The institute has come out with a guideline dated 4th November, 2011 permitting-

• All existing CA firms can convert themselves into LLP;
• New CA firms can be constituted as Limited Liability Partnership.

• The Delhi High Court in Maxopp Investments Ltd. vs. CIT deciding on 21 appeals has held that No S. 14A or Rule 8D Dis allowance can be made without showing how assessee's calculation is wrong and only real expenditure can be disallowed
• The Mumbai High Court in CIT vs. Manuja J. Shah has held that Indexed cost of gifted assets has to be determined with reference to previous owner for the purposes of computing capital gains
• The Delhi High Court in CIT vs. Manish Build well Pvt. Ltd. has held that if the CIT (A) acts on an application under Rule 46A for admission of additional evidence, then the requirement of giving the AO an opportunity as per Rule 46A(3) is mandatory..
• The Mumbai High Court in CIT vs. The Stock and Bond Trading Company has held that Penalty/ Fine for violation of procedural law is not hit by Explanation to s. 37(1) and the same is allowable as deduction.

The Delhi ITAT bench in ITO (TDS) vs. Indian Oil Corporation has laid down the Tests to distinguish
"transportation contract" from "hire contract" for TDS under 194I or 194C

• The Mumbai High Court in CIT vs. K. Mohan & Co. has held that for the purposes of section 147, retrospective amendment does not mean failure to disclose material facts.
• The Mumbai High Court in The Indian Hume Pipe Co. Ltd. vs. ACIT has held that for purposes of section 147, "Full & true disclosure of material facts" means "specific" disclosure of "each" fact
• The Delhi High Court in Atma Ram Properties Pvt. Ltd. vs. DCIT has held thatAO must specify what facts are failed to be disclosed. Lapse by AO is no ground for reopening u/s 147 if primary facts are disclosed.

• The Bangalore ITAT bench in Anil H. Lad vs. DCIT has held that Loss & Depreciation of eligible unit prior to "initial assessment year", if set-off against other income, cannot be notionally carried forward for purposes of section 80IA(5).
• The Mumbai High Court in CIT vs. Jyoti Plastic Works Pvt. Ltd. has held that for claiming deduction u/s. 80-IB "workers" need not be "employees", even persons employed through agency would be workers for the purposes of this section.

• The Mumbai ITAT bench in Asst DIT vs. Neo Sports Broadcast Pvt. Ltd. has held that payment for "live telecast" of event is not "royalty" nor arising from "business connection".
• The Mumbai ITAT bench in ACIT vs. Maersk Global Service Centre (India) P. Ltd. has held that if TPO does not give cogent reasons to reject a comparable, it must be presumed to be comparable & DR cannot argue to the contrary

The Bombay High Court (HC) has ruled that the Income- Tax Department cannot deny the benefits of deduction to the assessee companies on the ground that they must directly employ ten or more workers in their establishments. The court dismissed the plea of the revenue which said the benefits of deduction under the income-tax law cannot be extended to the assessee employing the stipulated number of the workers through the agency or contractors. A bench comprising Justice JP Devadhar and Justice AR Joshi said that the condition imposed under Section 80IB(2)(iv) of the Act (Income
Tax Act, 1961) is that the assessee must employ ten or more workers in the manufacturing process/production of articles or things and it is immaterial as to whether the workers were directly employed or employed by hiring workers from a contractor.

An appellate tax tribunal has ordered capital gains tax exemption for a Mauritius company which wanted to sell stake in an Indian company to another overseas firm. The Authority for Advance Ruling (AAR), a quasi- judicial body which gives advice on tax matters in advance of the actual transaction has said that the exemption holds good even if the company is set up in Mauritius for the purpose of avoiding capital gains tax in the country.

The Alternate Minimum Tax (AMT) on Limited Liability Partnerships (LLPs) and concessional rate of tax on dividend received from overseas subsidiaries of Indian companies will continue even in the proposed Direct Taxes Code (DTC).

The Delhi High Court (HC) held that full exemption under Section 54F of the Income-Tax Act, 1961, should be allowed even if the new property is purchased in joint name, if the tax-payer was the real owner, that is, if he has funded the entire cost of the property.

The income tax department has sought the Supreme Court's intervention in deciding whether "goodwill" is an intangible asset entitled for depreciation.

The Reserve Bank of India (RBI) asked banks to accept deposits up to Rs1 lakh under the Public Provident Fund (PPF). As many as 25 public and private sector bankers accept deposits under the PPF scheme. Recently, the government has raised the annual investment ceiling in PPF savings to Rs 1 lakh from the present limit of Rs 70,000. The interest rate on PPF has also increased to 8.6 per cent from 8 per cent.

In order to streamline settlement of claims by insurance companies, the Insurance Regulatory Development Authority (IRDA) has made it mandatory for persons seeking motor insurance to mention the name of nominee at the time of buying the policy. As per a circular sent to the insurance companies, IRDA has asked to ensure that the name of nominee is mentioned in the policy document at the time of giving cover for private vehicles. The directive follows disputes relating to settlement of claims by insurance companies in the event of death of the policyholder.

Promoters of life insurance companies may have to make a public offer within a year of completing a decade of operations with the regulator keen on nudging these companies towards a diversified ownership. Insurance companies will be required to list within six to nine months of completing 10 years.

If you are buying a pension-linked insurance plan, you will soon know the guaranteed maturity benefit at the time of buying. All the insurance-linked pension products will provide a guaranteed maturity benefit in about amounts from December 1. In the guidelines for pension products issued, the Insurance Regulatory and Development Authority (IRDA) said that the assured benefit could be utilized on the vesting date or on the date of surrender or on date of death. The life insurers can offer pension products both in the unit and non-unit-linked segments and in the form of variable insurance pension products, besides individual and group categories.

The Securities and Exchange Board of India (SEBI) wants companies making offers for buyback of own shares to make a firm commitment to buy at least 25 per cent of such buyback offers.

The Securities and Exchange Board of India (SEBI) has decided to prescribe a minimum allotment size of  Rs 5 crore for anchor investors in public issues. SEBI also decided to prescribe a maximum number of anchor investor's slab- wise. The regulator has decided to specify a maximum tenor of 12 months for warrants issued along with public and rights offerings to prevent their possible misuse.
Issuers would be required to provide details of fund utilisation both in the offer document and on a
continuous basis. A separate set of disclosures for venture capital and Private Equity (PE) funds that form part of a promoter group in investee companies will be prescribed. This is to do away with the constraints of investee companies regarding disclosure about these PE/VC funds. The SEBI board has doubled the net worth requirements for debenture trustees from Rs one crore to Rs two crore. This is to be done over two years. SEBI has also mandated that listed entities submit business responsibility reports as part of their annual reports in line with the key principles spelt out by the Ministry of Corporate Affairs (MCA).

The Supreme Court (SC) has stated that when a company is sold or transferred to another, workers of
the first transfer or company cannot be compelled to join the transferee company against their wishes and without their consent.

The Government has increased the penalty on educational institutions for charging capitation fees to
Rs50 lakh. The Cabinet also approved the change in the name of the Bill to Prohibition of Unfair Practices in High Educational Institutions Act, 2011. This brings all higher education institutions under the ambit of the Bill, barring agricultural institutions.

The Supreme Court (SC) has ruled that even if the main contract is terminated, the arbitration clause will survive.

The Companies Bill 2011, with tighter disclosure norms, stricter penal provisions, greater shareholder democracy and introducing the concept of Corporate Social Responsibility, for the first time, was cleared by the Cabinet. The Bill will replace the existing companies Bill, 2009.

