AMENDMENTS FOR ASSESSMENT YEAR 2009-10

AMENDMENTS FOR ASSESSMENT YEAR 2009-10

APPLICABLE FOR MAY – 2009 & NOV – 2009
COMPUTATION OF TOTAL INCOME AND TAX LIABILITY
1. Individual, HUF, AOP, BOI, Artificial Juridical person
Total Income upto Rs.1,50,000 Nil
Next 1,50,000 10%
Next 2,00,000 20%
Balance 30%

2. Resident women below the age of 65 years at any time during the previous year
Total Income upto Rs.1,80,000 Nil
Next 1,20,000 10%
Next 2,00,000 20%
Balance 30%
3. Resident individual of the age of 65 years or more at any time during the year
Total Income upto Rs.2,25,000 Nil
Next 75,000 10%
Next 2,00,000 20%
Balance 30%
No change in surcharge and education cess.
No change in tax rate and education cess for partnership firm and company.
Short term capital gain under section 111A shall be taxable @ 15% in all assessees.
Example
Compute tax liability in the following cases:
Mr. X (resident) has total income of Rs.6,00,000
Mr. X (non-resident) has total income of Rs.6,00,000
Mrs. X (resident) has total income of Rs.6,00,000
Mrs. X (non-resident) has total income of Rs.6,00,000
Mr. X (resident), aged 65 years has total income of Rs.6,00,000
Mrs. X (resident), aged 65 years has total income of Rs.6,00,000
Mr. X (non-resident), aged 65 years has total income of Rs.6,00,000
Mrs. X (non-resident), aged 65 years has total income of Rs.6,00,000
Solution:
Rs.
(i) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 85,000
Add: Education cess @ 2% 1,700
Add: SHEC @ 1% 850
Tax Liability 87,550
(ii) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 85,000
Add: Education cess @ 2% 1,700
Add: SHEC @ 1% 850
Tax Liability 87,550
(iii) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 82,000
Add: Education cess @ 2% 1,640
Add: SHEC @ 1% 820
Tax Liability 84,460
(iv) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 85,000
Add: Education cess @ 2% 1,700
Add: SHEC @ 1% 850
Tax Liability 87,550
(v) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 77,500
Add: Education cess @ 2% 1,550
Add: SHEC @ 1% 775
Tax Liability 79,825
Rounded off u/s 288B 79,830
(vi) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 77,500
Add: Education cess @ 2% 1,550
Add: SHEC @ 1% 775
Tax Liability 79,825
Rounded off u/s 288B 79,830
(vii) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 85,000
Add: Education cess @ 2% 1,700
Add: SHEC @ 1% 850
Tax Liability 87,550
(viii) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 85,000
Add: Education cess @ 2% 1,700
Add: SHEC @ 1% 850
Tax Liability 87,550
DEFINITIONS
Agricultural Income Section 2(1A) Explanation 3

Any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.



Charitable Purpose Section 2(15)
“Charitable purpose”
includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility:
Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity.

Reverse mortgage Scheme Section 10(43)

Any amount received by an individual as a loan, either in lump sum or in instalment, in a transaction of reverse mortgage referred to in clause (xvi) of section 47 shall be exempt from Income Tax.

Reverse mortgager
means the eligible person who has mortgaged the capital asset for the purpose of obtaining loan.

Reverse mortgage transaction
means a transaction in which the loan may be disbursed to the reverse mortgagor but does not include transaction of sale, or disposal, of the property for settlement of the loan.

Any transfer of a capital asset in a transaction of reverse mortgage under a scheme made and notified by the Central Government is not regarded as transfer.

BUSINESS/PROFESSION
1. Payments in excess of Rs.20,000 section 40A(3) Rule 6DD

If any person has made the payment to a particular person during a particular day in excess of Rs.20,000 and such payment was not made through account payee cheque or account payee bank draft, in that case entire payment is disallowed.
If any person has claimed expenditure on due basis but in the subsequent year the payment was not made by account payee cheque or draft, in that case it will be considered to be income of the year in which the payment has been made.
Example
During the previous year 2008-09 ABC Ltd. has incurred Rs.1,00,000 on advertisement and the company has not made the payment till 30.09.2009 and the expenditure was claimed on due basis and the company has filed the return of income. The company made the payment on 01.01.2010 in cash, in this case Rs.1,00,000 shall be considered to be income of the company in the previous year 2009-10.

