April 2022 Journal

GujRERA Corner received by him in respect of that apartment,
plot, building, as the case may be, with interest
As per Section 61 of the RERA Act, 2016, If any at such rate as may be prescribed in this behalf
promoter violates any other provision of this Act, including compensation in the manner as
other than those provided under section 3 or section provided under this Act:
4, or the rules or regulations made there under, he
shall be liable to a penalty of up to 5% of the Provided that where an allottee does not intend
estimated cost of the real estate project as determined to withdraw from the project, he shall be paid,
by the Authority, which means that if the builder or by the promoter, interest for every month of
contractor fails to deliver physical possession of the delay, till the handing over of the possession,
flat to the allottee, he will be liable to a penalty of at such rate as may be prescribed.
up to 5% of the estimated cost of the real estate
project as determined by. (2) The promoter shall compensate the allottees in
case of any loss caused to him due to defective
Under Section 14 of the RERA Act, 2016, if any title of the land, on which the project is being
structural defect or other defect in workmanship, developed or has been developed, in the
quality, or provision of services, or any other manner as provided under this Act, and the
obligation of the promoter under the agreement for claim for compensation under this subsection
sale relating to such development is brought to the shall not be barred by limitation provided under
promoter’s attention within a period of five years any law for the time being in force.
from the date of handing over possession by the
allottee, it shall be the promoter’s duty to rectify (3) If the promoter fails to discharge any other
such defects without further charge, within thirty obligations imposed on him under this Act or
days of the allottee’s notification. the rules or regulations made thereunder or in
accordance with the terms and conditions of
In addition to that as per Section 18 of the RERA the agreement for sale, he shall be liable to pay
Act, 2016 such compensation to the allottees, in the
manner as provided under this Act.
(1) If the promoter fails to complete or is unable to
give possession of an apartment, plot or Section 88 of the RERA Act, 2016 says that “The
building,— provisions of this Act shall be in addition to, and
not in derogation of, the provisions of any other
(a) in accordance with the terms of the law for the time being in force” which means that
agreement for sale or as the case may be, the home-buyer can also file a consumer complaint
duly completed by the date specified under the Consumer Protection Act, 1986 for the
therein; or deficiency of service on the part of promoter or
builder in not giving the delivery of possession of
(b) due to discontinuance of his business as a flat or plot in question in time or for some structural
developer on account of suspension defects in the building after the plot or building is
or revocation of the registration under this delivered.
Act or for any other reason;
❉❉❉
he shall be liable on demand to the allottees,
in case the allottee wishes to withdraw from
the project, without prejudice to any other
remedy available, to return the amount

5 0 Ahmedabad CharteredAccountants Journal April,2022

Allied Laws Adv. Ankit Talsania
Corner [email protected]

Gautam Thapar v. Directorate of Enforcement Bank officials colluded with the applicant for the
[Decided on 02.03.2022] grant of Term loan, which was ostensibly obtained
2022 SCC OnLine Del 642 by M/s. Oyster BuildwellPvt. Ltd. ( ‘OBPL’), to
Delhi High Court furnish security deposit in favor of Jhabua Power
and Investments Limited (JPIL), however in reality,
Background the same was sought with malafide intentions to be
siphoned off and diverted towards repayment of
The instant application considered by the Hon’ble facilities availed of byAvantha Group companies and
Delhi High Court was filed under Section 439 of the for meeting other expenses.
Criminal Procedure Code seeking regular bail filed
under Sections 45/44 of the Prevention of Money The prosecution also contended that the Bank was
Laundering Act, 2002 (PMLA) and arising out of well aware of the activities for which the loan was
ECIR registered under Sections 3 /4 PMLA by the being disbursed and consequently the valuable public
respondent/ED. money was being siphoned off under the blanket of
term loan, which ultimately resulted in generation of
In this case, the Hon’ble Delhi High Court dismissed ‘proceeds of crime’ which was projected as untainted
a bail plea by Avantha Group promoter Gautam money.
Thapar in a s 500-crore money laundering case lodged
by the Enforcement Directorate (ED). The money Therefore, a complaint was filed under Sections
laundering case was registered by the ED after taking 120B/406/420/468/471 by the CBI against OBPL,
cognisance of an FIR lodged by the Central Bureau the applicant, and others, for having committed
of Investigation (CBI). criminal breach of trust, cheating, criminal
conspiracy, and forgery for diversion/
Facts of the Case misappropriation of the public money during the
period from 2017 to 2019. The investigation in
In the instant case, an application was filed u/s 439 of the case in still being carried out, and the defendant
Cr.P.C seeking regular bail in a complaint case filed had applied for bail.
under section 44/45 of the Prevention of Money
Laundering Act, 2002. The prosecution contended Case of the Prosecution
that subsequent to the removal of then MD and CEO
of Yes Bank Ltd., certain complaints were filed The ECIR was recorded by the respondent under
assailing his role in grant of various credit facilities to sections 3 and 4 of PMLA, and subsequent filing of
borrowers, in violation of banking norms and against the prosecution complaint.As per the complaint, the
receipt of illegal gratification, which resulted in huge Avantha Group is led by the applicant, who is its
loss to the Bank. founder and chairman. The companies involved in the
transaction were OBPL, M/s. Jhabua Power and
One such complaint was related to M/s. Oyster Investments Limited and M/s. Jhabua Power Ltd.
BuildwellPvt. Ltd. ( ‘OBPL’), a real estate company, which were a part of Avantha Group and under the
which was extended credit facilities to the tune of control and beneficial ownership (direct or indirect)
Rs.514.27 crores, resulting in loss of Rs.466.51 crores of the applicant.
to the Bank.As per the case of the prosecution, certain