The Securities Appellate Tribunal (SAT) has interpreted the special provisions for small companies in delisting regulations 2009 in favour of Trichy Distilleries and Chemicals Ltd. and has directed the Madras Stock Exchange (MSE) to allow delisting of the equity shares of the company. The limited issue before SAT was whether the condition for delisting involved the consent of 90 per cent of the public shareholders in number or shareholders holding 90 per cent of the public shareholding in value, irrespective of their numbers. On examination of the issue, SAT came to the finding that to avoid certain patent absurdities wherein a minuscule minority can hold up the process consented to by the majority, shareholders holding 90 per cent of the public shareholding in value irrespective of numbers can give consent to delist the company.

Market regulator Securities and Exchange Board of India (SEBI) has called for the creation of an
independent regulator to oversee auditors, a move that is being opposed by the Institute of Chartered
Accountants of India (ICAI), the accounting regulator promoted by an act of parliament that regulates the auditing profession at present.

The Delhi High Court (HC) appointed SS Kothari Mehta & Company as the new auditor for Lilliput Kidswear, and asked it to review the company audit earlier carried out by SR Batliboi. The court also appointed the arbitrator to settle the dispute between Lilliput and its private equity (PE) investors, Bain Capital and TPG.

Revising the rules for the annual system audit of stock exchanges and depositories, market regulator Securities and Exchange Board of India (SEBI) said that an auditor can perform a maximum of three successive audits only.

The Reserve Bank of India (RBI) said that the central bank would look into why banks were raising loan rates by such hefty amounts when their costs were not going up in the same proportion. Reserve Bank of India also said that we find that banks are increasing rates by 2.5% when the cost of funds is
going up by just 1%.

The Reserve Bank of India (RBI) formally brought Micro Finance Institutions (MFI) under its direct regulation by classifying these as a new category of Non-Banking Financial Company (NBFC). The move follows the recommendations of the Malegam committee report of January and is expected to clear any ambiguity on who has responsibility for monitoring the sector. The guidelines say NBFC-MFIs will be non-deposit taking finance companies having minimum net owned funds of Rs5 crore, with not less than 85 per cent of net assets in the nature of 'qualifying assets'.

The Reserve Bank of India (RBI) allows banks to give 125 bps over Libor against a mark - up of 100 bps to Non Resident Indian.

Market regulator the Securities and Exchange Board of India (SEBI) has allowed mutual funds to invest in repo, or short-term repurchase of forward contract, of corporate debt securities with a ceiling of 10% of the net assets of the concerned scheme.

The Reserve bank of India (RBI) has already swung into action. It has asked corporates to immediately bring in the proceeds of their External Commercial Borrowings (ECBs) for rupee expenditure in India, such as local sourcing of capital goods, on-lending to self-help groups (SHGs) or for micro-credit, payment for spectrum allocation, and so on.

The Reserve Bank of India (RBI) has operational the new guidelines on credit default swap (CDS), directing market participants to report such trades within 30 minutes to the Clearing Corporation's online repository. The Reserve Bank of India (RBI) also said that it is advised that all market makers shall report their CDS trades in corporate bonds within 30 minutes of the trade to the Clearing Corporation of India Ltd (CCIL) trade repository CCIL Online Reporting Engine (CORE) beginning December 1, 2011.

Credit Protection

CDS provides credit protection to corporate bond buyers, as the sellers of the swaps guarantee the credit- worthiness of the product. Thus, the risk of default is transferred from the holder of the fixed income security to the seller of the swap. The Reserve Bank of India (RBI) observed that the
objective of introducing CDS on corporate bonds is to provide market participants a tool to transfer and manage credit risk in an effective manner through redistribution of risk.

The Reserve Bank of India (RBI) has decided to allow Non-Resident investors, including Foreign Institutional Investors (FIIs), to repatriate investments in rupee and Foreign Currency-Denominated Bonds issued by Infrastructure Debt Funds (IDFs) registered as Non-Banking Financial Companies (NBFCs) as also of rupee- denominated units issued by IDFs set up as SEBI-registered domestic MFs. The investors can be sovereign wealth funds, multilateral agencies, pension funds, insurance funds and endowment funds or High Net worth Individuals (HNI), which are registered with Securities and Exchange Board of India (SEBI) as eligible Non-Resident investors in IDFs.

• The original or initial maturity of the securities at the time of first investment by an NRI shall be five years subject to a lock in period of 3 years. However they can trade among themselves within this lock-in period.
• Foreign currency denominated bonds issued by IDFs would have to comply with conditions of Foreign Exchange Management Act (FEMA) guidelines and regulations for External Commercial Borrowing (ECB).
• All Non-resident investment in IDFs, other than NRIs, (in both rupee and foreign currency denominated securities) would be within an overall cap of $ 10 billion only. For NRIs there is no as such restriction.
• Refinance by IDF would be up to 85% of the total debt covered by the concession agreement. IDFs set up as MFs would invest minimum of 90% of its funds in debt securities of infrastructure companies or SPVs across all infrastructure sectors, project stages and project types.

The Government of India recently decided to put on hold a Cabinet decision vide which, it was proposed to permit multinational corporations to invest in retail sector. We congratulate the top leadership of the government as well as all parties forming part of UPA as well as those who are in the opposition to take such an active interest for this crucial matter and announcing a decision to put the Cabinet decision on hold. The Foreign Direct Investment in retail is actually not needed by the country and all the arguments regarding absence of adequate infrastructure for transportation, storage and distribution of food items and other items of necessity, is required to be addressed by the government by permitting freedom of movement, storage and trading of all agricultural produce and essential items freely across the country. The government need to take special initiatives to provide
concessional financing and taxation incentives besides direct subsidy for creation of cold-storages, warehouses, transportation, infrastructure and setting up of large number of mandis, free from any kind of market fees or taxes on the agriculture produce. There should be complete freedom to
the agriculturists to sell their produce to any one, anywhere without any mandi tax and other levies on the agriculturists or on the buyers.

FDI in Real Estate :

The government of India and the political parties may also please reconsider the policy on Foreign Direct Investments in real estate. The permission to non resident Indians to freely buy and sell properties in India up to any quantum is required to be regulated and monitored. Even the Foreign Direct Investment in real estate construction and development by foreign companies need to be
regulated as the funds from foreign countries are being currently invested openly in buying agricultural land, even without change of land use for couple of months or couple of years.

Where we need FDI?

FDI is actually needed in infrastructure sector including power, ports, roads etc. besides high technology and capital intensive Industries.

Lack of RBI Monitoring:

The RBI has not been monitoring the FEMA policies announced by government as well as the guidelines issued by RBI. A large number of Indian corporate as well as foreign investors are misinterpreting and misusing the liberal words of FDI guidelines, against the intention behind
the liberalization. This is serious matter and requires immediate action at the end of the Government. It may be necessary for RBI to consider prescribing mandatory reporting compliance with FEMA Rules, Regulations and notifications by all investors duly certified by the Auditors.

The Securities and Exchange Board of India (SEBI) was constituted in early 90's to bring in regulation and development of the capital market and also to protect the interest of the investors.

Significant Achievements:

SEBI has been able to bring out very significant achievements in the field of technical up gradation of the market, improved transparency, introduction of latest capital market products and to provide a detailed legal and regulatory framework for regulations of market intermediaries, insider trading, takeover code and several other similar areas including a feather in their cap in introducing de-materialization of shares and transparent trading through a national electronic network. The concept of Unique id and tracking of all trades at the end of investor are highly appreciable.

Stock Exchanges:

SEBI has also brought out significant changes in ownership, management and regulation of stock
exchanges. SEBI has however, not been able to find out a solution to issue of non working regional stock exchanges and OTCEI. The investors in companies which are exclusively listed only on these exchanges are severely suffering without any action at the end of SEBI. SEBI has also miserably
failed to act and provide a proper ownership and management framework to the existing operating stock exchanges and has permitted the disinvestment, even in the favour of nonresident foreign
investors, without responding to the question as to how can a regulator (stock exchange) can be privatized or listed?