2.
Rebate under section 88E has been omitted. The assessee is allowed to debit the amount of securities transaction tax to profit and loss account.

3.
Bank cash Transaction tax shall not be applicable from 01.04.2009 i.e. previous year 2009-2010 i.e. assessment year 2010-2011.

4.
The last date for filing the return of income for the company etc. shall be 30-09 of assessment year. The amendment is applicable from retrospective effect of assessment year 2008-09.


5.
Donation/contribution given to an Indian company for scientific research and development is also allowed 1.25 times.

6. Amortisation of certain preliminary expenses section 35D
The provisions shall be applicable to all the undertakings instead of only industrial undertaking.


Amendment of section 36.
In section 36 of the Income-tax Act, in sub-section (1), after clause (xiv), the following clauses shall be inserted with effect from the 1st day of April, 2009, namely:—
36 (1)(xv) , An amount equal to the securities transaction tax paid by the assessee in respect of the taxable securities transactions entered into in the course of his business during the previous year, if the income arising from such taxable securities transactions is included in the income computed under the head “Profits and gains of business or profession.’.
Explanation.—For the purposes of this clause, the expressions “securities transaction tax” and “taxable securities transaction” shall have the meanings respectively assigned to them under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004);
36(1) (xvi) an amount equal to the commodities transaction tax paid by the assessee in respect of the taxable commodities transactions entered into in the course of his business during the previous year, if the income arising from such taxable commodities transactions is included in the income computed under the head “Profits and gains of business or profession”.

Explanation.
—For the purposes of this clause, the expressions “commodities transaction tax” and “taxable commodities transaction” shall have the meanings respectively assigned to them under Chapter VII of the Finance Act, 2008.’.

Tax deduction at source for Payment of interest, commission, brokerage etc. in India Section 40(a)(ia)

In case of payment of interest, commission, brokerage, rent, royalty, professional fees, technical fees, payment to a contractor, payment to a sub-contractor and the payment is been made to a resident and tax has to be deducted at source as per provisions of Income Tax Act and the person making payment has deducted tax at source, the expenditure shall be allowed if tax has been paid to the government upto the end of the relevant previous year, in such cases amount shall be allowed to be debited in the relevant previous year. In section 115-O of the Income-tax Act, after sub-section (1), the following sub-section shall be inserted, namely:—
If the payment was made in the month of March, tax should be paid to the government till the last date of filling of return of income and in such cases amount shall be allowed to be debited in the relevant previous year.
If the above provisions have not been complied with, in such cases deduction shall be allowed in the year in which tax has been paid to the government.

Amendment of section 115-O.
24.
“(1A) The amount referred to in sub-section (1) shall be reduced by the amount of dividend, if any, received by the domestic company during the financial year, if—
(a) such dividend is received from its subsidiary;
(b) the subsidiary has paid tax under this section on such dividend; and
(c) the domestic company is not a subsidiary of any other company:
Provided
Explanation.

—For the purposes of this sub-section, a company shall be a subsidiary of another company, if such other company holds more than half in nominal value of the equity share capital of the company.”. that the same amount of dividend shall not be taken into account for reduction more than once.
DEDUCTION FROM GROSS TOTAL INCOME
1.
2.
Deduction shall be allowed if the assessee has paid premium towards medical insurance out of his income chargeable to tax.
3.
4.
Policy can be taken in case of an individual, in the name of wife or husband or dependent children and deduction shall be allowed equal to the amount of premium paid but subject to a maximum of Rs.15,000 but in case of senior citizen deduction shall be allowed upto Rs.20,000
If the individual has taken policy in the name of parents (dependent or independent), additional deduction shall be allowed to the extent of the premium paid but maximum Rs.15,000, however, if the policy has been taken in the name of senior citizen, deduction shall be allowed to the extent of Rs.20,000.
Hindu Undivided Family can take the policy in the name of any of its members and deduction shall be allowed in the similar manner.
5.
6.

