THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (Set up by an Act of Parliament)

BELGAUM BRANCH OF ICAI ISSUE 2 | FEBRUARY 2019 | PAGES E-NEWS LETTER

OFFICE BEARERS

CA. Jaykumar N. Patil

Chairman

CA. Satish M. Mehta

Vice Chairman

CA Nitin M Nimbalkar

Secretary

CA. Rahul V. Adake

Treasurer

CA M S Tigadi

SICASA Chairman

Respected Professional Colleagues, At the outset kindly accept my Greet-ings to you all. It is indeed a privilege to communicate as 44th Chairman of Belgaum Branch of SIRC of ICAI. First of all, on behalf of entire manag-ing committee I would like to thank all the members of Belgaum Branch for electing us as Torch Bearers of Branch Branch for the term 2019-22.

I would like to thank my past & present Managing Committee members for believing in my compe-tence & leadership and electing me as the Chair-man of Belgaum branch of SIRC of ICAI. I sin-cerely promise to do justice to my responsibilities. I must thank my predecessor past chairman’s CA Praveen Ghali, CA Chetan Chougule and CA Shivakumar Khadabadi for extending their support & Guidance to me during my previous tenure in managing committee. Working with them has surely added to my professional understanding. It was a great learning experience. I take this opportunity to congratulate & welcome my committee members CA Satish Mehta, CA Rahul Adake, CA Nitin Nimbalkar & CA M. S. Tigadi (Prakash), who are all geared up to do won-ders for the development of Belgaum Branch & our profession at large.

I am very much happy to inform you all that, un-der the able leadership of immediate past Chair-man CA Shivkumar Khadbadi, team work of man-aging committee, hard work of Branch employees, All the members & students, Belgaum Branch has been awarded “Best Branch Award” un-der Small Branch Category at SIRC level

I also take this opportunity to congratulate CA Prafulla P. Chhajed & CA Atul

Our Profession... Our Pride... Kumar Gupta who have taken Charge as President & Vice President of ICAI and CA Jomon K George & CA Dungar Chand Jain Who have taken the charge as Chairman & Vice Chairman of SIRC of ICAI. The managing Committee of Belgaum branch is the mixture of young and senior, enthusiastic and experienced members. I am sure with the support of all the members of managing committee, Branch Staff, students and members of CA frater-nity of Belgaum, we will be in a position to match expectations of members, students, General Public & ICAI. We have planned several programs during the year 2019-20 for the benefit of members, students, General Public & as a contribution to the ICAI, the details of which are hosted on the website of Branch www.belgaumicai.org. I believe in team work. For the Smooth Functioning of the Activi-ties of branch & to adhere to the Action Plan, we have formed various Committees. I am sure these committees will do great in their fields. The de-tails of which are hosted on the website of Branch www.belgaumicai.org.

Each one of you has something to contribute to our profession & I would be very happy to have your suggestion for the improvements in the af-fairs of Branch & in the action Plan.

Lastly with utmost humbleness I request whole hearted support and participation of all members in this new committee Endeavour. It is your sup-port that keeps us moving.

