu Kishnadwala briefly explained the
importance and relevance of RSCs and outlined the events planned for the
following four days.

 

The
inauguration was followed by the presentation paper on ‘Taxation Aspects of Ind
AS (including GST and MAT)’ by Gautam B. Doshi and another presentation
paper on ‘Recent Developments in Statutory Audit and Audit Reporting (including
CARO 2020)’ by Himanshu Kishnadwala.

 

On the next
morning, the study groups discussed the ‘Case Studies on Business Combination and
Consolidation and Ind AS 116-Leases’ by Raj Mullick. The group
discussion was followed by the presentation and reply by Raj Mullick,
the Paper writer. The second half of the day was set aside for leisure
activities for the participants.

 

Saturday
morning (7th March) saw fun-filled beach activities, which was
followed by the group discussion on Paper 2 – ‘Case Studies on Financial
Instruments and Ind AS 115-Revenue’ by V. Venkat. The post-lunch
session featured the Presentation Paper on ‘Conceptual Framework for Ind AS and
Recent Developments at IASB’ by Vidhyadhar Kulkarni, followed by
Response to Paper 2 Case Studies by V. Venkat.

 

A highly
interesting and lively panel discussion on ‘Utility of Financial Statements and
Relevance of Audit’ was organised on 8th March (Sunday), the last
day of the RSC. The panellists were Nilesh Vikamsey, Raj Mullick, Prashant
Jain
and Jigar Shah. The discussion was moderated by Sandeep Shah.

 

(Readers are
requested to refer to the April, 2020 issue of the BCAJ wherein we carried
an exhaustive report on the above panel discussion. It was written by Zubin
Billimoria
and appeared under the headline ‘Panel Discussion on Utility of
Financial Statements and Relevance of Audit at the 10th Ind AS RSC’.
The report appeared on Page No.s 101 to 104.)

 

Incidentally,
at the panel discussion a publication titled ‘Mandatory Accounting Standards
(Ind AS) – Extracts From Published Accounts’ was also released. The booking for
the publication was opened for outstation members and the response was very
positive.

 

The RSC
ended with a concluding session at which those members who were first-time
participants shared their experience of the event. Those who had participated
in five or more RSCs (including past and present) were also honoured on the
occasion.

 

The Chairman
thanked the participants for making the event a grand success. And Manish
Sampat
thanked him, Himanshu, for successfully planning and
executing such an important event this year by setting a very high benchmark
for quality learning.

 

Before
leaving, most participants said they had benefited immensely from the knowledge
shared by the learned and experienced faculties and also from the group
discussions.

 

OUR WORLD AFTER COVID-19

 

The Managing
Committee of the BCAS organised a virtual chat on ‘The World and
India Post Covid-19’
on 9th May with the celebrated entrepreneur
and academician, Mr. Mohandas Pai (pictured below).

A Padma
Shri
awardee, he is the Chairman of Manipal Global Education (Manipal
University). A former Director of Infosys and Head of the Administration,
Education and Research, Financial, Human Resources of Infosys Leadership
Institute, he was also an all-India rank holder at the CA finals of the
Institute of Chartered Accountants of India.

 

The expert
chat was crafted under the pressing times of Covid-19 to enable the
viewer-participants to understand the effect of Covid-19 in the fields of
economics, business and health, along with the dynamics of how this pandemic
will affect both India and the world. Had the government done enough for the
country? How will India make up for the loss? Will there be revival in the
economy? What will be the future of the world and of our country?

 

Padamchand
Khincha
helped arrange the chat which was moderated by two Past Presidents
Shariq Contractor and BCAJ Editor Raman Jokhakar. The
welcome address was delivered by Mayur Nayak.

 

Mr. Pai forecast
that world dependence on China will reduce. China’s export strategies will no
longer benefit it. Already, it had suffered an economic decline of 6% in the
first quarter of this year, a negative decline of 6% in its $15 trillion
economy. China will now have to be dependent on internal consumption.

 

The oil
industry had been majorly impacted due to the pandemic. The second largest
industry in the world ($6 trillion), it was affected due to excess production
by America. China was the second largest consumer of oil, but thanks to the
virus its consumption of oil had come down. Owing to this, the oil industry
economy had fallen to $4 trillion. Excess production of oil by countries like
the US, Saudi Arabia and Russia had led to a crash in oil prices, accounting
for a decline in the oil economy to $1.5 trillion and reduction in consumption
from 100 million barrels to 30 million barrels a day.

 

Central
Banks around the world had been trying to control the crisis by improving
liquidity. The Federal Reserve had increased in the balance sheet from $1
trillion to $6 trillion, thanks to buying of Government and Corporate Bonds.
The growth this year could be negative.

 

Mr. Pai
stated that the travel and tourism industry was virtually at a halt and
hospitality, too, had been affected. These were the largest employers worldwide
but had come to a total standstill.

 

Before
Covid, the global GDP of around $82 trillion had been growing by 2 to 3%, but
now it was down by 8 to 10%. The same position applied to the USA, too. Such a
dip in the economy had never been experienced since the Second World War.
Anti-China sentiments, the decline of China and Japan and the currency crisis –
all of these were a new experience.

 

As for
India, Mr. Pai said agriculture is expected to grow by 3.5 to 4% with
expectation of a good monsoon. Industries related to construction and mining
are expected to go down by 2.5%. Services would move into negative territory
with 2 to 3% growth. In fact, India may see a flat growth rate of not more than
1.5% in its GDP.

 

‘Work from
Home’ is the mantra of the new era, with a 40 million workforce staying home
and working. As for IT, new developments would be witnessed in areas such as
TeleMedicine, E-Health, E-Education and
E-Entertainment.

 

So far as global trade is concerned, India is the next China. The world
will trust India more than China, especially in global trade and the pharma
sector. The government is expected to boost demand by spending Rs. 1 lakh
crores on infrastructure.

 

Mr. Pai advised Chartered
Accountants not to ‘turn to ghosts’ (seers, soothsayers and astrologers) but to
use technology to become more global and more efficient. They would be able to
offer a quantum leap in the volume and quality of the services that they could
provide.

 

He concluded by stating that by 2025 the emerging markets will have
higher GDP compared to the OECD countries. Globalisation had gone too far – far
ahead of the need – and was trying to find a new normal with equal stress on
national considerations.

 

‘This pandemic is like a global war. Globalisation has made us realise
that there is interdependence between nations. There will be some ups and downs
for the next three to four years,’ Mr. Pai added.

 

Clearly, the
expert chat was a reality check on the current times. The speaker was
professional in his approach and knowledgeable in the points that he covered.

MISCELLANEA

I. Economics

 

13. The consumer in the age of coronavirus

 

The Sarasota Institute is focusing on how Covid-19 may affect some of the
ten categories listed across the top of this web site. We are having virtual
mini-symposia on several of these during April and May. In addition, we are
publishing thought pieces taking a look into the future.

 

Here is a column about consumerism by Phil Kotler, often referred to as
‘the father of modern marketing’, the single greatest thought leader and author
on marketing in the world today. [Phil is a fellow co-founder of the
Institute.] It is an in-depth look into the past and present of consumerism. It
is a must-read as we start to think about how and how much consumerism and the
role that it plays in the future will change.

 

Covid-19
is spreading relentlessly through the world leaving a trail of death and
destruction. The world is in danger of falling into a Great Depression, with
millions of unemployed workers across the globe. The impact will especially hit
the poor – both in terms of health and economics; many cannot even afford to
wash their hands because of the lack of water. What will happen to the millions
that cannot practice social distancing? The slum-dwellers, the prison
population and the refugees huddled in tents?

 

Businesses
are closing down and people are urged to stay home, practise social distancing
and vigorously wash their hands. People are stocking up on all kinds of food
and sundries that are part of daily living. Some are hoarding masks, toilet
paper and other necessities should Covid-19 linger on for weeks, months or
years.

 

While the
US has just passed a $2 trillion dollar aid package, the details seem to once
again point to socialism for Wall Street, in the form of bailouts, a small pay
check for the working poor and little else for Main Street. Income inequality
is poised to increase yet further.

 

I predict
that this period of deprivation and anxiety will usher new consumer attitudes
and behaviour that will change the nature of today’s capitalism. Finally,
citizens will re-examine what they consume, how much they consume and how all
this is influenced by class issues and inequality. Citizens need to re-examine
our capitalist assumptions and emerge from this terrible period with a new,
more equitable form of capitalism.

 

Capitalism’s dependence on endless consuming

Let’s
begin by taking a long view back to the emergence of the Industrial Revolution.

 

The
Industrial Revolution of the 19th century greatly increased the
number of goods and services available to the world’s population. The steam
engine, railroads, new machinery and factories and improved agriculture greatly
increased the economy’s productive capacity. More production inevitably led to
more consumption. More consumption led to more investment. More investment
increased production in an ever-expanding world of goods.

 

Citizens
delighted in the availability of more goods and choices. They could
individualise their personalities through their choices of food, clothing and
shelter. They could shop endlessly and marvel at the innovative offerings of
the producers.

 

Citizens
increasingly turned into consumers. Consuming became a lifestyle and culture.
Producers profited greatly from the increasing number of active consumers.
Producers were eager to stimulate more demand and more consumption. They turned
to print advertising and sales calls and as new media arose, they turned to
telephone marketing, radio marketing, TV marketing and Internet marketing.
Business firms would profit from the degree they could expand consumer desire
and purchasing.

 

From the
beginning some onlookers had misgivings about the rise of consumerism. Many
religious leaders saw the growing interest of citizens in material goods as
competing with religious attention and spiritual values. The legacy of
puritanical values kept certain population groups from acquiring too many goods
and getting into too much debt. Some citizens were particularly critical of
wealthy consumers who used goods to flaunt their wealth. The economist Thorsten
Veblen was the first to write about ‘conspicuous consumption’ that he saw as a
malady taking people away from more meditative life styles. In ‘The Theory of
the Leisure Class’, Veblen exposed this sickness of status display. Had he
lived long enough, he would have been aghast at the news that the former First
Lady of the Philippines, Imelda Marcos, owned 3,000 pairs of shoes that
languished in storage since her exile from the Philippines.

 

The growing number of anti-consumerists

There are
signs today of a growing anti-consuming movement. We can distinguish at least
five types of anti-consumerists.

 

First, a
number of consumers are becoming life simplifiers, persons who want to eat less
and buy less. They are reacting to the clutter of ‘stuff’. They want to
downsize their possessions, many of which lie around unused and unnecessary.
Some life-simplifiers are less interested in owning goods such as cars or even
homes; they prefer renting to buying and owning.

 

Second,
another group consists of de-growth activists who feel that too much time and
effort are going into consuming. This feeling is captured in William
Wordsworth’s poem,

 

‘The world is too much with us…

Getting and spending, we lay waste our powers:

Little we see in Nature that is ours;

We have given our hearts away, a sordid boon!’

 

De-growth
activists worry that consumption will outpace the carrying capacity of the
earth. In 1970, the world population was 3.7 billion. By 2011 it grew to 7.0
billion. Today (2020) the world population stands at 7.7 billion. The U.N.
expects the world population to grow to 9.8 billion by the year 2050. The
nightmare would be that the earth cannot feed so many people. The amount of
arable land is limited and the top soil is getting poorer. Several parts of our
oceans are dead zones with no living marine life. De-growth activists call for
conservation and reducing our material needs. They worry about the people in
the emerging poor nations aspiring to achieve the same standard of living found
in advanced countries, something that is not possible. They see greedy
producers doing their best to create ‘false and unsustainable needs’.

 

Third,
another group consists of climate activists who worry about the harm and risk
that high-buying consumers are doing to our planet through generating so much
carbon footprints that pollute our air and water. Climate activists carry a
strong respect for nature and science and have genuine concerns about the
future of our planet.

 

Fourth,
there are sane food choosers who have turned into vegetarians and vegans. They
are upset with how we kill animals to get our food. Everyone could eat well and
nutritiously on a plant, vegetable and fruit diet. Livestock managers fatten up
their cows and chickens to grow fast and then kill them to sell animal parts in
the pursuit of profits. Meanwhile, cows are a major emitter of methane gas that
heats our earth and leads to higher temperatures, faster glacial melting and
flooding of cities. To produce one kilogram of beef requires between 15,000 and
20,000 litres of water as well as so much roughage to feed the animals.

 

Fifth, we
hear about conservation activists who plead not to destroy existing goods but
to reuse, repair, redecorate them or give them to needy people.
Conservationists want companies to develop better and fewer goods that last
longer. They criticise a company such as Zara that every two weeks produces a
new set of women’s clothing styles that would only be available for two weeks. Conservationists
oppose any acts of planned obsolescence. They are hostile to the luxury goods
industry. Many are environmentalists and anti-globalists.

 

The
anti-consumerism movement has produced a growing literature. One major critic
is Naomi Klein with her books ‘No Logo’, ‘This Changes Everything’ and ‘The
Shock Doctrine’. See also the documentary film ‘The Corporation’ by Mark Achbar
and Jennifer Abbott.

 

How businesses sustain the consumer sentiment

Business
firms have an intrinsic interest in endlessly expanding consumption for the
purpose of higher profits. They rely on three disciplines to boost consumption
and brand preference. The first is innovation to produce attractive new
products and brands to enchant customer interest and purchase. The second is
marketing that supplies the tools to reach consumers and motivate and
facilitate their purchasing. The third discipline is credit to enable people to
buy more than they could normally buy on their low incomes. Businesses aim to
make consumption our way of life. To keep their productive equipment and
factories going, they must ritualise some consumer behaviour. Holidays like
Halloween, Christmas, Easter, Mother’s Day and Father’s Day are partly promoted
to stimulate more purchasing. Businesses want not only purchase of their goods
but fast consumption so that objects burn up, wear out and are discarded at an
ever-increasing rate.

 

Businesses
use advertising to create a hyper-real world of must-have products that claim
to deliver happiness and well-being. Businesses refashion commodities into
compelling brands that can bring meaning into the consumer’s life. One’s brand
choices send a signal of who the person is and what he or she values. Brands
bring strangers together to share carefully designed images and meanings.

 

How will anti-consumerism change capitalism?

Capitalism
is an economic system devoted to continuous and unending growth. It makes two
assumptions: (1) people have an unlimited appetite for more and more goods; and
(2) the earth has unlimited resources to support unlimited growth. Both of
these are now questioned. First, many people become jaded and satiated by the
effort to continuously consume more goods. Second, the earth’s resources are
finite, not infinite, and would not meet the needs of a growing world
population that comes with growing material needs.

 

Until
now, most countries have used only one measure to assess the performance of
their economy. That measure is the Gross Domestic Product (GDP). GDP measures
the total value of the goods and services produced in a given year by the
country’s economy. What it doesn’t measure is whether GDP growth has been
accompanied by a growth in people’s well-being or happiness.

 

We can
imagine a case where GDP grows by 2 or 3% by workers working very hard and even
at overtime. They only have two weeks of vacation a year. They have little time
for leisure or renewal. They might be stressed by unexpected medical bills that
hit their savings. They might be unable to send their children to college,
leaving their children with lower skills and lower earning potential. Those
students who manage to go to college graduate with huge debt. Graduates are
carrying a college debt of $1.2 trillion. They cannot buy furniture or a home,
or even afford to get married. In such a case, we would guess that the GDP went
up but the nation’s average well-being and happiness went down.

 

We badly
need to add new measures of the impact of economic growth. Some countries are
now preparing an annual measure of Gross Domestic Happiness (GDH) or Gross
Domestic Well-Being (GDW). We know that citizens in Scandinavian countries
enjoy a substantially higher level of happiness and well-being than American
citizens and run good economies. Is our addiction to consuming, consuming us?

 

Part of the
problem of economic growth is that the fruits of gains in productivity are not
shared equitably. This is obvious in a country with a growing number of
billionaires and a great number of poor workers. Many CEOs are paid 300 times
what their average worker earns and some take home as much as 1,100 times the
average worker. The economic system is rigged. Corporations have succeeded in
emasculating trade unions and leaving workers with no say in what they or their
bosses should be paid.

 

Even some
billionaires are unhappy with this greatly lopsided pay arrangement. Bill Gates
and Warren Buffet have publicly called for raising the top income tax rate.
This top rate is now down to 37% as a result of the 2018 Tax Reform. Meanwhile,
wealthy citizens in Scandinavian countries pay 70% and manage to run a good
economy, one with free health care and free college education. One citizen
billionaire, Nick Hanauer, has spoken about this on TED. He warns his fellow
billionaires that ‘the pitchforks are coming’. He pleads with them to pay
higher wages and taxes and share more of the productivity gains with the
working class. The working class should earn enough to eat well, pay rent and
retire with adequate savings. Today there are too many workers who couldn’t
muster $400 to pay for a pressing payment they must make.

 

Capitalism faces the Covid-19 crisis

Capitalism
will change for other reasons as well. If more consumers decide to be
anti-consumerists, they will spend less. Their spending has traditionally
supported 70% of our economy. If this goes down, our economy contracts in size.
A slowdown in economic growth will lead to more unemployment. Add the fact that
more jobs are being lost to AI and robots. This will require capitalism to
spend more on unemployment insurance, social security, food stamps, food
kitchens and social assistance.

 

Capitalism
will have to print more money. We see this happening with the $2 trillion
outlay voted by Congress to help support desperate workers in the face of the
Covid-19 crisis. And $2 trillion is only to tide over people in the short run.
More trillions will have to be spent. This means huge deficits that can’t be
covered by existing tax revenues. To the extent possible, tax rates will have
to be dramatically increased. The lives of the rich are normally not affected
by the grief and hardship of the poor. But now it is time for the rich to pay
more and share more. In our current crisis, CEOs and their highly paid staffs
have to take a cut in their pay. Boeing’s executives recently set an example by
saying they will work with no pay during the coming crisis.

 

When the
Covid-19 crisis is over, capitalism will have moved to a new stage. Consumers
will be more thoughtful about what they consume and how much they need to
consume. Here are possible developments:

 

Some
weaker companies and brands will vanish. Consumers will have to find reliable
and satisfying replacement brands.

 

The
coronavirus makes us aware of how fragile is our health. We can catch colds
easily in crowds. We must stop shaking hands when we meet and greet. We need to
eat more healthy foods to have a greater resistance to germs and various types
of flu. We are shocked by the inadequacy of our health system and its great
cost. We need to stay out of the hospital and play safe.

 

The
sudden loss of jobs will remain a trauma even after workers get jobs back. They
will spend and save their money more carefully.

 

Staying
home led many consumers to become producers of their own food needs. More home
cooking, more gardening to grow vegetables and herbs. Less eating out.

 

We place
more value on the needs of our family, friends and community. We will use
social media to urge our families and friends to choose good and healthy foods
and buy more sensible clothing and other goods.

 

We will want
brands to spell out their greater purpose and how each is serving the common
good.

 

People
will become more conscious of the fragility of the planet, of air and water
pollution, of water shortages and other problems.

 

More
people will seek to achieve a better balance between work, family and leisure.
Many will move from an addiction to materialism to sensing other paths to a
good life. They will move to post-consumerism.

 

Capitalism
remains the best engine for efficient economic growth. It also can be the best
engine for equitable economic growth. It doesn’t change to socialism when we
raise taxes on the rich. We have given up on the false economic doctrine that
the poor win when the rich get richer. Actually the rich will get richer mainly
by leaving more money in the hands of working class families to spend.

 

As the
coronavirus crisis shows us, a robust public health system is in the best
interest of all – rich and poor alike. It is time to rethink and rewire
capitalism and transform it into a more equitable form – based on democracy and
social justice. Either we will learn to share more like Scandinavian countries,
or we will become a banana republic. We are all in this together.

 

(Source: The
Sarasota Institute – By Philip Kotler – 6th April, 2020)

SOCIETY NEWS

FEMA REFRESHER COURSE

 

Enthused by the response to the four-day
Refresher Course followed by a panel discussion held in the month of April,
another Refresher Course was organised in June, 2020 that was far more
extensive and provided in-depth coverage of topics. The topics covered were
truly diverse, such as ‘Understanding the Structure of FEMA’, ‘Practical
Aspects of filing various Forms’, ‘Import and Export of Goods and Services’ and
‘Doing Business through Liaison Office, Project Office, Branch Office’. Also
covered were some more complex topics like joint venture, wholly-owned
subsidiary and indirect investment in India, investment on non-repatriation
basis and FDI in Limited Liability Partnerships, practical cases related to
compounding and so on.

 

Some unusual topics covered were FEMA from
an auditor’s perspective, fundamental and complex issues under the Benami Law,
Anti-Money Laundering Law and handling of offences and prosecution under FEMA.
This session also featured a panel discussion which covered all the above
topics.

 

The speakers for all the sessions were an
eclectic mix ranging from practising Chartered Accountants, Solicitors and
Consultants to members of the Income Tax Department and Advocates of the
Supreme Court of India. This gave participants a holistic view of FEMA which
will hone their skills and take them a long way in their professional careers.

 

The response to the Refresher Course was
overwhelming, with 298 participants registering from various cities across the
country, including Chennai, Indore and Gurugram. The participants appreciated
the fact that speakers not only explained the topics satisfactorily and
supplemented it with real-life situations, but also answered their queries and
concerns even if it meant going well beyond the time allotted for the session.
In a nutshell, it was a very enriching course for the participants, speakers
and conveners alike.


SEVEN SPIRITUAL LAWS OF SUCCESS

 

An online meeting of the Study Circle of the
Human Resource Development Committee was held on 12th May. The
speaker was Vinod Kumar Jain, who offered learnings from the book ‘Seven
Spiritual Laws of Success
’ by the eminent author and spiritual ‘guru’ Deepak
Chopra
.

 

The speaker started by asking the question,
how does one define the term ‘Success’? He answered by stating that in addition
to material wealth it will generally include good health, energy, enthusiasm
for life, fulfilling relationship, creative freedom, emotional and
psychological stability, sense of well-being and peace of mind. But ‘True
Success’ is the experience of a miracle of divinity unfolding within us which
is possible through understanding of the seven spiritual laws. The speaker then
explained each of the seven spiritual laws with examples from his own life.
After explaining the law, he described how the same can be applied in our daily
lives.

 

FIRST. The Law of Pure Potentiality. Our true self is one of pure
potentiality; we align with the power that manifests everything in the
universe. Practice: Meditation,
silence, non-judgement and being with nature.

SECOND. The
Law of Giving
. The universe operates through dynamic exchange of giving and
receiving. Practice: Learn to give
what you want.

THIRD. The
Law of Karma
. Every action generates a force of energy that returns to us
in like kind; what we sow is what we reap. Practice:
Witness the choice you make.

FOURTH. The
Law of Least Effort
. Nature functions with effortless ease. When we harness
the forces of harmony, joy and love, we easily create success and good fortune.
Practice: Accept, respond and no
defence.

FIFTH. The
Law of Intention and Desire
. Inherent in every intention and desire is the
mechanics for its fulfilment. Practice:
Make a list of desires, see it regularly and surrender.

SIXTH. The
Law of Detachment
. In order to acquire anything in the physical universe,
one has to relinquish one’s attachment to it. Practice:
Step infield of all possibilities.

SEVENTH. The
Law of Dharma or Purpose in Life
. Everyone
has a purpose in life… a unique gift or special talent to give to others. Practice: Use unique talent to serve.

There were over 175 participants and they
raised several questions. The speaker responded to all of them in detail.

The presentation on YouTube is available on
the Society’s link (http://youtu.be/1pw2XHC8wRA).

 

THE MAN OF THE CENTURY

 

Another meeting of the Study Circle of the
Human Resource Development Committee was held online on 9th June on
the topic ‘Values: Bapu@150’ . The speaker was Mukesh Trivedi. This talk
was in continuation of the celebration of the 150th birthday of
Mahatma Gandhi (fondly called Bapu) on 2nd October, 2019 by BCAS.

 

Initially, the speaker touched on how
different sections of the community perceived Bapu’s values today. He opined
that the new generation needed to know more about Bapu. In fact, Bapu was the
most respectful leader of the country who truthfully walked the values which he
talked about. He was the man of the century, a true Yug Purush. Each and
every citizen should recall his values for the holistic growth of the nation.

 

Next, the speaker discussed the Ekadash
Vrat
, i.e. the ‘11 Values’ or guiding principles on which Bapu lived his
life. He appealed to and encouraged participants to pick any value of Bapu and
imbibe it in their lives. If they did that, it would be a fitting tribute and
respectful celebration of the 150th year of Bapu’s birth
anniversary.

 

Speaker Mukesh Trivedi listed Bapu’s
Eleven Values as: Ahimsa, satya, asteya, brahmacharya, asangraha,
sharirshram, aswad, sarvatrabhayvarjan, swadeshi, sparsh, bhavana
. Of these
eleven, the values that he chose to focus on were three core values, Brahmacharya,
Ahimsa and Satya.

 

Discussing these, he shared the Vedantic
principles and Bapu’s views through his presentation. He also shared anecdotes
quoting from Bapu’s life described in his autobiography ‘My Experiments with
Truth’.

 

Mukesh Trivedi explained the three core values as under:

Brahmacharya
is living the life of moderation in ‘sense enjoyments’ and control over
‘indulgence’.

 

Ahimsa is
non-injury or non-violence which ought to be practised at the level of emotions
in the mind.

 

Satya is truthfulness lived with a strong conviction
of values. It must be followed at the level of intellect in the mind.

 

The speaker also replied to the questions
posed to him by participants, some of whom had logged in from Australia, UK,
New Zealand, Gujarat and from Mumbai.

 

This presentation is available on the
Society’s link at: https://youtu.be/fgoTUSL8Wtc).

 

WEBINAR ON MSME

 

The Seminar, Public Relations and Membership
Development  Committee organised a
webinar on Micro, Small and Medium Enterprises (‘MSME’) jointly with the
Association of Chartered Accountants, Chennai; the Hindustan Chamber of
Commerce; Jain International Trade Organisation; and Southern India Rajasthani
Chamber of Commerce & Industry. The session was conducted online on 13th
June.

 

It started with an introductory speech by BCAS
President Manish Sampat who shared details about BCAS, its motto
and its activities. He also introduced the subject and its relevance in the
current times.

 

The first speaker was Anand Bathiya
who explained the context, scope and benefits of registration as an MSME. He
described the revised definition of MSME, the registration process, the
benefits and details of the various schemes for MSMEs, and key initiatives such
as the Atmanirbhar Scheme and the TReDS platform.

 

Chirag Doshi,
the second speaker, dwelt on Standard Operating Procedures for MSMEs and
explained the plan of action for revival of small enterprises post-opening
after lockdown due to Covid-19.

 

Taking up the third session, Mrinal Mehta
explained the tax provisions applicable to MSMEs. He discussed the various
tax incentives and schemes available under the direct and indirect tax regime
for MSMEs, including the reliefs in the statutory due dates announced by the
government due to Covid-19.

 

The panel of Coordinators posed the
questions asked by the participants and the speakers answered all of them in
detail.

 

The session was attended by more than 650
participants from all over the country. They were unanimous in stating that
they had benefited immensely from the knowledge and practical experience shared
by the speakers.

 

‘VIRTUAL’ STUDENTS STUDY CIRCLE

 

The Students Forum under the auspices of the
HRD Committee organised the second ‘Virtual’ Students Study Circle meeting on ‘Direct
Tax Annual Compliance-Revised Income Tax Return Forms
’ on 19th
June via Zoom Meetings.

 

The Study Circle was led by Utsav Shah
and Samarth Patil who are experts on the subject. Azvi Khalid,
the student Coordinator, introduced the speakers and spoke about the
forthcoming student events. Raj Khona addressed the students and
encouraged them to actively participate in the events of the Students Forum.

 

Utsav Shah
briefed students about the basics of ITR and shared the revised due dates. He
presented latest amendments in the applicability of tax audit in a lucid manner
and explained various additions and deletions in the revised ITR Forms 1, 2, 3
and 4 in relation to income for ease of understanding.

 

Samarth Patil,
on the other hand, shared his insights on ITR Forms 5, 6 and 7. He also briefly
discussed the new tax regime, pass-through income, verification process,
transfer pricing and Form 26AS. He provided the students with an easy checklist
for selecting the correct ITR forms.

 

The interactive session ended with Vedant
Satya
, Student Coordinator, proposing the vote of thanks to the speakers.

 

The session can be viewed on the BCAS YouTube Channel at:
https://youtu.be/1e7jKQ2DIK0.

 

WEBINAR ON
‘KEY FCRA AND TAX CHALLENGES…’

 

The Bombay Chartered Accountants’ Society
organised a webinar on ‘Key FCRA & Tax Challenges for NGOs & Public
Trusts’
jointly with DevelopAid, Mahavan and Save The Children, India. It
was conducted online on 20th June.

BCAS
President Manish Sampat set the ball rolling by sharing details of the Society.
He also introduced the subject and its relevance in contemporary times.

 

Speaker Sanjay Agarwal started by
describing the key challenges under the Foreign Contributions Regulations Act
(FCRA) with respect to Prior Permission, Registration, Cancellation, Renewal,
Affidavit, Fund-Raising, Board, Covid-19 and FC issues, filing Covid-19 forms,
separate books of accounts and refund of unspent funds. He explained all the
rules and regulations concerned in detail and answered the questions posed to
him.

 

In the second
part of the session, the speaker covered the issues under Income Tax relevant
to the NGOs and Trusts. He explained the reasons for cancellation of 12A
registration, grant or service contracts, limits of remuneration to trustees,
section 115TD – Penal Tax and payments, TDS issues for trusts, anonymous or
cash donations, issues in filing tax returns for trusts and so on.

 

The third part of the webinar focused on
issues under GST to be taken care of by trusts. The speaker covered the
registration limits, scope of taxable supply and so on.

 

Every presentation by Sanjay Agarwal
was followed by a detailed question-answer session.

 

This webinar was attended by more than 500
participants, including Trustees and Finance Managers of renowned trusts and
foundations, from all over the country who said they had benefited immensely
from the knowledge and practical experience shared by the speaker.

 

MOTIVATIONAL
MUSIC VIDEO

 

In these unprecedented times, each of us has
been dealing in our own ways with the challenges that life has been throwing at
us. But to boost the indomitable spirit lying dormant within one each of us, a
motivational music video has been released by our Yuva Shakti and Jyeshta
Shakti
for the benefit of all. The intention was to give our performing
artists
a platform to express their josh and motivate members to
defeat the pandemic through sheer determination of mind. The idea of making the
video germinated in the minds of President Manish Sampat and the
Chairman of the SPMRD Committee, Narayan Pasari.

 

While BCAS has been a trail-blazer
over the last seven decades, be it the residential refresher courses, the
workshops, the lecture meetings, the expert talks, etc., a music video is a
novelty and has never been done before.

 

But with the blessings of the Almighty,
things started falling in place and soon the song started taking shape… Vijay
Bhatt
, a passionate musician, was roped in to lead the project. The need
for a Sutradhar was recognised early and the choice unanimously fell on
the Hon. Joint Secretary, Mihir Sheth, who enthusiastically penned the
lines and delivered them in his inimitable baritone.