Medical insurance shall be in accordance with a scheme framed in this behalf by the General Insurance Corporation of India or by any other insurer as approved by the Insurance Regulatory and Development Authority (IRDA). “Senior citizen” means an individual resident in India who is of the age of 65 years or more at any time during the relevant previous year.
Assessee engaged in operating and maintaining a hospital in India other than the excluded area Section 80-IB(11C)
2.
The amount of deduction in the case of an undertaking deriving profits from the business of operating and maintaining a hospital located anywhere in India, other than the excluded area, shall be 100% of the profits and gains derived from such business for a period of 5 consecutive assessment years, beginning with the initial assessment year, if–
(i) the hospital is constructed and has started or starts functioning at any time during the period beginning on the 01.04.2008 and ending on the 31.03.2013;
(ii) the hospital has at least 100 beds for patients;
(iii) the construction of the hospital is in accordance with the regulations or bye-laws of the local authority; and
(iv) the assessee furnishes along with the return of income, a report of audit in such form and containing such particulars, as may be prescribed, and duly signed and verified by an accountant, as defined in the Explanation to sub-section (2) of section 288, certifying that the deduction has been correctly claimed.

SERVICE TAX

Service tax exemption limit has been raised from Rs.8,00,000 to Rs.10,00,000 w.e.f. 01.04.2008.
Revision of Return Rule 7 Sub-Rule (7B)
An assessee may submit a revised return, in Form ST-3, in triplicate, to correct a mistake or omission, within a period of 90 days from the date of submission of the return under rule 7.
The payment must be made by any mode of payment other than cash.Deduction shall be allowed only to an individual or Hindu Undivided Family.
Deduction in respect of medical insurance premia Section 80D

sources:-http://www.caclubindia.com/forum/messages/2009/1/22412_amendments_for_may_2009.asp

How to read your Income Tax PAN?

How to read your Income Tax PAN?

The Income Tax Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Indian Income Tax Department.

A typical PAN for an individual would be AABPS1205E.

However, this appears to be a mysterious coded number to most of the people, there are some elements which would help you to validate a PAN.

The fourth letter of your PAN reflects your status. As such for an individual the letter will be 'P' for an HUF it will be an 'H', for firms - 'F' and for companies - 'C'.

The fifth letter of your PAN is the first letter of your surname in case of individuals and the first letter of the name in other cases. For example, in Nikhil Kumar's PAN the fourth letter will be 'P' and the fifth letter will be 'K'.

The other alphabets and numbers are allotted based on the Income Tax Department's series database.

Exemptions Of Capital Gain

EXEMPTION FROM CAPITAL GAIN:

A.

Section 54: Long Term Capital Gain arising from transfer of Residential House.

1.Who can claim benefit of this section?
Individual or H.U.F.

2.Which asset the tax payer should acquire to get the benefit this section?
Residential House Property in India or Outside India.

3.What is the time limit for acquiring the new asset?
Purchase: 1 Year before transfer or within year from the date of transfer.
Construction: Within 3 years from the date of transfer construction should be completed.
(Either of the two conditions should be satisfied But if both the conditions are satisfied then also there is no problem.)

4.From which date the time limit shall be computed?
From the date of Transfer but in case of compulsory acquisition from the date of receipt of compensation whether initial or full.*

5.Amount of Exemption?
Investments in the new asset (Including the amount deposited in the deposit scheme) or capital gain whichever is lower.

6.Possibility of revocation of exemption in the subsequent year?
If such new asset is transferred within 3 years from the date of acquisition.

7.In case of transfer of such new asset within 3 years how computation of capital gain is to be made for such new asset & such gain is Long term or short term capital gain?
(It is taxable in the Previous Year in which such transfer takes place).
Sales Consideration of New Asset: XXXX
Less: (Cost of Acquisition of new asset
Capital Gain claim exempted earlier
undersection 54 ) XXXX
--------
Short term Capital Gain XXXX
8.Whether Benefit of scheme is available?
Yes

9. Notes:

a) Such exemption is not limited to purchase or construction of one residential house property only. Assessee
may purchase two houses by selling one or can purchase one house by selling two houses.

b) Cost of new house includes cost of land.