Yours in Service CA Jaykumar Patil

Chairman Belgaum Branch of SIRC of ICAI

Owing to his professional discreetness, CA. Chhajed has been elected to the Central Council of the Institute for its three con-secutive terms (i.e. 2013-16, 2016-19 and 2019-22). As a mem-ber of the Central Council, he has served the Institute and the profession as Chairman of Committee for Professional Account-ants in Business & Industry, and Banking, Financial Services and Insurance Committee in 2017-18, and Professional Development Committee, Committee on Public Finance and Government Ac-counting and Committee on Corporate Social Responsibility in 2016-17, among others. His contribution through the Committees has been widely appreciated, especially that in the capacity of Chairman of Young Members Empowerment Committee and Women Members Empowerment Committee. CA. Prafulla Chhajed has a very well-defined vision and mission, which is to pursue the agenda of inclusive growth and take the Institute and accountancy profession of India to greater heights so that its members could stand tall and strong before the ac-countancy fraternity of the world. Personally, he wants the Insti-tute and his professional colleagues to keep contributing as ef-fective partner-in-nation-building. Carrying a vision of responding effectively to the expectation gap in the country and strengthen the membership base and consoli-date the brand of Indian CA globally, CA. Chhajed has been pas-sionate about both national and international image of the CA profession. In the past, he has pursued this agenda by represent-ing the profession on various national and international fronts through several meetings and conferences. His approach and vision has been appreciated while he was the Institute’s nominee on Public Sector Financial Management Committee of the Con-federation of Asian and Pacific Accountants. Coming from the industrial capital of India, i.e. Mumbai, CA. Pra-fulla Chhajed has always inspired his professional colleagues from the Western India Region by his straightforward, simple and profound approach to the affairs of profession and by his natural ability to connect with people around him, while he was Chairman of the Western India Regional Council of the Institute in the year 2007-08 and Regional Council member of the Western India Re-gional Council for almost a decade, i.e. 2001-10. CA. Prafulla P. Chhajed has contributed more than 600 articles and write-ups in the well known marathi daily Maharashtra Times on taxation and investments for about 16 years. In his leisure, he loves reading and checking the developments in profession.

CA. PRAFULLA P. CHHAJED,

PRESIDENT ICAI

2019-20

A crusader of inclusive growth in accountancy profession, CA. Prafulla P. Chhajed has been elected President of The Institute of Chartered Accountants of India for the term 2019-20 on 12th February 2019. He is 67th President of the Institute. Having served the profession for more than two decades, he had joined the Central Council in 2013. Then in 2018, he got elected Vice-President of the Institute for the term 2018-19. With commendable professional acumen and standing, CA. Chhajed sends across the vibes of an approachable and a very understanding professional. Conversant with great organizational skills, he has led the cause of various committees of the Institute in the capacity of both Chairman and Vice-Chairman. At present, he is the Chairman of Board of Directors of ICAI-ARF (Accounting Research Foundation) and XBRL India. He is also one of the Directors of Indian Institute of Insolvency Profession-als of ICAI, which incidentally is the first insolvency professionals agency (IPA) of India. As President of the Institute, CA. Chhajed is now the Chairman of its Standing Committees including Executive, Finance and Ex-amination Committees and Presiding Officer of Board of Disci-pline (under Section 21-A), Disciplinary Committee (under Sec-tion 21-B) and Chairman of Disciplinary Committee (under Sec-tion 21D). He is also an ex-officio member of all Non-Standing Committees of the Institute and the Editor of the Institute’s jour-nal, The Chartered Accountant. He is also on the Boards of vari-ous other reputed companies/ corporate and banks. CA. Prafulla Chhajed has represented the ICAI at many occa-sions in the past through various important committees as consti-tuted by Ministries/ Regulators, that include Government Ac-counting Standards Advisory Board (GASAB) and Audit Advisory Board, both constituted by C&AG of India, Board of Insurance Regulatory & Development Authority (IRDA), National Advisory Committee on Accounting Standards (NACAS) and SEBI’s Pri-mary Market Advisory Committee and XBRL Technical Advisory Committee. Currently, he is the Chairman of SMP Committee of SAFA (South Asian Federation of Accountants) and the Technical Advisor to SAFA Board member.

ISSUE 2 | FEBRUARY 2019

including Executive, Finance and Examination Committees, be-sides being the ex-officio member of all Non-Standing Commit-tees of the Institute and Joint Editor of the Institute’s Journal, The Chartered Accountant.

With a vision to patiently and clearly responding to the issue of image and identity of accountancy profession in the country and abroad, CA. Atul Kumar Gupta has a very keen eye and under-standing of the matter. With his deep insight for the affairs of pro-fession, he has always kept the profession on priority. Represent-ing the profession on national as well as international fronts, he has addressed numerous technical meetings and seminars/ con-ferences, and represented the Institute and its professional initia-tive in the past, including those at Association of Corporate Treasurer, Chartered Institute of Taxation and Financial Report-ing Council and ICAEW in London, American Accounting Asso-ciation, Chartered Institute of Public Finance Accountancy, Man-chester.

