53rd Residential Refresher Course at Hotel Radisson, Nathdwara 23rd - 25th June 2023 Office Bearers CA. Shivang R. Chokshi CA. Mayur H. Modha President Hon. Secretary CA. Riken J. Patel CA. Prakash B. Nandola Vice President Hon. Secretary Residential Refresher Course Committee CA. Atul R. Shah CA. Nirav R. Choksi Chairman Convenor CA. Anand Shrama CA. Hemang Patel CA. Hirak Shah CA. Hitesh Pomal CA. Ronak Khandwala CA. Rutvij Shah CA. Samir Shah CA. Shaleen Patni Chartered Accountants Association, Ahmedabad 2 nd Floor, Darshak, 14/A, Swastik Society, Opp. Shrey Hospital, Navrangpura, Ahmedabad – 380 009 Ground Floor, Pratyaksh Kar Bhavan, Near GST Bhavan, Panjrapole, Ambawadi, Ahmedabad – 380 015 Ph.: +91 79 4039 2596 M.: +91 6351 56842, E Mail: [email protected] Website: www.caa-ahm.org
President’s Message Distinguished Members, It is my utmost pleasure to welcome you all to this 53rd Residential Refresher Course of the Chartered Accountant Association at Radisson Hotel, Nathdwara. The role of Chartered Accountants is pivotal in ensuring the financial integrity and stability of organizations across industries. As trusted professionals, CAs are the guardians of financial information, providing expertise in areas such as auditing, taxation, financial reporting, and strategic planning. The theme of this RRC is “Turn Challenges into Opportunities”. In today's rapidly changing landscape, the accounting profession faces numerous challenges and opportunities. The emergence of new technologies, regulatory reforms, and evolving business models demand that chartered accountants continuously adapt and embrace innovation. It is crucial for us to stay ahead of the curve, leveraging technology to enhance our practices, improve decisionmaking processes, and deliver value-added services to our clients. Furthermore, as professionals, it is very important to keep up with the ever changing legal issues in the field of taxation along with creating a team which can cater to multi-disciplinary facets of this service industry. The topics are broadly based on group discussion to enhance the understanding of the subjects. The changes in auditing is also very important as we have a vital role to play in promoting sustainability, ethical business practices, and social responsibility being the prime area of reporting for future. This conference serves as a platform for knowledge sharing, collaboration, and networking. It brings together experts, thought leaders, and aspiring professionals to exchange insights, discuss emerging trends, and inspire one another. I encourage all participants to actively engage in the group discussions, panel discussions, and seminars, seizing the opportunity to learn, connect, and grow. The gathering will help all of us in learning together along with understanding the future and aspects of growth from the best in the industry. I am grateful to the learned speakers for sparing their time and also to the group leaders for taking the daunting task of taking their group ahead. I extend my heartfelt gratitude to RRC Chairman, Convenor and entire committee members along with Radisson Hotels who have made this conference possible. Your presence here today demonstrates your commitment to professional development and your dedication to driving excellence in the field of accounting. Thank you, and hope all of you have an enriching experience and enjoy the conference as much as we had planning it CA Shivang R Chokshi President, Chartered Accountants Association, Ahmedabad
Dear Members, As a Chairman of RRC Committee, I welcome you all to the 53rd Residential Refresher Course of Chartered Accountants Association, Ahmedabad. RRC is the most important event in the activity calendar of the Association and all the members await eagerly for the RRC. At the outset, I extend my gratitude towards the President of the Association, CA Shivang Chokshi for entrusting this responsibility to me. I assure to give due justice to the tasks assigned to me. The venue of the study RRC of CA Association has to be selected on the basis of its geographical location mainly because it is always an ex-destination RRC. So any place nearby to Gujarat within drivable distance was the obvious choice. With this idea in mind and looking to the past locations where RRCs were held, Nathdwara was a good option. And with the President giving his go ahead to me for the venue and the hotel, Radisson Hotel, Nathdwara was selected. All the Study RRCs of CA Association are always full of knowledge imparting sessions with special focus on group discussion so that all the participants are involved in the sessions. With this concept in mind, we decided to keep three papers with group discussion and one panel discussion. The theme of this year’s RRC “Turn Challenges Into Opportunities” has been selected keeping in mind the challenges being faced by SME Chartered Accountant firms. Instead of succumbing to the Challenges, we must turn them into Opportunities and therefore all the papers and panel discussion have been finalized so that we equip the participants to really Turn the Challenges into professional Opportunities. I along with my entire RRC committee have taken utmost care in planning for the RRC and the execution of the same will also be meticulous. The detailed program schedule of the RRC is a part of this paper book. With this I wish you all a happy stay at the RRC. CA Atul R Shah Chairman, Residential Refresher Course Committee
