Central India Regional Council

The Institute of Chartered Accountants of India Price : ` 5/-

l
CIRC Newsletter
Branches : U.P. : Agra, Aligarh, Allahabad, Bareilly, Ghaziabad, Gorakhpur, Lucknow, Mathura, Meerut, Moradabad, Muzaffarnagar, Noida, Saharanpur, Varanasi
Uttaranachal : Dehradun l Madhya Pradesh : Bhopal, Gwalior, Indore, Jabalpur, Ratlam, Ujjain l Chattisgarh : Bhilai, Bilaspur, Raipur l Bihar : Patna l Jharkhand : Dhanbad,
Jamshedpur, Ranchi l Rajasthan : Ajmer, Alwar, Beawar, Bhilwara, Bikaner, Jaipur, Jodhpur, Kota, Pali, Sriganganagar, Udaipur l CPE Study Circle : Firozabad, Bulandshahar, Jaipur Sikar
Road, Jaipur M.I. Road, Mansarovar, KCAS, Jaipur Central l CPE Chapters : Bundelkhand, Satna, Raigarh, Bhagalpur, Banswara, Bhiwadi, Chittorgarh, Shekhawati

Vol. : 33 No. : 1/1 (For Members only) January 2011

CA. Kemisha Soni - Chairperson CIRC, CA. Amarjit Chopra - President ICAI, Chief Guest H.E. Shri B.L. Joshi - Governor of Uttar Pradesh, CA. Raj Kumar
S. Adukia - Council Member, CA. Rohit Bhalla - Chairman Lucknow Branch, CA. Rajendra P Kumar (CCM) at All India Conference on “Management of
Fiscal & Natural Wealth” held on 2nd & 3rd December 2010 at Lucknow.

Front Row - Lt-Rt CA. Kemisha Soni - Chairperson CIRC, Padma Shri CA. T. N. Manoharan - Past President ICAI, CA. Manoj Fadnis - Council Member
Back Row - CA. O P Maheshwari - Secretary CIRC, CA. Manu Agrawal - Treasurer CIRC, CA. Ankush Golechha - Member CIRC at
National Conference for CA. Students held on 18th & 19th December, 2010 at Indore
I » USE OF AMORTISED COST AND EFFECTIVE INTEREST RATE METHOD UNDER IFRS. Pg/1
N » IAS 36 : IMPAIRMENT OF ASSETS Pg/2
D
E » A DOZEN OF ISSUES ON SECTION 50 C OF INCOME TAX ACT Pg/5
X » CIRC CPE ACTIVITIES HELD FROM SEPTEMBER TO DECEMBER, 2010 Pg/7
 Chairperson Writes...
“Excellence is not for someone else to notice but for your own satisfaction and
excellence”
The desire to excel is exclusive of the fact whether someone else appreciates it or not.
“Excellence” is drive from inside, not outside, excellence is not a singular act but a
habit. You are what you repeatedly do.
The members of our region will be happy to note that CIRC acquired a plot of land
measuring 2459.60 sq. meters - Plot No. 9, Scheme No. 38, Block -A 1, Lakhanpur,
Kanpur, from Kanpur Development Authority on the august day of 7th December
2010, for constructing Institute's Building. This is a great achievement of CIRC'
Hats off to the dynamic leader of our profession respected CA. Amarjit Chopra,
President ICAI who has given valuable time for Central Region during the year and
graced most of the occasions, which includes All India Conference on 2nd December
at Lucknow, National Conference for CA Students on 18th at Indore, National
Conference on Excellence in Professional Approach on 24th at Agra, National
Conference on Raising to the Challenges in Public Finance and Government
Accounting on 25th at Ghaziabad, felicitation function and meeting with members
and students at Saharanpur on 25th, interaction meeting with the members and
students at Roorkee on 25th Dec, felicitation and interaction meeting with the
members of Dehradun on 25th Dec., Inauguration of Bhilai Branch Building on 27th , Interaction meeting with the members of Raipur
on 27 Dec. and Inauguration of Sriganganagar Branch of CIRC on 31st December, 2010.
During the previous month I also had the occasion to visit Bareilly, Bikaner, Dhanbad, Jodhpur and Pali branches of CIRC and Nainital
apart from the above programmes with the President –ICAI and had interaction with the members and students and discussed
problems related to the profession.
CIRC has also organized S. Vaidyanath Aiyer Memorial Lecture for the year 2010 at Noida on 18th December, 2010. I congratulate
CA. Mukesh Singh Kushwah - Member CIRC and the Managing Committee of the Noida Branch for arranging this Lecture.
CIRC has also organized/hosted the following mega programmes in the month of December :-
l At Lucknow All India Conference on Management of Fiscal and Natural Wealth jointly with Lucknow Branch on 2-3 December,
l At Bhilwara Full Day Seminar hosted by Bhilwara Branch on 4th December,
l At Bareilly Seminar on Scrutiny assessment, Financial Derivatives hosted by Bareilly Branch on 6th December.
l At Kanpur Full Day Seminar on Taxation and Company Law with mega Haasya Kavi Sammelan on 7th December.
l Regional Sports Meet of CIRC at Indore on 13-14 December.
l National Conference for CA Students on the theme Enlightening Minds – Discovering the Future” hosted by Indore Branch on
18-19 December.
l Full Day Seminar on Direct Taxes and Accounting Standards hosted by Lucknow Branch on 19th December.
l National Conference hosted jointly with Agra Branch of CIRC on 24-25 December.
l National Conference on Public Finance and Government Accounting hosted jointly with Ghaziabad on 25-26 December.
l All India RRC on Excellence in Corporate Practice - Modern Approach at Tapti Retreat, Burhanpur MP from 31st Dec, 2010 to 2nd
January, 2011.
These all activities were resulted to a grand success, and was possible with the active participation of all the members.
And finally, “nothing comes without a price” and I believe this is true, you must decide for yourself whether it is worth to work hard
preparing the soil, planting the seeds, tending the plants and protecting the crops so that a good harvest is possible. There are no
guarantees and there will be many challenges, but at the end it will provide years of prosperity.
Please try and do your best. And before I call it a day, new is the year, new are the hopes and the aspiration, new resolution and new are
the spirits, have promising and fulfilling Happy New Year 2011.