A man of grass-root understanding of the matters and respected for his down-to-earth approach to the issues at hand among his professional colleagues, CA Atul Kumar Gupta has a surpassing ability to deal with a variety of difficult situations. Having an ex-ceptional ability to bring out a range of alternative solutions on the table in any given situation, he has to his credit successful closures of many a taskforce and time-bound non-standing groups and teams. With straightforward approach to profession, he has always been concerned about the expectations of his professional colleagues and their aspirations. Profusely inter-ested in the brand Indian CA and ICAI in India and abroad, he has always loved to act as a bridge between the stakeholders and the Institute.

Being thoroughly conversant with the professional concerns and demands of his times, CA Gupta has authored many relevant books, including GST Concept and Road Map (with a foreword by Union Finance Minister), Comprehensive Guide to Service Tax (14e), Guide to CENVAT Credit Rules, 2004 and student’s edition of Guide to Service Tax. He has also been a part of a recently-constituted Roundtable Meeting for Empowering Youth from Education to Employment that was chaired by Union HRD Minister.

An academic by temperament, CA Gupta has published numer-ous articles in leading newspapers, magazines and professional newsletters, and delivered lectures in about 1500 seminars and conferences.

CA. ATUL KUMAR GUPTA

VICE PRESIDENT, ICAI

2019-20

A man of refined thought-process, quick understanding and sharp vision, CA. Atul Kumar Gupta got elected Vice-President of The Institute of Chartered Accountants of India for the term 2019-20 on 12th February 2019. Having served the profession for about two decades, he had joined the Central Council in 2013. Then in 2019, he got elected Vice-President of the Institute for the term 2019-2020. Respected for his strong organizational skills and deep insight in the affairs of profession, CA. Atul Kumar Gupta has contributed to the cause of profession from various professional perspectives in the past in the last two Council terms, i.e. 2013-16 and 2016-19. With his constant dedication and service to the profession, he will take the profession to greater heights, coming up to the ex-pectations of stakeholders. Being a Commerce and a Law graduate by education, CA. Gupta has developed a unique perspective to look into the matter. He has led the cause of profession through various committees of the Institute, serving as Chairman of Digital Accounting and As-surance Board, Board of Studies, IT Committee and Indirect Taxes Committee, among others. CA. Atul Kumar Gupta is known and appreciated widely for his key contribution to the ICAI as facilitator of the Goods and Ser-vice Tax regime, particularly in its formative years. Under his leadership, the New Scheme of Education and Training that was benchmarked with the revised International Education Standards, was launched in 2017, with thorough revision of the content of the study materials of IPC and Final level courses. He has also been the Chairman of SAFA CPD Committee and Director of XBRL India and ICAI-Accounting Research Foundation (ARF) in the past. Through ICAI-ARF, he is credited for the promotion of the agenda of research in profession. After anchoring the ICAI-ARF team in the project of preparation of accrual-based financial statements of the North-Western Zonal Railways for the year 2014-15, CA. Gupta has mentored the team in the project of preparation of accrual-based financial statements of the Indian Railways for the years 2015-16 and 2016-17. Under his Chair in the year 2010-11, the Northern India Regional Council of the Institute got the Best Regional Council award. As Vice-President of the Institute, CA. Gupta is now the Vice-Chairman of all Standing Committees