53rd RRC, NATHDWARA 1 | P a g e CHARTERED ACCOUNTANTS ASSOCIATION, AHMEDABAD First Day: Friday, 23.06.2023 TIME PARTICULARS 1.00PM TO 2.30PM Arrival at Radisson Hotel - Check In and Lunch 2.30PM TO 3.30PM Relaxation Time 3.30PM TO 4.00PM Inaugural and Introduction of Participants 4.00PM TO 5.30PM Group Discussion on paper of "A Mixed Bag - Income Tax" 5.30PM TO 5.45PM Tea Coffee with Cookies 5.45PM TO 7.15PM Presentation of Paper By CA. Manthan Khokhani "A Mixed Bag - Income Tax" 8.00PM ONWARDS Dinner Second Day : Saturday, 24.06.2023 TIME PARTICULARS 8.00AM TO 9.30AM Breakfast 9.30AM TO11.30AM Group Discussion on paper of "Challenges of Audit for SME CA with special focus on documentation." 11.30AM TO 11.45AM Tea Coffee with Cookies 11.45AM TO 01.15PM Presentation of Paper By CA. Vishal Doshi "Challenges of Audit for SME CA with special focus on documentation." 1.15PM TO 2.15PM Lunch 2.15PM TO 4.15PM Panel Discussion by CA. Jayesh Sharedalal CA. Mukesh Khandwala CA. Kshitij Patel on “What’s Next for SME CA” 4.15PM TO 4.30PM Tea Coffee with Cookies 4.30PM TO 6.30PM Group Discussion on paper of "Income Tax Act, Section 68, 69 & 270A- Detailed analysis with latest Judicial pronouncements." 7.00PM to 8.00PM Visit to Shiva Statue- 4th Largest Statue in world 8.30 PM Dinner
53rd RRC, NATHDWARA Page | 2 Third Day: Sunday, 25.06.2023 TIME PARTICULARS 8.00AM TO 9.30AM Breakfast 9.30AM TO10.30AM Preparation time for Check out 10.30AM TO 12.30PM Presentation of Paper By Advocate Mehul Patel "Income Tax Act, Section 68,69 & 270A- Detailed analysis with latest Judicial pronouncements." 12.30PM TO 1.00PM Valedictory Session 1.15PM Lunch @ Navdeep Resort, Nathdwara and Depart for Ahmedabad
53rd RRC, NATHDWARA Page | 3 LIST OF MEMBERS FOR GROUP DISCUSSION Group A Group B SHALEEN S. PATNI UMESH S. SHAH JINAL M. GOHEL HEMANG V PATEL AJAY B. PARMAR RONAK MUKESHBHAI KHANDWALA JAYESH C. SHAREDALAL MUKESH M. KHANDWALA JIGNESH J. SHAH ASHOK C. KATARIA RAJNI M. SHAH CHINTAN M. DOSHI ATUL R. SHAH HITESH M. POMAL DEVANG A. DOCTOR GAURANG M. CHOKSI BHARAT M. VASHI SAMIR D. SHAH RUJUL M. PATEL NANAVATY ASUTOSH P. ARVIND P. DOSHI KUNJBIHARI S. SONI SHASWAT A. DOSHI RAJENDRAKUMAR JINDAL HIRAK P. SHAH JAY B. PAREKH MAYUR H. MODHA SHIVANG R. CHOKSHI VIJAYKUMAR M. VALIYA ANUJ J. SHAREDALAL DIPESH D. DIXIT AJIT C. SHAH MADHVI V. HALANI KETAN GANPATBHAI MISTRY PRAKASH B. NANDOLA MAITREYA C. SHAH RIKEN J. PATEL RAJU C. SHAH KUSHAL UMESH TALATI HARSH SURESHKUMAR KOTAK DARSHAN B. PARIKH KSHITIJ M. PATEL MUKESH O. PARIKH PRATIK DHIRAJLAL JOSHI NIRAV R. BANKER KUNAL SONI DIPAM A. PATEL VIJAY H. PATEL HARDIK NARESHBHAI ARORA
53rd RRC, NATHDWARA Page | 4 CA MANTHAN KHOKHANI Mr. Manthan Khokhani is an associate member of the Institute of Chartered Accountants of India. He regularly writes articles for the journal of Chartered Accountant’s Association. He endeavors to dedicate himself and excel in the profession, particularly in the area of Domestic Taxation (Encompassing Litigation) coalescing his knowledge of Income Tax to handle problems relating to direct tax matters. He has secured the 8th rank in India at the final examination conducted by the Institute of Chartered Accountants of India. He has also secured the 9th rank in the state in the HSC examinations. He has fine dominion over drafting Income Tax Appeals and has an excellent grasp over interpreting Direct Tax Laws and applying the principles of accounting standards to help resolving the queries of the clients. He has delivered lectures at various forums including the Ahmedabad Branch of ICAI and at various study circle meetings organized across the city. POSITIONS HELD 1. Past member of the Student Committee of WIRC of ICAI 2. Had been the Dy. Convenor of Ashram Road CPE Study Circle of WIRC of ICAI. 3. Had been the Convenor of the Brain Trust Committee of CAA, Ahmedabad 4. Had been the member of the Direct Tax Committee of Ahmedabad Branch of ICAI. 5. Had been the member of the CPE & PQC Committee of Ahmedabad Branch of ICAI. 6. Had been, the member of Skill Development Committee and Study Circle Committee of CAA, Ahmedabad
53rd RRC, NATHDWARA Page | 5 POSERS – “A MIXED BAG - INCOME TAX” S. 68 Vs. 115BBE 1. M/s. Benami Private Limited had issued 10,000 shares during the year under consideration at a price of Rs. 1000 per share. The face value of the shares was Rs. 10 per share. During the course of the assessment the AO noticed that the fair market value of the shares on the date of issue was Rs. 150 per share. The AO also asked for the details of the subscribers of shares and the source for making the investment. The company failed to prove the identity, genuineness as well as the credit worthiness of the subscribers. The AO therefore proposed to tax the entire amount received u/s. 68 of the Act in the hands of the company and therefore applied tax rate as per Section 115BBE of the Act. The company however argued that the provisions of Section 56(2)(vii)(b) were squarely applicable to the facts of the case and therefore the addition ought to be taxed @ 30% under the provisions of Section 56(2)(vii)(b) of the Act. Advise. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- S. 50C 2. M/s. ABC & Co. is a partnership firm with three partners, Mr. A, Mr. B and Mr. C. a. During the year, one of the partners Mr. C introduced a land owned by him in the firm. The stamp duty value of the land at the time of introduction in the firm was Rs. 5 Crores. However, the land was recorded in the books of the partnership firm at Rs. 2 Crores and accordingly, Mr. C was advised to pay capital gains considering the full value of consideration at Rs. 2 Crores as per section 45(3) of the Income-tax Act, 1961. The Tax Auditor of the firm however argued that the
