PWC was having business links with Satyam

In a twist to the Satyam fraud case, a global IT research firm has revealed details which may point to a collusion between Price Waterhouse Coopers and Satyam Computers. The report, by Gartner, indicates that PwC was in a strategic partnership with Satyam till last year, even as its Indian arm was auditing the firm headed by the disgraced Rajus.

The US-based Securities and Exchange Commission does not allow such a relationship. Even Indian auditing guidelines do not accept that statutory auditors can have a relationship with the audited company.

An auditor in India, working with one of the global Big-4 audit firms told the Financial Chronicle: “Mind you, Satyam was SEC registered. And it is not allowed in accountancy norms to have the same firm as auditor and strategic partner”.

A questionnaire sent to PwC by Financial Chronicle did not elicit any response. A Satyam spokesperson said that the company would not be able to comment on this matter. Satyam was taken over by Tech Mahindra last month in an auction supervised by government-nominate d directors.

The Gartner report quotes PwC’s own official as saying that Satyam did its system integration business for Idearc— even while a five-year non-compete clause with IBM was in place after 2002. That year, PwC had sold a large part of its consulting practice to IBM for $3.5 billion, kicking in the clause.

A popular blog among auditing firm members internationally called `Re:The Auditors’ quoted the Gartner report to say that the roots of the Satyam fraud might be deeper. Francine Mckenna, the blogger, and a former Big-4 employee, told the Financial Chronicle: “The report is a clear indication of the fact that Satyam was a strategic partner to PwC globally enabling them to bypass both the constraints of their non-compete with IBM and to provide a viable solution for their lack of technical expertise and technical bench strength.”

She said that the relationship between the two was for IT work at Idearc, and perhaps other projects. This relationship, she said, allowed PwC to enable “via negligence or worse the humungous fraud that is Satyam.”

The report, published in July 2008 is titled: “PwC to World: `We Implement’”. Since Octobe 1, 2007, when the non-compete agreement expired, there had been speculation as to whether PwC would get back into the IT implementation business, the report said. It then goes on to quote PwC’s US Advisory Strategy Leader Joe Duffy who stated at the PwC’s Analyst Day: “With Idearc (a $3 billion Verizon spin-off), PwC was engaged through the full project life cycle.” The Gartner report comments that Much of this engagement occurred while PwC was still under the IBM non-compete agreement and Satyam Computer Services did much of the system integration work. PwC also helped Idearc shift to an IT strategy heavily dependent on outsourcing, which saved the new company millions of dollars.

Form 3CD (For A.Y. 2009-10)

just click on the headline to download it.

Click Here: FORM 17 OF TDS

Analysis of new system for TDS / TCS payment and information reporting

Income Tax Department has introduced a scheme for centralized processing of annual income-tax returns which envisages no interface with the tax payer and processing of returns to be done in an automated jurisdiction-less manner. Implementation of such scheme requires having a robust system for information relating to payment of TDS and TCS so that the credit for TDS and TCS can be granted accurately and the risk of financial fraud is minimized.

In this regard, the Central Board of Direct Taxes (CBDT) issued Notification No. 858(E) dated 25th March 2009 introducing new rules in relation to remittance of taxes deducted at source, issue of certificate of taxes deducted, etc., effective 1^st April 2009. As per the said notification, CBDT substituted new rules for existing rules and had inter alia prescribed that TDS and TCS shall be paid electronically by furnishing an income-tax challan in Form No.17. Subsequently, a press release was issued clarifying that the new Form No. 17 will be applicable only for the payment of taxes deducted or collected at source on or after 1st April 2009. Thereafter, another press release was issued by the CBDT deferring the implementation of the above notification to1st July 2009 from1stApril 2009. The CBDT had also clarified that the tax deductors/collectors may continue to deposit TDS/TCS and file TDS/TCS returns as per the pre-amended provisions in the interim period.

The CBDT has now issued a circular no. 2/2009 dated May 21, 2009 providing detailed clarification with regard to the new scheme. Some of the salient features of this new scheme are discussed in the subsequent paragraphs. The aforesaid circular specifies that henceforth the claim for TDS and TCS shall be allowed only if the following conditions are complied:

· The amount of TDS / TCS has been deposited by the deductor / collector;

· Deductor / collector furnish information relating to the deductee;

· The TDS/TCS claim matches the information furnished by the deductor /collector.