ISSUE 2 | FEBRUARY 2019

DUNGAR CHAND U JAIN

VICE-CHAIRMAN 2019-20

SIRC OF ICAI CA Dungar Chand U Jain (DC Jain) is a Com-merce Graduate and Chartered Accountant-in-practice at Madurai. He has passed Higher Di-ploma in Software engineering . He is a Fellow Member of the Institute of Chartered Accountants of India and has passed DISA (Diploma in Information Systems Audit) of ICAI in 2005. He has also passed the Intermediate examination of Institute of Cost Accountants of India. Served in Madurai Branch of SIRC of ICAI : 2010-11 Branch Coordination Committee, 2011-12 & 2012-13 SICASA Chairman, 2013-14 Secretary, 2014-15 Vice Chairman, 2015-16 Chair-man of Madurai Branch of SIRC of ICAI Served in Regional Council of SIRC of ICAI : He has been elected to the Regional Council of SIRC of ICAI for the term 2016-19 and dur-ing the year 2017-18 served as Secretary of SIRC of ICAI. Ex-Officio (2016-19) of Madurai, Sivakasi & Trichy Branches of SIRC of ICAI. Leading the Committee as Chairman of the following Committees of SIRC of ICAI : Continuing Professional Education Committee (2016-17) Committee for Members in Industry (2018-19) Information Technology & Digital Transformation Committee (2016-17, 2017-18 & 2018-19) Nominated to: Information Technology Committee of Association of Chartered Accountants, Chennai (2014-15) Technology Initiatives Committee of Bombay Chartered Account-ants' Society, Mumbai (2018-19) MERIT RECORDS 1) School Topper in Accountancy in Higher Secondary Examination. 2) College Topper in Business Correspondence, Accountancy, Corpo-rate Accounting & Programming in COBOL. 3) Awarded second prize for the Best Presentation in the General Man-agement & Communication Skills course conducted by ICAI. MEMBER l) Bombay Chartered Accountants' Society, Mumbai 2) Association of Chartered Accountants, Chennai 3) Chartered Accountants Study Circle, Chennai 4) All India Federation of Tax Practitioners, Mumbai AREAS OF INTEREST / SPECIALISATION Evinces keen interest in the study of Capital markets and specialises in Derivatives (Futures & Options) & Taxation and have given guest lec-tures and presented papers at various schools, colleges, professional forums and various branches of ICAI. Visiting Faculty at Madura Col-lege and Fathima College, Madurai covering chapters on Stock Markets and Derivatives. Presented papers on Information Technology with reference to DSCs, Efiling and Uses of Excel in various forum & CPE meetings. Being tech-savvy, has been instrumental in preparing few in-house softwares. Also have prepared a template on "TN VAT Audit" in excel benefitting members. Regular contributor to monthly Newsletter of Chartered Accountants' Study Circle Bulletin on "Excel Tips" and few ICAI Branch Newsletters. Active participant of "Jan Seva" - An

organisation helping those in need. Authored Book on Excel Tips covering uses of MS Excel for Professionals.

CA. JOMON K GEORGE

CHAIRMAN 2019-20

SIRC OF ICAI

CA. JomonK George of Kochi, Kerala has unanimously been elected as Chairman of South-ern India Regional Council of the Institute of

Chartered Accountants of India for the year 2019-20. In the profession Qualified in 1992. Did Articleship in Chennai.26 years of diversified practice experience.Founder & Chief Executive Partner of M/s JVR & Associates, a Seven Partner firm with offices at Kochi and Trivandrum and an associate office in Dubai.Specializes in Corporate Advisory Services and Management Consultancy. @ SIRC Has served SIRC as Vice Chairman 2018-19 & Secretary 2016-17.As SICASA chairman of the region in 2014-15, evolved a meaningful theme “Engage, Empower, Enable” and bagged the SECOND BEST Region Award on All India basis. @ ICAIErnakulam Served as Chairman of the Ernakulam Branch of ICAI in 2002-03.The Branch commenced the GMCS course and developed the IT Lab during this period.The branch received the “Highly Commended” award at the All India level.Served as the Vice Chairman, Treasurer & SICASA Chairman of the Branch. Resource Person Has done more than 800 presentations across India and in West Asia.A regular paper presenter/ speaker at ICAI’s CPE programmes on Ac-counting Standards, Corporate Audits, Standards on Auditing, Ind AS etc. Serving ICAI as a Peer Review Trainer.Contributes articles in ICAI newsletters.Has served as member AASB during 2005-06. Faculty Faculty for Auditing at ICAI, Ernakulam for 18 years.Visiting faculty at many B-schools & management institutes.Lectures at ICAI, Dubai. Corporate Trainer Conducted training programs for Income Tax Department and Ministry of Corporate Affairs.Has done training programs on IGAAPs & IFRS for many renowned corporates including BPCL. Social Activities Honorary Treasurer, Kerala Management Association.Advisory Board Member, St. Teresa’s College, Ernakulam.Past President – Rotary Club of Cochin Central & Member of PHF Society. No One Starves (A free noon meal program) and Free Tailoring Institute for underprivileged women got th district best awards.Was Honorary Treasurer of Regional Sports Centre, Kochi. Parentage & Family Son of Late G. Thomas, AICWA and Late Prof. Mariakutty George.Happily married to Bindu, a PG, rankholder -Opted to be a homemaker. Blessed with two kids :-Liya doing CA/B.Com at Bangalore and Ryan - 9th Standard Student

