Quote of the Day

Quote of the Day
The government who robs Peter to pay Paul can always depend on the support of Paul.- George Bernard Shaw

Back Office

Term of the Day - back office
The administrative functions at a brokerage that support the trading of securities, including trade confirmation and settlement, recordkeeping, and regulatory compliance.
More generally, administrative functions that support but are not directly involved in the operations of a business, such as accounting and personnel.

ICAI to oppose Valuation Professionals Bill

THE government’s move to create a separate breed of corporate valuers in the country is set to face stiff resistance from the Institute of Chartered Accountants of India (ICAI), that trains and regulates the professional conduct of chartered accountants. The Institute is expected to tell the government that financial valuation of companies is best done by chartered accountants and this job be reserved for them. The government’s attempt is to institutionalise this profession with a well laid out code of conduct. It also wants to set up a panel of independent valuers that shareholders and clients would find credible. ICAI is now studying global valuation models, where CAs or their professional equivalents play the dominant role. The study results may be used to tell the government to reserve the work of financial valuation for CAs. The ministry of corporate affairs is expected to set up an expert panel to work out the modalities of a proposed law that will regulate the business of corporate valuation by creating a pool of government-recognised valuers. Even though the proposed panel of government-recognised valuers will comprise CAs in large numbers, the institute fears that such a move may affect its professional dominance, and also affect the quality of valuation work. Corporate valuation has always been a domain strength of chartered accountants because of their in-depth skills in auditing and finance. Corporate valuation is an essential part of initial public offerings, mergers and acquisitions, strategic corporate alliances and corporate restructuring. An official with ICAI said that world over, valuation of companies is done mainly by chartered accountants or certified public accountants (CPA), which is the statutory title of qualified accountants in the USA. The government’s expert panel that will decide on the draft valuation professionals bill is also likely to have representation from the ICAI, apart from other specialised bodies. The government intends to introduce the bill in the next session of Parliament, an official with the ministry of corporate affairs who did not want to be identified said. The proposed bill will seek to create a council of valuation professionals, which will set standards for the valuers, ensure for their training and monitor their performance.

Bonds

While you can probably pick up a lot about how the stock market works simply from following the news, the same cannot be said for the bond market. Because it is considered less exciting, the bond market doesn't get a lot of coverage. But it is essential that you understand the basics. Here are some of the most important bond-related terms.
Par Value
Par value is the amount that will be received at the time of maturity. It is also known as the principal, face value, or par value. Par value will vary depending on the type of bond. Most corporate bonds have a $1000 face value, while some government bonds will carry a much higher par value. Savings bonds can be purchased for sums under $100, so there is a wide variety of options. When the bond matures and the lump sum is returned, the debt obligation is complete. It is important to remember that bonds are not always sold at par value. In the secondary market, a bond's price fluctuates with interest
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rates. If interest rates are higher than the coupon rate on a bond, the bond will have to be sold below par value (at a "discount"). If interest rates have fallen, the price will be higher.
Maturity
Maturity is the length of time before the principal is returned on a bond. It is also called term-to-maturity. At the time of maturity, the issuer is no longer obligated to make interest payments. Maturities range significantly, from 1 month for some municipal notes to 40+ years for some corporate bonds. When evaluating your goals, keep in mind that bonds of different maturities will behave somewhat differently. For example, bonds with long-term maturities will be more sensitive to changes in interest rates. Shorter term bonds are more stable and, because you are more likely to hold it to maturity, are more predictable. There are some circumstances where a bond will be "called" before maturity .
Coupon
The coupon rate is the interest rate that is paid out to the bond holder. The name derives from the old system of payment, in which bond holders would need to
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send in coupons in order to receive payment. The coupon is set when the bond is issued and is usually expressed as an annual percentage of the par value of the bond. Payments usually occur every six months, but this can vary. If there is a 5% coupon on a $1000 face value bond, the bondholder will receive $50 every year. If two bonds with equal maturities and face values pay out different coupons, the prices of these bonds will behave differently in the secondary market. For example, the bond with a lower coupon rate will be less expensive because the bondholder is going to be getting more of his/her return from the return of principal at maturity than will the holder of a bond with a higher coupon. There are some bonds that do not pay out any coupons; these are called zero-coupon bonds .

Quote of the Day

Some people use one half their ingenuity to get into debt, and the other half to avoid paying it. - George D. Prentice

Arbitrator

Term of the Day - arbitrator
A private, neutral person chosen to arbitrate a disagreement, as opposed to a court of law. An arbitrator could be used to settle any non-criminal dispute, and many business contracts make provisions for an arbitrator in the event of a disagreement. Generally, resolving a disagreement through an arbitrator is substantially less expensive than resolving it through a court of law.