B.

Section 54B: Long Term/Short Term Capital Gain arising from transfer of Urban Land used for
Agricultural Purpose.

1. Who can claim benefit of this section?
Individual. Provided such land should be used for agricultural purpose by the assessee or by his parents at least for a period of two years immediately before the date of transfer.

2. Which asset the tax payer should acquire to get the benefit this section?
Agricultural Land may be situated at urban area or rural area.

3. What is the time limit for acquiring the new asset?
Such Asset should be acquired within 2 years from the date of transfer and in case of compulsory acquisition from the date of receipt of compensation initial or full.

4. From which date the time limit shall be computed?
From the date of Transfer but in case of compulsory acquisition from the date of receipt of compensation whether initial or full. *

5. Amount of Exemption?
Investments in the new asset (Including the amount deposited in the deposit scheme) or capital gain whichever is lower.

6. Possibility of revocation of exemption in the subsequent year?
If such new asset is transferred within 3 years from the date of acquisition.

7. In case of transfer of such new asset within 3 years how computation of
capital gain is to be made for such new asset & such gain is Long term or
short term capital gain?
(It is taxable in the Previous Year in which such transfer takes place).
Sales Consideration of New Asset: XXXX
Less: (Cost of Acquisition of new asset
Capital Gain claim exempted earlier
undersection 54 B) XXXX
--------
Short term Capital Gain XXXX

8. Whether Benefit of scheme is available?
Yes

C.

Section 54D: Long Term/Short Term Capital Gain on compulsory acquisition of land or buildings forming part of Industrial Undertaking.

1. Who can claim benefit of this section?
(Meaning of Industrial Undertaking: It not only includes undertaking situated in industrial area but also include any project or business, a person
may undertake)
Any person. Provided such land or building forming part of industrial undertaking is used (not owned) by the assessee at least for a period of two years immediately before the date of compulsory acquisition.

2. Which asset the tax payer should acquire to get the benefit this section?
Land or Building for industrial purpose.

3. What is the time limit for acquiring the new asset?
Such Asset should be acquired or building should be constructed within 3 years from the date of receipt of compensation.

4. From which date the time limit shall be computed?
From the date of receipt of compensation whether initial or full. *

5. Amount of Exemption?
Investments in the new asset (Including the amount deposited in the deposit scheme) or capital gain whichever is lower.

6. Possibility of revocation of exemption in the subsequent year?
If such new asset is transferred within 3 years from the date of acquisition.

7. In case of transfer of such new asset within 3 years how computation of
capital gain is to be made for such new asset & such gain is Long term or
short term capital gain?
(It is taxable in the Previous Year in which such transfer takes place).
Sales Consideration of New Asset: XXXX
Less: (Cost of Acquisition of new asset
Capital Gain claim exempted earlier
under section 54 D) XXXX
--------
Short term Capital Gain XXXX

8. Whether Benefit of scheme is available?
Yes

D.
Section 54EC: Long Term Capital Gain not to be charged if investment in Long Term Specified Assets i.e. Bonds of N.H.A.I. or R.E.C.

1. Who can claim benefit of this section?
Any person.

2. Which asset the tax payer should acquire to get the benefit under this section?
Bonds issued by the NHAI or REC redeemable after 3 Years and issued after April1, 2006.

3. What is the time limit for acquiring the new asset?
Such Asset should be acquired within 6 months from the date of transfer of original asset. However following should be considered:
(1) Upto 30th September, 2006: If Long Term Capital Asset is transferred between 29th September, 2005 and 31st December, 2005.
(2) Upto 31st December, 2006: If Long Term Capital Asset is transferred between 1st January, 2006 and 30th June, 2006.( Order F. No.142/09/2006 dated 30th June, 2006).