ISSUE 2 | FEBRUARY 2019

loan for self-occupied properties retained at INR 2,00,000

• Proportionate exemption on long-term capital gains arising from proceeds of sale of residential house extended to purchase of two residential houses from one house, subject to Amount of capital gain not exceeding INR 2 crore [no monetary threshold continues for investment in one residential house] and it is an One-time opportunity to claim such exemption

• The Government’s vision to create a tech-enabled tax system is a welcome initiative.

2. Corporate Taxation:

Minimum Alternative Tax

* Health and education cess of 4% has been considered for determining the tax rates above.

CA. B. B. Chandargi

bchandargi@gmail.com Author

1. Personal Taxation: Income tax slab rates for Financial Year 2019-20 ( Assessment Year 2020-21) :

• There are no changes in personal income tax rates and slabs

• Rebate under section 87A is proposed to be increased to INR 12500 from INR 2500 on tax for total income upto INR 5 lakhs for individuals

• Increase in standard deduction from INR 40,000 to INR 50,000 for Salaried employees.

• Surcharge for individuals having income exceeding INR 50 lakhs but less INR 1 crore would be 10% and individual having income more than 1 crore would 15%.

• Prescribed monetary threshold for deduction of tax on interest from bank or Post Office deposits increased from INR 10,000 to INR 40,000

• Relief for owners of more than one house; second self-occupied house not to be subject to tax on deeming/notional basis; aggregate deduction of interest on home

ISSUE 2 | FEBRUARY 2019

INCOME SLAB

( IN INR)

STATUS OF INDIVIDUALS - GEN-

ERAL CATEGORY

250,000 Nil

250,001-500,000 5%

500,001-10,00,000 INR 12500+20% on excess of INR 5 lakhs

10,00,001 & Above INR 62,500+30% on excess of INR 10

lakhs

INCOME SLAB ( IN INR)

STATUS OF INDIVIDUALS – RESIDENT SENIOR CITIZEN

(60 years to 79 years)

300,000 Nil

300,001-500,000 5%

500,001-10,00,000 INR 12500+20% on excess of INR 5 lakhs

10,00,001 & Above INR 62,500+30% on excess of INR 10 lakhs

INCOME SLAB ( IN INR)

STATUS OF INDIVIDUALS – RESIDENT VERY SENIOR

CITIZEN (80 years and above)

500,000 Nil

500,001-10,00,000 20% on excess of INR 5lakhs

10,00,001 & Above INR 50,000+30% on excess of INR 10 lakhs

Type of companies

Income upto INR 1crs

Income above INR 1 crs and less than INR 10

crs

Income above INR 10 crs

Sur-charge

Effec-tive Rate

Surcharge

Effec-tive Rate

Sur-charg

e

Ef-fective Rate

Domestic with turn-over (or gross re-ceipts) not exceeding INR 250 crores in the FY 2017-18

Nil 26% 7% 27.82% 12% 29.12%

New domes-tic manufac-turing

Nil 26% 7% 27.82% 12% 29.12%

Other Do-mestic

Nil 31.20%

7% 33.38% 12% 34.94%

Foreign Companies

Nil 41.60%

2% 42.43% 5% 43.68%

Type of companies

Income upto INR 1crore

Income above INR 1 crore and less than INR 10

crores

Income above INR 10 crores

Sur-charg

e

Ef-fective Rate

Sur-charge

Effec-tive Rate

Sur-charg

e

Effec-tive Rate

Domestic Companies

Nil 19.24%

7% 20.59%

12% 21.55%

Foreign Nil 19.24%

2% 19.62%

5% 20.20%

Interna-tional Fi-nancial Services Centre (“IFSC”)

Nil 9.36%

7% 10.02%

12% 10.48%

Extension of benefits in the real estate sector will give a boost to construction activity, particularly in affordable housing. Exemp-tion from levy of tax on inventories is likely to encourage invest-ment in the sector. From the consumers’ point of view, benefits of rollover in capital gains and exemptions on income tax on rent will boost housing demand, and is also expected to increase invest-ments in a second house. 3. Indirect Taxes:

• The Government has estimated the CGST collection for FY 2019-20 at INR 6.10 lakh crore. This assumes a growth of around 20% over the revised estimate FY 2018-19 at INR 5.04 lakh crore.