The revised information reporting scheme has been harmonized with a view to make TDS payment and information reporting system uniform across all deductors (including Central and State Government).

Payment of TDS / TCS

Rule 30 and Rule 37CA which provide for time for payment of the TDS / TCS to the credit of the Central Government and the mode of such payment have been substituted. It is now mandatory for all deductors (including the Central and State Governments) to make the payment by electronically furnishing the newly introduced income-tax challan in Form No. 17. While furnishing this challan, the deductor will be simultaneously required to furnish three basic information relating to the deduction i.e., Permanent Account Number (PAN), name of the deductee and amount of TDS / TCS, to the Taxpayer Information Network (TIN) system maintained by National Securities Depository Limited (NSDL) either through screen based upload or file upload.

Effective date

The new system of reporting will be effective for all TDS / TCS transactions made on or after 1stApril, 2009. However, any TDS or TCS effected from 1st April 2009 to 31^st May, 2009 shall continue to be paid to the credit of the Central Government by using the old challan forms. In this case, the deductor / collector shall, nevertheless, be required to fill up Form No.17 in respect of such payments at any time between 1^st July, 2009 and 15th July, 2009.

The TDS or TCS effected on or after the 1st June, 2009 shall be required to be paid by electronically furnishing income tax challan in Form No. 17.

Obtaining Unique Transaction Number (UTN)

Upon payment of TDS / TCS to the credit of the Central Government and after uploading of basic information, every tax deduction record will be assigned a unique transaction number (UTN). The deductor will be able to get the UTN for all deductions by e-mail or by downloading the UTN file. The deductor will be required to quote such UTN on the TDS/TCS certificate issued to the deductee. NSDL will also create a facility to allow independent viewing of the UTNs by the deductee. The deductees will be able to claim credit for the TDS / TCS by quoting the UTN in their annual income-tax return.

Know If your Income Tax Refund been returned undelivered

MUMBAI: Salaried taxpayers who have not received refunds for assessment years 2003-04 to 2006-07 can find out whether their refunds have been returned undelivered from this link:

http://www.incometaxindia.gov.in/CCIT/refundsearch.asp

You can get the information from the menu `undelivered salary refund management system’, using your PAN number.

If any refund has been returned undelivered due to a change in address, the taxpayer can enter the present address and the refund will be sent to the new address.

SC judgement on s. 271 (1)(c) penalty in Dharmendra Textiles explained

Kanbay Software vs. DCIT (ITAT Pune)

In respect of AY 2002-2003, the assessee claimed by a revised return that the loss suffered in respect of one s. 10A unit was not liable to be set-off against the profits of another s. 10A unit. The AO rejected the claim and the assessee accepted the decision of the AO. On the question whether the assessee was liable for penalty u/s 271 (1) (c) for “furnishing inaccurate particulars of income”, especially in the light of UOI vs. Dharmendra Textile Processors 306 ITR 277 (SC), HELD allowing the appeal:

(1) On first principles, penalty u/s 271(1)(c) is not simply a consequence of an addition being made to the income of the assessee. Penalty u/s 271(1) (c), irrespective of whether it is a civil liability or a criminal liability can only be imposed when the scheme of the Act permits or requires so. It is not an automatic consequence of an addition being made to the income. An addition made during the course of assessment proceedings, by itself, cannot be enough to initiate, leave aside conclude, penalty proceedings u/s 271(1)(c).

(2) The judgement in UOI vs. Dharmendra Textile Processors has to be understood in the correct perspective. It does not make a radical change in the law nor does it affect the basic scheme of s. 271 (1) (c). Even in K P Madhusudanan vs. CIT 251 ITR 99, the assessee’s plea to the effect that ‘revenue was required to prove mens rea of a criminal offence’ before penalty u/s 271(1)(c) can be imposed was rejected. Penalty u/s 271 (1) (c) has been held to be ‘civil liability’ in contradistinction to prosecution u/s 276C. It is wrong to infer that because the liability is a “civil liability”, it ceases to be penal in character. There is no contradiction in a liability being a civil liability and the same liability being a penal liability as well, though a civil liability cannot certainly be a criminal liability as well. As observed in Om Prakash vs. UOI AIR 1984 SC 1194 @ 1209 “A penalty imposed by the sales tax authorities is a civil liability, though penal in character”.