4. From which date the time limit shall be computed?
From the date of transfer of Long Term Capital Asset or from the date of receipt of compensation initial or full. *

5. Amount of Exemption?
Investments in the new asset (Including the amount deposited in the deposit scheme) or capital gain whichever is lower. (But from April 1, 2007 maximum investment allowed in such bonds is restricted to Rs.50 Lacs.

6. Possibility of revocation of exemption in the subsequent year?
If such new asset is transferred or it is converted into money or a loan is taken on the security of the new asset within 3 years from the date of acquisition.

7. In case of transfer of such new asset within 3 years how computation of
capital gain is to be made for such new asset & such gain is Long term or
Short term capital gain?
(It is taxable in the Previous Year in which such transfer takes place).
The amount of Long term Capital Gain on transfer of Original Asset not charged to tax due to such investment is chargeable as Long Term Capital Gain in the year of transfer of such bonds.

8. Whether Benefit of scheme is available?
No.

9. Notes: The Benefit of Section 54 EC is available to capital gain arising on transfer of depreciable assets. [CIT v/s
Assam Petroleum Industries Private Limited].

E.
Section 54F: Capital Gain arises on transfer of Long Term Capital Asset other than Residential House Property.

1. Who can claim benefit of this section?
Individual or H.U.F.

2. Which asset the tax payer should acquire to get the benefit this section?
Residential House Property provided that on the date of transfer of Original Long Term Capital Asset the assessee does not own more than one residential house property. Moreover He should not purchase a residential house within 2 years or construct within 3 years from the date of transfer of original capital asset except the new one.

3. What is the time limit for acquiring the new asset?
Purchase: 1 Year before transfer or within year from the date of transfer.
Construction: Within 3 years from the date of transfer construction should be completed.
(Either of the two conditions should be satisfied But if both the conditions are satisfied then also there is no problem.)

4. From which date the time limit shall be computed?
From the date of transfer of original Capital asset but in case of compulsory acquisition from the date of receipt of compensation whether initial or full. *

5. Amount of Exemption?
Amount invested to acquire the new asset
Amount of Capital Gain X -----------------------
Net Sale Consideration
Net Sale Consideration = Full Value of
Sale ConsiderationExpenses on Transfer

6. Possibility of revocation of exemption in the subsequent year?
Consequences

(a) If such new asset is transferred within 3 years from the date of purchase / construction; or

(b) Ifassessee purchases, within a period of two years or constructs within a period of 3 years a residential house from the date of transfer of Original Capital asset except the new one.
Capital Gain on transfer of such new asset will be termed as short term capital asset and the capital gain which was claimed as exempt u/s 54 F earlier is taxable as Long term Capital gain in the year in which such new asset is transferred.
Capital Gain which was claimed as exempt earlier u/s 54F is taxable as Long Term Capital Gain in the year in which another residential house is purchased or constructed.


7. Whether Benefit of scheme is available?
Yes

8. Notes:
(a) Cost of the new house includes cost of Land.
(b) If the Transferor allows the transferee to retain and apply a part of total consideration to discharge the mortgage to which such property has been subject to, the amount so applied for discharge for mortgage would have to be excluded from the full value of consideration.
(c) The expenditure incurred on making the house habitable i.e. flooring, wooden work, sanitary work etc. should be considered as investment in purchase of house, subject to condition that payment is made during the period specified in sec. 54 F.
(d) If by applying section 54 F, there is no income in hands of minor child to be added under section 64(1A), the benefit under section 54F cannot be denied to minor child on the ground that father of minor had two residential houses at the time of transfer of the capital asset.

F.
Section 54G: Long Term/Short Term Capital Gain arises from the transfer of capital assets in cases of shifting of industrial undertaking from urban area.

1. Who can claim benefit of this section?
Any person. The term Capital asset includes Plant, Machinery, Land or Building or Right in Land or Building but does not include Furniture.

2. Which asset the tax payer should acquire to get the benefit this section?
Land, Purchase/Construction of Building, New Plant or Machinery in order to shift an undertaking to Rural Area.

3. What is the time limit for acquiring the new asset?
Assessee has to acquire within a period of 1 Year before or 3 Years after the date on which such transfer took place.