• Overall growth in GST collection in the current year over last year is only 8% (INR 97,100 crore vs INR 89,700 crore on a month-on-month basis). It will need substantial expansion in the tax base and stringent control over revenue leakages.

4. MSME

• 2% interest rebate for MSMEs registered under GST for loans up to INR 1 crore

• Requirement of sourcing by government enterprises from SMEs increased up to 25%, of which, at least 3% to be sourced from women-led SMEs

• Government E-procurement Marketplace (GeM) platform ex-tended to Central Public Sector Enterprises

• Provisions relating to interest rebate will encourage more MSMEs to register under GST, which will promote compliance under GST, expand the tax base and boost formalisation of the economy. Improved access and the reduced cost of credit will lower organisations’ production costs and make them more competitive. With the implementation of the GeM platform, MSMEs will have access to a larger market.

LLP Tax rates

LLP Tax rates – Alternative Minimum tax (AMT)

• The provisions were introduced vide Finance Act 2017 to tax notional income on rentals from property held as stock-in-trade for a period beyond one year from the end of the financial year in which the certificate of completion of property was obtained. This period of holding is proposed to be increased to two years.

• Under the present provisions, deduction on profits is available to developers who are engaged in developing and building af-fordable housing projects. One of the conditions, i.e. the time taken to seek approval for a project from the competent author-ity, is proposed to be extended to 31 March 2020.

• The Government envisages a push towards technology-intensive tax assessments and return processing within the next two years. This is directed towards eliminating personal inter-face and bringing transparency.

• The provisions relating to TDS on rental payments provide for a monetary threshold of INR 1.8 lakh. This threshold has been enhanced to INR 2.4 lakh.

• Domestic companies with a turnover not exceeding INR 250 crore during FY 2016- 17 continue to enjoy a reduced tax rate of 25% (increased by applicable surcharge and cess). The base year for this reduced tax rate is proposed to be extended to do-mestic companies with turnover not exceeding INR 250 crore for FY 2017-18.

• In the Affordable Housing sector, benefits under Section 80-IBA of the IT Act were extended by a year for projects approved till March 2020. This will allow Real Es-tate developers to deduct 100% of profits derived from development of affordable housing projects.

ISSUE 2 | FEBRUARY 2019

Type of entity

Income upto INR 1crore

Income above INR 1 crore

Sur-charg

e

Effective Rate Sur-charge

Effective Rate

LLP Nil 31.20% 12% 34.94%

Type of companies Income upto INR 1crore

Income above INR 1 crore

Sur-charg

e

Effec-tive Rate

Sur-charg

e

Effec-tive Rate

Other than in IFSC Nil 19.24%

12% 21.55%

In IFSC (International Fi-nancial Services Centre and deriving its income solely in convertible foreign ex-change.)

Nil 9.36% 12% 10.48%

Character is like a tree and

reputation like a shadow. The

shadow is what we think of it;

the tree is the real thing. Abraham Lincoln

Abraham Lincoln

Abraham Lincoln

Abraham Lincoln

by three banks, namely Dena Bank, Syndicate Bank and Oriental Bank of Commerce, and we got a letter of appreciation. I am happy to share that this year, majority of banks have taken the demo of this soft-ware and many of them have expressed their consent to use the same. With such a vast usage of our soft-ware, our concern regarding the autonomy of banks in the selection of bank-branch auditors will be suitably addressed. Moreover, the allotment of audit will be uniform besides being fair, transparent and equitable. Our Emblem Registered—A Landmark in Pro-tecting Professional/ Trade Interests With a strong professional tradition of almost 70 years, ICAI has the privilege of contributing to the national economy with its heritage of work. With its unique logo and motto conceived by none other than the great Indian philosopher Shri Aurobindo, our in-stitute has created a place and a name of its own. In order to preserve its heritage particularly its identity relating to its logo, motto, etc., ICAI Council had in the past deliberated on how to enhance and preserve our identity and image which emanates from our 70-year long tradition of achievements and how to pro-tect our trade copyrights. I am happy to share that we recently got our Garuda emblem as well as our acro-nym ICAI registered as trademark of the Institute. I am sure this registration will help us in promoting our identity and brand and preserve our trademark and copyrights.

