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Category: News And Views

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.
Technology

 

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
YouTube Views

 

 

 

 

 

1.         Traffic Source : YouTube traffic
sources include sources from which viewers are coming to the channel and viewing
videos.

2.         Subscriber: This pie graph indicates,
of the total videos viewed, percentage of videos watched by subscribers.

3.         Device Type: This chart highlights most
preferred gadget for the viewer to watch videos of BCAS Channel.

4.         Most viewed videos: This is the list of
top 10 most viewed videos from 21st March to 14th
December, 2020.

5.  Demographic
Profile of the viewer: This graph highlights the age group BCAS attracts
to its channel.

 

 

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.]

SOCIETY NEWS

‘JOURNEY TO YOUR MIND AND SOUL’

An HRD Study Circle Meeting was held online on 24th November, 2020 on a very unusual topic, ‘Journey to your Mind and Soul’. It was presented by Dr. Devang Shah and Dr. Sunita Gandhi.

The faculty started by explaining how illnesses are caused and how they are treated by studying the history of the patient and ‘visiting the aspects of their mind and soul’. They emphasised that thoughts are the main reason for a variety of illnesses. The presentation focused on the following:

Homoeopathy – A holistic system of medicine
Holism means that a homoeopath considers a patient as a whole. It is not like modern medicine where if you have a toothache you go to a dentist and if you have a joint ache, then you visit an orthopaedician. Homoeopathy considers all the symptoms, such as understanding the exact location of the pain, factors that modify the pain, the past history, family history and understanding the personality of the patient who is suffering from a particular problem (this is done through understanding the patient’s entire life in terms of fears, dreams, nature, stressful situations, saddest and most joyous occasions of life). And only after a thorough investigation is a suitable medicine selected for that particular problem of the patient.

This was illustrated by way of the following example: There are two patients suffering from acidity. Patient A says he feels burning in the stomach when he is hungry and he has to eat something to get better. During the acidity episode he becomes very irritable and does not want people to talk to him, HE desires peace and wants to be left alone. But Patient B when he suffers from acidity, feels better on having cold things like ice cream, cold milk, etc. During the attack of acidity he wants to be with someone, he wants to communicate and seeks assurance that there is nothing serious.

Thus, there is a stark difference between two people suffering from the same condition but the manner in which they cope with it, or rather react to it, is totally different. This difference is what a homoeopath tries to identify and, based on this, a suitable homoeopathic medicine is selected.

Normally, it is believed that only bacteria and viruses are the cause of illnesses. However, homoeopathy also believes that there are mental or emotional causes which have the potential to produce symptoms in the body which allopathic doctors call stress. Each person, depending upon his perception of the situation, tries to cope with these external circumstances.

The human body is capable of fighting its own battle. Only when this coping mechanism falls short of what is actually required, a suitable homoeopathic remedy selected after a detailed study has the potential to heal not only the physical problems but also the mental traumas that a person goes through.

LECTURE ON REVISED ‘CODE OF ETHICS’

The BCAS and the Pune Chartered Accountants’ Society (PCAS) jointly organised a virtual lecture meeting on ‘ICAI Code of Ethics’ on 10th March, 2021. President Suhas Paranjpe began the proceedings by welcoming the speaker, Mangesh Kinare, and the office-bearers of the PCAS. He also briefed the participants about the activities being conducted by the Society. Vice-President Abhay Mehta introduced the speaker.

Mangesh Kinare started by acknowledging the contribution of C.N. Vaze who has been speaking on CAs and Ethics on the BCAS platform for several years. He then explained the reason and the need for the formulation of the revised Code. The ICAI had issued the revised Code of Ethics in 2019 that was made effective with effect from 1st July, 2020. The need to do so had arisen owing to the ICAI becoming a member of the International Federation of Accountants; the revised Code was based on the International Ethics Standard Board of Accountants (IESBA) Code of Ethics, 2018 edition. The earlier 2009 Code with two parts, A and B, had been replaced by a Code spread over three volumes.

Volume I of the new Code deals with the theory of the Code; Volume II gives a practical scenario; and Volume III contains a glossary of cases decided by the ICAI which serves as a guidance to its members. In the course of the lecture, the speaker stressed on the need to understand the importance of the provisions in Volume II which require a CA to observe a certain Code of Ethics. Volume I of the Code states the negative actions in the sense of what should not be done, whereas Volume II suggests what needs to be done and how. He dwelt on the major changes that came in by virtue of Volume I of the Code and noted that the same are applicable both to a member in practice and one in industry. Some of the standards explained by him were as follows:
1. Fundamental principles of the Code, like integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.
2. Threats in compliance of fundamental principles and safeguards from such threats.
3. Independence for audit and review engagements.
4. Independence for assurance engagements other than audit and review engagements.
5. Changes in professional appointment (section 320).
6. A new section dealing with ‘Management Responsibilities’ – that the firm shall not assume a management responsibility for an audit client.
7. Fees – Overdue (section 410) with respect to self-interest threats.
8. Regulation 191 of the CA Regulations – Chartered Accountants in practice to render entire range of ‘Management Consultancy and other Services’, under which category the Council has from time to time listed 28 different types of activities / services that a Chartered Accountant in practice can undertake.
9. Regulation 190A and Appendix 9 to CA Regulations, 1988.
10. A member in part-time practice.
11. HUF vis-à-vis member in practice – Position in the revised Code.
12. Sharing or receiving fees from a non-CA is forbidden under the new Code barring the persons who are members of the prescribed professional bodies under regulations 53A and 53B of the CA Regulations Act, 1988.

The speaker requested all CAs to read the ‘Independence Standards’ thoroughly considering the critical implication of the same. He emphasised that there should be no compromise on the independence of a CA. Management responsibilities under the new Code and the auditor’s responsibility were also highlighted.

He also explained the implicit provisions of Volume II. The penalties for misconduct are grave compared to the Volume I misconducts. He also explained the idea of ‘Director Simpliciter’ under the provisions of the CA Regulations Act, 1988, relevant for the new Code of Ethics. He lucidly explained the concept of independence, fees charged, due fees and many more such concepts and their implications on CAs with relevance to different statutes under the framework where a professional needs to discharge his / her responsibilities.

Mangesh Kinare ended the lecture with a quote from Swami Vivekananda: ‘In conflict between your heart and mind, follow your heart’ and related the Code of Ethics with the pandemic situation by stating that our ethics are our face and not masks. A brief question-answer session followed.

PCAS President Dinesh Gandhi proposed the vote of thanks. The entire meeting is available on YouTube @bcasglobal.

INTERNATIONAL WOMEN’S DAY

The International Women’s Day theme this year was ‘ChooseToChallenge’. A challenged world is an alert world and from challenge comes change. While challenges are not unique to women, the challenges faced by them are, in themselves, unique. BCAS this year endeavoured to provide a platform to its woman members to enable them to address their career-related challenges.

The Managing Committee, in association with the Seminar, Public Relations and Membership Development Committee and the Human Resources Development Committee, organised a unique event to celebrate the ‘International Women’s Day’ on 12th March.

The event was the brainchild of a senior member of the BCAS Core Group, Dr. Sangeeta Pandit. The main thrust of the event was to provide a voice and lend an ear to women across all ages and stages of their professional careers. Like all events of this past year, this one, too, was held on a virtual platform with registrations from places as far as Faridabad, Coimbatore and even Muscat. The event witnessed over 100 registrations, including from some erudite gentlemen.

Convener Preeti Cherian welcomed the gathering and briefed it about the events to follow. In his address, President Suhas Paranjpe commented on the significance of the event in the Indian context. The 10th of March marks the death anniversary of Savitribai Phule (1831-1897) who worked relentlessly against many odds for the cause of women’s empowerment. Today, she is recognised as one of the pioneers of women’s education in India. President Suhas also gave voice to a dream that many harbour – to see BCAS helmed by its first woman President.

The gauntlet was picked up by Vanishree Srinivasan, articled student and ‘Tarang’ contest finalist. She read out a Hindi poem, ‘Main adhunik naari hoon’ shared by Govind Goyal and followed it up with an energising song that helped set the tone of the evening.

Committee member Sneh Bhuta then introduced the distinguished panel comprising Bahroze Kamdin, Nandita Parekh, Mansi Jain and moderator Dr. Sangeeta Pandit.

Earlier, during the registration process, the participants had been asked three questions,
1. Your career journey so far
2. Your career aspirations
3. Your plan to achieve your aspirations

From the responses received, seven participants were selected to interact with the panellists. Their aspirations can be summarised as follows: establish their own brand and identity and also partner in the nation-building process; become a Fund Manager and then a Chief Investment Officer and leverage the position to create opportunities for talented women; specialise in financial accounting and reporting; balance commitment as a young mother by shifting to a less-demanding career while also chasing various passions in life; to be recognised as a leading voice in direct tax practice; to build a practice with young, dynamic women CAs as partners; to work for the benefit of the CA community.

The panellists suggested a few strategies and a roadmap that they could consider; this brought immense joy and satisfaction to the participants as was evident from the delighted expressions they wore and the words of gratitude they uttered.

Moderator Sangeeta, along with a Committee Member, Rimple Dedhia, then read out some interesting responses emailed by other participants who were looking to make a comeback after taking a break for family commitments: wanting to create a distinct identity other than the present one as an associate in a Big 4; aspiring to be a partner in one of the Big 4; considering a career in Internal Audit. The panellists deliberated upon these, too.

BCAS ran two poll questions during the event coordinated by Committee member Virag Shah. The first was, how satisfied are you with your present position? Here is a summary of the responses – 41% Extremely Happy; 54% Satisfied; and 4% Dissatisfied. The second question was whether the audience would be interested in a mentor-mentee programme by the BCAS – and this elicited an overwhelming response with 70% indicating their eagerness to sign up for the same!

In their concluding remarks, the panellists spoke with refreshing candour. Nandita Parekh emphasised on the need to enjoy each phase of one’s life and have an open dialogue – be it in personal life or at work; she reminded the audience that life is not a race, and to sit down once in a while and reflect on the journey thus far; she also suggested re-writing one’s CV every six months and if there was nothing exciting to add therein, to reflect on the same. Mansi Jain stressed on the need to find a niche or passion, identify areas to contribute and strengthen the ecosystem and partner in the nation-building process, adopt technology and develop one’s own financial plan. Bahroze Kamdin told the participants to dream big and plan appropriately, that life’s entire concept is doing what makes one happy; she quoted Einstein: ‘Weak people revenge. Strong people forgive. Intelligent people ignore.’

The routine Q&A session was followed by the surprise of the evening, viz., a rapid-fire round by the moderator who asked the panellists some very insightful questions which gave a sneak peek into their minds. Mansi Jain believes that work should also be fun and that social media is a necessary way to communicate; Nandita Parekh feels that emotional maturity and the ability to look at the bigger picture don’t come only with age; she also agrees that doing a relevant course is a good way to delve into technology faster; Bahroze Kamdin favours flexi-hours and remarked that while recruiting, the ability to communicate effectively also matters; she also agrees that office hours can also be used to discuss personal problems.

Virag Shah proposed the vote of thanks and requested everyone to fill the online feedback form.

The feedback from the participants has been extremely encouraging. With the release of the BCAS App, the Society hopes to bring many interesting and relevant woman-centric programmes within easy reach of members.

In the words of the American poet, memoirist and civil rights activist Maya Angelou, ‘Each time a woman stands up for herself, she stands up for all women.’ The distinguished panel and moderator and all the women that participated are indeed a testimony to that.

A MUNIFICENT DONATION

The Office-Bearers and members of the Managing Committee of the BCAS were pleasantly surprised recently by the noble gesture of a senior life member, Anilkumar Desai of Vadodara (BCAS Membership Number LD – 000047), who is aged about 77.

In a letter accompanying a cheque, he stated that he was donating a sum of Rs. 25,11,111 (Rupees twenty five lakhs eleven thousand one hundred and eleven only) towards the corpus fund of the Society. A portion of the said letter is being reproduced below.

Anilkumarji has been associated with the BCAS since 1970 and has been an active participant at the RRCs till the late 1980’s. His letter signifies his affection towards the CA fraternity associated with the BCAS. Apart from attending the RRCs, he has also been an avid reader of the Society’s monthly magazine, ‘The Bombay Chartered Accountant Journal’ (BCAJ), for more than 50 years.

During a brief interaction over a call with the President and the Vice-President who had called him to acknowledge his noble philanthropic gesture, Anilkumarji informed them that he has been a real beneficiary of knowledge-sharing through attending the RRCs and reading the Journal. Therefore, he wanted to give back to the Society that had provided him with such professional acumen.

Reading and understanding can take one to the pinnacle of success once these learnings are applied in performing one’s professional duties. And Anilkumarji is an apt illustration of this.

We express our heartfelt gratitude to Anilkumar Desai for such a noble gesture and the credit for this goes to all the volunteers of the BCAS.

KEY INTERNATIONAL TAX RULINGS

Advocate and Chartered Accountant Dr. Sunil M. Lala, a well-known tax counsel who has delivered many popular talks on international taxation, was the main speaker at the virtual lecture meeting on ‘Important International Tax Rulings (Post-2019)’ organised by the BCAS on 18th March. President Suhas Paranjpe set the ball rolling by welcoming the participants and Vice-President Abhay Mehta introduced the speaker.

Dr. Lala began by acknowledging Dr. Mayur Nayak, Chairman of the BCAS International Taxation Committee, and then went on to discuss ten judgments, five of the Supreme Court and the High Courts and five of various tax Tribunals. The judgments were on issues of permanent establishments, royalty, fees for technical services, capital gains, interest and foreign tax credit.

He started by explaining the intricacies of the ruling of the Supreme Court in Union of India vs. U.A.E. Exchange Centre [2020] 116 taxman.com 379 [SC]. All four liaison offices of the assessee in India were opened by the UAE Exchange Centre with the approval of the RBI to carry out financial transactions for their clients in the UAE for the beneficiaries in India. The Court had observed that the services provided through the liaison offices were auxiliary in nature and that the RBI approvals are not conclusive but persuasive. The verdict was in favour of the UAE Exchange Centre considering the fact that the liaison offices were just facilitating the services of the assessee in India and hence could not be considered as PEs. On the same lines, the speaker took up several other judgments where he applied the principles of international taxation.

Taking up the case of DIT vs. Samsung Heavy Industries Co. Ltd. [2020] 117 taxmann.com 870 (SC), Dr. Lala referred to some provisions of the India-Korea DTAA. The assessee, a tax resident of Korea, was awarded a contract for carrying out survey, design, engineering, procurement, fabrication, installation, modification, start-up and commissioning of facilities covered under the ‘Vasai East Development Project’ (the ‘Project’), by Oil and Natural Gas Corporation [ONGC] for which it had opened a Project Office in Mumbai to act as a communication channel between it and ONGC. The assessee reported a loss of Rs. 23.50 lakhs in the return filed for A.Y. 2007-08.

The A.O., during the course of assessment proceedings, passed a draft assessment order holding that the project was a single indivisible ‘turnkey’ project and therefore the profits arising from the commissioning of the same would arise in India. He further held that the work relating to fabrication and procurement of material was very much part of the turnkey contract and the said work was wholly executed by the PE in India. Not merely this, the A.O., with the help of ‘Capital Line’ software, determined that 25% of the revenue be taxed in India under the Transfer Pricing Guidelines. The Tribunal also held that the assessee is liable to be taxed in India considering several administrative expenses claimed by it.

The Uttarakhand High Court allowed the appeal of the assessee and set aside the Tribunal’s judgment so far as it related to imposition of tax liability on 25% of the gross receipts of the assessee. The Revenue appealed against the order and the matter moved to the Supreme Court. The Supreme Court observed that the finding of the Tribunal, the mere mode of maintaining the accounts alone, could not determine the character of a permanent establishment. The finding of the Tribunal was held to be a perverse finding. Further, the view of the Tribunal that the onus is on the assessee and not on the Revenue to demonstrate that the project office was not a permanent establishment of the assessee was held to be contrary to the decision of the Supreme Court in E-Funds IT Solutions Inc.

Another issue on PE was that of the Dependent Agency Permanent Establishment (DAPE) in the case of CIT vs. Taj TV Limited [2020] 115 taxmann.com 305 (Bombay). The Bombay High Court held that since none of the conditions as mentioned in Article 5(4) of the India-Mauritius DTAA was fulfilled, the DAPE of the assessee was not established in India, i.e., qua the distribution agreement.

On the issue of royalty under international taxation, the speaker gave his insights on the judgment in Majestic Auto Ltd. (Assessee – Ten Sports) vs. CIT [2019] 110 taxmann.com 261 (Punjab & Haryana). In this case, the Court had held that payments for supply of designs, drawings, specifications, etc., were not in the nature of royalty and favoured the assessee. The speaker also explained the provisions of the India-Austria DTAA.

Dr. Lala spoke in detail on the subject of fees for technical services in the judgment given by the Mumbai Tribunal by citing the case of Buro Happold Limited vs. DCIT [2019] 103 taxmann.com 344 (Mum-Trib). The Tribunal held that the supply of project-specific designs / drawings / plans did not make available technical knowledge, experience, skill, know-how or process (since the designs were project-specific and could not be used by Buro India subsequently) and hence the same was not taxable in India.

Another case in which the judgment went in favour of the assessee was when the Mumbai Tribunal in Morgan Stanley Asia (Singapore) Pte. vs. DDIT (IT) [2018] 95 taxmann.com 165 (Mumbai-Trib) allowed the main grounds of the appeal in favour of the assessee and did not adjudicate the balance grounds which became academic in its opinion (once the reimbursement of salaries was not taxable, the corresponding TP adjustment / mark-up could not be taxed). Provisions of the India-Singapore DTAA were also taken up at length.

On capital gains on the transfer of shares, the speaker, Dr. Lala, selected the case of Sofina S.A. vs. ACIT [TS-129 ITAT-2020 (Mum)] ITA No. 7241/Mum/2018. He explained the provisions of section 9 of the IT Act, 1961 along with Article 13 of the India-Belgium DTAA while explaining the verdict. The Tribunal in its decision had said that if a person holds shares outside India which, directly or indirectly, derive their value substantially from assets located in India, the legislation deems such shares located outside India to be located in India for taxation purposes. However, a similar approach is not envisaged in Article 13(5) of the relevant DTAA and hence it cannot be deemed that the mentioned transaction results in the transfer of shares of the Indian company.

As for the taxability of interest income in India, the speaker took up the case of Golden Bella Holdings Ltd. vs. DCIT [2019] 109 taxmann.com 83 (Mumbai-Trib) and made a brief reference to Article 11(2) of the India-Cyprus DTAA to explain the decision of the Tribunal. The Tribunal had held that the assessee would be eligible for the DTAA benefits and shall not be subject to tax in India.

On professional fees received by an Indian firm from its foreign clients, Dr. Lala explained the case of Amarchand & Mangaldas & Suresh A. Shroff & Co. vs. ACIT [2020] 122 taxmann.com 248 (Mumbai-Trib). He elucidated certain Articles of the India-Japan DTAA and stated that the contention of the A.O. while passing the assessment order does not fall in line with the DTAA. The Revenue had denied the TDS credit which the Japanese firm had taken while making payments to the Indian law firm. The Tribunal went with the assessee, thereby allowing the TDS credit to avoid double taxation.

Next, the speaker took up the newest issue in the area of international taxation, that of shrink-wrap computer software in the case of Engineering Analysis Centre of Excellence (P) Ltd. vs. CIT [2021] 125 taxmann.com 42 (SC). The issue was, does the payment made for the purchase of shrink-wrap computer software amount to royalty or not? The speaker explained section 9 of the Act read with Article 12(3) of the India-Singapore DTAA and also explained the implications of applying the provisions of the DTAA at the time of withholding taxes u/s 195. Further, he referred to section 14 of the Copyright Act which the Supreme Court considered while deciding on the case. The Supreme Court had to decide on more than 100 such pending appeals. The speaker, Dr. Lala, dealt with the topic in a quick but detailed manner, making references to the OECD commentary as well.

The meeting ended with a vote of thanks proposed by Siddharth Banawat, Convener of the International Taxation Committee of the BCAS. The above lecture is available on BCAS@bcasglobal on our social media platforms and at https://www.youtube.com/watch?v=3I9XFhBGWos.

IMPACT OF SC DECISION ON SOFTWARE TAXATION

The BCAS organised a lecture by H. Padamchand Khincha titled ‘Analysis and Impact of Supreme Court decision on Software Taxation in Engineering Analysis Centre of Excellence Pvt. Ltd.’ The virtual meeting was held on 24th March.

Interestingly, the above case and the decision thereon had been awaited for long as it dealt with one of the most contested issues in international tax.

Mr. Khincha spoke on the importance of the decision and its impact. While clarifying its scope, he pointed out that not all types of transactions related to software have been dealt with by the decision. He also noted how the decision lays down principles on copyright issues related to software by considering other decisions on copyright law. These principles can possibly be referred back on decisions on copyright law.

The speaker expounded on various relevant provisions of the copyright law which form the bedrock for a proper analysis of the decision. He then dealt with the Court’s decision on end-user license agreement in respect of a physical copy of a software sold to an end-user. The decision holds such an agreement to be in the nature of a contractual agreement and not a license of copyright. In that sense, use of a software would be akin to the purchase of a book. The Supreme Court has held, in essence, that sale of software to an end-user would be akin to the sale of a copyrighted article and hence not license of a copyright.

Mr. Khincha then analysed the Court’s decision on the phrase ‘granting of license’ in the definition of royalty u/s 9(1)(vi). It held that the phrase needs to be juxtaposed with the preceding words which necessitates transfer of rights or parting of rights from the copyright holder to the user. Without this, the payments would only become a business income and not a royalty payment. The Court held that even though the language used under the Act is distinct from that used under the treaty, the above reasoning would still hold good even under the treaty. He explained that the Supreme Court had held that mere letting or mere licensing would not be critical unless they related to specific rights under the copyright law, hence not leading to taxation as royalty in the case of software sold to end-users.

The speaker next focussed on the Supreme Court’s decision on transactions between the owner of software and its distributor. Does the distributor have a copyright right of ‘right to reproduce’ or ‘right to issue copies to the public’? While the distributor has a right to reproduce, it does not have an uninhibited right to reproduce but merely a right to reproduce for sale a limited number of copies of the software. Turning to the concepts of ‘principle of exhaustion’ and ‘principle of first sale’ which have been referred to in the Supreme Court decision, he pointed out that the Court had held that such limited right provided to the distributor to reproduce is for mere facilitation to sell those limited number of copies of the software and not an ownership right.

As for the Court’s consideration of the copyright rights of ‘rights to sell’ or ‘offer for sale’ or ‘offer for commercial rental’ of a computer programme, Mr. Khincha also enlightened the gathering about how the relevant notes to clauses for deletion of certain phrase in them were not brought to the notice of the Supreme Court and explained how the Court had relied on underlying decisions to arrive at its decision. The Court had held that ‘exclusivity’ is the distinguishing factor whereby
‘right to use’ can be considered as a transfer of copyright right in favour of a distributor only where the distributor has ousted the owner from these rights and hence has stepped into the shoes of the owner of the copyright. Where this is not the case, there would be no license of a copyright right and hence it would not be royalty. In fact, Paragraph 117 of the decision lays down six important principles of interplay of the copyright law and the Income-tax Act.

Following this masterful dissection of the Supreme Court decision, Mr. Khincha went on to analyse its other implications, starting with Explanation 4 to section 9(1)(vi) and its applicability to transactions done before the said Explanation was brought into law. The Supreme Court held that the Explanation could only be applied prospectively and not retrospectively. Such a decision is important to understand the implications of other explanations similarly having been introduced with retrospective effect. The speaker also analysed the implications of the decision on section 194J and other provisions of the IT act dealing with software taxation as well as equalisation levy. He dealt with the implications of this decision on other Supreme Court decisions and offered his views on the proposed amendments to the UN Model on the Article on Royalty. He ended his exposition with a peep into the Government’s thinking which portended that multiple levies and rates may become applicable to taxation of software royalty as the Government would not like to lose such revenue.

Rutvik Sanghvi proposed the vote of thanks. The archival video of the meeting has, in a short time, garnered a few thousand views.

‘IS THERE A CHANGE IN EXPECTATIONS FROM AUDITORS?’

Whilst the basic principles of conducting an audit have stood the test of time, like many other areas it has to evolve and move with the times whether in terms of increasing technical and reporting responsibilities laid down by the ICAI and other Regulators, including NFRA, technical challenges due to digitisation, increased frauds and irregularities and, last but not least, the new but continuing monster on the block by the name of Covid-19. Further, the expectations of the various stakeholders like managements and the Regulators as well as the society in general have also increased manifold, thereby creating an expectation gap.

With these thoughts in mind, the BCAS organised an interesting virtual panel discussion on 7th April styled ‘Is there a change in expectations from auditors?’ The elite panel consisted of M.P. Shah, Regional Director, Western Region ROC, Nilesh Vikamsey, Past President, ICAI, and Mr. Anil Singhvi, investor activist and former MD of Ambuja Cements Ltd., representing the interests of the Regulator, the practitioners and industry, respectively. The discussion was moderated by Sudhir Soni.

Welcoming the panellists and participants, President Suhas Paranjpe indicated that auditors and audit expectations is a hot topic which keeps on changing and hence he hoped that this discussion would provide a 360-degree view from the perspective of different stakeholders. Vice-President Abhay Mehta briefly introduced the moderator and the participants.

Starting the discussion, Sudhir Soni welcomed the panellists and indicated that whilst financial reporting and auditing give a lot of comfort to the various stakeholders, there have been several corporate failures coupled with frauds and compliance gaps in the recent past, resulting in the audit quality being called into question and also the consequential changes in expectations arising therefrom. He then initiated and very ably moderated the discussion by asking several questions on a wide range of issues impacting the various stakeholders which elicited several responses, concerns and suggestions from the panellists, the principal ones being as under:

  •  There have been very few references received from auditors u/s 143(12) of the Companies Act, 2013 despite the fact of too many corporate scams taking place. Further, even in cases where such references are received, there is a perception that no stringent action is initiated but a random scrutiny is undertaken based on complaints by aggrieved stakeholders.
  •  The recent amendments to CARO and its linkage with schedule III will put greater onus on managements on various aspects like usage of funds, filing of returns with banks, etc., which will also facilitate the auditors to discharge their reporting obligations in the right spirit.
  •  Whilst expectations from auditors to detect frauds on a timely basis have risen, anything which is in the nature of ‘premeditated murder’ is very difficult to detect.
  •  Audit no longer retains its glamour and is not considered as remunerative vis-a-vis consultancy. Audit is not an investigative or forensic exercise, though it is expected to raise red flags. However, the time is not far when the face and expectation of audit would change to that of being forensic and investigative due to the increased role of digital tools (including blockchain technology) which would largely do away with sampling. Further, reporting on internal control weaknesses needs to be more focused and widespread.
  •  The cushy relationship between auditors and promoters can be mitigated by getting their appointment approved by the majority of the minority.
  •  Even though in the past auditors had heavily qualified certain financial statements, banks continued to extend loans and no other regulatory action was immediately forthcoming.
  •  On the question of whether any independent analysis of audit qualifications is undertaken, it was indicated that as a part of the initiative to leverage technology, a Central Scrutiny Centre would look at various forms and financial statements which are filed to provide an early warning signal.
  •  Auditors should play a greater role in highlighting various corporate governance issues more in spirit rather than as a tick-in-the-box approach. This would also involve a holistic approach towards issues like appointment, remuneration, resignation and prosecution on the part of various stakeholders.
  •  The auditors would need to be more vigilant as managements and CFOs are getting smarter and are always a step ahead! There should be more emphasis on software and hardware-related digital skills and greater use of professional scepticism.
  •  The time has come for auditors to comply with the SAs in spirit and whilst documentation is important (especially for the Regulators), there should be greater emphasis on judgment and matters involving public interest.
  •  Whilst it is always the statutory auditors who are blamed for failures, the time has come for making credit rating agencies, internal audit, audit committees and Independent Directors more accountable.

The meeting concluded with a vote of thanks proposed by Zubin Billimoria.

WEBINAR ON TDS AND TCS PROVISIONS

The BCAS joined hands with the IMC Chamber of Commerce and Industry, the Bombay Chamber of Commerce and Industry, and the Chamber of Tax Consultants to organise a two-day online webinar on ‘TDS and TCS provisions – A 360-degree perspective’ on 7th and 8th April. The webinar was planned as a mix of panel discussion and presentation sessions on relevant TDS and TCS issues with knowledge-sharing by eminent tax experts from the corporate and professional fields, as well as from the Revenue Department. As panellists, they provided a holistic perspective and offered a blend of academic and practical solutions to the questions posed.

The first discussion moderated by Past President Anil Sathe had Mr. Saunak Gupta of Blue Star India and tax expert Daksha Baxi on the panel. It covered practical issues being faced by traders and e-commerce operators in relation to TDS on purchase of goods (section 194Q) to be introduced from July, 2021, TCS on sale of goods [section 206C(1H)], TDS on certain e-commerce transactions (section 194-O) and other provisions with various case studies. The panel dealt with issues like what would be considered as ‘goods’, sales returns, turnover thresholds prescribed for applicability of section 194Q, distinction between professional and technical services for section 194J, etc.

The panel for the second session, moderated by Atul Suraiya, formerly of Tata Chemicals, comprised Mr. Rakesh Gupta from the RPG Group and tax experts Ms Hema Lohiya and Mr. Mahendra Sanghvi. They discussed intricate legal issues arising from TDS mismatch in salary shown in Form 26AS versus actual salary, non-receipt of Form 16, claiming refund of TDS, prosecution for defaults and other important topics.

On the second day, Mr. Avinash Rawani covered the entire gamut of TDS and TCS procedural compliances, including issues in return-filing, rectifications, claiming refund, etc. Mr. Rawani also answered a host of queries from the participants pertaining to a number of issues that professionals face on a day-to-day basis and complying with the same.

The fourth session had the benefit of the experience of Mr. Sanjeev Sharma, Principal Director of Income-tax (Investigation), Bihar and Jharkhand, and tax experts Mr. Sanjiv Chaudhary and Dr. Mayur Nayak on issues related to tax deduction from payments to non-residents. It was ably moderated by Sushil Lakhani, a member of the International Taxation Committee. The panel discussed the recent Supreme Court decision on taxation of software along with TDS on various payments such as cloud computing fees, commission and marketing fees, reimbursement of expenses, the need of TRC, etc.

The last panel comprised of Mr. Hemant Kadel of Grasim Industries and BCAS Direct Tax Committee Member Sonalee Godbole. The moderator, Mr. Ravi Mahajan, led the panel through a host of topics such as TDS on employee contributions to provident funds in excess of the prescribed limits, differentiation between TDS u/s 192 as salary or as professional fees u/s 194J, changes in salary payments towards the end of the year, etc.

All the panels received several queries from the participants which were ably dealt with. On the whole, the clarifications provided by the panellists were quite detailed and proved helpful to the participants in clarifying some very practical questions and issues. A clear need was felt for reducing the tax deductor and collector’s burden by reforming the cumbersome and plentiful set of tax collection provisions.

The paid Webinar was attended by close to 500 participants and proved to be a successful example of conducting joint programmes with sister organisations on important topics.

IMPORTANT DECISIONS IN INDIRECT TAXES


A lecture meeting on ‘Recent Important Decisions in Indirect Taxes’ was held online on 9th April. It was open to all and was addressed by Advocate Mr. J.K. Mittal from New Delhi. He is a Co-Chairman of the National Council on Indirect Taxes, ASSOCHAM, and has been honoured several times by the Supreme Court Bar Association.

Mr. Mittal in his address dealt with several important decisions in the areas of service tax, GST, sales tax as well as customs, including the decision of the Supreme Court in the case of State of West Bengal and Ors. vs Calcutta Club in which the levy of service tax and VAT was held inapplicable on mutual association / members’ club even after the 46th Amendment adding Article 366(29A) to the Constitution of India. He also pointed out that an attempt has been made by the Government to make a retrospective amendment in the GST law to nullify the decision of the Supreme Court and also expressed concern over such frequent retrospective amendments which are not assessee-friendly.

He discussed another decision of the Supreme Court in the case of Canon India (P) Ltd. vs. Commissioner of Customs which dealt with the power of the DRI to issue show cause notice vis a vis the jurisdiction of ‘proper officer’. The decision of Torrent Power Ltd. dealing with the concept of ‘composite supply’ was also discussed. He also respectfully disagreed with the decision of the Calcutta High Court in Srijan Realty (P) Ltd. vs. Commissioner of Service Tax, the decision of the Orissa High Court in Safari Retreats (P) Ltd. vs. CC-CGST and the decision of the Delhi High Court in the case of Aargus Global Logistics Private Ltd. vs. Union of India & Anr. and shared his views thereon. A few other judgments such as South Eastern Coalfields Ltd. vs. CCE&ST (Delhi CESTAT), Sahitya Mudranalaya Private Ltd. vs. Additional Director-General (Gujarat High Court) and JSK Marketing Ltd. vs. UOI (Bombay High Court) were also discussed.

In his 90-minute-long address Mr. Mittal touched upon various legal propositions arising out of several decisions and also enlightened the audience with his views on certain contentious matters, including the power of officers to issue summons and to conduct audit under GST. He also answered queries posed by the participants, during as well as at the end of the session.

The meeting was attended by more than 160 persons on the Zoom platform and is also being watched continuously on the YouTube channel of the BCAS at https://www.youtube.com/watch?v=a7G4h4LNdBY with more than 900 views so far.

‘RECENT IMPORTANT DECISIONS IN IT’

The BCAS organised a lecture meeting on ‘Recent Important Decisions in Income Tax’ on 14th April which was addressed by advocate Hiro Rai. It was held in virtual mode on the Zoom platform with live streaming on YouTube.

President Suhas Paranjpe made the introductory remarks and welcomed the speaker, whereas Joint Secretary Mihir Sheth introduced him.

