E-FILING OF INCOME TAX RETURNS

RETURN MADE SIMPLER THROUGH E-FILING

NEW DELHI: As July 31 — the last date for filing income-tax returns for individuals, Hindu Undivided Families and other non-corporate assessees — draws closer, taxpayers have started preparing themselves for the yearly ritual of poring over their documents and making hurried calls to their chartered accountants. Though e-filing of returns is not compulsory for individual taxpayers, it has picked up in a big way because of the convenience it offers. All you need to do is to log on to the official website http://www.incometaxindiaefiling.gov.in or www.incometaxindiaefiling.gov.in, and register with your PAN, which will act as your user ID. Next, you need to identify the return form (in excel format) applicable to you and download the same. A salaried assessee with no other income (except interest from bank deposits) has to fill the form ITR 1. If he/she has also earned income by way of rent, selling a house property or stocks and so on, ITR 2 will be applicable. The Form-16 issued by your employer will serve as a helpful guide to filling the return forms. You need to go to Tools > Macro > Security and set the security level to medium and enable the macros. Once you are done with filling the form, you need to validate all the information by clicking on the Validate key and proceed to generate an XML file, which will have to be uploaded on to the site by hitting the Submit Return key. If you have obtained a digital signature (DS) certificate, you need to upload it along with the XML file. Once the website displays the acknowledgement details, your task can be considered complete. You can preserve a print-out of the acknowledgement slip for your records. However, in case you have submitted the return without a DS, the ITR-V form will be generated, which will have to be filled and submitted to your local income-tax office within 15 days of e-filing your return. In case you are unable to so, your return is rendered invalid. ITR-V has to be signed and submitted in duplicate. The I-T department will retain a copy and hand over the other duly stamped copy to you. This copy will serve as a proof that you have submitted ITR-V within stipulated time. While you are not required to attach any documents like the Form-16 or TDS certificates along with ITR-V, it is advisable to attach photocopies of the same to enable the taxman assess your return easily.
A digital signature (DS) is required to validate the electronic documents. A DS can be obtained for a fee from any of the seven Certification Agencies (CAs), including TCS, National Informatics Centre and MTNL, which are authorised by the government to issue digital signatures. An individual assessee is required to obtain Class II/Class III digital signature certificates, which are issued after the submission of relevant identity and address proofs. Usually, these are certificates issued with a validity period of 1-2 years, and need to be renewed thereafter. The process of obtaining a DS can take up to 1-2 weeks. The fees charged for issuing a DS depend on the vendor and the validity period. The cost of obtaining a Class II DS could range from Rs 300 to Rs 2,000. While e-filing has certainly made the taxpayer’s life simpler, certain hiccups such as slow downloading and uploading do crop up at times. One of the drawbacks of this system is that it does not guide you with helpful tips and information, points out Pune-based chartered account Vaibhav Sankhla. Besides, the portal’s functioning gets disrupted even if minor typographic errors such as extra spacing between the words or usage of an incorrect date format occur, says PricewaterhouseCoopers executive director Sandip Mukherjee. People who do not have the time or patience to file their returns directly through the official website can opt for the services offered by e-filing specific portals like Taxsmile and Taxspanner, who promise to simplify the procedure further for a fee (starting from Rs 250 a year). They arrange for a DS as well. Taking this route could make your task easier. “These portals provide useful inputs and tools that can guide the users properly,” says Mr Sankhla. You can also courier your ITR-V to their offices, which will in turn, submit the form at the local I-T offices, marking the culmination of the return-filing process. However, if you happen to miss the bus this time, you have an option of filing a belated return till March 31, 2010. But if the return is filed after March 31, 2009, you may have to shell out penal charges of up to Rs 5,000 if your papers are picked up for assessment by the taxman. Moreover, if any tax remains unpaid, the tax payer will also be liable to pay a penal interest of 1 per cent per month on the amount of unpaid tax from the date immediately following the due date, i.e. July 31, 2008, till the day the tax amount is finally paid.