Estimated expenditure towards warranty is allowable u/s 37 (1)

Rotork Controls vs. CIT (Supreme Court)

The assessee sold valve actuators. At the time of sale, the assessee provided standard warranty that if the product was defective within the stated period, the product would be rectified or replaced free of charge. For AY 1991-92, the assessee made a provision for warranty at Rs.10,18,800 at the rate of 1.5% of the turnover. As the actual expenditure was only Rs. 5,18,554, the excess provision of Rs.5,00,246 was reversed and only the net provision was claimed. The Tribunal allowed the claim on the basis that the provision had been consistently made and on a realistic manner. The High Court reversed the Tribunal on the basis that the liability was contingent and not allowable u/s 37 (1). HELD, reversing the High Court that:

(1) A provision is a liability which can be measured only by using a substantial degree of estimation. A provision is recognized when: (a) an enterprise has a present obligation as a result of a past event; (b) it is probable that an outflow of resources will be required to settle the obligation; and (c) a reliable estimate can be made of the amount of the obligation. If these conditions are not met, no provision can be recognized;

PC as FM: His achievements in 5 budgets

Hi Every one.

The UPA has come back to power. The ex-FM has been declared won under dubious declartion. At 3pm he accepted a probable defeat and left the counting center as he was trailing since beginning. But suddenly with an hour or so he was declared elected. GOD BLESS this highly Democratic country.

Well if he becomes FM then he sure will enter the gunnies book of records. As it is he must be a serious contender for introducing many innovative taxes in the Indian economy in the last 5 budgets as under:

1->Freight Tonnage tax for shipping companies. Refer Chapter XIIG. This is a DEEMED Income.

2-> STT. IT that was .15% when introduced and subsequently raised to .25%

3-> CTT tax at .1%. [This has been temporarily withdrawn for election funding.]

4-> Education cess 2% across the board. [This is tax on tax [surcharge] on tax]

5-> Higher education cess 1% across the board. [This also is tax on tax [surcharge] on tax]

6-> An expenditure direct tax called FBT a DEEMED dis allowance of expenditure.

7-> Service Tax was raised from 8% to 12% [How ever for election purpose it was brought down to 10% by his successor]

8-> MAT introduced for sec.10AA exempted companies.

10->Divided Tax raised from 10% to 15%

11> Covered a huge chunk of items under Service tax. Like Service tax on cheque leaves issued by bank, and interest charged etc.

Further a new levy called folio charges [Rs. 100 per quarter that is 400 per year] by banks on all accounts except Saving Bank account. It is the Business of the any business man to keep accounts of his customer. Then why should they charge the customer, I do no understand. If I say that I do not want the bank to keep my folio, will the bank accept my statement and charge interest as per my statement? They do not render any service in maintaining my account to charge me for the same. Over and above this, Service tax + edn cess + higher edn cess are also charged.

What you got? The share market [I would call it a gambling] income got taxed at lower percentage of 10% [now 15%] much lower than an income earned by toiling night and day.

Now if he becomes FM again you can expect the following:

a-> In hindi they ask “App kahan service karte hain?” and reply comes as “Main xx company may service karta hoon.”

That means an employement is a service rendered. Naturally it will attract Service tax ++ to be paid by the employer. Any case the employer can get input credit.

b-> One gives money to his/ her spouse for running the house which again is a service. This will attract service tax.

c-> A new cess at 2% will be levied as Agriculture development cess for recovering 60000 crores agri loans written off.

This article is given by Vishwanathan from ITAXUSERS group.