53rd RRC, NATHDWARA Page | 6 provisions of Section 50C of the Act will get attracted in the instant case and therefore Mr. C needs to pay tax considering the deeming provisions of Section 50C and taking the Full Value of Consideration as Rs. 5 Crores instead of Rs. 2 Crores. Advise. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- b. During the year, the firm had agreed to purchase a building from M/s. XYZ Developers for Rs. 3 Crores. However, before the final agreement was executed, the firm decided to sell the right in the building to a prospective buyer for Rs. 5 Crores. The stamp duty value of the building as on the date of transfer of right to the prospective buyer was Rs. 7.5 Crores. The partners of the firm seek your advise for the applicability of provisions of Section 50C. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- c. The firm had also sold a property during the year under consideration for Rs. 15 Crores whose stamp duty value as on the date of transfer was Rs. 17.5 Crores. During the course of assessment the AO had sought to tax the difference as Capital Gains in the hands of the firm u/s. 50C. The reason for distress sale was due to development of slums in the neighborhood area. Advise the firm on the suitable course of action.
53rd RRC, NATHDWARA Page | 7 ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- S. 45(4) and 9B 3. In view of the provisions of Section 45(4) and 9B please advise your client, Mr. A on the following issues: a. Stamp Duty Value of the asset to be transferred to the partner Mr. A is Rs. 5 Crores whereas the Fair Market Value of the asset is Rs. 15 Crore. What is the value to be adopted for the purpose of Section 45(4) and 9B? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- b. Whether the firm shall be entitled to claim depreciation on the amount attributed on account of gain paid at the time of retirement of the partner as per Section 45(4)? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53rd RRC, NATHDWARA Page | 8 c. Suppose the firm pays tax on the capital gain of Rs. 5 Crore as per the provisions of section 45(4) and the same is attributed to the three immovable properties held by the firm. However after two years the firm sales the entire business undertaking as a slump sale, whether the benefit of amount attributed to the assets forming part of the undertaking would be allowed or not? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- d. Whether provisions of Section 45(4) shall apply to receipt by a legal heir of the partner? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- e. Whether provisions of Section 45(4) and 9B become applicable when the assets of the firm are revalued and difference credited to the partners’ capital account at the time of admission of a partner? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53rd RRC, NATHDWARA Page | 9 f. Analyse the impact of waiver of debit balance of partner’s capital at the time of retirement. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- g. Analyze the impact of Rule 8AA(5) in a case where the retired partner receives cash from the firm which is wholly attributable to the value appreciation in the stock in trade retained by the firm. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 4. XYZ LLP has three partners having equal profit and loss sharing ratio and capital contribution. Partner X retires from the LLP w.e.f. 01st January 2023. The value of X’s interest in the firm is determined at Rs. 1 Crore which is to be paid by the LLP at the end of three years i.e. on 31st December, 2026. Mr. X is therefore recognized as a creditor in the books of the firm. After retirement, the remaining partners decide to corporatize the firm and therefore decide to convert the firm into a company. On 31st March, 2023 they form a company namely XYZ Private Limited and the company purchases the business from LLP for a lump sum consideration and the conversion is exempt u/s. 47(xiii). On 31st December, 2026, the company discharges the debt due to Mr. X by payment of cash. Analyse the impact of Section 45(4) and 9B in the present case.
53rd RRC, NATHDWARA Page | 10 ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- Conversion of company into LLP 5. What are the implications of a non-compliant conversion of a private limited company to LLP in the hands of a. Company b. Shareholders c. LLP ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 6. Assuming for a moment that the provisions of GAAR are not applicable, whether there are possible ways of structuring a transaction such that the requirements of Section 47(xiiib) are not required to be fulfilled? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53rd RRC, NATHDWARA Page | 11 7. Mr. A director of M/s. ABC Private Limited approaches you to advice on the ways the company and the shareholders can explore to withdraw the entire accumulated reserves of Rs 5 Crores without waiting for the cooling period of 3 years as required by Section 47(xiiib). ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- S. 194R 8. As per the circular on section 194R, the department has clarified that waiver of loan is considered a benefit on which TDS u/s. 194R shall apply. Whether bad debts written off would also be considered a benefit as per the provisions of section 194R? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 9. Whether TDS provisions u/s. 194R shall be applicable to the following: a. Brand building items like wall clock, mugs, stationery items, standees etc. provided to dealers and dealers are obliged under an agreement to place the same prominently in the show room.