Ahmedabad CharteredAccountants Journal April,2022 51

Allied Laws Corner Referring to Section 45 of PMLA, it was submitted
that the provision was amended by way of Finance
In December, 2017, JPL had signed an operations Act, 2018 to cure the defects pointed out by the
and management (O&M) agreement for its thermal Supreme Court in Nikesh Tarachand Shah Till date,
power project with JPIL, which work was sub- the amendment has not been struck down or declared
contracted by JPIL to OBPL at higher monthly ultra vires.As such, the twin conditions under Section
consideration. After the Term loan of Rs.514.27 45(1) PMLA stand revived.
crores was disbursed to OBPL, the funds were
transferred to JPIL as security deposit. Reportedly, Findings of the High Court
the said funds were utilized for retiring of Avantha
Group loans as well as for repayment of existing debt The Court observed that Article 21 of the
of the Group companies to the tune of Rs.190 crores Constitution of India guarantees a right to personal
ofAditya Birla Finance Ltd. liberty to every person, and thus, there is no
gainsaying that bail is the rule and jail an exception.
The prosecution alleged that the agreements entered The court categorically clarified that in matters of
into between OBPL, JPL and JPIL were ‘sham’, and regular bail under Section 439 CrPC, a Court must
that OBPL was part of Avantha Group and as such, consider aspects, including but not limited to the
was controlled by the applicant and it carried no larger interest of the State of public. And another
business activity and had no employees working in it. factor that is relevant to the question of bail is the
The applicant, who is the ultimate beneficial owner of gravity of the alleged offence and/or nature of the
OBPL, JPL and JPIL, was instrumental in generation allegations levelled. These factors may also be
of proceeds of crime, as he had the knowledge that applied as additional tests while deciding the
Term loan was being taken from the Bank on the basis severity of punishment that shall be awarded in an
of sham agreements and that the funds were going to offence.
be utilized for purposes other than sanctioned
The Court further clarified that Section 45(1) of the
Contentions raised on behalf of the ED Prevention of Money LaunderingAct,which deals with
grant of bail takes form of twin conditions:
The respondent opposed the bail application and
argued that OBPL is a paper company with no (i) that the Public Prosecutor shall be given an
business activity, which lacked the financial strength opportunity to oppose the application for release,
to service the proposed loan.Accordingly, the officers and (ii) where the Public Prosecutor opposes such
of Avantha Group connived with the officers of the application, the Court should be satisfied that there
Bank and created a paper trail to facilitate sanctioning are reasonable grounds for believing that the
of the loan in favor of OBPL on the basis of sham accused is not guilty of the offence and that he is
agreements and after the Term loan was disbursed by not likely to commit any offence while on bail.
the Bank, the funds were used to service pre-existing
loan obligations ofAvantha Group. TheTerm loan was The constitutional validity of Section 45 of the Act
not only taken by OBPL in violation of RBI Circular was questioned before the Hon’ble Apex Court in
dated 01.07.2015, but was also disbursed by the the case of Nikesh Tarachand Shah v. Union of India,
Bank knowing fully well that the funds would be utilized whereby explicating the defects inherent in the
to pay existing lenders, provision and the challenges posed thereby, it was
held that the twin conditions imposed by Section 45(1)
The respondent further argued that the applicant, who PMLA were manifestly arbitrary, discriminator and
is the ultimate beneficial owner of theAvantha Group violative of Articles 14 and 21 of the Constitution of
and major beneficiary of the entire money laundering India. Pursuant to the said judgment the amendment
scheme, was aware of the real purpose of the O&M was brought to Section 45 of the Act vide the
agreements and also that the Term loan granted by Finance Act, 2018.
the Bank was not going to be utilized for the sanctioned
purpose. Thus, he was instrumental in the generation Continued to page 57
of proceeds of crime.