 

The lyrics were penned by Past President Mayur
Nayak
over the span of an evening and the inspirational words were set to
music by Vijay Bhatt and others. The singers included our Yuva Shakti
members – Aditya Phadke, Devansh Doshi, Kartik Srinivasan,
Parita Shah, Ryan Fernandes, Tej Bhatt and the winner of
the singing competition at Tarang 2019, Vani Srinivasan;
they were ably supported by Vijay Bhatt and Mayur Nayak.

 

The Office-Bearers of the BCAS and
the Committee torch-bearers also enthusiastically participated in the music
video in colourful traditional attire. Over the next three weeks the video was
shot with the support of family members / colleagues as the location for the
shoot was either their homes or offices; social distancing norms were
maintained while learning and recording the assigned lines – some in the dead
of the night when the little one finally fell asleep, others at the crack of
dawn when all was quiet! In the capable hands of the video editor, ACCA Anirudh
Parthasarthy
, the video came to life, interspersed with visuals from the
many social events organised by BCAS over the years.

 

After a teaser was put out to announce the
impending release of the video, on 29th June, 2020 history was made
with BCAS releasing its first-ever motivational music video.

 

The Chairman of the SPRMD Committee, Narayan
Pasari
welcomed the participants, while President Manish Sampat and
Vice-President Suhas Paranjpe shared their thoughts on the video and the
work done by the Committee over the past one year.

 

Chairman Narayan
Pasari
revealed the idea behind the video, while Vijay Bhatt shed
light on the idea and the efforts that went into making it. The video was then
officially released by the President. Manmohan Sharma, Convener of the
SPRMD Committee, proposed the vote of thanks to all who were involved in the
making of the video.

 

A lot of efforts were put in by all the
performers for the video which was made under lockdown conditions and with the
help of personal devices. They did all this because of their passion for music.
A big applause for their efforts.

 

Given the lockdown restrictions still in
place, the entire proceedings were held online… and while all sat in their
respective homes / offices, the song and the journey behind it wove a magical
spell around the participants, bringing them (virtually) close to one another.

REGULATORY REFERENCER

DIRECT TAX

 

1.   Income-tax (9th Amendment) Rules,
2020
– Amendment to Rules 10TD and 10TE – the ‘Safe
Harbour Rules for International Transactions
’ shall apply for A.Y. 2020-21.
[Notification No. 25 of 2020 dated 20th May, 2020.]

 

2.   Clarifications in respect of prescribed
electronic modes u/s 269SU of the Act.
Provisions
of section 269SU shall not be applicable to a specified person having only B2B
transactions (i.e.. no transaction with retail customer / consumer) if at least
95% of aggregate of all amounts received during the previous year, including
amount received for sales, turnover or gross receipts, are by any mode other
than cash. [Circular No. 12/2020 dated 20th May, 2020.]

 

3.   Income-tax (11th Amendment) Rules,
2020
– Insertion of Rule 114I – Format and
procedure for uploading of Annual Information Statement prescribed.
[Notification No. 30 of 2020 dated 28th May, 2020.]

 

4.   Income-tax (12th Amendment) Rules,
2020
– Rule 12 amended – Form ITR-1 (SAHAJ), ITR-2,
ITR-3, ITR-4 (SUGAM), ITR-5, ITR-7 for A.Y. 2020-21 prescribed. [Notification
No. 31 of 2020 dated 29th May, 2020.]

 

5.   Cost Inflation Index for
F.Y. 2020-21 is 301.
[Notification No. 32 of 2020 dated 12th
June, 2020.]

 

ACCOUNTS AND AUDIT

 

A. Subsequent Events – Key Audit Considerations
amid Covid-19
– ICAI’s Guidance related to the
auditor’s responsibilities in relation to obtaining sufficient appropriate
audit evidence about subsequent events that is impacted by the Covid-19
pandemic, and how the results of the auditor’s procedures on subsequent events
impact the auditor’s report. The Guidance also provides examples of events or
conditions that may be relevant in the current environment. [ICAI’s Auditing
Guidance dated 23rd May, 2020.]

 

B. Advisory for CAs – CSR Provisions (section 135
of the Companies Act)
– Companies that undertake
CSR activities through a third party (trust / society / section 8 Company /
NGO) are advised to obtain an Independent Practitioner’s Report on funds
utilisation from the auditor / CA in practice of such third party to whom funds
are provided. The advisory includes a draft format of the Independent
Practitioner’s Report. [ICAI’s Advisory dated 29th May, 2020.]

 

FEMA

 

(I) Foreign
Portfolio Investors (FPIs) have been permitted to invest under the Voluntary
Retention Route (VRR) in Debt Instruments.
Investments under VRR are long-term in nature and
stable. Under the VRR, FPIs are required to invest at least 75% of their
Committed Portfolio Size (CPS) within three months from the date of allotment.
In view of the pandemic, it has been decided to allow FPIs that have been
allotted investment limits between 24th January, 2020 (the date of
reopening of allotment of investment limits) and 30th April, 2020 an
additional time of three months to invest 75% of their CPS. For FPIs
availing the additional time, the retention period for the investments would be
reset to start from the date that the FPI invests 75% of its CPS. [A.P. (DIR
Series 2019-20) Circular No. 32, dated 22nd May, 2020.]

 

(II) In view of the pandemic, it
has been decided to extend the time period for completion of remittances
against normal imports
(except in cases where amounts are withheld towards
guarantee of performance, etc.) from the existing period of six months to 12
months from the date of shipment for such imports made on or before 31st July,
2020. Normal imports would not cover import of gold or diamonds and precious
stones or jewellery. [A.P. (DIR Series 2019-20) Circular No. 33, dated 22nd
May, 2020.]

 

(III) RBI has enacted regulations for ‘mode of payment’ in case of
investment by various foreign investors. FPIs and FVCIs have been permitted to
open foreign currency account and SNRR account for investments in India. It
provides that the foreign currency account and SNRR account can be used only
for transactions under ‘this schedule’. The regulations on ‘mode of payment’ do
not have any Schedule. It was meant to refer to Schedules under the Non-Debt
Instruments Rules. This was an anomaly. RBI has now amended the Foreign
Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments)
Regulations to specify that a foreign currency or SNRR account used by FPIs
or FVCIs
can be used only for transactions under their respective schedules
(Schedules II and VII, respectively, of Non-Debt Instrument Rules). Further, an
FPI and FVCI can pay the consideration for trading in units of an Investment
Vehicle, listed or to be listed on the stock exchanges in India, out of their
SNRR account. [Notification No. FEMA, 395(1)/2020-RB dated 15th
June, 2020.]

 

MISCELLANEA

I. General

16. Faced with authoritarianism?  Think liberty

Regulating speech is a dangerous notion and not compatible with the principles of a free society – By Chris Rossini

There are always authoritarians mixed with the human population. These are people who have chosen to believe that they should be the boss of not only themselves, but everyone else as well. The most notorious authoritarians have always been tied to government in some way, since government is force.

But authoritarianism is not exclusive to government. People in any field or occupation can have the same lust to dominate just like a politician. But again, because of the nature of government being force, authoritarians are usually drawn to it like a magnet.

These misguided individuals are difficult because they never want to leave anyone else alone. In their minds, they can’t leave others alone. They’re supposed to tell everyone else what to do.

This can be quite daunting at times, especially when authoritarians have a lot of believers that want to be told what to do. This reinforcing relationship of the blind leading the blind will then drag society as a whole into a downward spiral.

Fortunately, there are always limits and it’s important to keep in mind some key thoughts, especially when the downward spiral escalates:

•    Authoritarians cannot create energy or matter or life.
•    They cannot create the truth or natural law.
•    They cannot be omnipotent or omniscient. They cannot be everywhere at all times and know everything that can be known.
•    They cannot turn all individual human beings into being the same exact thing. They can’t even turn two individuals into being the same thing. In fact, they can’t even make one individual remain the same. We’re all constantly changing. The infant you was different from the teenager you, who is different from the adult you.
•    Everyone is born at a different time and place. Everyone occupies a different and unique position in the universe. Everyone is raised under different conditions, in different environments and surrounded by different people.
•    We have different cultures and traditions.
•    We have different beliefs about God.
•    Authoritarians cannot think for anyone else. They only think for themselves.
•    They cannot interpret the non-stop occurrence of events for everyone. They only interpret events with their own thinking about them. They can certainly share their interpretations with others, but they can’t make others believe those interpretations or agree with them.
•    Authoritarians can’t believe anything for anyone else. They only have their own beliefs. They can change those beliefs, just as everyone else can change their beliefs and convictions.
•    They cannot value for anyone else. They value everything by themselves.
•    They cannot choose for anyone else. Everyone chooses on their own.
•    Authoritarians cannot know what knowledge everyone possesses. Knowledge is always decentralised. It cannot be centralised because there are no limits to knowledge. Like interpretations, knowledge can be shared. But also like
interpretations, knowledge does not have to be believed by anyone else, other than by their own voluntary choice.
•    Authoritarians can’t have all the data, because there are no limits to data. No matter how much data has been collected, far more will forever remain uncollected.
•    They cannot know the future no matter how much data they have. Data is always an incomplete look at the past. The future can certainly be guessed and projected by anyone, but it is always a matter of probabilities and can never be known with certainty and with pinpoint precision.
•    Authoritarians cannot know the unknown. Whatever is known will forever be dwarfed by what is yet to be known.
•    They cannot ‘order’ the universe, or human life, or the world, because these are not made and ordered by man. They cannot be re-made or re-ordered by man either.

Now, as liberating as the above is, does this mean authoritarians are a non-issue? No, it does not. Authoritarians are actors in this world, just like everyone else. As such, they choose their values and beliefs and then act on them. Those actions create consequences and results.

Those consequences, because they come from misguided beliefs and actions, produce bad results for everyone else. Much of human history, and especially the 1900’s, has been dominated heavily by authoritarian ideas. Hundreds of millions have perished as a consequence of those misguided ideas and subsequent actions.

Those ideas, in case you haven’t noticed, are still believed and embraced by many individuals today. They want to believe that authoritarian ideas can produce different results.

They can’t.

So, authoritarians are a serious issue, always.

The antidote to a bad idea is a good idea: individual liberty.

When the ideas of individual liberty dominate, the authoritarians have to take a back seat and society goes into an upward spiral.

Authoritarian ideas are never gone. They are always a choice for people to accept and embrace. So the best that can happen (in any time period) is that authoritarianism is kept at bay. And the only way for it to be kept at bay is for enough individuals to accept and embrace the glorious ideas of liberty.

Source: Ron Paul Liberty Report, By Chris Rossini – 13th January, 2021
 

II. Economy

17. Refine quality of expenditure to help fiscal sustainability

Maintaining and improving the quality of expenditure would help address the objectives of fiscal sustainability while supporting growth, RBI Governor Shaktikanta Das said on 16th January, 2021.

‘As per IMF’s calculations, the total fiscal support in response to Covid-19 amounted to about 12% of global GDP by mid-September, 2020,’ he said while delivering the Nani Palkhivala Memorial Lecture online on the subject, ‘Towards a Stable Financial System’.

‘Global public debt is said to have reached 100% of GDP in 2020. As a result, most economies are expected to emerge from the pandemic with higher deficits and debt vulnerabilities.

Mr. Das said although the scale of fiscal spending was expected to breach the quantitative targets of fiscal prudence across most economies in the short run, it was crucial in the context of the pandemic from the perspective of the welfare aspect of public expenditure.

‘Expenditure on physical and social infrastructure, including human capital, science and technology, is not only welfare-enhancing, it also paves the way for higher growth through their higher multiplier effect and enhancement of both capital and labour productivity,’ he said.

‘Going forward, it becomes imperative that fiscal road maps are defined not only in terms of quantitative parameters like fiscal balance to GDP ratio or debt to GDP ratio, but also in terms of measurable parameters relating to quality of expenditure, both for the Centre and the States.’

While conventional parameters of fiscal discipline will ensure medium- and long-term sustainability of public finances, measurable parameters of quality of expenditure would ensure that welfarism carries significant productive outcomes and multiplier effects, Mr. Das noted.

He also said that the principal objective of the Reserve Bank of India (RBI) during the pandemic was to support economic activity.

‘Looking back, it is evident that our policies have helped in easing the severity of the economic impact of the pandemic.’

The RBI ‘remains steadfast to take any further measures, as may be necessary, while at the same time remaining fully committed to maintaining financial stability.’

Responding to a question, Mr. Das said the RBI was open to examining any proposal for setting up a bad bank. ‘It is up to the government and the private sector to put up such a proposal,’ he added.

Source: The Hindu, Special Correspondent – 16th January, 2021)

III. World News

18. Oak trees take root in Iraqi Kurdistan to help climate

Delband Rawanduzi spoke softly to her oak seedlings, as if willing them to grow fast and repopulate forests in Iraqi Kurdistan depleted by war, illegal logging and fires.

Over the next five years, the 26-year-old aims to plant
one million oaks – resilient trees that can endure both the cold of northern Iraq and the dry spells of one of the world’s hottest countries. Her plan is taking root in her native Kurdistan.

In a pilot project late last year ‘we planted 2,000 oak trees. And in the upcoming autumn we will plant 80,000,’ said Rawanduzi, a hiker and rock climber.

She has mobilised visitors and shepherds who collect oak seeds from the mountains which are then planted in two greenhouses donated by a private university in the Kurdish regional capital of Arbil.

Once the young seedlings grow into saplings, they are re-planted in mountain areas selected by the Kurdish agriculture ministry.

And to ensure the oaks will thrive, Rawanduzi is winning over several sponsors who are asked to donate 1,000 Iraqi dinars (around 68 US cents) per tree.

‘It’s a response to climate change threats, as well as an effort to promote ecosystems and create a culture among people to contribute to a healthy climate,’ she told AFP.

Those threats are serious: some 2.2 million acres (nearly 900,000 hectares) of natural and manmade forests in the Kurdish region have been destroyed in the past two decades, according to estimates by Kurdish authorities.

This represents nearly half the forests of the region, with most of the damage occurring in the last five years. The culprits include uncontrolled grazing, tree-cutting for firewood, unregulated urban development and bombardment.

While the Kurdish north has been spared much of the carnage seen across Iraq after the US-led invasion in 2003, it has been targeted by several cross-border Turkish operations against Kurdish militants.

A review of satellite images conducted by Dutch civil society organisation PAX International found that Turkey’s military campaigns ‘can be directly linked’ to the burning of nearly 50,000 acres of land in northern Iraq from May until September, 2020. ‘About half – around 23,000 acres – of the burned land is part of special protected areas with a rich biodiversity,’ it said.

Another 250,000 acres of land in the autonomous region were burned during the same period, PAX said, without identifying the perpetrators.

‘Shelling and bombing resulted in bushfires and caused the displacement of thousands of people, destroying their livelihoods and damaging fragile ecosystems.’

According to the UN’S Food and Agriculture Organization (FAO), a mere 2% of Iraq’s 437,000 square kilometres (168,700 square miles) is forested. Most of that area lies in the Kurdish zone, where Rawanduzi hopes her project can make a change.

Young saplings have already been sponsored by Kurdish emigrants in Europe, Syrian refugees living in the Kurdish region, expatriates working in Arbil and local staff at schools and hospitals.

Intira Thepsittawiwat, a 50-year-old from the Czech Republic living in Arbil, is sponsoring 500 trees.

‘It’s a reliable, practical and inexpensive project. This is my small involvement and contribution to the nature of Iraqi Kurdistan,’ she told AFP.

For climate campaigners, tree planting is crucial but must be part of a wider effort to combat global warming.

Iraq recently ratified the 2015 Paris Climate Agreement which aims to chart a path away from catastrophic warming and has begun drafting plans to reduce carbon emissions.

Ahmed Mohammad, who headed the Kurdish region’s environmental awareness department till 2015, told AFP there are many ways to reach that goal.

Developing public transport, eliminating the usage of single-use plastics and educating the population on climate issues top his list.

‘People here like the open-air life, go picnicking on the weekends and have houses in the mountains, but still many of them don’t realise the importance of nature and climate catastrophes,’ Mohammad said.

He is petitioning regional authorities to ban the use of plastic bottles in government offices.

Environmentalist Hawker Ali, 35, said the region must be ready for the long haul. ‘It is not like Covid-19 for which scientists can find a cure,’ said Ali, who is helping Rawanduzi care for the oak seedlings in the Arbil greenhouses.

‘With climate change, everyone must get involved in order to reduce the threats and the consequences,’ he added.

Source: International Business Times, By Quassim Khidir – 18th January, 2021)

REGULATORY REFERENCER

DIRECT TAX

1. The last date for making a declaration under Vivad Se Vishwas Scheme has been extended to 31st January, 2021 from 31st December, 2020. [Notification No. 92 of 2020 dated 31st December, 2020.]

2. Government notifies extended due dates for issuing Tax Audit Reports, filing of tax returns and VSV Scheme. [Notification No. 93 of 2020 dated 31st December, 2020.]

3. Introduction of Faceless Penalty Scheme, 2021. [Notification No. 2 of 2021 dated 12th January, 2021.]

4. Directions for the Implementation of the Faceless Penalty Scheme, 2021. [Notification No. 3 of 2021 dated 12th January, 2021.]

COMPANY LAW

I. COMPANIES ACT, 2013

(I) MCA enforces certain provisions of Companies (Amendment Act, 2020) w.e.f. 21st December, 2020. MCA has appointed the 21st day of December, 2020 as the date on which certain provisions of the Companies (Amendment) Act, 2020 shall come into force. Accordingly, major defaulting provisions such as defaults related to formation of section 8 companies, non-compliance of provisions related to matters to be stated in the prospectus, transfer and transmission of securities and rectification of register of members, etc., are decriminalised effective from the said date. [MCA Notification S.O. 4646 (E) dated 23rd December, 2020.]

(II) MCA allows ROC to extend timeline for name reservation up to 60 days The MCA has made an amendment to the Companies (Incorporation) Rules, 2014 whereby a new Rule 9A has been inserted. The said rule allows the Registrar to extend the period of a name reserved under rule 9 by using web service SPICe+INC-32, up to 40 days from the date of approval on payment of a fee of Rs. 1,000 before expiry of 20 days under rule 9; 60 days on payment of Rs. 2,000 before expiry of 40 days; and extension up to 60 days on payment of Rs. 3,000 in case of expiry of 20 days from the date of approval. [MCA Notification G.S.R. 795(E) dated 26th December, 2020.]

(III) Companies allowed to conduct board and general meetings virtually till 30th June, 2021 Owing to the Covid-19 outbreak, the MCA has further extended the due date in relation to companies for conducting their meetings virtually from 31st December, 2020 to 30th June, 2021. [MCA Notification G.S.R. 806 (E) dated 2nd January, 2021.]

(IV) MCA clarifies that ‘Spending of CSR funds for awareness campaigns on Covid-19 vaccination programme is an “eligible CSR activity”’ under item Nos. (i), (ii) and (xii) of Schedule VII of the Companies Act, 2013 relating to promotion of healthcare, including preventive healthcare and sanitization, promoting education and, disaster management, respectively. [MCA General Circular 1/2021 dated 13th January, 2021.]

(V) Timeline for companies to hold AGMs through video conferencing extended till 31st December, 2021 In continuation of Circular 20/2020 dated 5th May, 2020, the MCA has decided to allow companies whose AGMs were due to be held in the year 2020, or become due in the year 2021, to conduct their AGMs on or before 31st December, 2021 through video conferencing or other audio visual means. [MCA General Circular 2/2021 dated 13th January, 2021.]

(VI) MCA launches ‘Scheme for condonation of delay for companies restored on the Register of Companies between 1st and 31st December, 2020 under section 252 of the Companies Act, 2013’. The Companies Fresh Start Scheme, 2020 [CFSS-2020] is no longer applicable for various filings done under the provisions of the Companies Act, 2013. The companies restored between 1st and 31st December, 2020 could not avail benefit of CFSS-2020 scheme and as such are liable to pay additional fees on filing overdue e-forms. MCA has accordingly launched the scheme for the purpose of condoning the delay in filing forms with the Registrar, insofar as it relates to charging of additional fees on account of delay in such filings. [MCA General Circular 3/2021 dated 16th January, 2021.]

II. SEBI

(VII) SEBI further extends relaxations for compliance with certain provisions of the SEBI (LODR) Regulations, 2015 due to the Covid-19 pandemic The MCA has further extended relaxations to companies to conduct their Extraordinary General Meetings through video conferencing or through other audio-visual means up to 30th June, 2021. It has also extended these relaxations to Annual General Meetings of the companies due in the year 2021 (i.e. till 31st December, 2021). Accordingly, the relaxations in respect of sending physical copies of annual reports to shareholders and the requirement of proxy for general meetings held through electronic mode are extended for listed entities till 31st December, 2021. [Circular SEBI/HO/CFD/CMD2/CIR/P/2021/11 dated 15th January, 2021.]

(VIII) SEBI extends relaxations for compliance with rights issues In view of the difficulties faced due to the Covid-19 pandemic and the lockdown measures, the SEBI has further extended the relaxations for compliance with rights issues in order to ensure that all eligible shareholders are able to apply to the rights issues during hard times. The validity of relaxations shall be applicable for rights issues opening up to 31st March, 2021. [Circular SEBI/HO/CFD/DIL1/CIR/P/2021/13 dated 20th January, 2021.]

ACCOUNTS AND AUDIT

(A) Risk-Based Internal Audit (RBIA) Framework. The RBI has issued a Notification on the RBIA Framework applicable to Scheduled Commercial Banks (excluding RRBs), Local Area Banks, Small Finance Banks and Payments Banks. Banks are expected to re-orient their approach, in line with evolving best practices, as part of their overall Governance and Internal Control framework. Banks are also encouraged to adopt International Internal Audit Standards. The Notification also contains advisories aimed at bringing uniformity in the approach followed by banks. [Notification No. RBI/2020-21/83 Ref. No. DoS.CO.PPG./SEC.04/11.01.005/2020-21 dated 7th January, 2021.]

FEMA

(i) The DPIIT has, vide a Circular, revised the SOP for seeking approval in FDI Proposals setting down the procedures, timelines and advisories to other Ministries / Departments. Some of the important changes are:
* An inter-Ministerial committee will assess delayed proposals and proposals escalated for quicker disposal.
* A review mechanism has been brought in before rejection of a proposal along with mandatory concurrence of DPIIT before rejection, including detailed guidelines regarding rejection or closure due to incomplete applications, proposals requiring amendments to earlier approvals, requirement of NCLT approval first for M&A applications, and imposition of compounding provisions in case of FEMA violations.
* Applications covered under Press Note 3 will be dealt with by the respective Ministries / Departments and
will also require clearance from the Ministry of Home Affairs.
* Regular review of pending proposals by the DPIIT along with the departments concerned will take place every four to six weeks, instead of the three months earlier.
* DPIIT and each of the Competent Authorities shall maintain a database on the proposals received along with details such as date of receipt, investor and investee company details, volume of foreign investment involved and date of grant of approval / rejection letter.
* The number of mandatory documents to be submitted has been reduced.
* Digitally-signed online submissions are now accepted.
* Overall time limit for processing of applications is set at 10-12 weeks.

The SOP also provides for other important points, advisories and formats for submitting FDI proposals and for Approval letter. [Circular No. 1/8/2016-FDI POLICY dated 9th November, 2020.]

(ii) The Directorate-General of Civil Aviation (DGCA) had, in March, 2019, issued revised SOPs for export of aircraft by companies lending them in case of defaults by companies which have leased such aircraft under the ‘Cape Town Convention’. RBI has now amended the Export of Goods and Services Regulations exempting the furnishing of declaration in case of re-export of leased aircraft / helicopters and / or engines / auxiliary power units (APUs) re-possessed by overseas lessor and duly de-registered by the DGCA on the request of Irrevocable Deregistration and Export Request Authorisation (IDERA) holder, subject to permission by the DGCA / Ministry of Civil Aviation for such exports. [Notification No. FEMA 23 (R )/(4)/2021-RB, dated 8th January, 2021.]

ICAI ADVISORIES AND ANNOUNCEMENTS

* Advisory – ICAI Valuation Standards 2018 to be followed while conducting any type of Valuation Engagement. [21st December, 2020.]
* Announcement – Clarification on Statutory Auditor of a company giving feedback to Credit Rating Agencies about Auditee Client. [5th January, 2021.]

ICAI MATERIAL

* Report on Audit Quality Review 2019-20. [29th December, 2020.]
* Handbook on Audit of CSR Activities. [11th January, 2021.]
* Compendium of Opinions of the Expert Advisory Committee – Volume XXXVII. [12th January, 2021.]

SOCIETY NEWS

 

BCAS
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MISCELLANEA

I.
Technology

 

11.
Facebook working on new tech that can read human brain

 

Facebook is doubling down on its efforts towards making artificial
intelligence (AI) ubiquitous in its products and next year might see them turn
into reality.

 

Apparently, it is planning to build a new neural sensor that can read
people’s minds and convert those thoughts into actions. The new project will
push the social media giant further into the AI domain, some instances of which
did not go well with Facebook. Facebook has also announced a new tool that
summarises news articles into bullets so that readers do not have to spend much
time on them, a move that can potentially impact publishers on the social media
platform.

 

The announcements were made at Facebook’s yearly meeting that
involved everyone working at the company. The details of the meeting are not
available publicly but BuzzFeed News managed to obtain
an audio recording that was broadcast to all employees. Facebook has revealed
some serious plans that are associated with upgrades in the AI category, as the
company ends a predictably difficult year with even tougher events that posed a
challenge.

 

The neural sensor that the company is said to be developing uses the
resources of CTRL Labs, a company that Facebook acquired in 2019. According to
the report, the sensor will take the neural signals from the brain through the
spinal cord and arms, and right up to the wrist. This will allow users to make
physical actions based on their thoughts. According to Facebook, this will help
users holding a virtual object, typing and controlling a character in a video
game. This is uncannily similar to the nascent brain-reading technology that
Elon Musk’s Neuralink company is working on. It will be interesting to see what
spin Facebook gives to this tech.

 

Facebook has of late seen itself caught in several controversies,
including political inclination in India, discontent among employees and, most
importantly, the anti-trust cases over dominance in the US and elsewhere. One of
the controversies was the removal of hate speech which uses AI-powered tools
significantly. Facebook is now expanding its range to cover even more AI-enabled
products, including the new summarising app for news articles. It said some
20,000 employees have joined Facebook this year and that people were using
Facebook and its services more than ever, thanks to the pandemic.

 

But for Facebook AI is not a small accessory for its services to take
advantage. The social media giant is pegging AI as the panacea for all the
problems that it has faced and will likely deal with in the future. ‘We are
paving the way for breakthrough new experiences that, without hyperbole, will
improve the lives of billions,’ said Mike Schroepfer,
chief technology officer in the briefing, as per BuzzFeed News.

 

Facebook is using AI for almost everything, from curbing the spread
of misinformation on its social media platforms to removing hate speech, along
with scanning political content. Schroepfer even said
that AI is helping Facebook detect 95% of the hate speech rampant on the
platform. However, this is entirely opposite of what some ex-employees who have
worked closely with the company’s AI products have said, viz., that AI has
helped to remove less than 5% hate speech content. However, Facebook did not
come clean about this claim.

 

Source:
www.indiatoday.in – 16th December, 2020

 

12.
Twitter planning to create label for automated ‘bot’
accounts

 

Twitter Inc. is planning to create a new type of account for bots
next year that will identify them as automated, the company said in a blog post
that finalised plans for a reboot of its long-paused verification programme. The
company said bot accounts ‘can bring a lot of value to the service,’ but
acknowledged that ‘it can be confusing to people if it’s not clear that these
accounts are automated.’

For years, Twitter has faced calls from misinformation researchers to
disclose more information about bots which have been used to amplify / influence
operations and make certain narratives appear more popular on its site. It
started requiring developers to identify automated accounts as bots in March,
but resisted pressure to apply a designated label, saying as recently as in May
that ‘calls for bot labelling don’t capture the problem we’re trying to
solve.’

 

Twitter also said that it would build a new ‘memoralised account’ type in 2021 for people who have died.
Abuse of those accounts has likewise been a feature of information campaigns,
such as in one case documented last year by academic Marc Owen Jones involving
the verified account of an American meteorologist who died of cancer in 2016
that began tweeting pro-Saudi government content in Arabic two years
later.

 

In November, Twitter announced that it would restart its verification
programme early next year, after pausing submissions in 2017 amid criticism over
how it awarded the blue check-mark badges used to authenticate the identity of
prominent accounts.

 

It said it would begin removing verified badges from inactive and
incomplete accounts that fail to adhere to the new guidelines as of
20th January, 
2021
, although it would leave up inactive accounts of people who
are no longer living while working on the new memorial feature.

 

Source:
www.indianexpress.com – 18th December, 2020

 

 

II.
World

 

13. A four-day
workweek for five days’ pay? Unilever New Zealand is the latest to try
it

 

Unilever New Zealand has said that it would begin a one-year
experiment to allow all 81 of its employees to earn their full salaries while
working one day less per week, a move the company said might actually boost
productivity and improve employees’ work-life balance.

 

The company, which imports and distributes tea, soap, vaseline and ice cream, is the
latest to experiment with the long-discussed four-day workweek. Some business
and productivity experts say the concept may finally get a serious look amid a
pandemic that has altered how billions live and work around the
globe.

 

Nick Bangs, MD of Unilever New Zealand, said
the four-day week experiment represented a fundamental shift in how the company
views its work force.

 

‘Our goal is to measure performance on output, not time,’ he said in
a statement. ‘We believe the old ways of working are outdated and no longer fit
for purpose.’

 

The goal, he said in an email, is to get the same amount of work done
in fewer hours for the same pay. ‘If we find that we’re all working the same
number of hours as before but in four days, then we’ve missed the opportunity
this trial presents us with,’ he said.

 

Essentially, Unilever is testing what the British historian and
writer C. Northcote Parkinson theorised was the nature
of man and time. ‘Work expands so as to fill the time available for its
completion,’ he wrote in 1955.

 

The concept has been widely disseminated – it was in the first
sentence of Mr. Parkinson’s
New York Times obituary – and has filtered its way into popular thinking. Michael
Scott, the bumbling manager of a regional midsize paper distributor in NBC’s
‘The Office,’ demonstrated a working knowledge of the idea in a conversation
with his supervisor, Jan Levinson, after she caught him watching television with
his staff during work hours.

 

Jan: How would a movie increase
productivity, Michael? How on earth would it do that?

Michael: People work faster after.

Jan: Magically?

Michael: No, they have to make up for the time they lost watching the
movie.

 

Nick Bangs, luckily, is relying on more than just Michael Scott
witticisms. Experts at the University of Technology
Sydney Business School are consulting with the company, as is Andrew Barnes,
founder of Perpetual Guardian, a New Zealand firm that shifted to a shortened
workweek in 2018.

 

‘A contract should be about an agreed level of productivity,’ Barnes
said at the time. ‘If you deliver that in less time, why should I cut your
pay?’