53rd RRC, NATHDWARA Page | 12 b. Loyalty points to credit card customers which enables them to get discount on next purchase. c. Gifts distributed on festivals or occasions like Diwali d. Conferences organized by a company to educate a section of the society in respect of certain products. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 10. ABC Private Limited provides foreign trips to dealers on completion of certain targets for FY 2022-23. For the year ended March 2023, the company makes a provision of Rs. 10 Lakhs in respect of the expense probable to be incurred on the foreign trips. The company did not deduct tax at source until the actual trip took place in the month of June 2023. The Auditor of the company is of the opinion that the company shall suffer disallowance u/s. 40(a)(ia) in the month of March 2023 as the company had failed to deduct tax at source. Advise. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53rd RRC, NATHDWARA Page | 13 S. 56(2)(x) 11. Section 56(2)(x) of the Income-tax Act, 1961 (‘the Act’) is applicable when the assessee receives any sum of money, ‘without consideration’ and aggregate value of which exceeds fifty thousand rupees. In many business transactions, an assessee pays the interest portion upto a certain date, however is unable to pay the principal portion of the same. In such cases, the assessee avails one-time settlement scheme with the banks wherein the banks waive off the principal amount. In such a situation, when a part of the loan is waived off by the bank, some benefit accrues to the debtor. Would the character of such benefit accrued to the debtor, fit within the ambit of section 56(2)(x) of the Act? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- S. 269ST 12. A. Ms. Rupali got married on 20-8-2020. At the time of her marriage, she received cash gifts from friends and relatives. Each payer has paid less than Rs. 2 Lakhs but there are 10 such payers and the total is Rs. 15 Lakhs. Can Ms. Rupali be subjected to penalty u/s. 271DA read with clause (a) of section 269ST. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53rd RRC, NATHDWARA Page | 14 B. Would your answer change if Ms. Rupali receives Rs. 150,000 from her father on the day of her wedding and Rs. 100,000 from her father on the day of her reception in cash? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- C. Ms. Rupali seeks your advice to avoid the penal proceedings. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- D. Ms. Rupali also receives cash gift of Rs. 300,000 otherwise on occasion of her marriage from her friend which is duly offered to tax u/s. 56(2)(x) at the time of filing of the return of income. Whether penalty u/s. 271DA be still applicable? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53rd RRC, NATHDWARA Page | 15 E. Ms. Rupali is also a partner in a firm M/s. Roshesh & Co and introduces the aforesaid cash received on her wedding into the firm as capital contribution. The Assessing Officer seeks to levy penalty on the firm u/s. 271DA. Advise. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- S. 44ADA 13. Mr. A is a Chartered Accountant having total receipts of Rs. 40 Lakhs. The total expense for the year came to Rs. 10 Lakhs. However, Mr. A wants to file his return of income by declaring presumptive profit of Rs. 20 Lakhs. Can he do so u/s. 44ADA? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- S. 54F 14. An assessee has derived long term capital gains of Rs. 2 crores. He has decided to invest the LTCG of 2 crores in another residential house property. The residential house property is in a multi storeyed building. The details of the flats that are to be purchased in the multi-storeyed building are as follows: On third floor, there are two flats - Flat Nos. 121 and 122 adjacent to each other and owned by a single owner. The permission from the Competent Authority was residential but the house is currently used as an office. Right underneath these two flats, there is one more flat i.e. Flat No. 112 which is
53rd RRC, NATHDWARA Page | 16 presently vacant (but owned by a different owner). Assessee hopes to use the flats for residence of himself as well as his married son. He is considering whether after purchase he can internally combine the flats on the same floor into a ‘duplex’; however, presently the flats are not combined. Can assessee claim benefit under s 54F? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- Faceless Assessment 15. Mr. A had an ongoing scrutiny assessment under the faceless regime. The case was approaching finalization due to time barring on 31st May, 2023. The assessing officer gave a show cause notice on 20th May, 2023 asking the assessee to reply by 23rd May, 2023. Unfortunately, the notice went to spam folder of the inbox of the assessee and therefore he could not reply. When the assessee checked the income tax portal on 24th May, 2023 he came to know of the fact that the e-filing window for submission was closed by the Assessing Officer. The draft assessment order was for an amount of Rs. 5 Crores on which demand of tax was proposed to be levied u/s. 115BBE of the Act. Terrified by the same, Mr. A seeks your advice on the matter on how to proceed further. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53rd RRC, NATHDWARA Page | 17 CA VISHAL DOSHI B. Com. (Hons), F.C.A., DISA (ICAI), DIRM (ICAI) DOB – 11/11/1973 Central Council Member of ICAI (2022-25) Member of Western India Regional Council of ICAI (2019-22) Chairman – Baroda Branch of WIRC of ICAI (2005-06) Practice Leader, Audit and Assurance K C Mehta & Co LLP, Chartered Accountants Vishal is a Central Council Member of The Institute of Chartered Accountants of India (ICAI) for 2022-25. He leads the Audit & Assurance practice of K C Mehta & Co LLP, Chartered Accountants, Vadodara and has more than 25 years of professional experience. He also possesses Diplomas in Information System Audit (ICAI) and Insurance and Risk Management (ICAI). Vishal looks after the Assurance functions of listed companies, government companies, multinational companies & large corporates. He also specialises in convergence from Indian GAAP to Ind-AS / IFRS and has successfully led some very prestigious Ind-AS implementation and convergence projects in oil & gas, power, infrastructure and manufacturing sectors. Vishal is the Chairman of Board of Studies (Academic), Vice Chairman of Auditing & Assurance Standards Board and Convenor of Centre for Audit Quality Directorate and also member of various Non-Standing Committees of ICAI for 2023-24. Alongwith Board of Studies (Academic) and Auditing & Assurance Standards Board he was also Vice Chairman of Expert Advisory Committee and member of various Standing and Non-Standing Committees of ICAI for 2022-23.