Market Manipulation:

The capital market administration is undertaken by SEBI with the help of several committees. These committees are primarily represented by concerned market intermediaries and vested interests. The independent professionals, academics, media and intellectuals are in great minority. This has resulted into bring in a regulatory framework which on the face of it looks very dynamic and modern but actually failed miserably on the basic requirement of investors' protection. For example:

Primary Market:

The primary market regulation has permitted issuance of shares with free pricing and by disclosing various risk factors. Several requirements of book runners, lead book runners, underwriting and
similar other requirements have been provided, but without any effective result. SEBI initiatives and
prescriptions have increased the cost of raising capital from about 2 to 3 percent to 10 to 15 percent of the amount raised from the public. The public issue of less than Rs. 100 crore has become enviable, due to unnecessary restrictions, regulations and mandatory intermediaries.

Free Pricing:

There are several studies conducted by the ICAI, ANMI and several other intellectual groups,
which clearly indicate that more than 85% of the public issues are so heavily priced that most of the investors loose 50% to 75% of the invested amount in a matter of few days to few months, without any significant changes in company fundamentals. There are only few exceptional issues by real genuine promoters, who had undertaken issues at realistic prices providing reasonable return to investors.

SEBI has completely failed to analyze and understand the manipulated practice undertaken by the promoters to jack up expectations from the corporate in the investors' mind manipulating valuation, profits and top line, without bringing in adequate value. In large number of cases the funds are diverted or misused, without any action on the part of SEBI or any other regulator. There is complete freedom to an open loot by grey market operators and licensed intermediaries from the issue proceeds. Pre dated transactions, buy back commitments, stop gap bridge loan to complete the
issue and then diversion are open secrets in most of the issues but no action. SEBI even permit public issue by tax defaulters, promoters under investigations or under criminal prosecution and companies with clearly manipulated accounts and financial statements. Due diligence by merchant bankers is only a farce.

Secondary Market: The secondary market position is precarious and in a large number of cases several miscreants are manipulating the prices of various scrips and shares. No action is seen at the end of SEBI or any of the stock exchanges, at the time when manipulation is going on. There are large number of cases which are registered after few days or few months, a number of which are also compromised by SEBI in their consent scheme. SEBI and stock exchanges openly permitted
code changes up to 2% and prescribed nominal fee (penalty) for breach. No action is taken on open
manipulation either on failing officials or on manipulators. There are large number of market manipulators and insider traders which are active in the Indian market places and in spite of complete access to the entire trading mechanism and even knowledge about who is buying, who is selling, and on what price and of what quantity, that neither SEBI nor stock exchange working under their active guidance are able to nab the culprits in time and stop the manipulation when investors are suffering. SEBI only undertake a detailed long drawn investigation, followed by very ineffective penalty or
consent fee. Confidential market information is freely available to market manipulators, which is unduly used by them against the interest of the investors.

SEBI Need to Act

The Securities and Exchange Board of India need to rise up and take effective and efficient action so that the faith of the investors can be revived.

The Finance Ministry (FM) is considering reopening assessments of taxpayers found to possess undisclosed foreign assets and bank accounts to up to 16 years as against six years now.

Exports of as many as 68 services, including banking and asset management, will be eligible for refund of service tax.. The Central Board of Excise and Customs (CBEC) has order to streamline the process of sanctioning of refund claims arising on account of service tax on input services that have gone into exports of services, has sought public comments by November 30 on the draft circular. However, if the input service has made no contribution to exports and has been exclusively utilised for domestic operations, it would not be eligible to refund.

Karnataka High Court had ruled that payments made for imported software will face withholding tax
This Verdict is likely to hit the likes of GE, Sonata Software and HP.

The Securities and Exchange Board of India (SEBI) has asked companies to disclose details of share
purchases by acquirers and Persons Acting in Concert (PAC) to include all voting rights and warrants held by the promoters and other insiders during their regulatory filings with stock exchanges. Under the new format, they (acquirers and PAC) have to provide additional disclosures about warrants and any other instrument which have voting rights, besides their disclosures regarding acquisition of shares/voting rights / and holding by them in the target company. The disclosures are mandatory. In the new format for disclosure acquirer will disclose his holdings in the target company before the acquisition under consideration, they will give details of the holdings being acquired and holding
after the acquisition.

The Reserve Bank of India (RBI) said that Indians who have Non-Resident Accounts in the country can now hold them in any currency which is fully convertible. Earlier, FCNR (B) account holders were allowed to hold accounts in only certain currencies such as the Pound Sterling, US dollar, Japanese yen, Euro, Canadian dollar and Australian dollar.

3i, Europe's biggest listed private equity firm, plans to raise up to $1.5 billion for its second India fund, but its investment choice will widen to healthcare and education from infrastructure as the sector is plagued by policy paralysis.

To cushion the global slowdown's impact on exporters, the Reserve Bank of India (RBI) announced a two per cent interest subsidy on rupee export credit for handicrafts, hand looms, carpets and small and medium enterprises (SMEs).

One percent interest subvention on housing loans up to Rs15 lakhs, compared with Rs10 lakhs at present. The subvention will be given when the total cost of the house is less than Rs25 lakhs. Currently, this limit is set at Rs20 lakhs.

The Reserve Bank of India has asked banks to seek approval from company boards before selling derivative products to them.The Reserve Bank of India also said while modifying the 'Comprehensive Guidelines of Derivatives' that before offering any derivative product to clients, banks should obtain board resolution from the corporate which explicitly mentions the limit assigned by the corporate to the bank.

In a move that could bring cheer to bank depositors, the Reserve Bank of India (RBI) has announced
deregulation of the interest rate on savings bank deposits with immediate effect.

The Chartered Accountants Profession has grown from strength to strength over last few decades. The backbone of strength of the Chartered Accountants profession is education and training mechanism adopted by the profession which predominantly includes 3 years practical training under
a Chartered Accountant Firm or partly as Industrial Training (Optional). The practical training ensures that the students are trained in actual day-to-day working, business processes, internal control mechanism, financial management, management accounting and preparation of financial statements besides compliance of corporate laws and tax laws in real time situation. An access to CA students of actual affairs of business organizations enable them to understand the theoretical education more effectively and once qualified as a chartered accountant it enable them to effectively and efficiently deliver up to the expectation of the employers/ clients. This approach has created double jeopardy to such students. They are unable to directly understand and bring out solution for professional issues and even for day today routine professional working they find themselves not fully suitable for the job. This results into rejection of such cases of dummy students once they qualified as a less trained
Chartered Accountants by service sector as well as practicing firms of Chartered Accountants as they may not be found themselves suitable for the desired job profile. In a large number of cases this has resulted into reduction of remuneration package for such less trained chartered accountants by 20% to 60% resulting into mental, emotional and financial stress after qualifying as a Chartered Accountant. A failure to undertake practical training seriously results into a permanent loss of confidence, capability and capacity to deliver as per international standard. In certain cases the firms where such articles get registered may not have adequate work to give all round experience to the students and
in such cases a special emphasis on secondment or industrial training will be necessary. The Institute of Chartered Accountants of India need to address the aforesaid issues very effectively and forcefully so as to ensure that all the students undergo the desired level of education and training so that they have adequate opportunities once they qualify and commence their career. This is the responsibility
of all chartered accountants in practice to ensure that dummy training is finished which is a menace to the profession and they should not permit the students to participate in any such activities as it is hampering and adversely impacting their own profession apart from ruining the career of the students. Allowing an articled trainee for doing dummy training is self-suicidal for the entire
profession. The current atmosphere in respect of fresh chartered accountants qualified recently is a clear evidence of mounting risk on the entire profession. The Institute of Chartered Accountants of India need to take adequate action against private coaching classes who are not adhering to time discipline laid down by the Institute. This will require strict disciplining.