 

The move to a four-day workweek has been kicked around for decades,
well before Richard M. Nixon, as Vice-President in 1956, predicted it would come
to pass in the ‘not too distant future.’

Still, it has remained elusive. Though technology has made employees
more productive (thanks, email!), it has not led to employees working fewer
hours (thanks again, email!).

 

In a work-centric culture, people simply are not wired to unplug from
the office, particularly in industries like finance, medicine and consulting,
according to Paolo Gaudiano, an adjunct associate
professor at New York University’s Stern School of Business.

 

Source:
www.nytimes.com – 3rd December, 2020

 

14. World’s ‘Most
Exceptional’ teacher wins Rs. 7 crore prize, splits it among nominees

 

Over a decade ago, in 2009, Ranjitsinh
Disale walked into the Zilla
Parishad school in the remote
Paritewadi village of Solapur; it was a rundown building that had a cattle-shed on
one side and a storeroom on the other. The students, mainly from the tribal
community, accommodated themselves in the middle room; just 2% of them were
girls.

 

But today the school is known to the world, thanks to the efforts of
Ranjitsinh who transformed its educational system
through technology.

 

For his extraordinary work to empower girls and promote education,
Ranjitsinh is now the world’s ‘Most Exceptional
Teacher’ after being conferred with the Global Teacher Prize 2020. The prize
money awarded is $1 million, equivalent to Rs. 7 crores in India.

 

Instituted by the Varkey Foundation, the
award attracted 12,000 nominations from across the world out of which ten were
shortlisted in 2019. Ranjitsinh was one of
them.

 

‘I will distribute half the amount (of the prize money) to the other
nine contestants for their exceptional work,’ Ranjitsinh told the host, Stephen Fry, in an interview
during the live telecast of the event.

 

Explaining the reason for this, Ranjitsinh
says he may have won the award but he cannot change the world by himself. All
the runners-up should get equal opportunity to continue their exceptional work,
he said.

 

With the remaining amount, he told Maharashtra Times, he would dedicate 30% of the amount to conceiving a Teacher
Innovation Fund across India. ‘Twenty per cent of the prize money will be spent
to bring 5,000 students together from war-afflicted zones of the world to form
the Peace Army,’ the 32-year-old teacher said.

 

Speaking to The Times of India, the teacher who oversees 110 students, worked hard to convince
girls and their parents to educate them. Thanks to his efforts, there are no
teenage marriages in the village and it sees 100% attendance rates today. The
school also got the ‘Best School Award’ from the Maharashtra State
Government.

 

Ranjitsinh was also in the limelight in 2016 when he started a QR code system
in school textbooks that was replicated across the State and the country. He had
introduced the technology to make education interactive and accessible to
students in the digital format. ‘I once saw a person scan the QR code from the
scanning device and realised that the same principle could get replicated for
transferring textbook information to digital mediums,’ he explained.

 

However, it was not just the technology that needed work. As the
majority of the students understood only Kannada, he had to learn the language
and translate the syllabus from Class I to IV and share his knowledge with the
help of the technology. Recently, one of the tribal girl students graduated from
university.

 

The technology helped students access video
lectures, audio poems and assignments. In 2017, the State Government announced
that it would have QR-coded textbooks for all classes. The following year, the
Central Government announced a plan to replicate the model.

 

His latest international recognition is not the first for this modest
teacher. In 2018, Ranjitsinh received the Microsoft
Innovative Educator Expert award. He was also recognised for his innovation by
the Government of India which conferred on him the National Innovation
Foundation’s ‘Innovator of the Year’ award.

 

Source: www.thebetterindia.com – 4th December,
2020

 

15. The British must
return the Bakhshali Manuscript with world’s oldest
zero to India

 

The world’s most important mathematical document is the Bakhshali Manuscript. Written on birch-bark in Sanskrit, it
is the world’s oldest extant document to use a zero symbol. It was written by a
Brahma?a identified as the
‘son of Chajaka’ and was found in the North-Western
region of British India in 1881.

Rudolf Hoernlé, a Christian missionary who
studied the Bakhshali Manuscript later stole India’s
most precious manuscript and gave it to Oxford University in 1902.

 

The most comprehensive research on this subject to date appears in a
book by Takao Hayashi titled
‘The Bakhshali Manuscript: An Ancient
Indian Mathematical Treatise.’

 

Such a precious document does not belong to descendants of the
British Raj. This document belongs in India – not in the hands of its former
British masters.

 

Background information

Having initially studied economics at the University of Melbourne,
Jonathan J. Crabtree is an autodidact, studying the history of mathematics since
1983.

 

In 1968, at age seven Jonathan noticed a 398-year-old problem with
his teacher’s explanation of mathematics. India’s zero was missing from
England’s 1570 definition of multiplication.

 

Having been perplexed by this and other maths education errors during
his school years, at the age of 21 he found himself in a hospital facing bleak
news. If he moved, he might never walk again. With both his dreams and his spine
shattered, he prayed for a miracle and promised to fix maths if he ever walked
again.

 

Today, elementary maths historian and www.podometic.in founder
Jonathan J. Crabtree is a guest lecturer at schools, universities and
mathematics conferences. Having reviewed writings in Latin, Greek, Arabic,
Sanskrit and other languages, his provocative presentations reveal how the
foundations of ancient Bharatiya (Indian) mathematics
are vastly superior to many western ideas taught today.

 

Source: www.kreately.in – 9th December,
2020

 

STATISTICALLY SPEAKING

 

 

 

 

 

 

 

 

 

 

 

ETHICS AND U

Shrikrishna:
Paarth, are you having a headache?

 

Arjun:
Lord, in our practice there is nothing but headache.

 

Shrikrishna:
So what’s new that has happened? Tax deadline? No Extension?

 

Arjun:
That is a routine headache, an annual feature. But other ethical headaches are
increasing.

 

Shrikrishna:‘Ethical’
headaches?

 

Arjun:
Yes. Relating to our Code of Ethics. Whatever you do, there is some
contravention or other. I wonder how we can continue in the profession.

 

Shrikrishna:
Tell me, what’s the problem.

 

Arjun:
See,
Bhagwan, we need to cater to a large
number of clients who are not very organised in terms of accounting and
record-keeping.

 

Shrikrishna:
Even in large corporates there is a mess in accounts. But in a ‘posh’
environment it gets concealed.

 

Arjun:
True. But these small people – SMEs, societies, trusts. Such clients do not
have regular accountants. They are not willing to appoint anyone and also
cannot afford them.

 

Shrikrishna:
Yes, I’m aware. But that is their problem. Why are you bothered?

 

Arjun:
Bhagwan, we need to certify their
accounts and sign the audit.

 

Shrikrishna:
Tell them that unless your accounts are proper, we cannot do the audit. Do they
at least pay your fees?

 

Arjun:
Don’t ask me! Fees they pay next year. But it is also our social work.

 

Shrikrishna:
What exactly is the difficulty?

Arjun:
The clients expect us to suggest some person to do up their
accounts.

 

Shrikrishna:
It is a patch-work. Not a long-term solution.

 

Arjun:
Right. This problem arises every year at the time of audit. We are helpless. So
we ask someone from our circle to write the accounts, or make up the
differences.

 

Shrikrishna:
What do you mean by ‘someone from our circle’?

 

Arjun:
It may be our employees or ex-employees, or someone does the accounts of our
other clients.

 

Shrikrishna:
I know. There are many such persons who write accounts and simply
take your signature on the audit.

 

Arjun:
Yes. That’s very common.

 

Shrikrishna: And you sign the accounts blindly. In good faith.

 

Arjun:
Yes, Bhagwan, you know
all our trade secrets! That signing gives us even more headaches. But I am
talking about something else here.

 

Shrikrishna:
And what is that?

 

Arjun:
When it comes to billing, our CA members raise a common invoice of audit and
accounting.

 

Shrikrishna:
Oh! That’s dangerous. You cannot render accounting services to
your audit client.

 

Arjun:
Yes. Our members also take it casually. And what they do is that after
recovering the amount from the client, they don’t pay separate cheques to the
accounts person. That makes things even worse.

 

Shrikrishna:
Oh! And many may be saying that they paid in cash?

 

Arjun:
You said it! That is the problem.

 

Shrikrishna:
It is all the more dangerous if that person is your own employee,
part-time or full-time, whatever.

 

Arjun:
And in any case, billing should not be common. So your social
service invites trouble for you.

 

Shrikrishna:
So, what is the lesson you learn?

Insist
on the clients to get organised.

Insist
on their appointing their own man for accounts.

Do
not raise a common invoice even by mistake.

For
any reason, if his payment is routed through you, make proper documentation and cheque entries.

Insist
on that person raising a separate bill.

 

Arjun:
There is one more difficulty. Section 34 of the Maharashtra Public Trusts Act
is very strange. It says the final accounts shall be prepared and submitted to
the Charity Commissioner by the auditor!

 

Shrikrishna:
Oh! There is a special reason for this. You should know the
history behind it. When these laws were framed the lawmakers believed that the
managing bodies of trusts and societies would consist of social workers. They
would not afford trained and qualified staff and the services of a
professional. So it was thought that an auditor would act as a friend,
philosopher and guide. But the times have changed.

 

Arjun:
True. Now, the regulators should review the whole situation. The leniency shown
earlier to trusts and societies should no longer continue.

 

Shrikrishna: Whatever
it may be, but as a professional it is your duty to take care. Don’t act in a
loose manner.

 

Arjun:
Yes,
Bhagwan!

 

Om
Shanti!

           

(This
dialogue is based on conflict of interest-maker checker principle, Council
guideline. Contravention of any guideline is misconduct under Item No. 1 Part
II of second schedule to the CA Act.)

 

 

REGULATORY REFERENCER

DIRECT TAX

 

1. Deduction of
tax at source from salaries
u/s 192 during the financial year 2020-21. [Circular
No. 20/2020 dated 3rd December, 2020.]

 

2.
Clarifications on provisions of the Direct Tax
Vivad Se
Vishwas
Act, 2020. [Circular No. 21/2020 dated 4th
December, 2020.]

 

COMPANY LAW

 

I. COMPANIES
ACT, 2013

 

(I) Designation
of Special Court for the States of Maharashtra, West Bengal and Tamil Nadu in
connection with trials under Companies Act, 2013 in respect of cases filed by
SEBI.
The Central Government has notified the special
courts, as mentioned in the Notification, for the states of Maharashtra,
West Bengal and Tamil Nadu
to ensure speedy disposal of trials of offences
punishable under the Companies Act, 2013 in respect of cases filed by SEBI. [MCA
Notification S.O. 4283(E) dated 27th November, 2020.]

 

(II) MCA
further extends due date for filing cost audit report.
MCA has extended the last date for filing Form CRA-4 (Cost Audit
Report) and relaxed additional fees in view of the large-scale disruption
caused by the Covid-19 pandemic. It has further allowed cost auditors to submit
their report for the F.Y. 2019-20 to the Board of Directors of Companies by 31st
December, 2020 (earlier, 30th November). Companies are required to
file Form CRA-4 within 30 days from receipt of a copy of the Cost Audit Report.
[MCA General Circular 38/2020 dated 1st December, 2020.]

 

(III) MCA
amends provisions with respect to online assessment exams to be cleared by
Independent Directors under the Companies Act, 2013.
Through this Amendment, MCA has notified that Independent Directors
(IDs)
shall pass an online proficiency self-assessment test conducted by
the Institute, obtaining a minimum of 50% (as against 60%) in aggregate, within
a period of two years (as against one year) from the date of inclusion of their
name in the data bank. MCA has further clarified that IDs are not required to
take the online proficiency self-assessment test when they have served for a
total period of not less than three years (as against ten years) in the
prescribed list of entities as on the date of inclusion of their name in the
data bank. [Companies (Appointment and Qualification of Directors) Fifth
Amendment Rules, 2020 dated 18th December, 2020.]

 

II. SEBI

 

(IV) SEBI
further extends timeline for conducting internal audit and system audit.
In view of the prevailing situation due to the pandemic, SEBI has
decided to extend the timelines for compliances by the trading members / clearing
members
related to system audit and internal audit, the due date of which
has been extended to 31st December, 2020. As regards
half-yearly net worth certificate, Cyber Security and Cyber Resilience Audit,
the due date has been extended to 31st December, 2020 and 31st
January, 2021
, respectively. [SEBI/HO/MIRSD/DOP/CIR/P/2020/235 dated 1st
December, 2020.]

 

(V) SEBI issues
operational guidelines for transfer and dematerialisation of re-lodged physical
shares.
In continuation of its Circular dated 7th
September, 2020 fixing 31st March, 2021 as the cut-off date for
re-lodgement of transfer requests and stipulating that such transferred shares
shall be issued only in demat mode, SEBI has now issued the operational
guidelines in this regard to be followed by the Registrar and Transfer Agents
(RTAs) and Investors and Depository Participants (DPs). As per this guideline,
RTAs, upon receiving the transfer re-lodgement request, are required to issue a
Letter of Confirmation (LoC) to the investor (the transferee) who has to submit
the same along with the Demat Request to the DP within 90 days of receipt of
the LoC. The format of the LoC is annexed to the Circular.
[SEBI/HO/MIRSD/RTAMB/CIR/P/2020/236 dated 2nd December, 2020.]

 

(VI) SEBI
issues Circular to increase participation of non-institutional shareholders in
e-voting facility provided by listed entities.
In order to
facilitate seamless authentication and to enhance ease and convenience of
participating in the e-voting process, SEBI has come out with the broad
initiatives to be implemented in two phases; the first phase is to be completed
by 9th June, 2021 and second phase to be completed
within 12 months of the completion of phase 1. With this, SEBI ultimately
intends to eliminate the key challenge of registration on various E-voting
Service Providers and maintenance of multiple user IDs and passwords by the
shareholders and eventually increase the participation. [SEBI/HO/CFD/CMD/CIR/P/2020/242
dated 9th December, 2020.]

 

ACCOUNTS AND AUDIT

 

(A) CARO 2020 now
made applicable from F.Y. 2021-22
– The MCA has extended the
applicability date of the Companies (Auditor’s Report) Order, 2020 for one
more year, i.e., for the financial years commencing on or after 1st
April, 2021. [MCA order dated 17th December, 2020.]

 

FEMA

 

1.)
Notification amending Regulation on Export and Import of Currency has
been issued whereby a new Regulation 10 has been introduced giving power
to the Reserve Bank to restrict export or import of currency. The
Reserve Bank may now, in public interest and in consultation with the Central
Government, restrict the amount of Indian currency notes of Government
of India and / or of Reserve Bank, and / or foreign currency, on
case-to-case basis that a person may bring into or take outside India and
prescribe such conditions as it may deem necessary. This is in furtherance of
earlier Notification No. FEMA 6(R)/(2)/2020-RB, dated 11th August,
2020 whereby the provision regarding RBI’s power to allow, on specific
application, import or export of Indian currency in Regulation 3 was replaced
with a new Regulation 9. [Notification No. FEMA 6(R)/(3)/2020-RB, dated 3rd
December, 2020.]

 

2.) The
Government had announced a hike in the limit of FDI in the defence sector from
49% to 74% in May, 2020. The DPIIT had issued Press Note 4 dated 17th September,
2020 detailing the changes and bringing in some conditions. These changes could
become effective only when necessary amendments are made in the FEMA(NDI)
Rules. A Notification amending the NDI Rules to bring in the changes for FDI
in the Defence Sector has now been issued
. The amendments made are in line
with the changes issued vide Press Note 4 earlier. Please refer to BCAJ,
October, 2020
detailing the changes brought in. [Notification No. S.O.
4441 (E) (F. No. 01/05/EM/2019), dated 8th December, 2020.]

 

3.) RBI has
issued an important Circular easing several Procedures for Export of Goods and
Services by delegating more powers to AD Banks:

 

a) Direct
dispatch of shipping documents

AD Banks were
allowed to regularise cases of dispatch of shipping documents by the exporter
directly to the consignee or his agent resident in the country of the final
destination of goods up to USD 1 million or its equivalent per export shipment.
It has now been decided to do away with this limit of USD 1 million subject to
the following conditions:

i) The export
proceeds have been realised in full except for the amount written off, if any,
in line with the provisions for write-off;

ii) The
exporter is a regular customer of AD bank for a period of at least six months;

iii) The
exporter’s account with the AD Bank is fully compliant with RBI’s KYC / AML
guidelines;

iv) The AD bank
is satisfied about the bona fides of the transaction.

 

b) ‘Write-off’
of unrealised export bills

RBI allowed,
through the AD Banks, exporters to ‘write-off’ unrealised export bills up to
specified limits in enumerated circumstances if all prescribed conditions were
met. To provide greater flexibility to the AD Banks and to reduce the time
taken for according such approvals, the procedure is now revised as under:

 

The AD bank
may, on request of the exporter, write off unrealised export bills without
any limit
in respect of cases falling under categories specified below:

(i) The
overseas buyer has been declared insolvent and a certificate from the official
liquidator, indicating that there is no possibility of recovery of export
proceeds, has been produced;

(ii) The
unrealised amount represents the balance due in a case settled through the
intervention of the Indian Embassy, Foreign Chamber of Commerce or similar
organisation;

(iii) The goods
exported have been auctioned or destroyed by the port / customs / health authorities
in the importing country.

 

The ‘write-off’ is allowed provided the AD Bank is satisfied with the
documentary evidence produced. Further, in
cases falling under the above categories, AD Bank may also permit
write-off of outstanding amount of export bills up to the specified ceilings
where the documents have been directly dispatched by the exporter to the
consignee or his agent resident in the country of final destination of goods.

 

In all other cases, the erstwhile limits and conditions continue as
currently prevalent. Certain corrections in the terms and forms have also been
made in the provisions.

 

c) Set-off of export receivables against import payables

There has been a long-standing demand of
importers and exporters to allow set-off of their outstanding export
receivables against outstanding import payables with their overseas group /
associate companies. At present, AD Banks are allowing exporters and importers
to set off only from / to the same overseas buyer / supplier. Accordingly, it
has been decided to delegate powers to AD Banks to also consider such requests
of set-off and a host of revised guidelines / conditions have been issued. The
chief ones among these are those requiring that the arrangement is backed by a
written, legally enforceable agreement / contract in case of set-off among
group / associate companies; not allowing set-off of export receivables for
goods against import payables for services and vice versa; allowing set
off only between the export and import legs taking place during the same
calendar year; and so on.

 

d) Refund of export proceeds

AD banks, through whom the export proceeds were originally realised,
were allowed to consider requests for refund of export proceeds of goods
exported from India and being re-imported into India on account of poor
quality. However, as per current provisions, the exporter had to provide an
undertaking that such goods will be re-imported within three months from the
date of remittance. The instructions have been reviewed and henceforth AD
Banks, while permitting refund of export proceeds of goods exported from India,
shall not insist on the requirement of re-import of goods, where
exported goods have been auctioned or destroyed by the port or customs or
health authorities or any other accredited agency in the importing country,
subject to submission of satisfactory documentary evidence. In all other cases
AD banks shall ensure that the procedures as applicable to normal imports are
adhered to and that an undertaking from the exporter to re-import the goods
within three months from the date of refund of export proceeds shall be
obtained. [A.P. (DIR Series 2020-21) Circular No. 8, dated 4th December,
2020.]

 

REGULATORY REFERENCER

DIRECT TAX

 

1. Extension of deadline
for filing declaration and payment of tax under Vivaad Se Vishwas
Scheme. [Notification No. 85 of 2020 dated 27th October,
2020.]

 

2. Clarifications in
respect of the Direct Tax Vivaad Se Vishwas Act, 2020. [Circular
No. 18/2020 dated 28th October, 2020.]

 

3. CBDT notifies Equalisation
Levy (Amendment) Rules, 2020
; revises Forms for filing statements and
appeals. [Notification No. 87 of 2020 dated 28th October, 2020.]

 

4. Extension of deadline
for filing Income Tax Return, Tax Audit Report and Transfer Pricing Report. [Notification
No. 88 of 2020 dated 29th October, 2020.]

 

5. CBDT authorises CIT to condone the delay in
filing audit report
in Form No. 10BB. [Circular
No. 19/2020 dated 3rd November, 2020.]

 

COMPANY LAW

 

I.   COMPANIES ACT, 2013

 

(I) MCA extends minimum residency requirement
relaxation for directors for F.Y. 2020-21
– MCA
relaxes minimum residency requirement of 182 days in a year for resident
directors for F.Y. 2020-21 as well, in view of Covid-19. Clarifies that
‘…non-compliance of minimum residency in India for a period of at least 182
days in a year, by at least one director in every company, under section 149 of
the Companies Act, 2013 shall not be treated as non-compliance for the
financial year 2020-2021 also.’ [MCA General Circular No. 36/2020 dated 20th
October, 2020.]

 

(II)        MCA extends LLP Settlement Scheme, 2020
applicability to documents having due dates 30th November
– MCA extends the date of applicability of the LLP Settlement
Scheme, 2020 to defaulting LLPs to 30th November, 2020 owing to the
large-scale disruption caused by the pandemic. Accordingly, it states that ‘any
“defaulting LLP” is permitted to file belated documents, which were due for
filing till 30th November, 2020 in accordance with the provisions of
this Scheme.’ It adds that if a statement of account and solvency for the F.Y.
2019-2020 has been signed beyond the period of six months from the end of the
financial year but not later than 30th November, 2020, the same
shall not be deemed as non-compliance. [MCA General Circular No. 37/2020
dated 9th November, 2020.]

 

II. SEBI

 

(III) SEBI requires
listed debt security issuers to contribute towards ‘Recovery Expense Fund’
– In order to enable the Debenture Trustee(s) to take prompt action
for enforcement of security in case of ‘default’ in listed debt securities,
SEBI has required the creation of a ‘Recovery Expense Fund’ (REF) by issuers of
debt securities. The REF shall be used in the manner as decided in the meeting
of the holders of debt securities. SEBI has also prescribed the norms for the
manner of creation and operation of REF, utilisation and provision for refund
to the issuer. These provisions shall come into force w.e.f. 1st
January, 2021.
[Circular No. SEBI/HO/MIRSD/CRADT/CIR/P/2020/207, dated
22nd October, 2020.]

 

(IV) SEBI
streamlines process for approval of draft Schemes of Arrangement by SEs
– SEBI streamlines the processing of draft Schemes of Arrangement
filed by listed entities with stock exchanges (SEs) to ensure that the
recognised SEs refer the draft Schemes to SEBI only upon being fully convinced
that the listed entity is in compliance with the requisite SEBI norms. SEBI
further states that the amended provisions will be applicable for all the
Schemes filed with the stock exchanges after 17th November, 2020. It
highlights that w.e.f. 3rd November, 2020 steps for listing and
trading in specified securities in relation to the Scheme of Arrangement must
commence within 60 days of receiving the NCLT order approving the Scheme. SEBI
further requires Audit Committees to comment on the viability of the Scheme
from the company’s perspective. SEBI also requires submission of a report from
the Committee of Independent Directors that the draft Scheme is not detrimental
to the shareholders of the listed entity. [SEBI/HO/CFD/DIL1/CIR/P/2020/215
dated 3rd November, 2020.]

 

(V) SEBI issues guidelines for Debenture Trustees
(DTs) to perform due diligence for creation of security
– SEBI issues guidelines for
strengthening of DTs’ role to safeguard the interest of investors in debt
securities, for new issues proposed to be listed on or after 1st January,
2021. SEBI further states that to enable the DTs to exercise due diligence
w.r.t. creation of security, the issuer, at the time of entering into the DT
agreement, shall provide information as prescribed. SEBI has cast the duty for
due diligence on DTs. SEBI provides that the DTs shall maintain records and
documents pertaining to due diligence for a minimum period of five years from
redemption of debt securities. SEBI also requires issuers of debt securities to
create charge in favour of the DTs before making application for listing of
debt securities and specifies, ‘The Stock Exchange(s) shall list the debt
securities only upon receipt of a due diligence certificate… from the Debenture
Trustee confirming creation of charge and execution of Debenture Trust Deed.’ [SEBI/HO/MIRSD/CRADT/CIR/P/2020/218
dated 3rd November, 2020.]

 

(VI) SEBI issues
Standard Operating Procedure with respect to imposition of fine and initiation
of action in case of non-compliance of continuous disclosures by issuers of listed
debt securities
– In order to align the SOP for
imposition of fine and initiation of action in case of non-compliance of
continuous disclosures by issuers of the listed securities, SEBI has laid down
that the fine is to be levied by the Stock Exchange (SE) for violation of
various regulations as listed in the Circular. The SE shall disclose on their
website the action(s) taken against the entities for non-compliance(s),
including the details of the respective requirement, amount of fine levied /
action taken, etc. The Circular shall come into effect for compliance period
ending on or after 31st December, 2020. [SEBI/HO/DDHS/DDHS/CIR/P/2020/231
dated 13th November, 2020.]

 

ACCOUNTS AND AUDIT

 

(A) Guidance
Note on Accounting for Share-based Payments (Revised 2020)
– This is the Revised Guidance Note (GN) applicable for enterprises
that are not required to follow Indian Accounting Standards. The revised GN
deals with share-based payment transactions with employees as well as
non-employees and deals extensively with group-wide share-based payment
transactions. [ICAI Guidance Note issued on 4th November, 2020.]

 

(B) Guidance
Note on Applicability of AS 25 and Measurement of Income Tax Expense for
Interim Financial Reporting (Revised)
– The revised
GN incorporates updated references used in earlier GNs and relevant examples.
It also enlightens about the impact of opinions issued by ICAI on the
preparation of interim financial reports. Pursuant to this revision, ‘Guidance
Note on Applicability of AS 25 to Interim Financial Results’
and ‘Guidance
Note on Measurement of Income Tax Expense for Interim Financial Reporting in
the Context of AS 25’
stand withdrawn. [ICAI Guidance Note issued on 4th
November, 2020.]

 

FEMA

 

(i) The FDI Policy Framework is put up periodically by the Government through the Department for
Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce
& Industry. The DPIIT makes these pronouncements on FDI through the
Consolidated FDI Policy Circular. These pronouncements are separately notified
by the Ministry of Finance by amending the FEM(NDI) Rules, 2019 under FEMA. DPIIT
has released a Consolidated FDI Policy which is effective from 15th
October, 2020.
This Policy subsumes and supersedes all past Press Releases
/ Press Notes, Circulars on FDI, Clarifications, etc. In case of any conflict
between the Consolidated FDI Policy and the NDI Rules, the Notifications issued
under FEMA will prevail. [DPIIT File Number 5(2)/2020-FDI Policy dated 15th
October, 2020.]

 

(ii)        DPIIT had vide ‘Press Note 4’
dated 18th September, 2019 brought entities engaged in the news
digital media sector under the FDI regime.

Accordingly, entities engaged in uploading or streaming of news and current
affairs through digital media platforms were permitted to receive FDI up to 26%
under the government approval route. This was a new requirement which resulted
in a few concerns among such entities, chief among which were: that no window
was provided to bring the investment as per the FDI regime; and it was not
clear whether or not entities which are digital news aggregators are covered
because ‘digital media’ was not defined.

 

In response to representations received on these and other concerns,
DPIIT has released a clarification stating that the FDI Policy will apply to
the following Indian entities:

(a)        digital media entities streaming /
uploading news and current affairs on websites, apps or other platforms;

(b)        news agency which gathers, writes and
distributes / transmits news, directly or indirectly, to digital media entities
and / or news aggregators; and

(c)        news aggregator, being an entity which,
using software of web application, aggregates news content from various sources
such as news websites, blogs, podcasts, video blogs, user submitted links,
etc., in one location.

 

A window is now
provided for entities covered in (a) above of one year from the date of this
clarification to align their FDI to the 26% level with approval of the Central
Government.

 

The following
additional conditions have been prescribed:

i)   The majority of the Directors on the Board of
the investee company shall be Indian citizens;

ii)   The CEO shall be an Indian citizen; and

iii) The investee company is
required to obtain security clearance of all foreign personnel likely to be
deployed for more than 60 days in a year by way of appointment, contract or
consultancy or in any other capacity for functioning of the entity prior to
their deployment. In the event of the security clearance of any foreign
personnel being denied or withdrawn for any reasons whatsoever, the investee
entity needs to ensure that the person concerned resigns or his / her services
are terminated forthwith after receiving such directives from the government.

 

Further, it is also
stated that the investee entities, i.e., the Indian entities receiving FDI,
would be responsible to comply with Press Note 4. [DPIIT File No.
5(4)/2019-FDI Policy dated 16th October, 2020.]

 

(iii) RBI has
issued a Notification for regulating posting and collection of margin on specified
derivative contracts.
By this regulation:

A. RBI has prohibited any person other than
Authorised Dealers (ADs) to post and collect margin and receive and pay
interest on margin, posted and collected on their own account or on behalf of
their customers for permitted derivative contracts entered into with a person
resident outside India.

B. Permitted derivative contracts have been
defined to mean Foreign Exchange Derivative Contracts, Interest Rate Derivative
Contracts and Credit Derivative Contracts undertaken in line with their
respective Regulations / Directions. The definition can also cover any other
derivative contract as specified by RBI.

C. Other important terms including ‘Margin’,
‘Derivative’, etc., have been defined specifically for this Notification. [Foreign
Exchange Management (Margin for Derivative Contracts) Regulations, 2020, No.
FEMA 399/RB-2020, dated 23rd October, 2020.]

 

(iv) There are several reports to be filed with RBI under FEMA. RBI
has decided to discontinue 17 returns / reports with a view to improve the ease
of doing business and reduce the cost of compliance.
The discontinued
reports are those that are to be submitted periodically by the AD Banks,
Custodians and FFMCs and are listed in the Annexure to the Circular. [A.P. (DIR
Series) Circular No. 05 dated 13th November, 2020.]

 

(v)        The RBI has now
issued a Circular in respect of Compounding of Contraventions under FEMA

whereby the following changes have been made:

(a)        The power to compound certain
contraventions under Notifications dealing with investment in India – FEMA 20
and FEMA 20(R) – was delegated to the Regional Offices / Sub-offices of the
RBI. This delegation of powers was superseded by the introduction of the NDI
Rules in October, 2019. The Circular now updates the reference to various
regulations as per the earlier Notifications to bring it in line with the NDI
Rules.

(b)        Contraventions under FEMA are classified
into ‘technical’ or ‘material’ or ‘sensitive / serious in nature’. Technical
contraventions are dealt with by administrative / cautionary advice without
levying of a compounding fee. The Circular now does away with this practice and
will regularise such contraventions by levying a minimum compounding amount as
per the Compounding Matrix.

(c)        Compounding Orders
issued by RBI have been made available on its website as a measure of public
disclosure. However, by this Circular, for orders issued after 1st
March, 2020 only a summary will now be put up on the RBI website in the
prescribed format. Complete orders will no longer be available for downloading
from the RBI website.

(d)         Appropriate amendments would also be made in
the Master Direction on Compounding.

[A.P. (DIR
Series) Circular No. 06 dated 17th November, 2020.]