4. From which date the time limit shall be computed?
From the date of transfer.

5. Amount of Exemption?
Investments in the new asset (Including the amount deposited in the deposit scheme) or capital gain whichever is lower.

6. Possibility of revocation of exemption in the subsequent year?
If such new asset is transferred within 3 years from the date of acquisition.

7. In case of transfer of such new asset within 3 years how computation of
capital gain is to be made for such new asset & such gain is Long term or
Short term capital gain?
(It is taxable in the Previous Year in which such transfer takes place).
Sales Consideration of New Asset: XXXX
Less: (Cost of Acquisition of new asset
Capital Gain claim exempted earlier
under section 54 G) XXXX
--------
Short term Capital Gain XXXX

8. Whether Benefit of scheme is available?
Yes

9.Notes: (a) The Cost of New Asset includes expenses incurred in relation to acquiring Land, Building, or Plant and
Machinery.

G.
Section 54GA: Long Term/Short Term Capital Gain arises from the transfer of capital assets in cases of shifting of industrial undertaking from urban area to SE
Z.

1. Who can claim benefit of this section?
Any person. The term Capital asset includes Plant, Machinery, Land or Building or Right in Land or Building but does not include Furniture.

2. Which asset the tax payer should acquire to get the benefit this section?
Land, Purchase/Construction of Building, New Plant or Machinery in order shifts an undertaking to Rural Area.

3. What is the time limit for acquiring the new asset?
Assessee has to acquire within a period of 1 Year before or 3 Years after the date on which such transfer took place.

4. From which date the time limit shall be computed?
From the date of transfer.

5. Amount of Exemption?
Investments in the new asset (Including the amount deposited in the deposit scheme) or capital gain whichever is lower.

6. Possibility of revocation of exemption in the subsequent year?
If such new asset is transferred within 3 years from the date of acquisition.

7. In case of transfer of such new asset within 3 years how computation of
capital gain is to be made for such new asset & such gain is Long term or
Short term capital gain?
(It is taxable in the Previous Year in which such transfer takes place).
Sales Consideration of New Asset: XXXX
Less: (Cost of Acquisition of new asset
Capital Gain claim exempted earlier
under section 54 GA) XXXX
--------
Short term Capital Gain XXXX

8. Whether Benefit of scheme is available?
Yes

9.Notes: (a) The Cost of New Asset includes expenses incurred in relation to acquiring Land, Building, or Plant and
Machinery.

* Section 54 H: Extension of Time limit for Acquiring new Asset.

1. Initial Compensation
As we know in case of Compulsory Acquisition, Capital Gain will be taxable in the Previous year in which compensation is received whether Part or Full.
For availing the benefit of exemption U/S 54, 54B, 54D, 54EC, 54F the new asset should be acquired within prescribed time limit. But such time period shall be computed from the date receipt of such compensation. Even if the initial compensation is received in parts then such period shall be determined on the basis such different dates of receipts.

2. Enhanced Compensation
For availing the benefit of exemption U/S 54, 54B, 54D, 54EC, 54F, such specified period shall be computed from the date on which such enhanced compensation is received.
DEPOSIT SCHEME: If the new asset is not acquired upto the due date of submission of Return of Income of the previous year in which Original Asset is transferred, the taxpayer has to deposit the unutilized amount in Capital Gain Deposit Scheme with a nationalized bank and proof of such deposit should be attached with Return of Income in order to avail the benefit of exemption.
Now the taxpayer has to withdraw from this account for acquiring the new asset. If the deposit amount is not utilized within stipulated time period as stated in Point 3 of each exemption then unutilized amount on the expiry of such time period will be taxable in the previous year in which such period expires as Long Term or Short Term Capital Gain depending upon the Original Capital Gain. It is to be noted that for section 54 & 54 F such period is 3 years.
# Transfer includes compulsory acquisition.
# In order to take benefit of Section 54 B and 54 D it should be ensured that the investment in the new asset is made only after effecting transfer of capital asset.
# It will be advisable that instead of selling or converting assets acquired under section 54, 54B, 54D, 54 F, 54 G and 54GA into money, the tax payer should obtain loan against the security of such asset to meet exigency.