Benefit of enhanced depreciation on commercial vehicles has been extended

No.402/92/2006-MC (10 of 2009)
Government of India / Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
***
New Delhi dated the 24th April 2009

The benefit of enhanced depreciation on commercial vehicles has been extended up to
30th September 2009. Now, commercial vehicles acquired on or after 1st January 2009 and put to use
before the 1st October 2009 will be eligible for depreciation at the rate of 50 percent. The Central
Board of Direct Taxes have issued a notification vide S.O. 989(E) dated 21st April 2009 (Notification
No.37/2009/F.No.142/01/2009-TPL) to this effect, substituting the words “1st day of April 2009”
with the words “1st day of October 2009”.
Earlier, the benefit was made available for commercial vehicles acquired on or after 1st January
2009 and put to use before the 1st April 2009 vide a notification dated 19th January 2009.
XXX

MAJOR CHANGE IN E FILING OF RETURNS-WITH REGARD TO ITR-V

MAJOR CHANGE IN E FILING OF RETURNS-WITH REGARD TO ITR-V

If the assessee does not use a digital signature for electronically transmitting the data, he is required to follow-up the electronic transmission of the data by submitting the Form ITR-V with the Income-tax Department as verification of the electronic filing of the return.

In such a case, the date of transmitting the data electronically will be the date of furnishing the return if the Form ITR-V is furnished within thirty days after the date of transmitting the data electronically. In case, Form ITR-V, is furnished after the above mentioned period, it will be deemed that the return in respect of which the Form ITR-V has been filed was never furnished and it shall be incumbent on the assessee to electronically re-transmit the data and follow it up by submitting the new Form ITR-V within thirty days.

Since the Form ITR-V is bar-coded, assessee is advised not to fold the same and post it in A4 size envelope. The assessee shall furnish the Form ITR-V to the Income-tax Department by mailing it to “Income Tax Department – CPC, Post Box No - 1, Electronic City Post Office, Bangalore - 560100, Karnataka” within thirty days after the date of transmitting the data electronically. The Post Box shall deliver all the Form ITR-V to the Centralized Processing Centre (CPC) of the Income-tax Department in Bangalore . Upon receipt of the Form ITR-V, the CPC shall send an e-mail acknowledging the receipt of Form ITR-V. The e-mail shall be sent in due course to the e-mail address furnished by the tax-payers in his return. No Form ITR-V shall be received in any other office of the Income-tax Department or in any other manner.

MCX TRANSACTION NON SPECULATIVE

The transactions entered in MCX Exchange i.e for Crude, Silver

Gold etc in MCX will now considered as non speculative from

22-05-2009. Please see the following notification.

Section 43(5)(d)(ii) of the Income-tax Act, 1961 - Speculative transactions - Notified recognised stock exchange

Notification No. 46/2009, dated 22-5-2009

In exercise of the powers conferred by clause (ii) in the Explanation to clause (d) of the proviso to sub-section (5) of section 43 of the Income-tax Act, 1961 (43 of 1961), read with rule 6DDB of the Income-tax Rules, 1962, the Central Government hereby notifies MCX Stock Exchange Ltd. as a recognized stock exchange for the purpose of the said clause with effect from the date of publication of this notification in the Official Gazette.

2. MCX Stock Exchange Ltd. shall separately maintain data regarding all transactions registered in the system in which client codes have been allowed to be changed for periodical inspection by the Director-General of Income-tax (Investigation) having jurisdiction over such exchange and provide copies of the relevant information as and when required.

3. The Central Government may withdraw the recognition granted to MCX Stock Exchange Ltd. if any of the conditions specified in rule 6DDA of the Income-tax Rules, 1962, subject to which the recognition is granted, is violated.

4. This notification shall remain in force until the approval granted by the Securities and Exchange Board of India is withdrawn or expires, or this notification is rescinded by the Central Government as provided in sub-rule (5) of rule 6DDB of the Income-tax Rules, 1962.

All queries For HUF answered here

HOW ONE CAN CREATE HUF(HINDU UNDIVIDED FAMILY)

Though every body is interested in this question and this question has been asked by many and generally not have any answer in text book also, why it so ?

The answer is very interesting that the above question is wrong the correct question is

"How we can create capital for HUF ?'