5 2 Ahmedabad CharteredAccountants Journal April,2022

Capital CA. Karan Vora
Markets [email protected]

Summary: · There are sanctions on Russian financial
institutions and central bank with various banks
Indian Economy is recovering well with record GST removed from SWIFT (Network through which
collections and positive core sector growth. There are International payments are initiated).
though troubles in neighborhood. Sri Lanka is going
through economic crisis and has defaulted on · Number of large multinational corporations
repayments. Russia-Ukraine war is still going with including ranging from shipping companies
serious implications on economic front. (FedEX, UPS), Tech (Apple, Microsoft,
Samsung), Automobiles (Ford, GM, Toyota),
Key M&A Deal includeEmami acquiring Dermicool Banks (Citibank, JPMorgan, Goldman Sachs) to
brand from Reckitt for a consideration of Rs. 432 Oil Companies (BP, Shell) have announced exits
Crore and Private Equity deal of Brookfield investing from Russia which will hurt.
Rs. 2000 Crore in Jindal Poly films.
· Global Credit rating have downgraded the Russian
Economic Update: government credit rating to junk which will make
it very difficult to borrow funds from international
· India’s GST collection has hit all-time high of Rs. markets.
1.42 Lakh Crore in March as economic activity
has improved. State wise also, almost all the states · World Bank expects Russian economy to plunge
have recorded healthy rise over March 2021 into a deep recession with contraction of over
numbers. 11% in 2022.

· India’s core sector growth was four month high · On the other hand, World Bank expects
in February 2022 at 5.8% due to recovery in steel, Ukraine’s economy to shrink by 45% this year
electricity and refinery products. Indian Railway due to war. It said that the war is a staggering
has also recorded highest ever loading in the month humanitarian crisis, a massive blow to Ukraine’s
of March. economy and enormous damage to infrastructure.

· India is planning a strategy to increase wheat Sri Lanka Economic crisis:
exports as the global wheat supply is disrupted
due to war as Russia and Ukraine are one of the · Sri Lanka has been going through Economic crisis
top wheat exporters. due to low exports, low foreign exchange reserves
and impact on tourismdue to Covid-19.
Economic impact of Russia-Ukraine War:
· Many sources put the blame of crisis on the
· The sanctions from west have apparently not economic mismanagement by the government
stopped Russian president Putin from waging war. which took decisions such as Tax cuts like
Russian currency Ruble has also stabilized after reducingVAT to 8% after 2019 elections,banning
initial slide with increased oil and gas demand. all chemical fertilizers in 2021 (which was later
reversed), printing record amount of money and
· However thesanctions will definitely have a severe excessive borrowing from international capital
long term economic impact on Russia. markets.

Ahmedabad CharteredAccountants Journal April,2022 53

Capital Markets Equity Markets Mar-22 Feb-22 Change%

· Crisis has sparked political protests in the island Sensex 58,569 56,247 4.13%
nation as people are affected by electricity and
food shortages, medicines shortages and double Nifty 50 17,465 16,794 3.99%
digit inflation. Sri Lankan rupee has also seen a
freefall and has become the worst performing BSE 500 23,695 22,742 4.19%
currency in last year.
BSE Bankex 41,754 41,636 0.28%
· India has also supported the country with over
$2Bn of aid in form of emergency credit lines and BSE Consumer 42,272 43,099 -1.92%
supplies.
Durables
· However inApril, Sri Lanka defaulted on its loan
repayments and has now sought funds from IMF. BSE Healthcare 24,304 23,356 4.06%

· Sri Lanka will require number of painful reforms BSE FMCG 13,335 13,008 2.51%
to come out of this crisis, a process that will be
complicated by the political instability.

Trends in Secondary Markets:

BSE Sensex went up by 4.13% to close at 58,569 in
March 2022 as against 3.05% lower to close at
56,247 in February 2022. Nifty 50 closed at 17,465
that is 3.99% higher as against 3.15% lower to close
at 16,794 in February 2022.

Foreign Institutional Investors (FIIs) invested Rs.1910
Crore while Domestic Institutional Investors (DIIs)
divested Rs.184 Crore from the Indian equity markets
in the month of March 2022.

5 4 Ahmedabad CharteredAccountants Journal April,2022

Majority of the BSE Indiceswere positive in the Capital Markets
month of March.The highest increase was in
Telecom(9.49%), Teck (9.02%), Energy (8.91%) Mergers and Acquisitions (M&A)and Private
and others.Metal stocks have performed very well Equity (PE)key deals:
due to Russia Ukraine crisis which has resulted
into increase in commodity prices. Metal index has M&A: Emami acquires Dermicool from Reckitt:
gained in the last few sessions. Other sectors that
stand to benefit from supply chain shocks due to Transaction:
Russia-Ukraine crisis are the Indian IT industry,
tech, financials, and capital goods.The real estate · Emami Limited announced the acquisition of
sector also had reasons to cheer as the home sales “Dermicool”, a brand in Prickly Heat Powder and
in the first quarter of 2022 are highest in last seven Cool Talc category from Reckitt Benckiser for a
years due to lower interest rates and preference total consideration of Rs.432 crores.
for home ownership.
· Emami said that the acquisition was funded
Primary market Update: through internal accruals.