 

(vi)
The Hon’ble Supreme Court vide its interim orders dated 4th
July, 2012 and 14th September, 2015 passed in the case of the Bar
Council of India vs. A.K. Balaji & Ors.
had directed RBI not to
grant any permission to any foreign law firm on or after the date of the said
interim order for opening of Liaison Office (LO) in India. RBI had issued a
Circular to that effect dated 29th October, 2015. The Supreme Court
has held in the same case that advocates enrolled under the Advocates Act, 1961
alone are entitled to practise law in India and that foreign law firms /
companies or foreign lawyers cannot practise the profession of law in India.
RBI, in line with this decision, has directed AD Banks not to grant any
approval to any branch office, project office, liaison office or other place of
business in India under FEMA for the purpose of practising legal profession in
India. Further, AD Banks have been directed to bring any violation of the
Advocates Act to the notice of the RBI. [A.P. (DIR Series) Circular No. 07
dated 23rd November, 2020.]

 

 

 

SOCIETY NEWS

FEMA STUDY CIRCLE MEETINGS

 

In October, 2020, the FEMA
Study Circle of the BCAS organised three meetings, details of which are
as follows:

 

1. Downstream investments

 

The virtual meeting was led
by Kartik Badiani, Aarti Karwande and Sneh Bhuta and was held on
17th October, 2020.

 

The speakers started by
explaining the basics of Foreign Direct Investment and Indirect Foreign
Investment. Next, they delved into the types of entities that are eligible to
undertake Indirect Foreign Investment and the manner of calculating Direct as
well as Indirect Foreign Investment. This was followed by a detailed
explanation on the various compliance and reporting requirements – as well as
consequences of non-compliance.

 

The presentation was
replete with case studies that not only made it interesting but also evoked
questions from members.

 

2. Amendments to the Foreign Contributions
(Regulation) Act, 2010

 

This virtual meeting was
held on 19th October and was led by Isha Sekhri.

 

It was
held in light of the recent amendments to the Act that came into force on 29th
September. Isha discussed various amendments pertaining to the
restriction on acceptance of foreign contributions by public servants,
prohibition on transfer of funds and the cap on administrative expenses at 20%,
amongst others, in a very crisp, eloquent manner.

 

The session was indeed
helpful as members felt they were better equipped to handle queries from their
clients on the manner in which they need to adapt to the recent amendments.


3. Structuring of
investments in Startups

Ganesh
Ramaswamy
led this meeting which was held on 31st October.

 

The
speaker explained the concept of a Startup and the various facets associated
with it, viz., investments by Foreign Venture Capital Investors (FVCI), issuance of Convertible Notes, FDI in Startups, amongst others.

 

He
explained in detail tax aspects pertaining to various jurisdictions, viz.,
Germany, Switzerland, the United Kingdom, the United States of America and the
Netherlands to name a few. The presentation was made more interesting with
anecdotes about his experiences with clients of different countries and the
people there.

 

COVID IMPACT ON ECONOMY AND CAPITAL MARKETS

 

A virtual panel discussion
on ‘Post-Covid Impact on Economy and Capital Markets’ was organised on 28th
October. The panellists were Dr. B.K. Bhoir (ex-RBI and an Economist), T.N.
Manoharan
(Past President of the ICAI) and George Joseph (CEO of an
ITI AMC). The panel was moderated by Dipan Mehta.

 

President
Suhas Paranjpe welcomed the panellists and spoke about the devastating
impact of the Covid-19 pandemic on industries, businesses – small and large,
the financial markets and the speculation about the V/U/L/H-shaped recovery in
the economy post the devastating contraction in the Indian economy. Speaking
about the expectations of stimulus packages, he also discussed the need for a
direction as to where the economy was headed and said that this was the theme
for the lecture meeting.

 

Vice-President Abhay
Mehta
introduced the panel members and handed over the proceedings to
moderator Dipan Mehta.

Each of the panellists gave
a brief overview. In his presentation, Dr. Bhoir pointed out that the
public at large is only discussing the impact of Covid on the GDP; however, its
impact had been far more devastating and far-reaching. It had impacted the
social fabric and the personal and mental well-being of the people at large.

 

He also noted the GDP
forecasts being made by various agencies and contrasted the same with his own
forecast and the reasons for the same. He also gave his prescription for the
way forward and the challenges that the government is likely to face in the
coming days.

 

T.N.
Manoharan
highlighted the positives from the pandemic and how virtual
webinars were helping increase the spread of knowledge. At the same time,
despite the pandemic, several sectors had been growing, such as telecom,
healthcare, drugs and pharma, financial services, agriculture, food processing,
agricultural implements like tractors, automobiles, power generation, etc.

 

He pointed out how some
sectors had adapted to the scenario and grown despite the challenges – a case
in point being resorts. He ended his talk by hoping that the worst was over and
prayed that the vaccine would be available soon.

 

George
Joseph
started his overview by pointing out that there were no
precedents to the current situation and the closest he could cite was in the
1820s; he remarked that it was surprising that 100 years later the manner in
which the extreme situation was being dealt with was strikingly similar.
Covid-19 had been a traumatic experience for the people at large but now they
were venturing out.

 

Referring to the historical
data, he said that by 2010 the economy had started to slow down; various
factors had contributed to that; and then there were a series of steps taken by
the government such as demonetisation, GST implementation, etc., which had
their impact on the economy – all these followed by a series of crises such as
the NBFC and other crises. But despite these negatives he was optimistic that
the Indian economy would rise and start growing since the protracted down-cycle
had ended and he expected a boom considering that the manufacturing cycle was
gathering momentum, and both the Chinese and the American economies were showing
positive indications. He expected the Indian economy to grow at a phenomenal
pace in the foreseeable future. If a stimulus package came through, it would
further assist in the growth of the economy.

Dipan
Mehta
then proceeded with questions to each of the panellists. These
ranged from aspects such as interest rates, thrust of the stimulus, impact of
moratorium on loans on the banks, increase in bank deposits and slowing down in
the investment cycle, recognition of NPAs, restructuring of failing businesses,
how to attract fresh investments, need for a fiscal stimulus, movement in
interest rates, likelihood of a second wave of Covid-19 and its impact, and the
way forward.

 

Joint Secretary Mihir
Sheth
proposed the vote of thanks.

 

ARTIFICIAL INTELLIGENCE – DEVELOPMENTS IN FINANCE,
ACCOUNTING & AUDITING

 

An unusual Zoom meeting was
organised on 4th November. It was a 
virtual lecture on ‘Artificial Intelligence – Developments in Finance,
Accounting & Auditing’. The faculty was Mr. Rohit Gupta who
delivered his talk live from the USA.

 

In his opening remarks,
President Suhas Paranjpe presented an overview of the increasing
prevalence and growing importance of Artificial Intelligence in the finance
world in general and in the field of financial accounting in particular.

 

Mr. Gupta
covered the following areas of interest:

 

  •    What is AI and why is it
    relevant today?
  •    The opportunities with AI
    in corporate finance;
  •    The journey to AI-driven
    Digital Transformation; and
  •    Practical approaches to
    adopting AI-driven Digital Transformation
    for Finance.

 

In the course of his
lecture, he discussed various concepts such as Natural Language Processing,
Computer Vision, Machine Learning and Deep Learning.

 

At the end of his talk, Mr.
Gupta
answered the queries of the participants such as the first steps to
learning and adopting AI, various avenues for learning about AI, the
opportunities and so on.

 

The virtual lecture meeting
was attended by 250 participants (both on Zoom and on YouTube).

 

PRIMARY FINANCIAL STATEMENTS (PFS) PROJECT

Another virtual lecture
meeting, this time on the Primary Financial Statements (PFSs) Project of IASB,
was held on 11th November.

 

The
keynote speaker was M.P. Vijay Kumar (ICAI Council Member) and the faculty
comprised Ms Aida Vatrenjak (Member of the Technical team and leader of
the PFS project) and Ms Nili Shah (Executive Technical Director).

 

President Suhas Paranjpe
gave the opening remarks and presented an overview about the PFS, including the
fact that the initiative aimed at reducing the variations in financial
reporting by standardising the presentation and the form of the reports and
making financial statements more comparable.

 

Immediate Past President Manish
Sampat
, giving the background of the subject, highlighted the hurdles faced
by various stakeholders while reading financial statements and the pressing
need for conformity.

 

M.P. Vijay
Kumar
started his keynote address by acknowledging the efforts of
various contributors to the project. He emphasised that he was a firm believer
in the dictum that the concept of accounting was to be accountable and
financial reporting was all about communication.

Financial reporting had to
focus on the three Cs – it had to be Clear, Complete and Candid, he added.

 

On her
part, Ms Nili Shah introduced the project and said that it had resulted
in the exposure draft on general presentation and disclosures. She also spoke
about the developments leading to the project and its current stage.

 

Ms Shah
stressed on the need for interaction and discussion on the subject since this
would assist in framing the standard. She spoke in detail about the project,
the terms used and their relevance in financial reporting.

 

Ms Aida Vatrenjak, on the
other hand, discussed the need for having rules related to sub-totals and
categories that would help in achieving consistency and how the lack of such
rules was a disadvantage. The importance of various categories such as
operating profits, income and expense from integral associations and joint
ventures, profit before financing and tax, application to financial entities,
unusual expense, management performance measures, etc., were also highlighted
by her.

 

The lecture meeting was attended by several seniors in the
profession and members in practice.

REPRESENTATION

Dated: 02nd
December, 2020

Subject:
Pre-budget Memorandum for the Finance Act, 2021, covering the Direct Tax Law
provisions

To: Smt. Nirmala Sitharaman, Hon. Union Minister of Finance, Ministry of
Finance, Government of India, North Block,New Delhi 110 001

Representation by: Bombay Chartered Accountants’ Society

Note: For full Text of the above
Representation, visit our website www.bcasonline.org

 

MISCELLANEA

I. Business

 

8.
Bitcoin price prediction: Here’s why analyst thinks $22,000 is next

 

KEY POINTS

  • Bitcoin
    breached $18,000 for the first time in three years;
  •  The
    number of people holding Bitcoin for a period of one year has increased;
  •  The
    number of Bitcoin being transferred out of exchanges is rising.

 

Bitcoin just hit $18,000 and an analyst
expects the next price target to be $22,000, a figure that is higher than the
previous all-time high.

 

Bitcoin closed Tuesday (17th
November, 2020) at $17,679, a new 2020 high, breaking the earlier record of
$16,726 which was hit just the previous day (Monday, 16th November,
2020). At the time of writing this report, the benchmark crypto currency hit
$18,000, its highest price in the last three years. Bitcoin last reached
$18,000 in December, 2017, the month when it went on to touch its all-time high
price of just below $20,000.

 

With the previous all-time high on the
horizon, people are looking forward to what’s to come after that. One analyst
said Bitcoin could reach $20,000 and the first initial target is $22,000.
According to Philip Swift, an analyst and founder of Lookintobitcoin.com,
multiple indicators, including institutional buying and the one-year HODL %,
are still likely to increase soon, Cointelegraph reported.

 

The one-year HODL % refers to the number of
people whose BTC addresses hold Bitcoin for at least a year. At this point, the
one-year HODL wave chart shows these investors are growing in number. This is
significant because despite Bitcoin being up by 154% already since the start of
the year, the number of people not selling their Bitcoins is still increasing.
This implies that these investors are looking forward to a further upside in
the price of the benchmark crypto currency and that they are not selling any
time soon.

 

Additionally, the funding rate has remained
neutral. This refers to the balance between buyers and sellers particularly in
the Bitcoin futures market. According to Cointelegraph, the average funding
rate has remained at 0.01%, suggesting a balance between buyers and sellers
which also implies that the market is not yet overheated. If the market becomes
overheated, a reverse in the price trend could happen.

 

Finally, more and more Bitcoin is being
withdrawn from exchanges. In a separate article, Cointelegraph noted that a
total of 145,000 BTC were moved out of crypto currency exchanges between 15th
October and 15th November. At the price point of Bitcoin on 15th
November, the amount is worth around $2.35 billion transferred out of
exchanges.

 

Source: International Business Times; By Vincent Figueras – 18th
November, 2020)

 

II. Science

 

9. World
Science Day For Peace And Development 2020: Inspirational quotes by famous
scientists

 

Science influences most aspects of human
life including health, medicines, transportation and energy. Hence, to
highlight the role of science in daily life, the United Nations Educational, Scientific
and Cultural Organization (UNESCO) proclaimed World Science Day for Peace and
Development in 2001. Since then, the day has been observed annually on 10th
November.

 

Apart from strengthening public awareness
about science’s role in society, the day also aims at keeping people informed
about the key developments in science and drawing their attention towards the
challenges the progress of science is facing.

 

On this day, here are a few inspirational
and powerful quotes by famous scientists, courtesy Famous Scientists and
Forbes:

An experiment is a question which science
poses to Nature, and a measurement is the recording of Nature’s answer
Max Planck

It is strange that only extraordinary men
make the discoveries which later appear so easy and simple – Georg C.
Lichtenberg

We pass through this world but once. Few
tragedies can be more extensive than the stunting of life, few injustices
deeper than the denial of an opportunity to strive or even to hope, by a limit
imposed from without, but falsely identified as lying within –
Stephen Jay Gould

Science without religion is lame, religion
without science is blind – Albert Einstein

The saddest aspect of life right now is
that science gathers knowledge faster than society gathers wisdom –
Isaac Asimov

Actually, everything that can be known has a
Number; for it is impossible to grasp anything with the mind or to recognise it
without this – Philolaus

Progress is made by trial and failure;
the failures are generally a hundred times more numerous than the successes;
yet they are usually left unchronicled –
William
Ramsay

Did the genome of our cave-dwelling
predecessors contain a set or sets of genes which enable modern man to compose
music of infinite complexity and write novels with profound meaning? … It looks
as though the early Homo (sapiens) was already provided with the intellectual
potential which was in great excess of what was needed to cope with the
environment of his time – Susumu Ohno

 

Source: International Business Times; By Vaishnavi Vaidyanathan – 11th
October, 2020)

 

III. Health

 

10. Can’t sleep during quarantine? How to
rest while anxious | Elemental

In the age of coronavirus, sleep is more
important – and more elusive – than ever

 

May be you’ve always struggled with your
sleep. Or, perhaps because of the coronavirus outbreak you’ve started
experiencing insomnia as a result of changes to your everyday life, fears about
the health and safety of yourself and your loved ones, financial insecurities
and the barrage of coronavirus information and misinformation that’s coming
from all directions. In these uncertain times, it’s not surprising to find that
many people are facing an increase in sleep difficulties.

 

With all the challenges we’ll be facing over
the next several months as individuals and within our communities, workplaces,
schools and, indeed, globally, there are many reasons to make healthy sleep a
priority and take steps to preserve this vital bodily function.

 

What constitutes good sleep? First, getting
the right amount for your age: Most adults require seven to eight hours of
sleep for optimal health. Adolescents and emerging adults benefit from eight to
ten hours, school-aged children need between nine and 11 hours, and our littlest
ones should get even more.

 

Then, timing: Sleep does its best work for
us when we get it at the right ‘time,’ according to our internal, 24-hour body
clock, aka our circadian rhythm. Humans are diurnal, meaning all of the
workings of our body – eating, digestion, hormone secretion, and even learning
and memory – are organised around the basic framework of wakefulness during the
day and sleep at night. For individuals who work at night or follow a rotating
shift schedule, finding the right sleep timing can be complicated because their
sleep-wake schedules are often out of sync with day and night.

 

Finally, getting high-quality sleep: Sleep
disruptions – whether they are from environmental sources, like noise or light
or children, or due to things we bring to bed with us, like anxiety or an
untreated sleep disorder – diminish the benefits of sleep.

 

In the face of the Covid-19 pandemic, we
can’t afford not to sleep well right now. Healthy sleep preserves our
immune function which will be critical if we are exposed to the virus.

 

Sleep also helps us focus, think clearly and
solve problems. It helps us maintain our composure when emotions are running
high. And for those with common chronic illnesses such as diabetes, obesity,
high blood pressure, heart disease or depression, healthy sleep promotes better
management of these underlying conditions.

 

Keep your body clock running on time

Just because you are stuck home does not
mean you cannot go outside. Staying inside decreases your light exposure and
makes it harder for your body clock to maintain its circadian rhythm. If you
can safely get some sunlight, especially in the morning, that will help your
brain and body keep the daytime / night-time schedule running smoothly.

 

You don’t have to keep the exact same
schedule every day. But if you are stuck at home for a while, adding structure
to your day will help. Plan some anchor activities like meals, social contact
and a concrete beginning and end of your work or school day so that everything
doesn’t run together.

 

If you have extra time at home, now might be
a good time to work on optimising your sleep environment. Install better window
blinds, put duct tape over those bright LEDs and set your phone for night mode.

 

Aim to get the amount of sleep you
need

For some people, schedule changes and more
time at home may equal more opportunities for sleep. If you’ve been ‘getting
by’ with less sleep than you need and spending your weekends ‘catching up’ on
sleep, reduced commuting time and prepping children for daycare and school may
allow you to establish new routines that allow you to get a healthier sleep
duration.

 

On the other hand, although staying home may
increase the time you have to sleep, resist the temptation to drastically
extend your time in bed. Most adults need seven to eight hours and should limit
their time in bed to the time they actually plan to sleep. Spending more time
in bed awake or sleeping on and off increases sleep fragmentation and results
in lighter, less restorative sleep.

 

Brief naps might be a good idea if you are
sleepy during the day and have the freedom to build a nap into your schedule.
Naps as short as ten minutes can improve energy levels and promote mental
performance. But too much napping across the day can backfire. A nap may make
it harder to sleep at night, leaving you sleepy the next day. Avoid this
vicious cycle whereby daytime napping worsens night-time sleep.

 

Three in the morning is a terrible time to
calm yourself down – your brain expects to be asleep at that time, not problem-solving!

 

Keep active to ‘earn’ your sleep

Move your body. Try to exercise. Do not sit
around just because you are home and your routine has changed. You will ‘earn’
better sleep with exercise and it can also keep your body clock synchronised.

 

Go easy on the booze

With the stress of a global pandemic, wine
might seem like the answer, but it is not. Although alcohol helps you fall
asleep faster, it also makes sleep more shallow and increases
middle-of-the-night insomnia. Best not to ramp up alcohol use.

 

Attempt to manage your worries

Although it is impossible to completely
avoid coronavirus-related stressors right now, you need to protect yourself
from anxiety-provoking information just as you are avoiding physical contact
with this virus. Depending on your job, you may need to check email and stay
available. Nevertheless, make an effort to limit the amount of information you
consume to what is absolutely necessary. Avoid reading news updates right
before bed.

 

For those middle-of-the-night wake-ups,
remember most of the problems can wait until tomorrow. Three in the morning is
a terrible time to calm yourself down – your brain expects to be asleep at that
time, not problem-solving! If you are worried that you’ll forget something
important, keep a notebook next to your bed and write it down. Then do your
best to go back to sleep.

 

Promote healthy sleep for your
children

For those with kids at home who are
transitioning to distance learning, remember that healthy sleep helps with
attention, memory and emotional regulation. Maintaining a structure of bedtime
and wake-time will make your job as ‘Wait, what? Now I’m a homeschool teacher?’
a little bit easier.

 

You may feel social pressure to keep your
children on their usual schedule, but remember that many schools, especially
middle schools and high schools, start earlier than is optimal for the
adolescent biological clock. A schedule is important, but there is no need to
start the day at a too-early time. Let your tweens and teens start the day at a
biologically acceptable time.

 

Take special care if you have sleep
apnoea

We should all
wash our hands, especially before bed, when we may unknowingly touch our faces
while sleeping. This is particularly important if you use continuous positive
airway pressure (CPAP) for sleep apnoea as it is common for CPAP users to
adjust their mask and headgear during the night.

 

If you are quarantined because of Covid-19
exposure or have any kind of cold or respiratory virus, it is wise, if
possible, to sleep separately from your bed partner while wearing CPAP. If you
are infected, then a CPAP machine might blow the virus into the air. By
sleeping in a different room, you will avoid exposing your bed partner to viral
exposure from your CPAP exhalation breaths.

 

The current public health situation is
stressful and might lead to some new sleep disruptions. We encourage you to use
these strategies to minimise this impact, or even make your sleep better, as we
combat the spread of coronavirus together.

 

Source: https://elemental.medium.com/pandemic-sleep-advice-straight-from-sleep-researchers-63cc2095f577

 

(Written by Katie Sharkey, MD, Ph.D. and
co-authored by Kelly Baron, Ph.D., MPH, Brendan Duffy RPSGT CCSH, Michael
Grandner, Ph.D., MTR, Jared Saletin, Ph.D., Rebecca Spencer, Ph.D., and John
Hogenesch, Ph.D. – 25th March, 2020)

ETHICS AND U

Shrikrishna:
Yes, my dear Arjun, how was Diwali? Any special purchases for Draupadi and
Subhadra?

 

Arjun:
Lord, due to this Covid-19 created by you, our coffers are empty. No money.
Running hand to mouth.

 

Shrikrishna:
I created Covid?

 

Arjun:
Who else? You are the Doer and Undoer of everything. Creator and Destroyer,
both.

 

Shrikrishna:
No, Arjun. I don’t create any pandemic. It is you mortals that invite
everything by your acts. It is a fruit of your karma. Anyway, how is
office going on? Still working from home?

 

Arjun:
Yes, Lord. In Mumbai, without local trains activity gets paralysed for a common
man. Staff cannot attend office. Efficiency is hampered.

 

Shrikrishna:
Why? One gets ample time at home.

 

Arjun:
Correct; but other necessary references are not readily available. But forget
that, I am disturbed due to another serious problem.

 

Shrikrishna:
What is that?

 

Arjun: See.
There is always last minute rush in our offices. Many complicated and delicate
issues arise in many cases. There is a dilemma as to what stand to take.

 

Shrikrishna:
Agreed. Even in the Mahabharat war you were faced with the dilemma – to
fight or not to fight! It’s a part of life.

 

Arjun: But
in our case it is all the more difficult. It is a daily phenomenon.

 

Shrikrishna:
Then take some expert advice. Discuss with the client.

 

Arjun:
That’s the problem, Bhagwan. There is no time. It is like fire-fighting.
So, ultimately we take a stand on our own and go ahead.

 

Shrikrishna:
So then…?

 

Arjun:
If anything goes wrong, the clients start blaming us. They speak from both the
sides. Actually, we take a decision which we honestly think is for the client’s
benefit.

 

Shrikrishna:
Agreed. But you have no control over the outcome. If it clicks, no one gives
credit, but if it misfires, you are to be hanged.

 

Arjun:
You said it! What to do?

 

Shrikrishna:
I see there are two reasons for such a situation. Firstly, you are not
proactive. Why the last minute rush every year? Secondly, you don’t communicate
with the client in time and involve him in the decision. Explain the pros and
cons.

 

Arjun:
But they say, it’s left to us.

 

Shrikrishna:
Fine. But then, they cannot blame you later. They were given an opportunity.

 

Arjun:
I remember, in the war also, you used to give opportunity to everyone before we
killed them!

 

Shrikrishna:
Moreover, please keep your role clearly in mind. You are an adviser and not the
decision-maker. Don’t step into the shoes of the client.

 

Arjun:
Just see, for example, there is the Vivad se Vishwas scheme of the tax
department. In many cases, appeals are dicey. Out of several grounds, a few are
strong, others very weak.

 

Shrikrishna:
Then you should communicate to the clients well in time about the scheme, what
are the merits, what are the stakes involved and take them into confidence.
Perhaps, they can also suggest something useful.

 

Arjun:
I agree. I must do this right away. Actually, the last date is 31st
December.

Shrikrishna:
Even in the tax audits and returns, you anticipate the issues of dilemma in
major cases. Start thinking immediately. Obtain experts’ views.

 

Arjun: I will do it on priority
basis. A few of my friends have received complaints made by clients to the
Council. They say, the CA took decisions directly without informing them!

 

Shrikrishna:
Remember, after explaining my full philosophy in the Bhagavad Geeta, I
asked you whether you have understood what I was saying; and then asked you to
take your own decision, use your own discretion. I said
(‘yathechchhasi tathaa kuru’).

 

Arjun:
Yes, Bhagwan. I will use my discretion and act.

 

Om Shanti!

 

(This
dialogue is based on understanding clearly the role of a professional, and the
importance of timely communication with the client while taking any stand.).

 
 

SOCIETY NEWS

TACKLING COMPLEX TAX LAWS

 

The International Taxation
Committee conducted a virtual Study Circle meeting on
‘Reading of Treaty, Treaty Applicability, Overall Construction of
the Treaty, Interplay with MLI’
on 4th
September, 2020. It was led by Group Leader
Dr.
Mayur Nayak
who covered the subject in detail.

 

Tax laws in India were
becoming more and more complex. Occurrences such as the globalisation of
economies, signing and review of tax treaties, increase in the number of
cross-border transactions, mergers, acquisitions, transfer pricing, etc., were
adding to the complexities. To assist our members, the
BCAS organised this Study Circle meeting to help
them understand the structure, construction and implications of tax treaties
and their interplay with Multilateral Instruments (MLI).

 

Dr.
Mayur Nayak
shed new light on the ever-evolving subject and the participants
benefited from the insights shared by him.

 

TWO-PART SESSION ON ‘ZERO MEDICINE’

 

The HRD Study Circle
arranged a two-part presentation on an unusual subject –
‘Zero Medicine Wisdom’, by Mr. Saify Saraiya. Both sessions were held
online and attracted eager participation by members.

 

The first session was held
on 15th September at which the

speakers demonstrated that
‘abnormal’ experiences such as pain, fever, cold, cough, vomiting, nausea,
diarrhoea, allergy and dizziness are symptoms guided by the mind to enable the
body to take rest and let it go through the process of smooth, eventual
healing.

 

He highlighted the ‘Healing
Symptoms of Diseases’ in the following manner:

 

Pain            Guides the body

Fever           Fights the disease force

Cold            Protects the lungs

Allergy        Radiates away bad energy

Vomiting     Ejects toxic energy

Diarrhoea    Flushes out toxic waste

Dizziness    Puts you on hold to take rest

 

The message that these
symptoms conveyed were like a billboard that read:
‘STOP!
WORK IN PROGRESS’
, which means giving rest to the body to help
it overcome the symptoms and implying that healing is going on.

 

Why
‘No’ to Medicine?

 

By ‘medicine’ we refer to a
non-biological chemical formula prepared to numb our system and adjust the
symptoms of disease for a while. Such medicine lets a disease condition
progress due to the absence of reactions against the disease.

 

We treat sleeplessness with
narcotics, depression with antidepressants, inflammation with
anti-inflammatories, pain with analgesics, fever with anti-fever drugs and
allergy with anti-allergy drugs. We question the use of drugs claiming to
prevent diseases that result in diminished resistance and side-effects giving
momentum to newer infections that advance into syndromes.

 

We realise the truth in the
radical message of ‘Zero Medicine Wisdom’ as it links directly with our life
experience and because we are not able to see through our various blindfolds
like conditioned upbringing, materialistic education, traditions, beliefs and
social influences.

 

The root cause of all
disease is the Mind. The mind controls the body. Bodily discomfort is due to what
is happening in the mind. Therefore, to cure the body is to cure the mind.

 

The mind is violated by the
loss of ease, thus the word ‘dis-ease’. We violate our mind when we respond to
situations in a manner that produces negative emotions. For example, when our
response to a situation causes anger, worry, fear, sorrow or stress, then that,
in turn, affects a particular organ in the body:

 

WORRY affects the STOMACH

FEAR damages the KIDNEYS

GRIEF affects the LUNGS

ANGER harms the LIVER

STRESS puts the HEART in
trouble

 

The session was lively and
interactive and the participants requested a follow-up session, which was
acceded to. Study Circle Convener
Ms Gracy Mendes
ended the proceedings with a vote of thanks.

 

Accordingly, the second
session of
‘Zero Medicine Wisdom’ was
organised on 22nd September and saw more panellists taking part in
it.

 

Mr.
Saify Saraiya
kicked off the proceedings along with the
other panellists,
Ms. Farzana from
Chennai,
Mr. Juzer from Doha, Mr. Sanjay from Kolkata and Mr. Sreejith from Cochin. It was a treat to
hear the panellists intersperse the session with wisdom from all religions and
orders, including a Kabir
Doha
(
Swas mein Ishwar), Aham
Brahmasmi, Bismillah
and so on.

 

Mr.
Saraiya
continued with the list of negative emotions such as anger,
jealousy and hatred leading to various forms of disease. He pointed out that
the eradication of diseases from mother earth is possible if mankind decides to
unlearn certain things.

 

Six matrix norms were
explained with birth, different dresses, learning and unlearning in simple
terms and with examples. The speaker shared the distilled wisdom of the ages
citing
Bismillah and the Vishnu sahasranamah and also a popular old
film song, ‘Lakh dukhon ki ek dawa’.

 

Panellists Sanjay, Farzana and Siraj
shared their knowledge of the seven layers of the body, of the
Atma, soul or Ruh,
and how believers in God can control the body with intelligence and conquer
diseases.

 

The second session, too, was interesting and interactive
and the participants requested yet another follow-up session.

 

 

A ‘kakistocracy’ is a system where the government is
run by the worst, least qualified or most unscrupulous citizens

@fact

MISCELLANEA

I. Technology

 

4. British Airways fined
£20 m over data breach

 

British Airways has been
fined £20 m ($26 m) by the Information Commissioner’s Office (ICO) for a data
breach which affected more than 400,000 customers. The breach took place in
2018 and affected both personal and credit card data. The fine is considerably
smaller than the £183 m that the ICO originally said it intended to levy back
in 2019.

 

It said ‘the economic impact
of Covid-19’ had been taken into account. However, it is still the largest penalty imposed by the ICO to date. The incident took place when BA’s systems
were compromised by its attackers and then modified to harvest customers’
details as they were input. It was two months before BA was made aware of it by
a security researcher and then notified the ICO.

 

The data stolen included
log-in, payment card and travel booking details as well as name and address
information. A subsequent investigation concluded that sufficient security
measures, such as multi-factor authentication, were not in place at the time.
The ICO noted that some of these measures were available on the Microsoft
operating system that BA was using at the time.

 

‘When organisations take
poor decisions around people’s personal data, that can have a real impact on
people’s lives. The law now gives us the tools to encourage businesses to make
better decisions about data, including investing in up-to-date security,’ said
Information Commissioner Elizabeth Denman. British Airways said it had alerted
customers as soon as it had found out about the attack on its systems. ‘We are
pleased the ICO recognises that we have made considerable improvements to
?the
security of our systems since the attack and that we fully co-operated with its
investigation,’ said a spokesman.

 

Data protection officer
Carl Gottlieb said that in the current climate, £20 m was a ‘massive’ fine. ‘It
shows the ICO means business and is not letting struggling companies off the
hook for their data protection failures,’ he said.

 

It’s taken more than two
years for BA to face the music over this extremely serious incident. The
company breached data protection laws and failed to protect itself from
preventable cyber attacks. It then failed to detect the hack until the damage
was done to hundreds of thousands of customers.