We cannot create HUF but can arrange capital for it

"Till the time the HUF has an empty kitty, it is like a balloon that no one has yet blown air into. A balloon can rightfully be called a "ball"oon only when it swells up with air inside it. Without the air the balloon is inert, dormant. An HUF too is inert and dormant without funds."............ ........CA Sanjeev Bedi (Ludhiana)

Hindu Undivided Family signifies that the undivided family should be of those to whom Hindu Law Applies - CWT V. Smt. Champa Kumari Singhi (1972) 83 ITR 720 (SC), Hindu Law applies to Jains, Indian Buddhists and Sikhs also. Muslims and Christians cannot form HUF, as this law doesn’t apply to them.

"The million-dollar question indeed is: How to blow funds into the HUF and turn it into a balloon that floats?
· A member of the HUF throwing his money into the common pool, or to use that overused cliché' the family hotchpots, is out of the question, thanks to Section 64(2) which would tax the income earned by the HUF on that money in the individual member's hands only.
· But the clubbing provisions can be bypassed if the HUF invests the money in instruments yielding tax-free income. The tax-free income can then be reinvested to earn even taxable income--income on income is out of the clubbing provisions.
· Strangers can make gifts but only up to Rs 50000 (Section 56).
· A way-out is to receive gifts from members of bigger HUFs, who though your relatives, aren't members of your smaller HUF.
· A father may make a gift of money to his son's newly created HUF, clearly specifying in the Gift Deed that the gift is to his son's smaller HUF and not to the son himself. This will keep both Section 64(2) and Section 56(2) at bay.
· After the HUF has a nucleus of its own and gets going, care has to be taken to keep the HUF's affairs completely distinct from the individual members' affairs. Where the members of the HUF carry on their individual businesses, as they normally do, the distinction between what constitutes the individual's income and what is HUF's income may get blurred.
· Some other people, who aren't members of the HUF but are relatives in terms of Section 56(2), can also be found out.

Now every body comfortable with the question because creating a capital by transfer, gift and all like stuff
so to have capital in HUF account we should take following steps

We should have opened a bank account first (not must) but it is advisable so that we can have transaction by cheques.
Apply for permanent account number (pan)
Formation of capital of huf, Transfer money by gifts etc to HUF capital keeping in view the clubbing provisions and tax on gifts under Income tax act, Remember there is no Tax on gifts in kind though they may attract clubbing provisions in some cases.