There wasno mainboard IPO in March 2022 as Emami Limited:
against two mainboard IPOs of Vedant Fashions
Limited andAdaniWilmar Limited in February 2022. · Emami is an FMCG Company in Personal &
There were four SME IPOs of Ekennis Software Healthcare Space and is the flagship company of
Service Limited, Bhatia Colour Chem Limited,Achyut the Emami Group of Companies. It is engaged in
Healthcare Limited and Evoq Remedies Limited in the business of manufacturing and marketing
March 2022 as against four SME IPOs in February personal care, healthcare and beauty products.
2022.
· Emami has market capitalization of approx. USD
Particulars Jan-22 Feb-22 3 bn.

I. Equity Issue 13,745 9,671 · Emami has a strong domestic distribution network
of more than 3,500 distributors and 4,000 sub
a. IPOs (i+ii) 700 6,831 distributors, with a direct reach across 9 Lakh
retail outlets and overall reach to 45 lakh+ outlets.
i. Main Board 680 6,749
· Emami owns brands like Boroplus, Navratna,
ii. SME Platform 20 82 Zandu, Fair & Handsome and Kesh King
amongst others.
b. FPOs 15 0
Reckitt Benckiser (India) Ltd:
i. Main Board 00
· Reckitt Benckiser is a British multinational
ii. SME Platform 15 0 consumer goods company with global presence.

c. Equity Rights Issue 99.32 113 · Reckitt Benckiser India Ltd. manufactures and
distributes household domestic goods. It
d. QIP/IPP 0 1,952 produces household, laundry, toiletry,
pharmaceutical, and food products and includes
e. PreferentialAllotment 12,931 775 brands like Dettol, Strepsils,Veet, Airwick etc.

II.Debt Issue 26,704 49,999 · Dermicool brand has 20% market share in the
category of cooling and respite from prickly heat
a. Debt Public Issue 1,128 695 caused during summer season and has high
consumer connect through its marketing campaign.
b. Private Placement 25,576 49,304
of Debt Rationale:

Total Funds Mobilised · Combined with Emami’s Navratna Cool Talc,
Emami expects to be leader in prickly heat
(I+II) 40,449 59,670

Ahmedabad CharteredAccountants Journal April,2022 55

Capital Markets

powder and cool talc category with acquisition · JPFL will continue to own its non-woven business
of Dermicool brand. unit and other corporate assets. It will retain 75%
ownership of the new unit, to be called JPFL Films
· Harsha Agarwal, Director of Emami Limited Pvt. Ltd.
commented that they are very happy to
announce the acquisition as it will help realize · Brookfield SPV has agreed to acquire 20 (twenty)
synergetic benefits and optimize costs. equity shares of JPFL Films and subscribe to
19,990 compulsory convertible preference shares
· He added that with increasing global warming (CCPS) of JPFL Films (on preferential basis).
and soaring summer temperatures, such
problem solution niche products are poised for · The structured equity investment in JPFL consists
strong growth in future. of CCPS and equity shares of the new subsidiary,
giving BSI a 25% stake and downside protection
· Emami further added that it is open to grow through a ratcheted equity structure tied to
through inorganic route. The Company financial performance.
considers acquisitions that add value and have
synergy with the current line of businesses, or
offer opportunities to be present in categories
that have high growth potential.

· Zandu, Kesh King and German brand Creme
21 are some of the brands or businesses
acquired by the Company in the past few years.

· Earlier this month Emami has acquired 19%
stake in TruNative, a nutrition focused food and
Beverage Company, for an undisclosed
amount.

· Though the market was not very cheerful to
the news, as Emami stock went down by 4%
in 2 days following the announcement.

PE: Brookfield picks up minority stake in Jindal Jindal Poly Films Limited:
Poly Films:
· Jindal Poly Films Limited (JPFL) is a part of
Transaction: the B.C. Jindal group. It is engaged in the
production and sale of packaging films. It
· Jindal Poly Films Limited (JPFL) announced includes flexible plastic films and non-woven
that it has signed an agreement for the sale of a fabrics products.
minority stake in its packaging films business
to Brookfield Asset Management, which, · Company has an integrated plant in Nashik,
through its Special Investments program (BSI), Maharashtra.
and together with institutional partners
(collectively Brookfield), has agreed to make · The products are used in packaging for food and
a Rs.2,000 crore investment in the company. cosmetics, labels, tapes, and various other
industrial segments. It also provides non-woven
· The transaction will result in JPFL carving out fabrics which find application in hygiene, baby
its packaging films business (PFB), which diapers and other medical applications.
generates approximately 85% of its total
revenue, into a wholly owned subsidiary in Brookfield Asset Management Inc.:
which BSI will hold a minority stake.