Homage to Our Brave Soldiers As we know, in a ghastly and gruesome attack on our CRPF personnel in the Pulwama district of Jammu & Kashmir, 40 personnel were killed. We strongly con-demn this despicable and cowardly act. I extend my heartfelt condolences to the families of those mar-tyred. I wish to inform that the Ministry of Home Af-fairs has undertaken a benevolent initiative in support of the families of the martyred and created a platform called India’s Bravehearts (Bharat Ke Veer), whereby the people of India can directly donate to the individ-ual accounts of the families of our Bravehearts. Please check bharatkeveer.gov.in for further details. I urge all of you to help those families. Interim Budget 2019 Presented by Our Member A balanced Interim Budget 2019 was presented, for the first time in the annals of Indian history, by a chartered Accountant – our interim Union Finance Minister CA. Piyush Goyal. With an objective to transform India into a $5-trillion economy by 2025 and a $10 trillion by 2030, the Finance Minister has laid down India’s Vision 2030 during the Budget. I am sure, my professional colleagues will contribute to the agenda of our government towards achieving the moderate taxation-high compliance regime. Adoption of ICAI Software on Allotment of Statu-tory Bank-Branch Audit by Banks As you know, we have over the years expressed our concern on the appointment of auditors of public sec-tor banks by Banks’ Board themselves and on the autonomy given to them. To address this, as you are very well aware, ICAI had developed an automated web-based software for the selection of statutory branch auditors of public-sector banks. On our re-quest, RBI requested all banks to take help of this software or any other software to allot bank-branch audit. And last year, the ICAI software was utilized

ISSUE 2 | FEBRUARY 2019

DISCLAIMER : The views and opinions expressed or implied in the newsletter are those of the authors and not necessarily reflect those of the Belgaum Branch of SIRC of ICAI. The Belgaum Branch is not responsible in any way for the consequences of any action taken on the basis of the advertisements, views & opinions expressed in this news-letter.

139(1). In fact, assessee have come across many instances where the co-operative societies were not aware of the change of law and have not filed their returns of income so far. Perhaps, the co-operative sector which is not that affluent and provides lifeline to many families they may approach the CBDT for a general order under section 119(2)(b) for extension of time for allowance of deduction under section 80P for the assessment year 2018-19 to over-come this hardship. This would provide great relief to co-operative sector across the country. Opening outstanding credit and section 68 In scrutiny assessment of our company, one of the contentious issues relates to addition contemplated under section 68 by the Assessing Offi-cer. A sum of Rs. 6,50,000 outstanding to loan creditors is sought to be added to the returned income. The balance represents amounts credited in the earlier year. There is no waiver from them nor was any transfer made to the profit and loss account. The whereabouts of creditors are not known at this juncture. Is the action of Assessing Officer tenable in law? Section 68 says that where any sum is found credited in the books of an assessee and the assessee offers no explanation about the nature and source thereof or the explanation offered is not satisfactory in the opin-ion of Assessing Officer, he may charge that amount as income of the assessee of that previous year. The tax chargeable on such amount would be @ 60 % plus surcharge and cess as per section 115BBE of the Act. In your case, the amounts were credited in the earlier year and in the year under scrutiny you could not produce confirmation letters to prove the existence of liability. As you have not transferred the amount to profit and loss account and the liability has not ceased to exist, it cannot be subjected to tax. You can refer to the decision in the case of Asstt. CIT v. ATS Promot-ers &Builders (P.) Ltd. [2015] 57 taxmann.com 21 (All) where it was held that any sum found credited in the books of account of the assessee in earlier year which is not a fresh credit, the provisions of section 68 would not be attracted. Therefore, the action of the Assessing Officer could be contested in the appellate forum. Taxability of Bonus Points and free gifts We own a ready-made garment retail shop. We issue a loyalty card to customers - for every purchase of Rs.500- 10 loyalty points are credited to card. On accumulation of 500 points, the customer can encash the same and get a watch worth Rs.1,000 free of cost. Do we need to charge GST on the bonus points or on the watch given to the customers If yes? on what value? The grant of bonus points in itself is not a supply of goods or services and, thus not exigible to GST. Further, as per Section 7(1)(a) of the CGST Act, 2017 in order to be regarded as supply the sale/transfer should be for a consideration, barring a few exceptions as listed out in