53rd RRC, NATHDWARA Page | 18 Vishal has been a Member of Western India Regional Council for 2019-22 and also Vice Chairman of WIRC of ICAI for 2020-21. He has been the Chairman of Baroda Branch of WIRC of ICAI for 2005-06. As a Regional Council Member, Vishal has been Chairman of Corporate & Allied Laws & Corporate Governance Committee, Branch Co-ordination Committee, Ind AS, Accounting Standard & IFRS Committee, Ethical Standards Board Committee and also Vice Chairman / member of several other committees. He has also been a Member of Regional Audit Committee of WIRC of ICAI for 2019-20 & 2021-22. Vishal has made presentations on Ind AS / IFRS, Accounting Standards, Standards on Auditing, ICAI Guidance Notes, Code of Ethics, Practice Management for SMPs, AS vs. ICDS, Companies Act, Schedule III, CARO and host of technical and non-technical subjects at various seminars, workshops, Certificate & Intensive Courses of the ICAI, WIRC, its Branches and Study Circles and other academic institutions. He has also been a visiting faculty to Post Graduate Course at M. S. University, Baroda. Vishal is a Peer Reviewer for Peer Review Board, ICAI. He has been a Technical Evaluator of financial statements for ICAI Awards for Excellence in Financial Reporting for Research Committee, ICAI and Member of Financial Reporting Review Group – Baroda for Financial Reporting Review Board, ICAI. To his credit Vishal has been awarded Rashtrapati Scout Award by Shri K. R. Narayanan, Hon’ble President of India. Presently, he is appointed Expert member on the Board of Studies in Accounting & Financial Management (Faculty of Commerce) for the term 2020-23 by the Maharaja Sayajirao University of Baroda.
53rd RRC, NATHDWARA Page | 19 POSERS – CHALLENGES OF AUDIT FOR SME CA WITH SPECIAL FOCUS ON DOCUMENTATION XYZ & Associates LLP (“LLP”) has been appointed as an auditor for ABC Co. Pvt. Ltd. (“the Company”) for the financial year ending 31st March, 2023. The management has taken the services of Third Party for preparation of Financial Statements. The audit report for the previous year is unmodified. The fees charged for this engagement is Rs. 30,000. Case Scenario 1: Appointment The predecessor auditor has rendered his resignation to the Company after forming an opinion and reporting on financial statements for the year ended 31st March, 2022 on 15th July, 2022. The Company approached LLP immediately thereafter. LLP has suggested to the Company as follows: a) NOC should be taken from predecessor auditors before issuing the notice for AGM because the whole appointment process will be invalidated if the retiring auditor objects to their appointment as incoming auditors. b) The NOC should be in the name of the Company as the incoming auditor has not yet been appointed. Whether you would agree to the above? Kindly provide reasons for your response. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- Case Scenario 2: Pre audit a) The partners of the LLP feel that engagement letter is not required as it is a small entity having turnover of Rs. 49 crores for financial year ended 2023.