Hiro started the session by listing a few principles which one should keep in mind while studying judgments of various courts. He explained the intricacies of the judgment given by the Supreme Court in Shree Choudhary Transport Company vs. ITO [2020] 426 ITR 289 [SC] which dealt with various issues relating to disallowance u/s 40(a)(ia). He then took up the important Supreme Court judgment in DCIT vs. Pepsi Foods Ltd. 126 taxmann.com 69 dealing with vacation of a stay under the third proviso to section 254(2A). The Court struck down the proviso as it was offending Article 14 of the Constitution of India and would be arbitrary and discriminatory if the delay was not attributable to the assessee. He then explained how the arguments accepted in this judgment would be important in challenging the constitutional validity of faceless Tribunals whenever they are challenged. He took up various other important Supreme Court judgments reported in the last one year and explained various crucial points and arguments and offered his insights on the said case laws.

Hiro then took up the Bombay High Court decision in Sesa Goa Limited vs. JCIT 423 ITR 426 which dealt with deductibility of education cess. It held that the education cess is allowable u/s 40(a)(ii). He also explained how this case law can help assessees on similar grounds or as an additional ground in their appeals. Further, he emphasised the importance of drafting appeals and submissions before various authorities and explained various legal points arising from these case laws.

He also discussed some of the recent important decisions of the Tribunals and then answered a few queries from the participants on the case laws discussed by him. The session was insightful and helpful for all (400-plus) participants who attended the meeting virtually.

The vote of thanks was proposed by Hardik Mehta, Convener of the Taxation Committee of the BCAS.

The lecture is available on BCAS@bcasglobal on our social media platforms and at https://www.youtube.com/watch?v=UjadD6oNo1Q&t=4676s.

FELICITATION OF NEW CA’s

It was Arthur C. Clarke who wrote, ‘The moon is the first milestone on the way to the stars’. In the case of the successful finalists of the CA exams of November, 2020 and January, 2021, just the cracking of the exams (touted to be among the toughest in the world), is truly the first major milestone in their lives.

The perseverance and grit displayed by these Achievers is particularly noteworthy, given the fact that the year that went by was an extremely challenging one for everyone, more so for those who took the Final CA exam.

Every year, the Seminar, Public Relations & Membership Development Committee (SPR&MD) of the BCAS felicitates the ‘achievers’ of the November and May examinations at the BCAS office. But this year, given the Covid-19 restrictions, the event was held on the virtual platform on 23rd April – this happened for the first time since it was launched. A special discussion on ‘Milestone 2.0 – Building a “CA”reer’ with a distinguished panel comprising Bhavna Doshi, Robin Banerjee and Anand Bathiya was organised to guide and mentor these youngsters.

The mentors can be best described by a line from a poem by Robert Frost:
Two roads diverged in a wood, and I,
I chose the one less travelled by,
And that has made all the difference.

One part of the registration form was designed in such a way that the questions and concerns of the pass-outs were highlighted. That the mentors took their roles very seriously was evidenced by the fact that they sought a mock session a week before the event. The questions and concerns were also shared with the mentors to give them an opportunity to better understand the participants’ minds.

Interestingly, within 24 hours of the announcement of the event it attracted close to 300 registrations – some from states as far away as Jharkhand, Bihar, Orissa, West Bengal and Chhattisgarh. By D-Day, the registrations crossed 500 – including over 70 rankers.

In his opening remarks, President Suhas Paranjpe welcomed the young pass-outs into the fraternity and reminded them that while they strive and focus to achieve success in their professional careers, it is also equally important to devote time and energy to look after their health and well-being.

Vice-President Abhay Mehta also addressed the gathering.

SPR&MD Chairman Narayan Pasari called upon the youth to rise up to their role in building a strong nation. He briefed them about the activities of the Committee, including the programmes where ‘Yuva Shakti’ takes the lead.

He pointed out that one of the important activities of the Committee is the publication of the BCAS Referencer which is now in its 59th year of publication. The Referencer acts as a Bible for every professional, whether in practice or industry.

Managing Committee member and SPR&MD Convener Kinjal Bhuta, who is also the youngest Editor of the Referencer, briefed the audience about the theme behind this year’s publication, ‘Namaste Bharat’, which celebrates the rich tradition and culture of the country. For the past several years, Past President Pranay Marfatia has been guiding the team that puts the Referencer together and this year was no exception. The principal team of writers, Zubin Billimoria and Yatin Desai, was also present.

The flip-book version of the Referencer was officially launched on the occasion by the President, the Vice-President and the three mentors. The exquisitely-crafted Referencer drew praise from the mentors as the pages unfolded on the screen.

The moderator for the event was Committee member Kushal Lodha, himself an all-India rank-holder in the November, 2019 examinations. The first question was the one that vexes every batch of pass-outs – industry or practice? Then there were questions such as ‘What if I realise after a year or so that I do not enjoy the work I am doing? What do I do then?’

Bhavna Doshi advised the pass-outs to not worry too much when it came to choosing between practice, industry and something else; it was never too late to do course-correction and no experience ever went waste. To those intending to start a new practice, she suggested that they think of it as a start-up and plan accordingly.

Another question was whether one should pursue MBA immediately after CA or gain some work experience for a year or two. Robin Banerjee suggested that it is far more important to ensure that the MBA is done from one of the top 20 or 25 institutions; and if becoming a CFO is the ultimate goal, one should look at being a generalist rather than a specialist. He also spoke of the importance of ‘CLEAR’ – C for Communication, L for Learning, E for Ethics, A Attitude and R Relaxation, and emphasised the importance of Intelligence Quotient, Emotional Quotient and Love Quotient.

On the question about industry vs. practice, or generalisation vs. specialisation, Anand Bathiya stated that it is good to have problems and questions at times and such discussions are possible ‘because we Chartered Accountants are so versatile’. He suggested that instead of a top-down approach, one should look at a bottom-up approach, starting with listing one’s preferences, family background, etc., to arrive at the right decision.

So far as the current lockdown was concerned, Bhavna Doshi stated that while the world has changed completely, there is a silver lining, too. Today, CAs are providing more than the traditional services and are able to reach out to a much larger potential client base irrespective of the geographical location. She further emphasised that as suggested by Robin Banerjee, ‘turn-around strategist’ is one of the emerging areas for CAs. The opportunity to help stressed clients must be explored. Anand Bathiya invited the achievers to look up the free courses available on Google Digital Garage on topics as varied as Artificial Intelligence, Blockchain, Cryptocurrency, Digital Marketing, to name a few – these courses take anywhere from three weeks to three months.

While a regular, physical event enables BCAS to felicitate the achievers in front of their peers, this being a virtual event, four achievers were given the opportunity to personally interact with the mentors. The happy faces which appeared on the screen spoke volumes of the effect that the mentors’ talk had had on them.

A rapid-fire round for the mentors at the end of the session gave the audience an opportunity to learn a little more about them, their likes and interests. Virag Shah proposed the vote of thanks. The efforts of Convener Preeti Cherian and Rimple Dedhia in setting up the event were acknowledged.

That the event was well received was evidenced in the feedback that was received after the event and the 2,000 + (and counting) views on YouTube since then.

VIRTUAL FIRE-SIDE CHAT

The BCAS joined hands with the Association for Chartered Accountants, Chennai, to organise a virtual fire-side chat on the ‘New Income Tax Provisions on Charitable Trusts’ on 24th April. It was held by means of the Zoom webinar facility.

The key speaker was Gautam Shah and the discussion was moderated by Divya Jokhakar. The webinar was also broadcast on YouTube and a total of 480 participants attended it.

Speaker Gautam Shah started by giving a brief introduction of the provisions of sections 12AB, 10(23C) and 80G of the Income-tax Act, 1961. He then went on to tackle the questions posed to him by the participants. Most of these were based on the practical and academic difficulties encountered by them while dealing with renewal, registration and re-approval of Income-tax exemption certificates from the Department under the above provisions.

After the chat, Gautam spent some time addressing even more queries from the participants. The two-hour session was helpful in resolving several real-time problems.

BOOK REVIEW

I ‘INDIA 2030: THE RISE OF A RAJASIC NATION’ – Edited by Gautam Chikermane Reviewed by Riddhi Lalan, Chartered Accountant

The world, beset by uncertainties and crumbling under the weight of a global pandemic, has now ushered in a new decade with socio-economic disturbances, sluggish growth and global disorder. This new decade shall surely mark the resurgence of a new world order and the revamping of the old. India 2030: The Rise of a Rajasic Nation is a book to read if you are curious about what the next ten years might hold and how India can charter its course towards 2030.

In the words of Editor Gautam Chikermane, Vice-President of Observer Research Foundation, ‘In the 2020s, the world will look at India to provide inner stability in outer chaos. It will bring out and turn into action the collective journeys of 1.3 billion souls. It will create new civilizational-spiritual narratives. It will pour out and share its knowledge of the intellectual-philosophical traditions in ways not seen before, through mediums that are still evolving. All this it will do while becoming the world’s third largest economy, a regional power and a shaper of world events. This it will do in an era of constant Black Swan events.’

What is intriguing is the use of the term ‘Rajasic Nation’. In his introductory essay Gautam talks about how the nation has been under the pressure of tamas – inertia, inactivity and dullness – since the war of Kurukshetra. Independence and the surge of nationalism were expected to see the transformation from tamas to rajas – action, force and passion. As these transformations take time to gather momentum, he expounds that the last seven decades were a preparation for the domination of rajasic forces that the 2020s shall witness.

He has comprehensively woven together essays by Abhijit Iyer-Mitra, Ajay Shah, Amish Tripathi, Amrita Narlikar, Bibek Debroy, David Frawley, Devdip Ganguli, Justice B.N. Shrikrishna, Kirit Parikh, Manish Sabharwal, Monika Halan, Parth Shah, R.A. Mashelkar, Rajesh Parikh, Ram Madhav, Reuben Abraham, Samir Saran, Sandipan Deb and Vikram Sood into a single volume that looks towards the next decade leading to 2030, beautifully describing the nuances and complexities of various subjects ranging from health, politics, justice, defence, economy, education, intelligence, science and technology and foreign policy.

Keeping this thought in mind, this annotation could either be considered a book of ideas, a guide for citizens, a handbook for policy-makers, or simply a collection of essays. At first it may seem partly like crystal-gazing and partly a wish list; on a closer reading, it turns out to be a scientific and strategic estimation of the future based on an analysis of historical and current facts. While ten years is a long time frame to look at, especially in an era when tomorrow seems to be as different from today as one’s imagination allows, the extrapolation of the future based on the current patterns and trends makes for interesting reading.

The underlying theme of optimism and assertiveness that emerges from it does not distract the reader from the challenges that the nation must overcome in the next decade. This is evident in most of the essays.

The essay on health by Rajesh Parikh points out that the less sensationalised problems of lifestyle, climate change, pollution and existing infections have been killing us from long before the advent of the novel corona virus. He also describes the looming danger of bio-terrorism and anti-microbial resistance. According to him, Artificial Intelligence (AI) and nature’s wisdom will be the future of healthcare.

The essay on economy by Bibek Debroy shows how the existing policy, focusing on inequality rather than inequity and wealth redistribution rather than wealth creation, is flawed. He points out that the policy shall now shift to wealth creation to reduce inequity. While inequality will still exist, that does not matter as long as the absolute standard of living improves.

In his essay on justice, B.N. Shrikrishna touches on the collegium system which will change in the 2020s. He unabashedly points out that the justice system resembles a mansion in utter disrepair and stresses the need to focus on technology, educating citizens about enforcing their rights, further strengthening the independence of the judiciary, the rise of the written word against oral arguments and faith in fiat justitia ruat caelum.

Abhijit Iyer-Mitra, writing on defence, gives an interesting insight into the Balakot strike, highlighting the flaws of the current defence system. He has listed nine trends that will dominate the defence sector in the 2020s. These include a shift from offsets to work share, empowerment of Medium, Small and Micro Enterprises (MSMEs), privatisation and bifurcation of economic and security policy, among others.

Amrita Narlikar brilliantly brings out how the pandemic has taught certain nations that ‘weaponised inter-dependence’ is not just an academic theory. Emphasising the importance of India’s stubborn adherence to principles and values, she predicts that a new robust and deeper multilateralism shall replace the old one, based on a commitment to shared principles reinforced by India.

In his essay on energy, Kirit Parikh predicts three concurrent trends: a fall in energy intensity at the level of industries, increasing use at the household level and greater use of clean energy. Pointing out that the share of renewable energy is currently low, he postulates that India’s rising energy consumption will be cleaner, greener and more sustainable compared to that of the rest of the world.

Manish Sabharwal gives us a thought-provoking line: ‘The problem in India is not unemployment but employed poverty’. Predicting a shift towards productivity, he highlights the key areas that will bring the required change, viz., increased formalisation, urbanisation, industrialisation, better governance and higher skills. The problem, he believes, is that we have created corporate dwarfs which remain small instead of babies that can grow. This will change by 2030.

Amish Tripathi in his essay on soft power, calling out the downsides of consumerism and individualism, anticipates that India could be a strange confluence of both materialism and spiritualism. He highlights how the Indian spiritual path helps us to be liberal while still being traditional. India will become a source of soft power that is gentle, compassionate and inclusive. It will reset the new principles of global co-existence.

Each essay in this compilation highlights the importance of strong and exemplary policy formulation along with disciplined implementation of these policies. We, as citizens, play a role in influencing such policies and manifesting the collective rajasic force emerging within us, too. As overwhelming as it seems, this idea is thought-provoking. It is for this that the book is worth a read both for the common citizen and policy-maker alike.

‘Philosophers have described the world in thousands of ways. The point, however, is to change it.’ This Karl Marx quote referred to by Manish Sabharwal in his essay is an appropriate description of what this book is about. Thought leaders from twenty diverse fields attempt to describe what 2030 could look like for India. Together, they lay out a path for the nation’s evolution in the coming decade. The point, therefore, is the synchronised efforts of the citizens and the policy-makers to take forward this daunting yet adventurous journey towards 2030.

Only time will tell whether this is a book of mere wishful thinking, a collection of informed predictions for 2030, or a prophecy for 2030. To some readers it may seem tilted towards the right and exceedingly optimistic. However, this illuminating book gives positive vibes that there are better times ahead and a hope that India will emerge as a ‘Developmental Superpower’ even while grappling with constant internal disruptions and uncertainties. For someone interested in comprehensively understanding the implications of the historical and current trends in various subjects and influencing policy-making, this book makes a good read.

II ‘INDIAN ACCOUNTING STANDARDS (Ind AS) – Interpretation, Issues & Practical Application’ by Dolphy D’Souza, Chartered Accountant
Reviewed by Bhavik Jain, Chartered Accountant

Many years ago the author had published two small pocket-edition books on accounting standards. From those days to now, we have seen the ever-widening scope of accounting standards. These three volumes, and they are really 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. This fifth edition containing 3,000 pages of analysis, including a third volume containing reference and application material, make a must-have compilation for preparers and auditors of financial statements.

The author has been an eminent writer and contributor to the BCAJ every month for more than 18 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 exhaustively covers new Ind AS 115, 116 (more than 300 practical illustrations and examples each) and guidance on the new definition of business under Ind AS 103. It handles these with illustrations, examples, references to EAC opinions, ITFG/IFRIC interpretations, where necessary and 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 (FIs). The book devotes more than 600 pages to them. 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 tax implications arising from Ind AS Accounting.

The book reproduces the text of both Ind AS and ICDS. It also gives significant changes made in the Draft ICDS on Real Estate Transactions vis-a-vis the Guidance Note on Real Estate Transactions issued by ICAI, making it handy for the Real Estate Sector. Electronic copy of the illustrative financial statement blending Schedule III and Ind AS makes it beneficial for preparers, especially during Work from Home / Remote Working situations. The last part of the book consists of some useful circulars / notifications on Ind AS issued by Securities and Exchange Board of India, related to Banking and Insurance Sector and Company Law such as the format of publishing financial results, formats for limited review / audit reports, clarification on ‘appointed date’ under the Companies Act, 2013 and more.

This book carries an enormous amount of content packed in three volumes with practical resources. The author once again 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

THE ‘SCIENCE OF MANIFESTATION’

The HRD Study Circle organised an online meeting on 13th October, 2020 on the ‘Science of Manifestation’ presented by Mr. Sanjay Mansukhani.

Interestingly, the speaker started the session in a matter of fact manner by saying that ‘all that we need to do is go in’. What he meant thereby was that when we go ‘inside ourselves’, we meet both our Mind and our Soul. By training our Mind and our Soul we can develop and access their power to the fullest. And if this is done smartly, then it can create magic in our lives and in the lives of others around us, namely, our family, community, nation and humanity at large.

The session was based on two world-class treatises that expound the powers of the Mind and the Soul.

1. ‘Master Key System’ by Charles F. Haanel, 1912
Mr. Mansukhani stated that this American tome is the ‘Father’ of all transformational and creative manifestation teachings. It produces unbelievable results through the right understanding and application of Thought, of the Conscious mind, the Sub-conscious mind, the Universal Mind, Universal Laws and Mental exercises. It is meant for advanced learners of the science of manifestation. It is for those who have already read ‘The Secret Book’ and know the ‘Law of Attraction’.

2. ‘Yoga Sutras’ by Rishi Patanjali, 400 BC
This is the ancient Indian science of Dhyana yoga. The four padas of Samadhi, Sadhana, Siddhis and Kaivalya reveal the deep science of manifestation. By practising it all worldly manifestations to God realisation can be achieved. It is strictly for serious advanced learners of the science of manifestation. It helps if the ‘Master Key System’ has already been learnt and practised.

A discussion on the above leads one to obtain a complete picture of the science of manifestation. ‘Master Key System’ is the western science of manifestation where the current laws of science are applicable, whereas Patanjali yoga sutras are the ancient Indian science of manifestation where the results go beyond the realms of modern-day science such as Siddhi (mystic powers) and Kaivalya (liberation).

The outcome of BIG manifestations will come with the right training and disciplined practice. The session ended with some intriguing thoughts. India and our friends and family are waiting for us to deliver BIG THINGS. The question is, CAN WE?

PANEL DISCUSSION ON ‘BUDGET 2021’

An illustrious panel of experts participated in a lively virtual discussion on ‘Budget 2021 – A 360° view of the Indian Economy’, on 24th February, 2021. They were Bhagirath Merchant, Ex-President, BSE; Niranjan Hiranandani, Co-Founder and Managing Director of the Hiranandani Group, and Dr. Ajit Ranade, Chief Economist of the Aditya Birla Group. Vikas Khemani moderated the discussion.

Welcoming the guests and participants, President Suhas Paranjpe explained that it was important to have a 360° view of the Budget as it was likely to have significant implications in the years to come. Vice-President Abhay Mehta introduced the panellists and the moderator.

Launching the discussion, Vikas Khemani said that the current year’s Budget did manage to meet the expectation of a ‘Once in 100 years Budget’ as was promised by the Finance Minister. It was indeed a shift of mind-set from extreme prudence to growth orientation, from incremental approach to leap-frogging, all this while keeping in mind the new economic realities. The Budget had demonstrated that policy-makers were working in a coordinated way to reach the goal of a ‘Five Trillion Dollar’ economy that the Prime Minister had envisioned.

Agreeing with these views, Niranjan Hiranandani said that there was indeed a paradigm shift evidenced in ‘Budget 2021’. Not deterred by the challenges posed by the pandemic, it had tried to convert them into an opportunity to bring about major reforms. The proposal to increase the capital expenditure for infrastructure by Rs 5 lakh crores without burdening the taxpayers with additional taxes was visionary. Although it could lead to deficit financing, it clearly reflected the positive mind-set of the policy-makers to give an impetus to infrastructure without impacting the consumption power of the people. Besides, openly supporting privatisation of the public sector was indeed a trendsetter. The concept of an infrastructure bank was a welcome move and he wished that there could be a couple of them rather than just one so as to increase the capability of taking on more projects with distributed risk. With expectations having been roused in the business community, he said that it would not be too much to ask for a clear asset monetisation policy and rationalisation of the highest tax rates which were currently at 42%. Concluding his remarks, he said that it was a great Budget that would put India on the trajectory of a growth rate of 11 to 12% in real terms.

Expressing his views, Dr. Ajit Ranade said that Budget 2021 laid the roadmap for several generations by providing funds for infrastructure. He was glad to note such evolved thinking on the part of the Government, that deficit financing is not a taboo if money is planned to be spent on building the future for generations to come. Lauding the Budget, he said that among the positives were that it was bold, with no further taxes, it showed a clear intent of privatisation of the public sector and proposed a push on many initiatives that would make GDP growth possible at 15% in nominal terms and at 11 to 12% in real terms. In Dr. Ranade’s opinion, the only caveat was to meet deficit financing without moving interest rates, with a proactive role for the RBI and providing a level playing field for the private sector to succeed.

For his part, Bhagirath Merchant complimented the Finance Minister for thinking out of the box and laying down the policy intent clearly. He appreciated the increased allocation for infrastructure, health and education and said that this was the first Budget that clearly quantified the disinvestment target. Making railways ‘future ready’ would help the manufacturing and agriculture sectors. Agricultural income would double thanks to this Budget. Growth in manufacturing will create opportunities by giving rise to ancillary industries, the SME sector and also the services sector. The move for privatisation of the public sector would unlock funds for Government to direct them in the right channels and would prove very useful in the long run.

Giving an example of how infrastructure investment could be self-fulfilling, Bhagirath Merchant said that with the build-up of the road network, the daily toll collection itself was more than Rs. 100 crores, thus helping in the direct recoupment of capital spent (to the tune of Rs. 36,500 crores per annum). Add to that the other benefits of faster traffic movement, increased trade volumes and tax collections, the benefits could be humongous. He gave a ‘thumbs up’ to the Budget on all these counts.

Pointing out that Government departments will now be permitted to bank with private banks, moderator Vikas Khemani said that the role of the private sector and external capital will assume greater importance. He invited the panellists to give their points of view. All panellists agreed with him and stressed the inevitability of investments from the private sector and access to funds from external sources. The general consensus was that ease of business will have to be accelerated even further as there were still quite a few issues on last-mile connectivity at the ground level. However, there was no denying that Government was quite proactive in responding to the challenges.

The next question raised by the moderator was whether the current account would continue to be in deficit or would be in surplus with rising exports that may occur with the push on manufacturing and the Atmanirbhar Bharat initiative. Most panellists felt that the current account numbers would continue to remain in deficit with rising import of crude and increasing consumption of aspirational India. However, that deficit would have ample leeway to be compensated by a rise in capital funding from external sources, making the overall balance of payment position positive.

On a question about the opportunities for wealth creation and green shoots for various types of industries, Bhagirath Merchant felt that there were ample opportunities. His opinion was backed by other panellists, too. The point in support of this argument was that the current pandemic had opened the vistas for cost reduction. And this was evidenced in the second quarter results of several companies. The Balance Sheets of Government banks and NBFCs had been nearly cleaned up to a ‘hygienic level’, free from their past issues, resulting in an improvement in their asset quality. The BFSI sector was on the verge of a major breakthrough with serious commitment of Government on business. The market would see huge capital mobilisation that companies already had on the anvil.

Niranjan Hiranandani echoed the above sentiments and said that the realty sector was also on the verge of a big turnaround with ease of finance, push to building houses under the PMAY and a proper regulatory framework of RERA in place. He said that NPAs in the realty sector could be transferred to the ‘Bad Bank’ which was under consideration of the Government. The private sector was prepared for something similar to SWAMIH fund that could infuse new life into many stalled projects. All these could provide a big boost to the realty industry. He cautioned, however, that instead of looking at the industry in general it would be prudent for the investors to look at each company separately for its credentials. On the whole, he was very positive about the market opportunities in the realty sector.

Dr. Ajit Ranade also opined that with growth in manufacturing and availability of funds, sectors such as warehousing, data warehousing, logistics, etc., looked positive.

The panel discussion was followed by a Q&A session. On a question whether there were any missed opportunities in the Budget, the opinion was that the wish list is always long but the Budget needs to be looked at as a balancing act for one year, and to that extent it did do justice to the exercise. To another question on the probable risks of losing the momentum, the answer was that there were always some risks in a democratic society that arise out of political fallouts, the excessive caution-driven approach by bureaucrats and last-minute hitches due to external factors. However, despite all these, the
Budget was indeed path-breaking in its approach and thinking.

Treasurer Chirag Doshi proposed the vote of thanks.

The panel discussion is available on YouTube and the BCAS website for viewing.

MISCELLANEA

I. Economy

1. How 100 unicorns are propelling India forward

Many believe constant claims by opposition parties and leftist journals that our economy is dominated by two Modi-friendly conglomerates. Rubbish. A research paper by Neelkanth Mishra of Credit Suisse reveals that India has spawned 100 ‘unicorns’ – unlisted new companies worth over a billion dollars each.

Never before has India witnessed such a broad-based upsurge of massive new businesses unconnected with old wealth, political contacts or dirty deals with public sector banks. The unicorns have raised billions of dollars from global investors keen to invest not in venerable names but newcomers with ideas capable of dominating the 21st century. The investors know that many unicorns will fail, but enough will succeed to make their investment profitable.

There is a veritable explosion of new entrepreneurs backed by global billions.

In the bargain, they are giving opportunities unknown in history to entrepreneurs earlier shut out of big business for want of capital, contacts and bribing capacity. This does not mean the newcomers are Yudhisthirs who have never sinned. But it does mean old businesses are being challenged by a veritable explosion of new entrepreneurs backed by global billions. Earlier, challengers started small and grew slowly. Today, they can explode from nothing to a billion dollars in a few years, threatening all existing giants.

Earlier, financial experts estimated that India had 30 to 50 unicorns. Credit Suisse used a slightly different definition, including firms valued at at least $1 billion in a recent round of funding; companies where, at the average multiple of similar firms, operating profits of newcomers would justify a billion-dollar valuation; and companies where business momentum had risen so strongly since the last round of funding that a fresh round would have a valuation of one billion-plus. Credit Suisse excluded subsidiaries of existing companies and firms that once rode high but had subsequently slipped in momentum. This gives it credibility.

Some unicorns are famous. The Serum Institute of India is the world’s biggest producer of vaccines. Flipkart sold its e-commerce business for $16 billion to Walmart. But few readers know other names like Wonder Cement, GRT Jewellers, Greenko, Digit or Chargebee. Ask Credit Suisse for the full list.

Two-thirds of these unlisted unicorns started after 2005. They are very diverse, covering not just IT and e-commerce but more humdrum areas. The fastest growth is of software-as-a-service, including gaming, new-age distribution and logistics, modern trade, bio-tech, pharmaceuticals and consumer goods. Unicorns are just the tip of a fast-growing pyramid of 80,000 startups, one-tenth of the new companies formed every year.

Their ambitions are stunning. Ola Cabs, famous for transport, also plans the world’s biggest electric two-wheeler factory of ten million vehicles. The dream may fail – but what a dream!

SEBI, India’s stock market regulator, is pathetically obsolete in rules and outlook. An Initial Public Offering enables companies to list shares on stock exchanges. For this, SEBI has dozens of onerous conditions including profits in three of five preceding years. But giants like Amazon and Facebook made no profits for years even as their value soared because of their potential. Many Indian unicorns too have never made a profit and would not qualify for a stock market listing under SEBI rules.

SEBI focuses on saving Indian household investors from crooks, not on nurturing unicorns. Had India been dependent only on local money and SEBI, it would not have 100 unicorns with hundreds more raring to go. Luckily, globalisation has enabled unicorns to sidestep local rules and red tape. Brand new companies with great ideas but no profit record are viewed by global investors as potential giants rather than potential crooks (as SEBI does).

This is not a bubble about to burst. The world has created massive new pools of private capital in recent decades from venture capitalists and private equity funds. It is now witnessing the explosion of a new species – SPACs, or Special Purpose Acquisition Companies. These raise billions from private investors (including the most illustrious financial names) with no specified investment targets or strategies, which is why some call them ‘blank-cheque’ companies. They are free to search the world for good investment opportunities. In 2020, 248 SPACs in the US raised $83 billion and in January, 2021 alone they raised $26 billion. SPACs can finance promising newcomers without the onerous, expensive route of an IPO to get listed on stock exchanges. Once, a stock market listing was essential for reputation and large-scale financing. Not anymore.

Most unicorns are owned overwhelmingly by foreigners. Indian promoters typically have only a small shareholding. In the US, Facebook CEO Mark Zuckerberg issued shares to others with reduced or zero voting rights, enabling him to raise billions without losing control over his company. India needs to go the same way. Nirmala Sitharaman, please pay attention.

Source: The Times of India – S.A. Aiyar in Swaminomics – 14th March, 2021

II. Science

2. Indian researchers discover unknown strains of bacteria in International Space Station

Researchers from the United States and India have discovered four strains of bacteria in the International Space Station (ISS) and three of these strains were until now completely unknown to science. The new finding suggests that bacteria living on earth are also capable to live in low gravity environments such as the International Space Stations.

In the study report published in the journal Frontiers in Microbiology, researchers noted that the bacteria were formed on plants that astronauts were growing in space. Three of these strains were found on the surface of the ISS in 2015, while one strain was discovered long back in 2011.

Researchers revealed that one of the bacterial strains was Methylorubrum rhodesianum, a known strain. However, after sequencing, researchers noted that the remaining three strains were unknown to humans until now. Researchers have now named these three strains IF7SW-B2T, IIF1SW-B5 and IIF4SW-B5.

‘To grow plants in extreme places where resources are minimal, isolation of novel microbes that help to promote plant growth under stressful conditions is essential,’ said Kasthuri Venkateswaran and Nitin Kumar Singh, researchers at NASA’s Jet Propulsion Laboratory in a recent press release.

Researchers also noted that the International Space Station is maintaining a clean environment, but beneficial microbes should also be there in these low-gravity conditions.

Breakthrough in space farming
As humans are eyeing space tourism and space colonization, the new discovery could create revolutionary changes in plant growth and space farming. The discovery could also help humans during long space missions which include a manned Mars exploration programme that could be initiated soon by NASA.

‘This will further aid in the identification of genetic determinants that might potentially be responsible for promoting plant growth under microgravity conditions and contribute to the development of self-sustainable plant crops for long-term space missions in the future,’ researchers wrote in the study report.

Source: International Business Times – By Nirmal Narayanan – 17th March, 2021

III. News

3. RBI may have to delay liquidity normalisation amid rising Covid cases

The central bank may have to delay the start of monetary policy normalisation by three months amid rising Covid-19 cases, but barring the return of stringent lockdowns there is no significant threat to the economy’s recovery, analysts say.

Having seen a peak of daily cases of nearly 100,000 in late September, infections had been on a steady decline but have now started rising again over the last month. ‘Even as the increase in the current caseload points to the risk of a second wave, more localised and less stringent restrictions (on activity) will help contain the economic impact versus the initial wave,’ said Radhika Rao, an economist with DBS Bank.

DBS has retained its assumptions for a stronger pick-up in March quarter growth versus the December, 2020 quarter and expects a double-digit rebound in the fiscal year 2021-22. India reported 35,871 new corona virus cases on 18th March, the highest in more than three months, with the worst-affected state of Maharashtra, which houses the country’s financial capital Mumbai, alone accounting for 65% of that.

India needs to take quick and decisive steps soon to stop an emerging second ‘peak’ of Covid-19 infections, Prime Minister Narendra Modi has said. Though analysts are unlikely to rush to review their long-term growth forecasts, several believe policy normalisation on interest rates and liquidity may now take a backseat.

‘Monetary policy normalisation might be pushed back by a quarter as authorities monitor developments closely, with status quo on the cards on the repo as well as liquidity management plans for H121,’ Rao said.

The Reserve Bank of India has repeatedly assured bond markets of ample liquidity being maintained to support the recovery, but in early January said it wanted to start restoring normal liquidity operations in a phased manner.

‘Growth concerns due to rising pandemic cases amid a negative output gap could push back market expectations on the timing of policy normalisation in the near term,’ Nomura economists Sonal Varma and Aurodeep Nandi wrote in a note. Though surplus liquidity is a positive from the perspective of ensuring credit flows to productive sectors, economists fear it may add to inflationary pressures if it remains in the system for too long.

‘Although inflation has moderated from the high level, the surge in global crude oil price has added to the upside risk,’ said Arun Singh, global chief economist at Dun and Bradstreet. ‘The central bank, thus, has a difficult task of managing the inflation target while preventing a rise in borrowing cost to the government.’.

Source: International Business Times – By IANS –  18th March, 2021

4 . India now has 4th largest forex reserves behind China, Japan and Switzerland

India has become the fourth largest in the world with forex reserves at $580.3 billion surpassing Russia and behind China, Japan and Switzerland.

Emerging markets have been building reserves to guard against volatility due to Covid aftershocks.

Reserves for India and Russia have plateaued after rising for months. India pulled ahead as Russian holdings declined at a faster rate. India’s foreign currency holdings fell by $4.3 billion to $580.3 billion as of 5th March, the Reserve Bank of India said, edging out Russia’s $580.1 billion pile.

The world’s largest forex reserves league table is headed by China, followed by Japan and Switzerland. India’s reserves are now worth 18 months of imports; they have been boosted by massive inflows by FIIs into the stock market and burgeoning FDI.

According to a recent report by Acuite Ratings, the Indian rupee has strengthened in 2021 so far on healthy portfolio inflows and sharp downward adjustment in inflation. ‘We expect India to post record BoP surplus of $105 billion in FY21, followed by a healthy surplus of $55 billion in FY22.

‘While FX intervention from the central bank will continue in FY22, the pace is likely to ease with moderation in inflation. We expect gradual appreciation in the currency to play out with USD-INR at 73.0 (with downside risk) in March, 20 to 71.0 by March, 21,’ the report said.

Source: International Business Times – By IANS –  15th March, 2021

REGULATORY REFERENCER

DIRECT TAX

1. Amendment to Notification No. 85 of 2020 for extension of date in Vivad Se Vishwas Act, 2020. [Notification No. 9 of 2021 dated 26th February, 2021.]

2. Extension of dates specified in Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 for penalty and reassessment proceedings under Income-tax Act and completion of action under Prohibition of Benami Property Transaction Act, 1988. [Notification No. 10 of 2021 dated 27th February, 2021.]