5 6 Ahmedabad CharteredAccountants Journal April,2022

· Brookfield Asset Management is a Canadian Capital Markets
asset management firm focused on property,
renewable energy, infrastructure, and private such as Brookfield. JPFL will have access to
equity. Brookfield’s global network for revenue
optimizations, operation improvements and global
· It has over US$690 billion of assets under best practices.
management (including through affiliate Oaktree
Capital Management). Brookfield has been · Globally PE players have been active in
operating in India for over 11 years and currently packaging sector in last two years. In India also
manages $21 billion in assets. large deals in this sector include Blackstone
acquiring Piramal glass and Essel propack, JM
Rationale: Financial investing in Canpac, Advent
investing in Manjushree Technopack etc.
· Transaction will help Jindal Poly Films to
finance future growth and expansion of the · The share price of Jindal Poly Films went up
business by partnering with a reputed PE fund. by 6.31% in one day following the acquisition
announcement.
· Along with enhancing profitability and growth
possibilities for its packaging business unit, JPFL Acknowledgements: RBI Bulletin
will be able to accelerate its diversification into (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in),
new companies as a result of this investment. NSE (www.nseindia.com), BSE (www.bseindia.com)

· JPFL commented that they are proud to enter a ❉❉❉
strategic partnership with a large global investor

Continued from page 52 Allied Laws Corner

With the apprehension of the applicant being on CBI Spl. Case No. 1233/2021 in relation to loan
the flight risk, the respondent had also issued LOCs taken byAHL, wherein the designated Special Court,
against the applicant, who was willing to surrender CBI, Mumbai has taken cognizance on 12.10.2021.
his passport and therefore, the High Court held that Therfore, considering the parameters of Section 45(1)
applicant’s presence during the trial may be secured PMLA as well as the gravity and nature of the alleged
by taking adequate measures like surrender of his offences, the Hon’ble High Court concluded that it
passport, and imposing necessary conditions in cannot be held that the applicant was not guilty of the
terms of the judgement of P. Chidambaram v. alleged offences or that he was not likely to commit
Central Bureau of Investigation. The Bench also any such offence while on bail and accordingly
took note of the observations made in the case of dismissed the bail application.
Rohit Tandon v. Directorate of Enforcement and
on its earlier judgment in State of Maharashtra v. Conclusion
Vishwanath Maranna Shetty.
In the present case, the Hon’ble Delhi High Court
The Court finally observed that the applicant of the observed that public money under the garb of aforesaid
bail was the real beneficiary as being the Founder term loan was siphoned off, resulting in generation of
and Chairman of the Avantha Group and in total, ‘proceeds of crime’ as well as its layering and ultimate
an amount of Rs 500.11 crores was stated to be projection as untainted money, thus, denied the bail
the ‘proceeds of crime’ in the case. application despite the Applicant having satisfied
the triple test for grant of bail.
On prima facie perusal of the evidences placed on
record the court was of the view that it is apparent ❉❉❉
that the applicant is also arraigned as an accused in

Ahmedabad CharteredAccountants Journal April,2022 57

From CA. Pamil H. Shah
Published [email protected]
Accounts
(c) by way of financial assistance on the basis of
Government Grants certain qualifying criteria are recognised as they
Significant Accounting Policies become receivable.

Asian Paints Limited In the unlikely event that a grant previously
recognised is ultimately not received, it is treated
Annual Report 2020-21 Notes to the Consolidated as a change in estimate and the amount cumulatively
Financial Statements for the year ended 31st March, recognised is expensed in the Statement of Profit
2021 and Loss.

Recognition and Measurement: The parent is Tata Motors Limited
entitled to subsidies from government in respect
of manufacturing units located in specified regions. Other income includes export and other recurring
Such subsidies are measured at amounts receivable and non-recurring incentives from Government
from the government which are non-refundable (referred as “incentives”).
and are inventories to their present location and
condition. Fixed production overheads are Government grants are recognised when there is a
allocated on the basis of normal capacity of reasonable assurance that the Company will comply
production facilities. with the relevant conditions and the grant will be
received.
ITC Limited
Government grants are recognised in the statement of
The Company may receive government grants that profit and loss, either on a systematic basis when the
require compliance with certain conditions related Company recognises, as expenses, the related costs
to the Company’s operating activities or are that the grants are intended to compensate or,
provided to the Company by way of financial immediately if the costs have already been incurred.
assistance on the basis of certain qualifying criteria. Government grants related to assets are deferred and
amortised over the useful life of the asset. Government
Government grants are recognised when there is grants related to income are presented as an offset
reasonable assurance that the grant will be received against the related expenditure, and government grants
upon the Company complying with the conditions that are awarded as incentives with no ongoing
attached to the grant. Accordingly, government performance obligations to the Company are
grants: recognised as income in the period in which the grant
is received.
(a) related to or used for assets, are deducted from
the carrying amount of the asset. Grasim Industries Limited

(b) related to incurring specific expenditures are Government grants are recognised when there is
taken to the Statement of Profit and Loss on a reasonable assurance that the same will be
the same basis and in the same periods as the received and all attached conditions will be
expenditures incurred. complied with. When the grant relates to an
expense item, it is recognised in the Statement of

