EIRC Newsletter | April 2012

Volume 38 | Issue No. 3

Chairman Writes "

My dear Professional colleagues, It was indeed a great way to trigger the new financial year. Concerns were raised from some quarters as to the viability of holding a seminar on 1st April. Be as it may, Sunday, 1st April, 2012, witnessed a full house of delegates for the Bank Audit seminar at the EIRC premises. The deliberations by the galaxy of speakers followed by the interaction proved to have resolved many significant queries. By the time this issue reaches, all my esteemed members must have completed the herculean task of Bank Branch Audit. I am quite sure that irrespective of the pressures of completing the audit in short time, our fraternity has discharged its duties to the nation with the due diligence the assignment demands. It was precisely for this reason that no CPE seminars were scheduled in the early part of April 2012. Before dwelling further, I feel my esteemed members must know the reason contributing to the deferment of dates for the felicitation of our Honble President CA Jaydeep N Shah and Honble Vice President CA Subodh Kr. Agrawal form April 24, 2012 (as was communicated to you within the last Newsletter) to May 9, 2012. Due to sudden unavoidable and urgent developments, both the Honble President and the Vice President would have had to reschedule their return earlier than expected on 24th April, 2012 and the date had to be changed. I tried to send SMS to all of you, however, the SMS could reach only a handful of members in as much as at some point of time the members who did not receive SMS had registered their cell numbers in DND (Do not disturb) category. To facilitate receipt of messages from EIRC I would request all my esteemed members to take one further step detailed below :arranged in the past to familiarise and encourage our fraternity to look at this avenue of professional opportunity. Apropos of the same you are all requested to attend the full day workshop which will not only answer your queries on the Entry tax issue, but also guide you through on Recent changes in West Bengal VAT Laws and in the second half Mock Board proceedings being chaired by President of the West Bengal Appellate and Revisional Board, Govt. Of West Bengal and the department being represented by currently functioning Departmental representatives should set a perfect Saturday. Seminars on other subjects and Direct Taxes including TDS have also been scheduled on different dates in May 2012. Please refer to Page 4 for details. I would also appeal to you to register for and attend the 2nd ICAI All Region Conference, 2012 being held at Baroda on 8th and 9th June, 2012. Details have been given in the website and Page 11 of this Newsletter We all are aware of the significance of meaningful, effective communication. Towards this, the Newsletter is an important means. Information is also available in the Website at www.eircicai.org. To ensure that all the members have their respective contact details and E-mail IDs updated, may I request you all to please take the trouble to ensure forwarding of your latest data alongwith your annual membership renewal form. You can also update the same with the Regional office/Member Section by E-mail or by written letters, about these details. I know this is an onerous task but this would facilitate and help me to reach you with ease and ensure close coordination amongst all of us. To iterate, let us make the felicitation of our torch bearers, the Honble President & Vice President, ICAI on Wednesday, 9th May 2012 a memorable one by your attendance therein. Recently we did have the privilege of having the august presence of our President and Vice President, ICAI on 21st April 2012 during the Social and Cultural Function of the Employees Association and an array of various talents were showcased by the employees of Kolkata Office. I would request your attendance in the forthcoming Rabindra Nazrul Sandhya planned on 18th May 2012 and thus aptly celebrating the 151st Birth Centenary of Kabiguru, Rabindranath Tagore. Plan is also in progress to mark the closing ceremony of Diamond Jubilee Year of the EIRC. To the students I would just add that positive attitude, enthusiasm, hard work and self-confidence are the keys for your success in the examinations. Nothing great was ever achieved without enthusiasm and there is no substitute for hard work. Regular study, Review and Repetition are the three Rs for success in examination. My best wishes are always with you. Before I conclude I take this opportunity to request you all to share your thoughts, expertise and areas in which you specialise including the areas of concern. Members in industry could share their experience of the issues concerning that industry and also the opportunity for members. My dream is to bring all members closer. The collective force of our members and students can continue to play a decisive role in nation building With best wishes and warm regards Yours sincerely

Is any of my CA friend not receiving SMS or Mobile Alerts? SMS start caeirc to 9290332233 from your Cellular phone where you intend to receive alerts.
The above would ensure while you receive sms (messages) from EIRC unhindered, your DND (Do not disturb) facility in so far as other message senders whom you want to avoid, remains valid and in operation. It was a pleasure to meet and interact with many of you at the CPE Seminar on Critical Aspects of E-filing and TDS Returns organised on 11th April 2012, Revised Schedule VI on 17th April 2012 and ERP Value Enhancer by experts from Tally on 20th April 2012. With the current budget totally changing the concept of Service Tax, I am sure to meet a full house again at the full day Workshop on Service Tax scheduled for 28th April 2012 in the EIRC premises. We are all aware that Revised Schedule VI has now become an integral part of our daily lives and with that in mind steps have been taken to have a full day workshop at The Park Hotel on Saturday 12th May, 2012 on Corporate Laws, LLP and Revised Schedule VI. Eminent speakers alongwith Dr. Navrang Saini, Regional Director and Mr. D. Bandopadhyay, Registrar of Companies, West Bengal should address a lot of your queries and offer appropriate guidance. There was a demand for holding a workshop on VAT with the introduction of Entry Tax and the same has been arranged for Saturday 19th May, 2012. My own belief is that in terms of numbers, many of us have shied away from the Indirect Tax Arena for far too long. Mock Board proceedings had been

CA. Prasun Kr. Bhattacharyya

Chairman, EIRC

Rabindra Nazrul Sandhya

Friday 18th May 2012 EIRC Auditorium From 6 pm onwards

EIRC Newsletter | April 2012

Volume 38 | Issue No. 3

Forthcoming Programme

NEXT FIVE WEEKS . . . . .

Day and Date Thursday 3rd May, 2012 Thursday 10th May, 2012 Thursday 10th May, 2012 Saturday 12th May, 2012 Wednesday 16th May, 2012 Saturday 19th May, 2012 Programme Transfer Pricing GAAR & Other international Tax matters Speakers Coordinator Venue Duration CPE Delegate Hours Fees ` 3 150 CA Milan Chakravarti CA Sushil Kr Goyal CA Himanshu Patel R.Singhi Hall, 5.15 to EIRC Premises 8.30 pm R.Singhi Hall, 11.00am EIRC Premises to 1.00pm R.Singhi Hall, 5.15 to EIRC Premises 8.30 pm Park Hotel, Kolkata 10.00pm to 5.00pm

Teleconference on CA Chandrashekhar EIRC Taxation Issues in Gokhale Development Agreements Hyderabad NBFC Audit Mr R.B.Kumar, AGM, RBI CA Manoj Banthia CA Pramod Dayal Rungta

100

150

Corporate laws LLP & XBRL ERP Recent Ammendments in VAT Laws, Introduction of Entry Tax & Mock Board Proceedings TDS and Related Issues

Eminent Speakers EIRC Details in page No.19 Speakers from Oracle Eminent Speakers Details in page No.20 CA Subhash Ch Saraf EIRC

6 3 6

1200 150 600

R.Singhi Hall, 5.15 to EIRC Premises 8.30 pm R.Singhi Hall, 10.00pm EIRC Premises to 5.00pm

Tuesday 22ND May, 2012

CA Barun Ghosh CA Sanjay Bajoria

CA Ranjeet Kr Agarwal

R.Singhi Hall, 5.15 to EIRC Premises 8.30 pm R.Singhi Hall 11.00am EIRC Premises to 1.00pm .

3 2

150 100

Wednesday Teleconference on 23rd May, 2012 Valuation of Internal Control Framework & Internal Audit in emerging Scenario Friday, 25 May, 2012
th

CA Rajkumar Adukia EIRC Central Council Member, ICAI

Cyber crime & Cyber laws Real Estate Issues

CA Aveek Gupta CA Arif Ahmed Eminent Speakers

CA Krishanu Bhattacharyya CA Sushil Kr Goyal

R.Singhi Hall 5.15 to EIRC Premises 8.30 pm R.Singhi Hall 5.15 to EIRC Premises 8.30 pm

3 3

150 150

Friday, 1st June, 2012

MOST SIGNIFICANT EVENT

Date Wednesday 9th May 2012 Event Felicitation of Honble President & Vice President, ICAI Contributory Dinner with President & Vice President, ICAI Time Venue 5.30pm - 7.45 pm R. Singhi Hall, EIRC Premises 8.00 pm onwards Park Hotel (Rs. 800/-)

SIGNIFICANT EVENT
Date Friday, 18th May, 2012 Event Rabindra Nazrul Sandhya Time 6.00 pm onwards Venue R. Singhi Hall EIRC Premises

BLOCK YOUR DATES

Date Friday, 24 August, 2012 & Saturday, 25th August, 2012
th

Event 37th Regional Conference EIRC at Science City, Kolkata

EIRC Newsletter | April 2012

Volume 38 | Issue No. 3

For Private Circulation Only Vol. 38 | Issue No. 3 | 27th April 2012

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EIRC of ICAI

The EIRC Newsletter seeks to 3 4 enhance the proficiency and competitive advantage of its readers by providing articles

Chairman Writes Forthcoming Programme for Members

EICASA

from amongst its Members and

Chairman, EICASA Writes

Student Forthcoming Programmes

6 6

other professionals. However the views expressed are the

News

personal view of the author

Study Circle News Library News Obituary

9 13 13

and not that of the EIRC. Many contemporary and relevant issues have been covered in this edition of the newsletter.