53rd RRC, NATHDWARA Page | 20 b) The audit manager feels that audit strategy & planning may not be required considering that the entity is small with not many transactions during the previous year and fees charged is not high. c) The audit manager also feels that materiality may not be determined and documented as the audit team proposes to vouch 100% transactions during the year under audit. Considering that you are an engagement partner, would you agree with the above proposal? If yes, what would be your reasons for agreeing? If not, what would be your response and what would you guide your audit manager w.r.t. including in audit strategy & planning and basis for determining materiality? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- Case Scenario 3 : Opening Balances – Initial Audit Engagements The audit manager approached the management of the Company to provide certain evidence related to the opening balances to ensure compliance with SA-510 – Initial Audit Engagement – Opening Balances. However, the management of the Company refused to provide such documents stating that this is already audited by previous auditors and there is no need to perform any testing around it. As an engagement partner, how will you deal with this matter? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53rd RRC, NATHDWARA Page | 22 ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- Case Scenario 5: Audit Conclusions and Reporting In the instant case, the Company has taken long-term funding for fixed capital requirements & short-term funding its working capital requirements. During the course of audit, LLP found that the Company’s financing arrangements are about to expire and the entity is unable to renegotiate or obtain the replacement financing. As such the Company may be unable to realize its assets and discharge its liabilities in the normal course of business. Notes to accounts annexed to the financial statements discuss the magnitude of financing arrangements, the expiration and the total financing arrangements, however the financial statements do not include discussion on the impact or the non-availability of refinancing. Thus, the financial statements (and notes thereto) do not fully disclose this fact. The audit manager has decided to obtain the written representation on specific matter from the management of the Company as per the requirement of SA 580- Written Representation. The management refused to give representation on specific matter. As partner of LLP, you are required to decide how would you deal with above matter in your audit report? ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53rd RRC, NATHDWARA Page | 23 CA JAYESH CHANDRAKANT SHAREDALAL Education : B.Com., LL.B., F.C.A. Date of Birth : 12th July, 1957 School : St. Xavier’s High School, Ahmedabad. College : H.L. College of Commerce, and I.M. Nanavati Law College, Ahmedabad. Articleship : M/s. C.R. Sharedalal & Co., Chartered Accountants, Ahmedabad. C.A. : Passed in 1981 Since then practicing as a partner of M/s. C.R. Sharedalal & Co. Chairman / President : Chairman of Ahmedabad Branch of WIRC of ICAI: 1989-90 President of Chartered Accountants Association Ahmedabad 2005-06. Co-options : Member of Research Committee of ICAI for 2001-02 and Public Relations Committee of ICAI for 2023-24 On Government : 1. Member of Fee Revision Committee under Gujarat Self Financed
53rd RRC, NATHDWARA Page | 24 Committees Schools (Regulation of Fees) Act, 2017. [2017 to 2020]. 2. Member of Justice Karia Committee for inquiry in the matter of The Maharaja Sayajirao University of Baroda. Contributed Articles on : * Current Tax Reporter. Direct Taxes in * The Chartered Accountant – Journal of I.C.A.I., New Delhi. * Income Tax Review – Journal of The Chamber of Income Tax Consultants. * Ahmedabad C.A. Journal, - Journal of C.A. Association, Ahmedabad. Presented Papers and : * Chartered Accountants Association, Ahmedabad Given Talks on Professional Subjects at * Various Branches and CPE Study Circles of W.I.R.C. of I.C.A.I. * Tax Payers Protection Council, Ahmedabad Widely Traveled for : * USA, UK, Belgium, Ireland, UAE, Kenya, Honk kong. Professional assignments Hobbies : Swimming and Reading Novels of selected Authors.
53rd RRC, NATHDWARA Page | 25 CA MUKESH KHANDWALA He has an extensive experience of over 40 years in the field of Accountancy, Auditing and Taxation. He is senior partner of CNK Khandwala & Associates, Chartered Accountants Ahmedabad. He has a commendable track record as an advisor in Accountancy, Auditing and Taxation including matters of International taxation. He is a past president of Chartered Accountant Association, Ahmedabad. He has also held the office as chairman of various sub- committees of Chartered Accountant Association, Ahmedabad. He has held the office as Secretary of Ahmedabad Branch of WIRC of ICAI. He was a member of group of Chartered Accountants for contributing certain clauses in Guidance Note on Tax Audit. He was invitee member of Direct Tax Committee of ICAI for F.Y. 2021-22. He is invitee member of Student Skills Enrichment Board for F.Y. 2023-24. He is member of FRRB group of Ahmedabad. He is qualified Independent Directors by Ministry of Corporate affairs. He is Certified Corporate Social Responsibility Professional Certified by ICAI. He has also held office as member of finance committee of Gujarat Chambers of Commerce and Industries. He has delivered several lectures on various subjects of professional interest at different forum.
53rd RRC, NATHDWARA Page | 26 He has been a member of the Finance sub-committee of Sports Club of Gujarat Limited since last 15 years. He has held the office as Master of Lodge Salem No. 563 SC-A Scottish Voluntary Organization. He has held various positions at Lions Club, Ahmedabad (West). Areas of Interest Accounts, Audit, Domestic & International Taxation.
53rd RRC, NATHDWARA Page | 27 CA KSHITIJ PATEL Kshitij Patel, B.Com., LL.B., F.C.A., F.C.P.A. (Aust.) is practicing as Chartered Accountant since 1992. Is partner of the firm Manubhai & Shah LLP since 1992 and co managing partner since the year 2010. AREAS OF SPECIALISATION : Audit, Taxation, Consultancy in Foreign Exchange Laws, Systems Analyst, Consultancy in Information Technology and IT Enabled services and Management Consultancy. Have been involved in advising clients on US taxes and its implication for Indian residents who are US citizens and green card holders. PROFESSIONAL EXPERIENCE : • Vast experience in implementing knowledge and IT enabled outsourcing projects and related systems for clients in India and abroad. • Advisor to various companies in USA, UK and Australia in respect of establishing their knowledge and IT enabled outsourcing operations in India • In charge of the International operations of the firm : o KPO activities in the areas of accounting, management information systems and taxation for clients in USA, UK, Australia, Singapore, New Zealand, Hongkong, Dubai, Abudhabi, Istanbul and Kenya since the year 2001.
