The Chartered Accountant

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I. Notifications DIRECT TAXES LEGAL UPDATE 1. Notification No. 96/2008, dated 8-10-2008 The Convention was between the Government of the Republic of India and the Government of Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income was notified by the Central Government under section 90 of the Incometax Act, 1961 in the Gazette of India vide G.S.R. 101(E) dated 1st March, 1990. Clause (a) of paragraph 4 of Article 11 of the said Convention provides the details regarding ‘Central Bank’ and ‘financial institution wholly owned by the Government’ in the case of Japan which will not be subject to tax under paragraph 3 of the said Article, in respect of interest arising to it in the other Contracting State. Sub-clause (ii) of clause (a) of paragraph 4 of Article 11 refers to Japan Bank for International Cooperation as one of the financial institutions wholly owned by the Government. By this notification both, the Government of India and the Government of Japan have omitted “Japan Bank for International Co-operation” from sub-clause (ii) of clause (a) of paragraph 4 of Article 11 and substitute therein “International business unit of Japan Finance Corporation”; This shall be deemed to have taken effect from 1st October, 2008. 2. Notification No. 97/2008, dated 10-10-2008 The Central Board of Direct Taxes has through the Income-tax (7th Amendment) Rules, 2008 substituted Rule 6DD with effect from Assessment year 2009-10. 3. Notification No. 98/2008 [F.NO. 142/12/2008- TPL], dated 22-10-2008 The Central Board of Direct Taxes has through the Income-tax (Eighth Amendment) Rules, 2008 inserted a new Rule 18DDA after rule 18DD, namely “Form of report for claiming deduction under sub-section (11C) of section 80-IB”. This rule specifies that the report of an accountant required to be furnished by the assessee along with the return of income, under sub-section 80-IB (11C) shall be in Form No. 10CCBD. NOTIFICATIONS/CIRCULARS Significant Circulars/Notifications during the Month of October, 2008 For details visit: http://law.incometaxindia.gov.in/ TaxmannDit/DisplayPage/dpage1.aspx?md=31 INDIRECT TAXES EXCISE I. Notifications 1. Notification No. 43/2008 CE (NT) dated 06.10.2008 The Notification has inserted two provisos after first proviso to sub-rule 2 and 3 of rule 9 of Central Excise Rules, 2002. The second proviso lays down that if a person manufacturing Compressed Natural Gas (CNG) [falling under tariff item 2711 29 00 of the of First Schedule to the CETA, 1985 (5 of 1986)], has more than one premises requiring registration (which fall within the jurisdiction of one Chief CCE), he may obtain a single registration for all such premises with any of the CCE. If subsequent to obtaining such registration any additional premises are started, it should be intimated in advance. The third proviso lays down that if the assessee is registered under the existing provision, he may apply for fresh registration or file amendment to the registration as the case may be, in accordance with provisions of this notification. For details visit: http://www.cbec.gov.in/excise/cx-act/ notfns-2k8/cent43-2k8.htm 2. Notification No.44/2008-Central Excise (N.T.), dated 6th October , 2008 The Central Board of Excise and Customs vide this notification made further amendment in the Notification 14/2002-Central Excise (N.T.) dated 08-03-2002: “Provided that the jurisdiction of the Commissioner of Central Excise, under whose jurisdiction a person manufactures Compressed Natural Gas falling under tariff item 2711 29 00 of the of First Schedule to the Central Excise Tariff Act, 1985 and has obtained a single registration for more than one premises in terms of the Notification No. 35/2001-Central Excise (N.T.) dated 26-06-2001, shall also extend to the entire jurisdiction of the concerned Chief Commissioner of Central Excise as specified in Table I for the said manufacturer.” For details visit: http://www.cbec.gov.in/excise/cx-act/ notfns-2k8/cent44-2k8.htm THE CHARTERED ACCOUNTANT 995 DECEMBER 2008
CUSTOMS I. Circulars 1. Circular No.16/2008-Customs dated 13.10.2008 The Circular has clarified the following points relating to refund of 4% Additional Duty of Customs (4% CVD) and even in some cases relaxing the procedural requirement for expeditious sanction of refund claims: (i) Time-limit for filing of refund claim; (ii) Early processing of refund claims; (iii) Early processing of refund claims; (iv) Declaration for non-admission of Cenvat Credit; (v) Payment of ST/VAT by cash or input tax credit; (vi) Submission of original copy of ST/VAT Challan; (vii) Unjust enrichment and its Certification by Chartered Accountants; (viii) Consignment Agents; (ix) Submission of refund claim for part of goods in a consignment. For details visit: http://www.cbec.gov.in/customs/ cs-circulars/cs-circulars08/circ16-2k8-cus.htm 2. Circular No.17/2008-Customs dated 21.10.2008 The Circular has clarified that import of readymade garments would be subjected to CVD only on the basis of transaction value and not on the basis of retail sale price. For details visit: http://www.cbec.gov.in/customs/ cs-circulars/cs-circulars08/circ17-2k8-cus.htm OTHER ACTS SEBI I. Circulars 1. Cir No.IMD/FII&C/34/2008 dated 20-10-2008 SEBI has reviewed the data submitted by the foreign institutional investors in pursuance of our circular no. 32, dated October 16, 2008. SEBI disapproves of the activity of the foreign institutional investors lending shares abroad. The facility of lending and borrowing has been made available on Indian Exchanges. SEBI is