3. When the Designated Authority passes an order under Vivad Se Vishwas Act, the Assessing Officer shall pass consequential order under the Act. [Circular 3 of 2021 dated 4th March, 2021.]

4. Insertion of Rule 3B to compute annual accretion referred to in the sub-clause (viia) of clause (2) of section 17 of the Act – Income-tax (1st Amendment) Rules, 2021. [Notification No. 11 of 2021 dated 5th March, 2021.]

5. CBDT amends Form 12BA, Form 16 and Form 24Q to incorporate changes related to Finance Act, 2020 The CBDT has amended Form 12BA, Form 16 and Form 24Q vide Income-tax (3rd Amendment) Rules, 2021. The Finance Act, 2020 has brought concessional tax regime for individual taxpayers. Further section 17(2) was amended to tax contribution made in excess of Rs. 7.50 lakhs in the hands of employees. The consequential changes related to the above amendments have been incorporated in the forms. [CBDT Notification No. 15/2021 dated 11th March, 2021.]
    
6. CBDT enhances the scope of Statement of Financial Transactions (SFT) In line with the announcement made in the recent Union Budget, the CBDT has amended Rule 114E. A new sub-rule 5A has been inserted to provide that for the purposes of pre-filling the return of income, an SFT shall be furnished by the specified persons, containing information relating to:

Nature of Transaction

Reporting Entity

Capital gains on transfer of listed
securities or units of Mutual Funds, (Refer Note Below)

Recognised Stock Exchanges, Depository,
Clearing Corporation, Registrars and Transfer Agents

Dividend Income

A Company

Interest Income

Banking Company, Post Master General, NBFCs
holding Certificate of Registration under RBI Act

[CBDT Notification No. 16/2021 dated 12th March, 2021.]

7. Insertion of Rule 29BA and Form 15E being Application for grant of certificate for determination of appropriate proportion of sum (other than salary), payable to non-resident, chargeable in case of the recipients. [Notification No. 18 of 2021 dated 16th March, 2021.]

COMPANIES ACT, 2013

(I) MCA notifies 5th March, 2021 as the effective date for enforcement of amendment to the provisions relating to annual returns MCA has notified amendment to section 92 which relates to Annual Returns. The amendment was introduced vide Companies (Amendment) Act, 2017 and will be effective from 5th March, 2021. Now companies would not be required to provide particulars of their indebtedness in their Annual Returns. Companies are also exempted from providing details pertaining to FIIs, their names and addresses, countries of incorporation, registration and percentage of shareholding held by them, etc. [MCA Notification No. S.O. (E) dated 5th March, 2021.]

(II) MCA introduces new E-form MGT-7A for filing of annual return by OPCs and Small Companies from F.Y. 2020-21 MCA has amended the Companies (Management and Administration) Rules, 2014 requiring every OPC and Small Company to file its annual return from F.Y. 2020-21 in Form No. MGT-7A (Abridged Annual Return). Further, the requirement of filing extract of Annual Return (Form MGT-9) is removed in case of such companies.[MCA Notification No. G.S.R. (E) dated 5th March, 2021.]

(III) MCA notifies amendment relating to remuneration of Independent Directors and Non-Executive Directors MCA has appointed 18th March, 2021 as the date on which provisions relating to remuneration to Independent Directors and Non-Executive Directors would come into force. This amendment was introduced vide Companies (Amendment) Act, 2020. The amendment prescribes the quantum of remuneration payable to an Independent Director in case a company has no profits or its profits are inadequate. [MCA Notification No. S.O. 1255 (E) dated 19th March, 2021.]

(IV) MCA amends schedule V; prescribes limit of remuneration payable to ‘other Directors’ in case of no profits MCA has notified an amendment to Schedule V, wherein a limit of yearly remuneration payable to ‘other Directors’ has been prescribed. The remuneration shall be Rs. 12 lakhs where the effective capital of the company is negative or less than Rs. 5 crores. The remuneration will be Rs. 17 lakhs if the effective capital is Rs. 5 crores or more but less than Rs. 100 crores. In case the effective capital is Rs. 250 crores and above, other Directors’ remuneration per year shall not exceed Rs. 24 lakhs plus 0.01% of the effective capital. [MCA Notification No. S.O. 1256 (E) dated 19th March, 2021.]

(V) Amendment to Schedule III to the Companies Act – The MCA has amended Divisions I (AS), II (Ind AS) and III (NBFCs, Ind AS) of Schedule III that is effective 1st April, 2021. The amendments require incremental disclosures in the financial statements including: a) disclosure of shareholding of promoters; b) current maturities of long-term borrowings; c) ageing schedules of trade payables, trade receivables, and capital work-in-progress; and d) specified Additional Regulatory Information that include: title deeds of immovable property not held in name of the company, details of Benami property held, relationship with struck off companies, ratio analysis, undisclosed income and details of Crypto / Virtual currency traded / invested. [MCA Notification G.S.R._(E ) dated 24th March, 2021.]

(VI) Companies (Accounts) Amendment Rules, 2021 – The MCA has mandated that for financial year commencing on or after 1st April, 2021, every company which uses accounting software for maintaining its books of accounts, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of accounts along with the date when such changes were made and ensuring that the audit trail cannot be disabled. [MCA Notification G.S.R._(E ) dated 24th March, 2021.]

(VII) Companies (Audit and Auditors) Amendment Rules, 2021 – The MCA has amended Rule 11 of the Companies (Audit and Auditors) Rules, 2014 that deals with ‘Other Matters to be included in Auditor’s Report’. The amendment which is effective 1st April, 2021 requires auditors to report on additional matters that include: a) management representation on no funds having been advanced / loaned to other persons / entities (Intermediaries) with the understanding that the intermediary whether directly or indirectly lends or invests in other persons or entities identified in any manner whatsoever by or on behalf of the company; b) whether dividend declared / paid during the year is in compliance with section 123; and c) whether the company has used such accounting software for maintaining its books of accounts which has a feature of recording audit trail facility. [MCA Notification G.S.R._(E ) dated 24th March, 2021.]

SEBI

(VIII) SEBI specifies investment limits for mutual fund schemes w.e.f. 1st April, 2021 SEBI has decided to put investment limits for mutual funds schemes with special features like Additional Tier 1 (AT1) and Additional Tier 2 (AT2) bonds. At present there are no specified investment limits for these instruments with special features and these instruments may be riskier than other debt instruments. Therefore, the prudential investment limits have been decided for such instruments. [Circular No. SEBI/HO/IMD/DF4/CIR/P/2021/032 dated 11th March, 2021.]

(IX) Ministry of Finance notifies new format of ‘Annual Report’ for SEBI The Ministry of Finance has notified the Securities and Exchange Board of India (Annual Report) Rules, 2021 whereby a new format for the Annual Report has been prescribed. Henceforth, such report shall include an analysis of the economic and investment environment in India along with a comparison with developed and peer countries and potential risk factors, stress factors indicated through market signals, etc. The Board shall have to submit a report to the Central Government giving a true and full account of its activities, policies and programmes during the previous financial year in the new format. The report shall be submitted within 90 days after the end of each financial year.[Notification No. G.S.R. 176(E) F. NO. 2/8/2019-RE dated 15th March, 2021.]

FEMA

(i) The Ministry of Home Affairs has issued a Notification superseding many of the earlier Notifications in respect of rights that Overseas Citizens of India (OCIs) enjoy in India. Among other points, the Notification states that:
(a) OCIs would enjoy parity with NRIs for purchase or sale of immovable property other than agricultural land or farmhouse or plantation property; and
(b) In respect of their rights in economic and financial fields not specified in the Notification or those not covered by the Notifications issued by RBI under FEMA, an OCI Cardholder shall have the same rights and privileges as a foreigner.

Kindly refer to the full Notification for other rights and privileges. [Notification – F. No. 26011/CC/05/2018-OCI dated 4th March, 2021.]

(ii) The Government had announced a hike in foreign investment limit for the insurance sector from 49% to 74% during the Budget presented on 1st February, 2021. In line with that, the Government has now introduced and passed into law (both in the Rajya Sabha and the Lok Sabha) the Insurance (Amendment) Bill, 2021 to raise the limit of foreign investment in Indian insurance companies from the existing 49% to 74%. A corresponding amendment in the Non-Debt Instrument Rules, 2019 (NDI Rules) is required. This should be announced soon. [The Insurance (Amendment) Bill, 2021 and news reports.]

(iii) DPIIT has issued a Press Note amending the Consolidated FDI Policy of 2020 by inserting a clause to state that downstream investment made by an Indian entity, which is owned and controlled by NRIs on a non-repatriation basis as per Schedule IV of the NDI Rules, 2019, shall not be considered for calculation of indirect foreign investment. This is because investments made by NRIs on a non-repatriation basis are deemed to be domestic investments at par with investments made by residents. It should be noted that OCIs, who enjoy similar relief, are not mentioned in the Press Note. Further, amendments made by Press Notes are not effective as law until corresponding amendments are made in the NDI Rules, 2019. However, in this case, the current NDI Rules in any case do not count investments made on a non-repatriation basis by both NRIs and OCIs towards indirect foreign investment. [Press Note No. 1 (2021 Series) dated 19th March, 2021.]

ICAI MATERIAL

Accounts and Audit

  •  Educational material on Ind AS 105, Non-current Assets Held for Sale and Discontinued Operations. [25th February, 2021.]
  •  Technical Guide on Audit of Internal Financial Controls in Case of Public Sector Banks. [19th March, 2021.]
  •  Guidance Note on Audit of Banks (2021 Edition). [20th March, 2021.]

SOCIETY NEWS

ON BUILDING A PROFESSIONAL  SERVICES FIRM
A virtual and thoroughly illuminating panel discussion on a vital subject, ‘Building a Professional Services Firm: Characteristics, Challenges & Leadership Model’, was organised by the BCAS on 10th February, 2021. The panel consisted of such illustrious speakers as Dinesh Kanabar, Mr. Haigreve Khaitan, Senior Partner, Khaitan & Co., and Mr. Jay Desai, Founder, Universal Consulting. Past President Shariq Contractor acted as the moderator.

Welcoming the participants, President Suhas Paranjpe gave the backdrop of the day’s topic for discussion. He said that the process of building a professional services firm resonated very well with the BCAS Theme for the year ‘Tradition – Transition – Transformation’ as every growth from small to medium to big would need to undergo this process.

After Hon. Secretary Mihir Sheth introduced the guest speakers, Shariq Contractor set the tone of the discussion by emphasising the need for growth by the professional services firms and a change in their mind-set if they wished to survive the challenges posed by continuing innovations and technology transformations. The need for change could not be overemphasised when 90% of the professional firms were operating with less than four partners, depriving them of the scale and depth required to maintain excellence through best possible talent retention. Sharing his own experience, he said that it was a ‘leap of faith’ fully realising that change could be painful. However, not changing would have been more painful in hindsight. Every professional firm would need to decide and discuss amongst its stakeholders its strategy, systems and processes, succession and leadership decisions and define the relevant metrics for growth. After this brief introduction, he invited each panellist to share his story of growth.

Dinesh Kanabar, who was the first to speak, said he would rather share the experience of what he did and why he did what he did instead of delving into the theories of growth. When he started his firm after retiring from the Big-4, he focused on the basics by defining the fundamental tenets of where the focus should be out of the large canvas of services that it was possible to offer. However, what made a difference was the realisation that growth could only be possible by offering expertise through quality talent in the chosen domain of strength. Besides, the services on offer had to be relevant to the marketplace. This, in turn, would build the size and scale necessary to create a brand that would self-sustain growth by attracting further best-in-class talent, making it possible to have patronage from large domestic and international firms.

Creating the right size with a deep knowledge base was the key to success. There was also an underlying conviction that the size and scale should not be achieved by chasing revenue enhancement and spreading thin into a number of domains. Another factor that was responsible for this decision was the belief that the services that his firm would offer must leave no chance of conflict of interest between the verticals. This belief reinforced his vision to focus on a few areas of acquired expertise that could count amongst the best. A broad vision to this effect was the germination point that eventually evolved by hiring the right talent, building the appropriate infrastructure and technology, and sourcing of the right mix of domestic and international clients. If one was ready to break the mould, there was huge scope and also plenty of opportunities for professional services firms. Dinesh Kanabar concluded by saying that growth was not an option but a compulsion in the current times.

Narrating his growth story, Mr. Haigreve Khaitan described how his more-than-100-year-old firm had to reinvent itself by breaking the shackles of its image of being only a regional player. One of the fundamental principles with which the firm decided to take up the challenge was that under no circumstances would it compromise on its culture and value system but yet cast itself in a new avatar, fully equipped with the right talent, knowledge base and infrastructure. It was this thought process that eventually led it to define the pillars that could help achieve the goal of building a firm with a stellar repute and consistent growth. The pillars that were defined were: (i) Knowledge, (ii) Technology, (iii) Infrastructure, and (iv) H.R. Practices and Hiring policies to attract the best talent. This resolve to change had met with the expected success.

Mr. Jay Desai, sharing the story of the journey of his firm Universal Consulting, stated that by force of circumstance he had to change and evolve continuously to meet the demands of time and of the ecosystem. He started management consultancy for the SME sector with a focus on Operations Improvement, Organisation Structuring and Developing an IT Strategy in 1994 – but he had to rethink and re-strategise in the year 2000 because of the dot.com crash followed by global recession. Adapting to the new reality, his firm then focused on developing strategies for mid-sized and large companies. This led to a change in the business model for the better when their client profile changed from 90% SME sector to 20%, with the rest of the 80% coming from mid- and large-sized companies. Again in the year 2008, with the financial sector crash, his firm decided to deepen focus on different industry verticals so as to have broad-based exposure. While this was helping, there was a recession that followed due to the anti-corruption movement and the lack of policy decisions by the Government which then prompted the firm to focus on implementation of a strategy for growth.

Again in 2020, the corona pandemic occurred that forced a complete overhaul and relook at the way of doing things. Mr. Desai said he abandoned the fixed office concept and created a digital platform enrolling consultants across various domains in different verticals. This helped him build size and scale for consulting and expand his business. At the firm level, they focussed on a single vertical of Life Science and Healthcare catering to their need for strategy, operations and organisational structuring. This led them not only to survive but also helped them to grow. Concluding his story, he added that it was not the ability to predict but the ability to adapt that leads an organisation to survive, sustain and grow.

Several other issues were also deftly handled by the experts. These were:

Treatment of goodwill, partners’ compensation, managing and retaining clients, managing technology, hiring strategies, succession planning, expanding footprints globally like big multinational professional firms, growth vs. profitability, retaining the core of the organisation by the code of conduct and the value system on which the organisation is built.

On the issue of goodwill payment, most panellists felt that goodwill should remain with the firm; on partners’ compensation, the opinion was that it should be based on a proper evaluation based on defined criteria giving full weightage to the fact that each partner could be different in his capabilities, some good on strategy, some on execution, some others on profiling and client acquisition. They must not be made to play a salesman’s role but be made part of the environment that gives them joy and satisfaction to work. Client retention and management could be best managed if the client was given end-to-end solutions and total comfort.

Technology management and hiring strategies was a specialised field and would require a long-term vision and the help of experts; a firm should not hesitate in taking their help. Succession planning should be openly discussed amongst partners and lead candidates as identified should be groomed with special training. Once the succession occurs, the successor should be empowered with full authority and no interference; the handing-over partner should only play the role of a guide.

Although global expansion was a desirable ambition, it required sustained wherewithal to make a mark globally. Some of the experts did share their experience on the challenges posed by local laws, huge investments and regulatory problems. On the issue of growth vs. profitability, the consensus was that they are not mutually exclusive. In the process of growth there was bound to be chaos that would upset the structure of costs and immediate profitability. But eventually it would give rise to a U-shaped recovery with sweet spots emerging by way of enhanced profits and client acquisition.

On retaining the core of the organisation, there was a consensus that growth and the value system forming the core of the organisation were not oxymorons but in fact complementary to each other. Growth based on the strong value system on which an organisation is formed will always be exponential. Anyone acting contrary to this was sure to die.

The panel discussion was followed by a Q&A session when questions and concerns related to many of the above matters were answered by the panellists.

Treasurer Chirag Doshi proposed the vote of thanks. The video link of the panel discussion is available on YouTube and the BCAS website.

MEETING THE MAYOR


President Suhas Paranjpe called upon the Mayor of Mumbai, Ms Kishoritai Pednekar, on Tuesday, 16th February, 2021. At this courtesy meeting, he briefed her about the BCAS and its activities. He also presented her with copies of the BCAJ for the months of January and February, 2021, the 28th Union Budget 2021 publication, the tome ‘Gita for Professionals’ and other publications of the BCAS. The Mayor noted that BCAS is a voluntary body of Chartered Accountants and has been in existence for 72 years with around 9,000 members all over India. She also appreciated the fact that the widely-read BCAJ has completed 52 years of continuous publication and that the annual Budget book was now in its 28th edition. President Suhas invited the Mayor to visit the BCAS office at her convenience.

President Suhas Paranjpe presenting recent publications of the BCAS to the Mayor of Mumbai, Ms Kishoritai Pednekar, when he called on her at her office on 16th February, 2021

MISCELLANEA

I. Technology

19. Apple fined for slowing down old iPhones

Apple has been fined 25 million euros (£21m or $27m) for deliberately slowing down older iPhone models without first informing its customers. The fine was imposed by France’s competition and fraud watchdog DGCCRF, which said consumers were not warned. In 2017, Apple confirmed that it did slow down some iPhones but said it only did so to ‘prolong the life’ of the devices. Apple said in a statement that it had resolved the issue with the watchdog.

Many customers had long suspected that Apple slowed down older iPhones to encourage people to upgrade when a new one was released. In 2017, the company confirmed that it did slow down some models as they aged, but not to encourage people to upgrade. It said the lithium-ion batteries in the devices became less capable of supplying peak current demands as they aged over time. That could result in an iPhone unexpectedly shutting down to protect its electronic components. So, it released a software update for the iPhone 6, iPhone 6s and iPhone SE which ‘smoothed out’ battery performance. The practice was confirmed after a customer shared performance tests on Reddit, suggesting their iPhone 6S had slowed down considerably as it had aged, but had suddenly speeded up again after the battery had been replaced.

The French watchdog said iPhone owners ‘were not informed that installing iOS updates (10.2.1 and 11.2) could slow down their devices’. As part of the agreement, Apple must display a notice on its French language website for a month. It says Apple ‘committed the crime of deceptive commercial practice by omission’ and had agreed to pay the fine.

Does Apple still slow down older iPhones? Yes. Since Apple confirmed the practice in 2017, it has implemented it on several more iPhones including:

* iPhone 6, 6 Plus, 6S, 6S Plus
* iPhone SE
* iPhone 7 and 7 Plus
* iPhone 8 and 8 Plus running iOS 12.1 or higher
* iPhone X running iOS 12.1 or higher
* iPhone XS, XS Max and XR running iOS 13.1 or higher

The setting is only enabled when the battery begins to degrade, and iOS now offers clearer information to consumers about when performance management has been switched on. ‘The effects of performance management on these newer models may be less noticeable due to their more advanced hardware and software design,’ Apple said.

Source: www.bbc.com, 7th February, 2021

20. Twitter begins testing voice message feature for DMs

If you intend to send a direct message (DM) on Twitter, the micro-blogging platform is offering an option of doing so through audio.

Twitter will begin testing the voice message feature for DMs in India. The feature, which is being tested in India, Brazil and Japan, will be rolled out in phases for users. ‘India is a priority market for Twitter and that is why we’re constantly testing new features and learning from people’s experience on the service here,’ said Manish Maheshwari, Managing Director, Twitter India

Here’s how it works
The voice messages feature builds on the voice tweets feature that the micro-blogging platform began testing in June last year. With voice tweets, users can compose their audio tweet from the composer tab. They can record their audio tweets by tapping on a new wavelength icon in the composer. Once they tap on the icon, they will see their profile photo with the record button at the bottom. They can tap the button to record 140 seconds of audio.

Voice DMs will also support 140 seconds of audio similar to the feature. The user’s current profile photo will be added to the voice note as a static image when the note plays in DMs.

The feature will be made available for both Android and iOS users. In order to send a voice message, users can open an existing conversation or start a new one. They can then record their message by tapping on the voice recording icon and end the recording once they’re done by tapping it a second time. Users can also listen to their voice message before sending it. iOS users can also press-and-hold the voice recording icon to start recording. They can then send the note immediately when they swipe up and release the icon.

Source: www.thehindubusinessline.com, 17th February, 2021

II. Motivational

21. Mumbra girl defies odds to top CA intermediate

The all-nighters spent studying in the kitchen of the modest 300 sq. ft. home that she shares with her parents and three younger siblings, the limited resources and the apprehensions over whether she would even clear an exam that thousands of hopefuls take, proved every bit worthwhile for Mumbra girl Zarin Khan when she topped the country in the chartered accountancy (CA) intermediate examination. A total of 4,094 students took the exam held as per the old syllabus.

When Zarin got the news from her friends, she could barely believe it. ‘I had not expected to be a ranker, let alone be the first in the country, as I was too scared to even take the exam. I had applied in 2017 and took a two-year gap. But with my family strongly backing me, I decided to take the exam last year. I used to study all night to focus better as in the morning hours there is too much noise.’ Her house is located alongside a main road in Mumbra which is on the outskirts of Mumbai.

The young woman, aged 25, is among the first generation of learners to pursue a professional course in her family. While her father, who could study only till class IX, is a mechanic, her mother is a homemaker. Seeing their oldest sibling ace the CA exam, her sister and brothers are now keen to pursue academics more seriously. Her younger sister has completed B.Sc. and
is working.

‘As no one is well educated in the family, I wasn’t even aware about the courses available or what I should pursue. It was not until 2017 after I completed my graduation that I applied for CA. Later, I did an internship for a year, after which I worked in a Thane-based company. I used the money to pay for my CA classes.’ After completing her articleship, Zarin will pursue her CA final exams. She plans to study all night when it is quieter.

Source: mumbaimirror.indiatimes.com, 13th February, 2021

22. Miss India 2020 runner-up Manya Singh, auto driver’s daughter, was told shakal achi nahi hai

Manya Singh, the daughter of an autorickshaw driver, who was crowned ‘Miss India 2020 Runner-Up’ recently, was once told ‘shakal achi nahi hai’ (you don’t have a nice face).

The newly-crowned Miss India 2020 Runner-Up, who hails from Uttar Pradesh, has made everyone proud after her story went viral on social media. Following the win, her struggles and inspiring story have won praise from all over the country.

In an emotionally-charged ‘Humans of Bombay’ post, Manya Singh spoke about her childhood struggles, her parents’ belief in her dreams and the way she was criticised because of her looks.

She recalled leaving home at 14 to come to Mumbai to pursue her dreams. She had to work at a Pizza Hut store to earn an income. ‘At 14, I boarded the train from my village and left for Mumbai to pursue my dreams, all by myself. I didn’t know where it would lead me, but I knew I was meant to achieve great things. When I walked out of the station, Pizza Hut was the first place I saw. I somehow got myself a part-time job there and temporary accommodation’.

Her parents were always supportive of her dreams. A few days after she arrived in Mumbai, they followed her there, took up a job and supported her.

‘Two days later, when I called Papa, he started crying. But I reassured him, “This is where I belong.” So the next day, both my parents came to Mumbai. Papa said, “We’ll support you”’; he drove an auto to make a living. Still, they put me in a good school. Alongside, I also worked part-time. I earned Rs.15,000 a month,’ she added.

Talking about her dream of winning the Miss India pageant, she said, ‘I was 15 when I watched the Miss India Pageant for the first time. I thought, “I’m going to win that crown someday and make Papa proud.” But coming from a patriarchal family, I was told that women are lesser than men. Tauji would say, “Ladkiyon ko padhai karke bhi shaadi hi karni padti hai.” But when I told Papa, “I want to compete for a beauty pageant”, he said, “Keep working hard and you’ll get there!”’

She revealed that in the beginning she had to face rejection because of her looks or her English. She was once told that she does not have a nice face. ‘I auditioned for over ten pageants, but they’d say, “Shakal achi nahi hai” (you don’t have a nice face), or “You don’t even know English!” Things weren’t easy at home either. Papa had mortgaged our jewellery to pay my fees. So if I’d need money to buy clothes, I’d mop the floor at the pizza place. There, I observed how people carried themselves and in college I’d observe how my friends spoke English (sic),’ Manya Singh added.

Source: www.indiatoday.in, 17th February, 2021)

23. Your big break

Some people get one. Most people don’t.

But, if you’re reading this, it means that you’ve received more than one, perhaps a countless number of, little breaks.
Access to tools, the benefit of the doubt, decent health, occasional peace of mind.
Little breaks. Over and over.
Little breaks get you into a room, but they don’t guarantee your performance. Little breaks get you a glimmer of trust or opportunity, they give you a microphone and a chance to share your dream.
Little breaks don’t always announce themselves the way big breaks do.
Little breaks compound, one often leading to another. Or they don’t, creating false momentum and then disappointment.
Sometimes little breaks pretend to be big ones, and sometimes they’re hiding in plain sight.
Little breaks are easy to ignore and thus are wasted.
Little breaks don’t like being waited for the way big breaks do, because while you’re waiting, you’re wasting the little breaks you’ve already gotten.

Source: seths.blog – Mr. Seth Godin, 14th February, 2021

STATISTICALLY SPEAKING

1.    Maharashtra
ranks 1st in justice delivery

Source: Times of India
Website

 

 

 

2.    Indian
startups attract $10.14 billion funding in 2020

Source: Financial
Express Website

 

3.    Karnataka
tops India Innovation Index 2020

Source: Times of India
Website

 

4.    Most
Innovative economies in the world

The index takes into account R&D
intensity, value-added manufacturing, productivity, high tech density, tertiary
efficiency, patent activity and researcher concentration

Source: Bloomberg 2021
Innovation Index

 

5.    Equalisation
levy Collections

* The figures for the
year 2020-2021 are up to 31st January, 2021

Source: Ministry of Commerce and Industry

ETHICS AND U

Arjun: Bhagwan, what kind of justice are you doing to innocent people? They are made to suffer always.
Shrikrishna: My dear Arjun, what happened? What’s on your mind?

Arjun: See, these banks sanction and disburse loans to any person against stocks, book debts and so on.

Shrikrishna: Yes, that is their business.

Arjun: Agreed. But they do not appraise the proposal properly. They may even act in collusion with the borrower. And finally, when the loan becomes an NPA, they just pass on the blame to the auditors.

Shrikrishna: How can they do that? Do you mean to say that your CAs do the job properly and still they are made to suffer?

Arjun: Precisely.

Shrikrishna: Tell me, how?

Arjun: See, what happens is the banks grant a loan for working capital. Then they appoint CA firms to do the stock audit. They ask the CAs to certify the stock values, book debts, loans, vehicles and what not.

Shrikrishna: What is unusual about that? It’s normal. It’s a part of your profession.

Arjun: Yes, Bhagwan. But quite often there are fraudulent transactions in large borrower companies. Stock records are not proper, there are multiple locations, there is no reconciliation, sales are inflated, debtors are bogus, vehicles are not properly registered, they are hypothecated to many banks…

Shrikrishna: Enough, enough! These are common problems. But what’s your problem? You have to verify and certify.

Arjun: True. But there are practical problems, managements of borrower companies do not co-operate, they conceal the details, data is not made available, the time given is very short, the fees are too low, and…

Shrikrishna: I know all this, Arjun. But it is for this task that you are appointed.

Arjun: How can we certify without proper data?

Shrikrishna: Then say clearly in the certificate that the data is not proper and inadequate and hence you can’t certify. Simple!

Arjun: Bhagwan, how can we give such a negative and harsh certificate? How shall we then get clients?

Shrikrishna: So, you want to somehow accommodate the client! For that, you are willing to compromise your principles and risk your degree?

Arjun: These bankers are funny! They complain that based on our certificate they renewed their working capital facility. But in fact they have already sanctioned or renewed it. And they pass the blame on to the CAs.

Shrikrishna: Arjun, yours is a responsible profession. You are expected to work without fear or favour. How can you certify something as true and correct unless you are objectively satisfied about it?

Arjun: Yes, in principle that is right. But in practice…

Shrikrishna: You cannot take the excuse of ‘practicality’… This is clearly gross negligence as well as lack of due diligence.

Arjun: But then what should we do?

Shrikrishna: Simple, follow the basics. Apply your common sense. Don’t rely only on financial books of accounts. You need to see beyond that. Learn to read between the lines. Have professional scepticism. Maintain working papers. Try to get third party evidence. Ask questions, create a record of your work. Remember, ‘Work should not only be done, but it should be seen that it is done!’

Arjun: Enough, enough! Followed. In short, the quality of work should be absolute regardless of fees. Right?

Shrikrishna: In fact, first understand the value of work, of your signature yourself. Only then will others recognise it. Don’t allow others to take you for granted. Now, Arjun, please don’t tell me that if you refuse to certify, some other CA will do it. I have no answer to this argument.

Arjun: Bhagwan, like in the Bhagvad Geeta, you have opened my eyes again today. Do keep on meeting me and guiding me, always.

Om Shanti

(This dialogue is based on the need for due diligence while certifying stocks, etc.)

REGULATORY REFERENCER

DIRECT TAX

1. Faceless Assessment (1st Amendment) Scheme, 2021. [Notification No. 6 of 2021 dated 17th February, 2021.]

COMPANIES ACT, 2013

(I) MCA amends Corporate Social Responsibility (CSR) Rules, 2014  Key amendments include changes in definitions. Terms such as Administrative Overheads, Ongoing Projects are now defined. Every entity undertaking CSR activity is required to register with the Central Government. CFO is required to certify that funds disbursed have been utilised for the purposes approved by the Board. Set-off of excess amount spent permitted subject to certain conditions. Unspent amount is required to be transferred to certain Funds. Revised format is prescribed for Annual Report on CSR activities to be included in Board’s Report. Amendments are effective 1st April, 2021; as such, few of them apply from the financial years commencing on or after 1st April, 2021. [MCA Notification G.S.R. 40 (E) dated 22nd January, 2021.]

(II) MCA notifies the commencement of specified sections in the Companies (Amendment) Act, 2019 and Companies (Amendment) Act, 2020  including provisions related to CSR, definition of listed entities, further issue of share capital, exemption related to any class of persons by the Central Government from complying with the requirements of declaration of beneficial interest if considered necessary in public interest. [MCA Notification S.O. 324 (E) dated 22nd January, 2021.]

(III) MCA amends criteria for a company to be classified as a Small Company w.e.f. 1st April, 2021 –  A company other than a public company with paid-up capital and turnover as per profit and loss account for the immediately preceding financial year not greater than Rs. 2 crores (as against earlier threshold of Rs. 50 lakhs) and Rs. 20 crores (as against earlier threshold of Rs. 2 crores), respectively, shall be considered as a Small Company under the Companies Act, 2013 and its Rules. [MCA Notification G.S.R. 92 (E) dated 1st February, 2021.]

(IV) MCA allows merger of startups u/s 233 – MCA now allows a scheme of merger or amalgamation u/s 233 to be entered into between any of the following class of companies, namely:
i) two or more startup companies; or
ii) one or more startup company with one or more small company.

For the purpose of this amendment, ‘startup company’ shall mean a private company incorporated under the Companies Act, 2013 or the Companies Act, 1956 and recognised as such. [MCA Notification G.S.R. 93 (E) dated 1st February, 2021.]

(V) MCA eases norms for One Person Company (OPC) incorporated under the Companies Act, 2013 and its Rules with effect from 1st April, 2021 – Key highlights of the Companies (Incorporation) Second Amendment Rules, 2021 are:
1. Non-resident Indians can also incorporate OPCs and the minimum residency period has been brought down to 120 days from 180 days for Indian citizens.
2. Automatic cessation of the validity of the OPC upon exceeding paid-up capital of Rs. 50 lakhs and average annual turnover (during the relevant period) of Rs. 2 crores has been dispensed with. This implies that it can continue to grow and operate as an OPC forever.
3. An OPC can convert itself into a public or private company at any point of time subject to compliance with prescribed procedure. [MCA Notification G.S.R. 91 (E) dated 1st February, 2021.]

(VI) MCA notifies change in timeline for acceptance of rights issue offer w.e.f. 1st April, 2021 – The Notification clarifies that where rights issue of shares is proposed, the offer shall be made to the existing shareholders by notice specifying the number of shares offered and the time limit [not being less than seven days (as opposed to 15 days) and not exceeding 30 days from the date of the offer] within which the offer, if not accepted, shall be deemed to have been declined. This Notification will be effective from 1st April, 2021. [MCA Notification G.S.R. 113 (E) dated 11th February, 2021.]

(VII) MCA Advises LLPs, Partners and Designated Partners to take note of proposed changes in LLP Act – MCA has advised stakeholders that certain provisions of the Companies Act, 2013 will soon be extended to LLPs with modifications and adaptations. The sections which are to be extended to LLPs include:
* Investigation of beneficial ownership of shares,
* Disqualifications for appointment of directors,
* Provision relating to number of directorships,
* Power to direct inspection of books and papers of a company by an inspector, and
* Provisions which specify that offences under the Act will be non-cognizable. [MCA Notice dated 18th February, 2021.]

SEBI

(VIII) No separate registration is required to render investment advice to general investors under Investment Advisers Regulations (IA) – SEBI in an informal guidance scheme has clarified that no separate registration is required to render investment advice to general investors under IA regulations. In addition, a portfolio manager registered under PMS regulations is also exempted from seeking registration as an investment adviser when it provides any incidental investment advice to its clients. [Circular No. SEBI/HO/IMD/DF1/OW/P/2021/3186/1 dated 6th February, 2021.]

(IX) SEBI notifies revised disclosure formats by specified persons under Regulation 7 of the Prohibition of Insider Trading (PIT) Regulations, 2015 – Further to the amendments made to Regulation 7 of the PIT Regulations, 2015 requiring that a member of the promoter group and designated person (in place of ‘employee’) submit disclosures under the said Regulation, SEBI has prescribed the revised formats for Initial Disclosures, Continual Disclosures and Disclosures by Connected Persons. [Circular No. SEBI/HO/ISD/ISD/CIR/P/2021/19 dated 9th February, 2021.]