Fair Value Derivatives Statement

GASB Issues Fair Value Derivatives Statement
USA July 7, 2008
The Governmental Accounting Standards Board has issued GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments.
Statement 53 is intended to improve how state and local governments report information about derivative instruments -- financial arrangements used by governments to manage specific risks or make investments -- in their financial statements. It specifically requires governments to measure most derivative instruments at fair value in their financial statements that are prepared using the economic resources measurement focus and the accrual basis of accounting.
The guidance in this Statement also addresses hedge accounting requirements and is effective for financial statements for reporting periods beginning after June 15, 2009, with earlier application encouraged.
"By requiring the fair values of derivative instruments to be reported on the face of financial statements prepared using the accrual basis of accounting, Statement 53 brings additional transparency to those transactions," said Robert Attmore, chairman of the GASB. "The application of the financial reporting standards required by this Statement gives the users of financial statements a clearer look into the risks their governments are sometimes exposed to when they enter into these transactions and how those risks are managed."
Governments often enter into derivative instruments as hedges of identified financial risks associated with specific assets or liabilities, or expected transactions (that is, hedgeable items). Many of these hedges are intended to effectively offset changes in interest rates or commodity prices. While derivative instruments can be an effective risk management or investment tool, they also can expose governments to significant risks and liabilities.
The new standard provides specific criteria that governments will use to determine whether a derivative instrument results in an effective hedge. Changes in fair value for effective hedges that are achieved with derivative instruments will be recognized in the reporting period to which they relate. The changes in fair value of these hedging derivative instruments do not affect current investment revenue, but are instead reported as deferrals in the statement of net assets or the balance sheet. Derivative instruments that either do not meet the criteria for an effective hedge or are associated with investments that are already reported at fair value are classified as investment derivative instruments for financial reporting purposes. Changes in fair value of those derivative instruments are reported as part of investment revenue in the current reporting period. Statement 53 also improves disclosures, providing a summary of the government's derivative instrument activity, its objectives for entering into derivative instruments, and their significant terms and risks.
More information about GASB Statement 53—including a question and answer document, fact sheet, and plain language article—is available at www.gasb.org.
[Source: SmartPros]
ABHASH KUMAR

MEMEBR JAB WE MET CA

REDEFINING PROFESSIONALIM.....

How to Incorporate a Company ?

Steps to be taken to get a new company incorporated:
Select, in order of preference, at least one suitable name upto a maximum of six names, indicative of the main objects of the company.
Ensure that the name does not resemble the name of any other already registered company and also does not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950) by availing the services of checking name availability on the portal.
Apply to the concerned RoC to ascertain the availability of name in eForm1 A by logging in to the portal. A fee of Rs. 500/- has to be paid alongside and the digital signature of the applicant proposing the company has to be attached in the form. If proposed name is not available, the user has apply for a fresh name on the same application.
After the name approval the applicant can apply for registration of the new company by filing the required forms (that is Form 1, 18 and 32) within six months of name approval
Arrange for the drafting of the memorandum and articles of association by the solicitors, vetting of the same by RoC and printing of the same.
Arrange for stamping of the memorandum and aticles with the appropriate stamp duty.
Get the Memorandum and the Articles signed by at least two subscribers in his/her own hand, his/her father's name, occupation, address and the number of shares subscribed for and witnessed by at least one person.
Ensure that the Memorandum and Article is dated on a date after the date of stamping.
Login to the portal and fill the following forms and attach the mandatory documents listed in the eForm Declaration of compliance - Form-1Notice of situation of registered office of the company - Form-18. Particulars of the Director's, Manager or Secretary - Form-32.Submit the following eForms after attaching the digital signature, pay the requisite filing and registration fees and send the physical copy of Memorandum and Article of Association to the RoC
After processing of the Form is complete and Corporate Identity is generated obtain Certificate of Incorporation from RoC.
Additional steps to be taken for formation of a Public Limited Company:
To obtain Commencement of Business Certificate after incorporation of the company the public company has to make following compliance
File a declaration in eForm 20 and attach the statement in lieu of the prospectus(schedule III) OR
File a declaration in eForm 19 and attach the prospectus (Schedule II) to it.
Obtain the Certificate of Commencement of Business.
Additional steps to be taken for registration of a Part IX Company:
The Part IX Company is required to file eForm 37 and eForm 39 apart from filing eForm 1, 18 and 32.
The company is required to file eForm 1 first and then the company can file all the other eForms (18, 32, 37 and 39) simultaneously or separately

VIKAS KAPAHI

TREASURER

JAB WE MET CA

REDEFINING PROFESSIONALISM....