CA. Kemisha Soni,

Chairperson –CIRC
(M)09826049594
Emai: kemisha288@yahoo.com
 USE OF AMORTISED COST AND EFFECTIVE INTEREST
RATE METHOD UNDER IFRS – BY CA. MOHAMMAD SALIM
msalimca@gmail.com

The concept of Amortised cost is financial instruments are included in the cash flow. Similarly,
very relevant during measurement premium / discount on issue or redemption are included in the
of the financial instruments i.e. cash flow. Effect of other contractual terms of the instrument
financial assets and financial like prepayment or embedded options is adjusted . However,
liabilities as per IAS 39 Financial normally no adjustment is carried out for possible credit losses.
Instruments: Recognition and The IRR can be calculated using a financial calculator or the IRR
Measurement (Ind. AS 30). The said function in a spreadsheet.
standard prescribes that an entity For understanding the basic concept following practical
recognises a financial asset or a illustration is given as under:-
financial liability when it first
becomes a party to the contractual A Ltd. purchased 10% Debentures of face value € 100 issued by
rights and obligations in the MN for € 99.5 on January 1, 2004. The debentures will pay an
contract. Under IAS 39, all the annual coupon every 31 December and be repaid after 5 years at
financial assets and financial liabilities, including derivatives, 100.10. MN has incurred transaction costs of € 0.2 per
should be recognised on the balance sheet at fair value when debenture .
the entity becomes party to the contractual provisions of the Explained below is the computation of the effective interest rate
instrument. Fair Value is the amount for which an asset could be and amortised cost.
exchanged or a liability settled, between knowledgeable, willing
Solution :
parties in an arm's length transaction.
Computation of Effective Interest Rate
Subsequent to the initial recognition, IAS 39's (Ind.AS 30)
measurement approach can be best described as a 'mixed 1 2 3 4 5
attribute' model with certain assets and liabilities measured at Year Cash Flow Remaining Interest (€) Principal
amortised cost and others at fair value.
(€) Principal Repayment (€)
The following financial assets are remeasured or subsequently
measured at amortised cost:- Balance (€)*
Held to Maturity investments : These are non-derivative 0 -99.7 99.70
financial assets with fixed or determinable payments and fixed 1 10 99.77 10.07 -0.07
maturity that an entity has the positive intention and ability to 2 10 99.84 10.07 -0.07
hold.
3 10 99.92 10.08 -0.08
Loans and Receivables : These are non-derivative financial
assets with fixed or determinable payments that are not quoted 4 10 100.01 10.09 -0.09
in an active market. Examples trade receivables, bank deposits. 5 110.1 100.10 10.09 -0.09
Further amortised cost is used for subsequent measurement of IRR 10.10%
financial liabilities other than those classified as Financial * Remaining Principal Balance signifies Amortised Cost
Liabilities 'at fair value through Profit and Loss Account
.Common examples of financial liabilities to be measured at Notes to the Table :
amortised cost are trade payables, borrowings and customer I) Find out cash flow of the debentures . Initial investment =
deposits etc. 99.5+0.2 = 99.7 .
Now let us understand the concept of Amortised cost and Subsequent cash flow
effective interest method. Year 1 through Year 4 = coupon amount € 10. In Year 5 ,
cash flow comprises both the coupon payment of € 10 and
CONCEPT OF AMORTISED COST AND EFFECTIVE INTEREST principal repayment of € 100.1. Thus redemption premium
METHOD : as well as transaction costs are included in computing the
The amortised cost of a financial asset or financial liability is effective interest rate.
defined as the amount at which the financial asset or financial ii) Effective interest rate is the IRR of cash flow shown in
liability is measured at initial recognition minus principal Column 2.
repayments , plus or minus the cumulative amortisation using iii) Interest in Column 4 is computed applying the effective rate
the “effective interest method” of any difference between that on the remaining principal balance at the beginning of the
initial amount and the amount payable at maturity and minus year. For Year 1 : 99.7 × 10.1% = 10.07
any reduction for impairment or uncollectibility. iv) Principal repayment in Column 5 = Coupon – Interest . If
The effective interest rate is the internal rate of return ( IRR) of interest is higher than coupon , there is a negative principal
the cash flow of the financial instrument through its expected repayment meaning that Remaining Principal Balance of
life i.e. the rate that exactly discounts estimated future cash Column 3 will increase.
flows through the expected life of the financial instrument or, v) Remaining Principal Balance ( Column 3) RPB = Opening
where appropriate, a shorter period to the net carrying amount balance – Principal Repayment. In case principal
of the financial asset or financial liability. Transaction costs repayment in column 5 is negative , RPB will rise. RPB
(which are directly attributable to acquisition or issuance of the signifies amortised cost of a particular date.