Announcement

Invitation to become Evaluators Work Disposal Position Seminar on Corporate Laws Seminar on Recent Ammendments

8 9 19 20 The Institute of Chartered Accountants of India

7, Anandilal Poddar Sarani (Russell Street), Kolkata - 700 071

Articles

Recent Unreported Judgements Of Kolkata Tribunal Re-Entry Of Entry Tax In West Benga Companies Bill 2011 - critical proposals Highlights of Monetary Policy 2012-13

8 10-11 12-13
z

Phone : (033) 39893989 Fax : (033) 22272317 Website : www.eircicai.org

Branches Asansol Cuttack Guwahati Sambalpur
z z z z

Bhubaneswar Durgapur Rourkela Siliguri

14-16

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Newsletter can be downloaded from the EIRC website : www.eircicai.org

EIRC Newsletter | April 2012

Volume 38 | Issue No. 3

EICASA
Dear Students, We started the last month with a very positive note.From 1st April,2012 we started effective online registration for GMCS,Orientation and ITT Course through eircicai.org. The following significant activities took place in last month: 1.4 (four) Batches of Orientation Course completed wherein 151 Students participated. 2.2 (two) Batches of ITT completed wherein 82 Students passed out the course. 3.A Full One Day Seminar was organised on 29th March,2012 on Corporate Laws and Costing wherein 70 students participated. 4.Campus placement was successfully completed.Though very few company turned up and very few Qualified CAs were recruited. We are,now ready with a very details programmes to be taken up in the month of May, 2012: 1.A series of Students Seminar on importance of Articleship Training and various issues faced while auditing has been planned to be conducted by Senior Partners of reputed firm from Kolkata,the details are given below in this page itself. 2.On 27th May, 2012 a Mega Sports Festival has been organised at Silver Spring Club,Kolkata. 3. We are in the process of starting Tuition Classes for Final Students at Institute Premises.The details regarding date,time,fees and feculty will be known in due course. 4.On 14th and 15th July,2012 a National Convention for Students has been planned wherein eminent speakers across India will guide the students.A Special session of Akash Gautam,a renowned motivator and prolofic speaker from Chandigarh has been planned in this convention.Please book your diary for the event. We do guide and help the students in getting suitable firm for registering in articleship.If any student has any issues in doing articleship,do contact me for resolving the issues. We are also committed to serve the students in the best possible manner.If the students are not getting the desired services,please bring to our notice,we will resolve their issues amicably. And I wish all the Students of PCC/IPCC/Final best of luck for the ensuing Exams! and please leave the fear fobia behind while preparing for exams. The greatest mistake you can make in life is to be continually fearing you will make a mistake." - Elbert Hubbard Regularly visit Institute website www.icai.org & EIRC website www.eircicai.org for updated information. Yours Truly,

CA Ranjeet Kumar Agarwal Chairman,EICASA & Vice-Chairman,EIRC 9830140211/ ranjeet.airan@gmail.com

FORTHCOMING PROGRAMME FOR STUDENTS

Day and Date Friday,11th May,2012 Thursday,24th May,2012 Thursday,7th June,2012 Programme Practical Aspects in drafting Balance Sheet in Revised Sch VI Audit Questionnaire- A Guide to conducting Statutory Audit Important Aspects in Statutory Audit (Incld CARO, Rev Sch VI, Applicable Auditing Standard) Speakers CA Debasish Mitra, Coordinator EICASA Venue Duration Delegate Fees

R Singhi 02.30 pm 50/Hall to 4.30 pm R Singhi 02.30 pm 50/Hall to 4.30 pm R Singhi 02.30 pm 50/Hall to 4.30 pm

CA Divya Mohta, Partner, SDPA & Associates. CA Sudersan Mukherjee, Partner, Mookherjee Biswas & Pathak

EICASA

EICASA

EIRC Newsletter | April 2012

Volume 38 | Issue No. 3

ANNOUNCEMENT
Invitation to become Evaluators for Chartered Accountants Examinations
Examination Department of the Institute would like to avail the services of the members of the Institute (upto 15 years of Experience) to act as Checker, other details are as under: The Examination Department of the Institute avails the services of resource persons (members of the Institute, academicians, executives, etc.) to act as Examiners to evaluate the answer books of Chartered Accountants Examinations (Final/IPCE/PCE). Each examiner is required to appoint a person as his checker to inter-alia perform the following functions besides assisting him in the preparation of Award List. The services of the checkers are required at individual examiner level to check the following: 1. To ensure that the marks awarded to the sub parts of a question entered in the marks grid on the cover page of the answer book has been totaled correctly. To ensure that the total marks written in numerals in the marks grid on the cover page of the answer book tallies with what is written in words therein below. To ensure that total marks in the grid is carried forward correctly in numerals in the OMR portion on the right hand bottom corner of the cover page of the answer book. To ensure that the darkening of the corresponding OMR circles on the cover page is done as per the numerals written in the box there above. To ensure that the total marks on the cover page of the answer book is carried forward correctly in the award list against the respective code number. To ensure that the totals of the marks entered in each column of the award list is correct. To ensure that the grand total of each award list is correct To ensure that the total number of answer books is entered correctly in the relevant box in the award list. To ensure that darkening of circles in the award list is in accordance with the marks written in numerals against the respective code number of the answer book. To ensure that the page wise totals of marks awarded on the award list is carried forward correctly to the summary sheet Over all scheme for members of the Institute to become Evaluators: 1. Members who would like to associate with the Examination Department to act as Checker have to fill up an online form available at http://www.icai.org/ app_forms/empanelment.html. The Examination Department will not entertain any other mode of empanelment application form. Based on the assignment given to individual examiners, reference of such examiners to whom the services of empanelled checkers are required would be provided to the empanelled checkers in due course. Though the empanelment is open to members having upto 15 years of experience, first preference will be given to members having upto 5 years of post membership experience. Similarly second preference will be given to members with upto 10 years of post membership experience and so on. The empanelled checkers have to visit the examiners at their residence or official address for providing the services as aforesaid. A token honorarium of Rs. 25 per full paper or Rs. 15 per half paper would be paid to the checkers. It is anticipated that the no. of visit of checker to the examiners office/residence would be maximum 3 to complete the assignment for which a conveyance expenditure reimbursement of Rs. 1000 for A class cities or 500 Rs. for B class cities (per occasion) will be paid. Additional visits by the checkers to examiners, if found necessary may, also be eligible for reimbursement of the conveyance expenditure subject to necessary approvals. Examination Department ICAI

2.

3.

2.

4.

3.

5. 6.

4.

5.

6. 7. 8. 9.

CLASSIFIED
Looking for Partners to start practice. Work experience in Lovelock, IFCI and in Industry for 35 years. CA Narayandas Adhya(M-50175)
Mobile: 9007061818. E-mail: anarayandas@gmail.com. Address - 14,Gobinda Dhar Lane, near Burra Bazar PS. Kokata - 700001

10.

11. To ensure that totaling of marks of all the candidates carried forward to the Summary Sheet is correct. 12. To ensure that darkening of OMR circles is done completely in Cover page of the answer books as well as OMR Award List.