ACCOUNTS AND AUDIT

(A) SAE 3410, Assurance Engagements on Greenhouse Gas Statements – The ICAI has issued a Standard on Assurance Engagement (SAE 3410) that deals with assurance engagements to report on an entity’s Greenhouse Gas (GHG) statement. [ICAI Release dated 27th January, 2021.]

(B) Risk-Based Internal Audit (RBIA) Framework for NBFCs and UCBs – The RBI has issued a Notification mandating an RBIA Framework for: (a) all deposit-taking NBFCs, irrespective of their size, (b) all non-deposit-taking NBFCs (including CICs) with asset size of Rs. 5,000 crores and above, and (c) all UCBs having asset size of Rs. 5,000 crores and above. The Framework needs to be implemented by 31st March, 2022 in accordance with the Guidelines framed. [Notification No. RBI/2020-21/88 Ref. No. DoS.CO.PPG./SEC.05/11.01.005/2020-21 dated 3rd February, 2021.]

(C) Guidance Note on Accounting by E-Commerce Entities – The ICAI has revised the ‘Guidance Note on Dot-com Companies’ as the ‘Guidance Note on Accounting by E-Commerce Entities’ applicable to companies preparing financial statements under the Companies (Accounting Standard) Rules, 2006, LLPs and Partnership firms, and deals with accounting by e-commerce entities in respect of certain issues relating to revenue and expense recognition. [ICAI Guidance Note released on 16th February, 2021.]

(D) Guidance Note on Accrual Basis of Accounting – The ICAI has revised this Guidance Note originally issued in 1988 that highlights the need for accrual basis of accounting, provides guidance in respect of transition from cash basis to accrual basis of accounting, and further states the benefits associated with the accrual accounting system. [ICAI Guidance Note released on 16th February, 2021.]

FEMA

(i) RBI had issued a Notification in October, 2020 (please refer to the December, 2020 issue of the BCAJ) allowing only authorised dealers in India to post and collect margins in and outside India on their own and their customers’ behalf, for permitted derivative contracts entered into with a person resident outside India in the form and manner that was to be specified by RBI. RBI has now specified that AD Category I banks can post and collect such margins in India in the form of:
a) Indian currency;
b) Freely convertible foreign currency;
c) Debt securities issued by Indian Central Government and State Governments;
d) Rupee bonds issued by persons resident in India which are:
1. Listed on a recognised stock exchange in India; and
2. Assigned a credit rating of AAA issued by a rating agency registered with the Securities and Exchange Board of India. If different ratings are accorded by two or more credit rating agencies, then the lowest rating shall be reckoned.

AD Cat-I banks shall maintain a separate account in the name of persons resident outside India for the purpose of posting and collecting cash margin in India, and transactions incidental thereto.

Further, AD Category I banks can post and collect such margins outside India in the form of:
a) Freely convertible foreign currency; and
b) Debt securities issued by foreign sovereigns with a credit rating of AA- and above issued by S&P Global Ratings / Fitch Ratings or Aa3 and above issued by Moody’s Investors Service.

AD Cat-I banks may also receive and pay interest on margin posted and collected on their own account or on behalf of their customers for a permitted derivative contract entered into with a person resident outside India. [A.P. (DIR Series 2020-21) Circular No. 10, dated 15th February, 2021.]

(ii) Indian residents are now permitted under LRS to make remittances to IFSCs set up in India for investment purposes. The following conditions have been prescribed:
a) Such investments shall be only in securities other than those issued by entities or companies resident in India (outside the IFSC).
b) Resident individuals can also open a non-interest-bearing Foreign Currency Account (FCA) in IFSCs for making the above permissible investments under LRS. However, any funds lying idle in the account for a period up to 15 days from the date of receipt into the account shall be immediately repatriated to the domestic INR account of the investor in India. Resident individuals cannot settle any domestic transactions with other residents through these FCAs held in IFSC. [A.P. (DIR Series 2020-21) Circular No. 11, dated 16th February, 2021.]

(iii) RBI had broadened the scope of Special Non-Resident Rupee (SNRR) accounts last year by allowing them to be used for specified transactions in trade, foreign investments, ECBs, etc. RBI has now issued FAQs for SNRR Accounts on 19th November, 2020. The FAQs provide clarifications on processes, responsibility for undertaking compliances, reporting, permitted transactions and transfers with respect to SNRR accounts. The FAQs have clarified that remittances or transactions under LRS cannot be routed through the SNRR account. These FAQs would not apply to FPIs, FVCIs and Depository Accounts or FCCB Conversion Accounts which are operated by custodians. The FAQs can be accessed at: https://m.rbi.org.in/Scripts/FAQView.aspx?Id=138.

ICAI MATERIAL


Accounts and Audit
* Educational material on Ind AS 23, Borrowing Costs. [27th January, 2021.]
* Internal Control System in State-Owned Universities: A Study to Formulate Internal Control Manual. [16th February, 2021.]

Valuation
* Technical Guide on Valuation (Revised Edition 2021). [11th February, 2021.]
* Valuation: Professionals’ Insight (Series 5). [11th February, 2021.]
* Educational material: ICAI Valuation Standard 103 – Valuation Approaches and Methods. [11th February, 2021.]
* Educational material: ICAI Valuation Standard 301 – Business Valuation. [18th February, 2021.]

Corporate and Other Laws
* Handbook on Role of Women Directors. [11th February, 2021.]
* FAQs on SEBI (LODR) Regulations, 2015. [11th February, 2021.]
* Background material on Business Responsibility and Sustainability Reporting. [15th February, 2021.]
* Money Laundering and Scams ‘Through’ Multi-State Urban Co-operative Credit Societies in India – Cash Deposits. [16th February, 2021.]
* Money Laundering and Scams ‘Through’ Multi-State Urban Co-operative Credit Societies, Angadias and Banks in India / Abroad – Gems and Jewellery Industry. [16th February, 2021.]

Taxation
* Inching towards Tax Certainty: Neoteric Domestic Dispute Mechanism for Cross-Border Taxation. [16th February, 2021.]

Others
* Analysis and Evaluation of Indian Startups in Non-Metropolitan Areas and Selected Metropolitan Areas – An Untold Story. [16th February, 2021.]
* Impact of Digital Transformation Strategies on Performance of Manufacturing Companies in India. [16th February, 2021.]
* How Indian Companies can play a pivotal role in the Supply Chain to Australia? [16th February, 2021.]  

SOCIETY NEWS

‘FINALISATION IN ZOHO BOOKS’

The Technology Initiative Committee of the BCAS organised a two-hour webinar on ‘Finalisation in Zoho Books: Challenges and Features’ on 1st May, 2021.

Jigar Shah gave an overview of the finalisation of books of accounts in Zoho Books. The session was interactive and the speaker demonstrated and addressed the following aspects:

1. Challenges that arise when finalising books of accounts for the first time in Zoho Books;
2. Do’s / Don’ts and aspects to take care of while finalising;
3. Key tailor-made / customisable reports to look out for;
4. Key features which can enable users to complete work with greater efficiency and effectiveness; and
5. Productivity aspects in audit finalisation.

The participants were offered an insight into using Zoho Books to finalise their audit and how to mitigate or resolve the issues and challenges that they might face in their audits.

FELICITATION OF ICAI PRESIDENT AND VICE-PRESIDENT

A virtual meeting was organised by the BCAS on 5th May to felicitate newly-elected President Nihar Jambusaria and Vice-President Dr. Debashish Mitra of the ICAI.

Past Presidents, Managing Committee members and core group members of the BCAS and office-bearers of the sister organisation, the Chamber of Tax Consultants, joined the felicitation. Invitees, Central Council members of the Western Region of ICAI and office-bearers of the WIRC were also present.

All those present at the meeting joined in welcoming and congratulating the President and the Vice-President of the ICAI and the Chairman of the WIRC.

BCAS President Suhas Paranjpe welcomed the new President and Vice-President of the ICAI as well as the Chairman of the WIRC. He also acknowledged the presence of the other invitees and pointed out that BCAS can join hands with ICAI for many an initiative for the benefit of the profession at large.

The meeting provided an interesting platform for the exchange of views, ideas and suggestions with the torch-bearers of the regulatory body. Several suggestions were made by the participants about how the image of the profession could be improved, how it could be perceived as an institution for nation-building, how students and their training programme could be reoriented, how ICAI could become more effective in conveying to the Government the genuine issues and grievances of various stakeholders and how it could portray its human face by projecting the various welfare activities that it is conducting.

The participants also requested the new team of the ICAI to throw light on the digital initiatives and the roadmap of the ICAI to deal with various challenges posed by the technological disruptions, the constantly changing arena of the legal framework and the rules and the ecosystem under which the profession operates. The ICAI President was also requested to give his thoughts on the new areas of opportunities for the professionals.

Both the new President and the new Vice-President of the ICAI gave a patient hearing to the suggestions and explained the various initiatives that the ICAI has taken and the rapid strides it has already made to address the various points raised by the participants. They elaborated on the background work done by various committees to create a digital hub and a training and guidance note to deal with new challenges.

ICAI President Nihar Jambusaria stated that after considerable background work the ICAI had been able to develop a ‘Digital Competence Maturity Model’ for members to assess themselves on their digital competence and decide the way forward. He also spoke about the social initiatives and reorientation of the training curriculum for students. He agreed with various suggestions made as regards the need for reskilling of professionals and threw light on some of the initiatives in that direction.

He gave the example of the technology audit tools that the ICAI is developing for the benefit of members and informed them that these will be available to them at almost no cost. He also spoke about the initiative for the MSME sector through the creation of 20 incubation centres. He assured members that a consultative process was going on with the MCA to address various issues on company law to help India achieve its goal of ‘Ease of Doing Business’.

The meeting was conducted in a positive atmosphere and offered great insight into the vision, foresight and plans of the new team at the helm of the ICAI. BCAS Vice-President Abhay Mehta proposed the vote of thanks.

‘AMENDED PARTNERSHIP PROVISIONS AS PER FINANCE ACT, 2021’

The Direct Tax Laws Study Circle held a meeting on ‘Amended partnership provisions as per the Finance Act, 2021,’ on 7th May.

Group leader Bhadresh Doshi gave a brief overview of the proposed provisions in the Bill vis-à-vis the final provisions on the enactment of the Finance Act, 2021. The rationale for the new provisions was discussed based on the Memorandum to the Finance Bill, 2021.

Thereafter, he took up the issue of whether the provisions of sections 45(4), 9B and 48(iii) lead to double taxation. Subsequently, Bhadresh discussed issues relating to multiple assets scenarios and multiple reconstitutions with illustrations. Finally, the impact of the provisions on the waiver of debit balance and stock in-trade were discussed in depth with reference to certain judicial precedents.

LETTER TO THE EDITOR

To,

The Editor,

BCAJ

 

Dear Sir,

This is to bring to your attention a major blooper on Page 25 of the May 2021 issue of BCAJ: the introductory paragraph states it as the 2nd Article in MLI, which is in gross contradiction to the title which states it is Article 4 of MLI.

 

 

Kindly issue necessary errata.

 

Best regards,

MLI Expert

 

Editor’s Note: The letter writer’s subscription has, since, been suspended permanently.

BOOK REVIEW

BE BETTER BIT-BY-BIT
Author Nishith Goyal
Reviewed by Riddhi Lalan, Chartered Accountant

A journey of a thousand miles begins with one step – Lao Tzu. The beginning is significant but the journey is the determinant of success. But what to do if the journey tires you? What to do if it gets lonely? What to do if you face hurdles? Well, try reading Be Better Bit-by-Bit!

The author, Nishith Goyal, is a Chartered Accountant and a life-cum-self-transformation coach. In his book, he not only motivates the reader to begin the journey but also focuses on the consistency and constancy in the journey.

This self-help book has a very simple philosophy at its heart – small and consistent improvements. ‘This book is about breaking down the journey into bite-sized, chewable goals and actions’, claims Nishith. While introducing the philosophy behind his book, he has raised some thought-provoking questions and propositions. For a person like me who thinks that the adventure of life is in its randomness and in the unknown, this book may seem a little non-conformist. However, there was one self-realisation paragraph on not wanting to feel embarrassed that struck just the correct chord in me – ‘What are the five things that I did in the last twelve months of which I am proud? Every time the answer leaves me amazed at how clarity of thought can bring our goals close to us. My mind now is accustomed to this question and supports me every time I take on something new because my brain does not want to feel embarrassed when I answer this question.’

A practical guide to self-development, the book starts with a detailed insight into its philosophy which is inspired by the Japanese Kaizen meaning continuous improvements. The illustrative non-theoretical expounding of this philosophy filled with anecdotes is engaging. Many of us tend to avoid change by just making excuses. The Limbic System of our brain, or the Chimp brain which has been conditioned to fear change through our evolution, is the real reason for our resistance to change, says Nishith. He elaborates that the Chimp’s fear of failure is the reason for us not fighting the resistance to change. His ‘Bit-by-Bit’ philosophy attempts to precisely target such resistance. Baby steps towards change that may seem insignificant at the start, but by the power of compounding will significantly tantamount to a noticeable improvement. Well, die-hard Warren Buffet fans know how compounding multiplies wealth!

Want to run a marathon? Start with a fifteen minutes’ run daily. Wish to read 50 books? Target five to ten pages daily. Want to write a book? Start with writing two pages a day. Want to join the 5 a.m. club? Wake up 15 minutes before your normal waking time. Nishith advises that we start with small steps and do so consistently so that they do not overwhelm the Chimp brain. The author has supplemented the philosophical explanation of the importance of the extensively accepted tools of self-improvement – Self-Awareness, Mindfulness, Meditation, Reading, Journaling and Morning routines – with practical tips and exercises to imbibe each element in our daily routine. The art of journaling as a technique of self-awareness and self-development is a recurring theme of the book, and rightly so. Those who have read Jim Collins’s Great by Choice will be reminded of ‘the 20 miles march’ – staying on course on bad days and not over-exerting on good days.

Describing self-awareness as a lifetime journey, Nishith has enumerated certain prompts like answering questions on self, mind-mapping, journaling, mirror gaze technique, writing an obituary or eulogy for oneself, as also practising mindfulness through gratitude, breathing exercises, window-gazing, de-cluttering and the water exercise. He has elaborated on certain useful tips to make commuting less irksome and steps on having a productive morning routine which sets the tempo for the entire day. The scientific explanation on rapid eye movement (REM) and non-rapid eye movement (NREM) stages of sleep along with simple tips of sleeping better (quality, not quantity) was a revelation for me. While Nishith’s running journey is an inspiring story, only running as a self-development technique was lost on me. He mentions physical exercise in general but mainly focuses on running which disrupted the flow of the book for me.

Throughout the book, Nishith has drawn from his own life experience of taking baby steps towards a journey of self-improvement. His shift from normalcy towards being a marathon runner, balancing a full-time corporate job with life and self-transformation coaching, reading hundreds of books, writing articles and at the same time enjoying quality family time, is an inspiring story. This he has done, he mentions, by practising each of the elements of self-improvement consistently over a span of three years – every day, bit-by-bit.

Nishith’s love for reading and continuous efforts towards self-improvement are evident from the collation of ideas emanating from inspirations drawn from a large number of books that he has referred to in the bibliography. The 31 questions on self-awareness from The 5AM Revolution by Dan Luca; principles of mind mapping from Finding Your Element by Ken Robinson and Lou Aronica; the Seed Exercise as a self-awareness exercise and the Water Exercise as a mindfulness exercise from The Pilgrimage by Paulo Coelho; and tips to better sleeping from Sleep Smarter by Shawn Stevenson, amongst others, including articles on the Medium, these may be familiar to some readers. If one has already read a number of self-help books, this book may just seem a retelling. Since the core focus is on journaling and, more specifically, writing and reading, creative arts like drawing and painting as self-awareness activities remain largely unexplored.

Even then, while most self-help books seem imposing, Be Better Bit-by-Bit is a subtle imposition through a perfect blend of theory, life experiences and short stories, techniques, practical tips and actions. The simple language, backed by the author’s own trials, is comfortable and friendly to the mind. It is like a display of self-development techniques from which you can pick and prepare a bouquet of the ones that suit you. To know which ones work for you, for each of the techniques, Nishith has designed certain exercise space in the book and activities that the reader can practise while reading the book. Not all the techniques may make it to the bouquet and no two bouquets may be the same.

Be Better Bit-by-Bit is Nishith’s attempt to guide the reader to start taking those baby steps towards a journey of self-development and achieving the goals. The tone of the book is friendly and motivational. It does not seem over-imposing or merely a non-practicable theory at any point. This book is a good starting point for someone who is a beginner in the self-help genre, or someone who has read self-help books but never got around to practising it. Atomic Habits by James Clear published in 2018 will be a good complementary read along with this book.

MISCELLANEA

I. Science

10 New technology enables conversion of waste plastics to jet fuel in just one hour

Researchers have been able to convert 90% of waste plastic to jet fuel and other valuable hydrocarbon products within an hour at moderate temperatures.

Washington State University researchers have developed an innovative way to convert plastics to ingredients for jet fuel and other valuable products, making it easier and more cost-effective to reuse plastics. They were also able to easily fine-tune the process to create the products that they wanted.

Led by graduate student Chuhua Jia and Hongfei Lin, Associate Professor in the Gene and Linda Voiland School of Chemical Engineering and Bioengineering, they report on their work in the journal Chem Catalysis. ‘In the recycling industry, the cost of recycling is the key,’ Lin said. ‘This work is a milestone for us to advance this new technology to commercialisation.’

In recent decades the accumulation of waste plastics has caused an environmental crisis, polluting oceans and pristine environments around the world. As they degrade, tiny pieces of micro-plastics have been found to enter the food chain and become a potential threat to human health.

However, plastic recycling has been problematic. The most common mechanical recycling methods melt the plastic and re-mould it, but that lowers its economic value and quality for use in other products. Chemical recycling can produce higher quality products, but it requires high reaction temperatures and a long processing time, making it too expensive and cumbersome for industries to adopt. On account of the limitations, only about 9% of plastic in the U.S. is recycled every year.

Converting plastic in one hour
In their work, the WSU researchers developed a catalytic process to efficiently convert polyethylene to jet fuel and high-value lubricants. Polyethylene, also known as the No. 1 plastic, is the most commonly used, in a huge variety of products from plastics bags, milk jugs and shampoo bottles to corrosion-resistant piping, wood-plastic composite lumber and plastic furniture.

For their process, the researchers used a ruthenium on carbon catalyst and a commonly used solvent. They were able to convert about 90% of the plastic to jet fuel components or other hydrocarbon products within an hour at a temperature of 220 degrees Celsius (428 degrees Fahrenheit), which is more efficient and lower than temperatures that would be typically used.

Jia was surprised to see just how well the solvent and catalyst worked. ‘Before the experiment, we only speculated but didn’t know if it would work… The result was so good.’

Adjusting processing conditions such as the temperature, time or amount of catalyst used, provided the critically important step of being able to fine-tune the process to create desirable products, Lin said.

‘Depending on the market, they can fine-tune to what product they want to generate,’ he said. ‘They have flexibility. The application of this efficient process may provide a promising approach for selectively producing high-value products from waste polyethylene.’

(Source: International Business Times – By IBT News Desk – 18th May, 2021)

II. Health

11 Scots researchers needed to test curcumin and Covid

Scots who have knee osteoarthritis are being urged to explore the latest research for pain relief from a clinical study. The health benefits of a bioavailable turmeric extract may not only help with pain relief for knee osteoarthritis, but could also lessen some of the severe complications from Covid-19 by offering possible protection as an anti-inflammatory agent against viral infection complications.

Turmeric, a spice used in curry, has been used as medicine in India for hundreds of generations. And recently a number of scientific studies have proved that it contains compounds with medicinal properties for pain relief because of its inflammatory properties.

One form of curcumin extract, called BCM-95®, currently has the strongest independent data in human trials, having been used in dozens of clinical trials. BCM-95® is an enhanced curcuminoid complex with the essential oils of turmeric which is seven times more bioavailable than standard curcumin. BCM-95® is also known as CURCUGREEN®.

BCM-95® is the most researched bioavailable curcumin in the world with over 70 clinical studies in high impact publications. According to the British Journal of Nutrition ‘unmodified curcumin is reported to be retained in the blood for two to five hours in humans, whereas retention of a modified form of curcumin (Biocurcumax-95, or BCM-95®) is reported as exceeding eight hours’.

The most important of these compounds is curcumin, and its bioavailability, or how easily a substance can be absorbed by the body, may be of interest to the 20% of Scots experiencing chronic pain.

Studies have shown that it can be used for a range of disorders and ailments, from osteoarthritis and diabetes to dementia.

Curcumin has well-established anti-inflammatory properties for any number of chronic health conditions. A 2013 article in Biofactors suggests that curcumin works by suppressing the mechanisms of actions that lead to chronic inflammation.

This 2014 study on BCM-95 noted that the ‘anti-inflammatory effects of curcumin may account for its increased effectiveness in patients with depression and that this nutraceutical may provide a safe and effective treatment for individuals suffering from a major psychiatric disorder.’

Covid
Curcumin’s pharmacological abilities as an anti-inflammatory agent may even be able to help with inflammation caused by Covid-19.

In the largest study of its kind to date, the UK’s International Severe Acute Respiratory and Emerging Infection Consortium (ISARIC), supported by the UK Coronavirus Immunology Consortium (UK-CIC), has identified new biomarkers of inflammation that both indicate the severity of Covid-19 and distinguish it from severe influenza.

In a study in Science Immunology, clusters of inflammatory disease markers (including two called GM-CSF and IL-6) increase in accordance with Covid-19 severity, giving insights into the causes of severe disease and potentially offering a new focus for therapy.

Evidence shows that pre-treatment with curcumin lowered levels of GM-CSF and in this experiment the level of IL-6 was significantly decreased in the group of rats treated with curcumin.

‘We all need the best possible protection against a viral infection and pre-treatment with curcumin may save many people from complications from coronavirus; next winter it would be wise to have a few BCM-95 bottles in everyone’s pantry,’ says Suphil Philipose from BioTurm Limited.

He cites evidence by Dr. Pradyut Waghray, a senior consultant pulmonologist to the Indian Armed Forces based in Hyderabad who has 32 years’ experience in this field. In a video, Dr. Waghray talks about evidence-based events he has seen in his patients on the role of curcumin in preventing the entry of the virus into the cells, inhibiting the multiplication of the virus and preventing the cytokine storm which can result in rapid worsening and even death of the patient.

BioTurm is keen to invest in further clinical trials and would like to hear from researchers and scientists based in Scotland, particularly to build on the findings published in the American Journal of Geriatric Psychiatry from 2018.

A twice-daily dose of curcumin extract for 18 months improved memory and was linked to changes in two hallmark Alzheimer’s proteins, amyloid and tau.

This could hold benefits for the brain in healthy individuals over 50 for its memory benefits.

(Source: Promoted by Bioturm Limited – The Scotsman – 3rd May, 2021)

III. Personal Growth

12 The value of minimalism

The less you own, the less you have to take care of.
The less you own, the less you have to replace.
The less you own, the less money you need to earn.
The less you own, the more time you have for other things (and people).
The less you own, the less things you need to protect.

It’s not always easy to want less, but we’re capable of doing it. It starts with appreciating what we already have.

While we’re thinking about what we don’t have, we’re forgetting about what we do have. We have more than we usually realise. And we don’t need many of the things we think we need.

It’s part of human psychology to gain something and shortly thereafter start thinking about what else we can get. It’s also our nature to vehemently protect what we have (even blessings that come our way unexpectedly, and unearned). The way to combat this is to regularly be thankful for what we have.

Minimalism isn’t about depriving yourself of comfort. It’s not about having a poverty mindset. It’s about removing distractions from your life. Having fewer wants can greatly uncomplicate your life.

It doesn’t mean we can’t be wealthy (if we have everything we need, we’re wealthy). It’s about not pursuing wealth as a way of fulfilling yourself spiritually. It’s about not allowing what you own to own you. It’s about not allowing your possessions to blind you from the things that are most important in life.

We all want to be comfortable and not have to worry about money. There’s nothing wrong with that. I wish we could all have that. Maybe one day everyone will. But don’t think that the more you have, the happier you’ll be. That’s true only to an extent.

Part of having more is wanting less. Being content with less is itself an increase.

(Source: Dan Pedersen-Personal Growth –April, 2021)

IV. Economy

13  India needs its own cryptocurrency unicorns, suggest experts

India is no longer a niche market but rather a rapidly expanding financial market. And India requires its own cryptocurrency unicorns.

Stressing that India needs smart and sensible crypto regulation, leading cryptocurrency players in the country have urged the Government against the ban (on cryptocurrency) and sought engagement to build consensus on crypto regulation.

The Government earlier indicated that it would take a ‘calibrated approach’ towards digital assets and formulating a Bill on cryptocurrencies. But a final decision is yet to be taken.

At a webinar organised by the Internet and Mobile Association of India (IAMAI) and its Blockchain and Crypto Assets Council (BACC) members, the stakeholders said that consultation and dissemination of information between the Government and the industry is crucial to determining the most appropriate regulatory framework and supporting innovation.

‘There are over 1.5 crore Indians holding over Rs. 1,500 crore worth crypto-assets. India is no longer a niche market, but a rapidly growing finance market. Despite the growth in crypto adoption, India is behind in terms of both regulations as well as number of successful crypto startups,’ said Nischal Shetty, CEO, WazirX.

‘India needs its own crypto unicorns and better regulations and for this we must encourage our entrepreneurs to build for crypto,’ he added.

Framing an appropriate regulatory framework for cryptocurrencies and crypto-assets continues to be a challenge with countries taking differing approaches to finding a solution.

In this regard, the experts said that it would be useful to consider the approach of other jurisdictions such as Singapore that has taken a balanced approach with regulations aimed at preventing nefarious activity without impeding technology innovation.

‘India and Singapore are both emerging as Fintech hubs and we hope that regulation in India will catch up soon with global best practices,’ said Vivek Kathpalia, Head, Singapore Office and Leader, Technology Law, Nishith Desai Associates.

Stressing the need for collaborative effort amongst regulators and industry, Sriram Chakravarthi, Counsel, Rajah & Tann Singapore LLP, stated that ‘in order to create an effective regulatory framework, Governments should collaborate with the crypto-industry and representative bodies and consider international approaches – particularly on the cross-border aspects of crypto-regulation’.

(Source: International Business Times – By IANS – 15th May, 2021)

REGULATORY REFERENCER

DIRECT TAX

1. CBDT has further extended due dates expiring on 30th April, 2021 by two months on account of the Covid-19 pandemic The Government has extended the various time-barring dates (which were earlier extended to 30th April, 2021) from 30th April 2021 to 30th June, 2021 in the following cases:
(a) The time limit for passing of any order for assessment or reassessment, the time limit for which is provided u/s 153 or section 153B.
(b) The time limit for passing an order consequent to the direction of DRP u/s 144C(13).
(c) The time limit for issuance of notice u/s 148 for reopening assessment where income has escaped assessment.
(d) The time limit for sending intimation of processing of Equalisation Levy.
(e) The last date for making payment without additional charge under Vivad se Vishwas Act. [Press Release dated 24th April, 2021.]

2. Extension of time-lines related to certain compliances under the Income-tax Act, 1961 In view of the pandemic, CBDT has provided that due dates of the following compliances if falling before 31st May, 2021 shall stand extended to 31st May, 2021:
a. Filing of appeal before CIT(A).
b. Filing of objections to Dispute Resolution Panel (DRP).
c. Filing of return of income in response to reassessment notice u/s 148.
d. Filing of belated or revised return of income for A.Y. 2020-21.
e. Furnishing of challan-cum-statement for tax deducted during the month of March, 2021 for sections 194-IA, 194-IB, and 194M.
f. Filing of declaration in Form No. 61 containing particulars of Form No. 60 received during the period from 1st October, 2020 to 31st March, 2021. [Circular No. 8 of 2021 dated 30th April, 2021.]

3. CBDT notifies threshold limits for Significant Economic Presence u/s 9 Income-tax (13th Amendment) Rules, 2021 Section 9 of the Income-tax Act relates to the incomes which are deemed to accrue or arise in India. Section 9(1)(i) provides that income accruing or arising, whether directly or indirectly, through or from any business connection in India shall be deemed as income accruing or arising in India.

Explanation 2A to Section 9(1)(i) provides that the ‘Significant Economic Presence’ of a non-resident in India shall constitute ‘business connection’.

Rule 11UB was inserted to prescribe the threshold limits for ‘Significant Economic Presence’. Rule 11UD provides that for clause (a) the threshold limit shall be Rs. 2 crores, whereas for clause (b) the threshold limit shall be Rs. 3 lakhs. [Notification No. 41 dated 3rd May, 2021.]

4. Income-tax (14th Amendment) Rules, 2021 A non-resident, being an investor who operates in accordance with the SEBI Circular No. IMD/HO/FPIC/CIR/P/2017/003 dated 4th January, 2017, shall not be required to obtain and quote PAN, subject to fulfilment of certain conditions. [Notification No. 42 dated 4th May, 2021.]

5. Income-tax (16th Amendment) Rules, 2021 Rule 2B is amended to provide that where the employee avails any cash allowance from his employer in lieu of any travel concession or assistance for the assessment year beginning on 1st April, 2021, he shall be eligible to claim an exemption for an amount equal to the lower of the following:
i. Rs. 36,000 per person for the individual and the member of his family; or
ii. One-third of expenditure incurred by an individual or a member of his family.

The exemption will be allowed subject to fulfilment of certain conditions. [Notification No. 50 dated 5th May, 2021.]

6. No penalty on cash receipt of Rs. 2 lakhs or more by hospital providing Covid-19 treatment As provided in section 269ST, no one can receive an amount of Rs. 2 lakhs or more in cash. CBDT has issued a Notification to provide that the provisions of section 269ST shall not apply to hospitals, dispensaries, nursing homes, Covid-care centres or similar other medical facilities providing Covid treatment to patients where payment is received in cash from 1st April, 2021 to 31st May, 2021 on obtaining the PAN or AADHAAR of the patient and the payer, and the relationship between the patient and the payer, by such entities. [Notification No. 56 dated 7th May, 2021.]

7. Extension of time-lines related to certain compliances under the Income-tax Act, 1961 In view of the pandemic, CBDT has extended the due dates of various compliances like filing of return of income for A.Y. 2021-22, furnishing of Tax Audit Report, furnishing of Transfer Pricing Certificate, filing of belated return, filing of TDS return of last quarter, etc. [Circular No. 9 of 2021 dated 20th May, 2021.]

COMPANY LAW

I. COMPANIES ACT, 2013

(I) MCA relaxes levy of additional fees in filing of certain forms under the Companies Act (and LLP Act, 2008) – MCA has notified that no additional fees shall be levied on Companies / LLPs up to 31st July, 2021 for delayed filing of forms (other than charge-related forms, namely, e-Forms CHG-1, CHG-4 and CHG-9), which were / would be due for filing during the period 1st April, 2021 to 31st May, 2021. [General Circular No. 06/2021 dated 3rd May, 2021.]

(II) MCA relaxes timeline for filing forms related to creation or modification of charges – MCA has provided relaxation as indicated in the Table below to companies / charge holder in respect of filing of Forms CHG-1 and CHG-9 (and not CHG-4). This Circular shall not be applicable in cases where the said forms have already been filed before 3rd May, 2021 or the timeline for filing has already expired / expires at a future date (despite exclusions of time period mentioned in the Table below) u/s 77 / 78.

Criteria

Relaxation granted
by MCA?

Applicable fees

Date of creation / modification of charge falling before 1st
April, 2021 but timeline for

For the purpose of counting the number of days under sections 77
and 78, the period 1st April, 2021 to 31st May, 2021
shall not be considered. In case the Form is not filed within

If the Form is filed on or before 31st May, 2021,
then fees payable as on 31st March, 2021 shall be charged
If the Form is filed after 31st May, 2021, then the fees shall be
levied by

[Continued]

filing such Form has not expired u/s 77

such period, then 1st June, 2021 shall be considered
as the first day after 31st March, 2021 for the ‘number of days’
calculation under the above-mentioned sections

adding the following:
a. No. of days beginning from 1st June, 2021 to the date of filing
of such Form;
b. Time period elapsed from the date of creation of charge till 31st
March, 2021

Date of creation / modification of charge falls on any date
during the period 1st April, 2021 to 31st May, 2021
(both dates inclusive)

For the purpose of counting the number of days under sections 77
and 78, the period from the date of creation / modification of charge to 31st
May, 2021 shall not be considered. In case the Form is not filed within such
period, then 1st June, 2021 shall be considered as the first day
after the date of creation / modification of charge for the ‘number of days’
calculation under the above-mentioned sections

If the Form is filed before 31st May, 2021, then
normal fees shall be payable. If the Form is filed after 31st May,
2021, then the first day after the date of creation of modification of charge
shall be considered as 1st June, 2021 and the number of days till
the date of filing of the Form shall be counted for the purpose of the fees

[General Circular No. 07/2021 dated 3rd May, 2021]

(III) Extension of the maximum gap required between two consecutive Board Meetings – MCA has extended the maximum gap between two consecutive Board Meetings to 180 days (as against 120 days) during the quarters April-June, 2021 and July-September, 2021. [General Circular No. 08/2021 dated 3rd May, 2021.]

(IV) Clarification on eligible CSR activities in light of Covid pandemic – MCA has clarified that creation of health infrastructure for Covid care, establishment of medical oxygen generation and storage plants, manufacturing and supply of Oxygen concentrators, ventilators, cylinders and other medical equipment for countering Covid-19 or similar such activities undertaken by the companies directly by themselves or in collaboration as shared responsibility with other companies, are eligible CSR activities under Schedule VII. [General Circular No. 09/2021 dated 5th May, 2021.]