Winning isn`t everything, But wanting to win is 1

 IAS 36 : IMPAIRMENT OF ASSETS
– Compiled by CA. SANJAY SAINI FCA, IFRS
E-mail: sanjaykumarusa@rediffmail.com

OBJECTIVE OF IAS 36 : recoverable amount.

The objective of this Standard is to The recoverable amounts of the following types of intangible assets
prescribe the procedures that an entity should be measured annually whether or not there is any indication
applies to ensure that its assets are that it may be impaired. In some cases, the most recent detailed
carried at no more than their recoverable calculation of recoverable amount made in a preceding period may be
amount. An asset is carried at more than used in the impairment test for that asset in the current period :
its recoverable amount if its carrying ! an intangible asset with an indefinite useful life
amount exceeds the amount to be ! an intangible asset not yet available for use
recovered through use or sale of the ! goodwill acquired in a business combination
asset. If this is the case, the asset is The impairment test in these circumstances may be carried out at any
described as impaired and the Standard time during the period, provided that it is carried out at the same time
requires the entity to recognize an each period.
impairment loss. The Standard also RECOGNITION OF AN IMPAIRMENT LOSS :
specifies when an entity should reverse ! An impairment loss should be recognized whenever recoverable
an impairment loss and prescribes amount is below carrying amount. [IAS 36.59]
disclosures. ! The impairment loss is an expense in the income statement (unless
APPLICABILITY : it relates to a revalued asset where the value changes are
IAS 36 applies in general to all tangible and intangible non-financial recognized directly in equity). [IAS 36.60]
assets, including: ! Adjust depreciation for future periods. [IAS 36.63]
! Property, plant and equipment, irrespective of whether carried at REVERSAL OF IMPAIRMENT LOSS :
cost or revalued amount under IAS 16; ! Same approach as for the identification of impaired assets: assess
! Goodwill arising on an acquisition, accounted for under IAS 22; at each balance sheet date whether there is an indication that an
Investments in Subsidiaries, accounted for under IAS 27; impairment loss may have decreased. If so, calculate recoverable
! Investments in Associates, accounted for under IAS 28; amount. [IAS 36.110]
! Interests in Joint Ventures, accounted for under IAS 31; ! No reversal for unwinding of discount. [IAS 36.116]
! Intangible assets, accounted for under IAS 38; and ! The increased carrying amount due to reversal should not be more
! Investment property measured at cost, under IAS 40 than what the depreciated historical cost would have been if the
! Property, plant and equipment, irrespective of whether carried at impairment had not been recognized. [IAS 36.117]
cost or revalued amount under IAS 16; ! Reversal of an impairment loss is recognized as income in the
! Goodwill arising on an acquisition, accounted for under income statement. [IAS 36.119]
IAS 22; ! Adjust depreciation for future periods. [IAS 36.121]
! Investments in Subsidiaries, accounted for under IAS 27; ! If the reversal of the impairment is in relation to a cash-generating
IAS 36 does not apply to the following assets covered under other unit, then the reversal is recognized on a pro-rata basis with the
accounting standards : carrying amount of the assets, excluding goodwill. [IAS 36.122]
! Inventories (IAS 2, Inventories, measured at the lower of cost and ! Reversal of an impairment loss for goodwill is prohibited. [IAS
net realisable value); 36.124]
! Assets arising from construction contracts (IAS 11 requires DISCLOSURE by class of assets: [IAS 36.126] :
determination of recoverable amount albeit on an undiscounted
basis); ! impairment losses recognized in profit or loss
! Deferred income tax assets (IAS 12 applies); ! impairment losses reversed in profit or loss
! Assets arising from employee benefits (IAS 19 specifies that an ! which line item(s) of the statement of comprehensive income
upper limit of such assets be determined on a discounted basis ! impairment losses on revalued assets recognized in other
broadly compatible with IAS 36); comprehensive income
! Financial assets included in the scope of IAS 32; ! impairment losses on revalued assets reversed in other
! Investment property measured at fair value (IAS 40 applies); and comprehensive income
! Biological assets measured at fair value (once IAS 41 becomes Disclosure by reportable segment: [IAS 36.129]
effective). ! impairment losses recognized
KEY DEFINITIONS : ! impairment losses reversed
Fair value : the amount obtainable from the sale of an asset in an arm's Other disclosures :
length transaction between knowledgeable, willing parties less the cost If an individual impairment loss (reversal) is material disclose: [IAS
of disposal. The Cost should be incremental Disposal Costs - which are 36.130]
directly attributable to the disposal of an asset.
! events and circumstances resulting in the impairment loss
Value in use : the discounted present value of the future cash flows
expected to arise from : ! amount of the loss
! the continuing use of an asset, and from ! individual asset: nature and segment to which it relates
! its disposal at the end of its useful life ! cash generating unit: description, amount of impairment loss
Impairment of loss : impairment of loss occurs only when Carrying (reversal) by class of assets and segment
Amount > Recoverable amount. If an impairment loss is recognized, any ! if recoverable amount is fair value less costs to sell, disclose the
related deferred tax assets or liabilities are determined in accordance basis for determining fair value
with IAS 12 by comparing the revised carrying amount of the assets ! if recoverable amount is value in use, disclose the discount rate
with its tax base. [IAS 38.64] If impairment losses recognized (reversed) are material in aggregate to
IDENTIFYING AN ASSET THAT MAY BE IMPAIRED : the financial statements as a whole, disclose : [IAS 36.131]
At each balance sheet date, review all assets to look for any indication ! main classes of assets affected
that an asset may be impaired (its carrying amount may be in excess of ! main events and circumstances
the greater of its net selling price and its value in use). IAS 36 has a list of Disclose detailed information about the estimates used to measure
external and internal indicators of impairment. If there is an indication recoverable amounts of cash generating units containing goodwill or
that an asset may be impaired, then you must calculate the asset's intangible assets with indefinite useful lives. [IAS 36.134-35]