EIRC Newsletter | April 2012

Volume 38 | Issue No. 3

RECENT UNREPORTED JUDGEMENTS OF KOLKATA TRIBUNAL

By CA Sunil Surana, FCA, DISA(I.C.A.I) Rajendra Prasad Jayaswal Vs. ITO, A- Bench, ITA No. 1275/Kol/2011 Unreconciled difference of sundry debtors cannot be taken as income. It was held that where sundry debtors amounting to Rs.6,06,102/- were overstated, it cannot be added back as income of the assessee, which is against the principle of accounting policy. Further, it is explained by the ld. Counsel for the assessee that this amount has been taken into account in computing the income of the assessee of previous year. During the process the assessee has taken steps to write off the debtors in subsequent years. Therefore, this addition is not warranted as it is the difference arose on overstatement of sundry debtors. It cannot be taken as income of the assessee. This difference was made out of difference in opening balance as rightly contended . Hence, it cannot be treated as income on the account of difference in balance. M/s. Meenakshi Tea Co. Ltd. Vs. DCIT, A- Bench, ITA No. 953/Kol/2011 Assessee has to be a shareholder for deemed dividend to be taxed. It was held that where in respect to loan received from X. Ltd. of Rs.46 lacs, Assessing Officer noted that M/s. Y another concern was a common shareholder in both the aforesaid companies It is a fact that the assessee has taken loan from X but it was not a shareholder in that company only Y was a common shareholder in both the companies. Relying on the decision of ITAT E Special Bench, Mumbai in the case of ACIT Vs. Bhaumik Colour Pvt. Ltd. dated 19.11.2008 118 ITD it was held that the payment should be made to a company in which lender holds 10% voting right and X does not hold 10% share in assessee company. Another finding was argued that the loans taken are commercial borrowings and assessees business is that of giving loans and investments and same is the case with two lender companies. It was held that the assessee company has paid interest on loans taken and details of interest paid to both the lenders are reflected in interest payment details enclosed in assessees paper book. It is a pure business transaction between the two companies, who are engaged in the business of loans and investments and when interest is paid there cannot be any question of any benefit derived on account of deemed dividend u/s. 2(22)(e) of the Act. ACIT v M/s. S.P Jaiswal Estate Pvt.Ltd, B- Bench, ITA No. 58/Kol/2010 Compensation for delayed payment of statutory liability is not penal and is allowable It was held that unless there is a material to show that payment is a penalty for infraction of law and rules, it cannot be disallowed as it is only compensatory payment for the delayed payment of statutory liability. Once it is explained that it is a compensatory, the decision of the Honble Supreme Court in the case of Malwa Vanaspati & Chemicals Co. Ltd reported in 224 ITR 383 (SC), the impugned order of the learned Commissioner of Income-tax (Appeals) was held to be quite justified. DCIT v Smt Gargi Poddar, B- Bench, ITA No. 1345/Kol/ 2010 Employees contribution to PF & ESI paid after due date but before the due date of filing the return of income is allowable. It was held that the decisions of the Honble Supreme Court in the case of Vinay Cement Ltd reported in (2007) 213 CTR 268 (SC) and in the case of CIT Vs. Alom Extrusions Ltd (2009) 319 ITR 306(SC) are directly applicable on the assessees case.. Respectfully following the same, it was also held to be allowable as it was borne out from the records that such contributions to the government account on ESI/ PF were paid by the assessee before the due date of filing of return u/s. 139(1) of the Act. Ashok Kumar Singhania v DCIT, B- Bench, ITA No. 1956/ Kol/2009 Seized cash would be treated as Advance Tax for the purpose of computation of interest and if not done is a mistake apparent from record to be rectified u/s 154 of the Act. It was held that where cash amounting to Rs.4.5 lacs was found and seized during search in the premise of the assessee u/s. 132 of the Act by the revenue and the assessee vide his computation, while filing return of income, has claimed the adjustment of seized cash against the computed liability as computed by him, but the adjustment was made by the AO not during assessment proceedings but only while passing rectification order u/s. 154 of the Act and in this process raised interest demand u/s. 234B of the Act, seized cash would be treated as advance tax for the purpose of computation of interest, and, therefore, no interest under sections 234A to 234C land 220(2) was leviable. The tribunal relied on the Coordinate Bench Tribunals decision on this very issue in the case of Vipul D. Doshi V. ACITl, ITA No.5754(Mum) of 1998 dated 23.10.2000 reported in (2001) 118 Taxman 30 (Mag), In the case of Shri Satpaul D. Agarwal, HUF V. ACIT, ITA No.5232/Bom/91, it cannot be said that the assessee had defaulted in payment of taxes when the amount had been retained by the Revenue Department. In the case of CIT V. Seshasayee Paper & Board Ltd. (2005) 272 ITR 364, wherein it has been held that paid does not necessarily imply that the amount should have been paid only by cash or cheque on the date it is regarded as having been paid. Payment can also be by way of adjustment from an amount which is already available with the Department against the liability as determined in the order of assessment.

EIRC Newsletter | April 2012

Volume 38 | Issue No. 3

STUDY CIRCLES PROGRAMMES IN RETROSPECT EIRC

ACAE CHARTERED ACCOUNTANTS STUDY CIRCLE - EIRC The Study Circle organised a Seminar on Union Budget / Finance Bill 2012 on 17th March 2012 from 4pm at Vidya Mandir The Study Circle organised a Seminar on Audit of Banks on 24th March 2012 from 3pm at Emami Conference Hall The Study Circle organised a Seminar on Survey under the Income Tax Act Important issues on 27th April 2012 at Emami Conference Hall. The speakers were Mr. S Bandyopadhyay and Mr. N P Jain DTPA CHARTERED ACCOUNTANTS STUDY CIRCLE - EIRC The Study Circle organised a Seminar on Union Budget / Finance Bill 2012 on 17th March 2012 from 3.30pm at Vidya Mandir The Study Circle organised a Seminar on Issues in Bank Audit on 24th March 2012 at Rotary Sadan NAGAON CHARTERED ACCOUNTANTS STUDY GROUP - EIRC The Study Group participated in a Teleconference on Finance Bill on 20th March 2012 The Study Group participated in a Teleconference on Revised Schedule VI on 11th April 2012 SHILLONG CHARTERED ACCOUNTANTS STUDY GROUP - EIRC The Study Group participated in a Teleconference on Companies Bill 2011 as introduced in Lok Sabha on 10th January 2012 The Study Group participated in a Teleconference on Bank Audit on 7th March 2012 The Study Group participated in a Teleconference on Finance Bill 2012 on 20th March 2012 The Study Group participated in a Teleconference on Revised Schedule VI on 11th April 2012 The Study Group participated in a Teleconference on Principles of International Tax on 17th April 2012 UTTARPARA CHARTERED ACCOUNTANTS STUDY CIRCLE - EIRC The Study Circle organised a Seminar on Union Budget 2012 on 18th March 2012 HOWRAH CHARTERED ACCOUNTANTS STUDY CIRCLE - EIRC The Study Circle organised a Seminar on 24th March 2012 VIP ROAD CHARTERED ACCOUNTANTS STUDY CICLE - EIRC The Study Circle organised a Seminar on Bank Audit on 11th March 2012 The Study Circle organised a Seminar on Union Budget / Finance Bill 2012 on 17th March 2012 from 3.30pm at Vidya Mandir The Study Circle organised a Seminar on Search & Seizure on 24th March 2012 VIEWS EXCHANGE CHARTERED ACCOUNTANTS STUDY CIRCLE EIRC The Study Circle organised a Seminar on Bank Audit on 31st March 2012. The speaker was CA. Ranjeet Kumar Agarwal

WORK DISPOSAL DISPOSITION

MEMBERS SECTION The position of disposal of various matters relating to members and students of EIRC as on 24/04/12 PARTICULARS Proprietary Firm Registration Partnership Firm Registration Constitution/ Reconstitution Grant of Certificate of Practice Fellow Admission Change of Address New Enrollment Restoration Permission of other Engagement ARTICLES SECTION The position of action taken on various matters relating to members and students of EIRC as on 23/04/2012 PARTICULARS Industrial training Registration Re-registration Termination Completion DATE 09/04/2012 20/03/2012 20/03/2012 15/03/2012 DATE 16/04/2012 16/04/2012 10/04/2012 10/04/2012 10/04/2012 16/04/2012 06/03/2012 16/04/2012 16/04/2012 Permission to Study Supplementary Registration Change of Address BOARD OF STUDIES SECTION The position of action taken on various matters relating to members and students of EIRC as on 25/04/2012 CPT Registration IPCC Registration Final Registraion 16-04-2012 16-04-2012 29-02-2012 BY HAND Issuance of Study Materials - CPT 24-04-2012 Issuance of Study Materials - IPCC 24-04-2012 Issuance of Study Materials - Final 24-04-2012 GMCS Certificate Issuance Upto Date Orientation Certificate Issuance Upto Date ITT Certificate Issuance Upto Date Change of Name/Address Upto Date BY POST 24-04-2012 24-04-2012 13-04-2012 12/04/2012 09/04/2012 19/04/2012