It has been noted that off late a large number of students misled by ill considered advices are
concentrating mainly on taking coaching classes and not give adequate attention to their training.

The Government of India has taken initiative to set up Regulators to regulate Capital Market (SEBI), to regulate Insurance Companies (IRDA), to regulate Telecom Sector (TRAI), to regulate Power Sector (Central and State level Electricity Regulation Commission). The Regulator of Financial Sector, Reserve Bank of India, has already been functioning effectively. The other regulators, as aforesaid have added significant value in development and regulation of the respective sectors. The Real Estate Sector is the backbone of the Indian economy as a large amount of development is taking place in commercial real estate as well as in the residential real estate, besides infrastructural real estate sector.

Major Issues

Real estate sector is facing a major challenge because of the following issues:

• Agreements between Real Estate Developer and the customer are typically one sided and do not provide for any implication for delay or failure on the part of the developer.
• A large number of Real Estate Developers commence the booking and sales of the real estate even much before obtaining possession, control and ownership of the land in question without an appropriate license/ permission to develop the real estate project being sold. The investors generally are left high and dry.
• A number of projects are inordinately delayed.
• In case of delayed delivery the developers try to coax the customers to seek refund with nominal interest with the view to profit by selling to others as over the period of time land prices escalate.
• The money collected from sale of one project is diverted for acquisition of further land for some other projects using low cost money to hoard land with ulterior motive to gain there from, this also  delay implementation of the project.
• Disclosures by the real estate developer are generally incomplete.
• Compliance and documentation requirements are not clearly prescribed.
• There is no grievance mechanism
• The rate of interest for the delayed payment by the investor and rate of interest/ penal charges for delay in completion of the project and circumstances in which such interest/penal charges may not become payable, are not prescribed.
• The property titles, land records, charges created on them and the agreement executed in relation to a particular property are required to become completely transparent and available for public inspection, something similar to MCA-21 platform. 

The real issue of taking direct action against corrupt officials and simultaneously making policy and procedural changes to ensure eradication of corruption has given way to over active and over charged criminal prosecution agencies in CBI and Enforcement Directorate. The businessmen of the country are feeling not only helpless but also a sense of fear has spread among them. Rather than creating a fear among the guilty and corrupt officials and politicians, the government is stressing 2G issue in a wrong direction. It is completely unfair to keep senior professionals and businessman behind bar without finally establishing their criminal role in corrupt practices. We are living in a democracy and Indian tradition has been built on equity, fairness and ethics and we cannot forget our fundamental constitutional and traditional virtues of not punishing an innocent at any cost. An arrest without
established evidence, amount to punishing an innocent without guilt. We expect statesmanship from the top Indian leadership and cleanliness in public life has to be established by taking certain tough initiatives and by setting some examples. The bribery in private sector is an issue which
can be addressed by Corporate by inculcating Ethical values.

The Securities and Exchange Board of India (SEBI) has released a concept paper on proposed AIF norms. These would cover venture capital funds, private equity funds, debt funds, real estate funds and PIPE (private investment in public equity) funds, among others. It has proposed a minimum investment size of Rs 1 crore. The current norms allow a high net worth individual (HNI) to participate in a portfolio management scheme with as little as Rs 5 lakh. There are currently 45 players in the domestic MF sector, with overall assets under management (AUM) of Rs 6.96 lakh crore as on August 31. In 2010-11, the industry witnessed a net outflow of Rs 49,406 crore, compared with a net inflow of Rs 83,081 crore in the previous year. The highest outflow, of Rs 13,000 crore, was in equity schemes.

The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) are joining hands to make equity trading more convenient. Sources close to the exchanges say stock feeds coming from both BSE and NSE will be made available on a single trading platform. Till now, stock brokers had to
use two separate terminals to trade or view stock quotes coming from both the exchanges. To begin with, BSE's online trading platform (BOLT), or Fast Trade, will be made available on NSE's in-house software Neat-on- Web (NOW). Traders using this platform will get access to more than 7,000 stocks listed on BSE. NSE has more than 1,300 major companies listed on its platform and a large number of BSE-listed stocks, lying outside this universe, are punters' favourites. BSE will get access to NSE's over 200,000 trading terminals in 1,400 towns across India. Effectively, the move means integration of trading terminals and widening of reach. BSE will offer NSE's trading terminal NOW (Net On Web) free of cost to its members

Securities & Exchange Board of India (SEBI) has said that the companies which offer Indian depository receipts (IDRs) through the rights issue have to file a document with the regulatory.

The futures market allows a client to give or take delivery of an asset at a fixed price on a future date,
while a spot exchange, in this context, entails delivery a day after a trade is executed or t+2 basis. However, like a futures market, it also allows clients to square off or cash settle trades on an intra day basis. Positions that are not squared off result in delivery. A client having a demat account with a commodity futures broker can now trade on commodity spot exchanges so long as the broker maintains a separate ledger account for clients on either market, issues separate contract notes and meets the capital adequacy and net worth criteria of each exchange.

The Securities and Exchange Board of India (SEBI) told the high court that it could not withdraw its order refusing permission to MCX Stock Exchange (MCX-SX) to start equities trading.

Under the proposals before the 27 members of the European Union, a 0.1 per cent rate of tax will be applied to the exchange of shares and bonds, while derivative contracts will face a levy of 0.01 per cent. Revenues will be shared across member States.

Securities & Exchange Board of India (SEBI) has said in a concept paper that persons offering investment advice can do so only after registering themselves with Securities & Exchange Board of India (SEBI) and must necessarily use the title "investment advisor" after obtaining the certificate of registration.

Stock market regulator (SEBI) has made it mandatory to appoint a SEBI approved credit rating agency for valuing structured products and market linked debentures. SEBI has said that the valuation of structured products would be put up once a week on the websites of the issuer and the rating agency. Issuers are also expected to provide the value to investors on request free of cost. The cost incurred for valuation shall be disclosed in the offer document of the structured product.

• New trigger for open offers at 25 per cent
• Open offer size fixed at 26 per cent
• Bar on non-compete fee
• Acquirers to cut stake if it crosses 75 per cent
• 1-year bar on voluntary delisting after open offer

The Securities and Exchange Board of India (SEBI) has extended the deadline to convert promoters' holding to demat form to December 31. SEBI said that on review of the promoters' holding in demat form it has been observed that there has been improved compliance to the circular and the companies/promoters have started the process of converting their physical holdings in dematerialized form.

The insurance regulator has proposed that insurance companies promoted by corporate houses will not be allowed to invest more than five per cent in group companies.

You health insurance portability will be a quick affair now. Insurers will have to share the data on policies to be migrated within seven days from the date of request. This has been mandated by the Insurance Regulatory and Development Authority (IRDA) in its final guidelines on the portability.

The insurance regulator stated that Insurance companies cannot mechanically reject claims on technical grounds, such as delay in intimation and submission of documents, particularly if the delay is due to unavoidable circumstances.

The Supreme Court (SC) stated while dismissing the appeal of the manufacturer buying gas in bulk from market and repacking theme in smaller cylinders after tests and giving different grades to it to be sold in open market would attract excise duty.

The Supreme Court (SC) ruled that manufacturers of laminated particle board will be liable to pay a higher excise duty as after processing, the product becomes a distinct marketable commodity different from the original one. The panels, after lamination, become water resistant, scratch resistant and look attractive due to printed design paper. The appellate tribunal had accepted the argument of the manufacturer that laminated board was similar to particle board. The court overruled that view.

