As part of providing greater flexibility to the resident individuals travelling abroad (other than to Nepal and Bhutan), the existing limit of Rs. 5,000 per person, have been enhanced to Rs. 7,500 per person.

The Reserve Bank of India has notified relaxation in remittance norms regarding salary earned by foreign nationals employed in India by a foreign company or an Indian citizen employed by a foreign company outside India. These individuals, according to the RBI, may open, hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office / branch / subsidiary / joint venture in India of such foreign company, by credit to such account, provided that income tax chargeable under the Income Tax Act, 1961, is paid on the entire salary as accrued in India.

The Supreme Court held that if Securities and Exchange Board of India (SEBI) unearth any artificial trading at any point of time, it is justified in passing prohibition order.

The Supreme Court said that any direction to the Securities and Exchange Board of India (SEBI) to
reconsider the plea for compounding of offences will open up a floodgate of litigations against the market regulator.

Markets regulator Securities and Exchange Board of India (SEBI) has barred Society Generale, a foreign institutional investor (FII) registered with it, from issuing fresh offshore derivative instruments (ODI) or participatory notes. The move comes after the regulator found that SocGen had wrongly reported the end beneficiary in 14 of the 45 transactions in which it had issued ODIs.

The Supreme Court has dismissed the appeal challenging Securities & Exchange Board of India's
order imposing penalty on a firm for non compliance of the summons is sued by the market regulator in connection with the irregularities.

The Securities and Exchange Board of India (SEBI) has extended the tenure of contracts for stock lending and borrowing (SLB) up to a maximum period of 12 months, as it tries to revive the comatose segment.

Securities and Exchange Board of India (SEBI) allowed exchanges to introduce currency futures in
three more currencies - euro, yen and pound.

Market regulator Securities and Exchange Board of India (SEBI) made it mandatory to furnish a copy of PAN card for transfer of shares in physical form.

The Delhi High Court has dismissed the petition of the British Company, European Metal Recycling Ltd, for winding up of a Delhi company for non-payment of 'debt'. The high court rejected the demand stating that the amount claimed by the British company might be disputed and therefore did not amount to 'debt' as interpreted by Indian courts. Therefore the winding up petition was not maintainable.

The Supreme Court ruled that in cheque bouncing cases, the right to give evidence of affidavit, as
provided to the complainant under section 145 of the Negotiable Instruments Act, is not available to the accused for expeditious decision in such mounting cases which are chocking the administration of criminal justice system in the country.

The Supreme Court ruled that “Skyline” is not a specific word on which a company can make a trade
mark claim, as it has become a 'generic' name. In India 117 companies including software firms are using the word as part of their name. In the US there are 10 educational institutions with the same name as the first word. In the UK also there are two such institutions

The Supreme Court has ruled that the absence of a signed contract between the parties should not come in the way of arbitration for resolving the disputes. The intention of the parties forming such a contract is to be considered in order to decide the issue of arbitration, said Apex Court rejecting the plea of Vedanta Aluminium. The apex court allowed the plea of Dubai-based minerals trading company, Trimex International EZE, seeking arbitration to resolve its dispute with Vedanta Aluminium, a subsidiary of London Stock Exchange-listed Vedanta Resources. Once the contract is concluded orally or in writing, the mere fact that a formal contract has to be prepared and initialed by the parties would not affect either the acceptance of the contract so entered into or implementation thereof, even if the formal contract has never been initialed.

The Supreme Court has ruled in the case of Tameshwar Vaishanav vs. Ramvishal Gupta that if
the payee or the holder of the cheque does not file a complaint of dishonor within the prescribed time, he cannot issue a second notice and then file a complaint again. Notice with respect to a cheque can be issued only once. The deadline or limitation starts from the date of the first notice. Later notices do not matter, the judgement stated while interpreting Sections 138 and 142 of the Negotiable Instruments Act. According to the Act, the notice of the dishonor of a cheque due to insufficiency in the account should be sent to the drawer of the cheque within 30 days of the dishonor. If the drawer of the cheque does not pay within 15 days thereafter, the holder of the cheque may file a criminal complaint.

The Delhi high court dismissed the petition of a US company seeking injunction against a Gurgaon real estate company which have similar names in the case, Century 21 Real Estate LLC vs Century 21 Main Realty Pvt. Ltd. The high court remarked there was no balance of convenience in favour of the US firm to grant injunction. It was not a case where the US firm was going to suffer any irreparable loss or injury. It has no business in India and it has no office in India. Except making an application for registration of trade mark and keeping trademark registered so as to block the trademark, it had done no work in India. “Blocking of trademark and blocking of trade name are not
looked upon kindly by the courts. It has become a practice to block important domain names, important trade names so that others cannot use it despite the fact that the person himself may not use it, the high court said.