Auditing Standard on Related Parties

IAASB Issues Auditing Standard on Related Parties; Makes Further Progress on Clarity Standards
New York July 14, 2008
Following the consideration and approval of due process by the Public Interest Oversight Board (PIOB), the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), today released International Standard on Auditing (ISAs) 550 (Revised and Redrafted), Related Parties and three clarity redrafted ISAs.
Related PartiesThe involvement of related parties in major corporate scandals encouraged the IAASB to revise its current auditing standard on the subject. The revised Related Parties standard clarifies the meaning of "related party" for purposes of an audit. It also makes clear the auditor's responsibility to obtain sufficient evidence about the required accounting and disclosure of related party relationships and transactions and to understand how such relationships and transactions affect the view given by the financial statements.
"The standard will strengthen current auditing practice in this area by emphasizing the need for the auditor to understand related party relationships and transactions in order to identify the risks of material misstatement to which these may give rise, and directing the auditor to focus work effort on the assessed risks of material misstatement, including those due to fraud," explains John Kellas, IAASB Chairman.
"The revised standard clarifies the auditor's responsibilities in those cases where the financial reporting framework establishes minimal or no related party requirements. In addition, it provides enhanced guidance to assist the auditor in understanding and responding to the risks of material misstatement that may arise in relation to related parties with dominant influence," emphasizes Kellas.
Clarity Redrafted ISAsIn addition to ISA 550 (Revised and Redrafted), the IAASB has also released the following clarity redrafted ISAs:
ISA 250 (Redrafted), Consideration of Laws and Regulations in an Audit of Financial Statements;
ISA 510 (Redrafted), Initial Audit Engagements-Opening Balances; and
ISA 570 (Redrafted), Going Concern.
They form part of the IAASB's ambitious 18-month program to redraft existing standards following the clarity drafting conventions.* To date, the IAASB has released 15 final clarity redrafted ISAs. The IAASB is on track to finalize its complete set of clarified ISAs by the end of this year.
The complete set of clarified ISAs, including newly revised standards such as ISA 550 (Revised and Redrafted), will be effective for audits of financial statements for periods beginning on or after December 15, 2009.
The ISAs can be downloaded free-of-charge from the IFAC online bookstore at http://www.ifac.org/store.
About the IAASB and IFACThe objective of the IAASB is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. The Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international auditing and assurance standards through the IAASB, IFAC, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.
* Key elements of the clarity drafting conventions include: establishing an objective for the auditor with respect to the subject matter of each standard; clearly distinguishing requirements from guidance on their application; avoiding ambiguity through eliminating the present tense to describe actions by the auditor and using more imperative language where a requirement was intended; and other structural and drafting improvements to enhance the overall readability and understandability of the standards.
[Source: IFAC]
ABHASH KUMAR
MEMEBR JAB WE MET CA

REDEFINING PROFESSIONALISM........

Fair value rules will not change, says IASB

UK July 11, 2008
The principal body responsible for global accounting rules said it would not dilute the "fair value" standards that critics blame for increasing the scale of credit crisis-related write downs at banks.
The International Accounting Standards Board is pushing ahead with a process to review how the value of assets such as mortgage-backed securities can be established in an illiquid market.
But the rules on "fair value", which dictate that assets should be valued at the price they would fetch in the marketplace, will not change.
A panel established by the board to assess whether it can give companies more guidance on valuing illiquid assets met for the first time last month.
John Smith, a director of the board, said the panel was likely to meet again in the coming months, possibly several times.
There is no fixed timetable for meetings, however, or fixed objectives.
"If there's something to be done, we'd like to do it as quickly as possible. I couldn't tell you when but I would say this year clearly versus sometime further out," Mr Smith said.
Accounting rules drawn up by the board are used in more than 100 countries and are mandatory for companies listed in the EU.
The Institute for International Finance, a lobby group for financial institutions, has said there is a need to clarify some accounting rules.
[Source: The Telegraph]
-- Thanks & Regards
ABHASH KUMAR
JAB WE MET CA
REDEFINING PROFESSONALISM............

IAS-2 ( TECHNICAL SUMMARY)

Technical Summary

This extract has been prepared by IASC Foundation staff and has not been approved by the IASB. For the requirements reference must be made to International Financial Reporting Standards. IAS 2 Inventories
The objective of this Standard is to prescribe the accounting treatment for inventories. A primary issue in accounting for inventories is the amount of cost to be recognised as an asset and carried forward until the related revenues are recognised. This Standard provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realisable value. It also provides guidance on the cost formulas that are used to assign costs to inventories.
Inventories shall be measured at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
The cost of inventories shall be assigned by using the first-in, first-out (FIFO) or weighted average cost formula. An entity shall use the same cost formula for all inventories having a similar nature and use to the entity. For inventories with a different nature or use, different cost formulas may be justified. However, the cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects shall be assigned by using specific identification of their individual costs.
When inventories are sold, the carrying amount of those inventories shall be recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories shall be recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, shall be recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

Golden Quotes

To make somebody wrong never makes anything right.....