Regarding HUF an Interesting and detailed reply has been given

· The Hindu Undivided Family has its roots in the ancient Hindu law like the Manu Smriti, compiled by a male chauvinist Hindu "Scholar" called Manu, who lived around 200 BC; the Yajnavalikya Smriti compiled by Yajnavalikya and Narada in 100 and 200AD (it merely embellished what had already been laid down by Manu); and Mitakshara codified by a guy called Vijneshwara somewhere around the year 1100AD. Mulla, the foremost authority on Hindu law, has described the Mitakshara as "the quintessence of the Smriti law, its precepts and injunctions".
· Later in the 12th century, there came along another variation of the Hindu law called the Dayabhaga written by one Jimutavahana.
· The Dayabhaga challenged and deviated from the Mitakshara law in some ways, particularly in relation to succession and inheritance.
· Under the Dayabhaga system, the father is the sole owner and the exclusive possessor of the joint family property. No member can enforce the partition of the HUF so long as the father lives.
· But the Mitakshara law stipulates that the property vests in the HUF itself and not in any individual member of the family and therefore can be partitioned within the lifetime of the father.
· The Dayabhaga law is prevalent in West Bengal and Assam.
· The Mitakshara law governs Hindus in the rest of the country.
· Manusmriti completely forbade women to have a share in the family property.
· The modern Indian government embarrassed by these antediluvian, anachronistic laws has sought to bring them inline from time to time with the egalitarian values of 21st century. On 9th September 2005, the Hindu Succession Act, 1956 was amended to provide that
· A daughter too could be a coparcener i.e. joint heir, like her brother to the joint family's assets and
· She too could enforce the partition of the family property to claim her individual share.
· She continues to be the coparcener in her father's HUF even after she gets married and forms another HUF with her husband. So gender bias has largely been taken out of the HUF laws.
· A coparcener is one who has a right to demand that the family property be divided and they be handed over their share in the property (or whatever assets the HUF has) in case he or she decides to part ways with the HUF.
· Not all members of the HUF are its coparceners. The coparceners extends to four degrees down the family hierarchy in the following manner:
· 1st degree: Holder of ancestral property for the first time.
· 2nd degree: Sons and daughters (09.09.2005) .
· 3rd degree: Grandsons.
· 4th degree: Great grandsons.
· The most frequently asked question about HUF is: How does it come into being? To form an HUF, all you have to do is Get Married. The HUF gets created as soon as you complete the seven (or four, whatever) circles round the holy fire and become Man and Wife.
· There have to be a minimum of two people to constitute a family. The husband and wife together make up a family. They don't have to wait till they have a baby to constitute their HUF.
· Someone asked, "Can an unmarried man create an HUF?" No, he cannot, if you mean an HUF of which he seeks to be the Karta himself. He can very well be the member of the HUF of his father or grandfather, but to create his own HUF he has to wait till he ties the nuptials. Come to think of it, "Creation of an HUF" is an oxymoron—-a contradiction in terms. Only orphan-and-unmarrie d Hindus don’t belong to an HUF. Every Hindu becomes a member of an HUF the moment she ejects out of her mother's womb, mode of delivery--C- section or Normal--notwithstan ding.
· Till the time the HUF has an empty kitty, it is like a balloon that no one has yet blown air into. A balloon can rightfully be called a "ball"oon only when it swells up with air inside it. Without the air the balloon is inert, dormant. An HUF too is inert and dormant without funds.
· The Karta, which in Hindi means the Doer, is usually the Father, the patter families of the family. He has immense powers over the affairs of the family, more than any other coparcener can wield.
· Can a female be the Karta? The answer can't be No in the light of the amendment in the HS Act in 2005.An unmarried daughter, in the unfortunate event of her father passing away, will become the Karta of the HUF if she has no brother.
· Can there be an all-female HUF? Yes, there can be. Where a couple has only one issue—-a daughter—-and the husband passes away, the mother-daughter duo can continue the HUF (although a problem may arise after she gets married and becomes a member of her husband's HUF). It has been held by the Allahabad High Court in CIT v. Sarwan Kumar 13 ITR 361 (All) that there can be an HUF consisting of female members only
· The Karta can enter into partnership with a firm on behalf of the HUF. But the HUF itself, being not a legal person, can never be a partner in a firm. The fact that Income Tax law grants a PAN to it and treats it as an assessable entity does not bestow upon it the status of a person under the general laws. This has been held to be so in numerous cases. In Ram Laxman Sugar Mills v. CIT 66 ITR 613(SC), the Supreme Court said that "an HUF is undoubtedly a person within the meaning of the Indian Income Tax Act, It is however, not a juristic person for all purposes and cannot enter into an agreement of partnership either with another undivided family or individual".
· So while conducting bank audit, in case you come across a loan file where the HUF is shown to be the partner, raise an objection.
· There have been cases where the courts have held that businesses started by individual members after borrowing funds from the HUF were assessable in the HUF's hands, especially where the HUF is already engaged in the same business. So think twice before letting the HUF lend any money to its members and vice versa.
· In CIT v. Gopal Bansilal Inani (2000) 245 ITR 2 (SC), the Supreme Court disallowed the interest paid to coparceners on the loan the HUF had taken from them as a business expenditure u/s 37(1).
· Can an HUF pay remuneration to its Karta? Yes, in Jugal Kishore Baldev Sahai v. CIT 63 ITR 238 (SC), the Supreme Court held that "if remuneration is paid to a Karta of the family under a valid agreement which is bona fide in the interest of and expedient for the business of the family and the payment is genuine and not excessive, such a remuneration must be held to be an expenditure laid out wholly and exclusively, for the purpose of the business and must be allowed as an expenditure under section 10(2)(xv)[correspon ding to the present-day Section 37(1)] of the Act".
· There is also the issue of Partition of the HUF. Al though the Mitakshara and other Hindu laws do not forbid partial partition of the HUF, the Income Tax law frowns upon it. Under the Hindu law, you may have eliminated the HUF by portioning the property (or what ever assets) of the HUF, but the taxation authorities have invested themselves with powers u/s 171 of the I T Act to continue to treat the defunct HUF as an assessee liable to pay tax unless the partition is effected in strict keeping with the manner laid down in that section. The law wants to dissuade assessees to smash up their bigger HUFs into smaller ones just to create more files to bring down their tax liabilities. Total partition in the context of the I T Act means partition by metes and bounds. "Metes and Bounds", an Anglo-French term, means the boundaries or limits of a tract of land. If the HUF property is physical, it isn't difficult to divide it up, delineating the
share of each member. But a non-physical property will have to be divvied up amongst the members in such a manner as to comply with Explanation (b) below Section 171(9). Care must be taken that erstwhile coparceners don't simply end up becoming co-owners in the property. For example an FD held by the HUF being partitioned can't be converted into a joint FD of members after partition; if it is, interest on it will continue to be assessed in the HUF's hands. The FD can continue only in one member's name; he can cough up some cash to the other members to compensate them for loss of FD. What metes and bounds partition does is deflate the balloon of the HUF. The Income Tax law will recognize its demise (for want of a better word, since a divided Hindu family can be reunited again), only when the HUF is stripped naked of each and every layer of the clothing of property—-tangible or intangible, movable or immovable--it had. It has to get back into its
birthday suit again to be truly partitioned.
· There is a book titled "Formation & Management of HUF along with Tax Planning" by authors S R Kharbanda and Prem Nath published by Commercial Law publishers.