 

The lag between incident
and fine has raised eyebrows in privacy circles but it is understood that the
Information Commissioner’s Office has been working methodically to get it
right. This is the Commissioner’s first major fine under the EU data regulation
GDPR and was being watched closely by the rest of Europe as a potential
landmark decision.

 

The final figure of £20 m
has come as a shock to many who were expecting it to be closer to the
eye-opening £183 m initially proposed but it is still a significant moment for
data privacy and GDPR. Other companies will look at the fine as the shape of
things to come if they also fail to protect customers. In a post-Covid world, the
ICO may not be as gentle.

 

Source:
www.bbc.com – 16th October, 2020

 

II. World

 

5. Indian-origin Srikant Datar named Dean of Harvard Business School

 

Eminent
Indian-origin academician Srikant Datar has been named as Dean of Harvard
Business School, succeeding Nitin Nohria and becoming the second consecutive
Dean hailing from India to lead the prestigious 112-year-old institution.

 

Datar,
an alumnus of the University of Bombay and the Indian Institute of Management,
Ahmedabad, is the Arthur Lowes Dickinson Professor of Business Administration
and the Senior Associate Dean for University Affairs at Harvard Business School
(HBS).

 

He will
assume charge as the school’s next Dean on 1st January, President
Larry Bacow said. He described Datar as an ‘innovative educator, a
distinguished scholar and a deeply experienced academic leader.’

 

Bacow
added: ‘He is a leading thinker about the future of business education and he
has recently played an essential role in HBS’s creative response to the challenges
posed by the Covid-19 pandemic. He has served with distinction in a range of
leadership positions over his nearly 25 years at HBS, while also forging novel
collaborations with other Harvard Schools.’

 

Datar
said he is in equal measures ‘humbled and honoured’ to take on the new role.
‘Harvard Business School is an institution with a remarkable legacy of impact
in research, education, and practice. Yet the events of the past year have
hastened our passage to an unforeseen future,’ he said, adding that he looks
forward to working with colleagues and friends of the school to realise ‘our
mission in what undoubtedly will be an exciting new era.’

 

He will
become the 11th Dean in the business school’s history as he succeeds
Nohria, who last November announced his plans to conclude his Deanship at the
end of June, 2020 after ten years of service. Nohria had agreed to continue
through this December in view of the pandemic, a statement posted on the
Harvard Gazette website said.

 

Datar
received his bachelor’s degree, with distinction, from the University of Bombay
in 1973. A chartered accountant, he went on to receive a postgraduate diploma
in business management from the Indian Institute of Management, Ahmedabad,
before completing master’s degrees in statistics and economics and a Ph.D. in
business from Stanford University.

 

Datar
is an ‘outstanding choice’ as Harvard Business School’s next Dean and he has
thought deeply about the challenges and opportunities facing management
education and has a proven record of collaboration, innovation, and leadership
– not only within HBS but across Harvard and at other organisations.

 

Co-author
of several books, Datar played a key role in launching both the M.S.-M.B.A. in
biotechnology and life sciences (with the Faculty of Arts and Sciences and
Harvard Medical School) and the M.S.-M.B.A. in engineering sciences (with the
Harvard Paulson School of Engineering and Applied Sciences) joint degree
programmes. He currently serves on the boards of companies such as Novartis and
T-Mobile US.

 

Source: www.livemint.com – 10th October, 2020

 

6. What the UK owes in reparations

 

The day
before the United Kingdom finally left the European Union, Bell Ribeiro-Addy
gave her first speech in Parliament. The debate that day was about the broader
future of ‘global Britain,’ but for Ribeiro-Addy it was also about old
injustices and their links to current problems. ‘Not only will this country, my
country, not apologise – by apologise I mean properly apologise; not “expressing
deep regret”,’ she said, ‘it has not once offered a form of reparations.’

 

The
35-year-old South Londoner who is of Ghanaian origin and describes herself as a
socialist and feminist, represents Streatham, the neighbourhood where she grew
up, for the UK’s Labour Party. She was speaking before the pandemic devastated
the British economy and global protests against racial injustice altered the
tone of the conversation, giving the reparations movement a fresh sense of
urgency.

 

A quick
glance at Hansard, the database of official transcripts of every debate in
Parliament for the last 200 years, reveals reparations are a rarely discussed
issue. British reparations would not be straightforward. Colonialism itself was
broad and complex and its modern-day outcomes are not easily disentangled.
British colonial subjects were not treated equally to one another, either, and
it may prove impossible to fully account for everyone’s interests. That’s
assuming the country owes anything, develops the political will to consider the
issue, or even has the means to pay after the economic shocks of coronavirus
and Brexit.

 

The
UK’s key role in the slave trade was perhaps the most shameful period in its
history. If and when the UK does decide it owes reparations, there are questions
to answer, such as to whom compensation should be made, and how. It could be
argued, for example, that the most heinous crime should have the highest
priority. But whom to compensate? The West African countries, still mostly
poor, whose able-bodied young people were ripped away centuries ago? The
descendants of enslaved people, some of whom are now British citizens? And
then, what about colonial subjects in other parts of Africa, or South Asia, and
their descendants? They may not have experienced enslavement but there was
indentured labour, stolen land and tremendous wealth extraction.

 

A history of colonisation

The
British Empire was the largest the world has ever seen. By the 19th
century, it controlled vast swathes of Africa, Asia and the Americas, as well
as Australia and New Zealand. For nearly 250 years, from the mid-1500s until
abolition in 1807, the UK played a key role in the abduction, enslavement and
trafficking of people from West Africa. It became the world’s foremost
superpower through coercive trade and military might, as well as its globally
significant innovations in technology, manufacturing and engineering.

 

Today,
around 10% of the UK’s population has its origins in the former colonies,
including many whose ancestors may have been enslaved. The Windrush generation
was named after a ship that brought migrants from the Caribbean to the UK in
1948. Over the subsequent decades, there were waves of South Asian immigrants
from the partitioning of India and Pakistan in 1947, and from East Africa
following the independence of Kenya, Uganda and Tanzania in the 1960s.
Labourers, refugees, students, CEOs, doctors and soccer stars came from the
rest of the Empire. After the end of World War II, a badly damaged and severely
diminished Britain needed workers in order to rebuild and still had obligations
towards many colonial subjects. Many UK residents resented the new arrivals,
and the 1970s saw the rise of racist organisations like the National Front,
with violent intimidation a daily reality for many minorities.

 

This
legacy continues. Many Black and South Asian people in the UK continue to face
substantial disadvantages. In general, they have worse housing, poorer schools
and greater levels of unemployment than their white counterparts. They are more
likely to be imprisoned, or die of Covid-19. The data are clear. In 2018, the
British government apologised after dozens of descendants of the Windrush
generation – many born and raised in Britain – were wrongly detained, denied
legal rights and even deported from the UK over citizenship issues. All of this
means that, for activists, the moral case for reparations is clear.

 

However, it is not true
that Britain has never paid any form of reparations. Archival research by
Hardeep Dhillon, a doctoral candidate at Harvard University, reveals the extent
to which the British eventually compensated victims of a massacre in Amritsar,
northern India, in 1919. It wasn’t much money – a total of around $30,000 at
the time (around $400,000 today), divided among nearly 2,000 victims and their
families – but it may have been the first example of reparations paid to
colonial subjects.

 

The UK
government was far more generous in compensating British companies and families
for the loss of the slave trade. The Slave Compensation Commission, which was
formed after abolition in the 1830s, awarded thousands of traders a total of
£20 million of public money – 40% of the government’s annual budget at the
time. It was, historian David Olusuga points out, the largest government
bailout until the financial crisis of 2009, and the final payment wasn’t made
until 2015. The Legacies of British Slave-ownership project, a research outfit
at the University of London, has analysed and uploaded the Commission’s records
– the project website says they ‘provide a more or less complete census of
slave-ownership in the British Empire.’

 

The time for reckoning

Britain
has shown that it is willing to pay compensation and that it can push
difficult, controversial policies through if there’s enough political will.
With the tortuous Brexit process nearly complete, the UK has also been
re-evaluating its position in the world. It has, for example, adopted a
surprisingly clear and direct stance on China and forcefully condemned
authoritarian Chinese policies in Hong Kong, even offering citizenship to
thousands of residents of the city, another former colony.

 

But the
British economy is now in dire straits. Thanks to Brexit, it has lost direct
access to the largest market for its goods and services and the security of the
European Union’s trade deals. The coronavirus pandemic has shrunk economic
activity and output substantially, with the government forced to borrow huge
sums of money to help workers and entire industries get through the ordeal. In
these extraordinary circumstances, it is difficult to see where the necessary
political will for reparations can emerge.

 

So far,
the British electorate has been largely unmoved by the moral arguments. In
2014, a coalition of 15 Caribbean countries, where Britain took slaves and
extracted resources, presented the UK with a plan for compensation; according
to a survey at the time, nearly three-quarters of the British population
opposed such payments by European countries for their roles in slavery and
colonialism. The government’s Foreign and Commonwealth Office (FCO), which
oversees diplomacy and international development, said in 2014 that reparations
were off the table. ‘We do not see reparations as the answer,’ an FCO spokesman
said. ‘Instead, we should concentrate on identifying ways forward with a focus
on the shared global challenges that face our countries in the 21st
century.’

 

Education
may be a reason why there’s so little political will. Priya Satia, Professor of
British History at Stanford University, told
Quartz that while
carrying out research in Birmingham – a city with a large Black and South Asian
population – she realised that many people, even those whose ancestors were
subjected to slavery and colonialism, have not necessarily been taught enough
of its history to be able to understand and articulate the issues around
reparations.

 

In
2008, the slave trade became a mandatory component of the high school history
curriculum in England, alongside the British Empire, World Wars I and II, and
the Holocaust. This means that Generation Z is the first to absorb,
en masse, this vital part of history. But given that nobody who went to high
school after 2008 is older than 30, the political and social consequences of
this shift in education policy may be some way off. ‘People don’t see a direct
connection between what they benefit from in this country and what enslaved
Africans did to contribute to its development,’ says Catherine Koroma
Whitfield, a researcher at Brighter Futures for Children, an educational
organisation in the UK. ‘That’s intentional by the state, I would argue,
because otherwise people would be rightly outraged and it would give legitimacy
to the call for reparations.’

 

A future of accountability

Following
the global wave of protests after the killing of George Floyd, an unarmed Black
man, by US police officers on 25th May, the conversation in Britain
soon turned to accountability for the country’s own history of subjugation.
Protesters tore down statues of slave owners and also figures like Cecil Rhodes
who played a key role in the further colonisation of Africa, while major
companies apologised and offered compensation for their ties to the trade.
Prime Minister Boris Johnson said that he was ‘appalled’ and ‘sickened’ by the
manner of Floyd’s death, and that in the UK ‘there is so much more to do – in
eradicating prejudice and creating opportunity.’ But he did not mention
reparations.

 

Activists
are focusing on justice rather than reparations, given the lack of popular and
political will for direct compensation. Modern-day trade, tax and debt policies
ensure the continuing poverty and dependence of many former colonies, argues
Naomi Fowler of the Tax Justice Network, a politically independent organisation
that campaigns ‘on a wide range of issues related to tax, tax havens and
financial globalisation,’ according to its website. Britain still pursues
‘extractive’ policies through its network of tax havens and small overseas
territories, she tells
Quartz: ‘It’s a second empire.’

 

The
modern reparations movement ‘is not just a call for monetary compensation; it’s
also a demand for radical and justice-driven change,’ writes economist Priya
Lukka in
Open Democracy. Debt policies are key, she tells Quartz. The poorest
countries in the world, many of them former colonies in Africa, owe billions to
the government, companies and other institutions in the UK; cancellation of these
debts could amount to a form of justice. Although some of this debt has been
‘rolled over and rescheduled’ because of the pandemic, Lukka adds, ‘a much more
progressive approach would be to look at how it was derived and question,
therefore, its legality.’

 

For
those with their sights set on financial reparations, patience is probably the
most important virtue. Shifts in public and political opinion, if they ever
happen, move slowly, and could be generational. ‘Demands that were on the table
for years – such as the removal of the Rhodes statue – are now coming to
fruition,’ says Priya Satia. ‘This is the moment in which some things are
beginning to find fulfilment, but the way any movement works is through the
cultural shift that it causes and that takes time. It can’t happen overnight.’

 

Source: www.qz.com; Author Hasit Shah, 6th
October, 2020

 

III. Leadership

 

7. 15 great leadership books on Adam Grant’s summer reading list

 

As Adam
Grant says, ‘Leaders who don’t have time to read are leaders who don’t make
time to learn.’ That’s why, for the past few years, he has shared a list of
upcoming books he feels have the potential to make a real difference in how you
think and act. Since I’ve also read advance copies of some of the books on this
year’s list, let’s start with books I’ve also read and wholeheartedly
recommend:

 

1. Ask for More by Alexandra Carter (5th May)

I’m a
terrible negotiator, especially when negotiations turn even the slightest bit
adversarial. If you’re like me, Carter’s book will be right up your alley. She
shows how to create better outcomes without burning bridges. Sometimes even
building better bridges.

 

2. The Biggest Bluff by Maria Konnikova (23rd June)

When
Konnikova decided to write a book about poker, she knew almost nothing about
the game. So she started playing in $20 and $40 tournaments. Then she moved up
to higher stakes tournaments, finishing second in one and winning $2,215.

 

And
then she won $84,600 at the PCA National, and decided to push back her book to
2019 and go all in (pun intended) on poker, a decision that paid off when she
finished second in an Asia Pacific Poker Tour Macau event and won $57,519.

 

As
Grant writes, ‘It’s rare enough to find a memoir this transfixing or a
behavioural science book this insightful. To have them combined in one place –
by a psychologist who mastered one of the most competitive games on earth – is
a real treat.’

 

3. Leading Without Authority by Keith Ferrazzi (26th May)

The
author of
Never Eat Alone, Ferrazzi turns to building teams. Since no one ever does anything truly
worthwhile on their own, that makes
Leading Without Authority a book that can benefit everyone.

 

4. You’re About to Make a Terrible Mistake! by Olivier Sibony (14th July)

The
title is hyperbolic, but the book is extremely practical. As Grant writes,
‘You’re probably familiar with many of the biases that can ruin your decisions.
The question is what to do about them when you’re developing your business
strategy, and Olivier has some compelling answers. Drawing on his extensive
experience as a consultant and his impressive knowledge of behavioural science,
he explains how you can make your organisation smarter than the people in it.’

 

5. The Power of Ritual by Casper ter Kuile (23rd June)

What
you do is who you are, and what you do regularly is definitely who you are. As
Grant writes, ‘His book brims with wisdom about how we can turn our daily
habits into deeper sources of connection and meaning.’

 

Connection
and meaning. Accomplishing more of what you set out to achieve. That’s an
unbeatable combination.

 

And now
for the books on Grant’s list that I haven’t read (descriptions for each are by
him):

 

6. Manifesto for a
Moral Revolution
by Jacqueline Novogratz
(5th May)

Jacqueline
is one of the most inspiring leaders on the planet. As the founder and CEO of
Acumen, she’s spent the past two decades waging a global war on poverty and
putting impact investing on the map. Now she’s poured her heart into a moving
book on how we can do more to make a difference. I can’t think of a better time
than right now to start learning how to improve at improving the world.

 

7. Leadership by Algorithm by David De Cremer (26th May)

Everyone
is buzzing about artificial intelligence, but few people have a clue how it
will affect the way organisations are managed. After spending years studying
leadership and trust, David has written the most informative book I’ve read on
how algorithms will change leadership – and which parts are unlikely to be
replaced by a machine.

 

8. Humankind by
Rutger Bregman (2nd June)

This
book demolishes the cynical view that humans are inherently nasty and selfish
and paints a portrait of human nature that’s not only more uplifting – it’s
also more accurate. Rutger is an unusually original thinker and by taking us on
a guided tour of the past, he reveals how we can create a future with more
givers and fewer takers.

 

9. Inclusify by
Stefanie Johnson (2nd June)

Many
leaders are talking about the need for more diverse, inclusive workplaces, but
few are making real progress. Enter Stefanie Johnson, a leading expert. She
draws on her background as a researcher, consultant and adviser to offer
rigorous evidence and practical ideas for making sure that people who stand out
are able to fit in, too.

 

10. The Making of a Leader by Tom Young (30th July)

Although
elite athletes understand the key to excellence, you rarely have the chance to
get inside their heads. You’re in luck. As a performance psychologist, Tom has
worked closely with some of the world’s best in both individual and team
sports. In this fascinating read, he shares rich stories and keen insights on
the science and the practice of achieving and sustaining success.

 

11. What Girls Need by Marisa Porges (4th August)

This is
a powerful book about how we can raise girls to become strong, ambitious women.
The ideas are timely and the stories are relatable. Marisa has lived them
herself. She flew fighter jets in the Navy and now runs a girls’ school.

 

12. Making Sense by Sam Harris (11th August)

Sam is
a true public intellectual: He thinks deeply about a wide range of issues and
engages fearlessly with controversial topics and unpopular opinions. This book
features some of the most compelling conversations from his hit podcast. You
don’t have to agree with him to learn from him, for he has a gift for surfacing
new ideas as well as new questions.

 

13. The End of Food Allergy by Kari Nadeau and Sloan Barnett (11th August)

As a
pioneering scientist, Kari has steered the allergy world out of the dark ages
and into the light of evidence-based cures. For anyone who has suffered from
food allergies or lived in fear of them, this book is a ray of hope. It’s an
illuminating read on why our own immune systems sometimes hold us hostage after
we eat – and how we can stop it from ever happening again.

 

14. Humanocracy by Gary Hamel and Michele Zanini (18th August)

If an
organisation has ever crushed your dreams, this book just might help to
rejuvenate you. It’s hard to imagine a better guide to busting bureaucracies
and designing workplaces that live up to the potential of the people inside
them.

 

15. 2030 by Mauro
Guillen (25th August)

For too
long the public’s understanding of social science has been dominated by
economists and psychologists. We know a lot about what’s going on with dollars
and senses, but we’re surprisingly uninformed about how social structures are
transforming the world around us. As a brilliant sociologist, Mauro is here to
change that. His bold, provocative book illuminates why we’re having fewer
babies, the middle class is stagnating, unemployment is shifting and new powers
are rising.

 

Source: www.inc.com, Author Jeff Haden – 22nd
May, 2020

 

 

 

If you weighed 100 kilos on Earth, you would only
weigh 38 kilos on Mars. You’re not fat – you’re just on the
wrong planet

 

The asteroid 16 Psyche is part of an asteroid belt
between Mars and Jupiter and could be made of entirely metal and worth more
than all of Earth’s economy.

The metals in the asteroid could be worth around
$10,000 quadrillion, according to
Forbes i.e
$10,000,000,000,000,000,000.

By contrast, the entire economy of
Earth was worth approximately $142 trillion in 2019

  @fact

REPRESENTATION

 1.  Dated: 30th September, 2020

     Subject: BCAS Comments on exposure Drafts
of Forensic Accounting and Investigation Standards

     To: Chairman and Vice-Chairman, Digital
Accounting and Assurance Board, The Institute of Chartered Accountants of
India, 7th Floor, Hostel Block, A-29, Sector- 62, Noida- 201309

     Representation by: Bombay Chartered
Accountants’ Society
Note: For full Text of the above
Representation, visit our website www.bcasonline.org

 

2.  Dated: 17th October 2020

     Subject: Representation for extension of
time-limit for audit and submission of audited accounts and related documents
in the Office of Charity Commissioner.

     To: Shri R.N.Joshi The Charity Commissioner,
Office of the Charity Commissioner, 3rd Floor, 83, Dr. Annie Besant Road,
Worli, Mumbai – 400 018, Maharashtra

     Representation by: Bombay Chartered
Accountants Society
Note: For full Text of the above
Representation, visit our website www.bcasonline.org

 

3.  Dated: 21st October 2020

     Subject: Press Release:  Issued in the interest of lakhs of tax payers
and tax professionals of the country.

     To: The Hon’ble Prime Minister of India Shri
Narendra Modi.

     Representation by: Bombay Chartered
Accountants’ Society, Lucknow Chartered Accountants’ Society, Karnataka State
Chartered Accountants’ Association, Chartered Accountants Association,
Ahmedabad, Chartered Accountants’ Association, Surat.

     Note: For full Text of the above
Representation, visit our website www.bcasonline.org.

 

 

Once you make a decision to move
on, don’t look back. Your destiny will never be
found in the rear view mirror

  
Mandy Hale

 

May we think of freedom, not as the right to do as we
please,
but as the opportunity to do what is right

  
Peter Marshall

 

Ideas won’t keep; something must be done about them.

  
Alfred North Whitehead

REGULATORY REFERENCER

DIRECT TAX

 

1. Income-tax (21st Amendment) Rules,
2020 – Rule 29B is amended.
It now permits an insurer to
apply for certificate u/s 195(3). Form 15C consequently amended.
[Notification No. 75 of 2020 dated 22nd September,
2020.]

 

2.  Faceless Appeal Scheme, 2020 notified.
[Notification Nos. 76 and 77 of 2020 dated 25th
September, 2020.]

 

3. Guidelines u/s 194-0(4) and section 206C(1-1)
of the Income-tax Act, 1961.
[Circular No. 17/2020 dated
29th September, 2020.]

 

4. Income-tax (22nd Amendment) Rules,
2020 – Rule 5 amended.
Rules 21AG and 21AH inserted.
Forms 3CD, 3CEB and ITR 6 amended. Forms 10IE and 10IF inserted – To prescribe
manner relating to option under sections 115BAC and 115BAD, and that of
determination of depreciation under sections 115BAA to 115BAD.
[Notification No. 82 of 2020 dated 1st October, 2020.]

 

5. Wholesale trading defined
for the purpose of section 92C r/w/r 10CA.
[Notification
No. 83 of 2020 dated 19th October, 2020.]

 

COMPANY LAW

 

I.  COMPANIES ACT, 2013

(I)
Various reliefs in timelines by MCA due to Covid-19 pandemic

Matter covered in
the Circulars referred alongside

Recent Circular/
Notification Reference

Previous General
Circular Reference

Previous Timeline

New Timeline

Extension of Companies Fresh Start Scheme,
2020
(CFSS,2020)

General Circular No. 30/2020 dated 28th
September, 2020

No. 12/2020

 

 

Extension of LLP Settlement Scheme,
2020

General Circular No. 31/2020 dated 28th
September, 2020

No. 13/2020

 

 

Extension of time – Scheme for relaxation of
time for filing forms related to creation or modification of charges

General Circular No. 32/2020 dated 28th
September, 2020

No. 23/2020

 

 

Clarification on passing of ordinary and
special resolutions
by companies on account of Covid-19 – Extension of
time

General Circular No. 33/2020 dated 28th
September, 2020

Nos. 14/2020, 17/2020 and 22/2020

30th September, 2020

31st December, 2020

Last date to enter details in Independent
Directors’ data bank

G.S.R. 589(E) dated 28th
September, 2020

 

MCA allows board meeting to be held via
video conference
on restricted matters for further three months

G.S.R. 589(E) dated 28th
September, 2020

 

MCA extends time for creation of DRR

General Circular No. 34/2020 dated 29th
September, 2020

Nos. 11/2020 and 24/2020

Necessary relaxation, insofar as filing of
various IEPF e-forms (Consequent to extension of CFSS, 2020)

General Circular No. 35/2020 dated 29th
September, 2020

 

 

31st December, 2020

 

(II)
Companies (Amendment) Bill, 2020 received President’s assent on 28th
September, 2020
and now has become The Companies Amendment
Act, 2020.
[Refer to Regulatory Referencer, page 115, October, 2020 issue of BCAJ
for more details.]

(III)
MCA eases private placement norms for qualified institutional buyers

– The MCA has notified the Companies (Prospectus and Allotment of Securities)
Amendment Rules, 2020 wherein Rule 14 has been amended. Now, a company need not
pass a special resolution again and again in case of offer or invitation of any
securities to qualified institutional buyers. It
shall be sufficient if the company passes a special resolution only once in a
year for all the allotments to such buyers.
[Notification
No. G.S.R. 642(E) dated 16th October, 2020.]

 

 

II. SEBI

(IV)
SEBI relaxes provisions relating to rights issue
– SEBI
has notified the SEBI (ICDR) (Fourth Amendment) Regulations, 2020. The
amendment aims to relax provisions relating to rights issue to make the raising
of funds through such issues easier and quicker. The amended norms relax eligibility
criteria and disclosure requirements for rights issues. The amended ICDR norms
increase the limit for filing requirement of rights issue draft letter of offer
with SEBI for its observations, from Rs. 10 crores to Rs. 50 crores.
[Notification No. SEBI/LAD-NRO/GN/2020/31, dated 28th
September, 2020.]

(V)
SEBI amends norms relating to Listing Obligations and Disclosure Requirements
(LODR)
– SEBI has amended the norms relating to LODR relating to
regulation 54 requiring listed entities to maintain
100%
asset cover.
An amendment has also been made to
Regulation 56(1)(d) requiring listed entities to obtain half-yearly certificate
from a statutory auditor along with the half-yearly financial results. However,
the requirement of submission of half-yearly certificate is not applicable
where bonds are secured by a Government guarantee. As per the amended norms,
now listed entities are also required to make disclosure to stock exchanges
with regard to initiation of Forensic audit. Entities shall have to
disclose the final forensic audit report
(other than for forensic audit initiated by regulatory / enforcement agencies)
along with comments of the management, if any.
[Notification
No. SEBI/LAD-NRO/GN/2020/33, dated 8th October, 2020.]

(VI) SEBI amends Debenture Trustees Regulations – SEBI has amended the norms relating to Debenture
Trustees whereby Regulation 14 has been amended requiring every debenture
trustee to accept the trust deeds which shall consist of two parts, i.e., Part
A containing statutory information on debt issue, and Part B containing
specific details to the particular debt issue. SEBI has further expanded the
scope of the duties of debenture trustees before creating a charge on the
security and the debenture trustees shall have to exercise due diligence to
ensure that such security is free from any encumbrance, or that it has obtained
the necessary consent from other charge-holders if the security has an existing
charge.
[Notification No. SEBI/LAD-NRO/GN/2020/34,
dated 8th October, 2020.]

(VII)
SEBI issues circular for standardisation of procedure to be followed by
Debenture Trustee(s) in case of ‘Default’ by issuers of listed debt securities

– SEBI,
vide its circular dated 13th October,
2020, has standardised the procedure to be followed by Debenture Trustee(s) in
case of ‘Default’ by issuers of listed debt securities.
[Circular No. SEBI/HO/MIRSD/CRADT/CIR/P/2020/203 dated 13th
October, 2020.]

 

FEMA

(i) Exporters are added to the Caution List of RBI on an automated
basis since 2016
vide A.P. (DIR Series) Circular No. 74. Barring exceptions
where an extension is granted by the AD Bank, if any shipping bill remains
outstanding for more than two years in the EDPMS system, the exporter would be
put under the caution list of RBI automatically. Once caution-listed, the
exporter would not be granted any extension in realising the export proceeds
against the outstanding bill, amongst other consequences. There was no leeway
for even genuine cases. Considering the hardships faced by exporters, this
system was sought to be discontinued by RBI as per its Statement on
Developmental and Regulatory Policies dated 9th October, 2020.
Following the same,
RBI has
now scrapped the automated caution-listing system
altogether.

 

However,
an exporter would continue to be caution-listed by the RBI based on the
recommendations of the AD Bank and investigative agencies as was the practice
hitherto. Further, the procedures to be followed by AD Bank for such
caution-listed exporters would continue as earlier.
[A.P.
(DIR Series) Circular No. 03 dated 9th October, 2020.]

 

ICAI ADVISORY

*    Advisory on Compliance
with Website Guidelines
– Advisory containing a
non-exhaustive list of
contents and features on the
websites of members and firms
that are prohibited. [14th
October, 2020.]

 

ICAI MATERIAL

*    Indian Accounting
Standards: An Overview
– Revised edition of publication
providing at-a-glance basic aspects of Ind ASs, differences between Ind AS and
AS / IFRS.
[6th October, 2020.]

 

*    Quick Insights on
Professional Opportunities Abroad for Indian CAs

Guide to members willing to seek opportunities abroad.
[14th
October, 2020.]

MISCELLANEA

I. Economy

1. India’s plan for public-private partnerships and
investments in railways set to transform the sector

 

The Indian Railways is in for a massive
makeover, rather a complete transformation. ‘India needs world-class railways
and it needs to be better than the airports,’ Amitabh Kant, CEO of the Niti
Aayog, said during a press conference at National Media Centre, while giving a
peep into the upcoming public-private partnerships in passenger train
operations. Joining him was the CEO of the Railway Board, Vinod Kumar Yadav.

 

‘This creates a win-win situation for Indian
Railways as well as investors, by tapping into the potential of huge unmet
demand in the passenger business. The private sector investment we are looking
at is about Rs. 30,000 crores,’ Kant said.

 

A peep into the Railways 2.0

The infrastructure of Indian Railways will
meet private entities operating modern technology. This means quality trains,
advanced technology, better service and a much better experience.

 

‘We are looking at 109 origin-destination
pairs, divided into 12 clusters requiring 151 trains… Our objective is also
50 railway stations.’

 

Kant further explained that efforts are
underway for transparent competitive bidding and some new, attractive routes
based on huge unmet demand will be put out to run premium passenger services.
In sync with the modernisation vibe, the newly-developed railway hubs will be
called Railopolis.

 

Public-private participation, it’s
happened before

Any inclusive discussion on privatisation
has often turned into apprehensions to do with the government’s redundancy. For
those looking at the flipside of the private investment, Kant puts a lot of
apprehensions to rest with the simple precedence of banks.

 

‘It is like when private banks were set up
in India. So many private players came in the banking sector. But that did not
lead SBI to shut. Private investment will bring in newer technologies. It will
create competition in the railway sector. The competition will increase
efficiency and reduce fares in the long run,’ he clarified to both in-house and
web-based participants during the conference.

 

Nominal hike in fares, experience
overhaul

The request for a quotation has already been
floated and the due date for applications is 7th October, 2020.
Addressing queries on the user charge proposed to be levied for the
redevelopment of railway stations, he assured that it will be a nominal amount.

 

‘It will be an affordable amount but it is
important to levy if we are looking at world-class facilities comparable to
airport infrastructure.’

 

The logistics, in a nutshell

The project will have a two-stage bidding
process; the first stage will comprise RFQ for pre-qualification based on
financial capacity, at least 50% of the estimated project cost. There will be
twelve clusters available for investment, namely, Chandigarh, Chennai,
Bengaluru, Delhi 1 and 2, Howrah, Mumbai 1 and 2, Jaipur, Patna, Secunderabad
and Prayagraj.