Schedule I of the CGST Act, 2017. In your case as the watch has been given free of cost to the customers viz, without consid-

eration, it will not be regarded as supply and, consequently, no tax is required to be paid on such watch at time of giving of such watch to

the customers. However, the Input Tax Credit attributable to such watch which has been given as a gift needs to be reversed in view of Section 17(5)(h) of the CGST Act, 2017.

Unjustified adjustments proposed under section 143 (1) by CPC Our firm is engaged in money lending business. We provide loans on the security of immovable property given by the borrowers as mort-gage. We have been filing the return of income for more than a decade by claiming deduction under section 40(b) in consonance with the part-nership deed. For the assessment year 2017-18, we filed the return of income of the firm by offering income under section 44AD. We recently received a communiqué from CPC, Bengaluru saying that the income admitted under section 44AD was incorrect. The reason for non-acceptance of the return was stated as receipts liable for TDS under section 194A "should be offered under income from other sources and not under any other head of income". Is this the correct legal position? Section 44AD clearly says that what is eligible business and who is eligible assessee. The eligible business is any business of the assessee, except (i) the business of plying hiring or leasing goods carriages; (ii) carrying on profession referred to section 44A(1): (iii) earning income in the nature of commission or brokerage; and (iv) carrying on any agency business. "Eligible assessee" means an individual, HUF or a partnership firm who is a resident (other than LLP) and excludes any person who has claimed deduction under any of the provisions of sections 10A, 10AA, 10B, 10BA or under any provision of Chapter VI-A under the heading "C. -Deductions in respect of certain incomes" in the relevant assessment year. Taking note of the legal position, viz., the eligible business and eligible assessee, interest income from money lending business is also covered by section 44AD. Once it is covered by section 44AD, the action of the CPC in stating that interest income under section 194A should always be offered under the head "other sources" seems to be unjustified. The adjustment made or proposed to be made by CPC will not stand the scrutiny of the Court, as the communication and the reasons have no legal backing. Denial of deduction under section 80P or co-operative societies Ours is a handloom co-operative society operating for more than 2 decades with more than 3000 members. We have claimed deduction under section 80P up to the Asst. year 2017-18. This year the audit of co-operative department got delayed and we got the accounts finalized only November, 2018. When we approached our tax counsel for audit under section 44AB, he advised us that because of the amendment to the Finance Act, 2018 in section 80AC the benefit of section 80P could not be claimed by us for the assessment year 2018-19. Is the amended sec-tion 80AC applicable from assessment year 2018-19 onwards or will it apply from the assessment year 2019-20 onwards? From the query raised by you, I understand that your society is eligible for section 80P deduction equivalent to the whole amount of profits and gains of business attributable to collective disposal of labour of your members. The Finance Act, 2018 substituted section 80AC which says that where the total income of an assessee of any previous year commencing on or after 1st day of April, 2018 includes any deduction admissible under Chapter VIA under the heading "C.- Deductions in respect of certain incomes" could be allowed when the return of in-come is furnished on or before the 'due date’ specified under sec-tion 139(1). Therefore, for the assessment year 2018-19 to claim the benefit of section 80P the return of income of the co-operative socie-ties have to be filed before the 'due date' specified in section

ISSUE 2 | FEBRUARY 2019

ISSUE 2 | FEBRUARY 2019

• 11th February 2019 (Monday) Live Webinar : Release of publication: "Certifications and Audit under Real

Estate (Regulation and Development) Act, 2016 (RERA)"

• 16th February 2019 (Saturday) Motivational talk by CA. T. N. Manoharan

• 18th February 2019 (Monday) Committee Change over and Installation Ceremony of New Committee for

2019-2020

ISSUE 2 | FEBRUARY 2019