You would achieve more, if you don`t mind who gets the credit 2
 Great Achievement of CIRC of ICAI
CIRC acquired a plot of land measuring 2459.60 sq.
metres - Plot No. 9, Scheme No. 38, Block -A 1, Lakhanpur,
Kanpur, from Kanpur Development Authority on the august day
of 7th December 2010,for constructing Institute's Building.'

WINNERS OF MEGA SPORTS EVENT OF CIRC HELD AT INDORE ON

13-14 DECEMBER 2010
Winner Runner's up

Badminton
Men's Singles CA. Vikram Gupte ( Indore) CA. Amit Jain ( Bhopal)
Men's Doubles CA. Vikram Gupte/ CA. Devendra CA. Sharad Kalani/ CA. Surendra
Chelawat ( Indore) Parakh ( Pali)
Women's Singles CA. Kemisha Soni ( Indore) CA. Kamna Punjawat ( Udaipur)
Women's Doubles CA. Kemisha Soni (Indore) CA. Rajni Jain/ CA. Vaishali Baheti
CA. Kamna Punjawat(Udaipur) ( Bhopal)
Mixed Doubles CA. Kemisha Soni / CA. Vikram CA. Amit Jain/ CA. Rajni Jain ( Bhopal)
Gupte ( Indore)

Table Tennis
Men's Singles CA. Bhagwan Agrawal ( Indore) CA. Kishore Motwani ( Indore)
Men's Doubles CA. Bhagwan Agrawal / CA. Ashish Agrawal/CA. Atul Rastogi
CA. Kishore Motwani( Indore) ( Kanpur)
Women's Singles CA. Vaishali Baheti( Bhopal) CA. Kamna Punjawat( Udaipur)

Mixed Doubles CA. Vaishali Baheti / CA. Nitin CA. Kishore Motwani/ CA. Anupama
Barjatya ( Bhopal) Pandey ( Indore)

Carrom
Singles CA. Yogesh Bhargava( Ujjain) CA. V.K. Sharma Indore
Doubles CA. Pranav Agrawal/ CA. Neeraj CA. Atul Khandelwal/ CA. Pradeep
Agrawal ( Jabalpur) Jasin ( Indore

Chess CA. Yogesh Bhargava ( Ujjain) CA. Punit Ved ( Indore)

If you do little things well, you`ll do big ones better 4

Contd. from December 2010 CIRC Newsletter….