 

(Source: International Business Times –
By Manpriya Khurana – 18th September, 2020)


 

2. RBI stands battle-ready to take whatever steps
needed for Covid-hit Indian economy: Governor Shaktikanta Das

 

Reserve Bank of
India (RBI) Governor Shaktikanta Das, while addressing the members of the India
Inc. body FICCI, said that the country’s economic recovery is not fully
entrenched and will be gradual as the impact of the coronavirus pandemic has
still not subsided.

 

‘Recovery is not
yet fully entrenched. In some sectors, the optics noticed in June and July
appear to have levelled off. By all indications, the recovery is likely to be
gradual as efforts towards reopening of the economy are confronted with rising
infections.’

 

The Governor’s
remarks come at a time when the country’s economy is going through a period of
crisis. He also said that some high-frequency indicators including agricultural
activity, Purchasing Managers Index for manufacturing, certain private
estimates for unemployment point to ‘some stabilisation’ of economic activity
in the second quarter of the current fiscal year.

 

‘Contractions in
many other sectors (are) simultaneously easing,’ he said.

 

‘Global economy
is estimated to have suffered the sharpest contraction in living memory in
April-June, 2020 on a seasonally adjusted quarter-on-quarter basis. World
merchandised trade estimated to have registered a steep year-on-year decline of
over 18% in the second quarter of the 2020 calendar year,’ the RBI Governor
added.

 

(Source:
International Business Times – By Meghna Sen – 16th September, 2020)

 

II. Science & Health

 

3. World leaders
drew 2020 deadline to save earth; set 20 goals, achieved none in 10 years

 

One million
species are at the risk of extinction as nature degrades and new opportunities
emerge for the spread of viruses like this year’s coronavirus.

 

Ten years; 196
world leaders; business as usual approach. And a bad report card. In 2010,
leaders from 196 countries gathered in Japan and agreed on a long list of goals
to save the only inhabitable planet known to mankind, Earth. They set a 2020
deadline to save nature and meet the 20 targets – but not a single target has
been met.

 

According to the
UN’s Global Biodiversity Outlook Report, the fifth report published in the
matter, the world has failed to achieve even a single goal from the list of
Aichi Biodiversity Targets. Aichi Targets are to biodiversity what the Paris
Convention is to climate change. These targets were established under the UN
Convention on Biological Diversity (CBD) and are the best bet of nations for
biodiversity conservation.

 

First the sad
news, then the scary news

As per the UN
report, one million species are at risk of extinction. ‘Pollution, including
from excess nutrients, pesticides, plastics and other waste, continues to be a
major driver of biodiversity loss. Plastic pollution is accumulating in the
oceans, with severe impacts on marine ecosystems,’ the report states.

 

It must also be
noted, the report further warns, ‘The number of extinctions of birds and
mammals would likely have been at least two to four times higher without
conservation actions in the past decade.’

 

So small steps,
though not nearly enough, still truly count.

 

Twenty
targets, only six achieved… partially

Let’s start with
the less bad news. Each nation was supposed to meet each of the 20 targets. The
six targets that have been partially met in the past decade are to do with –
preventing invasive species, conservation of protected areas, sharing benefits
from genetic resources, biodiversity strategies and improvement and
dissemination of knowledge, the science base and technologies relating to
biodiversity.

 

On average, the
participating countries reported that more than a third of national targets are
on track to be met, 50% of them were seeing slower progress, 11% showed no
progress and 1% were in fact moving in the wrong direction.

 

Money spent
vs. money needed

The 212-page
report also zeroes things down to funding. The half-hearted approach and the
significance governments attach to the environment and climate crises reflect
in the funding. Governments at a global level spend $78 to $91 billion annually
towards the conservation and promotion of biodiversity. That is significantly
less than the hundreds of billions of dollars needed to give the cause the
momentum it needs.

 

The faint
silver lining

As per the
report, the recent rate of deforestation is lower than that of the previous
decade, but only by about one-third, but deforestation may be accelerating
again in some areas. Programmes to eradicate invasive alien species, especially
invasive mammals on islands, have benefited native species. However, the report
cuts short the celebration, ‘These successes represent only a small proportion
of all occurrences of invasive species.’

 

Now what?

‘This flagship
report underlines that humanity stands at a crossroads with regard to the
legacy we wish to leave to future generations,’ said CBD Executive Secretary
Elizabeth Maruma Mrema.

 

The statement
further reads, ‘As nature degrades, new opportunities emerge for the spread to
humans and animals of devastating diseases like this year’s coronavirus. The
window of time available is short, but the pandemic has also demonstrated that
transformative changes are possible when they must be made.’

 

If the pandemic
doesn’t make humanity imbibe the lessons, nothing else really will.

 

(Source:
International Business Times – By Manpriya Khurana – 17th September,
2020)

 


SOCIETY NEWS

WEBINAR ON
‘CLOUD SOLUTION’

 

The Technology Committee of the BCAS
organised a webinar on ‘Cloud Solution by Google and Microsoft’ on Saturday, 25th
July, 2020.

 

Mr. Juned
Kasmani
, a Google Sales
‘Certified Professional’ having an experience of more than ten years in the
cloud industry and in Google Cloud, gave an overview of G-Suite and compared it
with MS Office 365 relevant to the professionals. He also gave a glimpse of the
management interface and administrative control of G-Suite.

 

Mr. Kasmani also
shared a demo on the productivity apps for creating and collaborating documents
on the Cloud and showcased the various corporate communication tools available
to practitioners.

 

He was joined by Mr. Punit Thakkar,
CEO of Shivaami Solutions, who answered all the questions posed by the
participants and also ran a live demo of the G-Suite and MS Office
applications.

 

The session was interactive and the speakers
concentrated on:

1.  Introduction and comparison of G-Suite and
Office 365,

2.  Business email and shared calendaring
services,

3.  Corporate communication tools,

4.  Productivity apps for creating and
collaborating,

5.  Google Drive vs. One Drive based on online
storage, with shared space for collaboration along with security features,

6.  Comparisons based on offering and price
points,

7.  Solutions by third party service providers.

 

The participants gained insights into
G-Suite and MS Office 365 applications and learned new ways of working more effectively
in an evolving and changing professional services and regulatory environment.

 

SOFTWARE
FOR GST

 

The Suburban Study Circle along with the
Technology Initiatives Committee conducted an online meeting styled ‘Excel –
GST ki Jugalbandi’
on 5th September. The meeting was led by Sandeep
Modi
.

 

The speaker demonstrated many Excel Tips and
Tricks for effective preparation and compilation of data for filing GST
returns. The following issues were discussed:

 

(i)    Look Up Magic,

(ii)   How to handle frequent
updating of client data in
       Excel,

(iii)  Date format issues,

(iv)  Tricks / Automating GSTR1,

(v)   GSTR2 & Purchase Reconciliation,

(vi)  Shortcuts in filing GSTR3B,

(vii) GST Liability Calculation Sheet.

 

Sandeep Modi
also shared Excel templates with the participants for future reference and use.
The personal working experiences in Excel for filing GST returns, issues faced
and their solutions will be of immense help to the participants.

 

There were more than 140 participants on
Zoom and 300 on YouTube who attended and imbibed the knowledge that was shared.
The speaker answered all the questions raised by the participants in the
session.

 

 

Let us learn to appreciate there
will be times when the trees will be bare, and look forward to the time when we
may pick the fruit

 
Anton Chekhov

STATISTICALLY SPEAKING

 

 

 

 

 

 

 

 

 

ETHICS AND U

Shrikrishna: Parth, you are
looking in a cheerful mood today! Quite unusual.

 

Arjun: Why?

 

Shrikrishna: Normally, in September
you are always stressed, depressed and nervous. This is the time you are always
busy longing for extension of the tax deadline.

 

Arjun:
You’re right! But this year, for tax returns the date is already extended. Now,
the company’s AGM dates have also got extended. So, relaxing.

 

Shrikrishna: And what about staff?
Articles?

 

Arjun: That is always a problem. But due to Covid
everybody is pretending to be working from home. Normally, we are quite used to
articles remaining at home on exam leave. But this year even the exam schedule
is a big question mark.

 

Shrikrishna: I think the May exam is
already cancelled.

 

Arjun: We wonder how to cope with this situation.

 

Shrikrishna: Actually, this is a good
opportunity to improve upon the quality of audit.

 

Arjun: How? We are somehow managing the ‘virtual’
audit on scanned documents.

 

Shrikrishna: That’s OK. But today you
are having some peaceful time to do things which are necessary but you can’t do
due to fire-fighting.

 

Arjun: Like what?

 

Shrikrishna: Real updating of
knowledge, not merely CPE hours.

 

Arjun: What do you mean?

 

Shrikrishna: See, in your audit text
book you studied many things. How far are you implementing them? All these new
standards of accounting are nothing but an elaboration and refinement of those
basic principles.

 

Arjun: Give me some examples.

 

Shrikrishna: You are supposed to have
a permanent audit file of each client. Do you have it? Have you ever read the
basic formation documents like Memorandum of Articles of companies,
constitution and bylaws of societies, Trust Deeds…?

 

Arjun: I am not sure whether we really have these
basic documents on our record. They might have been taken perhaps decades ago.

 

Shrikrishna: Have you ever seriously
looked into the secretarial records of companies – like minutes, notices,
attendance records?

 

Arjun: Ah! That we never see.

 

Shrikrishna: Fixed assets register?

 

Arjun: For that we just put a standard remark.
Maintained, but not updated! God alone knows whether that really exists.

 

Shrikrishna: And third party evidence?
There is a specific SA on that. Writing to banks and debtors, creditors,
lenders for confirmation of balances?

 

Arjun: We have never done it. But I agree, we
should make a beginning somewhere. But without staff how can we do it?

 

Shrikrishna: Technology! Prepare a
standard letter and insist on the clients to send them. Everything is possible.
What you lack is will power.

 

Arjun: What you say is right. These things were
never done before and clients find it difficult to digest such things now. We
were lax in this respect.

 

Shrikrishna: But it is necessary for
your own benefit. If you contravene the Council’s guidelines, it is misconduct.

 

Arjun: I don’t know why the Council is putting so
much burden on us!

 

Shrikrishna: It is for your own
safety. Users of financial statements audited by you are not happy about the
quality. You are losing credibility. The Council does not want that to happen.

 

Arjun: The future of our profession is really
gloomy. There are very few new entrants, regulation is increasing so much that
it is unbearable. It is not remunerative as no one understands the value of our
services.

 

Shrikrishna: You’re right. But what
else can you do? So whatever you are doing, try to do it properly,
systematically.

 

Arjun: Due to Corona, the economy is already
depressed. We are all in very low spirits. So, better not get further
frightened by a discussion on disciplinary cases. Actually, I feel the Council
should declare an amnesty scheme for all misconduct that has occurred so far.

 

Shrikrishna: You have already gone
away from ethics, that is why your future is gloomy. But make good use of this
time for creative thinking, knowledge upgradation… That will at least help
you in future after Corona goes away. Otherwise, you will repent that you lost
the opportunity to get better organised. Such a time may never come again. Be
positive! Be brave.

 

Arjun: I agree.

 

Shrikrishna: So wake up. Think of what
best you can do to perform better in the post-Covid scenario.

 

Arjun: Yes, my Lord! I will walk on the path shown
by you. Thank you, Lord.

 

Om Shanti!

 

(This dialogue is based on the general attitude required to face the
present Covid scenario and take things in a positive manner so as to follow
ethics better.)

REGULATORY REFERENCER

DIRECT TAX

Banks are
advised to immediately refund the charges collected, if any, on or after 1st
January, 2020 on transactions carried out using the electronic modes prescribed
u/s 269SU of the IT Act and not to impose charges on any future transactions
carried out through the said prescribed modes. [Circular No. 16/2020 dated
30th August, 2020.]

 

COMPANY LAW

I.
COMPANIES ACT, 2013

(I)   Amendments made in Corporate Social
Responsibility Rules
– The MCA has issued the
Companies (Corporate Social Responsibility Policy) Amendment Rules, 2020 in
order to amend the Companies (Corporate Social Responsibility Policy) Rules,
2014. Following this Notification, any company engaged in research and
development activity of a new vaccine, drugs and medical devices in their
normal course of business, may undertake research and development activity of
new vaccine, drugs and medical devices related to Covid-19 for the financial
years 2020-21, 2021-22 and 2022-23 subject to the conditions mentioned in the
said Notification. [Notification dated 24th August, 2020.]

 

(II)  MCA dispenses with the requirement to annex
extract of Annual Return in Form MGT-9 in Board’s Report if web link for Annual
Return is disclosed in the Board’s Report
– The MCA
has clarified an amendment in section 92 which now requires companies to place
a copy of the Annual Return on its website and the web-link of the same to be
provided in the Board’s Report. In such cases, companies are not required to
attach Form MGT-9 (Extract of Annual Return) in the Board’s Report. [Notification
dated 28th August, 2020.]

 

(III) MCA amends definition of deposits with respect
to convertible notes issued by Startups
– In order
to bring the definition of deposit in line with the revised definition of
Startup by the Department for Promotion of Industry and Internal Trade, the MCA
has notified revision to the Companies (Acceptance of Deposits) Rules, 2014.
Now, convertible notes issued by Startups which are convertible into equity
shares or repayable within a period not exceeding ten years
(as against the
original tenure of ‘five years’) from the date of issue, shall not be
considered as deposits. Further, the maximum limit in respect of deposits to
be accepted from members shall not apply to a private company which is a
Startup for ten years
(as against the original tenure of ‘five years’) from
the date of its incorporation. [Notification dated 7th September,
2020.]

 

(IV) MCA
extends due date of filing of Cost Audit Report till 30th November,
2020
– In view of the
extraordinary disruption caused due to the pandemic, it has been decided that
if cost audit report for the financial year 2019-20 is submitted by 30th
November, 2020
, then the same would not be viewed as violation of Rule 6(5)
of the Companies (Cost Records and Audit) Rules, 2014. Consequently, the cost
audit report for the financial year ended on 31st March, 2020 shall
be filed in e-form CRA-4 within 30 days from the date of receipt of the copy of
the cost audit report by the company. However, in case a company has availed
extension of time for holding Annual General Meeting, then e-form CRA-4 may be
filed within the timeline provided under the proviso to rule 6(6) of the
Companies (Cost Records and Audit) Rules, 2014. [General Circular No.
29/2020 dated 10th September, 2020.]

 

(V)  Lok Sabha passes Companies (Amendment) Bill,
2020 on 19th September, 2020
– The Lok
Sabha has passed the Companies (Amendment) Bill, 2020 to decriminalise several
non-compoundable offences as also to promote ease of doing business. The Bill
will permit direct listing of securities of Indian companies in overseas stock
exchanges without listing them on domestic stock exchanges. The Bill also
stipulates that specified classes of unlisted companies will have to prepare
and file their periodic financial results. The said Bill was introduced in the
Lok Sabha in March this year.

 

II. SEBI

 

(VI) SEBI notifies cut-off date for re-lodgement of
transfer deeds to 31st March, 2021
– As
per SEBI’s Circular No. 12/2019 dated 27th March, 2019 the Board had
clarified that transfer of securities held in physical mode lodged before the
deadline (1st April, 2019) but rejected and returned due to
deficiency in the documents, may be re-lodged with requisite documents. SEBI
has now fixed the cut-off date for such re-lodgement as 31st March,
2021 and shares that are re-lodged for transfer shall be issued only in
DEMAT mode
. [Circular SEBI/HO/MIRSD/RTAMB/CIR/P/2020/166 dated 7th
September, 2020.]

 

(VII) SEBI extends time to share information towards
Automation of Continual Disclosures under Regulation 7(2) of SEBI (Prohibition
of Insider Trading) Regulations, 2015 to 30th September, 2020
– SEBI has extended the deadline for submission of required
information as prescribed vide its circular dated 9th
September, 2020 with the designated depository by the listed companies to 30th
September, 2020 (as against the previous deadline of 18th September,
2020).

 

ACCOUNTS AND AUDIT

(A) Conceptual Framework for Financial Reporting
under Indian Accounting Standards (Ind AS)
– The
revised Ind AS Framework, corresponding to IASB’s Conceptual Framework 2018,
is applicable for Standard-setting activity from accounting periods beginning
from 1st April, 2020 and for the preparers of financial statements
from a future date. [ICAI Announcement dated 28th August, 2020.]

 

(B) Revised Long Form Audit Report (LFAR) – The formats of LFAR for (i) Statutory central auditors, (ii)
Branch auditors, and (iii) Large / irregular / critical accounts for Branch
Auditors have been revised and are required to be put into operation for the
period covering F.Y. 2020-21 and onwards. [RBI Notification No.
RBI/2020-21/33 dated 5th September, 2020.]

 

FEMA

The
Government had announced a hike in the limit for investment in the Defence
Sector
from 49% to 74% in May, 2020. The DPIIT has now issued a press
release for the same. The changes are:

 

(a) An industry under the Defence Sector requiring
Industrial and Arms Act Licences can now receive FDI under automatic route up
to 74%, increased from the earlier limit of 49%. However, this relief is
available only to companies seeking new industrial licenses.

(b) FDI beyond 74% can be received under Government
Route, and as at present, where it is likely to result in access to modern
technology or for other reasons to be recorded.

(c) Companies not seeking industrial licence, or
those that have already obtained Government approval, will require Government
approval for raising their FDI beyond 49%. Further, such companies will now
also need to mandatorily submit declaration with the Ministry of Defence (MoD)
in case of change in equity or shareholding pattern or for transfer of stake to
a new foreign investor.

(d) Government has now reserved the right to review
any foreign investment in the Defence Sector as also subject foreign
investments to scrutiny on grounds of national security.

(e) Other conditions related to security clearance
and self-sufficiency remain applicable as at present.

 

It should be noted that these changes will become
effective only from the date that necessary amendments are made in the FEMA
(NDI) Rules, which have not yet taken place. [Press Note 4 of 2020 dated 17th
September, 2020.]

 

ICAI MATERIAL

 

1.  New Compendium of Indian Accounting Standards
(Ind AS) as on 1st April, 2020

Compendium containing updated Ind AS’s applicable for the accounting period
beginning 1st April, 2020. [25th August, 2020.]

 

2.  Handbook on Potential for ‘NEO Import
Substituting Industrialisation in India’ – ISI (Covid-19)
– Research publication providing guidance in respect of potential
for import substitution industries in India. [3rd September,
2020.]

 

3.  Relief Measures Introduced
in Insolvency Resolution Process in the Country due to outbreak of Covid-19
Pandemic
– Booklet enumerating judicial, legislative and economic measures
initiated on account of the pandemic. [8th September, 2020.]

 

Problems are not stop signs, they are
guidelines

 
Robert H. Schuller

SOCIETY NEWS

MEETING ON ‘EQUALISATION LEVY 2.0’

 

The International Taxation
Committee conducted a virtual meeting on ‘Equalisation Levy – Finance Act,
2020 Amendments’
on 27th July, 2020. The meeting was led by Group
Leader Bhaumik Goda who explained the amendments in the Finance Act,
2020 in relation to the Equalisation Levy (EL).

 

The new business models
were facing a set of new tax challenges in terms of nexus, characterisation and
valuation of data and user contribution. Thus, there was a continuous need to
hone the working knowledge of taxation. It was in view of this that the group
discussion at the ITF Study Circle was organised and led by Bhaumik Goda.

 

In the course of the
meeting, he dealt with and discussed the EL legislation, the definition of
E-commerce operator, E-commerce supply or services, exemption and charge of EL.
Case studies pertaining to different industries were also brought up and
discussed to explain various features and the impact of EL. Participants said
that they had received several critical insights at the meeting.

 

ACCOUNTING SOFTWARE EXPLAINED

 

The Technology Initiatives
Committee of the BCAS conducted a webinar on ‘Hidden Gems of Tally ERP9
– Reports and Add-ons’ on 1st August. The meeting was led by Punit
Mehta
and Abhay Gadiya.

 

Punit Mehta explained the structure of Tally ERP9 Data for MIS
purposes. He also demonstrated the process of extracting the data with the use
of specialised tools. Certain add-on features of Tally for auto bank
reconciliation, copy of masters from one Tally account to another, auto
generation of similar entries through templates and so on were also explained.

 

Abhay Gadiya described the process of using the data extracted from
Tally for analysing and visualising in Power BI. The practical case studies
were very helpful in understanding the various graphics and charts that can be
created using Power BI. Both speakers replied in detail to the queries raised
by the attendees.

 

The live session was
attended by more than 700 participants on Zoom and YouTube. They appreciated
the efforts put in by the speakers.

 

24TH ‘ITF CONFERENCE 2020’ HELD ONLINE

 

This year’s International
Tax and Finance Conference was conducted online from 6th to 9th
August (with extended sessions on 14th and 15th August)
with a record attendance of 363 members from around 23 locations all over India
and abroad. The Conference was top-lined by experts from their respective
fields who dealt with their subjects with great clarity. The four-day
Conference was marked by seven technical sessions that included two group
discussion papers, one presentation, one expert chat and three panel
discussions.

 

There were a total of 23
faculty members, including speakers and session chairpersons, 16 group leaders
and about 30 contributors for case studies and the background material. It
clocked around 30 hours of solid study during the Conference.

 

Participants were divided
into six groups for group discussion on two papers written by Padamchand
Khincha
and Geeta Jani. Six breakaway rooms were created on the Zoom
platform and participants were seamlessly divided into different groups upon
their entry. About 16 leaders led the groups and helped generate in-depth
discussion of the case studies from the papers. Both the paper writers had a
virtual tour of each group to see the discussion by the participants.

 

President Suhas
Paranjpe
gave his opening remarks and explained some major BCAS
activities and its new initiatives. International Taxation Committee Chairman Dr.
Mayur B. Nayak
welcomed the participants and set the tone with his
introductory remarks.

 

The Conference was
inaugurated with a keynote address by Hon’ble Justice Vibhu Bakhru of
the Delhi High Court who spoke about the role of the taxpayer and the tax
authorities in today’s scenario.

 

Following the group
discussion on the issue, Padamchand Khincha in his presentation spread
over two sessions totalling six hours on ‘Practical application of the MLI in
relation to PE’, highlighted the issues in the interpretation of MLI and its
application on Permanent Establishment and the nuances of the interplay of the
MLI and synthesised text on specific tax treaties. Past President Kishor
Karia
chaired both the sessions and gave his valuable inputs on the
subject.

 

FEMA has become
increasingly complex and there are a host of issues which one needs to analyse
when dealing with any transaction that attracts it. A panel consisting of Mr.
G. Padmanabhan
, former Executive Director of the RBI, along with Hitesh
Gajaria
and Dr. Anup Shah and moderated by Past President Dilip
J. Thakkar
, shared its thoughts and offered insights on specific issues in
FEMA through case studies. These studies covered practical issues which would
be of relevance in today’s scenario such as implications of a returning OCI to
India, the recent circular by the Government to allow FDI from China only under
the approval route, downstream investments, agricultural income, ECB and
write-off of import payable against export receivable, and so on.

 

Gautam Doshi spoke on ‘Structuring of Outbound Transactions (tax and
non-tax aspects)’. He covered, in a succinct manner, the various tax and other
regulatory issues arising in setting up an SPV abroad as well as
externalisation of the family holding through a foreign trust. Past President Gautam
Nayak
chaired the session and also provided his insights on the subject.

 

Taxation of the digitised
economy is a hot topic with the world trying to find a consensus to enable
taxation of the highly-digitised businesses, even as a host of countries
including India have undertaken unilateral measures in this respect. Mr. Sam
Sim
, board member of the Tax Executive Institute in Singapore, in his
presentation covered various measures undertaken by different jurisdictions and
also shared his thoughts on some of the alternative approaches available.

 

Rashmin Sanghvi, in his presentation, covered the potential trade war on
account of various measures adopted by the countries and the role of the US in
the same. He also gave his views on the shortcomings of Pillar 1 of the Unified
Approach propagated by the OECD and currently being discussed by various countries.
This was followed by a panel discussion featuring Mr. Sam Sim, Rashmin
Sanghvi, Mr. Mukesh Butani
(advocate) and Shefali Goradia and chaired
by Mr. K. Vaitheeswaran (advocate). The panel deliberated on the issue
at length and provided its views on various facets in the Indian approach to
taxing the digitised economy such as the Equalisation Levy, the significant
economic presence and the extended source rule. Mr. Vaitheeswaran gave his valuable inputs and comments on several
issues.

 

The group discussion on
the paper written by Geeta Jani on ‘Case studies on impact of MLI on
select tax treaties with special emphasis on taxation of dividends’ took place
on 8th August. In her presentation, which followed the group
discussion, she brought out the various nuances in the application of the GAAR,
LOB and PPT provisions in respect of dividend payments as well as the interplay
of the MFN clause with the PPT provisions. Her presentation was based on case
studies for easy understanding in an online format. The session was chaired by Sushil
Lakhani
who also offered his views on the issue.

 

Mutual Agreement Procedure
(MAP) has gained significance due to the complex rules of various countries. T.P.
Ostwal
and Mr. Rajat Bansal, IRS, in an expert chat took the
participants through the MAP provisions and also shared their views on the
practical aspects of the MAP procedure, how to apply for the same and India’s
position in relation to the use of MAP as an effective tool for dispute
resolution.

 

The
last technical session was a panel discussion on ‘Case Studies on International
Taxation’. The panel consisted of Mr. Pramod Kumar, Vice-President of the
ITAT, Mr. Kamlesh Varshney, IRS, and Mr. Ajay Vohra, senior
advocate. It was chaired by Pranav Satya. It was quite a unique
discussion in that the panellists discussed issues from different possible
perspectives.


The issues discussed covered a range of topics of relevance in today’s world –
application of tax treaty
to DDT, royalty / FTS vs. EL, EL on E-commerce transactions, beneficial owner,
applicability of GAAR to indirect transfer, foreign tax credit and hybrid
entities. The panel was gracious enough to take part in another session on 15th
August which also lasted two and a half hours.

 

In addition, there were
two non-technical programmes for the participants – a musical programme by Nishant
Gadhok
and a Hasya Kavi Sammelan by Mr. Mahesh Dube and
Mrs. Savitri Kocher.

 

While the personal touch
and the camaraderie amongst the participants during physical Conferences were
certainly missed, the participants were compensated by the experts’ views
shared at the virtual Conference.

 

Incidentally, this was the
first Residential Refresher Course of the BCAS and the International
Taxation Committee in its true sense and meaning, where delegates participated
from their respective residences!

 

Mahesh Nayak was the chief coordinator and was ably assisted by Abbas
Jaorawala
as joint coordinator. The other members of the team were Ganesh
Rajgopalan, Bhaumik Goda, Rutvik Sanghvi, Siddharth Banwat
and Rajesh P.
Shah.

 

The Conference received an
encouraging response and feedback from the participants.

 

 

The 13th Jal
Erach Dastur CA Students’ Annual Day – ‘Tarang 2020’
was held online on
Zoom Cloud Meetings and broadcast live on YouTube on Sunday, 9th
August, by the BCAS Students’ Forum under the auspices of the Human
Resource Development Committee.

 

Taking Tarang
online for the first time involved several experiments but the long days and
longer nights of adaptation and innovation, technical checks and video call
meetings brought together over 650 students from across the country to prove
once again that CA students think about a lot more than just tax and audit. The
student coordinators Drishti Bajaj and Azvi Khalid took the lead
in the organisation.

 

The participants for ‘Talk
Hawk’ and the ‘Talent Show’ sent their audition entries as pre-recorded videos
and later performed live. Two new events were introduced this year – a ‘Quiz’
and a ‘Research Paper’ competition. Apart from these, Tarang also
featured an Antakshari competition, a talent show and an elocution
competition, resulting in a lifetime of learnings and memories. The theme for Tarang
this year was ‘Bollywood Retro’.

 

The event was sponsored by
Mr. Sohrab Dastur in memory of his brother, the Late Mr. Jal Erach
Dastur
. The Students’ Forum comprised of a group of 25 dedicated and
enthusiastic students. The event was truly an event ‘OF CA STUDENTS, FOR CA
STUDENTS AND BY CA STUDENTS’
. It imparted necessary life skills such as
public speaking, management and marketing skills, and even technical skills.

 

BCAS President Suhas Paranjpe and HRD Committee
Chairman Govind Goyal gave their inaugural speeches which were
motivating and lauded the students for participating in the event which
commenced with a prayer song to ensure a positive beginning.

 

The two finalist teams of
the lively Antakshari competition, styled ‘Suron ke Maharathi’ (or
‘Zoomtakshri’) were ‘Deewane’ and ‘Parwane’. They took over everyone’s screens
and hearts. The Antakshari held true to this year’s theme of ‘Bollywood
Retro’ and the quick-thinking and accuracy of the participants during the game
that has been played by every Indian household was both a surprise and a
delight.

 

The next event was the
quiz ‘inQUIZitive – Eureka Moments’ wherein the ten finalists were divided into
five teams (these were previously chosen after two elimination rounds). The
quiz was hosted by student Parth Patani. Everyone got a ‘KBC feel’ as
the participants answered question after question at astonishing speed,
managing to keep everyone hooked on to the screen.

 

The end of the
brainstorming quiz session led to the start of the signature event, ‘Talk
Hawk’, wherein the five finalists had to give a four-minute ‘Ted Talk’ on one
of the following topics:

 

1. Waiting is the hardest
part of life

2. Fringe benefits of
failure

3. Doing things we don’t
enjoy is discipline.

 

The viewers could feel the
energy of each of the speakers bursting forth from the comfort of their homes.
The insight and perspective that each person offered was encouraging. The
confidence and manner of delivering their thoughts was captivating.

 

And then it was time to
announce the winners of the research paper contest for ‘Writopedia’. The topics
offered were:

 

1. WHO Controversy – Lack
of Global Leadership in the Corona Crisis

2. How the Goals of
Feminists have Changed over the Decade

3. Can Encounters be used
to Bypass the Indian Judicial System

4. Untapped Potential of
North-Eastern States of India.

 

The judges shared their
thoughts on how they were surprised to go through several well-written papers.
They also described the building blocks of a well-written research paper and
how it was different from an essay.

 

Last, but not the least,
it was time for ‘CAs Got Talent’ wherein three persons each from the categories
singing, dancing and other performing arts helped make the evening entertaining,
leaving the participants asking for more. One inherent benefit of the online
competition this year was that initial entries from over 130 students were
received for various presentations, such as mono-acting, yoga, rapping, etc.,
bringing out the hidden talent of CA students. The judges had a hard time
finalising the top 12, let alone deciding the winners.

 

The winners were then
announced, each representing their firms, as follows:

 

Research Paper Competition
– ‘Writopedia’

Prize

Name
of Student

Name
of Firm

City

1st Prize Winner

Vedant Satya

CA student

Lucknow

2nd Prize Winner

Priya D’Costa

Vishwanathan Subramanian

Mumbai

 

 

Talk Hawk – ‘Aspire to
Inspire’

Prize

Name
of Student

Name
of Firm

City

1st Prize Winner

Tanmay Modi

K.C. Mehta and Co

Vadodara

2nd Prize Winner

Vanishree Srinivasan

Singhvi Oturkar Kelkar

Thane

 

 

Talent Show ‘CA’s Got
Talent’

Prize

Name of Student

Name of Firm

City

1st Prize
(Singing Category)

Vanishree Srinivasan

Singhvi Oturkar Kelkar

Thane

1st Prize (Others Category)

Prakhar Gupta

D.K. Surana & Associates

Indore

1st Prize (Dancing Category)

Sanjana Subramanian

          

Mumbai


Antakshari Competition –
‘Suro ke Maharathi’

Prize

Name
of Student

Name
of Firm

City

Winning Team

 

 

Best Individual Performer

Jagat Dave

Dipen Mehta & Co.