GOLDEN QUOTE

Ask someone to pick up your mail and daily paper when you’re out of town. Those are the first two things potential burglars look for.

recent Income Tax Cases

2008 SUPREME COURT

UNION OF INDIA AND OTHERS Versus DHARAMENDRA TEXTILE PROCESSORS AND OTHERS

Income Tax - Penalty u/s 271(1)(c) is a civil liability - Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276C - Section 11AC of Central Excise Act and Rules 96ZQ and 96ZO have no scope for any discretion – Wilful concealment is not an essential ingredient for imposing penalty thereunder

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2008 - BOMBAY HIGH COURT

CHANDRAKANT KANTILAL SHAH AND ANOTHER Versus S.K. LAL AND OTHER

Income Tax - Purchase of immovable property - appropriate authority failed to consider the merits and demerits of the case pointed out by the petitioners. In these circumstances, it is difficult to hold that the sale instances relied upon by the Appropriate Authority were comparable and consequently, it is difficult to hold that the flat in question sought to be purchased by the petitioners has been undervalued by 15% or more than the fair market value – order of pre-emptive purchase is invalid

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2008 GUJARAT HIGH COURT

HARIKRISHNA FAMILY TRUST Versus COMMISSIONER OF INCOME-TAX

Income Tax - Taxability of rental income from sub-lessee – assessee-trust lesee of property had sub-let the property - assessee trust at no point of time indulged in any systematic business activity, hence income is not taxable as “Income from Business”.– assessee is not a owner of property, so income is not assessable as “Income from House Property” - income is liable to be taxed as “Income from other Sources” and not as “Income from House Property” or “Income from Business”

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2008 BOMBAY HIGH COURT

SHAMIM BANO G. RATHI AND ANOTHER Versus ORIENTAL BANK OF COMMERCE LTD. AND OTHERS

Income Tax - Recovery of tax - Attachment and sale – dept. ordered that sale of properly was fraudulent - Held that in the absence of a declaration by a civil court the order declaring the sale deed, as null and void, was an order without jurisdiction and consequently had to be set aside - Consequently the order of attachment dated is quashed and set aside - As the sale is legal and valid, respondent no.1 was bound to issue the TDS certificate in favour of the petitioners from 30.7.2002 onwards

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2008 KERALA HIGH COURT

COMMISSIONER OF INCOME-TAX Versus SOUTHERN TUBES

Income Tax - “Transfer” - Section 2(47) - tax on capital asset u/s 45(4) – dissolution of firm consisting of two partners – held that the transaction resulted in dissolution of the firm and partner or partners getting rights over the immovable property. Subsequent reconstitution of the firm does not affect the liability of the dissolved firm to be assessed for capital gains in terms of Section 45 (4) - hold that the transaction in both the cases is transfer within the meaning of Section 2(47)(vi)

GOLDEN QUOTE

Always have something beautiful in sight, even if it’s just a daisy in a glass.

STORY-OF-THE-WEEK

PEAS BIRYANI


Steaming hot Peas Biryani! Mouth-watering! Delicious! Mother usually made Peas Biryani on Wednesday afternoons in winter. It was her favourite dish to prepare, for it was easy to make, yet a hot favourite amongst the kids. Moreover fresh peas were in season and tasted heavenly!

She heated some oil in a pan and added a spoonful of cumin seeds. Then she added a handful of chopped onions. She proceeded to add some green peas and seasoned them with salt and turmeric powder. Having sautéed them for a couple of minutes she turned in the cleaned and washed rice and poured in a good amount of water. She covered the pan with a lid and let it cook on a slow flame.

Strangely, the ingredients in the simmering pot started a conversation. The rice was the first to say, "I am the most important of all of us present here for I am pure white and wholesome. I am the key ingredient to making Peas Biryani. I am Sathya, this is the Truth."

The yellow turmeric powder chuckled and said, "No longer are you white my dear, for I have dyed you in my own colour. I am Dharma. This is my duty."

The peas smiled peacefully and said, "What is Peas Biryani, without peas, eh? We are the most attractive and delicious part of this preparation. We are shanti. We are peace. We are peas (peace) and our colour too is green that is the colour of peace!"

The salt mused to itself and said, "Who would ever be able to eat Peas Biryani, without salt? I am the most important of all. If I were not there Peas Biryani would be unpalatable. My taste shall be infused in each particle. I am prema. I love each one of you equally."

The onions said, "We add the tang to this dish. We add flavour. We are the soul of all vegetarian food. We are ahimsa. We tolerate all other flavours, yet retain our own!"

The pan spoke up and said, "It's I who is holding all of you in here. But for me, you would all have been separate identities. I have held you together, so that jointly, you can become a delicious dish. Where would you be without me? I am discipline and I am indispensable."

The cumin seeds were dancing up and down in the boiling water and said, "Try making Biryani, without us! It shall be quite tasteless. We sizzle in the hot oil first of all for we are devoted to spreading our flavour, wherever we go. We are devotion."

The Biryani was almost ready and the oil glistened on every grain of rice. It said, "I ensure that each grain of rice, each pea and each cumin seed, retains its individual identity. I prevent stickiness. I am discrimination!"

 The water was almost completely absorbed by now. It smiled contentedly and said, "I was determined to permeate into each particle of all of you. Without me could peas Biryani ever have been made? I am determination and I am the most important of all!"

Mother came by and checked to see, if the Biryani was done. The gas flame smiled quietly to itself and said, "Each one is so full of its own importance. Without the power of heat provided by me, what would they be? It is the power of God vested in me that I can give the energy to cook. But alas, who remembers the power of God?"

God smiled to Himself as the lady turned off the gas and waited, till He was needed again.

Each one of us in this world is so full of his or her importance. We conveniently forget God who gives us the power to do everything. Whether acknowledged or not, whether remembered or not, God is the power behind doing and making everything, even Peas Biryani!

SANJAY TANDON
COMPETENT-CHANDIGARH

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WITH REGARDS
SATBIR
PRESIDENT
JAB WE MET CA
REDEFINING PROFESSIONALISM....
WWW.jabwemetca.blogspot.com