The Central Board of Excise and Customs (CBEC) has recommended an overhaul of the Special
Economic Zone (SEZ) Act 2005 saying it has detected gross violations of duty and tax concessions causing it to suffer a revenue loss of Rs. 1,75,000 crore to date. Broadly, the CBEC report has sought the removal of numerous exemptions, drawbacks and concessions that have turned SEZs into tax-avoidance conduits for importers and exporters without any genuine business to back them.

Rule 5 of CENVAT Credit Rules, 2004 provides that accumulated credit on input services in case of exports can be refunded to the exporter subject to stipulated conditions. But, exporters of services (mainly the call centres or the BPOs) are facing difficulties in getting  refund under the said notification. Reasons for rejection and corresponding clarification:

• REASON: Use of different phrases in rules and notification
• CLARIFICATION: There cannot be different yardsticks for establishing the nexus for taking of credit and for refund of credit. Even if different phrases are used under different rules of CENVAT Credit Rules, they have to be construed in a harmonious manner. The following test can be used to see whether sufficient nexus exists. In case the absence of such input/input service adversely impacts the quality and efficiency of the provision of service exported, it should be considered as eligible input or input service.
• REASON: One-to-one co-relation between inputs and outputs and scrutiny of voluminous record
• CLARIFICATION: In Budget 2009, the scheme was simplified by making a provision of self-certification [Notification No. 17/2009-ST] where under an exporter or his Chartered Accountant is required to certify the invoices about the co-relation and the nexus between the inputs/input services and the exports. The exporters are also advised to provide a duly certified list of invoices. For details about procedure and limits & person authorized to sign the declaration, refer full circular.
• REASON: Quarterly refund claims
• CLARIFICATION: There should not be any objection in allowing refund of credit of the past period in subsequent quarters. It is possible that during certain quarters, there may not be any exports and therefore the exporter does not file any claim. However, he receives inputs/input services during this period.
• REASON: Incomplete invoices
• CLARIFICATION: In case of incomplete invoices,  the department should take a liberal view in view of various judicial pronouncements by Courts. In the case of refund under Rule 5, (i) so far as the nature of the service which has been received by the exporter can be ascertained; (ii) tax paid therein is clearly mentioned; and (iii) other details as required under rule 4(a) are mentioned, the refund should be allowed if the input service has a nexus with the service/goods exported as discussed earlier. In any case, the suggested Chartered Accountant’s certificate should clearly bring out the nature of the service and this will assist the officer in taking a decision.

The Supreme Court held that services received by vessels and ships outside India prior to April 18, 2006, from persons who are not residents of India or are outside India cannot be taxed. In view of Section 66A, offshore services cannot be subject to service tax prior to April 18, 2006, the high court said, adding that before enactment of Section 66A, there was no authority vested by law in the revenue to levy service tax on a person who was resident in India and received services outside India.

It is likely that the CST levy will continue for non- GST items. This implies that CST may go only for those items that will come under the proposed GST system. The Centre and the States have agreed that crude, ATF, motor spirit and high speed diesel will continue to be outside GST net.
So, inter-state sales of these products will continue to attract CST. Both the center and States are yet to take a call on the treatment of inter-state branch transfer and consignment sale in a GST regime.

In a major relief to software companies, the Supreme Court has held that the duplicating process which renders a blank compact disc (CD) fit for use can be termed as manufacture for claiming income tax benefits.

The Central Board of Direct Taxes (CBDT) has set up a committee to formulate rules for the safe harbor provisions- a set of rules that would enable the income tax (I-T) authorities to accept the transfer pricing returns without scrutiny.

The finance ministry has overhauled its income tax intelligence wing in order to speed up investigation of cases of Rs.10 lakhs and above and stop new methods of tax evasion. Commissioners of Income Tax (CITs) of the Central Information Branch (CIB) will now report to the intelligence wing headquartered in the national capital.

The Central Board of Direct Taxes (CBDT) has decided that any installment or advance tax paid in
respect of fringe benefits for assessment year (AY) 2010-11 would be treated as advance income-tax paid by the assessee for AY 2010-11.

The supreme court has ruled that it is mandatory for the Income Tax Department to issue notice within the prescribed time limit of one year where the assessing officer in repudiation of the block return filed by the assessee proceeds for an inquiry. If an assessment is to be completed under section
143(3) read with section 158-BC (Income Tax Act), notice under section 143 (2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with.