A division bench of Delhi High Court dismissed a large number of writ petitions challenging the constitutional validity of Section 65 (105) (zzzz) of the Finance Act, 1995 and Section 66 as amended by the Finance Act, 2010. The petitions were moved by tenant companies arguing that an "artificial liability" was imposed on them to pay service tax though the onus rested with the owners. The owners insisted upon the petitioner companies making the payment. The dispute arose due to the Finance Acts. The high court rejected the petitions, led by Home Solutions Retails (India), challenging the power of Parliament to pass a law which dealt with property. It was the state which has the power to deal with the renting of immovable property as it is a tax on lands and buildings which came within Entry 49 of List LL of the 7th of the Constitution. However in Retailers Association of India vs Union of India, SC has allowed an SLP against Bombay High Court Order on the same issue. SLP comes up for further hearing on 14th October.

The Finance Ministry (FM) has made it mandatory for taxpayers to file their central excise and service tax returns electronically from October 1, 2011. E-filing through the Centre's online tax payment application ACES (Automation of Central Excise and Service Tax) will be a must not only for returns due after October1, but also for returns of past periods which have not been filed yet or are to be revised. The Central Board of Excise and Customs (CBEC) said the returns would have to be filed electronically by all assesses, including export-oriented units, small-scale industries or those availing of certain exemptions, irrespective of the duty paid by them in the preceding financial year.

Considering the specific needs of the infrastructure sector, the existing ECB policy has been reviewed in consultation with the Government of India and it has been decided to allow Indian companies which are in the infrastructure sector, where "infrastructure" is as defined under the extant guidelines on External Commercial Borrowings (ECB), to avail of ECBs in Renminbi (RMB), under the approval route, subject to an annual cap of USD one billion pending further review.

The Reserve Bank of India (RBI) is hardening its stand on FDI deals to drive home the point that there should be no strings attached to such inbound flows. In eight out of 10 FDIs, Foreign investors have a right to sell back shares to Indian promoters if certain conditions are not fulfilled. In the last few months, the Reserve Bank of India (RBI) has questioned many such deals as it thinks such inflows are foreign 'loans' and not 'equity'. This is turning out to be a hotly-debated issue amid arguments that such a regulatory stance is not only misplaced but can also slow down FDI. But, according to recent communications, the central bank is not only sticking to its stand but also thinks
that such transactions are 'illegal'. The RBI feels that a sell back right, or a put option, to foreign investors amounts to one-to-one derivative deals. Since equity derivatives can be traded only on stock exchanges, such over-the-counter (OTC) contracts are not permitted under law.

The much awaited multi-brand retail policy allowing Foreign Direct Investment (FDI) in the sector has been put on the back burner. The Government is likely to take a call on the matter only in the next financial year.

The Reserve Bank of India (RBI) has eased foreign exchange facilities for individuals. According to the new norms, Non-Resident Indians can be joint holders in resident savings banks account and residents can be joint holders in NRIs' non-resident external rupee accounts. Residents can now lend to NRIs to the extent of Rs. 200,000 through electronic transfer and crossed cheques.

In a bid to attract precious foreign exchange in the face of the global economic crisis, the Reserve Bank of India (RBI) in consultation with the Centre, has hiked the External Commercial Borrowing (ECB) limit for corporates. Corporates in the industrial and infrastructure sectors can raise up to $750 million or equivalent under the automatic route as against the present limit of $500 million or equivalent. Further, corporates in specified service sectors - hotel, hospital and software - can raise up to $200 million or equivalent under the automatic route as against the present limit of $100 million or equivalent. This is, however, subject to the condition that at least 75 per cent of the fresh ECB proposed to be raised should be utilised for capital expenditure towards a 'new infrastructure' project(s). Further, infrastructure companies can import capital goods by utilising short-term credit (including buyers' credit / suppliers' credit) in the nature of 'bridge finance', under the approval route.
Corporates in the infrastructure sector can avail themselves of ECBs for 'interest during construction
(IDC) as a permissible end-use, under the automatic/ approval route, subject to the IDC being a part of project cost and is capitalised.

A person resident in India can now give to a person resident outside India, by way of gift, any security, shares or debentures of value up to $ 50,000 in value per financial year. Individual residents in India are also now permitted to include a non-resident close relative as a joint holder in their resident bank accounts. Non-resident Indians (NRIs) or persons of Indian origin (PIOs) are now permitted to open non-resident (external) (NRE) Rupee Account Scheme/Foreign Currency (Non-Resident) (FCNR) Account (Banks) Scheme with their resident close relative as a joint holder on a 'former or survivor' basis. Resident individuals can now make rupee gifts within the overall limit of $200,000 per financial year as permitted under the Liberalised Remittance Scheme (LRS) to an NRI/PIO who is a close relative. Moreover, the sale proceeds of FDI can be credited to NRE Account Scheme/Foreign Currency (Non- Resident) Account FCNR (Banks) Scheme, provided the original acquisition was by way of inward remittance or funds held in their NRE/FCNR (B) accounts.

The government has relaxed the Foreign Direct Investment (FDI) norms for the FM radio segment by
raising the limit of Foreign Capital inflows to 26 per cent from 20 per cent. It has also eased the FDI norms regarding construction of old-age homes and educational institutions. These amendments were done as part of the fourth revision of the Consolidated FDI Policy.

The Supreme Court (SC) stated that the Consumer law in India will apply to foreign carriers in addition to the Carriers Act and international conventions. The remedy available under the Carriers Act by way of a suit will not bar a consumer complaint under the Consumer Protection Act.

The Ministry of Corporate Affairs (MCA) has diluted its earlier decision and allowed companies not filing their updated balance sheets and profits and accounts to the Registrars of Companies (ROCs) to apply for liquidation through a speedy process. MCA has now revised its stand to allow ROCs to accept over two dozen types of submission, irrespective of the compliance level of registered firms.

Companies with 'dollarized' balance sheets will pay the biggest price with the rupee crashing against the US currency. Attracted by low interest rates in overseas money markets, many Indian companies have either borrowed in dollar or converted rupee debt into dollar by striking deals, known as 'principal only swaps' in the currency market, with banks. Such deals, kept unhedged or exposed to currency fluctuations, can dramatically lower interest outgo on loans. But interest costs jump when the dollar strengthens. The rupee ended at 49.58. Dollar has fallen about 10% in three months.

Considering the specific needs of the infrastructure sector, the existing ECB policy has been reviewed in consultation with the Government of India and it has been decided to allow Indian companies which are in the infrastructure sector, where "infrastructure" is as defined under the extant guidelines on External Commercial Borrowings (ECB), to import capital goods by availing of short term credit (including buyers' / suppliers' credit) in the nature of 'bridge finance', under the approval route,subject to the following conditions:-

• the bridge finance shall be replaced with a long term ECB;
• the long term ECB shall comply with all the extant ECB norms; and
• prior approval shall be sought from the Reserve Bank for replacing the bridge finance with a long term ECB.

As per the extant ECB policy, a 'foreign equity holder' to be eligible as 'recognized lender' under the automatic route would require minimum holding of paid-up equity in the borrower company as set out below:

• for ECB up to USD 5 million - minimum paid-up equity of 25 per cent held directly by the lender,
• for ECB more than USD 5 million - minimum paid- up equity of 25 per cent held directly by the lender and debt-equity ratio not exceeding 4:1 (i.e. the proposed ECB does not exceeds four times the direct foreign equity holding).

Companies issuing structured products or market-linked debentures should have a minimum net worth of at least Rs. 100 crore, if they want them to be listed on the stock exchanges.