Mumbai

Nisarg Shah

Mumbai

Bidisha Banerjee

Kolkata

Jagat Dave

Dipen Mehta & Co.

Mumbai

 

Quiz – ‘inQUIZitive’

Prize

Name
of Student

Name
of Firm

City

Winning Team

 

Best Individual Performer

Kalpak Masalia

CA student

Pune

Mangesh Pai

CA student

Mumbai

Akash Sagar

Lucknow

 

 

Hearty
Congratulations to all the winners and their firms.

 

The judges for the various
competitions were as follows:

Competition

Level
1

Elimination
Rounds

Final
Round

Writopedia

Nikunj Shah
Raman Jokhakar

Talk Hawk

Apurva Wani
Mukesh Trivedi

Rajesh Muni
Mihir Sheth

Narayan Pasari
Mayur Nayak
Mudit Yadav

Antakshari

Yogesh Arya (Judge), Nidhi Shah (Judge)
Vijay Bhatt (Host), Meena Shah (Host), Tej Bhatt (Host)

Talent Show

Hrudyesh Pankhania,
Tanvi Parekh

Rishikesh Joshi
Devansh Doshi
Parita Shah

Mihir Sheth
Aditya Phadke

 

Mr. Soham Pandya, a member of the technical team that held the event
together, proposed the vote of thanks to Mr. Dastur’s family, the Office
Bearers, the Managing Committee and HRD Committee members, the coordinators of
the Annual Day, the BCAS staff, the creative, social media and technical
teams, the vibrant team of student volunteers and all the students for
participating in big numbers.

 

With
another successful Tarang held, this time in a new format, it was an
unprecedented experience for the students who put up a great show in these
challenging times.

 

Mr. Dastur watched the event live on YouTube and was overwhelmed
with the performances. BCAS is honoured to receive the following letter
of appreciation from him:


 

 

‘TUNE INTO YOUR EMOTIONS’

The HRD Study Circle meeting
was held on 11th August with a session on ‘Tune into your Emotions
and Bounce back with Resilience’ presented by Leonie D’Mello, an
experienced counsellor, behavioural trainer and energy healer.

 

The session covered the
basics of Emotional Intelligence. The icebreaker, when participants were asked
to share what they were feeling at the moment, helped to bring home how we may
confuse our thoughts and feelings. Tuning into one’s emotions is to be able to
identify and be aware of one’s feelings. Self-awareness can then lead to other
awareness and social awareness. Self-awareness is necessary for self-management
and, together with social awareness, leads the way for effective relationship
management.

 

The session allowed
exploration of how we express our emotions. Taking responsibility for our
feelings and healthy expression is preferable since suppression of feelings
causes diseases.

 

Participants then shared
the feelings that they had experienced in the past four months of the pandemic
and lockdown. Most of these were difficult feelings as it had been a tough
period for each one of them. Light was thrown on the purpose of these difficult
feelings so that we understand why they are there, listen to the message that
they have for us and allow them to guide us to the best course of action – thus
enabling us to regain our mental equilibrium and tapping into the inner
strength of resilience to bounce back.

 

Being mindful of the
present moment and living in the here and now, reframing events and looking at
things from a different perspective enables us to regulate our feelings.
Nurturing ourselves and taking support from our near and dear ones and
embracing change are some of the ways in which we can build our resilience,
according to Leonie D’Mello

 

JOINT WEBINAR WITH IACC


Just slash the regime of
767 establishment approvals to fuel India’s post-Covid recovery through FDI,
several experts urged at the online webinar organised by the IACC in
association with the BCAS on 12th August on the topic ‘Investment
into India and the USA’
. The economic slowdown due to the global pandemic
has made other countries think about China and its future strategy towards
global trade and commerce. For this, IACC brought together many industry
experts having rich experience in cross-border investments.

 

The eminent experts were Nishith
Desai
, Founder and Partner, Nishith Desai & Associates; Sunil Kaul,
Managing Director and Head, Southeast Director Asia, Carlyle Group; Hoonar
Janu
, Co-Head, Americas Region, Invest India; Dave Springsteen,
Partner, Withum; Timothy R. Lavender and Deepak Nambiar, Partners
at Kelley Drye; Kamlesh Vikamsey, Senior Partner, Khimji Kunverji &
Co.; and Rajesh Tripathi, Principal, US-India Corridor, Withum. Rajesh
Tripathi
and Deepak Nambiar moderated the discussion.

 

Mr. Desai said that India needed to develop the art of
visualisation to uproot investments from China to India. The most critical
challenge was environmental policies. Similarly, India should become a heaven
to attract foreign investments, a rather difficult task. Some contrasting
trends had been seen in investment – investment in manufacturing and
infrastructure had taken some beating. Looking at services, there had been a
huge upsurge; technology, media and entertainment, telecom, pharma, healthcare,
medical devices, agrotech, IoT, financial services, especially insurance, were
catching up. The Government had opened the insurance sector for investment up
to 45%, but in case of intermediate investment it was allowed up to 100%.

 

Mr. Kaul said that India would be competing with other South-East
Asian countries for this chunk of business such as Vietnam which was very
welcoming to foreign companies. There was also the case of regulatory controls
and taxation policies. India had to simplify its tax systems and provide ease
and predictability in the tax and regulatory structures.

 

But standing in the way
(of inviting investment into the nation) was the lack of single-window
clearance for investors, said Naushad Panjwani, BCAS Past President and
also the Regional President of the IACC, West India Council. He narrated how
foreign businesses who sought to develop roots in India had to face a committee
of secretaries from 35 Central Ministries or Departments, apart from an overall
regime of 767 pre-operational licenses. Adding to this was the multitude of
inspections, approvals and renewals after the commencement of operations.

 

Mr. Vikamsey said the second piece in this puzzle was to find a
solution to the issue of tax on cross-border or international transactions. The
challenge in India was implementing and interpreting its plethora of good laws.
Several developments were taking place right now, offering better opportunities
for India. American businesses that were looking for better opportunities,
provided a chance for all, thanks to the large market here.

 

Ms Hoonar Janu said American ventures had spiked by four times in
pursuit of defence partnerships and three times for healthcare. That underlined the larger, strategic relationship,
all thanks to the economic strength of India.

 

The webinar was well
moderated by Rajesh Tripathi and Deepak Nambiar. The vote of
thanks was proposed by BCAS President Suhas Paranjpe.

 

‘CASE STUDIES ON GAAR’

 

The International Taxation
Committee conducted a virtual meeting on ‘Case Studies on GAAR’ on 24th
August. The discussions were led by Group Leader Rutvik Sanghavi who
explained the far-reaching practical impact of GAAR through relevant case
studies.

 

The concept of GAAR is
predominantly based on the concept of ‘substance over form.’ The Group Leaders began
the meeting by taking up a flow-chart of GAAR applications. They discussed the
key points to be kept in mind before concluding whether transactions were
GAAR-tainted. The speakers dealt with various case studies to explain the
conceptual aspects of GAAR.

 

It was an
interactive meeting and the participants said they had enormously benefited
from the discussions and insights provided during the same.

 

 

 

Great amount of scientific research is there to show
that health is better
because transcendental meditation deals with consciousness,
and consciousness is the basic value of all the physical expressions.
The entire creation is the expression of consciousness.

 
Maharishi Mahesh Yogi

 

REPRESENTATION

 

 

 

                                                                                                                                            26.08.2020

 

Smt.
Nirmala Sitharaman,

Hon’ble
Minister of Finance & Minister of Corporate Affairs,

New Delhi – 110001

 

Madam,

 

Subject: Request for extension of due date for holding Annual General Meeting (AGM) under the Companies Act, 2013
for companies whose
financial year has
ended on 31.03.2020

 

1. We draw your kind attention to General
Circular (GC) No. 28/2020 dated 17th August, 2020 whereby the
Ministry of Corporate Affairs has, after considering the representations for
extension of AGM for the financial year ended 31.03.2020, have asked the
Companies to seek extension of time in holding AGM with the concerned Registrar
of Companies on or before 29.09.2020. The aforesaid GC also mentions procedural
relaxations granted vide GC 20/2020 dated 21.04.2020 to conduct the AGM through
video conferencing (VC) or other audio-visual means (OAVM).

 

2. Whereas the procedural relaxations
granted vide aforesaid GC 20/2020 dated 21.04.2020 would go a long way in
mitigating hardships for conducting AGM, however, at present, the companies are
struggling even to finalize their financial statements for the financial year
ending 31.03.2020. These financial statements would then be required to be
audited by the statutory auditors of the company for laying before the AGM.

 

3. Your goodself is aware that due to
nation-wide lockdown in the months of March, April and May, 2020 and the
staggered process of unlocking from June, 2020 on account of Covid-19, the
offices of the companies as well as of their Chartered Accountant auditors have
largely remained closed. Since the Covid-19 infections are still increasing
exponentially, the level of activity in the offices of the Companies is limited
to achieving day-to-day functioning for running the business. Consequently,
finalization of financial statements for the financial year 2019-20 has taken a
backseat and priority is being given to run the business.

 

4. It would be relevant to mention here that
though large companies and their auditors with their elaborate ERP systems have
been able to finalize their audited financial statements through Work from Home
infrastructures, the mid-segment and small segment companies due to severe
infrastructural handicaps have been struggling to finalize their financial
statements for the financial year ended 31.03.2020. Needless to mention that
most of these companies are audited by small and medium sized Chartered
Accountant auditors by making physical visits to the company’s offices which is
not possible due to the pandemic. In a nutshell, the difficulties faced by
small and medium sized companies whether for running the business or for making
necessary compliances under various laws cannot be overemphasized.

 

5. The aforesaid GC 28/2020 dated 17.08.2020
has caused a lot of consternation in the management of such small and medium
sized companies as it would now require them to seek extension of time for
holding AGM by making necessary compliances in these already trying times.

 

6. In view of genuine hardships arisen
due to Covid-19 pandemic, we request you to kindly consider our request for
blanket extension of due date for holding AGM under section 96 of the Companies
Act, 2013 of those companies whose financial year has ended on 31.03.2020
(other than first financial year) by at least three months from 30th
September, 2020 to 31st December, 2020 instead of requiring the
companies to seek extensions separately.



Respectfully Submitted,


Thanking you

Yours sincerely,

 

 

 

 

 

Cc to:
The Secretary, Ministry of Corporate Affairs,
Government of India, Shastri Bhawan,  Dr.
Rajendra Prasad Road,
New Delhi – 110001

 

 

 

 

You will be the same person in five years as you are
today,
except for the people you meet and the books you read.

                                  — 
John Wooden

 

MISCELLANEA

I. Technology

 

22. The long journey into holographic
transportation

 

Who can forget Princess
Leia’s hologram asking for Obi-Wan Kenobi’s help in the movie Star Wars?
That was perhaps the best-known hologram of the many used in the Star Wars
franchise movies, but the power and promise of holographic technology have been
depicted in science fiction stories for years.

 

The starship Voyager’s
chief medical officer in Star Trek: Voyager was a hologram and
holographic characters and ships are featured in several episodes in the Star
Trek: The Next Generation
series.

 

Holographic transportation
is ‘an extension of mixed reality, a new use case if you will,’ Rob Enderle,
principal analyst at the Enderle Group, told TechNewsWorld. ‘It’s more a
variant on telepresence.’

 

Aexa Aerospace, which
provides custom software and hologram development for mixed and virtual reality
devices for aerospace, medical and other industries, is one of several
companies working on holographic transportation. The company demonstrated a
holographic interaction between CEO Fernando De La Peña Llaca, in his Houston,
Texas, office and company software architect Nathan Ream in his Huntsville,
Alabama, office.

 

Ream’s hologram was
imported into De La Peña Llaca’s office, then Ream pointed to various objects
and read from a magazine in the CEO’s office in real time when asked. The two
also played Tic-Tac-Toe. Ream won. However, an attempt to shake hands failed.

 

Aexa Aerospace has
demonstrated the prototype to a potential client in a United States government
department, Ream said. It’s targeting a first release for late summer and that
‘could be working at the client’s facility before the end of 2020.’

 

Microsoft researchers
coined the name ‘holoportation’ for holographic transportation. The company
trademarked the term in 2018. Still, holographic transportation ‘is not
offering anything that augmented reality, virtual reality, mixed reality and
cross reality doesn’t,’ Michael Hoffman, a founding partner at Object Theory,
told TechNewsWorld. Hoffman was a principal lead on the Microsoft HoloLens
team.

 

(Source:
www.technewsworld.com – 14th August, 2020)

 

23. Trump tells TikTok to find US owner
within 90 days, or close its business

 

US
President Donald Trump issued a new executive order extending the timeline for
ByteDance, the parent company of TikTok, to sell its US business or wrap up its American
operations. According to the earlier executive order, ByteDance was given a
45-day deadline that was to end on 20th September, 2020. With the
new executive order, ByteDance has got slight relief since it now has time
until 12th November to work out a sale deal.

 

In the
order issued on 14th August, Trump wrote, ‘There is credible
evidence that leads me to believe that ByteDance… might take action that
threatens to impair the national security of the United States.’ The US
government has highlighted the issue that TikTok may share data and information
about Americans with the Chinese government. The company has denied that it has
ever done so.

 

Earlier,
TikTok was banned by the Indian government, citing national security and user
privacy concerns. The latest US order also requires ByteDance to destroy all
TikTok data from American users and destroy any data from TikTok’s predecessor
app Musical.ly, which was acquired by ByteDance in 2017. Further, ByteDance
must report to the Committee on Foreign Investment in the United States once
all the data has been erased. TikTok, the short video creating and sharing
platform, has over 80 million users in the United States.

 

(Source:
www.indiatoday.in – 15th August, 2020)

 

24. New work order:
Notebook sales hit an all-time high, courtesy work-from-home amid Covid

 

The lockdown and work from
home (WFH) saw demand for notebooks hit an all-time high, with even companies
placing large-scale orders for employees to ensure business continuity.
Notebook sales saw a whopping 105.5% y-o-y growth during the April-June period.

 

As
per analysts, Q2FY2020 has had some bright moments for the domestic PC market
as decline in desktops and workstations was to an extent arrested by the huge
demand for laptops. Traditionally, January-March sees an increase in demand, but
due to Covid the pent up demand shifted to Q2. Besides, WFH further perked up
the market for notebooks.

 

According to IDC, most IT
services, global enterprises and consulting companies placed large orders for
notebook PCs. This led to an all-time high of enterprise notebook purchases
with shipments growing by 105.5% y-o-y in Q2FY2020. Small and medium businesses
(SMBs) also increased their procurement of notebooks with relatively moderate
growth of 12.1% on an annual basis.

 

‘Demand for notebooks
exceeded expectations with most of the vendors exiting the quarter with minimum
inventory. Despite supply and logistics challenges in the first half of the
quarter, companies executed most of the large orders in Q2. Besides, many
companies shifted their employees to notebooks for the first time; this change
is surely going to alter their procurement strategy in the long term with a mix
of in-office and remote workforce becoming a reality for many organisations,’
said IDC India market analyst (PC devices) Bharath Shenoy.

 

With
most of India under lockdown, IT companies such as TCS, HCL, Infosys and Wipro
have all announced arrangements for employees to work from home for the foreseeable future. The pandemic forced most IT
companies
in India to forego their strict office-based working policies
in favour of adopting new hybrid working arrangements to ensure business
continuity during the lockdown.

 

(Source:
www.financialexpress.com – 16th August, 2020)

 

II. Sports News

 

25. M.S. Dhoni announces
retirement from international cricket

 

M.S. Dhoni, the former
Captain of the Indian cricket team, has announced his retirement from
international cricket, bringing down the curtains on a near 16-year-long
storied career of one of the country’s greatest limited-overs cricketers. Dhoni
retires as India’s most successful captain in limited-over internationals,
having won three ICC trophies – the 2007 T20 World Cup, the 50-over World Cup
in 2011 and the 2013 ICC
Champions
Trophy – the only Captain to do so.

 

Dhoni, 39, made the
confirmation through a video on Instagram, its caption reading: ‘Thanks –
Thanks a lot for ur love and support throughout. From 1929 hrs consider me as
Retired.’

 

The announcement means
that Dhoni’s last India game would remain the semi-final of the 2019 ICC
Cricket World Cup in which India lost to New Zealand by 18 runs. It was his
350th ODI, in which he scored 50 off 72 balls before being run-out
by a bullet throw from Martin Guptill in the deep. Incidentally, Dhoni was
run-out in his first ODI as well.

 

Having retired from Test
cricket in December of 2014 with 4,876 runs from 90 matches, Dhoni carried on
playing ODIs and T20Is. With 10,733 runs, Dhoni is fifth in the list of India’s
all-time run-scorers in ODIs behind Sachin Tendulkar, Virat Kohli, Sourav
Ganguly and Rahul Dravid. His overall Indian numbers are staggering: 538
matches, 17,266 runs, 16 centuries, 108 fifties, 359 sixes, 829 dismissals.

 

Dhoni’s future was a hot
topic of speculation since his sabbatical from cricket following India’s World
Cup exit. Ever since the defeat to New Zealand, Dhoni did not play any form of
cricket in the last one year, hinting he might have played his last in India
colours. Dhoni, however, would be turning up in the IPL where he will captain
the Chennai Super Kings in the tournament’s 13th season, to be
played in the UAE.

 

(Source:
www.hindustantimes.com – 16th August, 2020)

 

III. World News

 

26. Citi wired $900
million in ‘clerical error’, they won’t hand cash back

 

Even for Citigroup Inc.,
it was big money. Loan operations staff at the New York bank wired $900
million, seemingly on behalf of Revlon Inc., to lenders of the troubled
cosmetics giant controlled by billionaire Ron Perelman.

 

It was a mistake for the
ages – a ‘clerical error,’ as Citigroup told lenders – that’s now plunged the
bank into a battle between the Perelman empire and a corps of sharp-edged
investment funds that have become its impatient creditors.

 

One financier involved
likened the surprise payment to finding a fortune on the sidewalk. And, as of a
week later, several hedge funds who claim Revlon was in default on the loan
were showing no signs that they’ll be giving Citigroup its money back.

 

The wayward transfer of
nearly a billion dollars appears to be one of the biggest screw-ups on Wall
Street in ages and it’s set tongues wagging in financial markets. The question
everyone is asking: how could this happen? A spokeswoman for Citi declined to
comment. A representative for Revlon said in an emailed statement that Revlon
itself didn’t pay down the loan, or any portion of it.

 

‘It’s
a billion-dollar clerical error,’ said Michael Stanton, a former restructuring
and bankruptcy adviser. ‘This is probably knocking around some very big rooms
at Citibank.’

 

(Source: www.ndtv.com – 17th
August, 2020)

 

27. Pakistan’s blasphemy
law a weapon of revenge used against minorities

 

Radical Islamists of
Pakistan found a new ‘hero’ recently. His name is Khalid Khan, who shot dead
Tahir Naseem, an American citizen accused of blasphemy, in a Peshawar courtroom
on 29th July.

 

Even though Khalid Khan
surrendered before the police, thousands rallied in his support and his photos
were shared widely on social media. Before he was taken to the court, he was
welcomed with hugs and kisses.

 

Naseem was charged with
blasphemy in 2018 after he declared himself Islam’s prophet.

 

The killing has ignited a
debate on the dangerous blasphemy law and Pakistani society’s mindset in
general. Pakistan’s blasphemy laws (PPC section 295 and subsections, section
298 and subsections) state that ‘derogatory’ remarks on the Prophet Muhammad,
insulting any religion, disturbing a religious assembly and trespassing on
burial grounds can cause lifetime imprisonment or sentence to death.

 

Till now, no blasphemy
convict has been executed by Pakistan but allegations of blasphemy are enough
to cause riots and killing of accused by vigilante groups. According to Al
Jazeera
, 77 people have been killed since 1990 over accusations of
blasphemy. In Pakistan, as per data released by the National Commission for
Justice and Peace, a total of 776 Muslims, 505 Ahmadis, 229 Christians and 30
Hindus have been accused under the various clauses of the blasphemy law from
1987 to 2018. Ahmadis, Christians and Hindus constitute less than 4% of the
general population of Pakistan, but they account for around 50% of blasphemy
accused.

 

It isn’t that a politician
has never tried to change these laws or bring reforms. But those who did faced
the wrath of the religious zealot section of the country. In 2011, Punjab
Governor Salman Taseer was killed by his own guard after he defended a Christian
woman, Asia Bibi, accused of blasphemy. She was acquitted in 2018.

 

Rights groups and critics
say Pakistan’s blasphemy laws are often used against religious minorities.
Often the laws are used as a weapon of revenge. Therefore, there’s an urgent
need to replace these laws.

 

It is important that
murderers like Khalid Khan be given maximum punishment by the judiciary to set
an example that the guilty will not be spared. If Pakistan wants to prove
itself as a haven for religious freedom, then it must ban these regressive
laws.

 

It’s also imperative that
global powers raise this issue on international platforms to create pressure on
the internal politics of the country. A proposal to put sanctions or
interrogation at international level may force them to think on this again.
Progressive countries of the world should give refuge to the acquitted.

 

(Source:
www.outlookindia.com – 13th August, 2020)

 

IV. Spiritual

 

28. Is being a Hindu
acceptable but having faith in Hindutva ‘dangerous’? Quite the contrary

 

Is being a Hindu
acceptable while faith in Hindutva is not? Is it even dangerous? Many Hindus
seem wary to be associated with Hindutva in spite of the fact that Hindutva
simply means Hindu-ness or being Hindu. They tend to accept the view which
mainstream media has peddled for long: ‘Hindutva is intolerant and stands for
the communal agenda of an extreme right Hindu party that wants to force uniform
Hinduism on this vast country which is fully against the true Hindu ethos.’

 

‘Hindutva is indicative
more of the way of life of the Indian people… Considering Hindutva as hostile,
inimical, or intolerant of other faiths, or as communal, proceeds from an
improper appreciation of its true meaning.’

 

From personal experience,
I also came to the conclusion that Hindutva is not communal and dangerous.

 

For many years I lived in
‘spiritual India’ without having any idea how important the terms ‘secular’ and
‘communal’ were. The people I met valued India’s great Vedic heritage. They
gave me tips, which texts to read, which Sants to meet, which mantras
to learn, etc., and I wrote about it for German magazines. I thought that all
Indians are proud of their ancestors, who had stunningly deep insights into
what is true and who left a huge legacy of precious texts unparalleled in the
world.

 

However, when I settled in
a ‘normal’ environment away from ashrams and connected with the
English-speaking middle class, I was shocked that several of my new friends
with Hindu names were ridiculing Hinduism without knowing anything about it.
They had not even read the Bhagavad Gita but claimed that Hinduism was
the most depraved of all religions and responsible for the ills India is
facing. The caste system and the Manusmriti were quoted as proof.

 

My new acquaintances had
expected me to join them in denouncing ‘violent’ Hinduism which I could not do
as I knew too much, not only from reading but also from doing sadhana.
They declared that I had read the wrong books and asked me to read the right books,
which would give me the ‘correct’ understanding. They obviously didn’t doubt
that their own view was correct.

 

My neighbour, a
self-declared communist, introduced me occasionally to his friends as ‘the
local RSS pracharak’. It was half in jest, but more than half intended
to be demeaning. My reaction at that time: ‘If RSS is in tune with my views,
then it must be good.’

 

Standing up for Hindu Dharma
indicted me as belonging to the ‘Hindutva brigade’ that is shunned by political
correctness. My fault was that I said that Hindu Dharma is the best
option for any society.

 

Of course, my stand is not
communal or dangerous. Hindu Dharma is indeed not only inclusive but
also most beneficial for the individual and for society and needs to gain
strength. And yes, politicians, too, need to base their lives on Hindu Dharma
if they want to be efficient in serving society. Propagating blind belief
has no place in politics, but following Dharma is in the interest of
all.

 

Humanity needs to win over
the madness that ‘the Supreme Being’ loves only those human beings who believe
in a certain book and condemns all others to eternal hellfire. But how to make
them see sense?

 

Even some staunch
‘secular’ Indians occasionally declare themselves as Hindus. It’s a good sign,
but they usually get something wrong: They believe that being Hindu means that
everything goes – believe in a god or not, be vegetarian or not, go to temples
or not. It even seems to imply: be truthful or not. They portray Hindu Dharma
as having no fundamentals.

 

Being Hindu means to know
and value the profound insights of the Rishis and follow their
recommendations in one’s life. These insights may not be obvious to the senses,
like the claim that everything, including nature, is permeated by the one
consciousness (Brahman), but it can be realised as true; similarly, as
it is not obvious that the earth goes around the sun, but it can be proven.
Being a Hindu does not require blind belief.

 

Being Hindu also means
having the welfare of all at heart including animals and nature, because each
part is intimately connected with the Whole.

 

Being
Hindu means following one’s conscience and using one’s intelligence well. It
means diving into oneself, trying to connect with one’s Essence. It means
trusting one’s own Self, Atman, and doing the right thing at the right
time.

 

Being Hindu means being
wise – not deluded or gullible or foolish. This wisdom about the truth of this
universe and about how to live life in the best possible way was discovered and
preserved in India. Yet its tenets are universal and valid for all humanity.

 

Isn’t it time for our
interconnected world to realise this and benefit?

 

(Source: OpIndia.com – 6th
August, 2020); Author: Maria Wirth from Germany and living in India for 38
years)

 

V. Markets

 

29. Tencent loses nearly
$34 billion since the PUBG Mobile ban in India — its second-largest valuation
dip this year

 

Chinese technology company
Tencent loses $34 billion in two days since Indian mobile app ban took away the
largest set of users from its iconic game, PlayerUnknown’s Battlegrounds
(PUBG)Tencent

 

  •  The company behind the
    Chinese app PlayerUnknown’s Battlegrounds (PUBG) Mobile, Tencent, is trading in
    the red for a second straight day after the Indian government banned the battle
    royale game.

 

  •  Its market value has
    plummeted by nearly $34 billion over the last two days with Tencent’s share
    price falling by 2% yesterday and is over 3% in the red so far today.

 

  •  The company said that
    they will engage with the Indian authorities to ensure the continued availability
    of their apps in India.

 

The Chinese technology
mammoth Tencent has lost nearly $34 billion (HK$ 261.05) of its market value
over the last two days after news of its signature battle royale game
PlayerUnknown’s Battlegrounds (PUBG) Mobile being banned by the Indian
government. This is the second biggest dip in Tencent’s valuation since
Bloomberg reported that the company lost $66 billion last month when the US
President Donald Trump banned WeChat.

 

India makes up one-fourth
of PUBG’s user base


Tencent first set its eyes
on India in 2017 when it pumped in $700 million into India’s most valuable
Internet at the time – Flipkart – and another $1.1 billion into the cab-hailing
service Ola. Already leading in China, the technology behemoth was looking at India’s
market to provide the growth it needed to keep up valuations.

 

One year down the line,
after a soft launch in China, it released PUBG to the rest of the world. Come
2020, gamers in India account for nearly a quarter of its downloads – ahead of
even China, according to data by Sensor Tower.

 

(Source: Business Insider,
4th September, 2020)

 

 

 

 

VI. Psychology

 

30. Kids today are
lacking these psychological nutrients

 

When
it comes to the rules and restrictions placed on children, author and Stanford
Graduate School of Business lecturer Nir Eyal argues that they have a lot in
common with another restricted population in society: prisoners. These
restrictions have contributed to a generation that overuses and is distracted
by technology.

 

Self-determination
theory, a popular theory of human motivation, says that we all need three
things for psychological well-being: competence, autonomy, and relatedness.
When we are denied these psychological nutrients, the needs displacement
hypothesis says that we look for them elsewhere. For kids today, that means
more video games and screen time.

 

In
order to raise indistractable kids, Eyal says we must first address
issues of overscheduling, de-emphasise standardised tests as indicators of
competency, and provide them with ample free time so that they can be properly
socialised in the real world and not look to technology to fill those voids.

 

 (Source: Big Think, 30th April,
2020)

 

You could try to pound your head against the wall and
think of original ideas or
you can cheat by reading them in books.

 
@patrickc

 

In life, loss is inevitable. Everyone knows this, yet
in the core of most people it remains deeply denied – ‘This should not happen
to me.’ It is for this reason that loss is the most difficult challenge one has
to face as a human being

  
Dayananda Saraswati

REGULATORY REFERENCER

DIRECT TAX

 

1.
Notifications bearing Nos. 68, 70 and 80 of 2019 issued under clause (v) of the
proviso to section 194N of the Income-tax Act, 1961 prior to its
amendment by the Finance Act, 2020 shall be deemed to be issued under the
fourth proviso to section 194N as amended by the Finance Act, 2020. [Circular
No. 14/2020 dated 20th July, 2020.]

 

2. Income-tax
(17th Amendment) Rules, 2020 – Rule 31AA amended.
It notifies amendments in
TCS statement being Form 27EQ. [Notification No. 54 of 2020 dated 24th
July, 2020.]

 

3. Income-tax
(18th Amendment) Rules, 2020 – Rule 12CB amended. It notifies amendments
in the procedure of filing of statement of income paid or credited by an
investment fund
to its unit holders as well as in Form 64C and 64D. [Notification
No. 55 of 2020 dated 28th July, 2020.]

 

4. All those
whose original due date for filing returns was 31st July, 2020 have
to pay self-assessment tax by 31st July, 2020. Interest u/s 234A
will not be charged if senior citizens pay part of the tax payable for A.Y.
2020-21 by 31st July, 2020 and balance tax payable does not exceed
Rs. 1 lakh. Self-assessment tax paid by senior citizens before 31st
July, 2020 will be deemed to be advance tax paid for the purpose of levy of
interest u/s 234. [Notification No. 56 of 2020 dated 29th July,
2020.]

 

5. Introduction of Faceless assessment
scheme.
[Notification Nos. 60 and 61 of 2020 dated 13th
August, 2020.]

 

COMPANY LAW

 

I.
COMPANIES ACT, 2013

 

(I) MCA’s relief on delivery of notice to
shareholders extended for listed companies, for rights issues opening up to 31st
December, 2020 –
In case of listed companies which
comply with the relevant circulars issued by SEBI, inability to dispatch the
relevant notice to shareholders through registered post or speed post or
courier would not be viewed as violation of section 62(2) of the Companies Act,
2013 for rights issues opening up to 31st December, 2020.
Other requirements provided in the said General Circular 21/2020 dated 11th
May, 2020 remain unchanged. [General Circular No. 27/2020 (F. No.
2/4/2020-CL-V); Dated 3rd August, 2020.]