A DOZEN OF ISSUES ON SECTION 50 C OF INCOME TAX ACT

– CA. Ashish Goyal
E-mail: ashishgoyalg@yahoo.com
2.5 Whether section 50C is Assessee asked the AO to make valuation of property.
mandatory? How can DVO valued the property at a figure more-or-less similar
assessee prevent himself to what was the guideline value. Whether still section
from the rigors of section 50C would be attracted?
50C?
Although not much research has been done on this
Assessee may sell his aspect, I may submit that in an array of decisions in
property below the guideline respect to section 55A and 142A, it has been held that
value for various reasons, Report of the DVO is not sacrosanct. It is only estimation.
some of which are: -
It has been held in Santosh Kumar Dalmia 208 ITR 337
1. Title is disputed.
(Cal.) that valuation is only a matter of opinion and
2. L a n d h a s i n h e r e n t valuation differs from valuer to valuer, depending on the
problems like it is on slope or inner side of colony etc. facts and circumstances of each case. The valuer's report
3. Surroundings are not palatable; there is a nearby is after all a statistical hypothesis that leaves wide room
railway line or high-tension line or hospital or a for error on either side. [Bhola Nath Majumdar (1996)
factory etc. 221 ITR 608 (Gau.); Kamalam Rajendran 129 Taxman 840
(Mad.); Abdul Mazid 178 ITR 616 (MP)]
4. Urgent need of funds.
In such a case, the question becomes important whether Therefore assessee can give report of his Authorised
section 50C would be still applicable. U/s. 50C(2), Valuation Officer (AVO) and can also challenge the
assessee has two defenses against the application of valuation on merit. This view further finds support by a
section 50C: - direct decision in Waqf Alal Aulad (2010) 37 SOT 58 (Del.)
the DVO had given deduction of 33% on account of
a) Assessee can challenge the stamp valuation before encumbrances in tenancy while computing Market Value
the Stamp valuation authority; or in alternative, u/s. 50C. Matter was remanded back to AO to allow
b) Assessee can apply to the AO for making a reference proper time to assessee to rebut the DVO's report. See
to the District Valuation Officer (DVO). On such also Ravi Kant (2007) 110 TTJ 297 (Del.), where the DVO
application by assessee, the AO may make a made the valuation at Circle rates, which are not
reference to DVO. indicative of market rates. It was held that such an
approach will render exercise u/s. 50C(2) a meaningless
In determining the Fair Market Value (FMV), the DVO
ritual and an empty formality. In such a case, the DVO's
shall follow the provisions of sections 16A(2) to (6),
report should be based on consideration stated in the
23A(1)(i), 23A(6) and 23A(7), 24(5), 34AA, 35 and 37 of
registration documents for comparable transactions, as
Wealth-tax Act, 1957.
also factors such as inputs from other sources about the
It has been held in N. Meenakshi 226 CTR 625 (Mad.) that market rates.
once the assessee applies to AO for making reference to
DVO u/s. 50C, “may” becomes “shall”. Therefore, if Further, one can argue that if there is an acceptable
assessee applies, AO shall make reference to DVO. It is margin, say upto 15% in the actual consideration and
not optional for AO to make reference to DVO. It was held valuation of DVO, same should be ignored and no
that right of assessee u/s. 50C is a valuable statutory addition should be made. [Rahul Construction 38 DTR 19
right available to protect his interest against arbitrariness (Pune)]. Reliance is further placed on C.B. Gautham 199
which may creep in while fixing the value of capital gain ITR 530 (SC).
and it is the safeguard given to the assessee. The said 2.7 Assessee sold a land for Rs. 10 lacs. However, u/s. 50C,
right is more effective in cases where the parties to the the Full Value of Consideration was treated as Rs. 19
document have not taken any steps to defend or to lacs. Whether, for claiming exemption u/s. 50F, assessee
initiate proceedings under Stamp law. [Jitendra Mohan should invest Rs. 10 lacs or Rs. 19 lacs?
Saxena 117 TTJ 974 (Trib. Luck.)]
As per the latest decision in Gyan Chand Batra 133 TTJ
Further, in Jitendra Mohan Saxena 117 TTJ 974 (Trib. 482 (Jp.), the "full value of consideration" for section 50C
Luck.), it was held that both the remedies u/s. 50C are shall be the guideline value. Section 50C creates a fiction
alternative. If guideline value has been challenged before and replaces the “full value of consideration” u/s. 48 with
the stamp valuation authority, same cannot be again the guideline value. Such fiction cannot be extended to
challenged before the AO. In other words, assessee can section 54F. Reinvestment u/s. 54F shall be done only of
challenge the guideline value before AO only if he has not actual consideration. In given example, assessee shall
challenged the same before stamp valuation authority. only invest Rs. 10 lacs. The decision needs to be highly
[Mohd. Shoib 127 TTJ 459 (Luck.)] appreciated, as the assessee may not be in a position to
2.6 Assessee sold his property below the guideline value. reinvest Rs. 19 lacs since he received only Rs. 10 lacs.

