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JUNE 2020 VOL. 52-A PART 3 paGES 132 PRICE: `100 THE BOMBAY CHARTERED ACCOUNTANT JOURNAL CURIOSITY TO CREATIVITY 11 16 19 28 GOVERNANCE AND INTERNAL AUDIT SPECIFIED POssIBLE SOLUTION INTERNAL CONTROLS FOR ANALYTICS DOMESTIC TO THE PROBLEM OF SUSTAINABLE BUSINEss AND AI TRANSACTIONS STREssED AssETS BCAJ VOL. 52-A P BCAJ VOL. 52-A SATIO NI N A G R A RT 3 | JUNE 2020 RT O FU STAB TH NC IL O T I O IO T Y M N S I N G SU S T A I N A B I L I S T L Y O TR N O C Bombay Chartered Accountants’ Society BCAS knowledge resource update Who can benefit? Chartered Accountants, Mandatory Legal Professionals, Trade & Accounting Industry Professionals Standards Authors CA Deepali Shrigadi (Ind AS) CA Gunja Bathiya CA Harnish Shah -From Published Accounts CA Jiten Jataniya CA Shraddha Kishnadwala Features The Indian Accounting Standards (Ind AS) have been introduced in India from April 2016 in a phased manner. The Accounting & Auditing Committee of the BCAS presents the 8th Edition of the publication .To enable easy reference for such companies, the Accounting and Auditing Committee of the BCAS had asked a young team of chartered accountants having experience in the first phase of implementation of Ind AS, to come with an Ind AS standard wise compilation of the typical accounting policies and disclosures made by the companies who have implemented Ind AS for the FY 2016-17. The said book was well appreciated by all preparers and users of financial statements. Since then, several new Ind AS have been issued and being implemented by corporates. It was hence felt that the above publication needs revision to bring it in line with the current trends in financial reporting. The Committee again asked the same team viz., CA Deepali Shrigadi, CA Gunja Bathiya, CA Harnish Shah, CA Jiten Jataniya, CA Shraddha Kishnadwala, who had worked on the earlier publication to revise the publication and update the same for disclosures in FY 2018-19. The final review and editing of the disclosures is done by two very experienced members of the Committee viz., CA Vijay Maniar and CA Chirag Doshi. Based on the MCA notification, NBFCs also implemented Ind AS from 1st April 2018 onwards. Since NBFCs belong to a specialised sector and is also regulated by norms the Reserve Bank of India, several specific issues arise in Ind AS implementation. The Committee had therefore come with a separate publication in December 2019 on similar lines covering disclosures by NBFCs on implementation of Ind AS. The six compilers and the two reviewers have put in substantial efforts in wading through a large number of annual reports and then selecting extracts from published accounts of more than 100 companies. We would like to convey our sincere thanks to all of them for devoting their valuable time in bringing out this revised edition. We are sure that, like the earlier editions, this edition would also be of immense value to the preparers, reviewers and analysts of the Financial Statements as well as to various other stakeholders. Price For buying your copy, please choose an appropriate option. E-book can be viewed only on one device. To access the E-book, user ID shall be your mobile number and upon payment confirmation, password shall be shared with you through email. After making the payment, please send an email at [email protected]. Hard copy of the publication shall be made available only when the current lockdown restrictions eases out. Mandatory Accounting Standards - Ind AS - Extracts from Published Accounts E-Book Rs. 710 (Including 18% GST): Payment Link https://bit.ly/2X52Etc E-Book + Printed Book Rs. 1,060/- (Including 18% GST) : Payment Link https://bit.ly/3eqlDnP Accounts E-Book + Printed Book + Postage (Rs.150) Rs. 1,210/-: Payment Link https://bit.ly/2TJyU2S Discipline: Format: Accounting Standards (IndAS) E-Book (Single Device), Soft Bound Book (Pages 978) Continuous No. 724 Price Rs. 100 (For Members only) CONTENTS In this issue . THE BOMBAY CHARTERED ACCOUNTANT JOURNAL Namaskaar | 5 Editorial Unpacking the Package from Taxpayer Perspective | 8 QUOTE OF THE MONTH From the President Preparing for ‘The New Normal’ | 9 Life will give you whatever experience is most helpful for the evolution of your consciousness ▄ TAXATION ECKHART TOLLE Direct Taxes ● ARTICLE: Specified Domestic Transactions: Retrospective Operability of Omission of Clause (I) To Section 92Ba(1) on GST | 19 ● GLIMPSES OF SUPREME COURT RULINGS | 55 ● CONTROVERSIES: Double Deduction for Interest Under Sections 24 and 48 | 68 ● IN THE HIGH COURTS: PART A: REPORTED DECISIONS 19 Business expenditure – Section 37 of ITA, 1961 – General principles – Difference between ascertained and contingent liability – Public sector undertaking – Provision for revision of pay by government committee – Liability not contingent – Provision deductible u/s 37 Income – Accrual of income – Principle of real income – Public sector undertaking – Amounts due as fees – Amounts included in accounts in accordance with directions of Comptroller and Auditor-General – Amounts had not accrued – Not assessable; A.Y.: 2007-08 | 47 20 Business expenditure – Allowability of (prior period expenses) – Section 37 of ITA, 1961 – Assessee had prior period income and prior period expenses – Assessee set off the two and offered only net amount of expenses for disallowance – A.O. disallowed the claim – Tribunal allowed the claim – No substantial question of law arose from Tribunal's order; A.Y.: 2004-05 | 47 21 Cash credits (Bogus purchases) – Section 68 of ITA, 1961 – Assessee had declared VOL. 52-A I PART 3 I JUNE 2020 certain purchases to be made during year and A.O. added entire quantum of purchases to income of assessee on plea that purchases were bogus purchases – Tribunal held that JOURNAL COMMITTEE only reasonable profit at rate of 5% on purchases should be added back to income of assessee – Tribunal was justified in its view; A.Y.: 2010-11 | 48 EDITORIAL BOARD 22 Charitable purpose – Sections 2(15) and 12AA of ITA, 1961 – Registration – Cancellation Chairman & Editor I Raman Jokhakar of registration – Condition precedent – The assessee is hit by proviso to section 2(15) is Convener not a ground for cancellation of registration | 49 Jagdish Punjabi 23 Charitable purpose – Section 2(15) r/w sub-sections 11, 12 and 13 of ITA, 1961 – Where Publisher I Raman Jokhakar India Habitat Centre, inter alia set up with primary aim and objective to promote habitat Members of Editorial Board concept, was registered as a charitable trust, principle of mutuality for computation of its income was not required to be gone into as income was to be computed as per sections Anil Sathe, Anup Shah, Ashok Dhere, 11, 12 and 13; A.Y.: 2012-13 | 49 Gautam Nayak, Kishor Karia, Sanjeev Pandit 24 Charitable or religious trust – Registration procedure (Deemed registration) – Sections 12AA Ex-Officio and 13 of ITA, 1961 – Where Commissioner (Exemption) did not decide application u/s Manish Sampat I Suhas Paranjpe 12AA within six months from date on which matter was remitted by Tribunal, registration Members u/s 12AA(2) would be deemed to be granted to assessee society; A.Ys.: 2010-11 to Abbas Jaorawala I Chandrashekhar Vaze 2014-15 | 50 Chetan Shah I Gaurav Shah I Ishaan Patkar Jagdish Shah I Kinjal M. Shah 25 Deemed income – Section 41(1) of ITA, 1961 – Section 41(1) will not apply to Mihir Sheth I Nitin Shingala I Parth Desai waiver of loan as waiver of loan does not amount to cessation of trading liability; A.Y.: Puloma Dalal I Rajaram Ajgaonkar 2003-04 | 51 Ritu Punjabi I Rutvik Sanghvi I Shreyas Shah 26 Revision – TDS – Non-resident – Shipping business – Section 263 and section 172, Shweta Ajmera I Sonalee Godbole r/w sections 40(a)(ia), 194C and 195 of ITA, 1961 – Where assessee had paid export Sunil Gabhawalla I Tarunkumar Singhal freight to a shipping agent of non-resident ship-owner or charter without deduction of tax Vinayak Pai I Zubin Billimoria at source, provisions of section 172 would be applicable and provisions of section 194C or section 195 which provide for deduction of tax at source shall not be applicable; A.Y.: 2014-15 | 51 ● IN THE HIGH COURTS: PART B: UNREPORTED DECISIONS 6 Reopening – Beyond four years – Assessment completed u/s 143(3) – A mere bald Printed and published by Raman Jokhakar on behalf of Bombay assertion by the A.O. that the assessee has not disclosed fully and truly all the material Chartered Accountants’ Society, 7, Jolly Bhavan No. 2, New Marine Lines, Mumbai-400020. Phone : 61377600 E-mail : [email protected] facts is not sufficient – Reopening is not valid | 52 Printed at Spenta Multimedia Pvt Ltd, Plot 15, 16 & 21/1, Village Chikloli, ● TRIBUNAL NEWS: PART A: REPORTED DECISIONS Morivali, MIDC, Ambernath (West), Dist. Thane. 9 Section 45 – Amount received by assessee in its capacity as a partner of a firm from the BOMBAY CHARTERED ACCOUNTANT JOURNAL JUNE 2020 3 268 (2020) 52-A BCAJ other partners on account of reduction in profit-sharing ratio of the nature of ‘royalty’ u/s 9(1)(vi) and, consequently, tax was required to assessee, is a capital receipt not chargeable to tax | 40 be withheld | 44 10 Section 56 read with sections 22 and 23 – Compensation received 9 Article 12 of India-Korea DTAA, section 9(1)(vii) of the Act – Fees under an agreement entered into with a tenant granting him an option paid to foreign company for providing shortlist of candidates as to take on lease other units which belonged to the assessee is taxable per job description, were not in the nature of FTS u/s 9(1)(vii) of under the head Income from Other Sources | 41 the Act | 45 11 I.