5 8 Ahmedabad CharteredAccountants Journal April,2022

Profit and Loss by way of a deduction to the From Published Accounts
related expense on a systematic basis over the
periods that the related costs, for which it is D. When loans or similar assistance are provided
intended to compensate, are expensed. When the by governments or related institutions, with
grant relates to an asset, it is recognised as income an interest rate below the current applicable
on a systematic basis over the expected useful life market rate, the effect of this favourable
of the related asset. interest is regarded as a government grant. The
loan or assistance is initially recognised and
Government grants, that are receivable towards measured at fair value and the government
capital investments under State Investment grant is measured as the difference between
Promotion Scheme, are recognised in the the initial carrying value of the loan and the
Statement of Profit and Loss when they become proceeds received. The loan is subsequently
receivable. measured as per the accounting policy
applicable to financial liabilities. However, in
The benefit of a government loan at a below- accordance with the exemption as per Ind AS
market rate of interest is treated as a government 101, for such loans that existed on April 1,
grant, measured as the difference between 2015 the Group uses the previous GAAP
proceeds received and the fair value of the loan carrying amount of the loan at the date of
based on prevailing market interest rates, and is transition as the carrying amount of loan.
being recognised in the Statement of Profit and
Loss. Mahindra & Mahindra Ltd.

When the Group receives grants of non-monetary The Company, directly or indirectly through a
assets, the asset and the grant are recorded at fair consortium of Mahindra Group Companies, is entitled
value amounts and released to profit or loss over to various incentives from government authorities in
the expected useful life in a pattern of consumption respect of manufacturing units located in developing
of the benefit of the underlying asset. regions. The Company accounts for its entitlement as
income on accrual basis.
Zydus Wellness Limited
Government grants are recognised in profit or loss
A. Government grants are recognised in on a systematic basis over the periods in which
accordance with the terms of the respective the Company recognises as expenses the related
grant on accrual basis considering the status of costs for which the grants are intended to
compliance of prescribed conditions and compensate.
ascertainment that the grant will be received.
The benefit of a government loan at a below market-
B. Government grants related to revenue are rate of interest is treated as government grant and is
recognised on a systematic and gross basis in the measured as the difference between proceeds received
Statement of Profit and Loss over the period and the fair value of the loan based on prevailing
during which the related costs intended to be market interest rates.
compensated are incurred.
❉❉❉
C. Government grants related to assets are
recognised as income in equal amounts over the
expected useful life of the related asset.

Ahmedabad CharteredAccountants Journal April,2022 59

From the CA. Ashwin H. Shah CA. Kunal A. Shah
Government [email protected] [email protected]

INCOME TAX 3) Circular relating to Condonation of delay
u/s 119(2)(b) of the Income Tax Act 1961 in
1) Notification regarding New ITR forms for filing form 10-IC for AY 2020-2021.
FY 2021-2022
The CBDT hereby makes rules further to amend In pursuance of subsection (5) of section 115
the income tax rules,1962, namely, BAA of the Act read with Rule 21AE of the
- They shall come into force w.e.f. 01/04/2022 Income tax Rules,1962, the assessee company
- In the principal rules, inAppendix-II, for Forms is required to submit Form 10-IC electronically
SAHAJ ITR-1,ITR-2, ITR-3, SUGAM ITR on or before the due date of filing of return of
4,ITR5, ITR-6, ITR-V AND ITR–Ack, the income u/s 139(1) of the Act and such option
new forms has been substituted. once exercised shall apply to subsequent
( For New ITR forms refer Notification dated assessment years.
30th March,2022)
Further failure to furnish such option in the
2) Circular regarding clarification with respect prescribed form on or before the due date
to relaxation of provision of rule 114AAA of specified u/s 139(1) of theAct results in denial of
Income tax Rules,1962 prescribing the concessional rate of tax of twenty two percent to
manner of making Permanent Account such person.
Number (PAN) inoperative
The CBDT in exercise of the powers conferred
In pursuance of sub-rule (2) of rule 114AAA u/s 119(2)(b) of the Act, hereby directs that :-
i.e. Where a person, whose permanent account
number has become inoperative under sub- The delay in filing of Form 10-IC as per Rule
rule(1), is required to furnish , intimate or quote 21AE of the Rules for the previous year relevant
his permanent account number under the Act, to AY 2020-2021 is condoned in cases where
it shall be deemed that he has not furnished, the following conditions are satisfied:-
intimated or quoted the permanent account
number, as the case may be, in accordance with i) The return of income forAY 2020-2021 has
the provisions of the Act, and he shall be liable been filed on or before the due date specified
for all the consequences under the Act for not u/s 139(1) of the Act;
furnishing, intimating or quoting the permanent
account number, shall come into effect from 1/ ii) The assessee company has opted for taxation
4/2023 and the period beginning from 1/4/2022 u/s 115BAA of theAct in (e) of “Filing Status”
and ending with 31/3/2023 shall be the period in “Part A-Gen” of the Form of return of
during which the said sub-rule shall not have income ITR-6 and
its negative consequences of the nature referred
to in the said sub-rule or as specified in the iii) Form 10-IC is filed electronically on or
referred circular. before 30/06/2022 or 3 months from the end
of the month in which this Circular is issued,
(For full text refer Circular No 7 of 2022 dated whichever is later.
30th March,2022)
(For Full text refer Circular No 6/2022, dated
17th March,2022)