Only those who do nothing do not make mistakes 4

5
2.8 Compare the provisions of section 50C with section One may note that transfer of a capital asset is taxable
56(2)(vii). under the head Capital Gains on the date of transfer.
As on date, section 50C and section 56(2)(vii) operate in a Section 50C is merely a computation provision. Section
totally different fields: 50C shall apply to compute the income under the head
capital gains. Section 50C therefore applies at the time of
a) Section 50C will apply to seller, if he transfers an transfer. Therefore, in my view, guideline value on the
immovable property (being capital asset) without date of transfer shall be applicable. Registry is a post-
adequate consideration. This transfer may be to a transaction event. The same should not have value for
relative or to a non-relative. For the buyer, the cost is computation of capital gains u/s. 50C.
actual cost of acquisition and not the guideline
value. One may note that such an issue was for consideration in
one of the cases in Smt. Meera Somasekaran (2010) 4 ITR
b) Section 56(2)(vii) apply to a buyer, if he receives an (Trib) 271 (Chennai). In this case, it was held that assessee
immovable property (being capital asset) without should bring evidence on record to show that all the
consideration. This is taxable only if it is received conditions of section 53A of Transfer of Property Act are
from a non-relative. For the buyer, the cost is the satisfied at the time of agreement.
guideline value considered for the purpose of
Further, in Kaushik Sureshbhai Reshamwala 39 SOT 357
section 56(2)(vii). [One may note that this is in
(Ahd.), assessee transferred agricultural land in March
contradiction to section 49, whereby in case of asset
2006 u/s. 53A of Transfer of Property Act, but the
received under a gift, the cost is cost of previous
registration could be done only in F.Y. 2007-08. AO
owner]
adopted the market value instead of stamp value u/s.
2.9 Assessee becomes a partner aof the firm. He gives his 50C. It was held that section 50C applies only to
house as capital contribution to firm. Value recorded in computation of capital gains in real estate transaction.
books of firm is Rs. 30 lacs. Guideline value is Rs. 45 lacs. Therefore, even on the date of transfer u/s. 53A, section
Section 45(3) states that full value of consideration for 50C would apply and AO cannot adopt a higher figure on
the partner shall be the value recorded in the books. the plea that registry was done belatedly. It was further
However, section 50C states that the full value of held that AO had no evidence otherwise to adopt a
consideration shall be guideline value. Whether section higher value than the guideline value.
45(3) or section 50C would be attracted? In M. Siva Parvathi 129 TTJ 463 (Visakha), the issue was
This issue came for consideration in a latest decision in whether section 50C would apply to transfers which
Carlton Hotel P Ltd. (2009) 122 TTJ 515 : 35 SOT 26 (Luck.). were entered into prior to insertion of section 50C, but
In that case, it was held that in such situation, section 50C registry was done after the insertion of section 50C. It
would override section 45(3). Section 45(3) is a general was held that section 50C shall not be applicable. This
provision and section 50C is a special provision which decision can be taken as a help for argument that
would override section 45(3) if the sale deed is sought to “transfer” is different from section 50C, which is merely
be registered by paying stamp duty. Hence, in the given computation provision; and the computation is done at
case, the partner transferring his house to the firm would the time of transfer.
be subjected to capital gain by taking sale consideration 2.12 Whether addition u/s. 50C would necessarily mean that
at Rs. 45 lacs. assessee has “concealed” the income or “furnished
2.10 Assessee sold a building which was depreciable asset. inaccurate particulars thereof” and therefore penalty
Can section 50C be applied. u/s. 271(1)(c) should be levied?
As held in ACIT vs Roger Pereira Communications P Ltd. As held in ACIT vs N. Meenakshi (2009) 125 TTJ 856
34 SOT 64 (Mum.), section 50C cannot be applied as (Chennai), penalty cannot be levied in such a case, as
section 50 is a special provision for computation of there is no 'concealment or furnishing of inaccurate
depreciable assets which are covered by block of assets particulars'. Also see Prakash Chand Nahar 110 TTJ 886
concept. [see also Panchiram Nahata 127 TTJ 128 (Kol)] (Jodh.); Balkrishna Waghere & Others, July/ Aug, 2010,
BCAJ, 3 (Pune).
2.11 Assessee sold the immovable property by way of
transfer u/s. 53A of Transfer of Property Act, 1882, on 3.0 Conclusion
10.03.2010. At that time the guideline value was Rs. 40 To sum up, section 50C is a specific section creating a
lacs. Subsequently, the property is registered on deeming fiction. The section is only for the purposes
12.05.2013. On that date, the guideline value becomes where there is underhand dealing. The section should be
Rs. 150 lacs. Whether sale consideration shall be Rs. 40 applied only with reference to the context for which it
lacs or Rs. 150 lacs? was introduced.