EIRC Newsletter | April 2012

Volume 38 | Issue No. 3

RE-ENTRY OF ENTRY TAX IN WEST BENGAL

CS Timir Baran Chatterjee After nearly two decades, the West Bengal Government has re- introduced entry tax, on goods. The West Bengal Tax on Entry of Goods into Local Areas Act, 2012 (Act) has been passed effective from 1st April, 2012. According to this new tax legislation , the tax will be levied on movement of specified goods entering into local area from other States for consumption, sale or use. However, goods purchased locally under tax invoice (i.e. intra state sales) would not be subject to payment of entry tax. Under the legislation, local area includes Corporation, Municipalities, Gram Panchayats etc and tax rate is @ 1% of the invoice value. Virtually, entire West Bengal will be considered as local area. However, the tax so paid, will not be allowed as credit and hence it is a cost to the organization. Other salient features of the Act are as under: (1) Utilization of the Tax proceeds: Basic purpose of introduction of the new Tax legislation is to set up a Fund to be called the West Bengal Compensatory Entry Tax Fund. The proceeds of the levy under the Act, net of the cost of collection and incidental expense, shall be utilized exclusively for the development or facilitating the trade, commerce and industry in the State like, construction, development and maintenance of roads and bridges for linking the market and industrial areas, construction of transport hubs, cold storage etc. (2) Inter state purchases : All inter state purchases (specified goods) entering into the local area including imports for consumption , use or sale will be subject to payment of tax . (3) Tax to pay only on Specified Goods: Only specified goods are subject to payment of entry tax provided the rate of tax has been prescribed by the Government. Specified goods liable to entry tax are : (a) Goods referred to in Schedule C of the West Bengal Value Added Tax Act, 2003 excluding the following: (a) All Agricultural implements; (b) Tractors, threshers, harvesters; (c) Chemical fertilizers including basic slag, pesticides, weedicides, insecticides, germicides, fungicides and herbicides, other than bleaching powder; (d) Tea; (e) Groundnut or peanut seed, rapeseed and mustard seed; (f) Bamboo including split bamboo, kite sticks and cut bamboo, and cane (b) Goods referred to in Schedule CA and Schedule D of the West Bengal Value Added Tax Act, 2003 Goods Specified in Schedule IV and in schedule VIII of the West Bengal Sales Tax Act, 1994 . ( Items under Schedule IV have not been notified ; hence not within the tax net for the time being) (4) No tax on exempted Goods: There will be no entry tax on goods specified as Exempted Goods (Schedule A) under the VAT Act. Thus, no entry tax on goods like : (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) (xviii) (xix) (xx) (xxi) (xxii) (xxiii) (xxiv) (xxv) (xxvi) (xxvii) (xxviii) (xxix) (xxx) (xxxi) Agricultural implements; Bio-fertilisers and micronutrients; Paddy Rice; Wheat; Flour (including atta, maida, suji, besan and sattu) Pulses; Sugar; Salt Textile fabrics; Vegetables; Fruits; Egg; Meat; Fish; Prawns; Livestock; Bread; Fishnet, fishnet fabrics and fish net hook; Seeds of fish, prawn and shrimp; LPG for domestic use; Kerosene oil; Poultry feed; Cattle feed; Aquatic feed; Raw jute; Hay; Books, periodicals and journals; Bed sheets, pillow covers, towels, handkerchief, blankets, mat, etc. Newspaper; Oil cake;

(5) Tax on Invoice Value: Tax will be paid on the turnover value of imports.Turnover of import means the aggregate of the import value of specified goods which the dealer brings or receives in any local area for the purpose of consumption, use or sale therein. It is the import value of a consignment of specified goods brought or received in any local area for consumption, use or sale. To compute the import value, the Invoice value or similar document to be

EIRC Newsletter | April 2012

10 Volume 38 | Issue No. 3

considered. In case of stock transfer, the stock transfer invoice value to be considered. (6) Tax if goods are brought into local area for consumption, sale or use: No tax if there is no consumption, sale or use. Purpose of the entry i.e. consumption, use or sale is very important. In case the materials are brought to the local area in West Bengal simply for storing and thereafter it is transferred to other units of the same company or other organization outside the state of West Bengal in the same form , no tax under the act is applicable. (7) No payment at Checkpost: There will be no collection of any tax at any checkpost. The tax to be paid periodically like tax under VAT etc. Hence, there is no question of detention of consignment at the check post point. The earlier system of payment of entry tax/octroi at the Checkpost is not applicable under this new system. (8) Assessment: There will be no assessment process excepting in the following events where : (a) No return is furnished by a registered dealer under section 9(1) ;or

(b) the return furnished by a registered dealer appears to the Commissioner to be incorrect or incomplete ;or a claim for refund has been made by a registered dealer; or (d) the Commissioner is satisfied that an assessment is required to be made for any other purpose under the Act. (9) Registration : The existing dealer registered under the WB Vat Act or Sales Tax Act importing goods through Way Bill will be deemed to be a dealer registered under this new Act upon submitting an one page application. There is no need to make any separate application for registration. In the absence of any specific declaration by the dealer, it will be presumed that goods entering into local area are for consumption, use or sale. Conclusion Since West Bengal is a deficient state in terms of raw materials availability and it mostly depends on inter state imports to meet the industrys input requirements, the above tax will certainly increase the cost of production to some extent.

2nd ICAI ALL REGION CONFERENCE, 2012

Organized by :

Western, Southern, Eastern, Central & Northern India Regional Councils of The Institute of Chartered Accountants of India
Hosted By:

Baroda & Nagpur Branches of WIRC of ICAI

Date: Friday 8th June & Saturday 9th June, 2012 Venue : Sir Sayaji Rao Nagar Gruh, Akota, Baroda, Gujrat

12 CPE Hrs
Conference Chairman :
CA. Durgesh Kabra, Chairman - WIRC of ICAI 09869015418, 09323575801

Conveners of Regional Registration Committee :

CA. Anil Bhandari, Secretary, WIRC of ICAI,09821037605 CA. P .V. Rajarajeswaran, Secretary, SIRC of ICAI, 09843036311 CA. Subhash Chandra Saraf, Secretary, EIRC of ICAI,09831087579 CA. Ankush P. Golechha, Secretary, CIRC of ICAI, 09826123598 CA. Pramodkumar Maheshwari, Secretary, NIRC of ICAI, 09810017953 CA. Nayan Kothari , Secretary, Baroda Branch of WIRC of ICAI, 09824433445 CA. Ashwini Agrawal, Secretary, Nagpur Branch of WIRC of ICAI, 09823162968

Conference Co-Chairmen : CA. Prasun Kumar Bhattacharya, Chairman

EIRC of ICAI, 09830056571

CA. K. Vishwanath, Chairman - SIRC of ICAI,

09945525595 CA. Mukesh Singh Kushwah, Chairman - CIRC of ICAI, 09810470274, 09310470274 CA. Durga Das Agrawal, Chairman - NIRC of ICAI, 09811075092

FEES

NOTES: Members 2400 up to (21.05.2012) Per person (1) Fees are inclusive of course material, breakfast, lunch on June 8 & 9, 2012 2800 thereafter & Mega Cultural evening followed by dinner on June 8, 2012. For outstation (Non-Residential) Delegates,accommodation is available on payments basis. Delegates are Non-Members 3200 requested to inform & register in advance. Hotel details are given in the registration form. (2) Registration Fees, Cheque / DD to be drawn in favour of Baroda Branch of WIRC of ICAI, payable at Baroda. Delegates can also make online E-Payment on www.barodaicai.org (delegates making online payment have to submit their details via e-mail/post on given address of Baroda Branch of WIRC of ICAI) (3) Registration is strictly on first come first serve basis, send your registration in advance to avoid last minute rush as seats are limited. (4) Delegates interested to participate in the cultural evening are requested to register with CA. Viral Shah, Convener - Program Committee up to May 31, 2012, Mob.: +91 98243 62211. (5) For Sight Seeing (A) Local Sight Seeing by Vadoda Municipal Seva Sadan - Half Day Tour Rs. 300 per person. (B) Visit to Akshardham Temple, Gandhinagar - Full Day tour Rs. 1000 per person, minimum 20 participants. Timings : 7 am to 7 pm. Contact : CA. Arpan Dodia (M) 98983 83530 For Further details please visit: www.eircicai.org, baroda@icai.org, or abhishek.nagori@jlnus.com