❉❉❉

6 0 Ahmedabad CharteredAccountants Journal April,2022

IT Corner

India’s startup ecosystem is booming. The Indian CA. Rushabh Shah
startup ecosystem has seen over 57K startups [email protected]
launched till date. The market calculations put the value
created by Indian startups to be over $450 Bn. success, an entrepreneur must execute a big idea,
Around $112 Bn has been raised by Indian startups like Sridhar Vembu of Zoho, or Zerodha’sNithin
between 2014 to 2021. The Indian social milieu is Kamath.
also reflecting this change. Shark Tank India, a reality
show where entrepreneurs pitch their products to real- Family or Friends-led Funding
life investors (called sharks), has gripped the nation.
As can be seen, extracting startup funding from a shark Several startup founders have raised money from
needs you to be aggressive when it comes to selling their friends and family. With no initial orders, they
your idea, either through a prototype or a solid are the most likely to trust you. While it’s a good
business plan. practice to draw up agreements that specify interest
on their loan or equity stake, this form of funding is
Startup Funding a less formal process. More importantly, it allows
you to keep complete control of your business.
Startup funding refers to raising the money a
company requires to meet its costs, like product However, if you fail to deliver, it could strain your
development, marketing, office spaces, and personal relationships. It may be a good idea to
inventory. In later stages, a startup might also raise consider professional investors, who can absorb losses
funds for product launch expansion into newer better than individuals.
markets or to go public.
Investor-led Funding
Most often, it is obtained through venture capitalists,
angel investors, banks, or other financial institutions. Angel Funding or Seed Funding
However, some startups choose to self-fund, to begin
with, and raise external funding as they scale up. Angel investors are groups of high net-worth
individuals who like your business idea and decide to
Let’s examine the different types of startup funding. back you. This type of startup funding is also referred
to as seed funding, as it nurtures your business in the
Self-funding or Bootstrapping earliest stage. So why do angel investors provide seed
money to a small business without a track record?
Self-funding—also called bootstrapping—can be This is because they are risk-takers who will sell their
an effective first-funding option. You do not have shares for a profit.
to pay interest on a loan or share profits with other
investors, and most importantly, you retain control. Angel investors have helped start up many prominent
However, the flip side is that you could lose your companies in India, including Urban Company, Ola,
life’s savings. and Snapdeal. It is a good option for startups that
may otherwise not get a bank loan. However, angel
Bootstrapping also means operating on a shoestring investors expect up to 30% equity, which means
budget.Yet, some of the greatest entrepreneurs have relinquishing control.
been self-made. To bootstrap your way to mega-
The average ticket size of an angel investor is lower
than that of a venture capitalist. So, if you want bigger
bucks, then venture capital (VC) funding is the way
to go.

Ahmedabad CharteredAccountants Journal April,2022 61

IT Corner Bank Loan

Venture Capital Funding Commercial banks do give loans to startups.
However, to mitigate the higher risk, lending
Venture capitalists are no angels. VCs take their guidelines for loan approval are more stringent.
pound of flesh in equity and control. So, it is Banks also need to see your ability to pay back.
advisable to use VC funding at a later stage when
you are already generating revenue and need the So, they expect you, the founder, to put up a strong
big bucks for rapid growth. Flipkart and collateral—usually your home. This shows your
BookMyShow owe their success to this strategy. commitment to the project. Banks also check if there
is enough money in your accounts to cover loan
Venture capital firms are managed by professionals payments for at least two months.
and prefer to invest in companies with huge
potential, and some do look to recover their Crowdfunding
investment within three to five years. So, if your
product has a long gestation period, avoid Crowdfunding is another way of funding a
approaching VCs looking for quick exits. Also, startup. It cuts out professional investors by putting
keep in mind your cash burn as closing the deal funding in the hands of common people. How
can take anywhere from 2-6 months. as an investor does it work?
evaluates your business from every angle, from
sustainability to scalability. An entrepreneur will put up their business plan on
a crowdfunding platform. Consumers will give
Debt Funding or Venture Debt money if they believe in the idea. Those giving
money will make online pledges with the promise
So, is venture debt an alternative to angel funding of pre-buying the product or donating.
or venture capital? Rather, mixing equity and debt
could be the key to a startup’s growth without giving Along with financing, crowdfunding also generates
up more ownership. interest and helps in marketing the product.
Crowdfunding sites help innovators launch ideas,
Venture debt is a capital loan provided only to particularly when unsure about the demand. Some of
companies who have raised venture capital. Venture the popular crowdfunding sites in India are Catapoolt,
loans are particularly helpful when you need to finance Fundlined, Indiegogo, Ketto, and Wishberry.
a specific project, like a marketing campaign or
purchase equipment. The Bottom Line?