SEBI Guidelines -

• While the issuers are free to determine the face value for such securities, no invitations for subscription or allotments shall be made for an amount less than Rs. 10 lakh in any issue.
• Only intermediaries regulated by SEBI (Securities & Exchange Board of India) can sell such securities.
• The companies would also need to disclose, in all offer documents, a detailed scenario analysis or a valuation matrix showing graphically, the value of the security under different market conditions.
• Risk factors need to be suitably highlighted so that it is clear to investors that the securities are created on the basis of complex mathematical models.
• It will be mandatory for the issuer to appoint a third-party valuation agency, which shall be a credit rating agency registered with SEBI (Securities & Exchange Board of India).

The government, political thinkers, intelligentsia and media and the top leadership of the country include the senior government officials have been raising an issue of independence of auditors for quite some time. No effective policy decision or action has so far been initiated. The issues which require an open debate within and outside the profession include:

• Role, responsibility and powers of Auditors in Companies and other organizations where public interest is involved.
• Whether the Auditors of public interest entities can be appointed independent of those who are charged with Governance by allowing minority shareholders or regulator appointing the Auditors.
• Whether such auditors are permitted to provide other services including taxation and consulting to their audit clients. There is a strong view both in favour and against separation of audit from other than audit practices.
• Self regulatory practices, code of ethics and code of conduct prescribed by the Institute of Chartered Accountants of India may require substantial modification to meet changing expectations of stakeholders of entities where public interest is involved.

The Indian economy is passing through a fairly rough patch, after a record performance of GDP growth for last several years. The major issues which are impacting the economy include:

Growth Slow Down

The Indian Economic Growth is apprehended for a slowdown thereby impacting GDP growth, employment, poverty alleviation. Growth in industrial production is one of the lowest in recent months as compared to last several years. The tax collection on the direct tax as well as indirect tax is much lower as compared to the budgeted estimated figure. It is important to appreciate that for last several years the tax collection always exceeded the estimate. Lower tax collection also indicates poorer health of the economy.

Heavy Government Borrowings

The Government of India plan to borrow an additional Rs. 50000 crore to Rs.80000 crore from the Indian financial market in addition to existing plan of about Rs. 500,000 crores as per its original planned budgeted borrowing.

Falling Savings

The savings and the public provident fund and other government saving schemes have gone down this year by about Rs. 30,000 crores.

Increase in Interest Rates

The interest rate has substantially gone up for last few years, thereby putting very heavy burden of finance cost for industry, services and trading sector. The increase in domestic interest rate by about 3.5% as well as increase in international borrowing cost, by about 200 basis point has impacted expansion, diversification and growth plan of various businesses. The non-performing assets with
the banking sector are also likely to increase substantially due to sudden increase in the financial burden.

Inflation

The government has not been able to tame the inflation, in spite of several fiscal policy interventions alibi corrections. Government has not addressed the issues of hoarding, speculative trading, supply improvements and regulatory and administrative interference in in genuine price increase. The prices of all basic amenities and necessities are increasing sharply including the cost of fuel, milk, pulses, cereals, vegetables, edible oil, transportation, and clothing and most seriously the prices of housing have gone up very substantially. The government needs to consider banning international investment in real estate sector in the interest of a common man. Even NRI need to be given a limited access to Indian real estate.

Exchange Rates

The recent rise of US Dollar all other major currencies vis-à-vis Indian rupee by more than 10% is not only unexpected but also shocking and clearly indicate the lack of necessary policy intervention by RBI and the Government of India. The Indian society is repeatedly asking a question as to where is our political leaderships. The Prime Minister Dr. Manmohan Singh, who was once upon a time considered as one of the best finance ministers and policy makers of the country, is practically missing from the government. No policy initiative or direction is being given by the current leadership. We urge upon the top leadership of the country including the leadership of the major political parties to have a brain storming session and give an appropriate direction to India and its economy. 

To simplify and rationalize the trading account opening process, stock market regulator Securities &
Exchange Board of India (SEBI) has replaced all client-broker agreements with the "Rights and
Obligations" document. "The client will now be required to sign only on one document: the Account
Opening Form. Further, in the same form, the client shall continue to put his signatures instead of saying 'yes' or 'tick mark' while indicating preferences for trading in different exchanges/segments, in
accordance with existing requirements."

The move by Securities & Exchange Board of India (SEBI) allowing Non-Banking Financial Companies (NBFC), categorized as infrastructure finance companies, to issue long-term bonds to foreign institutional investors would help boost investment. SEBI's decision to frame regulations for alternative investments to govern entities promising returns from off-beat avenues, examination of social relevance of innovative financial products, launch of web-based complaints redressal system and simplification of trading account opening procedures would enhance investor' confidence in the markets and also aid investment decision-making.

A qualified foreign investor (QFI) is a person residing in a country (other than India) which is a signatory to IOSCO's multilateral MoU and is compliant with FATF standards. He should be registered with SEBI as a foreign institutional investor or a sub-account.

• SEBI allows QFIs in Indian MFs
• Aggregate investment can be up to $ 10 billion in equity schemes; $3 billion in debt schemes
• QFISs can't avail facilities such as SIPs, withdrawals, transfer of units and switching between schemes
• Foreign investors can only subscribe and redeem
• MFs responsible for deduction of applicable tax at source before redemption payments.
• DPs to open separate, single-rupee poll bank account only for QFI investments in India.
• Foreign-based agent of MFs to be appointed after SEBI's approval.
• MFs required to file details of subscription and redemption on a daily basis with SEBI.

The Securities & Exchange Board of India (SEBI) alleged in the Bombay High Court that MCX-SX
Stock Exchange (MCX- SX) had concealed some facts while diluting its equity stake under the Capital Reduction cum arrangement. The court observed that it was obligatory on the part of MCX - SX to disclose the buy- back to SEBI and that such negligence could not be tolerated.

Securities & Exchange Board of India (SEBI) has asked stock exchanges to impose heavy penalty on
brokers allowing theirs clients to trade in derivative market without sufficient margin in money and said that fines could be as high as the shortfall of funds, while the minimum penalty is 0.5 % of the shortfall of margin money, the penalty could be as high as 100%.

The Revenue department has decided to make it mandatory for all the assesses to file online returns of their transactions. At present, the online filing of returns is mandatory only when the service tax
payment is over Rs. 10 Lakh annually.

'Capital goods' would not only include goods falling under Chapters 82, 84, 85 and 90 of the Central Excise Tariff Act but also components, spares and accessories of such goods, and molds and dies which are used in the factory of the manufacturer of the final product.

The Supreme Court dismissed the appeal of Royal Enfield Ltd., rejecting its argument that the cost of
packing charges incurred by it should not be taken into account for computing excise duty on the
motorcycles manufactured by it.

The Supreme Court has said that the excise appellate tribunal cannot revise its final order on an application of rectification of errors in its final order. It can only remove errors apparent on the record.

Gain from fluctuation of foreign exchange is directly related with the export activities and should be
considered as income derived from export in the year in which the export took place for the purpose of deduction u/s 10A of the Act. The exchange value based on upward or downward of the rupee value is not in the hands of the assessee. The assessee does not determine the exchange value of the Indian rupee; that when the fluctuation in foreign exchange rate was solely relatable to the export business of the assessee and the higher rupee value was earned by virtue of such exports carried out by the assessee, there was no reason why the benefit of sec.10A should not be allowed to the assessee.

It has been held that where services have been rendered outside India and have been utilised for the
purpose of making or earning any income from any source outside India, such payments would fall outside the purview of Section 9(1)(vii) of the Act and will not be deemed to accrue or arise in India.

There is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars.

The undisclosed income determined in the case of the assessee is not as a result of disallowing any claim of the assesse because the same is not allowable as per the provisions of law but undisclosed income has been determined on the basis of the evidences found during the course of search, which has established the fact that the true nature of transactions have not been recorded by the assessee in the books of account and the same has resulted the undisclosed income.