IFAC’s International Auditing and Assurance Standards Board Issues Strategy and Work Program for 2009-2011

*IFAC's International Auditing and Assurance Standards Board Issues Strategy
and Work Program for 2009-2011*

New York
July 14, 2008

The International Auditing and Assurance Standards Board (IAASB), an
independent standard-setting board under the auspices of the International
Federation of Accountants (IFAC), today released its Strategy and Work
Program, 2009-2011. The three-year strategy includes an emphasis on the
development of standards that contribute to the effective operation of the
world's capital markets and that address the needs of small- and
medium-sized entities and small and medium practices.

The Strategy and Work Program, issued following consideration and approval
of its completeness from a public interest perspective by the Public
Interest Oversight Board (PIOB)*, is consistent with the IAASB's overall
objectives. ** It builds on the strong base of standards developed by the
IAASB to date and focuses on three areas:

- The development of standards;
- The facilitation and monitoring of adoption of those standards; and
- Responding to concerns about the implementation of the standards by
activities designed to improve the consistency with which they are applied
in practice.

"The IAASB's vision is that the high quality standards on assurance, related
services and, in particular, International Standards on Auditing that we
develop in the public interest are adopted and applied internationally. The
strategy and work program are consistent with this longer term vision,"
explains John Kellas, IAASB Chairman.

The Strategy and Work Program responds to significant developments in the
environment in which audit and other assurance services are performed, and
in which standards for such services are set. It also highlights the IAASB
role in working toward global acceptance of and convergence with its
standards and in establishing and maintaining relevant partnerships. It is
underpinned by the IAASB's communications initiatives to keep stakeholders
informed of its activities and to promote adoption and implementation of its
standards.

The Strategy and Work Program reflects the outcome of an extensive
consultation program to obtain the widest possible input into determining
the IAASB's priorities over the next three years. A summary of the IAASB's
conclusions with regard to significant matters raised during these
consultations is presented in the Basis for Conclusions: IAASB Strategy and
Work Program, 2009-2011.

"I am grateful to the many people and organizations that contributed to our
strategy review consultations. I hope that the direction of our work will be
seen as responding to the representations made to us, and to the public
interest, which must be our overriding concern. Of course, events and
circumstances may require us to amend our program, and for this reason it
will be kept under constant review," notes Kellas.

The Strategy and Work Program, 2009-2011 can be downloaded free-of-charge
from the IFAC online bookstore (http://www.ifac.org/store). To access the
related Basis for Conclusions and other information on the IAASB's work,
visit its home page at http://www.iaasb.org/.

*About IFAC*
IFAC is the global organization for the accountancy profession dedicated to
serving the public interest by strengthening the profession and contributing
to the development of strong international economies. IFAC is comprised of
157 members and associates in 123 countries and jurisdictions, representing
more than 2.5 million accountants in public practice, education, government
service, industry and commerce. In addition to setting international
auditing and assurance standards through the IAASB, IFAC, through its
independent standard-setting boards, sets ethics, education, and public
sector accounting standards. It also issues guidance to encourage high
quality performance by professional accountants in business.

*Notes to Editors*

* The PIOB was formally established in February 2005 to oversee IFAC's
auditing and assurance, ethics, and education standard-setting activities as
well as the IFAC Member Body Compliance Program. The objective of the PIOB
is to increase confidence of investors and others that such activities,
including the setting of standards by the IAASB, are properly responsive to
the public interest. PIOB members are nominated by international
institutions and regulatory bodies.

** The objective of the IAASB is: "To serve the public interest by setting,
independently and under its own authority, high quality standards dealing
with auditing, review, other assurance, quality control, and related
services, and by facilitating the convergence of national and international
standards." This objective contributes to enhanced quality and uniformity of
practice in these areas throughout the world and to strengthened public
confidence in financial reporting. The IAASB aims to achieve its objective
through the following strategic initiatives:

(a) Development of Standards - Establish high quality auditing, review,
other assurance, quality control, and related services standards.