(V) Clarification on offsetting excess CSR amount spent for F.Y. 2019-20 under the Companies Act, 2013 and its Rules – MCA has clarified that any excess amount or part thereof can be offset against the requirement to spend u/s 135(5) for F.Y. 2020-21 if a company has contributed any amount to ‘PM CARES Fund’ on 31st March, 2020 which is in excess of the mandated amount as prescribed u/s 135(5) for F.Y. 2019-20. The offset shall be subject to the following conditions:
a. the excess amount that is being offset should factor in the unspent CSR amount for previous financial years, if any;
b. the CFO shall certify that the contribution to ‘PM-CARES Fund’ was indeed made on 31st March, 2020 in pursuance of the appeal dated 30th March, 2020, which was sent to MDs / CEOs of top 1,000 companies in terms of market capitalisation and the same shall also be so certified by the statutory auditor of the company; and
c. the details of such contribution shall be disclosed separately in the Annual Report on CSR as well as in the Board’s Report for F.Y. 2020-21 in terms of section 134(3)(o). [Circular dated 20th May, 2021, E File CSR-01/04/2021-CSR-MCA.]

II. SEBI

(VI) Portfolio manager needs to obtain prior approval of Board in case of change in control – SEBI has notified the SEBI (Portfolio Managers) (Second Amendment) Regulations, 2021 whereby it has clarified that the Portfolio Manager will be required to obtain prior approval of the Board in case of change in control. [Notification No. SEBI/LAD-NRO/GN/2021/16, dated 26th April, 2021.]

(VII) Submission of Internal Audit Report (IAR) by Registrar and Transfer Agents (RTAs) extended to 31st July, 2021 in view of the Covid-19 situation – SEBI has decided to extend the timeline for submission of IAR by RTAs for the half-year ended 31st March, 2021 from 15th May, 2021 to 31st July, 2021 in view of the Covid-19 situation. [Circular No. SEBI/HO/MIRSD/RTAMB/P/CIR/2021/558, dated 29th April, 2021.]

(VIII) SEBI relaxes compliance of certain provisions of LODR Regulations due to Covid-19 pandemic – SEBI has decided to grant relaxations from compliance with certain provisions of the LODR Regulations / other applicable Circulars as under:

Compliance requirement and regulation reference

Requirement

Due date

Extended due date for quarter / Half-year ended
31st March, 2021

Annual Secretarial

Sixty days from end of

30th May, 2021

30th June, 2021

[Continued]


Compliance report

[Regulation 24A read with Circular CIR/CFD/CMD1/27/2019 dated 8th
February, 2019]

the financial year

 

 

Quarterly financial results / Annual audited
financial results

[Regulation 33(3)]

Forty-five days from the end of the quarter / Sixty days from
the end of the financial year

15th May, 2021 /
30th May, 2021

30th June, 2021

Statement of deviation or variation in use of
funds

[Regulation 32(1) read with SEBI Circular CIR/CFD/CMD1/162/2019
dated 24th December, 2019]

Along with the financial results (within 45 days of end of each
quarter / 60 days from end of the financial year)

15th May, 2021 / 30th May, 2021

30th June, 2021

Further, listed entities are permitted to use Digital Signature Certifications for authentication / certification of filings / submissions made to stock exchanges under the SEBI (LODR) Regulations, 2015 for all filings until 31st December, 2021. [Circular No. SEBI/HO/CFD/CMD1/P/CIR/2021/556, dated 29th April, 2021.]

(IX) SEBI unveils format for Business Responsibility and Sustainability Reporting (‘BRSR’) applicable for top 1,000 listed companies – SEBI has prescribed the format for ‘BRSR’ (applicable to top 1,000 listed companies) and the reporting of the same shall be voluntary for F.Y. 2021-22 and mandatory from F.Y. 2022-23. The BRSR is an initiative towards ensuring that investors have access to standardised disclosures on ESG (Environment, Social and Governance) parameters. [Circular No. SEBI/HO/CFD/CMD-2/P/CIR/2021/562, dated 10th May, 2021.]

FEMA

(i) An Indian party acting as a sponsor to an Alternative Investment Fund (AIF) set up in an overseas jurisdiction, including in an IFSC in India, will be treated as Overseas Direct Investment as per FEMA Notification 120/2004-RB (FEMA 120). Accordingly, such Indian party can set up an AIF in these jurisdictions under the Automatic Route provided it complies with Regulation 7 of FEMA 120. [A.P. (DIR Series) Circular No. 4 dated 12th May, 2021.]

IRDAI

Accounts and Audit
(a) IRDAI (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) (First Amendment) Regulations, 2021 – The IRDAI, by substituting extant provisions contained in Paragraph 2 of Part I of Schedule B of the IRDAI (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002 notified on 30th March, 2002, has now provided a revised manner in which ‘premium’ and ‘unearned premium reserve’ should be recognised by insurers carrying on general insurance business. [Notification F. No. IRDAI/Reg/5/177/2021 dated 5th May, 2021.]

RBI

Accounts and Audit
(b) Guidelines for appointment of Statutory Central Auditors (SCAs) / Statutory Auditors (SAs) of commercial banks (excluding RRBs), UCBs and NBFCs (including HFCs) – The RBI has notified Guidelines applicable for F.Y. 2021-22 and onwards in respect of appointment / reappointment of SCAs / SAs. The guidelines cover the following: prior approval requirements, branch coverage, eligibility criteria of auditors, auditors’ independence, professional standards, tenure and rotation, audit fees and expenses, and statutory audit policy and appointment procedures. [RBI Notification Ref. No. DoS.CO.ARG/SEC.01/08.91.001/2021-22 dated 27th April, 2021.]

ICAI ANNOUNCEMENT

(A) Extension of validity of Peer Review Certificate in wake of Covid-19 spurt – The Peer Review Board has granted extension to the Peer Review Certificates expiring during the period from 1st April, 2021 to 30th June, 2021 up to 31st July, 2021. Accordingly, the validity of such Certificates shall now be treated as 31st July, 2021. [4th May, 2021.]

ICAI MATERIAL

Accounts and Audit

  •  FAQ on Accounting for amounts to be incurred towards Corporate Social Responsibility (CSR) pursuant to the Companies (CSR Policy) Amendment Rules, 2021. [10th May, 2021.]

Company Law

  •  FAQs on Circular on relaxation of time for filing Forms related to creation or modification of charges under the Companies Act, 2013 issued by the MCA on 3rd May, 2021. [4th May, 2021.]

SOCIETY NEWS

THE
GLOBAL ENERGY & OTHER CRISES

 

The world is currently experiencing
a plethora of problems – energy crisis, supply chain disruption, chip shortage
and inflation – and these will directly impact our lives and businesses and
also the manufacturing and economic development of the country. We are staring
at shortages of coal and natural gas, along with a sudden spike in the prices
of coal (up 40% to 100% in one year), natural gas (prices have shot up six to
eight times in the last one year) and oil (prediction of oil > $100+).
Global supply-chain bottlenecks are feeding on one another, with shortages of
components and surging prices of critical raw materials squeezing manufacturers
around the world with a delay in turnaround time for containers and congested
ports in the USA and China. This is adding to inflation.

 

The USA walked out of its
20-year-old war on terror in Afghanistan, proving once again that Afghanistan
is the ‘Graveyard of Empires’, having forced the retreat of the USSR, Britain,
the Mughals and the Mongolians. Will China take the risk of entering this
graveyard? Is Pakistan celebrating its pyrrhic victory in humbling two empires
(the USA and the USSR), or will it live to regret it as the international
community is upset with it? India could see the inflow of terrorists into
Kashmir, but with the technology widely used by our security forces, terrorists
are unlikely to have a safe passage.

 

These were some of the points made
at the IESG meeting held on 25th October, 2021. All members of the
group along with CA Harshad Shah gave their views in the course of the
deliberations.

 

‘IMPORTANT
LEGACY JUDGMENTS ON INDIRECT TAXES’

The Indirect Tax Study Circle
organised a Zoom online meeting on ‘Important Legacy Judgments on Indirect
Taxes – Discussion on Principles, Issues & Jurisprudence w.r.t. GST’ on 26th
October. Group leader CA Vishal Poddar had drafted five case studies on
important legacy judgments on indirect taxes. The implications of the
principles, issues and jurisprudence of these cases in the GST era were
discussed.

The case studies broadly covered
the following:

 

1. Penalty u/s 74 for non-reversal
of proportionate ITC u/s 17(2) towards sale of factory building;

2. Taxability and valuation of
supply in case of supply of raw materials by customer;

3. Mismatch in ITC as per GSTR9 and
GSTR2A;

4. GST on royalty for mining,
including RCM provisions; and

5. GST on cost-sharing
arrangements.

 

The participants took active part
in the discussion on all the case studies and the issues were discussed at
length. Mentor Adv. CA Jatin Harjai offered his exhaustive comments on
several aspects covered in all the case studies. Around 50 participants
benefited from the active discussion led by him.

 

ITF
STUDY CIRCLE MEETING

 

The ITF Study Circle’s virtual
meeting on ‘Residence of Companies under the Act and DTAA’ took place on 29th
October.

 

It was led by Group Leader CA Abbas
Moiz Jaorawala who explained the concepts with respect to residence of companies
under the Indian Income-tax Act and DTAA.

 

Determining a company’s residence
status is one of the most important factors based on which taxability is
decided. With this in mind, he walked the audience through the Income-tax Act,
its amendments, DTAAs and various court rulings in relation to residence of
companies. With the help of several simplified illustrations, he lucidly
explained various concepts related to the topic.

 

A
few other speakers also dealt with and answered queries raised by the audience.
The meeting was quite interactive and the participants said they benefited
enormously from the discussion and insights provided. The BCAS
ITF
Study Circle plans to organise such insightful and exciting meetings for
participants in future as well. Details of the upcoming sessions will be shared
with the Study Circle and other members soon.

REGULATORY REFERENCER

DIRECT TAX


1. Tolerance band for wholesale trading and others: The Central Government has notified the ‘Tolerance Band’ for A.Y. 2021-22 for wholesale trading and others. The Notification provides a tolerance range of one per cent for wholesale trading and three per cent in all other cases. [Notification No. 124 dated 29th October, 2021.]


2. e-Settlement Scheme, 2021: The CBDT has notified ‘e-Settlement Scheme, 2021′ to settle pending income-tax settlement applications transferred to a settlement commission. [Notification No. 129/2021 dated 1st November, 2021.]

 

COMPANY LAW

I. COMPANIES ACT, 2013
 
1. Relaxations in paying additional fees in case of delay in filing Form-8 by LLPs: The MCA has extended the deadline for LLPs to file Form 8 (Statement of Accounts and Solvency) for F.Y. 2020-2021 until 30th December, 2021 in response to representations about the challenges faced because of the Covid-19 pandemic. [General Circular No. 16/2021 dated 26th October, 2021.]
 

2. Relaxation on levy of additional fees in filing of e-forms: MCA has provided relaxation on levy of additional fees for Annual Financial Statement filings required for the F.Y. ended 31st March, 2021. The normal fees are payable up to 31st December, 2021 for filing the annual financial statements in the e-forms such as AOC-4, AOC-4 (CFS), AOC-4 XBRL, and AOC-4 Non-XBRL, and MGT-7 / MGT-7A. [General Circular No. 17/2021 dated 29th October, 2021.]


3. Extension of last date of filing of Cost Audit Report: MCA has extended the due date for filing of Cost Audit Report for F.Y. 2020-21 with the Central Government. As a result, the companies can file a Cost Audit Report by 30th November, 2021 instead of 31st October, 2021. [General Circular No. 18/2021 dated 29th October, 2021.]

 
4. IEPFA claim settlement process simplified: The MCA has further simplified the claim settlement process by rationalising various requirements under IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. For claimants, requirement of advance receipt has been waived off and the requirement of Succession Certificate / Probate of Will / Will has been relaxed up to Rs. 5 lakhs both for physical and demat shares. [Press Release dated 12th November, 2021.]


II. SEBI

5. SEBI directs ‘Investment Advisers’ not to deal in unregulated activities: SEBI has directed registered Investment Advisers (IAs) not to deal in unregulated activities, i.e., advisory, distribution and execution / implementation services in digital gold and other unregulated instruments. Any dealing in unregulated activities by IAs may entail action as deemed appropriate under the SEBI Act, 1992 and regulations framed thereunder. [Press Release No. 30/2021, dated 21st October, 2021.]


6. SEBI amends norms for determination of legitimate claims: SEBI has decided to revise the section relevant to the determination of legitimate claims with the goal of aligning them with securities market norms. When a member is designated a defaulter, the claim must be presented to the Member Core Settlement Guarantee Fund Committee (MCSGFC) for penalty and approval. In addition to the foregoing, the MCSGFC’s advice regarding legitimate claims shall be sent to the Investor Protection Fund (IPF) Trust for disbursement of the amount immediately. In case the claim amount is more than the coverage limit under IPF, or the amount sanctioned and ratified by the MCSGFC is less than the claim amount, then the investor will be at liberty to opt for arbitration / any other legal forum outside the exchange mechanism for claim of the balance amount. The provisions of this Circular shall come into effect from 1st January, 2022. [Circular No. SEBI/HO/CDMRD/DoC/P/CIR /2021/651, dated 22nd October, 2021.]

7. SEBI authorises practising Cost Accountants to issue Reconciliation of Share Capital Audit Report: SEBI has amended Regulation 76 of the SEBI (Depositories and Participants) (Second Amendment) Regulations, 2018 authorising practising Cost Accountants to issue Reconciliation of Share Capital Audit Report. [Notification No. SEBI/LAD-NRO/GN /2021/53, dated 26th October, 2021.]

 
8. Stock brokers should maintain current accounts in multiple banks for holding of client funds: In order to facilitate seamless settlement of funds and for the convenience of investors, the SEBI has clarified that stock brokers should maintain current accounts in appropriate number of banks (subject to the maximum limit prescribed by stock exchanges / SEBI) for holding client funds for settlement purposes and any other accounts mandated by stock exchanges. [Circular No. SEBI/HO/MIRSD/DOP/P/CIR/2021/653, dated 28th october, 2021.]

 
9. Legal framework governing portfolio managers – can’t provide investing advice on unlisted offshore shares: The SEBI has issued informal guidance whereby it has been clarified that the extant legal framework governing portfolio managers does not envisage investment advice on offshore shares and securities which are neither listed nor intended to be listed in the recognised stock exchanges. [Circular No. SEBI/HO/IMD/DF1/OW/P/2021/31147/1 dated 2nd November, 2021.]


10. SEBI eases norms for processing investor service request by RTAs: As per SEBI’s new framework effective 1st January, 2022, in addition to responding to queries, complaints, and service requests through hard copies, the RTAs shall also process the same received through the registered e-mail address of the holder. Additionally, in the case of service requests, the documents furnished shall have e-sign of the holder(s) / claimant(s). [Circular No. SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2021/655, dated 3rd November, 2021.]

 
11. Any person holding more than 10% or more equity shares will be deemed as related party w.e.f. 1st April, 2023: The SEBI has amended the Listing Obligations and Disclosure Requirements Regulations, 2015 whereby the scope and definition of related party has been extended. The amendment states that any person or any entity holding equity shares of 20% or more, or 10% or more in the listed entity at any time during the immediate preceding financial year, shall be deemed to be a related party. [Notification No. SEBI/LAD-NRO/GN/2021/55, dated 9th November, 2021.]

 

FEMA

1. FPIs allowed to invest in debt instruments issued by REITs and InvITs on repatriation basis: RBI has amended the Foreign Exchange Management (Debt Instruments) Regulations, 2019 to allow FPIs to invest in debt securities issued by REITs and InvITs on repatriation basis by including these securities in Schedule 1 of the said regulations. [Notification No. FEMA. 396(1)/2021-RB, dated 13th October, 2021 notified on 21st October, 2021 and A.P. (DIR Series 2021-22) Circular No. 16, dated 8th November, 2021.]

 

RBI

1. Clarifications related to Prudential Norms on IRACP Norms: To ensure uniformity in implementing Income Recognition, Asset Classification and Provisioning (IRACP norms) of advances, the RBI has issued clarifications on specific aspects of the extant regulatory guidelines, which applies to all lending institutions. The clarifications relate to: specification of due date / repayment date; classification as SMA and NPA account; definition of ‘out of order’; NPA classification in case of interest payments; upgradation of accounts classified as NPAs; and income recognition policy for loans with moratorium on payment of interest. [Notification No. RBI/2021-22/125. DOR.STR.REC.68/21.04.048/2021-22 dated 12th November, 2021.]

 

ICAI MATERIAL

Accounts and Audit

1. Report on Audit Quality Review (2020-21): The report highlights key findings observed in Audit Quality Reviews conducted by the Quality Review Board during F.Y. 2020-21. It includes a summary of observations related to Standards on Auditing, AS and Ind AS, other relevant laws and regulations and key takeaways for audit firms.

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Errata

Article: Auditor’s Evaluation of Going Concern Assessment, published in November 2021
We regret to point out a typographical error on Page 28 where ‘SA 260 Using the Work of an Expert’ should be replaced with ‘SA 620 Using the Work of an Auditor’s Expert’ and to be read accordingly.

MISCELLANEA

I. World News


Why governments across the globe are taxing major tech companies: Explained

In a landmark decision, 136 countries including India signed a pact to levy a minimum corporate tax of 15%. The pact would pave the way for governments across the globe to tax multinational companies where they operate. The step is part of a growing convergence that large multinational corporations are re-routing profits via low-tax jurisdictions in order to avoid paying taxes.

For over ten years the Organisation for Economic Co-operation and Development (OECD), which is mostly made up of developed economies, has led discussions on a minimum corporate tax rate. Next year, a multilateral convention will be signed. The greatest impact is likely to be felt by ‘Big Tech’ companies which have largely chosen low-tax jurisdictions to base their operations.

The new proposal aims to limit multinational companies’ ability to engage in profit-shifting by requiring them to pay at least some of their taxes where they do operate. Earlier, in April this year, US Treasury Secretary Janet Yellen urged the world’s 20 advanced economies to adopt a minimum global corporate income tax. At this time, the US Government benefits from a global agreement. Similar is the case with most other Western European countries, even though some low-tax European jurisdictions, such as the Netherlands, Ireland and Luxembourg, as well as some Caribbean jurisdictions rely heavily on tax rate comparative advantage to attract MNCs.

It is pertinent to note that the IMF has also expressed some interest in the proposal. While China is unlikely to object seriously to the US call, Beijing is concerned about the impact on Hong Kong, which is the world’s seventh-largest tax haven, as per a study published earlier this year by the advocacy group Tax Justice Network. Furthermore, China’s strained relationship with the United States may act as a deterrent in negotiations.

How will this affect big tech companies?

Apart from low-tax jurisdictions, the proposals are tailored to address the low effective tax rates paid by some of the world’s largest corporations, including big tech behemoths such as Apple, Alphabet and Facebook, as well as Nike and Starbucks. These giants will have to pay taxes in the country of their operation. Importantly, these firms generally depend on complex webs of subsidiaries to divert profits from big markets to low-tax jurisdictions such as Ireland, the British Virgin Islands, the Bahamas or Panama.

 
(Source: International Business Times – By Ashish Shukla, 13th October, 2021)

II. Technology

Karnataka to set up Startup Silicon Valley Bridge

On 19th November, 2021, Karnataka’s Minister for Electronics announced the setting up of a ‘Startup Silicon Valley Bridge’ to help skilled employees to work for Startups located in the US’ Silicon Valley. He said the Government has received invitations from various participating countries in the BTS-2021 to visit their countries to further strengthen investment ties.

Dr. C.N. Aswath Narayan, who is the State’s Minister for Electronics, IT, BT and S&T, Higher Education, Skill Development, Entrepreneurship and Livelihood, pointed out that Startups located in the US’ Silicon Valley are facing human resource shortage.

In his valedictory address at the 24th edition of the ‘Bengaluru Tech Summit-2021’ (BTS), he said the bridge will also serve as a connection between Startups of both the countries, enabling sharing of knowledge and other resources as part of the new initiative.

Further, a ‘Beyond Bengaluru Startup Grid’ will be set up to facilitate growth of emerging industries in other cities outside Bengaluru.

Taking a cue from the success story of India’s leading stock broking company Zerodha, a home-grown fin-tech venture, Dr. Narayan announced the constitution of a fin-tech task force to attract investments in the financial sector.

 
The Government plans to set up a Centre of Excellence (CoE) and a back office in Mangaluru for the purpose.

An entrepreneur has evinced interest in setting up an electric battery manufacturing unit at Hubballi, he said.

 
As for the BTS-2021, it has attracted investments to the tune of over Rs. 5,000 crores in the aftermath of the announcement of the Government’s new ESDM policy with industries evincing interest in setting up semi-conductor plants, motors for air conditioners, solar cell units, and electric vehicles, among others.

 
Notwithstanding the raging pandemic, Dr. Narayan said a million people had changed jobs in the last six months and another 400,000 candidates were getting ready for employment.

 
He said that for the first time, organisers conducted pre-events in the cities of Mangaluru, Hubballi and Mysuru in the run-up to BTS-2021 to promote the concept of industries going beyond Bengaluru.

‘Tech Summit’ was held in these clusters with strong participation notwithstanding the pandemic, he said.

 
The Government of Karnataka has received invitations from various participating countries in the BTS-2021 to visit their countries to further strengthen investment ties.

The Sydney Conclave and the Indo-US Conclave were successes as these saw interactions between the Prime Ministers of India and Australia and the US Consul-General in Chennai.

 
Dr. Narayan added that the 25th edition (silver jubilee) of the BTS to be held in 2022 (between 16th and 18th November) will be bigger and better and no effort will be spared to make it grand and more successful than its previous editions.

 
(Source: International Business Times – By IANS, 20th November, 2021)

 

III. Science

Space will be first home for humans, and earth will be a holiday destination: Jeff Bezos

 
Jeff Bezos is widely considered a visionary in the modern world and he is one of those billionaires on planet earth who believes in the future of space colonisation. And now, he has predicted that the future will witness human beings giving birth to children in space and over the course of time the planet earth will become a holiday destination.

Jeff Bezos made this prediction during a surprise appearance at the 2021 Ignatius Forum in Washington, DC.

‘Over centuries, many people will be born in space, it will be their first home. They will be born on these colonies, live on these colonies, then they’ll visit Earth the way you would visit, you know, Yellowstone National Park,’ he said during the event.

Future space colonies: Vision of Jeff Bezos

According to a report published in The Guardian, Jeff Bezos had once claimed that the future will have floating space colonies with weather like Maui all year long.

 
‘This is Maui on its best day, all year long. No rain. No earthquakes. People are going to want to live here.’

 
Jeff Bezos is not the only billionaire who dreams of future space colonisation. SpaceX founder Elon Musk has a strong action plan to take humans to Mars. He had several times claimed that humans are the only conscious beings in the universe, and he believes that we should use this consciousness to emerge as a multi-planetary species.

 
At one point in time, Elon Musk had revealed that the future government that will be set up on the Red Planet will be based on direct democracy. He also made it clear that people will have a direct role in the decision-making process in the future Martian government.

(Source: International Business Times – By Nirmal Narayanan, 15th November, 2021)

LETTER TO THE EDITOR

I refer to CA C.N. Vaze’s article on Lokmanya Tilak, published in the BCAJ issue of August, 2021. My heartiest compliments and thanks to him for writing this illuminating article and to you for publishing it. Like others, I thought that I had fairly good knowledge of Tilak Maharaj’s life. However, the article was an eye-opener. It is indeed unbelievable that in a single lifetime Tilak Maharaj accomplished so much and contributed so much to the society and to the country in so many diverse areas, in spite of facing so many trials and tribulations.

 

I would urge you to consider featuring such biographical sketches in future in NAMASKAAR.

 

– Rajesh Kadakia

Chartered Accountant

SOCIETY NEWS

INTERNAL AUDIT INITIATIVES DURING THE QUARTER

The Internal Audit Committee of BCAJ prepared its annual calendar of events and other knowledge-sharing initiatives back in the month of July, 2021. All the events / webinars were bifurcated into four major categories, viz., Internal Audit, Risk Management, Technology and Forensic Studies. The Committee also initiated a plan for a ‘Blog a Month’ styled ‘Internal Audit Matters (Pun Intended)’ which was a collaborative space for issues to be discussed and concerns to be voiced and also to help find solutions. The activities undertaken by the IA Committee during the July to September quarter are summarised below:

A. Blogs
The Blogs were launched in August, 2020 and till date the IA Committee has published 14 posts on various topics related to Internal Audit. Bloggers include several veterans from the field of Internal Audit. The Blogs have garnered a total of 14,000+ views and received 400+ comments. The Blogs published during the quarter were:

An Internal Auditor’s Tale

CA Nandita Parekh

A to Z of a Good Internal Auditor

CA Ashutosh Pednekar

Relevance of Post-Qualification Professional Certifications

CA Nehal Shah

B. Workshop on ‘Conventional and Novel Techniques for Forensic Investigations’
The IA committee, jointly with Chetan Dalal Investigation & Management Services (CDIMS – renowned for conducting forensic and investigation assignments), initiated an E-learning course on Forensic Accounting and Investigation Studies. Over 60 participants have enrolled for the course and about 25 have successfully completed it. As one of the events for course promotion, a half-day workshop was arranged on 27th August at which about 75 attendees were present. CA Chetan Dalal and CA Mahesh Bhatki were the speakers at the workshop. On behalf of the BCAS, the course was coordinated by CA Vishal Mandani, a member of the IA Committee.

Organised via the Zoom software, the workshop covered two topics: 1) Theory of Inverse Logic in Fraud Investigation using the conventional and novel methods with unique and unusual case studies, and 2) Data Analysis using the Novel Quantification Model.

The welcome speech was delivered by President CA Abhay Mehta who pointed out that fraud investigation is one of the evolving areas for qualified professionals since the number of frauds is increasing every day. Further, different methods are being adopted by fraudsters and it is the need of hour to detect such frauds using novel investigation techniques. CA Manish Sampat introduced CA Chetan Dalal and also shared his own experiences gained while working with him on various professional assignments.

CA Chetan Dalal explained the practical approach of using the Theory of Inverse Logic in detecting fraud with the help of various case studies. In one of his case studies, he explained that a person can see a star despite the fact that it may have collapsed by the time its light reaches the earth – because of the tremendous time taken by light to travel. Various case studies relating to insurance claim frauds, misappropriation of assets by fraudsters, etc., were explained along with suggested methods to identify the red flags and carry out systematic investigation.

CA Mahesh Bhatki described how to carry out Data Analysis using a novel quantification model with the help of case studies and examples. The use of Excel and other casewares for carrying out different types of Data Analysis was explained through practical examples to identify the red flags and pursue further analysis to detect frauds.

Participants asked questions related to writing reports post-forensic audit and the benefits of various tools / casewares available for forensic audit. CA Uday Sathaye made the closing remarks and CA Kishore Iyer proposed the vote of thanks.

C. Revival of MOU between BCAS and IIA Bombay Chapter
During the quarter, representatives of BCAS and IIA Bombay Chapter (‘IIA BC’) interacted closely to revisit the MOU entered into in 2017 and review the activities undertaken under it so far. The objective was to ideate and deliberate the areas where there is scope for stronger association and prepare an action plan to implement ideas.

The meeting was successful with both the parties committed to activate the MOU through a series of innovative and interesting initiatives all through the year. Various joint events, activities and initiatives to advocate Internal Audit, Joint Internal Audit Training Programmes, Events and Activities to bring BCAS and IIA members on the same platform, to plan some joint publications, to host a few lecture meetings every year with experienced speakers and so on were identified.

D. Curtain-Raiser Event with IIA BC
A virtual curtain-raiser event was organised by BCAS along with IIA Bombay Chapter on 18th September to announce the above-mentioned initiatives. The event was organised to provide detailed insights into various certification programmes offered by IIA globally as well as the CIA challenge examination specifically designed for Chartered Accountants who wish to build their career in IA. The speakers, both from IIA BC, were CA Percy Amalsadiwalla, the current president of IIA BC, and CA Chetan Thakkar, member of the BOG of IIA BC.

The event commenced with a welcome address by CA Mihir Sheth, Vice-President of BCAS. The opening remarks about the new initiatives planned jointly with IIA BC and the curtain-raiser event were made by CA Nandita Parekh, Co-Chair of the IA Committee of BCAS. Both speakers were introduced by CA Nirav Mehta, a member of the IA Committee.

CA Chetan Thakkar opened the technical sessions by describing the mission, goals and objectives of the global institute IIA, global statistics of its members / affiliates / countries, etc., benefits of IIA memberships of IIA India, various certifications offered globally by IIA, CIA exam fees and resources available for study.

CA Percy Amalsadiwalla shared information about the CIA Challenge exam, a single exam specifically designed for eligible members of the 17 qualified accounting bodies of various countries, which includes ICAI members. The speaker scrolled through various FAQs designed by the IIA for the CIA Challenge exam which included eligibility, documentation, registration process, syllabus, schedule, fees, etc. He also announced a special offer to all BCAS members desirous of taking the CIA Challenge examination, preferential rates for becoming IIA members, namely, 10% discount in membership fees for the year 2021-22 and waiver of one-time registration fees of Rs. 1,500 for a short window between 18th September and 15th October. The questions posed by the participants were addressed by both speakers.

The event was attended by 107 participants. The vote of thanks was proposed by CA Atul Shah, Convener of the IA Committee of BCAS. The event is available for viewing on YouTube video link: https://www.youtube.com/watch?v=_vt6kbuj5Ww.

Or, watch it at:

 


 

 

E. Workshop on An overview of Tableau and Power BI
A unique virtual workshop to explore new possibilities on Audit Analytics with the ‘magic of data visualisation’ for internal auditors was organised by the IA Committee. It was designed in such a way that it provided training for two hours every day for four days from 22nd to 25th September.

The welcome address was delivered by President CA Abhay Mehta. Opening remarks about the workshop and the introduction of speakers was done by CA Uday Sathaye, Chairman of the IA Committee.

Mr. Asif Rampurwala and Ms Sajeela Sagar gave an overview of the Tableau on the first day. Ms Sagar conducted the interactive workshop on the Tableau on the second day. Ms Deephika S. conducted the interactive workshop on Power BI on the third and fourth days.

The workshop was attended by 36 participants of different age groups (including six young members and five senior citizens) from different cities (24 from Mumbai and 12 from other cities). The workshop was quite interactive and the participants were pleased with the knowledge gained by them.

The votes of thanks for the speakers were proposed by Ms Purvi Malani, a Convener of the IA Committee, and Ms Mitalee Chovatia, a member of the IA Committee.

‘EXPECTATIONS MANAGEMENT’ BY MAHATRIA

The Human Development Study Circle arranged a Zoom meeting on ‘Expectations Management’ by Shri Mahatria on 10th August. It featured a video screening followed by a discussion led by CA Vinod Kumar Jain.

The meeting commenced with the screening of a video on ‘Expectations Management’ delivered by Shri Mahatria from Infinitheism. Initially, Mr. Manohar from Infinitheism shared information about various activities and works being undertaken by Shri Mahatria and Infinitheism.

He revealed that for over 25 years Shri Mahatria has been empowering millions across the world to live a life of ‘Holistic Abundance’. He helps people to overcome their belief systems and conditioning and to discover breakthroughs in health, wealth, love, bliss and a spiritual connect. People from all walks of life find their success, purpose, peace, happiness, faith and miracles with Infinitheism, the path of holistic abundance.

In the video, Shri Mahatria explains the importance of discipline for any nation or individual to grow. It is very important to give one hour to the body through exercise, etc., only then can the body take care of itself for the next 23 hours. He said that when seeker and giver meet with strong intensity, transformation takes place, otherwise it is only a mere exchange of information.

Shri Mahatria pointed out that people continue with their childish behaviour – first they cry for a Rs. 60 car in childhood and then for a Rs. 60 lakh car in adulthood. This ‘crying’ becomes acute with anger, frustration, disappointment, depression, unhappiness, sadness, envy, jealousy, etc. He noted that if we squeeze a lemon, lemon juice will come out, and when we squeeze a grape grape juice will come out. Similarly, what is inside will come outside – when life squeezes us, what comes out of us is that which is inside us.

We need to channelize our emotions. There is no point in cribbing or spitting our emotions; it is better to give them a direction. Our life’s greatest turning point may be a big setback… Most of our frustration comes from our choices like standing below a mango tree and expecting oranges to fall at our feet. We have a right to choice; consequences are always born of existential (God) forces.

Out of every choice, as per the design of life, there are four possible consequences – getting what is expected, getting more, getting less or getting the opposite. Life is not linear but cyclical. No matter what you get, you need to go back and execute the next choice. Good results can be seen as motivators and negative results will bring experience and maturity.

Shri Mahatria concluded by suggesting that we follow CAR, or Change the changeable, Accept the unchangeable, or Remove yourself from the unacceptable.

After the video presentation, CA Vinod Jain explained in brief the learning from this video.

PRE-PACKAGED RESTRUCTURING

President CA Abhay Mehta welcomed the participants at the lecture meeting on ‘The Pre-packaged restructuring – The way to go’ organised by BCAS on 1st September.

The speaker, CA Sajeve Deora, started with the  introduction and history of bankruptcy law as introduced in British India and then amended by various laws and authorities in the post-Independence era. The Government introduced the Insolvency Law in 2016 but it was found to be wanting in some aspects relating to MSME businesses.

 

 

MSME businesses are peculiar in certain aspects like predominantly being managed by the promoter, dependency on the promoter’s skills, personalised relationship between the promoter and stakeholders, and hence replacing the promoter from the management can be difficult for the business, apart from the high cost of CIRP (Corporate Insolvency Resolution Process) for the MSME business entity.

Pre-packaged restructuring as it stands today is available only for MSMEs. It provides an opportunity to them to act before the creditors take action. However, it is expected that management should be acting in a bona fide manner and not to defraud its creditors and other stakeholders. The promoters would be able to restructure the debts and assets of the business with the support and sacrifice of all stakeholders, including Government, pension funds, creditors, lenders, etc.

The speaker also shared his experience of international practices for Pre-packs in the UK, the USA and Germany.

Speaker CA Sajeve Deora then dealt with various important aspects of PPIRP (Pre Package Insolvency Resolution Process) covering:
• Eligibility criteria,
• Process of initiating PPIRP and filing the application,
• Process during formulation of resolution plan,
• Removal of promoters by CoC (Committee of Creditors) during PPIRP,
• Duties and powers of promoters / management during PPIRP,
• Restructuring process under resolution plan,
• Contents of resolution plan,
• Approval of resolution plan,
• Termination of PPIRP,
• Suggested / model timelines for PPIRP,
• Implementing sustainable restructuring.