Venture debt is cheaper than equity financing and can Should you bootstrap your startup or raise venture
be used to complement equity financing. However, capital? It is a subjective choice. It is dependent on a
the downside is that this debt takes precedence over lot of factors — the startups’ stage, its goals, and its
other outstanding obligations. So, if a company is not financing requirement among others.
entirely sure about repayment, it must avoid this
financing tool. Therefore, it is essential to understand these startup
funding methods and the trade-offs involved. No
The amount of venture debt funding in Indian matter which route you choose, do evaluate —
startups has doubled from $217 Mn in 2019 to $427 much like a shark — all the different options of
Mn in 2020. This shows that the Indian startup startup funding. The future of your business
ecosystem is maturing, and startups are exploring depends on it.
alternative fundraising methods. The leading platforms
in India for venture debt include players such as ❉❉❉
Trifecta Capital, Unicorn India Ventures, InnoVen
Capital, andAlteria Capital.

6 2 Ahmedabad CharteredAccountants Journal April,2022

Association
News

CA. Rushabh M. Shah CA. Jay B. Parekh
Hon. Secretary Hon. Secretary

We begin the new FinancialYear 2022-23 with lots of positivity, high hopes and wishes. The past year may have
been a bit stressful, but this year aims to relax us all a bit. With this, we wish you all a very successful upcoming
year.

1. Glimpses of previous events:

Time Program Speaker Venue

Professional Development Committee

12th February 2022 Series on BankAudit CA.Anand Sharma Online
Saturday and Zoom
9.45 am to 12.45 pm Platform
CA. Hitesh Pomal

96 participants attended the program

Sports Committee

16th March 2022 Pooling Carnival – Ellisbridge
Wednesday For Box Cricket Gymkhana
5.45 pm to 9.45 pm Tournament 2022

52 participants attended the program

Brain Trust Committee

19th March 2022 Issues under FEMA and CA. Saumya Sheth ATMA Hall,
Saturday Income Tax related to Ashram Road
9.30 am to 12.15 pm Non-Resident Indians

17 participants attended the program

Sports Committee

26th March 2022 Box Cricket Club O7,
Saturday Tournament 2022 Shela
7.30 am to 9.00 pm

48 participants attended the program
2. Forthcoming Programmes:

Time Program Speaker Venue

Direct Tax Study Circle Committee (jointly with Gandhinagar CPE Study Circle)

26th April 2022 – Changes in ITR FORM CA. Manthan Online
Tuesday for A. Y. 2022-23 Khokhani Zoom Platform
5.00 pm to 7.00 pm
❉❉❉

Ahmedabad CharteredAccountants Journal April,2022 63

ACAJ Crossword Contest - 11

Across Down
4. As per amended Schedule III to the Companies
1. Once the assessee files objections to the reasons
u/s 148, the assessing officer is bound to dispose Act if variance in ratio is more than _______
the objections by passing a ___________ order. percent as compared to the previous year,
reasons for the same are to be provided.
2. Carbon credit is not an offshoot of business but 5. While preparing financial statements as per
an offshoot of _________ concerns. Schedule III to the Companies Act, where the
company has turnover less than Rs. 100 crores,
3. If any promoter violates any other provision of the figures are to be rounded off nearest to
the RERA Act 2016 he shall be liable to penalty hundreds, thousands, lakhs or __________ or
of _______ percent. decimal thereof.
6. Under the GST law, w.e.f. 1-4-2022, ________
is mandatory for the assessees having turnover of
more than 20 crores.

4 1 6
2 5

3

Notes: Prize Courtesy

1. The Crossword puzzle is based on this issue of Winners of ACAJ Crossword Contest – 10
ACA Journal.
1. CA. Pratik Kikani
2. Two lucky winners on the basis of a draw will be
awarded prizes. 2. CA. Pankaj Lunker

3. The contest is open only for the members of ACAJ Crossword Contest 10 - Solution
Chartered Accountants Association and no
member is allowed to submit more than one entry. Across: Down:

4. Members may submit their reply either physically 1. Trial 4. Finacle
at the office of the Association or by email at
[email protected] on or before 2. Carpet 5. LLP
20-05-2022.
3. Composite 6. Ukraine
5. The decision of Journal Committee shall be final
and binding.

❉❉❉

6 4 Ahmedabad CharteredAccountants Journal April,2022

About Care4U

Chartered Accountants Association, Ahmedabad (CAAA) was founded in 1951, and this year is the
“PLATINUM JUBILEE YEAR”. The greatest assets that our Association has built over all these years is
U – the members. This esteemed group of 1500 plus members has been the driving force of the
Association and we are sure you will continue your support in the years to come.

CAAA to celebrate this special year has launched this Privilege Card “Care 4 U” and we extend a warm
welcome to you and your family members to these exclusive offerings card.

The celebrations of the “PLATINUM JUBILEE YEAR” has begun and during the coming months we will
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