EIRC Newsletter | April 2012

11 Volume 38 | Issue No. 3

Companies Bill 2011 - critical proposals

By CA Arijit Chakraborty The aftermath of the Satyam debacle saw the spate of regulatory investigations culminating in the Yashwant Sinha Committee which took up the onerous task of modifying the 55 years old Companies Act 1956. The Ministry of Corporate Affairs introduced the much awaited Companies Bill 2011in the Lokh Sabha and the same is expected to be enacted in the current fiscal. The promulgation of the new Act is a step towards globalization and is a successful attempt to meet the changing environment . In many ways , it is progressive and futuristic duly envisaging the technological and legal developments that have taken place in the last few decades. The new law promises investor democracy and addresses the public concern over corporate accountability and responsibility also introducing some industry friendly provisions. Some of the major provisions of the Bill are discussed below: The Bill prescribes 33 new definitions. Some of the major new definitions introduced are o o o o o o o o o
z

Measures to address corporate frauds and corruption: The biggest challenge is to tackle corporate corruption and frauds without hurting the Indian enterprise. This can be ensured only if there is a level-playing field in almost all business sectors. This can be achieved by enshrining in the law ( similar to Sarbanes Oxley Act of 2002) a prohibition against corrupt practices as they exist in developed countries and providing stringent punishment for violation. In addition to a statute-backed Serious Fraud Investigation Office (SFIO), the SFIO should also be empowered to investigate into serious corrupt practices by companies on a fast track basis and prosecute effectively. In the investigation by SFIO, professionals such as forensic auditors / accountants and corporate lawyers should be involved. The powers of SFIO has been enhanced in the Bill. National Financial Reporting Authority ( NFRA) to be created to monitor and oversee accounting & auditing issues, professional misconduct by auditors & firms ( this is uncalled for as ICAI has always been playing its regulatory role & discharging its duties effectively) Judicial system for company law: The Companies Bill, provides for National Company Law Tribunal(s) (NCLTs) and an Appellate Company Law Tribunal. While this may seem to be a pragmatic approach in the context of the docket explosion in the judiciary, given the track record of tribunals in this country, such a measure may not be desirable , unless systemic changes take place. Reinforcing the audit function: Auditor rotation - For effective corporate governance, a strong audit function is necessary. In the Indian context, to prevent corporate frauds and corruption, the importance of the audit function need not be over-emphasised. In order to bring about greater objectivity and independence to the audit function, statutory auditors should be rotated every 10 years . The auditors will be appointed for a period of 5 years in one go and can be reappointed for another 5 year period. The Bill also removes the difference between partners and firm of partners , so action against a firm of auditors can also be initiated under the Bill. However the Mandatory Rotation of Auditors every five years, subject to maximum 10 years ( 2 appointments), will pose problem, as maintaining auditors panel will be difficult) Strengthening the institution of independent directors: The clause contained in the Companies Bill, 2011, regarding the definition of an independent director, says that the independent director should not have any pecuniary interests with the company or its associates other than his entitlement for remuneration in law. The independent director should not be a relative of the promoter. The appointment of an independent director should be through a transparent process under the guidance of the remuneration and nomination committee of the board of directors of the

Associate Company Small Company Employee Stock Option Promoter Related Party Turnover Chief Executive Officer Chief Financial Officer Global Depository Receipt

The Financial Year of any Company can be only from April-March and companies complying with certain conditions can have a different financial year with the approval of Tribunal. Under the Companies Act 1956, there was no restriction on the period of financial year. The maximum number of members, which a Private Company can have, is increased from 50 as provided in the Companies Act 1956 to 200. The scope of officer under default has been broadened. The share transfer agents, registrars and merchant bankers to the issue or transfer related to issue of shares & Chief Financial Officer are also brought under its ambit. Directors who aware of the default by way of participation in board meeting or receiving the minutes without objecting to the same will also be included in this category even if company has Managing Director / Whole Time Director / other Key Managerial Personnels.

EIRC Newsletter | April 2012

12 Volume 38 | Issue No. 3

company. The Bill has also brought huge responsibilities, accountability and transparency on the roles of the independent director and fixed tenure of 5 years for them, similar to auditors. The changes in provisions relating to Independent directors , 5 years term, 3 years cooling period than again 5 years ( logic of 3 years cooling period is unknown, as many things in the company will change by then, directors will need more time for induction) Corporate social responsibility (CSR): The Bill proposes spending of 2 % of net profits on CSR by eligible companies, ie above Rs 500 crore networth, Rs 1000 crore turnover or Rs 5 crores profit. While corporate social responsibility should be encouraged by law, it should not be made mandatory so as not to deprive it of its legitimacy. It is provided in the Bill that CSR initiatives of the company should be stated in the directors report of the company. (but MCA has not given clear guidelines on what is CSR initiative) OPC : The concept of One Person Company (OPC) has been introduced and the said company will be formed as a private limited company. This concept has been introduced for the first time.

Utilisation of proceeds : Company, which has raised money from public through prospectus and still has any unutilised amount out of the money so raised, shall not change its objects unless a special resolution is passed by the company and other requirements of advertisement and exit opportunity to dissenting shareholders is complied with, there was no such requirement under the Companies Act 1956 Women on Board : At least 1 woman Independent director , no stock options for independent directors ( welcome move) Auditors to comply with all auditing standards ( seems to be - too much burden as audit time and fees are mostly the same), auditors penalty proposed- 3 times fraud amount and upto 10 years imprisonment ( seems auditors have been sharply targeted , without adequate grounds) It seems that the Satyam episode has overshadowed many of the provisions of the Companies Bill 2011. There are many provisions which have good intentions but successful practical implementation will have huge challenges, specially in an emerging economy like India with its own complexities of socio-political and economic issues.

LIBRARY NEWS
Every year from April to March EIRC Library is continuously striving to update its stock according to the need of the Members and Students. While selecting the titles EIRC Library takes care even to support the Research work, Post Qualification courses, different developmental programmes of the Institute to help in conservation of knowledge and ideas. The Different Library services that EIRC provides: Members Services Air -Conditioned Reading Room with latest configured computers with Internet connectivity along with the support of well-stocked Library is available for Members. Digital Library Intranet Services z Internet Browsing z Capitaline Database provides fundamental and market data on more than 22,000 Indian listed and unlisted companies classified under 300 Industries. z IBFD online (International Tax Academy) z Direct tax Encyclopaedia package (TP Multimedia) z Service Tax Encyclopaedia package z Company Law Encyclopaedia package OPAC On line public access Catalogue, link to ICAI website to search Books & Periodicals available in EIRC Library. z ICAI publications,CDs/DVDs available ( public domain). Facility to access and borrow the resources of American Centre Library at Jawaharlal Nehru Road. Students ServicesSeparate Reading Hall at Park Circus is available for the Students.All trypes of reading material including publications,newspaper ,books &Journals are there for reference reading. Students lending facility is available at EIRC Library Suggestion for new titles ,non book materials and improvement of Library services are welcome for betterment. Library membership deposit For Members Rs.500/For Students Rs.500+10+510/Forms may be downloaded fromeircicai.org For any further information mail eirc.library@icai.in/ swati.banerjee@icai.in, Phone-033 30211103/05.
z

OBITUARY
(Members left for heavenly abode. We pray to the Almighty may their soul rest in peace.) CA Kajal Kumar Banerji (M. No. 3995) Left us on 4th February 2012 CA Subodh Kumar Hajra (M. No. 053068) Left us on 2nd April 2012