 

(II) Application for extension of AGM by companies
whose Financial Year ended on 31st March, 2020 –
MCA has clarified that companies whose Financial Year ended on 31st
March, 2020
and who cannot hold their AGM by 30th September,
2020
[even with relaxations granted vide Circular No. 20/2020 dated
5th May, 2020 to conduct AGMs via Other Audio Visual Means (OAVM)],
need to apply in Form GNL-1 to jurisdictional Registrar on or before 29th
September, 2020
to seek extension of time (for a maximum period of three
months)
for holding the same. The Registrar of Companies has been advised
to consider the applications made by companies liberally. [General Circular
No. 28/2020 (F. No. 2/4/2020-CL-V); Dated 17th August, 2020.]

 

(III) The Institute of Company Secretaries of
India Centre for Corporate Governance, Research and Training (ICSI-CCGRT) –
Under its research initiatives, it has
launched a series on Companies Act Checklists Chapter-wise. Till date Checklists
on Chapter II, Chapter VI and Chapter X are launched and the same are available
on the link https://www.icsi.edu/ccgrt/research-initiatives-2/

 

II. SEBI

 

(IV) SEBI
clarifies that investors with physical securities are allowed to tender shares
in buybacks, open offers and delisting of securities –
SEBI has clarified that shareholders holding securities in physical
form are allowed to tender shares in open offers, buy-backs through tender
offer route and exit offers in case of voluntary or compulsory delisting and
the restriction under Regulation 40(1) of LODR Regulations shall not apply. [Circular
SEBI/HO/CFD/CMD1/CIR/P/2020/144 dated 31st July, 2020.]

 

(V) SEBI
allows extension on use of digital signature certifications for authentication
/ certification of filings / submissions made to Stock Exchanges till 31st
December, 2020 –
SEBI has permitted listed entities
to authenticate / certify any filing / submission made to stock exchanges on or
after 1st July, 2020 under the LODR Regulations, using digital
signature certificates (DSCs) till 31st December, 2020. Earlier,
SEBI had permitted the same until 30th June, 2020 vide its
circular dated 17th April, 2020. [Circular
SEBI/HO/CFD/CMD1/CIR/P/2020/145 dated 31st July, 2020.]

 

(VI) Every
listed entity shall maintain public shareholding within a period of three years
instead two years –
Now, every listed company which
has public shareholding below 25% on the commencement of the Securities
Contracts (Regulation) (Second Amendment) Rules, 2018, shall increase its
public shareholding to at least 25% within a period of three years from
the date of such commencement, in the manner specified by SEBI. [Notification
G.S.R. 485(E) (F. No. 5/35/CM/2006 Volume- III); dated 31st July,
2020.]

 

(VII)
RESOURCES FOR TRUSTEES OF MUTUAL FUNDS –
Trustees
shall appoint a dedicated officer having professional qualifications and a
minimum five years of experience in finance and financial services related
field.
The officer so appointed shall be an employee of the Trustees and
directly report to them. [Circular SEBI/ HO/IMD/DF4/CIR/P/2020/0000000151
dated 10th August, 2020.]

 

ACCOUNTS AND AUDIT

 

(A)
Companies (Indian Accounting Standards) Amendment Rules, 2020 –
Amended standards / topics: (i) Ind AS 103: Definition of a Business,
Optional test to identify concentration of Fair Value, Elements of a Business,
and Assessing whether an acquired process is substantive;
(ii) Ind AS 107: Uncertainty
arising from interest rate benchmark reform;
(iii) Ind AS 109: Temporary
exceptions from applying specific hedge accounting requirements;
(iv) Ind
AS 116: Covid-19-related rent concession for lessees; (v) Ind AS 1, 8,
10 and 34: Materiality; and (vi) Ind AS 37: Restructuring. [MCA
Notification dated 24th July, 2020.]

 

(B)
Implementation of Ind AS by NBFCs and ARCs –

Unrealised gain / loss on a derivative transaction undertaken for hedging may
be offset against the unrealised loss / gain recognised in capital (either
through P&L or OCI) on the corresponding underlying hedged instrument for
the purposes of computation of regulatory capital and regulatory ratios. [RBI
Notification No. RBI/2020-21/15 dated 24th July, 2020.]

 

(C)
Timeline for submission of financial results by listed entities (under
Regulation 33 of the LODR Regulations) for the quarter / half year / financial
year ended 30th June, 2020 –
extended
from 14th August to 15th September, 2020. [SEBI
Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/140 dated 29th July, 2020.]

 

(D) Review
Engagements on Interim Financial Information in the Current Evolving
Environment Due to Covid-19 –
ICAI’s Guidance
highlighting key areas of focus in the current environment when undertaking a
review of interim financial information in accordance with SRE 2410. [ICAI’s
Auditing Guidance dated 7th August, 2020.]

 

FEMA

 

(i) FEMA was
earlier regulated and administered by RBI including with respect to capital
account transactions covered u/s 6. However, with effect from 15th
October, 2019 this power was shifted to the Central Government for non-debt
capital account transactions including those covered for FDI under the Non-Debt
Instruments (NDI) Rules. Each change in these rules or introduction of an
instruction or circular required a notification by the Ministry of Finance.
This created delays. Further, Master Directions issued by RBI became
inoperative. Now, the powers have again been shifted back from the Central
Government to the RBI, though partly. RBI has now been empowered to:

(a) Administer the NDI Rules and, while
administering them, it may interpret and issue such directions, circulars,
instructions and clarifications as it may deem necessary.

(b) Permit investment into India by a person
resident outside India; or permit an Indian entity prescribed under the NDI
Rules to receive investment without the requirement of a consultation with the
Central Government as was needed previously.

 

(ii)
Sectoral caps and conditions for FDI in the sector of Air Transport Services
as covered in Serial No. 9.3 and Other Conditions as prescribed in
Serial No. 9.5 for the Civil Aviation sector under Schedule I to the NDI Rules
have been amended. The position in the NDI Rules has now been brought in line
with the changes made in the FDI policy as amended by Press Note 2 of 2020
dated 19th March, 2020. The important changes are:

(a) The benefit to OCIs to invest up to 100% under
the automatic route is now removed. Only NRIs are allowed this benefit.

(b) Further, investment by NRIs up to 100% has been
allowed in M/s Air India Limited.

(c) Foreign airlines are at present allowed to
invest in Indian companies operating scheduled and non-scheduled air transport
services up to a limit of 49% under the Government approval route. It has now
been clarified that this limit will subsume FDI and FII / FPI investment.

(d) Reference to Aircraft Rules, 1937 have been
made where necessary.

[Notification
No. S.O. 2442 (E) dated 27th July, 2020 – F. No. 01/05/EM/2019.]

 

ICAI MATERIAL

 

  •  MSME
    Business Continuity Checklist: Rebooting MSMEs in the Covid-19 Era –
    Checklist that focuses on factors requiring special attention by
    MSME managements to guide their initiative to face the ongoing tough times. [25th
    July, 2020.]

 

  •  FAQs on
    the SEBI Settlement Scheme, 2020 –
    ICAI’s FAQ
    Publication on the One-Time Settlement Scheme issued by SEBI on 27th
    July, 2020. [30th July, 2020.]

 

  •  Relaxations from Regulatory Compliances Due to Outbreak of Covid-19 Pandemic – Publication that collates various relaxations provided by MCA and
    SEBI. [10th August, 2020.]

 

  •  Guidance
    Note on Report u/s 92E of the Income Tax Act, 1961 (Transfer Pricing) –
    Revised edition based on the law as amended by the Finance Act,
    2020. [20th August, 2020.]

 

MISCELLANEA

I. Technology

5 Facebook faces mass legal action over data leak

Facebook users whose data was compromised by a massive data leak are being urged to take legal action against the tech giant. About 530 million people had some personal information leaked, including, in some cases, phone numbers. A digital privacy group is preparing to take a case to the Irish courts on behalf of EU citizens affected.

Facebook denies wrongdoing, saying the data was ‘scraped’ from publicly available information on the site. Antoin Ó Lachtnain, Director of Digital Rights Ireland (DRI), warned other tech giants its move could be the beginning of a domino effect. ‘This will be the first mass action of its kind but we’re sure it won’t be the last,’ he said. ‘The scale of this breach, and the depth of personal information compromised, is gob-smacking.’ He added: ‘The laws are there to protect consumers and their personal data and it’s time these technology giants wake up to the reality that protection of personal data must be taken seriously.’

DRI claims Facebook failed to protect user data and notify those who had been affected. The data leak was first discovered and fixed in 2019, but was recently made easily available online for free. DRI said individual users who take part in the legal action could be offered compensation of up to €12,000 (£10,445) if it is successful – based on what it says are similar cases in other countries.

‘If successful this could well set a precedent and open the door to further class action down the line,’ Ray Walsh, a digital privacy expert at ProPrivacy, told the BBC. ‘Big Tech might then find that being made to compensate individual users is a strong reminder to work harder on privacy compliance,’ he added.

The Irish Data Protection Commission announced its decision to launch an investigation into the leak. It will assess whether any parts of the GDPR or Data Protection Act 2018 were infringed by Facebook. If found to be in breach, the social media giant could face fines of up to 4% of its turnover.

Responding to DRI’s legal case, a Facebook spokesman said: ‘We understand people’s concerns, which is why we continue to strengthen our systems to make scraping from Facebook without our permission more difficult and go after the people behind it.’

He also pointed to other firms involved in similar recent leaks. ‘As LinkedIn and Clubhouse have shown, no company can completely eliminate scraping or prevent data sets like these from appearing. That’s why we devote substantial resources to combat it and will continue to build our capabilities to help stay ahead of this challenge,’ he said.

(Source: bbc.com, dated 16th April, 2021)

6 Crypto firm Coinbase valued at more than oil giant BP, hit a market value of nearly $100bn

Cryptocurrency firm Coinbase, which runs a top exchange for Bitcoin and other digital currency trading, hit a market value of nearly $100 billion (£72.5 billion) in its stock market listing.

Shares debuted on the Nasdaq at a price of $381, but later closed below $330. The initial valuation put Coinbase ahead of many well-known firms, such as oil giant BP and key stock exchanges. The listing was seen as the latest step toward cryptocurrencies gaining wider acceptance among traditional investors.

The price of Bitcoin surged more than 300% last year – and has climbed even higher in 2021 – as firms including Tesla, Mastercard and BlackRock unveiled plans to incorporate digital currencies into their businesses. It hit a record of more than $63,000 on 13th April, 2021, ahead of the Coinbase listing.

Less well-known digital currencies have also made gains with Dogecoin, which was created as a joke, rising more than 70% to more than 13 cents. US-based Coinbase, which makes money primarily by charging transaction fees, has benefited from the soaring demand.

Founded in 2012, Coinbase had more than 56 million users across more than 100 countries and held some $223 billion in users’ assets at the end of March. It reported $1.8 billion in estimated revenue in the first three months of 2021 – more than its total for all of 2020 – as interest in Bitcoin and other digital currencies boomed.

(Source: bbc.com dated 15th April, 2021)

7 NASA chooses SpaceX to build Moon lander

NASA has chosen Elon Musk’s company SpaceX to build a lander that will return humans to the Moon this decade. This vehicle will carry the next man and the first woman down to the lunar surface under the space agency’s Artemis programme. Another goal of the programme will be to land the first person of colour on the Moon.

The lander is based on SpaceX’s Starship craft, which is being tested at a site in southern Texas. SpaceX was competing against a joint bid from traditional aerospace giants and Amazon founder Jeff Bezos, as well as Alabama-based Dynetics. The total value of the contract awarded to Musk’s company is $2.89 billion.

‘With this award, NASA and our partners will complete the first crewed demonstration mission to the surface of the Moon in the 21st century as the agency takes a step forward for women’s equality and long-term deep space exploration,’ said Kathy Lueders, the organisation’s head of human exploration.

‘This critical step puts humanity on the path to sustainable lunar exploration and keeps our eyes on missions farther into the solar system, including Mars.’

The Artemis programme, initiated under the Trump administration, had targeted a return to the lunar surface in 2024. But a shortfall in funding of the landing system has made that goal unattainable.

Elon Musk has been developing the Starship design for years. Resembling the rocket ships from the golden age of science fiction, it is a crucial component of the entrepreneur’s long-term plans for settling humans on Mars. For now, though, it will serve as the lander that ferries astronauts from lunar orbit to the surface.

(Source: Yahoo.com dated 16th April, 2021)

8 Google makes it easier for users in India to take calls and messages while driving

Texting or even taking a call while driving is an extremely dangerous thing to do. However, many people across the world continue to do so while putting their and others’ lives at great risk. Google is now rolling out a feature that will make it easier for users to take calls and reply to messages while driving their cars.

According to Google’s support page for Maps, Google Assistant Driving Mode is now rolling out in Google Maps to Android users in India.

‘Thanks to the new driving-friendly Assistant interface, you can easily get more done while keeping your focus
on the road. Use voice to send and receive calls and texts, quickly review new messages across your messaging apps in one place,’ noted Google on the support page.

Google Assistant will also read out texts so that people don’t have to look down at their phones. Android users will also get alerts for incoming calls which they can answer or decline with their voice.

Google says that Driving Mode ensures that users can do all this without actually leaving the navigation screen. This will ensure to a certain extent that distractions are minimised for the driver.

How does Driving Mode work in Google Maps?
Google explains that it’s quite simple to get started with Driving Mode. Users simply have to begin navigating to a destination with Google Maps and tap on the pop-up to get started. Another way to get started is head to Assistant settings on your Android phone or say ‘Hey Google, open Assistant settings.’ Then simply select ‘Transportation,’ choose ‘Driving Mode’ and turn it on.

The feature is currently available for Android users only and will work on phones running Android version 9.0 phones or higher with 4GB RAM.

(Source: newskifactory.com dated 17th April, 2021)

II. Motivational

9 Meet CA Bhavani Devi, the first Indian fencer to qualify for the Olympics

In 2004, a shy 11-year-old girl walked into Chennai’s Jawaharlal Nehru Stadium for the first time, tightly clutching her mother’s hand. A new student at Muruga Dhanushkodi Girls’ Higher Secondary School, Tondiarpet, Chadalavada Anandha (CA) Bhavani Devi had just learnt the term ‘fencing’ as part of the ‘Sports in Schools’ initiative started by the late Chief Minister J. Jayalalithaa.

Vishwanathan P, who would soon be her first coach, looked on from the parapet, and put the little girl to a 30-second test. ‘I don’t remember what the test was. But right then I knew she had the talent,’ laughs Vishwanathan. In 30 seconds, she secured a spot in the school’s fencing classes, one among 40 other girls.

Cut to 15th March, 2021 in Budapest, Bhavani, now 27, made history by becoming the first Indian fencer to qualify for the Olympics and will represent India at the Tokyo Olympic Games.

Currently ranked 42nd in the world and 1st in the country, the sabre fencer from Old Washermanpet qualified through the Asia / Oceanic Zone of official rankings after Hungary lost to South Korea in the quarter-finals of the Sabre Fencing World Cup.

Wielding a sword, dressed in an electric suit and mask that flickers when the opponent’s weapon lands a jab, her swift, calculated footwork and mental focus brought her this honour after failing to qualify for the 2016 Rio Olympics. She states, ‘In 2016, I realised that there is a limit to which you can put pressure on yourself. It backfires.’

Seventeen years on, Bhavani still wears a coy, almost uncomfortable, smile when put in the spotlight. In the few days she got to spend at home before flying to Italy to resume coaching, she has had little time to relax.

Bhavani remembers starting with bamboo sticks. The little equipment they had was saved for competitions. ‘We used all sorts of things to practice,’ she reminisces. ‘We would go to the stadium at 5.30 am every day and from there to school. In the evening, from school back to the stadium and then return home. This was the routine for years.’

Catching the public bus on time to get to the stadium and back was a struggle, she remembers. ‘But, we still enjoyed the process.’ Vishwanathan quips, ‘She was a “jolly” child, and it was fun to train her.’

The 40-member fencing group at school quickly diminished and five years down, Bhavani was the sole participant. Fencing then was still an unknown sport in India with no big achievements to point out, she says. ‘Some wanted to focus on education. Some felt fencing was not good for girls. There were no job prospects in the sport unlike athletics or volleyball.’

Many asked if the sport was ‘safe enough’ for a girl to pursue. Bhavani’s mother Ramani, a constant and perhaps the most significant presence in her life, nipped such negative comments in the bud. Ramani says, ‘“Why should you bother,” I asked them. The girl is interested in this, so let her be.’

The proud mother is now preparing to fly to Tokyo to watch her daughter’s most anticipated competition. Time and again, Bhavani reiterates that her parents – her late father was a priest and her mother a homemaker – were her biggest support. She says, ‘Many ask her if she is proud to be “Bhavani’s mother”, but it’s the other way round. I am proud to be her daughter.’

She finished Class X, packed her bags and moved to Thalassery where she continued her studies and trained at the same time. In 2017, she became India’s first international gold medallist at the Women’s World Cup held in Reykjavik, Iceland.

Bhavani says there is a surge in the interest towards fencing in India. ‘Earlier, when I used to win international medals many wouldn’t understand what the excitement was about,’ she recalls. But now, people have started recognising the equipment.

Modern fencing is a combination of three disciplines: the épée, the sabre, and the foil. While in épée, the entire body is a valid target area, in sabre, the upper body becomes the target, and in foil, only the torso can receive a strike. Weapons used in each also differ in terms of their make and flexibility.

Bhavani specialises in sabre fencing, in which a typical competition lasts only ten minutes. Has she ever felt intimidated? ‘I have never been afraid, even my parents haven’t for that matter. You can get hurt anywhere, it’s all about how you take care of yourself,’ she says.

With only months to the Olympics, Bhavani recalls the times she had to travel to international competitions alone. This time though, she has the entire country backing her. With her trademark shy smile, she concludes, ‘I will make you all proud. I am confident.’

(Source: thehindu.com dated 31st March, 2021)

STATISTICALLY SPEAKING

 

CAPACITY-BUILDING

Arjun: O Lord! I am tired of this Corona.

Shrikrishna: (smiles) Everybody is fed up and afraid!

Arjun: You are saying so! You are yourself the creator of everything including this Covid chaos. And you are smiling?

Shrikrishna: Dear Arjun, I am the Creator (Generator), Organiser and Destroyer of everything. That is why they call me ‘GOD’. Anyway, destruction is also one of my essential tasks.

Arjun: That reminds me. Over so many years of practice, I have ‘created’ so many files. Lot of paperwork. And many clients have discontinued more than eight to ten years ago.

Shrikrishna: Then why are you carrying all their records? Do I need to tell you that space is the most costly asset?

Arjun: This lockdown spoils the mood. Don’t feel like doing anything.

Shrikrishna: On the contrary. This is an opportunity for housekeeping, cleaning up work.

Arjun: Yes, you are right. Weeding out on mass scale is necessary. But there are no assistants. Even the offices have to be kept closed.

Shrikrishna: But there is one thing you are neglecting. One valuable asset that you are not utilising properly.

Arjun: What is that?

Shrikrishna: Manpower. Your articled trainees and your assistants.

Arjun: Oh! You are calling them an asset? We treat them as a liability.

Shrikrishna: Then why don’t you get rid of them?

Arjun: Ah! They do help us in audit, tax work. But they are not dependable. Articles have different priorities always.

Shrikrishna: Like what?

Arjun: Their coaching classes, exams, leave. And they lack sincerity. They don’t take interest in the work. They do only a superficial job.

Shrikrishna: But what efforts do you make to create interest in their minds? There is an obligation on you to train them. Do you really do it?

Arjun: Where is the time? We just send them somewhere for audit, or ask them to do data feeding for GST.

Shrikrishna: If you don’t have time, are there seniors in your office who can guide them?

Arjun: No. We can’t afford to have seniors. And I doubt whether they themselves are updated. Mine is a small firm.

Shrikrishna: Ok, please tell me, are you yourself updated?

Arjun: (No answer)

Shrikrishna: Remember, so many new things are coming up in your profession. You never had those things in your syllabus.

Arjun: True.

Shrikrishna: But your articles are studying those things. They know it better. They are also more tech-savvy than many of you.

Arjun: Agreed.

Shrikrishna: What is necessary is to guide them, motivate them, train them and arouse their interest in the work.

Arjun: Frankly, I don’t consider myself competent to teach them anything.

Shrikrishna: Don’t worry. You need not teach them technical things. But you can always share your experience with them. You have done so many audits. You can tell them what to see, what to ask for, how to see a particular thing.

Arjun: They cannot even write the queries.

Shrikrishna: Instead of writing routine queries, you must explain to them the implications of queries, the legal implications from the perspective of various laws.

Arjun: Like tax disallowances, company law, labour laws, FEMA…?

Shrikrishna: Right! They should feel that their work is meaningful and important. Today, they do it without taking much interest in it.

Arjun: I agree. But I am not an expert on these laws. We cannot afford such training sessions.

Shrikrishna: You have to combine three or four firms so that there is sufficient number of articles. You can invite experts from outside. In the process, you also learn.

Arjun: I understand what you are saying. Actually, training our staff is in our own interest. We cannot
check everything. Finally, we just put our signatures on the audit with a fear that there could be many blunders in them.

Shrikrishna: And then you get caught in disciplinary action!

Arjun: True. Prevention is better than cure. I am convinced that training the staff is an investment. It is for our own benefit.

Shrikrishna: But it should be like a workshop for limited numbers. Not a big scale lecture. Coaching classes may be teaching them theory. But you have to explain to them how to relate theory to practical work.

Arjun: And I think, even in the peer review, they see what we have done for staff training. Today I have realised that it is not only our duty to train the staff and articles, but it is in our own interest to do so.

Shrikrishna: Not only the articles, but even your administrative staff – clerks, receptionists, peons also need training. They should not feel monotony in their work. They should feel some change, some progress in life.

Arjun: And I should myself be more serious about updating and upgrading myself, I should not take CPE hours as a thing to be ‘managed’. Otherwise, I will soon become outdated and unfit to carry on practice.

Shrikrishna: While listening to the Geeta, you showed so much inquisitiveness. You should continue the same interest in learning even now.

Arjun: Lord, I will. Thank you for opening my eyes.

Om Shanti.

(This dialogue is intended to bring out the importance of training and capacity-building for a CA’s office.)

REGULATORY REFERENCER

DIRECT TAX

1. Clarifications on provisions of the Direct Tax Vivad se Vishwas Act, 2020 A ‘search case’ means an assessment or reassessment made under sections 143(3), 144, 147, 153A, 153C, 158BC of the Income-tax Act in the case of a person referred to in section 153A, section 153C, section 158BC or section 158BD of the Act on the basis of a search initiated u/s 132, or requisition made u/s 132A. The FAQ No. 70 of Circular 21/2020 stands modified to this extent [Circular 4 of 2021 dated 23rd March, 2021.]

2. Reporting under clause 30C and clause 44 of Form 3CD shall be kept in abeyance till 31st March, 2022 [Circular 5 of 2021 dated 25th March, 2021.]

3. Income-tax Rules – Income-tax (6th Amendment) Rules, 2021 Procedure and forms for application for the purpose of grant of approval of a fund, trust, institution, university, or hospital or other medical institution under clauses (i), (ii), (iii) or (iv) of the first proviso to clause (23C) of section 10, intimation of registration u/s 35, registration of charitable or religious trusts, approval of institution for the purpose of section 80G [Notification No. 19 of 2021 dated 26th March, 2021.]

4. Income-tax Rules – Income-tax (7th Amendment) Rules, 2021 Substitution of forms Sahaj ITR-1, ITR-2, ITR-3, Sugam ITR-4, ITR-5, ITR-6, ITR-7 and ITR-V [Notification No. 21 of 2021 dated 31st March, 2021.]

5. Insertion of Rule 6G of the Income-tax Rules and Form 3CD – Income-tax (8th Amendment) Rules, 2021 A new sub-rule 3 has been inserted in Rule 6G which permits furnishing of a revised audit report. It provides that if there is payment by a person after furnishing of report which necessitates recalculation of disallowance u/s 40 or section 43B, he may furnish a revised audit report before the end of the relevant assessment year to which the report pertains. Such revised report is to be signed and verified by the accountant.

An Amendment has also been prescribed in clauses 17, 18, 32 and 36 of Form 3CD [Notification No. 28 of 2021 dated 1st April, 2021.]

6. DTAA between India and Iran shall have effect in India in respect of taxes on income arising in any fiscal year beginning on or after 1st April, 2021 [Notification No. 29 of 2021 dated 1st April, 2021.]

7. Format, procedure and guidelines for submission of statement of financial transactions (SFT) for dividend income and interest With the aim to pre-fill the ITR form with dividend and interest income earned by different classes of assessees, Rule 114E has been amended and sub-rule 5A has been added wherein three types of transactions – dividend paid, interest paid and capital gains on transfer of listed securities or units of mutual funds – are required to be reported by certain reporting entities in Form 61A [Notification Nos. 1 and 2 of 2021 dated 21st April, 2021.]

COMPANIES ACT, 2013

(I) Penalty provision on non-compliance of unpaid dividend account enforced w.e.f. 24th March, 2021 The Ministry of Corporate Affairs (MCA) has enforced a penalty provision on non-compliance of unpaid dividend account from the Companies (Amendment) Act, 2020 with effect from 24th March, 2021. [MCA Notification No. S.O. 1303(E), dated 24th March, 2021.]

(II) Companies (Audit and Auditors) Second Amendment Rules, 2021 Rule 11(g) inserted in the Companies (Audit and Auditors) Rules, 2014 vide Notification dated 24th March, 2021 relating to Auditor Reporting (‘Other Matters to be included in Auditor’s Report’) on whether accounting software used for maintaining books of accounts by a company has a feature of recording audit trail facility, has now been made effective in respect of financial years commencing on or after 1st April, 2022. [MCA Notification G.S.R. 248 (E) dated 1st April, 2021.]

(III) Companies (Accounts) Second Amendment Rules, 2021 Sub-rule (1) of Rule 3 inserted in the Companies (Accounts) Rules, 2014 that mandated every company which uses accounting software for maintaining its books of accounts to use only such accounting software which has a feature of recording audit trail for each and every transaction, has now been made effective for financial years commencing on or after 1st April, 2022. [MCA Notification G.S.R. 247 (E) dated 1st April, 2021.]

(IV) Setting up of makeshift hospitals and temporary Covid Care facilities are now eligible as CSR activity MCA has clarified that spending of CSR funds for setting up of makeshift hospitals and temporary Covid Care facilities are eligible as CSR activities under items (i) and (xii) of Schedule VII of the Companies Act, 2013 to promote health care. Companies may spend CSR funds for such specified activities in consultation with the State Government to comply with the Companies (CSR) Rules, 2014. [MCA General Circular No. 5/2021 dated 23rd April, 2021.]

SEBI

(V) SEBI issues registration norms on transfer of business by intermediaries SEBI has issued new registration norms for transferring of business by intermediaries whereby it has been clarified that the transferee shall obtain fresh registration from SEBI in the same capacity before the transfer of business if it is not registered with SEBI in the same capacity. In addition to the above, SEBI will issue a new registration number to the transferee different from the transferor’s registration number in the various scenarios mentioned in the Circular. [Circular No. SEBI/HO/MIRSD/DOR/CIR/P/2021/46, dated 26th March, 2021.]

(VI) SEBI issues guidelines pertaining to surrender of FPI Registration In order to have a uniform market practice for processing of surrender requests, SEBI has revised the guidelines for the surrender of FPI (Foreign Portfolio Investor) registration and directed Designated Depository Participants (’DDPs’) to follow the additional guidelines. [Circular No. SEBI/HO/IMD/FPI&C/CIR/P/2021/045, dated 30th March, 2021.]

(VII) SEBI reduces timelines for refunding investors’ money SEBI has decided to reduce the timelines for refund of investors’ money to four days from seven days in case of non-receipt of minimum subscription and the issuer failing to obtain listing or trading permission from the stock exchanges. [Circular No. SEBI/HO/CFD/DIL1/CIR/P/2021/47 dated 31st March, 2021.]

(VIII) Alternative Investment Funds to submit report on their activity on quarterly basis Based on consultations with various stakeholders and recommendation of the Alternative Investment Policy Advisory Committee, the SEBI has decided that all AIFs shall submit a report on their activity as AIFs to SEBI on a quarterly basis within ten calendar days from the end of each quarter in the revised formats. [Circular No. SEBI/HO/IMD/IMD-I/DOF6/CIR/2021/549, dated 7th April, 2021.]

FEMA

(i) RBI has decided to collect more details of international transactions using credit card / debit card / unified payment interface (UPI) along with their economic classification (merchant category code – MCC) through a new return called ‘FETERS-Cards’. RBI has provided the manner and format in which the details are to be submitted by AD Banks on the web-portal. [A.P. (DIR Series) Circular No.13 dated 25th March, 2021.]

(ii) RBI has stated that the limits for FPI investment in corporate bonds remain unchanged at 15% of outstanding stock of securities for the F.Y. 2021-22 The revised limits for FPI investment in Central Government securities (G-Secs) and State Development Loans (SDLs) for F.Y. 2021-22 will be advised separately. Till such announcement, the current limits shall continue to be applicable. [A.P. (DIR Series 2020-21) Circular No. 14, dated 31st March, 2021.]

(iii) Borrowers availing External Commercial Borrowings (ECBs) are allowed to park ECB proceeds in term deposits with AD Category-I banks in India for a maximum period of 12 months cumulatively With a view to provide relief to the ECB borrowers affected by the Covid-19 pandemic, RBI has decided to relax the above stipulation as a one-time measure. Accordingly, unutilised ECB proceeds drawn down on or before 1st March, 2020 can be parked in term deposits with AD Category-I banks in India prospectively for an additional period up to 1st March, 2022. [A.P. (DIR Series 2021-22) Circular No. 1, dated 7th April, 2021.]

ICAI ANNOUNCEMENTS

Accounts and Audit
(A) Temporary exceptions to hedge accounting prescribed under the Guidance Note on Accounting for Derivative Contracts due to Interest Rate Benchmark Reform
The announcement provides temporary relief to entities not following Ind AS and having transactions in financial market products for accounting periods beginning on or after 1st April, 2020 on account of some major interest rate benchmarks ceasing to be published across the globe after December, 2021. [ICAI’s Announcement dated 31st March, 2021.]

(B) Revised criteria for classification of non-company entities for applicability of Accounting Standards (AS) The announcement effective for accounting periods commencing on or after 1st April, 2020 classifies non-company entities into four categories, viz., Level I (Large size entities), Level II (Medium size entities), Level III (Small size entities) and Level IV (Micro entities) based on revised criteria related to turnover and borrowings. Level I entities are required
to comply in full with all Accounting Standards (AS 1 to AS 29), while certain exemptions / relaxations have
been provided to Level II, Level III and Level IV non-company entities. [ICAI’s Announcement dated 31st March, 2021.]

ICAI MATERIAL

  •  Technical Guide on Revised Formats of Long Form Audit Report [22nd March, 2021.]