AS 30

The Accounting Standards Board of the Institute of Chartered Accountant of India, which sets the standard for the country, has formulated two new Standards on Financial Instruments — AS 30 (Financial Instruments: Recognition and Measurement) and AS 31 (Financial Instruments: Presentation). These standards were placed in public domain as exposure drafts for comments up to March 31, 2007 and are now being finalised. While AS 30 is the equivalent of International Accounting Standard IAS 39, AS 31 corresponds to IAS 32.

Features of AS 30

The AS 30 is a complex standard and its main objective is to
establish principles for recognising and measuring financial
instruments whose definition encompass most items of financial
assets, financial liabilities in an entity's balance sheet. The introduction of this Standard is likely to affect almost all items
in a corporate/bank balance sheet. It deals with recognition/de-
recognition and measurement of financial instruments as also
derivatives and hedge accounting.

AS 30 uses a mixed measurement model. Some assets and liabilities
are valued at Fair Value and others on cost basis. The concept of
fair value is central to the standard as also the concept of
symmetry. Fair value is the amount for which an asset could be
exchanged or a liability settled between knowledgeable willing
parties in an arm's length transaction. The standard stipulates
measurement of assets and liabilities at fair value unless otherwise
stated. Rationale for fair value stems from the fact that for
financial instruments the most relevant information is the amount
that could be realised from disposal. Subsequent measurement of
financial assets depends upon their classification at initial
recognition into any of the four categories.

Financial assets at fair value through P&L (held for trading)

Held to maturity investments

Loans and receivables

Available for sale financial assets

Subsequent measurement of financial liabilities classified under
fair value through P&L is at fair value and the resulting
gains/losses are recognised in the statement of profit and loss. All
other financial liabilities are to be measured at amortised cost
using the effective interest method.

The standard also stipulates restrictions on reclassification
between categories. No reclassification of a financial instrument
into or out of the category fair value through profit and loss is
permitted. The standard however prescribes certain exceptional
circumstances under which reclassification between `held to
maturity' and `available for sale' categories are permitted.

The requirements regarding impairment and uncollectability of
financial assets constitute an important and significant part of AS
30. Conceptually at each balance sheet date, an entity should assess
whether there is any objective evidence that a financial asset or
group of financial assets is impaired and if so it should determine
the amount of impairment loss and provide for the same.

Asset is defined as a resource controlled by an entity having future
economic benefit. Two key ingredients in this definition are
resource controlled by an entity and future economic benefit
associated with it. If the entity loses control or future economic
benefit ceases, there is impairment and it has to be provided. These
areas will have significant impact on the financial statements of
banks, since they are currently following 90-day delinquency norms
for recognition of NPAs and provisioning.