EIRC Newsletter | April 2012

13 Volume 38 | Issue No. 3

Highlights of Monetary Policy 2012-13

CA Anirban Datta Monetary policy primarily deals with the supply of money in the economy. Broadly it aims at fulfilling certain objectives or goals for the betterment of the economy and as a result instruments of monetary control, its efficacy and implementation are critical and important to the society at large. Indias monetary policy since the first plan period was one of controlled expansion- that is, a policy of adequate financing of economic growth ensuring reasonable price stability. Thus, RBI helped the economy to expand via expansion of money and credit and attempted to check rise in prices through monetary and other control measures. Monetary policy is related to the availability and cost of money supply in the economy in order to attain certain broad objectives. The Central Bank of a nation keeps control on the supply of money to attain the objectives of its monetary policy. The package of economic reforms, which are expected to have long-term impact on the economy, includes fiscal, monetary, financial, and industrial and export-import (EXIM) sector reforms. The reforms in monetary and credit policies aimed at slowing down monetary expansion and thereby controlling inflation. Economic activity generally follows a cycle increased activity in terms of output and employment, followed by decreased activity. Countercyclical policies act to promote or support growth and employment when the activity is at low ebb and vice versa. The objective is to achieve balanced and sustained economic activity over time, preventing adverse features like high inflation, and fiscal and current account deficits. Therefore, policies also follow a cycle, a tightening phase followed by an easing phase. Indian Economy at a glance z GDP growth moderated to 6.1 per cent during Q3 of 201112 from 6.9 per cent in Q2 and 8.3 per cent in the corresponding quarter of 2010-11. This was mainly due to moderation in industrial growth from 2.8 per cent in Q2 to 0.8 per cent in Q3. The services sector held up relatively well (with growth being 8.7 per cent in both Q2 and Q3 of 2011-12). Overall, GDP growth during AprilDecember 2011 slowed significantly to 6.9 per cent from 8.1 per cent in the corresponding period of the previous year. z Growth in the index of industrial production (IIP) decelerated to 3.5 per cent during 2011-12 (AprilFebruary) from 8.1 per cent in the corresponding period of the previous year. In terms of use-based classification, while capital goods and intermediate goods sectors registered negative growth of 1.8 per cent and 0.9 per cent, respectively, the growth of the consumer durables sector decelerated to 2.7 per cent. These trends suggest that activity may have expanded slower than 6.9 per cent in Q4 implied in the advance estimates of GDP. z An analysis of corporate performance during Q3 of 201112, based on a common sample of 2,352 nongovernments, non-financial companies, indicates that sales growth was relatively robust even after adjusting for inflation. However, earnings before depreciation interest and tax (EBDITA) and profit after tax (PAT) margins continued on the downward trajectory that began earlier in the year. These patterns suggest a steady decline in the pricing power, as producers found it increasingly difficult to pass on rising input costs to their customers. Liquidity conditions remained in a deficit mode throughout 2011-12. However, beginning November 2011, the liquidity deficit went beyond the comfort level of (+)/(-) one per cent of net demand and time liabilities (NDTL) of banks. Average net injection of liquidity under the daily liquidity adjustment facility (LAF) increased from around 0.5 trillion during April-September 2011 to around 1.4 trillion during February 2012 and further to 1.6 trillion during March 2012, partly reflecting a build-up in government cash balances. The currency market was under pressure during AugustDecember 2011 due to a slowdown in capital inflows reflecting global uncertainty. However, conditions eased in Q4 of 2011-12 reflecting a pick up in capital inflows as well as the impact of policy measures undertaken to improve dollar supply and contain speculation. Considering the current economic position of India, following are the key changes /guidelines proposed in the monetary policy 2012-13:

Repo rate/Reverse Repo rate and CRR Repo rate under the liquidity adjustment facility (LAF) has been reduced by 50 basis points from 8.5 per cent to 8.0 per cent while reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands adjusted to 7.0 per cent. The reduction in the repo rate is based on an assessment of growth having slowed below its post-crisis trend rate which, in turn, is contributing to a moderation in core inflation. However, it must be emphasized that the deviation of growth from its trend is modest. At the same time, upside risks to inflation persist. These considerations inherently limit the space for further reduction in policy rates. In order to provide greater liquidity cushion, it has been decided to raise the borrowing limit of scheduled commercial banks under the marginal standing facility (MSF) from 1 per cent to 2 per cent of their net demand and time liabilities (NDTL) outstanding at the end of second preceding fortnight with immediate effect. The MSF rate, determined with a spread of 100 basis points above the repo rate, stands adjusted to 9.0 per cent. While the cash reserve ratio (CRR) of scheduled banks has been retained at 4.75 per cent of their NDTL, the Bank Rate stands adjusted to 9.0 per cent as per the recent changes in the policy.

EIRC Newsletter | April 2012

14 Volume 38 | Issue No. 3

Financial Inclusion It was indicated in the Monetary Policy Statement of May 2011 that all public and private sector banks had prepared and submitted their board approved three-year financial inclusion plans (FIPs). These contained self-set targets in respect of opening of rural brick and mortar branches; deployment of business correspondents (BCs); coverage of unbanked villages with population above 2,000 as also other unbanked villages with population below 2,000 through branches/BCs/other modes; opening of no-frills accounts; kisan credit cards (KCCs) and general credit cards (GCCs) issued; and other specific products designed by them to cater to the financially excluded segments. Going forward, the focus will be more on the number and value of transactions in no-frills accounts and credit disbursed through information and communication technology (ICT) based BC outlets. For the purpose, banks have been advised that FIPs prepared by their head offices are disaggregated at respective controlling offices and further at branch levels. They were also advised to put in place a mechanism to monitor the progress at these levels periodically. In pursuance of the announcement made in the Monetary Policy Statement of April 2010, the roadmap to provide banking services in every village with a population above 2,000 was finalized by state level bankers committees (SLBCs). Under the roadmap, 74,414 villages with population above 2,000 were identified as unbanked, which were allocated to various banks, including regional rural banks (RRBs) for providing banking services by March 2012. Banks have covered 74,199 (99.7 per cent) of these unbanked villages. Now the challenge is to cover all the unbanked villages of the country. Accordingly, it is proposed to mandate SLBCs to prepare a roadmap covering all unbanked villages of population less than 2,000 and notionally allot these villages to banks for providing banking services in a timebound manner. Priority Sector Lending As indicated in the SQR of October 2011, the Reserve Bank had constituted a Committee to re-examine the existing classification and suggest revised guidelines with regard to priority sector lending classification and related issues. The Committee submitted its report in February 2012. It made the following major recommendations: (i) the existing target of the domestic scheduled commercial banks for lending to the priority sector be retained; (ii) the sector agriculture and allied activities be a composite sector within priority sector; (iii) a sub-target for small and marginal farmers within agriculture and allied activities be segregated; (iv) a subtarget for micro enterprises under the micro and small enterprises (MSE) category be stipulated; (v) the priority sector target for foreign banks be increased to 40 per cent of adjusted net bank credit (ANBC) or credit equivalent of offbalance sheet exposure (CEOBE), whichever is higher with sub-targets of 15 per cent for exports and 15 per cent for the MSE sector; (vi) non-tradable priority sector lending certificates (PSLCs) be allowed on a pilot basis; (vii) bank loans to non-bank financial intermediaries for on-lending to

specified segments be allowed to be reckoned for classification under priority sector, up to a maximum of 5 per cent of ANBC or CEOBE, whichever is higher; and (viii) the present system of report-based reporting may be improved through data-based reporting. Licensing of Co-operative Banks The Committee on Financial Sector Assessment had recommended that rural co-operative banks, which failed to obtain a license by end-March 2012, should not be allowed to operate. The Reserve Bank, along with the National Bank for Agriculture and Rural Development (NABARD) implemented a roadmap for issuing licenses to unlicensed state co-operative banks (StCBs) and district central cooperative banks (DCCBs) in a non-disruptive manner, to ensure the completion of licensing work by end-March 2012. After considering the NABARDs recommendations for issuance of licenses based on inspection/quick scrutiny, one out of 31 StCBs and 41 out of 371 DCCBs were found to be unable to meet the licensing criteria by end-March 2012. In this regard, suitable action will be initiated in due course. Urban Co-operative Banks (UCBs) At present, UCBs are permitted to assume aggregate exposure on real estate, commercial real estate and housing loans up to a maximum of 10 per cent of their total assets with an additional limit of 5 per cent of their total assets for housing loans up to 1.5 million. In order to facilitate enhanced priority sector lending, it is decided to permit UCBs to utilize the additional limit of 5 per cent of their total assets for granting housing loans up to 2.5 million, which is covered under the priority sector. Abolition of Foreclosure Charges/Prepayment Penalty in Home Loans It is felt that the removal of foreclosure charges/prepayment penalty on home loans will lead to a reduction in the discrimination between existing and new borrowers and the competition among banks will result in finer pricing of home loans with the floating rate. Though many banks have, in the recent past, voluntarily abolished the pre-payment penalties on their floating rate home loans, there is a need for ensuring uniformity across the banking system in this regard. Accordingly, it is proposed not to permit banks to levy foreclosure charges/pre-payment penalties on home loans on a floating interest rate basis. Minimal variation in Interest Rate on Deposits The Reserve Bank has stipulated, inter alia, that banks should not discriminate in the matter of interest rate paid on deposits, except in respect of fixed deposit schemes specifically meant for resident Indian senior citizens and single term deposits of 1.5 million and above. However, it is observed that there are wide variations in banks retail and bulk deposits rates, making it unfair to retail depositors. Further, banks are offering significantly different rates on deposits with very little difference in maturities. This suggests inadequate liquidity management system and inadequate pricing methodologies. It is, therefore, advised that banks should have a board approved transparent policy on pricing of liabilities and they