(b) Global Acceptance, Convergence and Partnership - Promote the acceptance
and adoption of IAASB pronouncements throughout the world and support a
strong and cohesive international accountancy profession by coordinating
with IFAC member bodies, regional organizations, and national standard
setters to achieve the objective of the IAASB.

(c) Communication - Improve the quality and uniformity of auditing practices
and related services throughout the world by encouraging debate and
presenting papers on a variety of audit and assurance issues and increasing
the public image and awareness of the activities of the IAASB.

[Source: IFAC]

--
Thanks & Regards
ABHASH KUMAR

Bank liable to deduct TDS on MICR charges

*Bank liable to deduct TDS on MICR charges*

New Delhi
July 15, 2008

The Ahmedabad Income-Tax Tribunal has held that where charges are incurred
towards MICR facilities regarding identifying, reading and clearing cheques
through special kind of machines, the same would be in the nature of fees
for technical services (FTS) and would accordingly be liable to deduct tax
at source (TDS) under section 194J. In the relevant case, the assessee was
engaged in the business of banking activities/services. During verification
of the TDS return, the AO observed that the assessee had made payment
towards MICR charges to MICR centre managed by State Bank of India without
deducting TDS. The tribunal held that the definition of the term FTS is very
wide. The services of MICR facilities involve human skills as well as
computerised machines and that it is not automatic. In that sense, it is not
hiring/leasing or making available the technical equipment working on its
own. But it is fully supported by services of personnel and requires human
application of mind along with technical equipment. Since other banks pay
charges for the MICR facilities through its special machines, the same is in
the nature of FTS and therefore, would be exigible to TDS under section
194J.

[Source: The Economic Times]

--
Thanks & Regards
ABHASH KUMAR

Taxability of intangible assets located in India

Transfer of intangible assets located in India

As per Indian Income-tax Act, all incomes accruing or arising, whether directly or indirectly, through the transfer of a capital asset situated in India is liable to Income-tax. Many a times, a controversy arises as to the situs of the asset in India. The controversy is more prominent in case of intangible assets like trademarks, brand-names, etc.
In the above context, recent case of Foster's Australia Ltd (170 Taxman 341) may be referred to. The brief facts of the case are that an Australian company is engaged in brewing, processing and selling of beer products. It owns trademarks, logos, technology and know-how, etc. On Oct, 13, 1997, the company entered into a Brand License (BL) Agreement with Foster's India, an Indian company whereby Foster's India was granted an exclusive license to brew, package, label and sell Foster's beer and an exclusive right of use of the trademarks within the territory of India. The Australian company was paying income-tax on such consideration, treating the same as royalty income.
On August, 4, 2006, the Australian company entered into a sale and purchase (S&P) agreement with SAB Miller, UK in Australia for transfer of shares of Foster India and other intangible assets in the nature of intellectual property.
In the instant case, the prime issue for consideration was as to whether the capital assets transferred through the S&P Agreement are ‘situated in India'. This issue arises since the income arising from the transfer of capital asset situated in India is deemed to be an income liable to be taxed in India as per the explicit mandate of section 9(1).
The Australian company approached the Authority for Advance Ruling for a ruling. It contended that the items of intellectual property covered by the S&P Agreement have no location in India and the situs in this case would be the place of fiscal residence of the owner. Therefore, both the asset and the place of contract being outside India, no income can be charged to tax under the Income-tax Act, 1961.
The department argued that Foster's India is held by Foster's Group, Australia, through the cobweb of its subsidiaries. Though the shares and trademarks and Foster's brand are shown to be sold by two different entities, in effect and in substance, Foster's group, Australia has transferred the ownership of its Indian company, i.e., Foster's India including its tangible as well as intangible assets.
The Authority however observed that: "The situs of these intellectual property assets, in our view, should not be traced and confined only to the place where the contract (India S&P Agreement) was entered into and acted upon by the parties. On the relevant date of transfer, they were very much present in India and the transfer of such assets took place concurrent with the transfer of controlling interest in Foster's India to SAB Miller. At best, their location in Australia is only notional or fictional. The fact that the trade-marks and names originated in Australia and initially registered there does not make material difference."
It was therefore held that the income arising to the Australian company from the transfer of its right, title and interest in the trade-marks and Foster's brand Intellectual Property is taxable in India under the Income-tax Act, 1961.
It is thus clear that intangible assets like trademarks, brand-names etc shall be taken as located in India if they are used in India. Their place of registration in this context is not material.

source-Business standard