It is held that redemption of preference shares amounts to 'transfer' of a capital asset under the Income-tax Act and any loss on redemption thereon would thus be allowable as a capital loss. The Tribunal, relied on the Supreme Court (SC) decisions in the case of Anarkali Sarabhai v. CIT [1996] 224 ITR 422 (SC) and Kartikeya Sarabhai v. CIT [1997] 228 ITR 163 (SC) , held that redemption of preference shares has to be considered as 'transfer' and loss on redemption thereof is an allowable long-term capital loss.

When anticipated profits on un matured contracts are held to be non-taxable, there is no good reason as to why anticipated losses on un matured contracts can be taken into account while computing business income. There is an inherent fallacy in this approach inasmuch as anticipated losses and anticipated profits are not treated in the same manner in the computation of business profits. These dual standards in recognizing anticipated losses and anticipated profits are accepted accounting norms.

From a plain reading of the definition of 'royalty' given in Article 12(3) of DTAA between India and
Switzerland, it is clear that any payment made for the use of or right to use of the properties mentioned there in would be royalty. We find that both the definitions are similar and encompass the payment for 'the use of and the right to use of' any intellectual property mentioned therein such as copyright of a literary, artistic or scientific work or any patent, trade mark, design or model, plan etc.. Thus, the license granted by Oracle Data Base for use of its software by the assessee company constitutes royalty.

The due date for submission of ITR-V for A.Y. 2010-11 has been extended upto 31.10.2011 or 120 days from the date of upload whichever is later.

Payments made by the assessee to the employees employed by it on daily wage basis cannot be said to be a contractual payment, as such the assessee in such cases was not required to deduct tax from such payments u/s. 194 C of the Act. The payments were not in the nature of payments under contract but had the character of wages. It is obvious that the liability to deduct tax under Section 194C of the said Act, only arises in case of contractual payments. Since the payments were made to the employees employed by the assessee on daily wages, they cannot be said to be contractual payments.

The order of the Tribunal and the Commissioner of Income Tax (Appeals) show that the assessee
purchased loss making cement plant from M/s. Coramandel Fertilizers Limited, for a sale consideration of Rs.105.30 crores. Evidently, the cement plant purchased was making loss ever since
its commencement of the business, hence, no value was assigned in respect of the brand name as well as for goodwill.

The Finance Ministry has issued a circular diluting the rules that govern stake sale by promoters of Indian insurance companies.

OLD RULE

Any Indian promoters holding more than 26% stake in the insurance firms could divest stake only after completing 10-years of its operations.

NEW RULE

The Indian company will be able to sell stake any time but will have to retain at least 26% holding.

The Institute of Chartered Accountants of India (ICAI) is piloting a new initiative by empanelling its members as arbitrators. This move could help bring down the cost of arbitration for domestic companies.

The Supreme Court (SC) has reiterated that Arbitral Tribunals should not travel beyond the issues referred to them. They should not decide issues which are not in the terms of reference and should not enlarge the scope of the reference. If the tribunal goes beyond the reference, a court can intervene to correct it.

The Supreme court has ruled that court should give reasons for its decision and should not dismiss an
appeal with a cryptic order. The Delhi High Court had dismissed the appeal of the importer against the customs tribunal's order with a cryptic order though seven substantial questions were raised. One of the issues was the power of the Additional Director General in the Directorate of Revenue Intelligence. However, the High Court did not deal with any. The Supreme Court states that every litigant who approaches the court for relief is entitled to know for the reason for acceptance or rejection of his prayer, particularly when either of the party has a right to appeal. Otherwise the right of appeal will not be meaningful. The Tribunal was asked to reconsider the case.

The Supreme Court (SC) has held that a non-advocate could appear before the consumer disputes redressal forum if he/she is appearing on an individual case basis without charging a fee and also without any pre-existing relationship with the complainant. A bench of Justice Dalveer Bhandari, Justice Mukundakam Sharma and Justice Anil R Dave in their judgment has said that pre-existing relationship includes relatives, neighbors, business associates or personal friends. The court said this in its detailed suggestion to the National Consumer Disputes Redressal Commission (NCDRC) for framing rules to facilitate the appearance of representatives who, however, are not legal practitioners before consumer forums.

A division bench of the Bombay High Court has issued 11-point guidelines to speed up proceedings under the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act (SARFAESI Act). Under this law, a creditor can take possession of secured assets without intervention of a civil court. In a batch of petitions by banks and FIIs led by International Asset Reconstruction Company (IARC), it was pleaded that a number of their applications were pending before the courts across Maharashtra, especially in Mumbai, Pune and Thane and appropriate directions need to be issued to magistrates asking them to dispose off the applications without delay. The Judgment agreed with this and stated that it is in the interest of general public to state that they
take possession of the secured assets and recover money advanced by them where the borrower is
under liability and his account has become non- performing. According to the guidelines, the borrower has no right to be heard at any stage of proceedings including the execution of the magistrate's order. The applications shall be decided within two months. The magistrate's order shall (i) authorize the taking of physical possession of the secured asset with reasonable force which includes the breaking open of locks, wherever necessary; (ii) direct the police station concerned to provide assistance in taking possession.

The Ministry of Corporate Affairs has issued a notification notifying the companies (cost audit report) rules, 2011. These rules shall apply to every company in respect of which an audit of the cost records has been ordered by central government under section 233(1) of the companies act, 1956. The rules specify the manner and the mode of appointment of a cost auditor, form of cost audit report, timeline for submission of the cost audit report, rights of cost audit in relation to the production of the accounting records, penalty for contravention of the rules.

The Central Board Of Direct Taxes (CBDT) has said that partnership firms, individuals and hindu undivided family (HUF's) subjected to mandatory tax audits will now be required to file their income tax (IT) returns only electronically and that too under digital signature. This regime would be applicable for assessment years 2011-12 and subsequent years. Hitherto, such assesses had an option to file their income tax returns either electronically under digital signature or transmit the data electronically and also physically file a supplementary return . Now this option has been done away with and all income tax returns of such assessees would have to be filed electronically under digital signature.

The Institute of Chartered Accountants of India (ICAI) has stressed the need for independent auditing of cooperative societies, various educational trusts and NGOs, saying it would bring down discrepancies in financial statements. ICAI said revenue of NGOs, cooperatives and educational trust had gone up manifold. ICAI had also said to the Centre and other state governments that if government wants transparency then they should go for private audit like in Maharasthra and Gujarat, where it is being carried out in cooperative societies.

The Centre must not link the availability of the clear income tax pass-through regime for venture capital (VC) fund investments into 10 specified sectors should be removed. The restrictions have to be removed so as to provide a clear and stable income tax regime for VC/PE funds investing in any sector.

India is rolling out a system - Authorized Economic Operator (AEO) - under which traders, logistics providers, and customs agents sporting secure trader tag would be able to move their goods speedily through customs in countries with similar facility. US, Japan, South Korea and China already have such a system in place and talks are on with them for a mutual recognition agreement.

The government has asked Special Economic Zone (SEZ) co-developers setting up their own units to register themselves as separate legal entities, a move that is expected to plug possible revenue leakages. If a separate legal entity cannot be set up, the co-developer will have to take special permission and ring-fence the activities of the SEZ and his unit by stringent accounting norms.

Banks would be required to seek prior approval of Reserve Bank of India (RBI) for raising paid-up capital beyond Rs. 1,000 crore for every block of Rs. 500 crore.

After implementing the move to split the posts of Chairmen and Chief Executive Officers (CEOs) in private banks in 2007, the Reserve Bank of India (RBI) is now considering the same step for public sector banks.

To give a further boost to infrastructure financing, the Securities and Exchange Board of India (SEBI) allowed Infrastructure Finance Companies (IFCs) to issue corporate bonds to Foreign Institutional Investors (FIIs).