The standard also stipulates the criteria to qualify for hedge
accounting and the recognition and measurement of gains and losses
for different types of hedging relationships such as fair value
hedges, cash flow hedges and hedge of a net investment in a non-
integral foreign operation. Derivatives will be recorded on the
balance sheet at fair values and changes in their fair values will
be reflected in the profit & loss account unless stringent hedge
accounting criteria are satisfied.


Challenges

Change in accounting ushered in by the standard can substantially
affect the operation of entities. The implementation of AS 30 has
the potential to accentuate earnings volatility especially since
hedge accounting has been defined very rigorously under the
framework and derivatives that do not qualify as hedges will have to
be marked to market and resultant gains or losses will have to be
routed through the profit & loss account.

Resorting to fair value measurement would pose a serious challenge
in the valuation of financial instruments underpinning the need to
develop skills for valuation among accountants, finance
professionals and prepare for greater level of transparency through
enhanced disclosure requirements and documentation needs prescribed
by the standard.

Appropriate Board oversight and involvement of senior management
would be a pre-requisite for the smooth adoption. Further, there is
a need to revamp the MIS and technology capabilities of the entities
that have to comply with AS 30 for which significant initial
investment would have to be earmarked. Migration to fair value
accounting has its own challenges but at the same time it brings in
enormous amount of opportunities for Indian corporates and financial
institutions especially in the context of greater integration of our
markets with international markets.

IT Return preparations excel file for itr 1, 2, 3 & 4 of a.y. 2009-10

Dear All,

AY 2009-10 IT Return preparations excel file for itr 1,2,3 & 4 launched in

https://incometaxindiaefiling.gov.in/portal/downloads.do

Filing of Income Tax returns is a legal obligation of every Individual/HUF whose total income for the previous year has exceeded the maximum amount that is not chargeable for income tax under the provisions of the I.T Act, 1961. Income Tax Department has introduced a convenient way to file these returns online using the Internet.

Every new user has to register at this website in order to avail the e-Filing facility. After completing the registration process and logging in, the user may download the software tools from the download section. Based on all the relevant information the required ITR Form should be filled using the software provided. The software would generate the XML format of the return which should be uploaded on this website. On successful transmission of the return a receipt will be generated in the form of a provisional acknowledgement.

Clarification regarding new Form No.17

Mr. S.S.N. Moorthy,

Chairman

Central Board of Direct Taxes

Department of Revenue

Ministry of Finance

Government of India

North Block

New Delhi – 110 001

Respected Sir,

Sub: Clarification regarding new Form No.17

The Income-tax Rules relating to time and mode of payment to Government account of -

(1) tax deducted at source; or

(2) tax paid under Chapter XVII-B; or

(3) tax collected at source under Chapter XVII-BB

have been amended vide the Income-tax (8th Amendment) Rules 2009 with effect from 1st April, 2009.

The two significant requirements arising as a consequence of such amendments are as follows –

(1) The new Rules [namely, Rule 30(4) and Rule 37CA(2)], inter-alia, mandatorily require the person responsible for making deduction, or payment of tax, under Chapter XVII-B, and the person responsible for making collection under Chapter XVII-BB, to electronically furnish an income-tax challan in new Form No.17 within the specified time.

(2) Further, new Rules 30(1)(b) and 37CA(1) provide that all sums deducted in accordance with the provisions of Chapter XVII-B and all sums collected in accordance with the provisions of Chapter XVII-BB should be paid to the credit of the Central Government within one week from the end of the month in which the deduction or collection is made.

From a combined reading of both the requirements [i.e. (1) and (2)] above, it is clear that remittances have to be made by the 7th of the succeeding month in new Form No.17. Therefore, the tax deducted and collected during the month of April, 2009 have to be remitted latest by 7th May, 2009 in new Form No.17.

However, the new Form No.17 has not yet been uploaded in the payment gateway on the site www.incometaxindia.gov.in. Only the old challan 281 is available on the website.

Therefore, we request you to clarify whether remittances can be made using the old challan 281. This clarification is required on an urgent basis since the new rules make it mandatory to furnish income-tax challan in new Form No.17 and only two more days are available to comply with this requirement.