Tax at higher of the prescribed rate or 20% will be deducted on all transactions liable to TDS, where the PAN of the deductee is not available, and the new provision will become applicable with effect from April 1, 2010.

The Delhi High Court stayed the Government’s order directing a special audit of tax returns filed by
information technology company Oracle India. A division bench comprising justices BD Ahmed and
Siddharth Mridul stayed the order passed by the Income Tax Department on December 29, 2009,
directing for a special audit of the returns filed by the company for 2006-07.

The Supreme Court allowed the appeal, Navin Jindal Vs Assistant Commissioner of Income Tax, deciding the issue whether the loss on renunciation of right to subscribe to Partly Convertible Debenture (PCDs) is short-term capital loss or long-term capital loss in the light of Section 48(2) of the Income Tax Act. A number of assessees in a similar situation argued that it was shot-term capital loss, while the revenue authorities maintained that it was long-term capital loss. The Supreme Court ruled that nature of the loss in the concerned transactions should be considered as short-term loss.

The Supreme Court has held that Advance Against Depreciation (AAD) is ‘income received in advance’ subject to adjustment in future for Income Tax purposes and not ‘reserve’. Allowing the appeal in the case of National Hydroelectric Power Corporation vs. Commissioner of Income Tax, the Supreme Court explained that AAD is a ’timing difference’ and it is not carried through profit and loss account. Therefore, Section 115JB, clause (b) of the Act is not applicable. The court further stated that since the amount of AAD is reduced from the sale of electricity, there is no debit in the profit and loss account. The amount did not enter the stream of income for determination of net
profit at all.

The Central Board of Direct Taxes (CBDT) has extended the time limit for filing of ITR-V, which is
the form relating to income tax returns filed electronically (without digital signature). For returns
to be filed on or after April 1, 2009, the CBDT has extended the time limit to March 31, 2010, or within a period of 120 days from the date of uploading of the electronic data, whichever is later. An official release said that the ITR-V form should continue to be sent by ordinary post to Post Bag No 1, Electronic City Post Office, Bengaluru—560100. However, in cases where email acknowledgement for ITR-V form is not received by the taxpayer from the CPC, Bengaluru, then the taxpayer may send another duly signed ITR-V form by speed post to the centralised processing centre in Bengaluru.

REVENUE MANIPULATION

Change in operating cash flow as a percentage of EBITDA

If this ratio is deteriorating over time, then it raises concerns over the company’s revenue recognition

policy.

Change in other income as percentage of investments

If there is a significant reduction in the yield over time, then it raises concerns over the company’s
revenue recognition policy, as some part of the other income might have been booked as revenues

thereby resulting in higher revenue growth.

EXPENSE MANIPULATION
Change in depreciation rates

If there is a significant change in the depreciation rate over time then it raises concerns regarding

manipulation of expenses to boost profitability.

Change in other expenses as percentage of revenues

If this ratio is deteriorating over time then it raises concerns over the company using “low visibility
line items” to massage earnings and extract cash from the company’s books

CASH MANIPULATION
Loans and advances as percentage of net worth

If this ratio is high then it raises concerns about the company’s cash management policy, as some
portion of cash may be taken out of the company by lending it to seemingly unrelated companies.

Loans and advances to related parties as percentage of net worth

If this ratio is high then it raises concerns over the company’s cash management, as cash from the
company’s books might have been taken out to fund the directors’ personal business endeavors.

The Supreme Court has granted bail to Price Water house auditor, T Srinivas, an accused in multi-crore Satyam scam, on the ground that the bulky charge sheet running over 55,000 pages could lead to a long-drawn trial in the case and the accused was lodged in jail for over a year.

The Securities and Exchange Board of India (SEBI) has said all credit rating agencies (CRAs) will have to get internal audit done every six months. It shall cover all aspects of operations and procedures, including the investor grievance redressal mechanism.

Nearly a year after the mega Satyam Computer scam, the approach of many large firms towards audit fee has changed, with many even preferring to outsource internal audits. This has come about with independent directors insisting on third party audits.

In a step towards initial public offer (IPO) guidelines for insurance companies, the Insurance Regulatory and Development Authority (IRDA) has come out with final public disclosure norms, to be effective from March 2010.

The Institute of Chartered Accountants of India found two CA’s guilty for professional misconduct in the Global Trust Bank (GTB) collapse case and have recommended that their names should be struck off the members roll for differing periods.

NBFCs having FDI whether under automatic route or under approval route have to comply with the stipulated minimum capitalization norms and other relevant terms and conditions, as amended from time to time under which FDI is permitted. As such these NBFCs are required to submit a certificate from their Statutory Auditors on half yearly basis (half year ending September and March) certifying compliance with the existing terms and conditions of FDI. Such certificate may be submitted not later than one month from the close of the half year to which the certificate pertains, to the Regional Office in whose jurisdiction the head office of the company is registered.