The Reserve Bank of India (RBI) has paved the way for corporate India to enter banking, but has set stiff conditions that straightaway shut the door on real estate companies and brokerage firms. In its much-awaited draft guidelines for new private banks, Reserve Bank of India (RBI) said that private groups or entities with diversified ownership, sound credentials and a "successful track record" of 10
years would be allowed to apply for new banking licenses. The Central Bank is considering issuing banking licenses for the first time since 2004. Such groups or entities cannot have more than 10 per cent or more assets or income from real estate and capital market activities.

Companies welcome, but with caveats

• Promoters with diversified ownership, track record of 10 years.
• Clearance needed from regulatory, investigative agencies.
• Minimum paid-up capital of Rs 500 crore.

Anna Hazare movement duly supported by a large number of Indians including intellectuals, media, bureaucracy, judiciary as well as political parties and leaders has brought corruption as a major issue for consideration before the Indian polity as well as the Indian public.  The Jan Lokpal Bill, once enacted will be put to a real hard test of the LOK PAL regarding transparent working, judicious and
practical approach and whether it is able to act as a deterrent or will it become another investigating / judicial endless process are all questions which are being considered by the Indian society. The Indian public and intellectuals and all those who matter including policy makers, bureaucrats, judiciary,
regulators, top professionals, media, social activists are all committed in their minds that corruption is bad and it is vitiating our working, value system as well as the culture and is also creating impediments to growth and more importantly inclusive growth.

How to eradicate corruption from day-to-day life and at all levels of working in the government sector, regulators, tax department, private sector as well as offices of public dealings, is a major
question. What should be the approach of the policy makers and those who are responsible for governance in this country, is being questioned in every strata of the Indian society including top businesses, professionals, intellectuals besides the Indian public. We wish to give certain suggestions for consideration and reaction. The basic cause of corruption could be greed or fear and the following suggestions may be able to address these reasons to a great extent:

• Governance Process: The policy makers and system designers need to review all procedures and processes in governance on zero base basis to make these processes and procedures simple and time bound.
• The personal contact between the officials and the public has to be reduced to the most minimum and all the requirements and procedures can be automated using information technology and be made transparent in a manner that the interaction is completely electronic and transparently on the record. The MCA 21 system of filing with ROC could be one glaring example, as to how the corruption can be eradicated by transparency and improvement in procedure.
• The Indian Tax Department, regulators, property department, Municipal Corporation, and other government departments can be mandated to urgently redesign their systems and procedures and rules & regulations in such a manner that the public contact is completely eradicated from the system.
• The initiative to centralize electronic filing of income tax return, selection of cases for scrutiny, centralized processing of refund undertaken by the tax department is worth appreciating. These models can be extended to the scrutiny process as well as appeals and personal hearing may be made only exceptional. The personal hearing, if it becomes very necessary, in a particular case, can be arranged by video conferencing with the concerned officials from a distant location or may be  made a public hearing with audio/video recording.
• Time: The decision making as well as compliance of various procedures at the end of government officials may be time bound and officials should be made responsible for their decisions. The possibility of a wrong decision can still be exonerated but if the decision is done unprofessionally or with ulterior motive, the same should result in action against the concerned official.
• The charter of rights and responsibilities as well as the procedures can be transparently made available to all stake holders.
• A quick judicial redressal mechanism of difficulties or harassment being experienced by the public can be mandated.
• The politicians as well as bureaucracy of the country should be incentivised monetarily on the basis of good performance, achievement of targets, transparent working and a corruption free professional working in their domain areas.
• A silent and secret surveillance mechanism needs to work and bring exceptions to the knowledge of senior officials, judicial process and public servants.
• The working of government departments, municipalities, panchayats and various other public dealing departments can be supervised by duly elected local groups for which a detailed structure can be designed to delegate necessary authorities and responsibilities.

A very serious issue is being examined by Reserve Bank of India currently in respect of various buy back and similar commitments and obligations of the investee company and / or the promoter towards the foreign private equity fund or venture capital fund investing in India as Foreign Direct Investment. It is clearly understood that external commercial borrowings from outside India is restricted to specific lenders including banks and others and can be utilised only for certain specific purposes. The Foreign Direct Investment on the other hand is more freely permitted including in sensitive sectors like real estate, single brand retail, telecommunication, insurance, banking and most of the industrial and service sectors. The Reserve Bank of India has noted that the private equity
investors/venture capital funds investing as foreign direct investment in India are investing in equity or in fully mandatorily convertible debentures with pre committed minimum return ranging from 18% to 30% besides various penalty default clauses. In view of RBI, these commitments actually convert these investments into as good as an international borrowing or as a derivative product, which is not permitted in terms of FEMA guidelines framed by Indian government as a sovereign. Such commitments can bring systemic risk. The RBI may consider with open mind about providing an exit option to the investors on the basis of listing or pre committed buy back on the basis of a valuation of the equity invested by the foreign investor at the time of disinvestment also. Currently the valuation is prescribed only at the time of investment. India need to offer a reasonable and well
structured solution to foreign investors so that it can be a win win situation for Indian industry as well as the foreign investors. A regulatory framework in this regard needs to be developed on the basis of open public debate and consensus may be arrived at keeping in mind interest of India, Indian economy and Indian entrepreneurs fully in mind while providing a judicial solution to the foreign
investors.

The Ministry of Corporate Affairs (MCA) is contemplating making open offer mandatory in transactions involving sale of any business. This is even as the Securities & Exchange Board of India (SEBI) is said to have rejected MCA's suggestions on this while revising the Takeover Code. ICAI
suggestion has been accepted in principle by MCA in this regard.

The Supreme Court (SC) has ruled that an Arbitration agreement in an unregistered deed can be enforced and acted upon for dispute resolution even if the deed is compulsorily registrable, this principle will apply.

Reserve Bank of India (RBI) has warned banks against internal fraud committed by their own employees. Reserve Bank of India (RBI) also said that today's employees are able to easily export sensitive files and information via email, FTP or by copying data to portable media. Banks have to control where their sensitive information is, how it's used, and who obtains.

The government will set up state level independent bodies to carry out financial and social audits of its flagship rural employment guarantee programme. The rural development ministry will also make it mandatory for state governments to submit a report on the social audit, which unlike other government audits, allows beneficiaries of the scheme to register companies.

Public sector banks (PSBs) have requested the government to extend the deadline for moving towards the system of technology based identification of non-performance assets. Banks have asked that the deadline, which was scheduled to expire on September 30, be extended for

Securities & Exchange Board of India (SEBI) has made it mandatory for companies to announce their fourth quarter numbers along with audited annual results. Securities & Exchange Board of India (SEBI) also said that companies opting to submit audited annual results within 60 days of  the end of the fiscal in lieu of last quarter results shall also submit Q4 results along with audited annual results.

The Finance Ministry (FM) has deferred a decision on changing the norms so; foreign investors will not get voting rights in Indian firms in which they hold shares through the depository route.

SEBI has said limited liability partnership (LLP- a concept which came into being in India only in 2008) firms should be considered as a body corporate and are eligible to become members of stock exchanges.

Market Regulator Securities and Exchange Board of India (SEBI) wants to put in place standard guidelines for the due diligence process carried out by merchant bankers for public issues.

Standard due diligence norms

• Guidelines to involve verification of issuer eligibility, corporate records, the issuer's objectives , among other things,
• Specific instructions on how to conduct due diligence of company management, promoters and group companies.
• Move aimed at protecting investors' interest and enhancing the quality of companies to the market.

The Securities and Exchange Board of India (SEBI) has directed Vaswani Industries to give a withdrawal option to investors in the Non Institutional Investors (NII) and Retail Individual Investor (RII) categories.