Later, he responded to all the queries raised by the participants.

The meeting concluded with a vote of thanks.

Youtube Link – https://www.youtube.com/watch?v=W9W7l4px1Aw
QR Code

 

 ‘VALUATION PRINCIPLES AND DEFINITION OF CONSIDERATION UNDER GST’

The Indirect Tax Study Circle’s meeting on the above subject was organised on 13th September through the Zoom process.
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This was the Indirect Tax Study Circle’s fifth meeting of the year 2021-22. It was addressed by Group Leader CA Umang Talati and Mentored by CA Deepak Thakkar.

Group Leader CA Umang Talati had prepared six case studies on the law and practical issues covering Valuations and Considerations under GST. The presentation broadly covered the nuances of the definition of Consideration as well as Valuation Issues on:

1. Write-back of deposits,
2. Vaccination drives during the pandemic for employees, vendors, relatives,
3. Pure agent concept for tour operators and different models of valuations of package tours,
4. Valuation implications of TDR,
5. Can cryptocurrency be considered as consideration?
6. Job work valuations.

The participants took active part in the discussion on all the case studies and the issues were discussed at length. Mentor CA Deepak Thakkar made exhaustive comments on a variety of aspects covered in all different case studies. Around 60 participants benefited from the active discussion lead by the Group Leader and the Mentor.

UNDERSTANDING THE LAW AND SCIENCE OF KARMA

The Human Resources Development Committee of the BCAS organised a meeting, presented by CA Vijay Mehta, on ‘Understanding the Law and Science of Karma,’ on Tuesday, 14th September, on the virtual online platform.

The discussion was focused on Karma from the perspective of Law and Science.

The Law of Karma is based on the law of causality. Since it is based on natural and universal law, it is governed automatically and requires no interference from anyone to operate or control it. The rules are universally applicable to all living beings. The Law of Karma gives justice equally to all without any exception. The example of the 19th Tirthanker was cited in support of its universal application and justice irrespective of position. However, an exception from its ambit was carved out for Sidhha Jiva. They are the ones who have destroyed the reason / cause, namely, attachment and aversion (Raag and Dwesh) necessary for Karma to bond with the Soul.

To better understand the law, Karma is compared to a Court, a Doer (Karta) with an Accused, and a third person who only executes the judgment of the Court / judge as a Jailor. Drawing a parallel, anyone fighting with the Jailor, who is ordered to give punishment, increases the sentence ordered by the Court. The importance of periodicity of seeking immunity was explained in a nutshell. The procedure for lifetime immunity was explained with compounding fees, as decided by Guru, to be compensated to get rid of bad Karma.

The science of Karma is based on the principle that every action has its reaction in the opposite direction. Karmaisa Karmic particle mixes with the Soul like water with milk. These Karmic particles are grouped atoms of matter known as Karman Vargana. They get bonded to a soul like a magnet attracting iron particles. The Soul continuously engages in Raag and Dwesh, which creates a magnetic force to attract karmic particles. This Karma gives its effect upon maturity. Functionally, Karma covers and vitiates the virtues of Souls. Bondage of Karma is the leading cause for the Soul not experiencing and experiencing its virtues diversely. Karma is broadly classified and named in eight categories for eight significant virtues of the Soul. For example, the quality of infinite knowledge of the Soul covered by Karma is called Gynavarniya Karma.

The four stages of Karma, namely, influx, bonding, silent period and ripening, were explained in a nutshell. During the third stage or the silent period, it is possible to reduce past bad Karma (Paap Karma) and increase past good Karma (Punya Karma) if one knows the Science of Karma.

Summing up, Karma is portrayed as the enemy since it causes a never-ending cycle of birth, death and misery. But knowing the Science of Karma is important because it is only during human life that this knowledge can be put into action.

INTERPLAY OF NEW AND OLD PENALTY PROVISIONS UNDER THE INCOME-TAX ACT, 1961

The Direct Tax Laws Study Circle Meeting on ‘Interplay of new and old penalty provisions under the Income-tax Act, 1961’ was held online on 17th September.

The Group Leader, CA Krishna Upadhyay, gave a comprehensive analysis of the erstwhile section 27(1)(c) of the Act. The provisions of section 270A were also discussed at length with illustrations. The exceptions to under-reported income were discussed in detail. Further, the differences between 270A and 271(1)(c) were highlighted by the Group Leader.

Thereafter, he discussed in detail the immunity provisions of section 270AA with illustrations. The session ended with the speaker making his concluding remarks and suggesting practical steps to be taken on receipt of a penalty notice.

ENERGY SECURITY, FOOD SECURITY AND DEFENCE SECURITY – LEADING TO OVERALL ECONOMIC SECURITY

The International Economics Study Group held its meeting on 28th September to discuss ‘Energy Security, Food Security and Defence Security – Leading to Overall Economic Security’. CA Shalin Divetia led the discussion and presented his thoughts on the subject.

He presented AtmaNirbhar – the Holistic Approach to National Security – and provided crucial aspects of each of the critical issues. As regards Food Security, India is a net exporter of agri-related products but edible oil and pulses have still to be imported; India will overcome this hurdle very shortly.

Energy Security is very critical due to our overdependence on oil imports but the Government is bridging the gap with ethanol blending and renewable energy.

As regards Defence Security, India has focused on Make in India, although it is one of the largest importers of arms, to overcome  the shortfall and the current initiatives are paying rich dividends which got further strengthened by PLI. With this, India appears to be on the path to economic security with Forex reserves climbing to all-time highs.

CA Harshad Shah presented his thoughts on ‘China’s Evergrande Debt crisis – Cause and Effects’, and highlighted that Evergrande is the second largest real estate developer (and also the world’s most indebted real estate firm) and any adverse development could spill over to China’s real estate sector (which is highly overleveraged) and contributes about 29% of the GDP; but any mess-up in this sector could spiral into a potential debt crisis as China is also highly leveraged with a debt-to-GDP ratio of around 300%.

But then China has the comfort that most of its debt is financed by very high domestic savings of 45%. Evergrande’s woes are merely the symptom of a much bigger problem as Chinese regulators have introduced ‘3 red lines’, a stress test and Mr. Xi’s slogan of ‘common prosperity’. The measures include making housing more affordable and ridding the property market of speculation. But any accident or misstep could result in a domino effect and downturn in the economy, debt crisis, unemployment and probable social unrest.

MISCELLANEA

I. Technology

4 Fed up with traffic jams? Flying taxis to take to the sky in mid-2020s

Fed up with traffic jams? Imagine a world where your taxi takes to the skies and lands on top of your office building, recharges and sets off afresh.

That’s the vision of Stephen Fitzpatrick, founder and CEO of Britain’s Vertical Aerospace, which is set to raise $394 million in a merger with a blank-cheque New York-listed company, and who says his aircraft will be flying by the mid-2020s.

And he’s not alone. Some of the world’s most high-profile engineers and airlines believe that Vertical is on to something with its plan for zero-emission mini-aircraft to almost silently take four passengers through the skies for up to 120 miles (193 km.).

American Airlines, aircraft lessor Avolon, engineers Honeywell and Rolls-Royce, as well as Microsoft’s M12 unit are investing in the merger which is expected to complete by the end of the year.

Fitzpatrick, who also set up OVO Energy, Britain’s No. 3 energy retailer, said Vertical flights between London’s Heathrow airport and its Canary Wharf financial district will take 15 minutes and cost 50 pounds ($68) per passenger.

That potential is attracting airlines’ attention. More than 1,000 VA-X4 aircraft have been pre-ordered by customers.

Interest in the zero-emission aircraft comes at a time when aviation companies are under mounting pressure from investors to help decarbonise the sector and boost their environmental, social and governance scores.

‘We are going to sign deals. We’re finding the appetite and the demand from airlines to be really strong,’ Fitzpatrick told Reuters.
 

(Source : www.business-standard.com, dated 12th October, 2021)

 

5 Yes or no, Android phones keep tracking users even without permission

Owning an Android phone could mean that your data is being tracked even if you do not give permission to the device to do so. Researchers have found that some Android devices have system apps that come pre-installed with Android device or bloatware, that comes right out of the box, sends back user data to the OS’s developers and various third parties. These system apps could serve some functionality like the camera or messages app but would send data to their OS even if the user never opened them.

According to researchers at Trinity College in Dublin, there is no way to opt out of the data tracking from these system apps, unless users decide to root their devices as these apps are usually packaged into the read-only memory (ROM).

The researchers studied popular proprietary variants of the Android OS developed by Samsung, Xiaomi, Huawei and Realme. They also reported on the data shared by the Lineage OS and /e/OS open-source variants of Android. The researchers noted that Samsung has the largest share of this market, followed by Xiaomi, Huawei and Oppo (which is the parent company of Realme).

‘System apps cannot be deleted (they are installed on a protected read-only disk partition) and can be granted enhanced rights / permissions not available to ordinary apps such as those that a user might install. It is common for Android to include pre-installed third-party system apps, i.e., apps not written by the OS developer,’ the research paper noted. ‘One example is the so-called GApps package of Google apps (which includes Google Play Services, Google Play Store, Google Maps, YouTube, etc.). Other examples include pre-installed system apps from Microsoft, LinkedIn, Facebook and so on,’ it adds.
 

Reported first by Gizmodo, the researchers noted that the system apps would send something called the ‘telemetry data,’ which includes details like the user device’s unique identifier and the number of apps from the company of a pre-installed app that you have installed on your phone. The data also gets shared by third-party apps or analytics providers that users might have plugged in.
 

Meanwhile, Apple has released a 31-page-long document titled ‘Building a Trusted Ecosystem for Millions of Apps (A threat analysis of sideloading)’, in which it has talked about various aspects of iOS and its closed ecosystem criticising EU’s draft proposal forcing Apple to allow users to download third-party apps. ‘Supporting sideloading through direct downloads and third-party app stores would cripple the privacy and security protections that have made iPhone so secure and expose users to serious security risks,’ Apple said to support its defensive stance against the argument that iOS should be made open like Android. Apple is citing reports from regulators from around the world to show the shortcomings of Android because of its open nature.

(Source: www.indiatoday.in, dated 15th October, 2021)

 

II. Economy
 

6 India-China trade on course to touch record USD 100 billion-mark

The India-China trade volume looks set to cross the record figure of USD 100 billion this year and has already touched USD 90 billion in the first nine months, despite a chill in bilateral relations due to the continuing military stand-off between the two countries in eastern Ladakh.

 

China’s total imports and exports expanded 22.7% year on year to 28.33 trillion yuan (about USD 4.38 trillion) in the first three quarters of 2021, official data has shown. The figure marked an increase of 23.4% from the pre-epidemic level in 2019, according to the General Administration of Customs.

 

The bilateral trade between India and China totalled USD 90.37 billion by the end of September, an increase of 49.3% year-on-year (YoY), according to the nine-month data released by the Chinese customs.

 

China’s exports to India went up to USD 68.46 billion, up 51.7% YoY, apparently aided by massive imports of urgent supplies like oxygen concentrators, when India was in the grip of the second wave of the Covid-19 pandemic in April and May this year.

 

The Indian exports totalled USD 21.91 billion, registering a noteworthy increase of 42.5%. However, from India’s point of view, the trade deficit, which remained a concern over the years, reached USD 46.55 billion and is expected to climb further by the year-end.

 

Observers say that with three months still remaining, the target of USD 100 billion trade previously set by both the countries was expected to be reached this year despite the eastern Ladakh impasse.

 

(Source : www.financialexpress.com, dated 10th October, 2021)

 

III. Health

 

7 Life is Short. ‘Time Urgency’ is a Trap

 

In our attempt to optimise for speed, we sacrifice the most important things in life: good health, relationships, meaningful experiences and self-learning.

 

Whilst we are busy doing more work, checking things off our list, reacting to urgent but unimportant things, we miss out on life-changing experiences that can bring out the best in us and make us better humans.

 

‘The desire to focus on multiple things at once is often driven by anxiety – by the worry that we might not have enough time to do all the things we’re convinced we need to do in order to justify our existence on the planet,’ says Oliver Burkeman in his book, Four Thousand Weeks: Time Management for Mortals.

 

Work should not be the only thing that defines how we use time.

 

Busy is not always better.

 

When you are ahead of yourself, you lose a part of you that makes you human. You create a disconnect that leaves you empty.

 

The unfortunate reality is that many people have less choice to be more conscious of how they use time. But it doesn’t mean you are trapped. You can do something with that bit of time you control.

 

The real measure of any productivity tool is whether it saves us time to focus on the right things in life.

 

If you are in desperate need to control time, you will end up in a time trap where you quickly cross things off only to wake up the next morning with more things to do.

 

‘It’s an irony of our modern lives that while technology is continually invented that saves us time, we use that time to do more and more things, and so our lives are more fast-paced and hectic than ever,’ writes Leo Babauta.

 

Are you chronically short of time?

 

Plato once said, ‘Never discourage anyone who continually makes progress, no matter how slow.’

 

The universal truth in life is that how you spend time is how you are spending your life. There’s never enough time to do everything.

 

Time urgency (when you are chronically short of time) can impede meaningful relationships and cause stress, which can negatively impact your health.

 

Slowing down doesn’t necessarily mean you are being unproductive – it means being more aware of what you do and doing the essential things right without getting overwhelmed.

 

If you are caught in a busy-ness trap, it pays to measure how you spend your limited time or why you feel that you need to rush.

 

The trouble with modern life is that we spend a lot of time trying to keep up, only to miss out on the things we really need to enjoy life.

 

You can make progress and still enjoy life. It’s a balancing act that takes deliberate planning.

 

If you find yourself consistently rushing from one thing to another, learning to be more present and conscious of your activities may be exactly what you need to take back control.

 

Nothing is as pressing as your health. ‘Men talk of killing time, while time quietly kills them,’ Dion Boucicault said.

 

Life can quickly become an infinite chain of things to do every day.

 

Unless you actively break the chain and choose different experiences or a new way to spend your time, stepping outside the trap will be incredibly difficult.

 

To slow down, get real things done and still make time to enjoy life, disrupt your current routine, try something different today (even if it’s just for 30 minutes).

 

Accept a more present challenge, learn new timeless skills (empathy, active listening, resilience, making better connections, being more present and appreciating nature).

 

Learn to break the busy-ness chain — create a deliberate white space on your calendar and tune in to the silence.

 

Review your schedule and replace commitments that bring out the worst in you with activities that bring out the best in you.

 

Change your need to fill every hour of your day with work. You need an untouchable hour every day.

 

How would you spend today if you knew it was your last? Ponder over what means a lot to you and make time for it.

 

Life can be so much more if you learn to slow down and start every new day intentionally slower but better.

 

‘Time and health are two precious assets that we don’t recognise and appreciate until they have been depleted,’ Denis Waitley once said.

 

Turn off the noise of the modern world and make time for you.

 

Start paying more attention to where you are, what you do and what’s happening around you. In an insanely busy world, slowing down is the antidote to burnout.

 

(Source: www.medium.com, by Thomas Oppong, dated 6th October, 2021)

STATISTICALLY SPEAKING

1.     Record exports of USD 197.89 billion by India in the first half of F.Y. 2022

 

2.     Rise of Cryptocurrency in millennials

 

 

3.   India second in Unicorn race in Q3

 

 

 

4.   India jumps two places to rank 46 on Global Innovation Index (GII)

 

 

RIGHT TO INFORMATION (r2i)

Part A IDECISION OF HIGH COURT

Once an investigation is completed and B-Report is filed by the police, there is no prohibition on giving information about the same under the Right To Information Act:

Case name:

The Public Information Officer and
Director-General of Police, the first appellate authority and Police Upa
Mahanirkshakaru vs. Sri Malleshappa M. Chikkeri and State Information
Commissioner

Citation:

Writ petition No. 18599/2021

Court:

The High Court of Karnataka at Bengaluru

Bench:

Justice N.S. Sanjay Gowda

Decided on:

12th October, 2021

Relevant Act / sections:

Appeal under Right to Information Act, 2005

 

Decision:

• By an impugned order, the State Information Commissioner had directed the Public Information Officer and Director-General of Police to hand over and furnish the B-Report and the enclosures which were sought by Sri Malleshappa M. Chikkeri.

• Mr. Chikkeri’s son had supposedly ended his life by jumping out from a window and it was stated by the authorities that he had died due to excess drinking and a B-Report was submitted in the court. Mr. Chikkeri had sought information regarding the B-Report (which is drawn when the allegations are found to be false or no evidence is found after the completion of investigation), contending that a stigma was attached to his family by the B-Report stating that his son had lost his life due to excessive drinking.

• During the second appeal, the Commissioner had noticed that there was no prohibition to give the information sought because the investigation was already completed. He noted that only in the event that a matter was under investigation was there a bar for grant of information regarding the investigation.

• A writ petition challenging the order passed by the Information Commissioner was filed by the Public Information Officer and Director-General of Police… the First Appellate Authority and Police UPA Mahanirkshakaru with the High Court of Karnataka.

• The Court decided that the Commissioner was absolutely justified in directing the furnishing of the B-Report and its enclosures as sought by Mr. Chikkeri, especially when the investigation in the matter had been concluded.

• The learned counsel for the petitioners were of the opinion that it was open for Mr. Chikkeri to secure the B-Report and enclosures from the Magistrate and there can be no ground to deny the information sought under RTI. Therefore, no grounds are made out to entertain the petition and accordingly the petition was dismissed.

 

Part B I ARREST WARRANT ON NON-COMPLIANCE UNDER RTI

On 20th September, 2021, in one of the rarest of rare cases, an arrest warrant was issued by Mr. Rahul Singh, the Information Commissioner (IC) of Madhya Pradesh (PIO), against Dr. Vikram Singh Verma, the Chief Medical and Health Officer (CMHO) of Burhanpur district, who is also the Public Information Officer. Mr Singh was irritated by the PIO’s four-year-long disobedience and non-compliance with the State Information Commission’s (SIC) instructions. Dr. Verma had previously been
issued a show cause notice in which he was asked to explain why disciplinary action should not be taken against him. The SIC had also imposed a fine of Rs. 25,000 on him in December, 2020.

 

Is it possible for the SIC to arrest a PIO for non-compliance? Mr. Singh’s order, most likely anticipating this question, cites specific rules from the Central RTI Act and Madhya Pradesh’s rules to support his action. They are as follows:

 

• If the PIO violates section 7(1) of the RTI Act, 2005 by failing to provide information within 30 days of the RTI application, a penalty of Rs. 250 per day, up to a maximum penalty of Rs. 25,000, shall be imposed on the guilty PIO u/s 20 of the Act. The amount is expected to be deposited with the SIC by the PIO.

 

• Pursuant to Rule 8(6)(3)(i) of the MP RTI (Fees and Appeal) Rules, 2005, the PIO is required to deposit the imposed penalty with the SIC within one month of receiving the SIC’s penalty order.

 

• According to Rule 8(6)(iii) of the MP RTI (Fees and Appeal) Rules, if the PIO fails to deposit the imposed penalty amount within the prescribed time limit, the SIC shall report to the disciplinary authority concerned in order to take disciplinary action and ensure recovery of the penalty amount against the PIO.

 

• According to section 19(8)(a) of the RTI Act, the Commission has the authority required by a public authority to take any steps necessary to ensure compliance with the provisions of this Act. The order of the SIC is binding on the officer concerned according to Rule 8(4) and section 19(7) of the RTI Act.

 

As a result, State IC Rahul Singh issued an arrest warrant in accordance with Order XVI Rule 16 of the Code of Civil Procedure (CPC) and section 18(3) of the RTI Act. He directed the Indore division’s Deputy Inspector-General (DIG) to execute the warrant to secure Dr. Vikram Singh’s personal attendance before the SIC at 12 pm on 5th October 5, 2021 in his Court.

 

The first arrest warrant against a PIO was issued by the Information Commissioner of Arunachal Pradesh in 2009.

 

Part C I INFORMATION ON & AROUND

• Over 2.5 lakh RTI appeals, plaints pending with 26 Information Commissions across India

 

In this 16th year of the Right to Information Act, 2005 (RTI), the only thing that continues to cripple its effectiveness is the pitiful performance of the Information Commissioners (IC), which is reflected in the backlog of second appeals and complaints. To date, 2.56 lakh appeals and complaints are pending in the 26 Information Committees. This is a serious matter because the Information Commissions established at the Central and State level are the ultimate appellate authority and have a mandate to protect and facilitate the fundamental right to information.

 

This distressing disclosure of information was compiled in the ‘Report Card on the Performance of Information Commissions in India, 2021’. The research was conducted by Satark Nagrik Sanghatan, a group of citizens working for transparency. The report primarily analyses information accessed under the RTI Act by 29 Information Boards across India. To obtain this information, a total of 156 RTI requests were filed with the National and Central Information Commissions. In addition, information was also found in the websites and annual reports of the Information Committees.

 

• Two officials fined for not providing information under RTI Act

 

Two officials attached to the Department of Rural Development, Thoothukudi, have been fined Rs. 25,000 each for not providing information on queries filed under the Right to Information Act even after the second appeal.

 

The Information Commission, which was conducting a district-level inquiry on second appeals for the past three years, had received over 9,000 second appeal petitions, including 30 petitions from Thoothukudi district.

 

• Mahiti Kanaja, an endeavour to enhance Right to Information

 

In Karnataka, Mahiti Kanaja is a single unified portal for all departments which will disclose information related to the status of implementation of Government schemes / public expenditures, etc., on a real-time basis in a user-friendly format down to the GP / ward level. This is on the lines of the ‘Jan Soochna Portal’ initiated in Rajasthan. The information will be provided to the public free of all ‘log-ins’ and passwords, enabling genuine ‘freedom of information’. As in Rajasthan, a ‘Digital Dialogue’ has been initiated by DPAR-Egov, facilitated by the Social Accountability Forum for Action and Research (SAFAR), with a host of civil society organisations and across various departments to revise Mahiti Kanaja from the citizens’ perspective.1

 

1   https://www.deccanherald.com/opinion/panorama/mahiti-kanaja-an-endeavour-to-enhance-right-to-information-1041507.html

CAPACITY-BUILDING

Arjun: Hey Bhagwan! Main toh ab pareshan ho gaya hoon! (I am fed-up!)

Shrikrishna: What happened? Now you have got ample time to file the tax returns. No tension of extension!

Arjun: True. But I am not talking of that.

Shrikrishna: Covid is also subsiding. Activities are reviving. Then what is your pareshani?

Arjun: These election candidates! Every day dozens of messages. I have asked my assistant to delete all such messages without even opening them.

Shrikrishna: Then what is the difficulty?

Arjun: Phone calls! The candidates phone, then their assistants keep on calling. Some of them have even appointed agencies to follow up with voters.

Shrikrishna: Oh!

Arjun: And candidates come personally and keep on requesting for references. It’s a big nuisance.

Shrikrishna: But you can’t avoid elections. By the way, when are the elections?

Arjun: The 3rd and 4th of December. So this month there will be continuous bombarding of messages. Some of them want me to go with them for canvassing.

Shrikrishna: Good. Your PR increases.

Arjun: Ah! Such PR is of no use. And I know many candidates who are absolutely useless. They have no professional standing, no recognition as knowledgeable members. Even their integrity is doubtful.

Shrikrishna: Then it is all the more necessary that you should be alert in voting.

Arjun: I don’t even feel like going for voting. But they don’t allow us to sit at home. They keep on ringing us.

Shrikrishna: But democracy is a big value. It is a boon to the citizens. You must honour it.

Arjun: Agreed. But these elections are dangerous. They are a mockery of democracy.

Shrikrishna: It is up to you to maintain its value.

Arjun: Two of my friends are contesting. But our community votes are getting divided.

Shrikrishna: Oh! Community matters?

Arjun: What do you mean? It matters the most. Rather, it alone matters.

Shrikrishna: So it means there is no difference between your Council elections and your country’s elections.

Arjun: Absolutely. Now the problem is that the younger generation is mostly in corporates. They have no connect with the profession. Many times they don’t even bother to take membership of the Institute.

Shrikrishna: Then what is the meaning of their degrees?

Arjun: Yes, it’s a fact of life. Now, it is a task to bring these people to vote. There is total indifference.

Shrikrishna: Isn’t there any Code of Conduct?

Arjun: Conduct ko maro goli! All ethics are crushed in the election process. The organisers of seminars even go to the extent of promoting only their preferred candidates. They even avoid inviting the other candidates to speak as a faculty.

Shrikrishna: So, all kinds of politics?

Arjun: Yes. In the good old days, canvassing was strictly prohibited. Knowledge, reputation, good work was the only canvassing. But now, the less said the better.

Shrikrishna: But then how are you discharging your duty as a member? Are you a silent spectator when ethics are killed? Like Bhishma and Drona in the Mahabharat – who remained silent when Draupadi was humiliated?

Arjun: What you say is right. But what can I do?

Shrikrishna: There is a lot that you can do. You may spread the message – motivating the maximum number of people to vote. And that, too, purely on merits. Try to tell people that in professional matters community, caste, creed should not matter.    

Arjun: Every time I decide to do what you are saying… But in reality it does not happen. It consumes a lot of our time and energy and our work suffers. Everybody thinks ‘Yeh aisa hi hota rahega’ (It will continue as it is!)

Shrikrishna: There should be some collective action. Something like a movement. You discuss with a few like-minded friends and start this campaign. Act now. Otherwise, you have no right to complain.

Arjun: What you say is right. We must act. If we remain silent spectators, things will further deteriorate.

Shrikrishna: And remember, the candidates whom you elect are going to lead the profession. They should be such who command respect for their knowledge and integrity. They should be able to represent your profession. And most importantly, they are going to sit in judgement to decide the cases of misconduct. So, they should themselves be ethical.

Arjun: I wholeheartedly agree. If we fail in our duty, we are ourselves to blame. We cannot afford to be indifferent.

Shrikrishna: If you fail in your duty to vote properly, that in itself will be an unethical act on your part.

Arjun: Bhagwan, thanks for opening my eyes. I will do what you say.

Shrikrishna: Tathaastu

!! OM SHANTI !!

[This dialogue is intended to make the members aware about their duty in respect of the Council elections and to be more careful and serious about the same]

REGULATORY REFERENCER

DIRECT TAX

1. Extension of various due dates: (a) The time limit for linking PAN with Aadhaar has been extended from 30th September, 2021 to 31st March, 2022; (b) The due date for the completion of penalty proceedings under the Income-tax Act has been extended from 30th September, 2021 to 31st March, 2022; (c) The time limit for issuing notice and passing the order by the Adjudicating Authority under the Prohibition of Benami Property Transactions Act, 1988 has been extended to 31st March, 2022. [Notification No. 113 of 2021 dated 17th September, 2021.]

2. Amendment to Rule 10D – Income-tax (30th Amendment) Rules, 2021: Applicability of Safe Harbour Transfer price specified under Rule 10TD extended to A.Y. 2021-22. Earlier, the same was applicable only for A.Y. 2020-21. [Notification No. 117 of 2021 dated 24th September, 2021.]

3. Insertion of Rules 11UE and 11UF – Income-tax (31st Amendment) Rules, 2021: The Taxation Laws (Amendment) Act, 2021 amended the Income-tax Act so as to provide that no tax demand shall be raised in future on the basis of the amendment made to section 9 of the Act by the Finance Act, 2012 for any offshore indirect transfer of Indian assets if the transaction was undertaken before 28th May, 2012 (i.e., the date on which the Finance Bill, 2012 received the assent of the President). It further provided that the demand raised for offshore indirect transfer of Indian assets made before 28th May, 2012 shall be nullified on fulfilment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc., shall be filed and such other conditions as may be prescribed are fulfilled.

Rule 11UE provides for the specified conditions to be eligible to claim relief and Rule 11UF provides the form and manner of furnishing the undertaking for withdrawal of pending litigation, claiming no cost, damages, etc. [Notification No. 118 of 2021 dated 1st October, 2021.]

4. CBDT exempts certain non-resident persons from the requirement of furnishing of return of Income u/s 139 subject to fulfilment of prescribed conditions: The benefit of exemption is available from A.Y. 2021-22 onwards. [Notification No. 119 of 2021 dated 11th October, 2021.]

COMPANY LAW

I.    COMPANIES ACT, 2013

1. MCA directs RoCs to extend due date of AGM for F.Y. ending 31st March, 2021 by two months: The Central Government received representations seeking extension of Annual General Meetings (AGM) for F.Y. 2020-21 due to many difficulties faced by stakeholders during the second wave of Covid-19. In view of these hardships, the Central Government advised the Registrars of Companies (RoCs) to accord approval for extension of time for a period of two months beyond the due dates by which companies are required to conduct AGMs for the F.Y. 2020-21 ended on 31st March, 2021. [Office Memorandum issued by Office of the Director-General of Corporate Affairs, Ministry of Corporate Affairs, dated 23rd September, 2021. Pursuant to this Office Memorandum, the respective RoCs have issued orders extending the period of holding of AGM, e.g., RoC, Pune has issued such order for Companies in Maharashtra within its jurisdiction on 23rd September, 2021.]

2. MCA extends due date of filing of cost audit report in e-form CRA-4 for F.Y. 2020-21: MCA has extended the due date for filing of Cost Audit Report for F.Y. 2020-21 with the Central Government. Now, companies can file cost audit report by 30th November, 2021 if the cost audit report is submitted by the Cost Auditor to the Board by 31st October, 2021. In case a company has extended the time for holding its AGM, then e-form CRA-4 may be filed within 30 days of receipt of the cost audit report. [MCA Circular No. 15/2021 F.No.01/40/2013 CL-V (PT-I)], dated 27th September, 2021.]

II.    SEBI

3. SEBI amends risk management framework for mutual funds: With the objective of management of key risks involved in mutual fund operations, SEBI has revised the Risk Management Framework (RMF) for mutual funds. The new framework shall provide a set of principles or standards, which inter alia comprise the policies, procedures, risk-management functions and roles and responsibilities of the management, the Board of the AMC and the Board of Trustees. [Circular No. SEBI/HO/IMD/IMD-1 DOF2/P/CIR/2021/630, dated 27th September, 2021.]

4. SEBI extends timelines to conduct annual compliance audit by investment advisers: SEBI has extended the timeline to conduct annual compliance audit by investment advisers (IAs) by three months. SEBI had received representations from IAs seeking extension due to the Covid-19 pandemic. Accordingly, IAs are now required to conduct the annual compliance audit by 31st December, 2021 for the financial year ending 31st March, 2021. Correspondingly, the date for obtaining a certificate from an auditor has been extended till 31st December, 2021. [Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/632, dated 30th September, 2021.]

5. SEBI discontinues usage of pool accounts for mutual fund transactions: With an aim to protect mutual fund investors against misuse of their investments, SEBI has decided to discontinue the usage of pool accounts by all platforms in transactions of mutual fund schemes. In addition, stock brokers / clearing members facilitating mutual fund transactions shall not accept mandates for SIPs or lump sum transactions in their name. [Circular No. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/635, dated 4th October,2021.]

6. SEBI revises formats for filing ‘Financial Information’: SEBI has decided to revise the formats for reporting of financial information and limited review report. The new format shall contain the items mentioned in the statement of profit and loss (excluding notes and detailed sub-classification) as prescribed in Schedule III of the Companies Act, 2013 and the extent and nature of security created and maintained in case of secured non-convertible debt securities. [Circular No. SEBI/HO/DDHS/CIR/2021/0000000637, dated 5th October, 2021.]

7. Revised Formats for Limited Review / Audit Report for issuers of non-convertible securities: SEBI, vide Notification dated 7th September, 2021, has amended Regulation 52 of the SEBI (LODR) Regulations, 2015, inter alia mandating entities that have listed non-convertible securities to disclose financial results on a quarterly basis, including assets and liabilities and cash flows, as well as requiring certain changes in the line items in the financial results. Accordingly, SEBI has issued a Circular providing the revised formats for limited review report / audit report. [Circular SEBI/HO/DDHS/CIR/2021/0000000638 dated 14th October, 2021.]

FEMA

1. Increase in FDI limit for telecom sector: The Government has increased the FDI limit for the telecom sector from 49% to 100% under automatic route. The FDI in telecom sector shall be subject to para 3.1.1 of the FDI policy which requires prior Government approval in case of investment by any entity from a border-sharing country. The increase in FDI limit will, however, take effect only once appropriate amendments are made under the Exchange Management (Non-Debt Instruments) Rules, 2019. [Press Note No. 4 (2021 Series) dated 6th October, 2021.]

RBI

1. Enhancement in family pension of employees of banks; Treatment of additional liability: The RBI has permitted the following course of action to all member banks of the Indian Banks’ Association (covered under the 11th Bipartite Settlement and Joint Note dated 11th November, 2020) in relation to the increased expenditure resulting from the revision in family pension for employees: (a) The liability for enhancement of family pension shall be fully recognised as per applicable accounting standards; (b) The expenditure may, if not fully charged to the P&L Account during the financial year 2021-22, be amortised over a period not exceeding five years beginning with the financial year ending 31st March, 2022 subject to a minimum of 1/5th of the total amount involved being expensed (spent) every year; and (c) Appropriate disclosures of the accounting policy followed in this regard shall be made in the ‘Notes to Accounts’ along with disclosures of the amount of unamortised expenditure and the consequential net profit if the unamortised expenditure had been fully recognised in the P&L. [Notification No. RBI/2021-22/105 DOR.ACC.REC.57/21.04.018/2021-22 dated 4th October, 2021.]

ICAI ANNOUNCEMENT

1.    Time limit of generating UDIN aligned with SQC: With an aim to align the time limit for generating UDIN with the Standards on Auditing and Standard on Quality Control (SQC 1), the ICAI has decided that the time limit of generating UDIN would be 60 days from the date of the signing of certificates / reports / document instead of 15 days henceforth. Further, for the documents where the respective regulator / other stakeholders require UDIN immediately on signing or within a specified period,
the same shall be provided by the member. Also, the UDIN so generated has to be communicated to ‘Management’ / ‘Those Charged with Governance’ for disseminating it to the stakeholders from their end. [17th September, 2021.]