sources :www.caclubindia.com

ICAI sets ball rolling against auditors

The Institute of Chartered Accountants of India (ICAI) has written letters to government agencies and Satyam Computer Services, seeking relevant information to initiate investigation into the role of the statutory auditor in fudging the accounts of the Hyderabad-based software services firm.
However, the institute, which regulates the chartered accounting profession in India, is yet to communicate with the statutory auditor — Price Waterhouse — regarding the overstatement of profit by Satyam over the years.
“Based on the collected information, the disciplinary board of ICAI may summon the statutory auditor and also the internal auditors,” Ved Jain, president of ICAI, told Business Standard, adding they hope to get the inputs from the ministry of corporate affairs (MCA) and the Securities and Exchange Board of India (Sebi) in the next two to three days.
Jain also met Corporate Affairs Minister Prem Chand Gupta on Friday and appraised of the steps taken by ICAI and the future course of action. “We plan to coordinate between various government agencies and ICAI,” Jain added.
ICAI has disciplinary powers against its members who are acting as statutory and internal auditors of any company. It has maximum powers to revoke the license for lifetime and also levy a maximum penalty of Rs 5 lakh. While statutory auditors are appointed by the company’s shareholders, the internal auditors are hired by the management.
ICAI is seeking the list of auditors (both statutory and internal) employed by Satyam, and also the balance sheet and other documents filed with the Registrar of Companies (RoC), with whom firms are mandated to submit a list of documents on a regular basis.
If summoned, ICAI’s disciplinary committee could seek the “working paper file” maintained by statutory auditors. Working papers contains all audit evidences collected while auditing the financial statements of any company.
This is expected to help the investigators to piece together how the financial fraud of this magnitude had taken place at the country's fourth-largest software firm.
Satyam's promoter, in a letter to the stock exchanges, said they had inflated profits and revenue of the company for many years, involving a total amount of around Rs 7,000 crore. Cash position alone was inflated by Rs 5,000 crore.
Srinivas Talluri, a partner in Price Waterhouse, was the statutory auditor for the IT major in FY08, as per the corporate information provided by third party websites. Satyam’s website was inaccessible to retrieve information.
Price Waterhouse is the only from among the big four audit firms to have registered with ICAI, as all its partners are Indians, said Uttam Prakash Agarwal, vice-president of ICAI.

sources:-www.calubindia.com

ICAI to issue a show cause notice to Satyam auditors, PwC

The Institute of Chartered Accountants of India (ICAI) has decided to issue a show cause notice to the auditors of Satyam Computer Services in the backdrop of Satyam Computers chairman B Ramalinga Raju's sensational revelations on Wednesday. Talking to ET, ICAI president Ved Jain said: "We have set the ball rolling. On the basis of statements made by Mr Ramalinga Raju, ICAI has already initiated proceedings against the concerned auditor. Under legal provisions our disciplinary committee can take cognizance of information from external sources and initiate action against our members. On the basis of the statement, a show cause notice will be sent to the auditor of the Satyam Computer Services." Asked specifically, who the notice was being sent to, Mr Jain said: "I am told the audit firm was PricewaterhouseCoopers. A show cause notice will soon be sent to the auditor. This is indeed a situation where fingers are being pointed towards some chartered accountants." On the issue, an ICAI council member who declined to be named said: "As auditors, we definitely have a role to play. This incident gives the entire chartered accountants fraternity a bad name. If we unravel any wrong doings on the part of the auditors, the institute (ICAI) will initiate action against the concerned auditor. Auditors base their observations on documentary evidence provided to auditors and Mr Raju did not mention that the figures provided to auditors were wrong. However, if the auditors have failed, the institute will file an 'Information Case' against the concerned individual (at PwC, in this case) as a first step." The ICAI's Council is a core team that deals with critical aspects of running the Institute and policy matters involved as well as various accounting norms. Experience, however, shows the process of ruling on such cases takes time. For instance, ICAI had initiated proceddings against the auditors of the erstwhile Global Trust Bank (GTB) a couple of years ago. The case is yet to be diposed off, the council member said.

source:-www.caclubindia.com