reworking the existing stock exchange offered securities lending and borrowing mechanism, to make suitable changes. The custodians are requested to communicate to their FII constituents the disapproval of SEBI. For details visit: http://www.sebi.gov.in/circulars/2008/ fiicir3408.html 2. MRD/DoP/SE/Cir- 31 /2008, dated 31-10- 2008 The framework for Securities Lending and Borrowing (SLB) was specified vide circular no. MRD/DoP/SE/ Dep/Cir- 14 /2007 dated December 20, 2007 w.e.f. April DECEMBER 2008 996 THE CHARTERED ACCOUNTANT LEGAL UPDATE 21, 2008. Pursuant to feedback from market participants and proposals for revision of SLB received from NSE and BSE, the framework is being revised as under: 1. Tenure for SLB may be increased to 30 days from the present 7 days. 2. The SLB tenure of 30 days will result in the need for appropriate adjustments for corporate actions. 3. The time for SLB session may be extended from the present one hour (10 am to 11 am) to the normal trade timings of 9:55 am to 3:30 pm. 4. With regard to risk management in SLB, it is advised that common risk management practices shall be followed by stock exchanges for SLB. It is reiterated that the exchanges should ensure that the risk management framework strikes a balance between ensuring commercial viability of SLB transactions and ensuring adequate and proper risk management. Exchanges should satisfy themselves regarding the adequacy of the risk management system. 5. Exchanges and Depositories are advised to: a) take necessary steps and put in place necessary systems for implementation of the above at the earliest; b) make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above; c) issue necessary instructions to the member brokers/clearing members and depository participants and also to disseminate the same on the website. For details visit: http://www.sebi.gov.in/circulars/2008/ cir312008.html RBI I. Circulars 1. DNBS (PD) CC. No.131/03.05.002 /2008-2009 dated 29- 10-2008 Taking into consideration, the need for enhanced funds for increasing business and meeting regulatory requirements, it has been decided that Systemically Important Non-Deposit taking Non-Banking Financial Companies (NBFCs-ND- SI) may augment their capital funds by issue of Perpetual Debt Instruments (PDI) in accordance with the guidelines. Such PDI shall be eligible for inclusion as Tier I Capital to the extent of 15% of total Tier I capital as on March 31 of the previous accounting year. The minimum investment in each such issue/tranche by single investor shall not be less than Rs 5 lakh. The amount of funds raised by NBFCs- ND-SI shall not be treated as ‘public deposit’ within the meaning of clause 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998. The, amount of PDI in excess of amount admissible as Tier I shall qualify as Tier II capital within the eligible limits. For details visit: http://www.rbi.org.in/scripts/Notification User.aspx?Id=4588&Mode=0
Page 1 and 2: Volume 57 No. 06 December 2008 THE
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Page 11 and 12: ICAI President CA. Ved Jain address
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& a) Yes b) No Comments, if any ___
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& Comments, if any_________________
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IASB Exposure Drafts on: Icai news
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Icai news NEW PUBLICATIONS From the
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Icai news OFFICE OF THE COMPTROLLER
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Icai news Requirements The student
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DECEMBER 2008 1064 THE CHARTERED AC
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(This Accounting Standard includes
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counts the nominal amount of the in
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accounting treatments set out in pa
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inspection are complete. However, r
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(This Accounting Standard includes
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Some loans may be interest-free or
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Standard for Local Bodies: (i) Inte
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the business, to an entity’s abil
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l Ensuring employees are properly t
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own legal counsel as to whether a c
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cial statements (in other cases tho
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strategies, and the related busines
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Entities A35. In the case of audits
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with governance is not adequate and
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in the preparation of financial sta
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asis but, in the auditor’s judgme
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further into the future, in conside
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Introduction 1. The purpose of this
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Introduction 1. The purpose of this
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for which controls are being assess
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erised applications or over the ove
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