LETTER TO THE EDITOR

Referring to the Editorial in the BCAJ Journal of September, 2021, reader Chinmaya has sent the following mail:

Great article, Raman (WHY INDIA SHOULDN’T JUST AIM TO BE A $5 T ECONOMY) about why Indians succeed more outside of India… agree on everything you have outlined. ‘Hatred for business’ is something we really need to talk about and celebrate ‘good businesses’ as role models, including assessing their impact on the people and on society. Is it possible to do a good job, earn a fair wage and advance and can it be that simple…? Yes, it can.

How many managers and members of the C-suite are really good ‘leaders’? I do feel leadership training and leading with a human element allows for a good environment for all hardworking and talented individuals to succeed, especially Indians, who benefit from great mentorship and fair opportunity in addition to professional qualifications and hard work, the latter two of which we do have in India, too, but the first two are not always there!

I will be very proud when we can bridge this ‘small’ gap… Then we will soar!!!

– Chinmaya Thakore, Canada

SOCIETY NEWS

BOOK REVIEW

HARSH REALITIES – THE MAKING OF MARICO

Authors: Harsh Mariwala and Ram Charan

Reviewed by Raman Jokhakar, Chartered Accountant

The unique cover of the book strikes you when you first hold it in your hands. It’s a transparent plastic jacket where part of the title is printed on the plastic jacket and part on the hardbound cover. ‘Transparency. Always. The very basis of my life. My work’ writes Mr. Mariwala on the second cover. And that is what the book is really about. The wordplay of the title – mixing maker with Marico – makes the book more enticing for the reader.

I was delighted to one day receive an email from Mr. Harsh Mariwala (HM) mentioning about the release of his book and requesting my address to send it. He had graced the BCAS Annual Day celebrations as the Guest Speaker on 6th July, 2016 when my term as the President of the Society was coming to a close. In his email he described (t)his book as: ‘It encapsulates my journey, the challenges I faced, the risks I took and learnings from not only my successes but, more importantly, my failures. It is meant for entrepreneurs, business leaders, professionals & students who will relate to the Marico story, and the learnings therein.’ I was delighted to request him to sign and send the book, to make it a collectable although I would have loved to buy it and have the author sign it in person if it were not for the Covid times.

The book is divided into 21 chapters and has more than 200 pages. It tells the tale of ‘what determines success’, ‘scaling up’, ‘about failing’, ‘creating right to win on a perpetual basis’ and not only building a business but ‘impetus to give back to the society. To make a difference.’ In other words, almost everything one would dream of going through in one’s lifetime.

The book is co-authored by his coach Ram Charan, who summarises, analyses, unpacks, distils the wisdom at the end of the chapters.

Like most businesses around the world, Marico had roots in a large joint family business that was cohesive and bonded. Although HM was amongst the eight boys of his generation and eldest grandson of the senior-most Mariwala, he and other cousins felt difficulties in realising their business aspirations within the model created by the previous generations. They sat down and decided to carve out the family business of Bombay Oil Mills into subsidiaries where they could find space for their vision and aspirations. A great process to amicably split yet stay tied, and chart one’s own course…

We all know that some Marico brands are household names in India for a few generations now. Those who grew up in the 1990s know of the strong buzz Marico advertisements created, through shock, attention-gripping commercials.

Although I cannot write about everything nor summarise all chapters, I have tried to share the juice from important themes and key learnings. An important chapter that grabbed my attention was about hunting for talent. How to be a gravitational power that would attract the best, make the organisation that would survive him. HM shares how a Chief HR Officer was his first acquisition target. The chapter chronicles hiring people who knew much more than he did. He notes that this strategy paid off when Marico’s turnover grew from Rs. 80 crores to Rs. 648 crores in ten years from 1990 to 2000, giving a CAGR of 24%.

The chapter on Shared Vision and Unique Culture covers setting the tone across the organisation. HM was particularly influenced by reading stories of successful companies and biographies of well-regarded business leaders. The lessons from those stories he MARinated with his own thoughts and crafted the core beliefs of the company which eventually took shape as 3Ps – People, Products and Profits. It is fascinating that ideas of Dharma from Bharatiya ethos moved through these ideas. I remember having visited HM’s office and seeing Sanskrit verses etched on the walls of the passageway leading to his office. The author shares in detail the principles and practices of Marico and how it went on to spot the gaps between values and practices to ensure that its people walked the talk. A 5E model of continuous improvement was set up to sustain and enhance culture, which consists of Educate, Engage, Enable, Evaluate, and Evolve. In short, culture is taken as a competitive advantage and a force that drives decisions, actions and behaviour on a perpetual basis.

The middle section of the book walks you through the brass tacks of transformation, challenges… and growth. Inspiring stories one would love to read: of building brands like Parachute (the most copied) and Saffola; of agony of family separation, and Organising for Growth and Scaling (Marico’s Rs. 236-crore market cap in 1996 multiplied 190 times by 2020). The episode of Hindustan Lever (HL) wanting to take over Marico is full of movie material where Dadiseth threatened to turn Marico into history if HM didn’t sell out. This was the time when Coca Cola had bought Thums Up. But how nimbleness and strategy worked for Marico is to be read from the book (and not here) when post the war for market, Parachute came out stronger against the giant HL, gaining 4% additional market share to 52%, Marico gaining better strategic health and reputation. An important lesson that must be pointed out is about having a coach in Prof. Ram Charan at various stages. The ideas of building a brand extension in Saffola and making it suit Indian taste buds make some obvious yet innovative stories where western breakfast brands have not clicked. The overseas expansion theme has several anecdotes where Marico captures 82% market share in Bangladesh, and where the Unilever director wants to put their soaps in shops that sold Parachute although Unilever were in Dhaka since the 1800s.

The chapter on managing the capital markets is particularly ingenious. About splitting the Kaya business out, to having cartoons along with newspaper reports and keeping cheeky humour alongside reporting on performance. HM’s approach to using Board and governance as a competitive advantage where he would pre-empt practices before they were mandated by law. HM selected competencies and then selected Board members who fit the bill.

Imagine a company that reached a value of Rs. 25,000 crores in 25 years and its scrip outperforming the FMCG index had to plan for the most contentious challenge – the future leadership where the founder had to give up the ‘cocaine’. A chapter deals with how the founder had to find people who had foresight, competencies, were steeped in organisational culture and purpose and who would enhance profitability, respect and growth. A tall order! HM did step back while handing over the hot seat to a non-family professional to assume that responsibility. This, in the words of the author, was the toughest call he had to make. The last two of three chapters take one through purpose beyond profit and personal social responsibility. Of numerous initiatives and investments. The final chapter lists out Milestones and Maxims that I would like you to read in the book. A rich list coming straight out of rich, wide and deep experience.

After reading the book, which is an easy read, one feels like having gone through a live life story of a man, his endeavours and a business. As HM writes in the end about his perpetual quest to do more, BE more and make a difference. The takeaways from the book are countless like the shades in a rainbow, and enlighten every reader, no matter which station of life she is at. By the time you reach the end of the book, you will get a feeling of your mind opening a bit more, just like a parachute which works only when open!

REGULATORY REFERENCER

DIRECT TAX

1. Extension of due dates for filing various forms CBDT has extended the time limit for filing applications for registration of trusts u/s 10(23C)/11/80G, electronic filing of Form No. 15CC, Equalization Levy Statement in Form No. 1, Form No. 15CC, uploading of declaration received in Form No. 15G/15H, Form No. 10BBB, Form 3CEAC, Form 3CEAD, Form 3CEAE and Form II SWF due to difficulties faced by the assessees in electronic filing of Forms and non-availability of the utility for e-filing of Forms. [Circular 16 of 2021 dated 29th August, 2021.]

2. CBDT under Direct Tax Vivad se Vishwas Act, 2020 extended the last date of payment of the amount (without any additional amount) to 30th September, 2021. [Notification No. 94 of 2021 dated 31st August, 2021.]

3. Insertion of Rule 9D – Income-tax (25th Amendment) Rules, 2021 The Finance Act, 2021 amended section 10(11) and section 10(12) to provide that exemption shall not be available for the interest income accrued during the previous year on the recognised and statutory provident fund account of the person to the extent it relates to the contribution made by the employee in excess of Rs. 2,50,000 / Rs. 5,00,000 in the previous year.

The CBDT has inserted Rule 9D to calculate the taxable amount of interest relating to the contribution made to a statutory or a recognised provident fund in excess of the threshold limit. [Notification No. 95 of 2021 dated 31st August, 2021.]

4. Insertion of Rule 26D and Form No. 12BBA – Income-tax (26th Amendment) Rules, 2021 – A senior citizen proposing to claim benefit of section 194P shall furnish a declaration in Form No. 12BBA in paper form to the specified bank. On furnishing the declaration, the specified bank will compute the total income of such senior citizen after considering the deduction allowable under Chapter VI-A and rebate allowable u/s 87A. The specified bank will deduct income-tax on the total income so computed at the rates in force. The specified bank shall properly maintain the declaration and the evidence furnished by the senior citizen and shall make available the same to the PCCIT or CCIT as and when required. [Notification No. 99 of 2021 dated 2nd September, 2021.]

5. Insertion of Rule 14C – Income-tax (27th Amendment) Rules, 2021 To ease the process of authentication of electronic records under the Faceless Assessment Regime, CBDT has provided that the persons who are mandatorily required to authenticate electronic records by digital signature shall be deemed to have authenticated the electronic records when they submit the record through their registered account in the Income-tax Department’s portal. [Notification No. 101 of 2021 dated 6th September, 2021.]

6. Extension of due dates for filing Income tax returns and various audit reports for A.Y. 2021-22 The due date of filing return of income, Tax Audit Report, Transfer Pricing Audit Report and filing revised / belated return for A.Y. 2021-22 was extended vide Circular No. 9/2021 dated 20th May, 2021, which is now further extended. [Circular 17 of 2021 dated 9th September, 2021.]

COMPANY LAW

I. COMPANIES ACT, 2013

1. MCA amends norms relating to creation and maintenance of databank of Independent Directors (IDs) MCA has notified the Companies (Creation and Maintenance of databank of Independent Directors) Second Amendment Rules, 2021. A new Rule 6 has been inserted requiring the Institute to submit an annual report on the capacity-building of IDs within 60 days from the end of every financial year to every individual whose name is included in the databank and also to every company in which such individual is appointed as an ID in prescribed format. [Notification No. S.O. 3406(E), dated 19th August, 2021.]

2. MCA issues FAQs on various issues concerning Corporate Social Responsibility The FAQs have been broadly classified into topics such as (a) Applicability of CSR, (b) CSR Framework, (c) CSR Expenditure, (d) CSR Activities, (e) CSR Implementation, (f) Ongoing Project, (g) Treatment of Unspent CSR Amount, (h) CSR Enforcement, (i) Impact Assessment, and (j) CSR Reporting & Disclosure. [General Circular No. 14 /2021, dated 25th August, 2021.]

II. SEBI

3. SEBI revises format for disclosure of shareholding pattern of promoters and promoter group entities In the interest of transparency for investors, SEBI has revised the format for disclosure of shareholding pattern. Consequently, all listed entities shall henceforth provide shareholding, segregated into promoter(s) and promoter group. At present, the shareholdings of promoter(s) and promoter group entities are collectively disclosed showing shareholding pattern of the promoter and promoter group. [Circular No. SEBI/HO/CFD/CMD/CIR/P/2021/616, dated 13th August, 2021.]

4. SEBI asks depositories to create, host, and maintain a system using ‘Distributed Ledger Technology’ In order to strengthen the process of security creation, monitoring of security created, monitoring of asset cover and covenants of the non-convertible securities, SEBI has asked depositories to create, host, and maintain a system using the distributed ledger technology. The new system shall come into effect from 1st April, 2022. However, testing of the system shall start from 1st January, 2022. [Circular No. SEBI/HO/MIRSD/MIRSD_CRADT/CIR/P/2021/618, dated 13th August, 2021.]

5. SEBI notifies single regulations on Share-Based Employee Benefits and Sweat Equity The market regulator, SEBI, has merged SEBI (Issue of Sweat Equity) Regulations, 2002 and SEBI (Share-Based Employee Benefits) Regulations, 2014 into a single regulation called SEBI (Share-Based Employee Benefits and Sweat Equity) Regulations, 2021. The new Regulation has provided flexibility in switching the administration of their schemes from the trust route to the direct route and vice versa. [Notification No. SEBI/LAD-NRO/GN/2021/40, dated 13th August, 2021.]

6. SEBI specifies additional penalty for repeated delivery default In order to put in place a sufficient deterrent mechanism to handle instances of repeated delivery defaults, SEBI has stated that in the case of a ‘Repeated Default’ by a seller or a buyer, an extra penalty of 3% of the total value of the delivery default will be imposed. Here, the term ‘Repeated Default’ shall be defined as an event wherein a default on delivery obligations takes place three times or more during a six-month period on a rolling basis. The penalty levied on ‘Repeated Default’ shall be transferred to the Settlement Guarantee Fund (SGF) of the Clearing Corporation. However, the Circular shall be effective after one month from the date of its issuance. [Circular No. SEBI/HO/CDMRD/DRMP/CIR/P/2021/619, dated 17th August, 2021.]

7. SEBI requires depositories to use distributed ledger technology to monitor security creation SEBI has asked depositories to use blockchain technology to record and monitor security creation as well as covenants of non-convertible securities. Distributed ledger technology has the potential to provide a more resilient system than traditional centralised databases. It offers better protection against different types of cyberattacks. The move is aimed at strengthening the process of security creation and monitoring of security created, asset cover and covenants of non-convertible securities. [Press Release No. 26/2021 dated 25th August, 2021.]

8. AMCs must disclose ‘risk-o-meter’ of scheme while disclosing its performance In order to enhance the quality of disclosure w.r.t. risk and performance, SEBI has asked AMCs to disclose the ‘risk-o-meter’ of the scheme wherever the performance of the scheme is disclosed and the ‘risk-o-meter’ of the scheme and benchmark wherever the performance of the scheme vis-a-vis that of the benchmark is disclosed. The provisions of this Circular shall be applicable with effect from 1st October, 2021. However, AMCs may choose to adopt the provisions of this Circular before the effective date. [Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/621, dated 31st August, 2021.]

9. SEBI asks investors to link PAN with Aadhaar before 30th September, 2021 SEBI has asked investors to link their PAN with Aadhaar by 30th September, 2021 for continual and smooth transactions in the securities market. As per CBDT Notification GSR 112(E) dated 13th February, 2020, the PAN of a person allotted as on 1st July, 2017 shall become inoperative if it is not linked with Aadhaar by 30th September, 2021 or any other date specified by CBDT. SEBI has also asked market intermediaries to ensure compliance of the said Notification. [Press Release 27/2021, dated 3rd September, 2021.]

FEMA

(i) Amendment in rate of interest on advance payment under export regulations Where an exporter receives advance payment with interest from a buyer / third party named in the export declaration made by the exporter, outside India, the exporter shall be under an obligation to ensure that the rate of interest payable on the advance payment does not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points. This rate has now been amended to include any other applicable benchmark as may be directed by the RBI. No direction has yet been provided by the RBI in this matter. [Notification F. No. FEMA 23(R)/(5)/2021-RB, dated 8th September, 2021.]

MISCELLANEA

I. World News

1 US-Australia submarine deal: What are the risks?

The US decision to sell nuclear-powered submarines to Australia has put at risk longstanding but fragile global pacts to prevent the proliferation of dangerous nuclear technologies, according to experts.

The deal killed a previous French agreement to sell non-nuclear subs to Australia and radically bolsters Canberra’s ability to project military power across the Asia-Pacific region.

But will it encourage other countries to freely sell their nuclear technology, potentially expanding the number of countries who can build nuclear weapons?

Australia had originally sought conventional diesel-powered French submarines, which are more easily detected and must rise to the surface every few days to recharge their batteries.

Nuclear-powered submarines can spend weeks on end beneath the surface, travelling long distances undetected, only limited by stocks of food and water for the crew, generally a maximum of three months.

The submarines used by the US Navy, and also the British, who are part of the deal with Australia, use highly-enriched uranium, or HEU, enriched to a level of 93%. At that level the submarines can run for 30 years without new fuel.

But that is also the same level of uranium concentration necessary for a powerful nuclear weapon.

One of the key worries about nuclear proliferation is that weapons-grade HEU cold fall into the hands of a rogue state or terror group, said Alan Kuperman, coordinator of the Nuclear Proliferation Prevention Project at University of Texas at Austin.

‘The most likely path to such a bomb would be for an adversary to divert or steal one of the two required nuclear explosives, plutonium or highly-enriched uranium, from a non-weapons purpose like reactor fuel,’ Kuperman wrote on the Breaking Defense news site.

US Navy ships ‘use about 100 nuclear bombs’ worth of HEU each year, more than all of the world’s other reactors combined,’ he said.

Only six countries – the United States, Britain, France, China, India and Russia – have nuclear-powered submarines. Countries have been cautious about allowing the spread of the technology and the fuel.

For James Acton of the Carnegie Endowment for International Peace, the US sale to Australia is a disturbing precedent.

He noted that under the 1970 Nuclear Non-Proliferation Treaty, countries that do not have nuclear weapons are not prohibited from acquiring nuclear-powered submarines and, if they wanted, could remove the nuclear material from the watercraft.

‘This is a huge loophole,’ Acton wrote on Twitter.

‘I’m not particularly concerned that Australia will acquire nuclear weapons. I am concerned that other states will use this precedent to exploit a serious potential loophole in the global non-proliferation regime,’ he said.

Daryl Kimball of the Arms Control Association said the US sale ‘compromises’ Washington’s own non-proliferation principles.

’It has a corrosive effect on the rules-based international order,’ he told AFP.

White House spokeswoman Jen Psaki insisted that the United States is still committed to non-proliferation, calling the sale to Australia ‘an exceptional case, not a precedent-setting case.’

But experts call it risky.

The US-Australia deal ‘could well open a Pandora’s Box of proliferation,’ said Tariq Rauf, the former head of verification at the International Atomic Energy Agency, which helps enforce nuclear agreements.

He said it could encourage non-nuclear weapons countries like Argentina, Brazil, Canada, Saudi Arabia or South Korea to buy nuclear submarines that could give them weapons-grade fuel.

Hans Kristensen of the Federation of American Scientists worries there could be a snowball effect of proliferation.

After the US-Australia deal, he told AFP, ‘Russia could potentially increase supply of such technology to India, China could potentially provide naval reactor technology to Pakistan or others, and Brazil might see an easier way forward on its troubled domestic submarine reactor project.’

Experts say a somewhat safer alternative could be for Australia to obtain nuclear submarines that use low-enriched uranium (LEU).

LEU is enriched to a level of less than 20% uranium, a grade used in nuclear power plants.

In submarines, it has to be replaced every ten years, in a dangerous and difficult process.

That has not deterred the use of the technology by navies in France and China. The US Navy has been pressured to shift to LEU, but has yet to do so.

(Source: International Business Times – By Sylvie Lanteaume – 21st September, 2021)

II. Economy

2 OECD marginally lowers India’s F.Y.22 growth projection to 9.7%

The Organisation for Economic Co-operation and Development (OECD) has marginally lowered India’s growth projection for the on-going fiscal year to 9.7%, a reduction of 20 basis points (bps), and to 7.9% for the next financial year, down 30 bps from its May forecast, citing pandemic risks.

The inter-governmental economic organisation with 38 member nations had slashed India’s F.Y.22 growth forecast to 9.9% in May from 12.6% estimated in March, as the second Covid-19 wave impacted recovery.

‘The risk of lasting costs from the pandemic also persists. The output shortfall from the pre-pandemic path at the end of 2022 in the median G20 emerging-market economy is projected to be twice that in the median G20 advanced economy, and particularly high in India and Indonesia,’ OECD said in a report.

It pointed out that high-frequency indicators had rebounded. ‘High-frequency activity indicators, such as the Google location-based measures of retail and recreation mobility, suggest global activity continued to strengthen in recent months, helped by improvements in Europe and a marked rebound in both India and Latin America,’ it said.

The OECD projected a strong global growth of 5.7% this year and 4.5% in 2022, slightly changed from its outlook in May of 5.8% and 4.4%, respectively, on the back of continuing vaccine roll-out and a gradual resumption of economic activity, besides decisive actions by governments and central banks at the height of the crisis.

Vaccination key to recovery
The OECD report cautioned that to maintain recovery stronger international efforts were needed to provide low-income countries with the resources to vaccinate their populations, both for their own and global benefit. ‘Ensuring that the recovery is sustained and widespread requires action on a number of fronts – from effective vaccination programmes across all countries to concerted public investment strategies to build for the future,’ said OECD secretary-general Mathias Cormann.

(Source: Economic Times Bureau – 22nd September, 2021)

III. Industry

3 Will 2021 be the second-best year in a decade for Indian car market? Yes, IF it survives chip shortage

It’s always the darkest before the day dawns.

India’s carmakers, despite niggling chip shortages, are proving this year that there’s much more than a grain of truth in that age-old saying.

Last year was a washout and car sales slumped to levels not seen in a decade. But 2021 has been stellar by all yardsticks so far: The passenger vehicle market has already posted its second highest sales in a decade through August in 2021.

And that isn’t all: This calendar year may turn out to be the second best in a decade!

With sustained demand and expectations of improving chip supplies, Jato Dynamics expects the Indian passenger vehicle market to end 2021 with volumes of 3.34 million units – the second highest in a decade and just about 50,000 lower than the peak.

Sales charts would have gleamed even more had Covid two not come in the way.

Global forecasting firm IHS Markit expects India to overtake Germany as the fourth largest light vehicle maker in the world in 2021.

So far this calendar year, volumes have climbed over 70% to 2.13 million units, which is the highest growth rate in a decade. Vehicle makers produced 58% more than last year, against the highest in absolute terms at 2.29 million units.

The low base of last year, the need for personal mobility and the spike in demand for SUVs have led to a swift rebound.

Vehicle makers have posted sales of over three lakh units per month this calendar year, and despite the second wave of Covid-19, the revival has been so quick that dealer inventory has been among the lowest. For some, inventory is only for days as against weeks.

Ravi Bhatia, president of JATO Dynamics India, told ET that sales this year are running close to the best in a decade and the market is expected to close at 3.34 million units.

The Indian middle class pool of 121 million households with an income of Rs. 75,000 to Rs. 150,000 clearly wants to get back to work and they need personal mobility, which is clearly reflected in the numbers.

Year

Volumes

2012

27,70,730

2013

25,71,683

2014

25,95,185

2015

28,03,088

2016

29,93,492

2017

32,26,175

2018

33,91,094

2019

29,72,786

2020

24,47,697

2021
(estimate)

33,45,752

*Source: Jato Dynamics India

‘If vaccinations proceed and we have no severe third wave, then it could be close to one of the best. What stands out is the resilience of demand. Also, dealers have done this with lower inventory, lower incentives and higher prices,’ added Bhatia.

One of the factors hurting output recently has been the disruption in manufacturing in Malaysia due to rising Covid cases. However, the situation is gradually improving and that may help the Indian market secure better supplies than in the recent months. Vehicle makers on their part have adapted to the chip shortage with special trims.

Bhatia says Malaysia has 13% of the world’s automotive testing and packaging capacity and that the testing and packaging capacity is almost back up, boosting supplies in the coming months.

Experts believe that if not for chip shortages, the market could have crossed its peak. Over a dozen models have a waiting period of more than eight weeks. The industry still faces pending bookings of more than four lakh units and the numbers are swelling, with several more high-profile launches – of Mahindra XUV 700, Tata Punch, MG Astor and Citroen C3, for instance – coming up.

China

23.14 million

US

8.96 million

Japan

7.45 million

India LVP

3.9 million

Germany LVP

3.43 million

*Source: IHS Markit

Gaurav Vangaal, associate director at IHS Markit, says strong demand, low semi-conductor content, better product mix and proactive management have cushioned the impact of chip shortage.

‘We project India to surpass Germany in 2021 to become the fourth largest manufacturing base for Light Vehicle Production. However, Germany might regain its position once the supply scenario improves. Demand is indeed very strong; however, the recent disruption in the supply scenario is a cause of concern and it is likely to continue. How vehicle makers manage this disruption will determine the final numbers,’ Vangaal added.

(Source: ET Bureau – By Ketan Thakkar & Ashutosh R. Shyam – 22nd September, 2021)

MISCELLANEA

I. World News

19 ‘Nobody should trust Wikipedia’, warns its co-founder; says the site is taken over by Leftists

Larry Sanger, the co-founder of Wikipedia, has said that nobody should trust the crowd-sourced online encyclopaedia as it is run by Left-leaning volunteers. The site is no longer trustworthy as it does not allow content that does not fit the agenda of Leftists, and therefore people can’t get a complete view on topics.

Sanger, who had co-founded Wikipedia along with Jimmy Wales in 2001, said that the platform has betrayed its original mission by only reflecting the views of the ‘establishment.’ In an interview with Lockdown TV, he said that he agrees with the view that there are teams of Democratic Party-leaning editors who remove content that they don’t like.

In fact, he noted, Wikipedia had lost its neutral nature way back in 2009, before which editors from all ideologies would debate equally before deciding what should be published on the platform. Articles on most recent issues, from Covid to Biden, had become partisan, particularly supporting the Biden administration on such issues and blacking out information that does not show the Democrats in positive light.

The Wikipedia co-founder gave examples of articles on Joe Biden and his son Hunter Biden in which important details about them were completely missing. The article on the US President does not mention most of the criticisms against him and it has completely whitewashed the Ukraine scandal. The paragraph on the Ukraine imbroglio ‘reads like a defence counsel’s brief’. The section concerned on the page says ‘no evidence was produced of any wrongdoing by the Bidens’ and that ‘Trump and his allies falsely accused Biden’ of involvement in Ukraine to protect Hunter Biden.

In fact, the Wikipedia page on Hunter Biden is even more shocking as it does not mention anything about the content found on his laptop. The article does say that no evidence of wrongdoing was found ‘after the seizure of a laptop purportedly belonging to Biden’, but does not mention other explosive content found in the laptop which was left by Hunter at a computer repair shop and which he forgot to pick up later.

In October last year, The New York Post had published emails retrieved from the laptop relating to Hunter’s business dealings in Ukraine and the links to his father. Twitter and Facebook, run by the same Left-leaning propagandists, had blocked The News York Post article, preventing people from sharing it. Similarly, Wikipedia is also completely blocking out any information about the contents of the laptop.

Larry Sanger said that Wikipedia’s coverage of Covid-19 is also very biased as it just reproduces the views of the World Economic Council or the World Economic Forum, the World Health Organization, the CDC and various other establishment mouthpieces like Anthony Fauci.

He also gave the example of Wikipedia articles on eastern medicine which are biased as they basically call the ancient medicine systems quackery in dismissive, quite judgmental language.

Showing how biased Wikipedia has become, Larry said that major media houses like Daily Mail and Fox News are blacklisted by it. This means that if something is covered by these published publications but not by the Leftist media houses, then that can’t be published on Wikipedia.

Wikipedia has become just like any other Left-leaning media house. ‘There are a lot of people who would be highly motivated to go in and make the article more politically neutral, but they’re not allowed to.’ Sanger added, ‘If only one version of the facts is allowed, then that gives a huge incentive to wealthy and powerful people to seize control of things like Wikipedia in order to shore up their power. And they do that.’

There are now big companies like Wiki PR that employ people to write on Wikipedia, but such writers and editors don’t reveal that they are associated with such companies. People are spending money to make changes to Wikipedia articles ‘because there’s a very big, nasty, complex game being played behind the scenes to make the article say what somebody wants them to say’.

Larry Sanger had left Wikipedia over differences with co-founder Jimmy Wales over how to run the website and has since become a staunch critic of it for its Left-leaning bias. Earlier, he had said that Wikipedia has become a huge moral hazard, saying that it has turned into a ‘monocultural establishment organ of propaganda’.

(Source: OpIndia – https://www.opindia.com/2021/07/nobody-should-trust-wikipedia-warns-its-co-founder-larry-sanger/-16th July, 2021)

II. Business

20 How can you become a space tourist?

Thrill-seekers might soon be able to get their adrenaline kicks – and envy-inducing Instagram snaps – from the final frontier, as space tourism finally lifts off. All you’ll need is a bit of patience. And a lot of money.

Here’s a rundown of where things stand.

Two companies are offering short ‘suborbital’ hops of a few minutes: Jeff Bezos’s Blue Origin and Virgin Galactic, founded by Richard Branson.

Blue Origin’s New Shepard rocket takes off vertically and the crew capsule detaches and crosses the Karman line (62 miles, or 100 kilometres, in altitude), before falling back to earth with three parachutes.

Virgin Galactic uses a massive carrier plane which takes off from a horizontal runway then drops a rocket-powered spaceplane. This, in turn, soars to over 50 miles altitude before gliding back.

In both cases, up to six passengers are able to unbuckle from their seats to experience a few minutes of weightlessness and take in the view of earth from space.

Virgin Galactic has said that regular commercial flights will begin from 2022, following two more test flights. Their waiting list is already long, with 600 tickets so far sold.

But the company predicts it will eventually run up to 400 flights per year. Two seats on one of the first flights are up for grabs in a prize draw: registrations are open until 1st September.

As for Blue Origin, no detailed calendar has been announced. ‘We’re planning for two more flights this year, then targeting many more in 2022,’ a spokesperson told AFP.

Another way to get to space is via reality television. Space Hero, an upcoming show, says it plans to send the winner of a competition to the International Space Station (ISS) in 2023.

The first tickets sold by Virgin Galactic went for between $200,000 and $250,000 each, but the company has warned that the cost for future sales will go up.

Blue Origin hasn’t announced prices. The anonymous winner of a public auction for a seat on the first crewed flight paid $28 million, but decided to defer the trip.

It’s not known what amount was bid for the seat secured by Dutch teen Oliver Daemen, who will fly in the auction winner’s place.

The more ‘budget-conscious’ might consider spending $125,000 for a seat on Space Neptune, a capsule that offers 360-degree windows and is lifted to the upper atmosphere by a balloon the size of a football stadium.

Despite the promise of spectacular views, the balloon ascends only 19 miles – far from the boundary of space and weightlessness. The 300 seats for 2024 have all been sold, but reservations are open for 2025.

No – you’re only expected to be in reasonable shape. Virgin Galactic’s training lasts just five days. And Blue Origin promises to teach you everything you need to know ‘the day before you launch,’ and its first crewed flight includes pioneering aviator Wally Funk, who at 82 will become the oldest astronaut.

The company’s requirements include being able to climb seven flights of stairs in under 90 seconds (the height of the launch tower) and being between 5’0” and 110 pounds (152 centimetres and 50 kilogrammes) and 6’4” and 223 pounds (193 cm. and 100 kg.).

Elon Musk’s company is also getting into the space tourism game, but its plans involve journeys that are far longer. The costs are also predicted to be astronomical – tens of millions of dollars.

In September, American billionaire Jared Isaacman has chartered a mission called Inspiration4 to take him and three other passengers into orbit around the earth on a SpaceX Crew Dragon, launched into space by a Falcon 9 rocket.

Then in January, 2022, three businessmen will travel to the ISS with an experienced astronaut. The mission, named Ax-1, is being organised by the company Axiom Space, which has signed up for three other future flights with SpaceX.

Elon Musk’s company is also planning a trip to orbit for four people, organised by intermediary Space Adventures – the same company in charge of the flight of the Japanese billionaire Yusaku Maezawa to the ISS in December, aboard a Russian Soyuz rocket.

Maezawa is also supposed to take a trip around the Moon in 2023, this time aboard a rocket that is still under development by SpaceX, called Starship.

He invited eight members of the public to join him – but applications are now closed.

(Source: International Business Times, 17th July, 2021 – By Lucie Aubourg)

III. Technology

21 How Web3 is overturning the Internet status quo

Today, it’s almost taken for granted that the Internet is controlled by a handful of tech behemoths that seem to amass more and more power every day. It’s easy to forget that when these titans first arrived on the scene, each one of them was considered a disrupter, a revolutionary, an upstart. Now, they are the establishment.

Since its birth in 1983, the Internet has evolved from an obscure and clunky tool used by a select few into a vast network integral to every facet of our lives. This destiny first became apparent during the dot-com boom of the 1990s. And although many naysayers were quick to self-congratulate during the ensuing bust, the downturn proved no more than a healthy pruning that readied the Internet for a new era of growth.

This next phase of Internet evolution, dubbed Web 2.0 in 2005 by Internet guru Tim O’Reilly, produced the trends that now dominate our lives: mobile-centric e-commerce, social media, user-generated content and video streaming. It also set the stage for the reign of the FAANGs: Facebook, Apple, Amazon, Netflix and Google.

Together, these giants offer us forms of connection, entertainment and instant gratification we could only have imagined a decade ago. But because their business models are based on the large-scale monetisation of data and centralised control of networks, our reliance on these services has also handed them enormous power: over our time, our wallets and our personal information.

That stranglehold may seem unbreakable at this point. But behind the scenes, away from debates about monopolies, privacy and free speech, a new incarnation of the Internet is emerging. Forces are quietly mustering for a new revolution – one whose very structure is designed to prevent such concentrations of profit and control from shaping the future.

The key to this new iteration is decentralisation. Its foundation is blockchain technology.

A quiet revolution

While the concept of blocks of information shackled together in a tamper-resistant way dates back to 1991, it wasn’t until 2009 that Satoshi Nakamoto, the pseudonym for the developer (or developers) of Bitcoin, set up the first blockchain to allow trading in the new currency. Now there are hundreds. On each blockchain, peers can exchange economic value – work, content, assets – without intermediaries.

This opens up the potential for a new kind of Internet – Web 3.0. Since blockchain transactions are anonymous and processed by a distributed network of many computers known as nodes, users no longer need to cede control of their data to a central authority. Meanwhile, the links between blocks produce a record that is resistant to hacking and manipulation.