CONDOLENCE....
CIRC deeply mourn the said demise of CA. Vijay Kumar Dodia (M. No. 085567) of Pali. He passed away
in a road accident on 28th Nov. 2010. His wife and son were also with him in the same car and both of
them were injured. We pray to almighty that the departed noble soul may rest in eternal peace.

f
You won`t get a second chance to make the first impression 6
Contd. from October 2010 CIRC Newsletter….
CIRC CPE Activities held from September to December, 2010
S.No. BRANCH DATE PROGRAMMES GUESTS /FACULTIES CPE
42 CIRC at Noida 01.09.2010 Sub Regional Conference of CIRC at Noida hosted CA. Kemisha Soni, Chairperson CIRC, CA. Sanjiv Verma, 6
by Noida Branch. CA. Anju Sharma - Chairperson Patna Branch of CIRC, CA.
Abhijeet Mitra, CA. Ankush Golechha-Member CIRC
43 CIRC AT INDORE 09.10.2010 Sub Regional Conference of CIRC at Indore CA.Kemisha Soni - Chairperson CIRC, Council Members - 6
hosted by Indore Branch on the topics/Key Note CA. Manoj Fadnis & Nilesh Vikemsey, CA. Aseem Trivedi,
on Latest Trends in Ind. AS, Practice Management, Dr. Girish Ahuja, CA. Ankush Golechha, CA. Manu Agrawal
Code of Ethics and Post Audit Documentation, - Trsr CIRC, CA. O. P. Maheshwari - Secy. CIRC, CA. Vivek
Security Derivatives. Khanna- Chairman CICASA, CA. Vijesh Khandelwal, CA.
Sheetal Jain
44 CIRC AT RATLAM 10.10.2010 Full Day Seminar of CIRC An Overview on IFRS, CA. Kemisha Soni - Chairperson, CA. Manoj Fadnis - 6
Practice Management, Share Securities and Council Member, CA. Nilesh Vikamsey - Council Member,
Derivatives ,Accounting auditing and Taxation, CA M.D. Sodani, CA. Manu Agrawa, CA. Ankush Golechha,
Issues relating to Security Assessment. CA. T. H. Khamoshi, CA. Promod Naahar.
45 CIRC at Dubai 18 – 21 Oct. 2010 International Residential Refresher Course of CA. Manu Agrawal, CA. Ankush Golechha, CA. Rakesh 12
CIRC at Dubai hosted by Bhilai Branch of CIRC Dhodhy, CA. Shripal Kothari, CA. Kemisha Soni, CA. O.P.
Maheshwari.
46 CIRC, Kanpur 21.10.2010 6th Workshop on Income Tax CA. Swaran Singh, CA. Govind Krishna, 2
47 CIRC, Alwar 22.10.2010 Half Day Seminar of CIRC hosted by Alwar Branch CA. Kemisha Soni, Chairperson CIRC, CA. Manu Agrawal, 4
of CIRC on the topics Issues in Scrutiny Treasurer CIRC, CA. Ankush Golechha, Member CIRC, CA.
Assessment, Financial Derivatives – Overview, Mahesh Jain, Chairman Alwar Branch
Accounting and Taxation,
48 CIRC Kanpur 23.10.2010 6th Workshop on Indirect Taxes CA. Dharmendra Srivastava, Shri Santosh Gupta, 2
Advocate, Kanpur
49 CIRC at Udaipur 23.10.2010 Sub Regional Conference of CIRC at Udaipur CA. Kemisha Soni - Chairperson CIRC , CA Manoj Fadnis- 6
hosted by Udaipur Branch at Udaipur on the Council Member, CA. Arvind Shah, CA Sanjay Jhanwar,
topics IFRS Implementation – Challenges and way CA. Anuj Goyal, Council Member, CA. Manu Agrawal-
forwards, Accounting, Treasurer CIRC, CA C.S. Nanda, Council Member, CA.
Satish Chandra, CA. Sangeeta Bardia, Chairman Udaipur
Branch
50 CIRC, Kanpur 27th Oct – 10 Nov. Workshop on MS Excel for Members (Advanced Internal ITT Faculty. 12
2010 Course) MS Excel - Functions, Charts, Short Cuts &
Tips