Small- Scale units may now get a better deal in allocation of space in private special economic zones. The centre has now said that minimum 10 per cent of the space in IT/ITES SEZ may be reserved for SSI /IT/ITES units. All other SEZs were asked to allocate 10 per cent space for SSI units.

The Indian Capital Market Regulator has shut its doors on several foreign funds amid concerns that they may turnout to be vehicles for round-tripping of money by local residents. The Securities and Exchange Board of India (SEBI) is taking a closer look at the structure of new investors as well as those seeking renewals following misreporting of transactions by blue-chip foreign institutional investors (FIIs) like Barclays and Society Generale.

The Reserve Bank of India launched an assault on inflation by increasing the Cash Reserve Ratio (CRR) 75 basis points to 5.75 per cent. While sounding upbeat on economic growth, the central bank has kept the door open for an increase in interest rates even before the annual policy statement in April.

Chairman of Securities and Exchange Board of India (SEBI), C B Bhave criticised market intermediaries that devise innovative products, which were nothing but ways to conceal high leverage. Bhave’s comment come soon after the Reserve Bank of India (RBI) recently expressed concerns about complex structured products like synthetic securitisation and credit derivatives.

The Reserve Bank of India (RBI) issued guidelines in subordinated debt to retail investors. The apex bank has also cautioned banks on several issues. According to RBI, banks should not use its fixed deposit rate as the benchmark for floating rate instruments.

India’s banking regulator, the Reserve Bank of India (RBI), has expressed concern about banks offering home loans with teaser rates – schemes where monthly installments rise after the initial years. The central bank’s worries stem mainly from the fear that borrowers may find it tough to repay loans once interest rates go up after the first couple of years when the rates are fixed. According to RBI, banks shall ensure that borrowers are well aware of the implications of such rates and the appraisal takes into account the repaying capacity of borrowers when the rates become normal.

RBI has released guidelines on the base rate which will replace the BPLR system with effect from April 1, 2010. Banks may determine their actual lending rates on loans and advances with reference to the Base Rate. Determination of the Base Rate will be based on:

• cost of deposits
• adjustment for the negative carry in respect of CRR and SLR
• unallocatable overhead cost for banks such as aggregate employee compensation relating to administrative functions
• profit margin

The profession of Chartered Accountants is growing leaps and bounds with large number of opportunities knocking at our doors; and still a larger number of actual professional opportunities
have culminated into professional assignments bringing a new stream of reputation, responsibility and commitments of the profession as the custodian and watchdog of transparency and financial discipline. The latest announcement of more than 7.5% GDP growth and more than 16% industrial growth are indicative of directions that Indian economy will become the 3rd largest economy in the world within the next 10 years. Every growth opportunity comes with a big challenge. The profession of chartered accountants is also passing through challenging times. Satyam kind of aberrations have brought the challenges to the profession of Chartered Accountants to the fore . The Institute of Chartered Accountants of India, The All India Chartered Accountants’ Society and each and every member of the profession of Chartered Accountants is deeply committed to transparency, financial
discipline and corporate governance of the highest level. The growth of the profession has brought in enemies of the profession into action. These enemies are both within and outside the profession and we as a professional community needs to fight with these enemies very strongly and with hard hand. The Chartered Accountants community also needs to ensure that the profession is distinguished
from business. Our aim is not to increase the top line or bottom line of our profession in terms of financial figure. The real achievement is reputation, recognition and excellence. This comes at a cost.
The delivery of professional service has to be handled in a highly professional manner and without fear and favour. We need to be committed to eradication of corruption, transparency, complete financial discipline, proper documentation, adequate disclosure and adherence to basic corporate governance by educating our clients and the society. We do not dither towards a wrong path due to
fear of losing professional assignments or by greed of making fast buck or larger money. The
most important being continued and well sustained professional reputation which will bring all that we need from our life as a profession. The opportunities of making adequate money are immense
on the right path itself and we need to ensure that all Chartered Accountants as a community remain committed to the right path. It is also important to ensure that no loose talks or loose communication or false allegations are percolated in the society and wherever we encounter certain people resorting
to such methodology creating unwarranted menace, we need to control them and tame them to the right direction. In case we have any major issues which may have impact on the profession's reputation, the same should be discussed open heartedly with the top leadership with a positive bent of mind; the leaders of profession too need to be honestly committed to bring a rightful solution or at
least work sincerely in resolving such issues.