Protocols powered by the many

There are a multitude of new ideas for how to use the power of decentralisation to offer tools and services that eschew centralised authority and are thus more affordable and accessible. And since protocols built on the distributed Internet are powered by hundreds or even thousands of computers, they are subject to neither single points of failure nor single points of control. This makes them both more stable and more secure.

As part of the Web3 community’s commitment to democratisation, many of these projects are led by Decentralised Autonomous Organisations (DAOs) – decentralised corporations governed by egalitarian communities rather than boards and executive hierarchies. Built on principles of self-sustaining growth and community governance, they are already having major real-world impacts.

Mirror, a community-run publishing protocol, puts power in writers’ hands. Since it is built on the Ethereum blockchain, the authorship and provenance of each piece of content is indelibly recorded. Writers can also collaborate on projects, turn their work into non-fungible tokens (NFTs) for auction, or even bankroll efforts by issuing their own tokens.

The user-generated music platform Playdj.tv uses decentralised infrastructure to cater to a different kind of creator at rates that enable it to be competitive with YouTube. Its platform enables DJs to set up their own live streams for their sets, which they can use to earn money and interact with fans all over the globe – a boon during the pandemic, when clubs and private party venues were forced to shut their doors.

The team behind Arweave has built a distributed hard drive that offers a permanent repository for all kinds of information and data. Then there’s The Graph, which helps make sense of all this by allowing fast, private and secure queries of its vast store of data about the Web3 universe.

New breeds of distributed financial systems are on the rise as well, including decentralised finance (DeFi) platforms where people can earn rewards by ‘staking’ assets and performing key tasks on a network. The number of decentralised cryptoasset exchanges (DEXs in industry parlance) has ballooned in the past two years, capturing some market share from their centralised counterparts (CEXs) with their promise of greater anonymity, safety and security.

Total trading volume on these platforms surged to a record $172 billion in May, more than twice the $80.2 billion record set just three months before. Protocols such as Uniswap have been at the forefront of this growth.

There are scores and scores more out there or percolating in the imaginations of developers, many of which will become the building blocks for a new Internet and a new economy. Some projects will inevitably fall by the wayside as Web3 grows to maturity, but many will survive and become foundational tools for the industries and customer bases they serve.

The difference this time is that these tools are governed and powered by their own user communities, rather than by the leaders of a small circle of massive corporations.

(Source: Opinion: International Business Times, 7th June, 2021 – By Doug Petkanis)

 

REGULATORY REFERENCER

DIRECT TAX

1. CBDT prescribes procedure for compliance check on sections 206AB and 206CCA – These two sections, effective from 1st July, 2021, provide for deduction or collection of tax at a higher rate in the case of non-filers of return of income. The CBDT has issued a new functionality, ‘Compliance Check for Sections 206AB & 206CCA’. This functionality is made available through the reporting portal of the Income-tax Department. It provides for compliance checks for single PAN or bulk verification. [Circular regarding use of functionality under sections 206AB and 206CCA. Circular 11 of 2021 dated 21st June, 2021; Notification No. 1 of 2021 dated 22nd June, 2021.]

2. Extension of time limits of certain compliances like filing of TDS returns for the last quarter of F.Y. 2020-21, issue of Form 16, filing of return of Equalisation Levy, etc., to provide relief to taxpayers in view of the pandemic. [Circular 12 of 2021 dated 25th June, 2021.]

3. CBDT issues guidelines to clarify provisions related to TDS u/s 194Q on purchase of goods – As per section 194Q, the buyer is responsible for deduction of tax from any sum paid to a resident seller for purchase of any goods, subject to certain threshold. CBDT has issued guidelines to remove the difficulties in implementation of section 194Q and in overlapping situations while implementing 194O and 206C(1H). [Circular 13 of 2021 dated 30th June, 2021.]

4. Guidelines for application of newly-inserted section 9B and amended section 45(4). [Circular 14 of 2021 dated 2nd July, 2021.]

5. Extension of various Income tax due dates including for imposition of penalty under Chapter XXI, linking of Aadhaar with PAN, for assessment or reassessment under the Income-tax Act and the time limit for completion of such action u/s 153 or u/s 153B, etc. [Notification No. 74 of 2021 dated 25th June, 2021.]

6. Last date of payment of amount under Vivad se Vishwas (without additional amount) which was earlier extended to 30th June, 2021 is further extended to 31st August, 2021. The last date of payment of amount under Vivad se Vishwas (with additional amount) has been notified as 31st October, 2021. [Notification No. 75 of 2021 dated 25th June 2021.]

7. Amendment to Rule 8AA and insertion of Rule 8AB – Income-tax (18th Amendment) Rules, 2021 – The Finance Act, 2021 inserted a new section, 9B, to provide that whenever a partner or member (specified person) receives any capital asset or stock-in-trade or both from a firm / AOP / BOI (specified entity), during the previous year in connection with the dissolution or reconstitution of such specified entity, it shall be deemed to be a transfer made by the specified entity to the specified person. Consequently, section 45(4) was amended. Section 48 was also amended to provide that the amount chargeable to income-tax as income of such specified entity u/s 45(4), which is attributable to the capital asset being transferred by the specified entity, shall be reduced from the full value of consideration while computing capital gains. CBDT notifies Rule 8AB for computation of sum attributable to capital asset u/s 48(iii). [Notification No. 76 of 2021 dated 2nd July, 2021.]

8. Insertion of Rule 8AC – Income-tax (19th Amendment) Rules, 2021 – CBDT has introduced Rule 8C to provide for computation of short-term capital gains and written down value of block of assets, where goodwill is a part of such block and depreciation has been obtained. [Notification No. 77 of 2021 dated 7th July, 2021.]

COMPANY LAW

I. COMPANIES ACT, 2013

(I) MCA clarifies that companies can conduct their EGMs via E-mode up to 31st December, 2021 – MCA has issued a clarification to allow companies to conduct their EGMs through VC / OVCM or transact items through postal ballot up to 31st December, 2021 in accordance with the framework provided in the various Circulars and subject to the conditions prescribed therein. [MCA General Circular No. 10/2021 dated 23rd June, 2021.]

(II) Companies (Accounting Standards) Rules, 2021 – The MCA notified the Companies (Accounting Standards) Rules, 2021. It applies to companies other than those preparing their financial statements using Ind AS framework. The Notification, effective 1st April, 2021, redefines a Small and Medium-Sized Company (SMC). The quantitative threshold limits to qualify as an SMC stand amended as follows: (a) turnover does not exceed Rs. 250 crores in the immediately preceding accounting year, and (b) borrowings, at any time during the immediately preceding year, do not exceed Rs. 50 crores. [MCA Notification dated 23rd June, 2021.]

(III) ICSI Guidance Note on CSR – The Institute of Company Secretaries of India has issued Guidance Note on Corporate Social Responsibilities. In this Guidance Note, provisions related to Business Responsibility Reports by Listed Companies, CSR in Insurance Companies, CSR in Banking Companies, CSR and Sustainable Development Goals, CSR and Corporate Governance, etc., have been elaborated in detail. [Published in June, 2021.]

(IV) MCA further extends due date for filing certain forms under the Companies Act and the LLP Act to 31st August, 2021 – Extension granted to companies / LLPs to file forms (other than a CHG-1 Form, CHG-4 Form and CHG-9 Form) which were / are due for filing from 1st April to 31st July, 2021 without any additional fees. [MCA General Circular No. 11/2021 dated 30th June, 2021.]

(V) MCA now allows companies to file charge-related forms without paying an additional fee up to 1st August, 2021 – In view of the Covid-19 pandemic, the MCA has decided to relax the timelines for filing of forms related to the creation / modification of charges. As a result, companies can file charge-related forms without paying an additional fee up to 1st August, 2021. [MCA General Circular No. 12/2021 dated 30th June, 2021.]

II. SEBI

(VI) SEBI introduces cross margin facility on commodity futures – In order to improve the efficiency of the use of the margin capital by market participants, SEBI has decided to introduce cross margin benefit between Commodity Index futures and futures of its underlying constituents or its variants. This shall reduce the cost of trading and may lead to enhanced liquidity in both the Commodity Index futures and its underlying constituent futures or its variants. [Circular No. SEBI/HO/CDMRD/CDMRD_DRM/P/CIR/2021/586, dated 29th June, 2021.]

(VII) SEBI issues SOP for company getting delisted through scheme of arrangement – SEBI has issued the Standard Operating Procedure (SOP) for listed subsidiary company desirous of getting delisted through a Scheme of Arrangement wherein the listed parent holding company and the listed subsidiary are in the same line of business. [Circular No. SEBI/HO/CFD/DIL1/CIR/P/2021/0585, dated 06th July, 2021.]

(VIII) Mutual Funds to provide justification to stakeholders if put option favourable to scheme is not exercised – Based on the recommendation of the Mutual Fund Advisory Committee, the SEBI has decided that, with effect from 1st October, 2021, if put option is not exercised by a Mutual Fund, and if exercising the put option would have been in favour of the scheme, then a justification for not exercising the put option shall be provided by the Mutual Fund to the Valuation Agencies (VA), Board of AMC and Trustees on or before the last date of notice period. [Circular No. SEBI/HO/IMD/DF4/P/CIR/2021/593, dated 09th July, 2021.]

(IX) SEBI reduces advance intimation timeline for modifications in commodity derivative contract – In order to bring in uniformity while giving effect to the contract modifications (so that they have the desired impact) and the modified contract represents a healthy replica of the physical market, SEBI has decided, in consultation with the stock exchanges, to reduce the number of days of advance intimation for all the three categories, i.e., non-material, material and material modifications which can be made only after approval from SEBI, to ten days. [Circular No. SEBI/HO/CDMRD_DOP/P/CIR/2021/592, dated 08th July, 2021.]

FEMA
(i) RBI has decided to collect information about LRS transactions in XBRL format instead of the Online Return Filing System (ORFS). Accordingly, AD Category – I banks shall upload the requisite information on the XBRL system on or before the fifth of the succeeding month from 1st July, 2021 onwards. [A.P. (DIR SERIES 2021-22) Circular No. 7, dated 17th June, 2021.]

(ii) Indian residents are permitted under LRS to make remittances to units set up in IFSCs in India for investment purposes since February 2021. For this purpose, Resident Individuals could also open a non-interest-bearing Foreign Currency Account (FCA) in IFSCs. The International Financial Services Centres Authority (IFSCA) has now amended regulations applicable to Banking Units in such IFSCs. Among other amendments, such Banking Units can now open accounts in a freely convertible foreign currency for individuals and corporate or institutional entities, resident in India or outside India, subject to such conditions as may be specified by the Authority. [Notification No. IFSCA/2021-22/GN/REG013, dated 5th July 2021.]

(iii) The Government had announced a hike in foreign investment limit for the Insurance Sector from 49% to 74% during the Budget on 1st February, 2021 and an appropriate Amendment Bill was passed into law (covered in the April, 2021 issue of this Journal) followed by formally notifying these amendments on 19th May, 2021 with Clarifications on the final rules for increasing the foreign direct investment limit to 74%. The FDI Policy for the same was also amended by the issuance of Press Note 2 of 2021 (covered in the July, 2021 issue of this Journal). The IRDAI has now amended regulations mandating requirement of Resident Indian Citizens at various management posts of Indian Insurance Companies having foreign investment. Further, there are disclosure and compliance requirements stated in respect of these new regulations. Full details are provided in the Notification. It should be noted that a corresponding amendment in the Non-Debt Instrument Rules, 2019 (NDI Rules) is pending after which the FDI amendments will take effect. [Notification No. F. No. IRDAI/REG/6/178/2021, dated 7th July, 2021.]

ICAI ANNOUNCEMENTS


A) Audit Quality Maturity Model – Version 1.0 (AQMM v1.0) – The ICAI has released AQMM v1.0, an evaluation matrix, as part of its capacity-building measure. The Evaluation Matrix is for sole proprietors and audit firms to help them self-evaluate their current level of audit maturity. The same would be recommendatory initially. Firms auditing the following entities are covered in AQMM v1.0: (i) a listed entity; or (ii) banks other than co-operative banks (except multi-state co-operative banks); or (iii) Insurance Companies. Firms doing only branch audits are not covered. [3rd July, 2021.]

ICAI MATERIAL
Accountancy and Audit
• Guidance Note on Accounting for Derivative Contracts (Revised, 2021) [6th July, 2021.]

Corporate Laws

  •     Technical Guide on Incorporation of Foreign Companies in India [3rd July, 2021.]

Handbooks:

  •     Resolution Plan under the Insolvency and Bankruptcy Code, 2016 [10th July, 2021.]
  •    Personal Guarantors to Corporate Debtors under the Insolvency and Bankruptcy Code, 2016 [10th July, 2021.]
  •     Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 [10th July, 2021.]
  •     Moratorium under the Insolvency and Bankruptcy Code, 2016 [10th July, 2021.]

Valuation
Booklets:
•    Disclaimers, Limitations in a Valuation Report – Are they even Real? [3rd July, 2021.]
•    Is DCF the most Popular Method for Valuation under Companies Act? [3rd July, 2021.]
•    Is DCF the only Method for Valuation of Shares under Income-tax Act? [3rd July, 2021.]
•    Minority Holding Valuation: Often Unsatisfactory? [3rd July, 2021.]
•    Valuation Reports – Do’s and Don’ts – To what extent are they Followed? [3rd July, 2021.]
•    Valuation date, Valuation reports date and events between these dates [9th July, 2021.]
•    Valuation: Professional’s Insights (Series-6) [10th July, 2021.]

SOCIETY NEWS

BOOK REVIEW

ATOMIC HABITS Author James Clear

Reviewed by Veena D’Souza, Chartered Accountant

This book is jam-packed with philosophy, psychology and practicality. I learned just as much about the brain, genes and identity as I did about habits. There are many things that you know at the back of your mind, but once you see it in writing, something inside you clicks and you have that very satisfying ‘Aha! It’s magical!’ moment.

I simply love how James Clear in his book Atomic Habits explains the workings of human behaviour, discussing ground-breaking topics on human behavioural psychology and neurology. He explains precisely how and why it is that we form certain habits and patterns in our lives. The book breaks down the process of habit-formation and provides an extremely practical framework to implement small improvements to your already existing routine, cultivating it for greater efficiency and growth.

A few things that really stuck with me while reading the book:


1. Identity change first, the rest will follow
The ultimate form of intrinsic motivation is when a habit becomes a part of your identity. It’s one thing to say I’m the type of person who wants this. It’s something very different to say I’m the type of person who is this – James Clear

I used to tell myself, ‘I want to start reading books!’ I used to always try but stop mid-way. After struggling for almost eight years, I successfully finished reading the book Atomic Habits by James Clear. However, it was ironic that my first book taught me how not to make it my last and implement the reading habit with simple strategies.

The simple cues that the book teaches helped to shape my habits as a reader.

So if a non-reader like me could do this, after implementing some simple tricks which Clear has beautifully articulated in the book, it proves that it can be applied to many different facets of life to implement good habits and slowly phase out the bad ones.

Today, I would call myself a reader and this identity change helps me to continue reading other books.

2. The 1% rule
It is so easy to overestimate the importance of one defining moment and underestimate the value of making small improvements on a daily basis – James Clear

The 1% improvement says that first, you need to understand everything about your work, break it down into small easily achievable tasks and improve it by just 1% every day. This can give significantly better results in the long run.

3. The 1st Law of Behavioural Change is to make it obvious, and the two most common Cues are Time and Location. The Implementation Intention is: I will (Behaviour) at (Time) in (Location) – James Clear

Clarity > Motivation: Many people think they lack motivation when what they really lack is clarity. It is not always obvious when and where to take action.

We often tend to procrastinate on some easy but important tasks. I am no different. My habit of procrastination even led to financial losses at times which further increased the baggage of tasks leading to the vicious cycle of further procrastination.

However, the implementation intention formula helps to realistically perform the behaviour. The difference is that the behaviour that was previously decided to be performed is now given the precision of when and where it is going to be performed.

4. Valley of disappointment
We often feel that progress should come quickly to us, that a task we begin should soon yield benefits for us. In reality, the results of our efforts are often delayed, not by a few days, but months, maybe even years, until we realise the true value of the previous work we have done.

In ‘Clear’ terms, the level of disappointment faced by us when we don’t get results is the ‘Valley of disappointment’.

5. Environment is the invisible hand that shapes human behaviour
In this way, the most common form of change is not internal, but external: we are changed by the world around us. Every habit is context dependent – James Clear

We drink more water if we keep a bottle of water handy around us while we study / work, etc. This is because we create an environment around us that helps us to develop a habit of drinking water regularly.

6. Focus on systems
Clear says that instead of focusing on goals, focus on systems. Goals are your end results. For example, I want to be fit and healthy; whereas a system is a process of how to achieve the goal more systematically and smartly.

Systems > Goals: ‘My results had very little to do with the goals I set and nearly everything to do with the systems I followed.’

When you fall in love with the process rather than the result, you don’t have to wait to give yourself permission to be happy. You can be satisfied anytime your system is running.

7. Focus on taking action, not being in motion. You don’t want to merely be planning. You want to be practising – James Clear

I used to plan to work out every day. Before 2020, I never acted much on my plans, it was only motion and didn’t include actions, the progress thus being very static.

I realised it was easy to be in motion and convince myself that I am making progress but in reality, I wasn’t. In 2020, I converted my motions into actions, starting with little cues like shopping for sportswear which tempted me to use them and eventually leading me to diligently work out which now has become part of my everyday life.

On reading this chapter of the book that says ‘Walk slowly, but never backwards’, it dawned on me to pick habits that I polished and acted on to make my plans of working out real.

8. If you want to master a habit, the key is to start with repetition and not perfection – James Clear

Frequency > Time: There is nothing magical about time passing with regard to habit formation. It doesn’t matter if it’s been twenty-one days or thirty days or three hundred days. What matters is the rate at which you perform the behaviour.

I am currently learning to play a musical instrument. I often used to wonder how effortlessly people play an instrument, some learn it within months, while others take years of practice. This is where the key of repetition got stuck with me and made me realise that I need to practise to excel and learn the instrument. It’s not about the amount of time I have been performing a habit, but the number of times I have been performing it.

There are many further wisdom-filled one-liners, habit-formation formulae that Clear has mentioned in the book which clearly provide a lot of self-help tips that one can inculcate in one’s life.

The book is smooth and easy-flowing. The concepts of each chapter tie together beautifully and compound in such a way that the entire reading experience is seamless. The author is able to deduce seemingly complex, scientific and psychological jargon into easily understandable and relatable terminology for the layman.

The book teaches HOW TO
* Make time for new habits (even when life gets crazy),
* Design your environment to make good habits easier and attractive to implement and bad habits unattractive to get rid of,
* Environments that affect habit formation and how to overcome frictions… and much more.

I would recommend this book to anyone wanting to change certain aspects of their current lifestyle, inculcating some new habits or getting rid of a few others. Reading it will effectively convey how a daily improvement of just 1% can yield extraordinary results in your life.

MISCELLANEA

I. Technology

14 Drone food deliveries to take off soon? Swiggy and ANRA Technologies to launch trials

Swiggy may soon deliver food using drones, with trials to begin for both food and medical packages. Swiggy’s drone delivery partner, ANRA Technologies, has got final clearances from the Ministry of Defence, the Ministry of Civil Aviation and the Directorate-General of Civil Aviation to commence drone trials for delivering food. ANRA Technologies has got the clearances for Beyond Visual Line of Sight (BVLOS) operations. After a lot of planning, air traffic control integration and readying equipment, ANRA launched its first sortie on 16th June, 2021. For the next several weeks, its team will conduct BVLOS food and medical package delivery trials in Etah and Rupnagar districts in Uttar Pradesh and Punjab, respectively.

Apart from partnering Swiggy for food delivery, the integrated airspace management firm is also engaged in a similar project for which it has partnered with IIT, Ropar, and will focus on medical deliveries.

Amit Ganjoo, the founder and CEO of ANRA, said that the motivating factor for him and his team comes from knowing that ‘our technology may soon help deliver food and medical packages to underserved populations’.

In a test flight video, the ANRA team showed how the deliveries are likely to take place. A drone is seen in the almost-three-minute video picking a small food package, flying out to a certain distance, before returning to the ground and delivering the package.

A few weeks ago, Dunzo, the Google-backed delivery startup, had announced that it was set to pilot drone delivery of medicines under the ‘Medicine from the Sky’ project launched by the Telangana Government in collaboration with the World Economic Forum. The project is aimed to enable emergency medical deliveries that could include Covid-19 vaccines and other essentials. Dunzo is amongst the entities that were recently allowed by the Central Government to attempt BVLOS experimental flights using drones.

(Source: ndtv.com, dated 14th June, 2021)

15 Hyderabad market turns 10 tons of waste into biogas every day; powers 170 shops

When you think of vegetable and fruit markets in India, you ‘see’ messy visuals of vegetable shavings trampled on the ground, bustling crowds and bargaining vendors. The foul smell of leftover and damaged produce lying on the floor is not only unpleasant but also results in tonnes of waste at the end of the day.

But at the Bowenpally fruit and vegetable market in Hyderabad, the vegetable waste generated is used to power streetlights and shops. ‘Over the last six months, ten tonnes of waste that is generated daily is being converted into 500 units of electricity. It is used to power 120 streetlights, 170 shops and a cold storage unit,’ says Lokini Srinivas, Selection Grade Secretary, Bowenpally market.

‘Using the same waste, 30 kg. of biogas is produced through this process and is replacing LPG cooking gas in the canteen at the market,’ he explains, adding that the market uses 800 to 900 units of electricity every day and now 80% of the power supply is fulfilled with the biogas.

On the days when Bowenpally market does not generate ten tonnes of waste, neighbouring vegetable markets and supermarkets pitch in.

So how do they do it?

Converting waste into a resource
In an allocated space of 30 m x 40 m in the market, Hyderabad-based Ahuja Engineering Services Pvt Ltd., an organisation that has been involved in setting up biogas plants across India, has set up a unit that can process the ten tonnes of waste every day.

‘Though we have set up many plants across India, this is the first one with such a high capacity. The plant was set up under the guidance of Chief Scientist Dr. A. Gangagni Rao of the CSIR-IICT (Council of Scientific and Industrial Research – Indian Institute of Chemical Technology). Using his patented technology, we could set up a unit that could work at such a high rate capacity,’ says Sruthi Ahuja, Director of Ahuja Engineering.

She adds that the research using this technology has been going on since 2012.

Apart from producing electricity and biogas, the plant is also generating organic manure that can be used in farming.

Earlier, a model using the same technology but with a lower capacity of 250 kg. was installed at a poultry farm in Hyderabad where farm waste was converted into energy. Its success prompted Dr. Gangagni to engineer a system that could convert ten tonnes of waste every day into biogas.

‘The research at CSIR-IICT began in 2006 to find ways to produce biogas from vegetable, fruit and food waste. By 2011, we had developed a patented technology which was tested on a small scale at various farms and kitchens across India. We then re-engineered the method to make it more efficient so that it could handle the higher capacity of waste and produce more energy,’ says Dr. Gangagni.

The Department of Biotechnology picked up this project and provided capital investment to set up the plant. The Department of Agriculture Marketing also lent support and carried out the necessary civil work.

Every day, the waste is collected from across the Hyderabad market by a designated team hired on contract. This is brought to the plant located in the same premises and goes through a bio-methanation process.

First, the waste is shredded and then it is soaked in a feed preparation tank to be converted into slurry. This undergoes an anaerobic bio-methanation process using a special culture (bacteria consortium). Finally, the biogas is collected in separate tanks and directed to the kitchen for cooking. The biofuel is also supplied to a 100% biogas generator which is used to power water pumps, cold storage rooms, and street and shop lights.

Dr. Gangagni adds, ‘There are other markets where more biogas plants will be installed in future.’

(Source: betterindia.com, dated 15th June, 2021)

II. Health

16 More than half of the cosmetics sold in the US, Canada are full of toxins, finds study

Researchers at the University of Notre Dame tested more than 230 commonly used cosmetics and found that 56% of foundations and eye products, 48% of lip products and 47% of mascaras contained fluorine – an indicator of PFAS, or so-called ‘forever chemicals’ that are used in non-stick frying pans, rugs and countless other consumer products.

‘The Environmental Protection Agency is moving to collect industry data on PFAS chemical uses and health risks as it considers regulations to reduce potential risks caused by the chemicals.’

Some of the highest PFAS levels were found in waterproof mascara (82%) and long-lasting lipstick (62%), according to the study published in the journal Environmental Science & Technology Letters. Twenty-nine products with higher fluorine concentrations were tested further and found to contain between four and 13 specific PFAS chemicals, the study found. Only one item listed PFAS, or perfluoroalkyl and polyfluoroalkyl substances, as an ingredient on the label.

A spokeswoman for the US Food and Drug Administration, which regulates cosmetics, said the agency does not comment on specific studies. It said on its website that there have been few studies of the presence of the chemicals in cosmetics and the ones published generally found the concentration to be at very low levels not likely to harm people, in the parts per billion level to the 100s of parts per million.

A factsheet posted on the agency’s website says that ‘As the science on PFAS in cosmetics continues to advance, the FDA will continue to monitor’ voluntary data submitted by industry as well as published research.

But PFAS chemicals are an issue of increasing concern for lawmakers who are working to regulate their use in consumer products. The study results were announced as a bipartisan group of Senators introduced a bill to ban the use of PFAS in cosmetics and other beauty products.

The move to ban PFAS comes as Congress considers wide-ranging legislation to set a national drinking water standard for certain PFAS chemicals and clean up contaminated sites across the country, including military bases where high rates of PFAS have been discovered.

‘There is nothing safe and nothing good about PFAS,’’ said Senator Richard Blumenthal, D-Conn., who introduced the cosmetics bill with Sen. Susan Collins, R-Maine. ‘These chemicals are a menace hidden in plain sight that people literally display on their faces every day.’

Representative Debbie Dingell, D-Mich., who has sponsored several PFAS-related bills in the House, said she has looked for PFAS in her own makeup and lipstick, but could not see if they were present because the products were not properly labelled.

‘How do I know it doesn’t have PFAS?’ she asked at a news conference, referring to the eye makeup, foundation and lipstick she was wearing.

The Environmental Protection Agency is also moving to collect industry data on PFAS chemical uses and health risks as it considers regulations to reduce potential risks caused by the chemicals.

The Personal Care Products Council, a trade association representing the cosmetics industry, said in a statement that a small number of PFAS chemicals may be found as ingredients or at trace levels in products such as lotion, nail polish, eye makeup and foundation. The chemicals are used for product consistency and texture and are subject to safety requirements by the FDA, said Alexandra Kowcz, the Council’s Chief Scientist.

‘Our member companies take their responsibility for product safety and the trust families put in those products very seriously,’ she said, adding that the group supports prohibition of certain PFAS from use in cosmetics. ‘Science and safety are the foundation for everything we do.’

But Graham Peaslee, a Physics Professor at Notre Dame and the principal investigator of the study, said the cosmetics pose an immediate and long-term risk. ‘PFAS is a persistent chemical. When it gets into the bloodstream, it stays there and accumulates,’ he said.

Blumenthal, a former State Attorney-General and self-described ‘crusader’ on behalf of consumers, said he does not use cosmetics. But speaking on behalf of millions of cosmetics users, he said they have a message for the industry: ‘We’ve trusted you and you betrayed us.’

Brands that want to avoid likely government regulation should voluntarily go PFAS-free, Blumenthal said. ‘Aware and angry consumers are the most effective advocate for change’, he added.

(Source: firstpost.com, dated 18th June, 2021)

17 Should world stop shaking hands after Covid? What experts say

Banished at the start of the pandemic, the handshake is making something of a comeback, thanks to vaccinations and the lifting of social restrictions – but ‘pressing the flesh’ faces an uncertain future.

More than speeches or communiqués, one of the most striking takeaways from the Vladimir Putin and Joe Biden summit in Geneva was their fulsome handshake in front of the world’s cameras – a rare moment of physical human contact. A few days earlier, at the G7 summit in Cornwall, Biden and his fellow leaders were still elbow-bumping away at outdoor events spaced six feet apart.

Back in the US, most Covid-19 restrictions have been lifted and vaccinated citizens have been told they don’t need masks – even indoors. Social distancing is largely a thing of the past and unlimited domestic travel is back on. But many Americans are still treading carefully – mask-wearing is still encouraged in many shops and offices, friends often greet each other with a brief wave and handshakes are treated warily.

New York telephone technician Jesse Green declines to shake hands with customers, but does with people he knows and who have been vaccinated. ‘Because of the pandemic, people are more aware about the way they use their hands,’ he said. For William Martin, a 68-year-old lawyer, shaking hands with anyone, vaccinated or not, is out of the question. He won’t do so ‘until it is safe,’ he said, adding ‘and “safe” will not be determined by some government.’

Some US companies and organisations are using coloured bracelets to allow employees, customers or visitors to signal their openness to contact: red, yellow or green, from the most cautious to the most comfortable.

Hugging is generally out of bounds and kissing to greet someone – never common in the US – is almost unimaginable for most.

Unscientific?
Jack Caravanos, a Professor at New York University’s School of Global Public Health, said wariness of handshakes does not exactly match the evidence. Covid-19 ‘is poorly transmitted by surface contact and is essentially an airborne virus, (so) the scientific basis for no skin contact is moot,’ he says.

‘However, the common cold, influenza and a host of other infectious diseases are transmitted by touch, therefore eliminating handshaking will overall have a positive public health impact.’ Tapping into the wider health benefits, many experts would not mourn the death of the handshake.

‘I don’t think we should ever shake hands ever again, to be honest with you,’ White House pandemic adviser Anthony Fauci said last year as the virus took hold worldwide. Allen Furr, Professor of Sociology at Auburn University, said ‘We’ve always had germophobes, people who don’t like to touch people because they see everything as a contagion. We may have some more of those, because of the psychological effect that safety is equated with not coming close to people – that may stick in some people’s minds.’

A human ritual
Shaking hands is a ritual taught to children by adults, but after 16 traumatic months it is one that could weaken if it is not passed down to the next generation, he said.

Other forms of greeting such as fist-bumping, a brief wave, or alternatives such as an Indian-style ‘Namaste’ could become increasingly popular compared with the hearty grip of a ‘manly’ handshake. But ‘so much will be lost if we didn’t shake hands,’ mourns Patricia Napier-Fitzpatrick, founder of The Etiquette School of New York.

‘You can tell a lot about a person by their handshake. It’s part of body language – people have lost jobs in the past because of bad handshakes. When you touch someone, you’re showing you trust them, you’re saying “I’m not going to harm you”.’

As with everything, handshaking today has ‘become a political thing’, suggests New York paramedic Andy McCorkle, with some people shaking hands as a sign of defiance against the government and Covid restrictions. ‘I feel like it’ll be solidified psychologically, to keep one’s distance,’ he said.

The pandemic has upended many things about everyday life and the handshake is just one of them – the test will be to see if humans need it back. Furr, for his part, expects the handshake to endure. ‘It’s just kind of too important a ritual in our culture,’ he adds.

(Source: ndtv.com, dated 16th June, 2021)

III. World news

18 Taxing Amazon is like squeezing rice pudding

Around 100 years ago, the UK fumed as the wealthy Vestey brothers shifted their family business to Argentina to escape the long arm of London tax collectors. As the multinational used ever-more-elaborate schemes to shuffle profits, including creating a trust in Paris, the authorities likened attempts to tax the Vesteys to ‘trying to squeeze a rice pudding.’ The relevant loophole, which outraged the public, wasn’t closed until the 1990s.

Today’s rice-pudding squeezers have a new breed of multinationals in sight: Tech companies such as Amazon.com Inc. and Facebook Inc. that sell their services to consumers around the world yet pay little or nothing in tax.

Part of the problem is a global system rife with low-tax jurisdictions and smart advisers helping firms to devise ingenious Vestey-esque ways to pay as little as possible. But it’s also about the system’s failure to adapt to the digital age.

Corporate tax rules requiring a physical presence make it harder to tax businesses in the virtual world. The European Union recently estimated a 14-percentage-point gap in the tax rate between digital companies and bricks-and-mortar rivals.

Hence why, from a historical perspective, the G7 tax deal struck recently is such a big deal. Its minimum effective tax rate of 15% puts tax havens on notice. And its accompanying measure promises to tax the biggest multinationals above a certain threshold and reallocate the proceeds fairly around the world. This would supersede existing rules and allow countries a crack at collecting tax where they couldn’t before.

It’s taken decades of pressure, a financial crisis and a pandemic to get to a point where globalisation means tax convergence and not competition. Big countries found it relatively easy to ignore low-tax rivals when profits were on the up, but they now have little time for a race to the bottom on tax rates with climate change, inequality and pandemic management calling for more investment.

The playing field needs levelling: A country like Ireland (headline rate 12.5%) would stand to lose around two billion euros ($2.4 billion) in tax revenue, while France (headline rate 26.5%) would gain around five billion euros, according to national estimates.

As the G7 shops its initiative farther afield, not everyone is going to be happy. Ireland has made clear it intends to defend its way of doing things. Successive Irish governments have backed corporate tax as one of the few areas where Ireland can compete globally. U2 singer Bono has crooned that it gave his homeland ‘the only prosperity it’s ever known.’

Yet there’s real political momentum here and palpable public outrage. It’s one thing to build a national identity around a 12.5% tax rate. But last week, The Guardian reported that an Irish subsidiary of Microsoft Corp. paid zero corporation tax thanks to its residency in Bermuda. In 2014, Apple Inc. was estimated by the European Union to have paid a 0.005% tax rate. This is increasingly about corporate, not national, sovereignty.

The real risk is of future loopholes to come. Enforcement and tax collection will be a big part of making this deal stick: Listen hard and you can almost hear the cogs of wonkish brains whirring to spot new gaps in a system that’s already insanely complex. Simplification and clarity are both needed to avoid the global tax system collapsing under its own weight.

Still, getting to this stage is a victory in itself. No doubt the spirit of the Vesteys will live on, and new creative ways to dodge taxes will be found – but if the current revamp lasts another 100 years, it will be worth it.

(Source: bloomberg.com, dated 7th June, 2021)

STATISTICALLY SPEAKING