EIRC Newsletter | April 2012

15 Volume 38 | Issue No. 3

should also ensure that variation in interest rates on single term deposits of 1.5 million and above and other term deposits is minimal. Unique Customer Identification Code for Banks Customers in India Availability of a unique customer identification code (UCIC) will help banks to identify a customer, track the facilities availed, monitor financial transactions in various accounts, improve risk profiling, take a holistic view of customer profile and smoothen banking operations for the customer. While some of the Indian banks have already developed UCIC, there is no unique number to identify a single customer across the organization in many banks. In this regard, the Government of India has proposed the introduction of unique identifiers for customers across different banks and financial institutions. While such a system for the entire financial system is desirable, it is likely to take quite some time for a complete roll out. As a first step, banks are advised to initiate steps to allot UCIC number to all their customers while entering into any new relationships in the case of all individual customers to begin with. Similarly, existing individual customers may also be allotted unique customer identification code by end-April 2013. Basic Bank Deposit Account Financial inclusion has been high on the agenda of the Reserve Bank. With a view to providing fillip to this concept, banks were advised, in November 2005, to make available a basic banking no-frills account with either nil or very low minimum balance as well as charges that would make such accounts accessible to vast sections of the population. The nomenclature of the account in this manner has tended to signify that these accounts are opened more with a view to indicating achievement of numerical targets under the financial inclusion plans. On a review, it has been decided to modify the guidelines on opening of basic banking no-frills accounts with a view to doing away with the stigma associated with the nomenclature and making the basic banking facilities available in a more uniform manner across the banking system. Accordingly, it is proposed that banks should offer a basic savings bank deposit account with certain minimum common facilities and without the requirement of minimum balance to all their customers. Implementation of Basel III Capital Regulations Reserve Bank of India has prepared the draft guidelines on Basel III Implementation of Capital Regulations in India, which were placed on its website in December 2011, for comments/suggestions from various stakeholders. The draft guidelines provide for a roadmap for smooth implementation of Basel III capital regulations in terms of the transitional arrangements (phase-in) of capital ratios and grandfathering (phase-out) of ineligible capital instruments. The Reserve Bank is also in the process of estimating, on the basis of data collected from banks, the likely impact of the proposed Basel III norms on banks capital position and leverage. The estimation exercise, as also the comments/suggestions from various stakeholders, will form the basis for finalizing the guidelines on capital regulations. It is proposed to issue the final guidelines on the implementation of Basel III capital regulations by end-April 2012.

Bank Finance to NBFCs Predominantly Engaged in Lending against Gold NBFCs that are predominantly engaged in lending against collateral of gold jewellery have recorded significant growth in recent years, both in terms of their balance sheet size and physical presence. Certain prudential measures have been taken on account of regulatory concerns, given the rapid pace of their business growth and the nature of their business model which has inherent concentration risk. The measures include a loan-to-value (LTV) ratio not exceeding 60 per cent for loans against collateral of gold jewellery and a minimum Tier 1 capital of 12 per cent by April 1, 2014. It has also been stipulated that NBFCs should not grant any advance against bullion/primary gold and gold coins. Also it is proposed that banks should reduce their regulatory exposure ceiling in a single NBFC, having gold loans to the extent of 50 per cent or more of its total financial assets, from the existing 10 per cent to 7.5 per cent of banks capital funds. However, exposure ceiling may go up by 5 per cent, i.e., up to 12.5 per cent of banks capital funds if the additional exposure is on account of funds on-lent by NBFCs to the infrastructure sector; and banks should have an internal sub-limit on their aggregate exposure to all such NBFCs, having gold loans to the extent of 50 per cent or more of their total financial assets, taken together. White Label ATMs At present, only banks are permitted to set up automated teller machines (ATMs) in India. The Reserve Bank has since reviewed the policy on ATMs and it has been decided to permit non-banks to set up, own and operate ATMs to accelerate the growth and penetration of ATMs in the country. Such ATMs will be in the nature of white label ATMs (WLA) and would provide services to customers of all banks. While such WLAs will be owned and operated by non-bank entities, cash management and customer grievance redressal will be in the domain of the sponsor banks. Lets expect that the monetary policy 2012-13 would help significantly to maintain its vigil on controlling inflation while being sensitive to risks to growth and other vulnerabilities.

CORRIGENDUM
This photograph is of CA Vikash Kumar Jain, Secretary, Guwahati Branch which was not printed/placed in the 3rd position from the left against Guwahati Branch in the March, 2012 (Issue No. 2, Page No.4, Volume 38) of EIRC Newsletter. However, inadvertently, a photo of CA. Vikash Kumar Jain, Chairman, Durgapur CA Vikash Kr Jain, Branch has been erroneously placed. Secretary, Further, CA. Kailash Prasad Sarda, 5th Guwahati Branch position from left against Guwahati Branch had been inadvertently designated as the Treasurer of Guwahati Branch in the March, 2012 (Issue No. 2, Page No.4, Volume 38) of EIRC Newsletter whereas he is the Member of the Managing Committee of the said Branch. The Editorial Board sincerely regrets the above inadvertent errors.

EIRC Newsletter | April 2012

16 Volume 38 | Issue No. 3

SEMINAR ON CORPORATE LAWS, LLP & XBRL

Organised by

6 Hrs CPE

Eastern India Regional Council The Institute of Chartered Accountants of India

Registration from 9.30pm onwards

Fees ` 1200

Date : Saturday, 12th May, 2012

Venue :

Time : 10.00am to 5.00pm

Park Hotel, Kolkata

Navrang Saini, Regional Director, Eastern Region, MCA Guest of Honour : Mr. Debashis Bandyopadhyay, Registrar of Companies, W. B., MCA
TOPICS
z z z

Chief Guest : Dr.

SPEAKERS CA Vinod Kothari CS Mamta Binani CA Debashis Mitra

LLP XBRL Revised ScheduleVI

Fees can be paid by Cheque / Draft drawn in favour of The Institute of Chartered Accountants of India, EIRC payable at Kolkata. Cash can be paid on the programme day at the venue. For Online Registration please visit www.eircicai.org Register early to avoid disappointment

NICHE TECHNOLOGIES PRIVATE LIMITED

Category I SEBI AUTHORISED REGISTRARS & SHARE TRANSFER AGENTS (Registration No- INR000003290)
z z z z

Registrars to Issues

Transfer Share Transfer Agent Connectivity to NSDL Connectivity to CDSL

D-511, Bagree Market 71, B.R.B.Basu Road, Kolkata-700 001

Phone: 2235 7271/7270/5236, 2234 2318/3576 Fax: 2215 6823 E-mail: nichetechpl@nichetechpl.com www.nichetechpl.com Website : www.nichetechpl.com Contact Persons : Mr. S. Abbas - 9830326165 z Mr. A.Dutta - 9331212314 z Ms. Swati Sharma - 9830022251
z

EIRC Newsletter | April 2012

19 Volume 38 | Issue No. 3

SEMINAR ON RECENT AMMENDMENTS IN VAT LAWS INTRODUCTION OF ENTRY TAX & MOCK BOARD PROCEEDINGS
Organised by

6 Hrs CPE

Eastern India Regional Council The Institute of Chartered Accountants of India

Registration from 9.30pm onwards

Fees ` 600

Date: Saturday, 12th May, 2012

Chief Guest :

Time: 10.00am to 5.00pm

Venue: R.Singhi Hall, EIRC

Mr. Vinod Kumar, Commisioner of Commercial Taxes Govt of W.B**

First Session Recent Changes in W.B VAT Impact & Introduction of Entry Tax Second Session Mock Board Proceedings

Mr Khalid Aizaz Anwar, Jt Comm of Sales Tax, Govt of W.B. CA Rip Das

Mr. K.Y.S Manhas, Honble President, W.B Commercial Taxes, Appellate & Revisional Board, Govt of W.B Mr Anil Sarkar, Honble Member, W.B Commercial Taxes, Appellate & Revisional Board, Govt of W.B Ms Lovely Mukherjee, Jt Commissioner of Sales Tax, Govt of W.B Ms Anjana Chakraborty, Jt Commissioner of Sales Tax, Govt of W.B Practicing Chartered Accountants ** Confirmation awaited

Honble Judicial Member Honble Administrative Member Departmental Representative Departmental Representative Authorised Representative

Indoor Sports Festival for Students

on Sunday, 27th May 2012 Organised by : EICASA of EIRC
Members are also invited to participate.