53rd RRC, NATHDWARA Page | 28 o Is advising international clients from Germany, France, Netherlands, Israel, USA, UK, Australia, France, Italy and Iceland for doing business in India and providing handholding services to such clients for setting up and structuring their business in India. o Have carried out various accounting, auditing and other management consultancy assignments over the period of 29 years. PROFESSIONAL ACHIEVEMENTS : 1. Co-opted Member of the Auditing and Assurance Standards Board of ICAI for the year 2020-21. 2. Chairman of the Information Technology committee of the Ahmedabad Branch of the Institute of Chartered Accountants of India for the year 1998-99 and member of the committee for the year 2002-03. Also a member on the various other committee of Ahmedabad Branch of ICAI from time to time. 3. A member of the Executive Committee of the Chartered Accountants Association for the year 1998-99, 2004-05, 2006-07 2008-09, 2021-22 and 2023-24. Also a member of various committees formed by the Chartered Accountants Association. 4. Chairperson of the Indo American Chamber of Commerce, Gujarat branch for the year 2022-23.
53RD RRC, NATHDWARA 29 | P a g e 5. A member of the Executive Committee of the Indo American Chamber of Commerce, Gujarat branch for the year 2021-22. 6. A member on the Board of Directors of Gujarat Electronic and Software Industries Association for the year 2010-11. 7. Delivered talks on the subject of “Knowledge Process Outsourcing - Indian Perspective” at London - UK, New York and San Diego – USA, Ho Chi Minh City - Vietnam and Perth - Australia. 8. Also delivered lecture on this topic at various other bodies like Confederation of Indian Industry, Chartered Accountants Association, Ahmedabad and Ahmedabad Branch of The Institute of Chartered Accountants of India etc. 9. Awarded the "Akshay Trivedi Memorial Gold Medal" for the highest marks in auditing in the Chartered Accountant's Examination by the Chartered Accountants Association
53RD RRC, NATHDWARA 30 | P a g e ADV MEHUL K PATEL Practicing as an Advocate since 32 years. B.Com. H.L. College, Ahmedabad, 1987 IInd LL.B. – L.A. Shah College, Ahmedabad, 1989 IIIrd LL.B. – Government Law College, Bombay, 1990. Served at ‘Chalishazar & Co., Chartered Accountants, Ahmedabad – 1988 & 1989. Served at ‘J.S. Parikh & Co.’, Advocates, Bombay – 1989 & 1990. Obtained Diploma in Public Speaking from ‘Nazareth Speakers Academy, Bombay – 1990. Elected as the youngest President of the Income-tax Appellate Tribunal Bar Association, Ahmedabad for the years 2007 upto 2009 Attended various seminars and lecture meetings as a speaker-faculty organized by various professional associations.
53RD RRC, NATHDWARA 31 | P a g e POSERS ON INCOME TAX – SECTION 68, 69, 115BBE & PENALTY U/S 270A 1. Whether Bank Passbook/ Loose papers can be considered as “Books” for making addition u/s 68 of the Act ? - 141 ITR 67(Bom) Bhaichand H. Gandhi - (1998) 3 SCC 410(SC) V.C.Shukla - (2017) 85 taxmann.com 306(Bom) Arunkumar J. Muchhala ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 2. On whom is the initial Burden of Proof for the purpose of section 68 of the Act? - 50 ITR 1 (SC) Kale Khan Mohd. Hanif - 107 ITR 938(SC) Roshan Di Hatti ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53RD RRC, NATHDWARA 32 | P a g e 3. When addition on account of rejection of Books of Accounts is made, can simultaneous addition be made u/s 68 of the Act ? -229 ITR 229 (All) Banwarilal Banshidhar -232 ITR 776 (AP) Indwell Constructions -Deepak Mittal (Delhi ITAT) ITA.No.4709/Del/2017. Bench”E”. DT: 23/03/2018 -40 taxmann.com 284(Guj) Dhiraj R. Rungta -72 ITR 194(SC) Devi Prasad Vishwanath - 120 ITR 294(AP) Maduri Rajaiahgiri Kistaiah ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 4. Can opening balance be added u/s 68 of the Act ? - Shri Ivan Singh (HC of Bombay at GOA) Tax Appeal no. 29 of 2013 dated 14/02/2020 - (2009) 183 taxman 277(Delhi) CIT/ Usha Stud Agricultural Farms Ltd. - (2014) 45 taxmann.com 441(Guj) Jagatkumar Satishbhai Patel
53RD RRC, NATHDWARA 33 | P a g e ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 5. Can addition u/s 68 be made when Loan is repaid, and repayment is accepted by Department ? - Manibhadra Securities Services P. Ltd.(Ahd ITAT) ITA.No. 2507/Ahd/2018. Bench “C” Dt: 24/08/2022 - (2014) 42 taxmann.com 251(Guj) Ayachi Chandrashekhar Narsangji - (2022) 145 taxmann.com 27(Guj) Ambe Tradecorp (P) Ltd. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 6. When cash deposited in Bank account is shown as cash sales, can the said cash deposit be added u/s 68 ? -Shree Sanand Textiles Ind. Ltd. (Ahd ITAT) ITA.No. 995/Ahd/2014. Bench “B” Dt: 06/01/2020