Venue: Silver Spring Club, 5, J.B.S Haldane Avenue (EM Bypass) Kolkata-700105 Time : 10am to 4.00pm

Sports Category

For participation in Sports Category please contact:

For Members

Chess

Badminton

Mr. Amit Paul,Executive Officer Ph. 30211104/33/34/44 Email: eirc@icai.in

For Students
Mr Ankit Bidasaria, Vice Chairman, EICASA, M : 9051054351 Mr Pallab Ghosh Email : eircgmcs@icai.org Ph. : 30211123

Carrom Carrom

Tennis Table Tennis

Last date for receiving applications 22nd May,2012 In email and correspondence mention the sports category

EIRC Newsletter | April 2012

20 Volume 38 | Issue No. 3

BRANCH / STUDY CIRCLE PROGRAMMES IN RETROSPECT-EIRC

CUTTACK BRANCH
Seminar on Union Budget held on 21.03.2012 at ICAI Bhawan, Cuttack Seminar on Bank Audit 2012 on 26.03.2012

LtoR: CA. Jayanta Kumar Sahoo,CA. M V Sarma, CA.Rajkumar Routray, Chairman,Cuttack Branch, Shri Abhaya Charan Naik, IRS, Commissioner of Income Tax,CA.Chandra Sekhar Veeraghanta, CA. Pawan Kumar Udayapuria, Secretary, Cuttack Branch.

Lto R : CA. Prasant Kumar Bal, Past Chairman of Bhubaneswar Branch, Sri Rajiv Verma, General Manager (NW-1), State Bank of India, LHO, Bhubaneswar, CA. Rajkumar Routray, Chairman of Cuttack Branch, CA. P R Suresh, Treasurer, SIRC, Chennai, CA. Pawan Kumar Udayapuria, Secretary of Cuttack Branch.

GUWAHATI BRANCH
CPE PROGRAM ON Issues Related to E-TDS & E-VAT Returns on 10th March 2012: CPE PROGRAM ON Bank Audit & Union Budget 2012 on 20th March 2012

ROURKELA BRANCH
Seminar on union budget 2012 & bank audit

L to R:- CA Veena Hingarh,CA Sailesh Agarwal, CA Rajendra Pasa Agarwal,Shri Sarada Prasad Nayak,Honble Minister,Housing and Urban Development, Govt of Odisha,CA Rakesh Kr Jain, Chairman, BBSR Branch, CA R.K.Vyas

SILIGURI BRANCH
A panel discussion on Union Budget2012 on 16th of March2012 Seminar on Bank Audit on 17.03.2012

The programme was held jointly with CII (Confederation of Indian Industry) and STBA (Siliguri Taxation Bar Association) Seminar on Union Budget held on 25.03.2012

The speaker CA . A K Jain explained the provisions of NPA and other aspects of Bank Audit

SAMBALPUR BRANCH

CPE Seminar on Bank Audit and Direct Tax Proposals of Budget 2012 held on 24th March2012

Speaker Dr. Girish Ahuja and CA Narayan Agarwal.

L to R : CA Mahendra Agrawal,CA Sunil Kakkad,CA Nabin K Lath, Sambalpur Br Chairman.

Felicitation of CA Subodh Kr Agrawal,Vice Presient, ICAI at Sambalpur

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Workshop on Insurance on 20th March, 2012 at Grand Hotel

Lighting of the Inaugural lamp: L to R: CA. Sushil Kr. Goyal, Member, EIRC, CA. Ranjeet Kr. Agarwal, ViceChairman, EIRC, CA. Prasun Kr. Bhattacharyya, Chairman, EIRC, CA. Sumantra Guha, Council Member, ICAI, Shri Sriram Taranikanthi, Executive Director & Financial Advisor, IRDA, CA. J. Venkateswarlu, Council Member & Chairman, COBIP, ICAI, CA. Subodh Kumar Agrawal, Vice -President, ICAI.

CA.Prasun Kr. Bhattacharyya,Chairman, EIRC, addressing the gathering, L to R: CA Abhijit Bandyopadhyay, Council Member, ICAI, CA. Subodh Kumar Agrawal, Vice -President, ICAI, Sri. R.K. Nair, Member, IRDA, CA. J. Venkateswarlu, Council Member & Chairman, COBIP, ICAI, Shri Sriram Taranikanthi, Executive Director & Financial Advisor, IRDA, CA. Sumantra Guha, Council Member, ICAI and Ranjeet Kr Agarwal, Vice Chairman, EIRC.

CA. R. Chandrasekhar, CA. Subhash Chandra Saraf, Secretary, EIRC, CA. S. N. Jayasimhan, Joint Director (Investment), IRDA, CA. Pramod Dayal Rungta, Treasurer, EIRC.

CA.Shri S.K.Goswami, CA. Pradipta Roy,GM (Finance), National Insurance Co. Ltd, CA. Sushil Kr. Goyal, Member, EIRC

CA. Prasun Kr. Bhattacharyya, Chairman, EIRC, CA V.Manickam, CEO, LIC Pension Fund , Shri S. K. Goswami

CA. Krishanu Bhattacharyya, Member, EIRC, CA. J. Venkateswarlu,Council Member & Chairman, COBIP, Shri S.K. Goswami, CA. Pradipta Roy, CA. S.N. Jayasimhan.

Conference on Private Equity in India on 23rd March, 2012 at Taj Bengal

CA. Prasun Kr. Bhattacharyya,Chairman, EIRC, Rakesh Sony (Director),Motilal Oswal Private Equity Advisors Pvt. Ltd, CA. Ranjeet Kr. Agarwal, Vice-Chairman, EIRC,

CA. Prasun Kr. Bhattacharyya,Chairman, EIRC, Mr. Amit Ladsaria, Director, Turtle India, Mr Nitin Jain, Director,Indcap Advisors Pvt. Ltd., CA. Subhash Chandra Saraf, Secretary, EIRC.

Mr Anurag Singhi, Director,Baker Tilly Singhi Consultants Pvt. Ltd., CA. Pramod Dayal Rungta, Treasurer, EIRC.

Mr Subir Nag, Director, ICICI Venture Funds Management Company Ltd, Mr. Amit Ladsaria,CA Vinod Kothari,Mr Manoj Parasar, Principal Investment Officer,IFC Washington. Mr. Samir Agarwal, Director,Indcap Advisors Pvt. Ltd.

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Chairmen meet at New Delhi on 23rd April, 2012

CA Sushil Kr Goyal, Member, EIRC

L to R : CA. Durgesh Kabra,Chairman, WIRC,CA K. Viswanath, Chairman, SIRC,CA Subodh Kr Agrawal,Vice President,ICAI,CA Jaydeep Narendra Shah,President,ICAI,CA Prasun Kr Bhattacharyya, Chairman, EIRC, CA. Mukesh Singh Kushwah,Chairman, CIRC and CA (Dr) Durga Das Agrawal, Chairman, NIRC

Seminar on Bank Audit on 1st April, 2012 at EIRC Premises

CA Prasun Kr Bhattacharyya, Chairman, EIRC giving his welcome address. Sitting from L to R: CA Ranjeet Kr Agarwal, Vice Chairman, EIRC, CA Dipankar Chatterji, Former Council Member, ICAI, CA Santanu Ghosh

CA Dipankar Chatterji, Former Council Member, ICAI

CA Santanu Ghosh

CA Neena Maheshwari

L to R : CA Krishanu Bhattacharyya, Member, EIRC, CA Anirban Datta, CA Neena Maheshwari, CA Dipankar Nandi, CA Sushil Kr Goyal, Member, EIRC and CA Prasun Kr Bhattacharyya, Chairman, EIRC.

CA Dipankar Nandi

CA Anirban Datta

Aglimpse of the audience

Seminar on Revised Schedule VI on 17th April, 2012

L to R: CA. Prasun Kr. Bhattacharyya, Chairman, EIRC and CA Debashis Mitra.

Aglimpse of the audience

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23 Volume 38 | Issue No. 3