53RD RRC, NATHDWARA 34 | P a g e -Vishal Exports Overseas Ltd. (Guj HC) Tax Appeal No. 2471 of 2009. DT: 03/07/2012 -Mr. Ramesh Kochar (Delhi ITAT) ITA.No. 171/Del/2022. Bench “SMC” DT: 26/04/2022 -(2022) 142 taxmann.com 278(Chandigarh ITAT) Smt. Tripta Rani -Mahendra Kumar Parakh (Kolkata ITAT) ITA.No. 696/Kol/2022 Bench “SMC” DT: 16/05/2023 ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 7. If excess stock found during Survey is disclosed as undisclosed income, is it liable to be taxed as per normal rates or u/s 115BBE of the Act ? - Smt. Nandini Sharma ( Amritsar ITAT) ITA.No. 148/Asr/2022. DT: 10/10/2022
53RD RRC, NATHDWARA 35 | P a g e - M/s Overseas Leathers (Chennai ITAT) ITA.No. 962/Chny/2022. Bench”C”. Dt: 05/04/3023 - (2022) 145 taxmann.com 109(Chandigarh ITAT) Gandhi Ram - Nilaykumar & Bros Jewellers (Ahd ITAT) ITA.No. 146/Ahd/2022. Bench “A” DT: 11/01/2023 ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 8. Can the entire amount credited be taxed as undisclosed income in case of an “Entry provider” or an entity used as “conduit pipe” ? -M/s Sanguine Media Ltd. (Chennai ITAT) ITA.No. 882/Chny/2020. Bench “C” DT: 31/01/2023 -425 ITR 658(BOM HC) Alag Securities (formerly known as Mahasagar Securities) ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53RD RRC, NATHDWARA 36 | P a g e ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 9. Can a trade liability outstanding in Balance Sheet since many years, be taxed u/s 68 of the Act ? - (2019) 104 taxmann.com 366(Guj) Dattatray Poultry Breeding Farm (P) Ltd. -265 ITR 202 (MP) V.I.S.P.(P) Ltd. ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 10. If the overall weight of Jewellery disclosed in WT Returns tallies during the physical inventory taken during Survey, can addition be made of unexplained investment if the Description of Ornaments does not tally ? -Nirmal Kumar Minda (Delhi ITAT) ITA.No. 1151/Del/2020. Bench“E”. DT:03/05/2023
53RD RRC, NATHDWARA 37 | P a g e -Mohamed Mohideen Ayesha Nasreen (Chennai ITAT). ITA.No.825/Chny/2022. Bench “B” Dt. 24/01/2023 -Ballabh Prasad Aggarwal (Delhi ITAT) ITA.No. 2351/Del/2019. Bench “A” DT: 17/05/2023 ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 11. Can the AO carry out rectification u/s 154 to change the addition made and apply section 68 and tax u/s 115BBE of the Act ? - Anjanee Vijetha Kasturi (Hyderabad ITAT) ITA.No. 196/Hyd/2023. Bench “SMC”. DT: 09/05/2023 -(2020) 117 taxmann.com 178(Jaipur ITAT) Sudesh Kumar Gupta ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53RD RRC, NATHDWARA 38 | P a g e 12. Whether amendment made in section 115BBE wef 1/4/2017 is retrospective or prospective ? - (2019) 104 taxmann.com 306(Chandigarh ITAT) Fatima Knit Fabs - M/s Pitamber Commodity Future P. Ltd. (Jaipur ITAT). ITA.No. 863/Jp/2017. DT: 21/03/2018 ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 13. If the claim made u/s 80G is disallowed by AO, can it be added u/s 69A and taxed u/s 115BBE of the Act ? - (2023) 147 taxmann.com 480 (Rajkot ITAT) Batuk Vithalabhai Donga ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------
53RD RRC, NATHDWARA 39 | P a g e 14. Can addition be made in respect of unexplained money u/s 69A of the Act only on the basis of print out taken from Mobile SMS and Whattsapp messages, without any further corroborative materials ? - Atul Tantia (Kolkata ITAT) ITA.No. 492/Kol/2021. Bench “C”. DT: 28/03/2023 -Gavireddygari Aparna Kalyani (Hyderabad ITAT). ITA.No. 3/Hyd/2023. Bench “A”. DT: 28/02/2023 ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- 15. Penalty u/s 270A : - Whether this penalty is automatic/ mandatory as a consequence to addition made by AO ? - Whether existence of mens rea is necessary ? - Whether the principles/ ratio of Judgments relating to penalty u/s 271(1)(c) will also be applicable to levy of Penalty u/s 270A ? -(2022) 142 taxmann.com 38(Delhi) Prem Brothers Infrastructure LLP
53RD RRC, NATHDWARA 40 | P a g e -Rajendra Sadashiv Patil (Pune ITAT) ITA.No. 669/Pun/2022. Bench”B”. DT: 31/03/2023 -Saltwater Studio LLP (Mumbai ITAT) ITA.No.13/Mum/2023. Bench”G”. DT: 22/05/2023 ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------