51 CIRC, Kanpur 28.10.2010 Workshop on Derivatives - Accounting and CA. Sunil Gupta 2
Taxation of Derivatives
52 CIRC, Jamshedpur 28.10.2010 Sub Regional Conference of CIRC at Jamshedpur CA.Kemisha Soni, Chairperson CIRC, CA. Manu Agrawal, 6
hosted by Jamshedpur Branch on the topics Treasurer CIRC, CA. Ankush Golechha, Member CIRC,
Issues in scrutiny assessment,
53 CIRC, at Ranchi, 29.10.2010 Sub Regional Conference of CIRC Ranchi Branch CA. Kemisha Soni, Chairperson CIRC, CA Manu Agrawal, 6
topics Issues in Scrutiny Assessment, Financial Treasurer CIRC, CA. Ankush Golecha, Member CIRC, CA.
Derivatives, Overview, Accounting and Taxation, Avinash Dewan, CA. R K Kaushal, CA V K Gaddhyan, CA. R
Recent Issues in TDS/DTC Bill, under IT Act, 1961 K Garodia, Chairman Ranchi Branch, CA Sumit Agrawal.
54 CIRC at 12.11.2010 Sub Regional Conference of CIRC at Muzaffarnagar CA.Kemisha Soni- Chairperson CIRC, CA. Manu Agrawal - 4
Muzaffarnagar Hosed by Muzaffarnagar Branch of CIRC Trsr CIRC, CA. Ankush Golechha- Member CIRC, CA. Vivek
Khanna - Charman. CICASA, CA. R. S. Garg.
55 CIRC at Dehradun 13.11.2010 Full day seminar of CIRC at Dehradun hosted by CA. Kemisha Soni, Chairperson CIRC, CA. Manu Agrawal, 6
Dehradun Branch of CIRC on Direct Taxes - Issues Treasurer CIRC, CA. Ankush Golechha, Member CIRC, CA
in Scrutiny Assessment, Financial Derivatives - Pawan Gupta Chairman of Branch, CA . Ankur Gupta,
56 CIRC at Saharanpur 14.11.2010 Half Day Seminar of CIRC Issues in Scrutiny CA. Kemisha Soni, Chairperson CIRC, CA Manu Agrawal, 4
Assessment, Financial Derivatives - Overview,
Accounting and Taxation , Wills and Family Treasurer CIRC, CA. Ankush Golecha, Member CIRC, CA
Settlement, Taxation of Trust & Societies Vivek Khanna, Chairman CICASA

If you think nobody cares, try missing a couple of payment 7

57 CIRC at Indore 18.11.2010 Chartered Accountants CEO/CFOs Meeting organised by Committee for members in Industry Hosted by the 3
CIRC and Indore Branch of CIRC.
58 CIRC at Kanpur 23 Nov to 9 Dec. MS Excel Workshop II for Members held CIRC Internal ITT Faculty. 12
2010

59 CIRC at Kota 27.11.2010 Half Day Seminar of CIRC hosted by Kota Branch CA. Kemisha Soni- Chairperson CIRC, CA. O P 3
of CIRC on the Topic Survey Under Income Tax Act, Maheshwari, Secretary CIRC, CA Ashish Goyal, Indore
1961 at Kota
60 CIRC at Jabalpur 28 - 29 Nov. 2010 Two Days Regional Conference of CIRC hosted by CA. Amarjit Chopra-President ICAI, Council Members - 12
Jabalpur Branch ,on the theme Excellence in CA. Manoj Fadnis - CA Subodh Agarwal, , CA. Ravindra
Profession inaugurated by the President ICAI Holani CA. Vijay Kapoor, , CA Kemisha Soni -Chairperson
CIRC, CA. Rajiv Mehrotra, CA. Manu Agrawal- Treasurer
CIRC, Shri G N Purohit, Advocate, CA S. Krishnan,
Chairmen Bhopal Br., CA Manoj Jain
61 CIRC at Lucknow 2-3 Dec.2010 All India Conference on Management of Fiscal and H. E. Shri B L Joshi - Governor of Uttar Pradesh, CA. 12
Natural Wealth organised by CIRC and Lucknow Amarjit Chopra - President ICAI, CA. G. Ramaswamy-Vice
Branch of CIRC under the aegis of Committee on President ICAI, CA. Anuj Goyal-Council Member, CA.
Economic and Commercial Laws and Trade Laws Rajkumar Adukia- Coucil Member, CA. Rajendra Kumar P,
and WTO of ICAI, A Mega Cultural Evening was CA. Kemisha Soni- Chairperson CIRC, CA. Manu Agrawal,
also arranged in the evening of the 2nd December, Treasurer CIRC, CA. Vivek Khanna-Chairman CICASA, CA.
2010 Ankush Golechha, Member CIRC , CA. Akshay Gupta, Past
Coucil Member, CA. Padam Khincha, CA. Govind Goyal,
CA. Ashok Batra, CA. Bharat Jee Aggarwal, Advocate , CA.
Sanjeev Verma.CA. Rohit Bhalla, Chairman Lucknow
Branch, CA. Avichal Kapoor, Vice Chairman Lucknow
Branch
62 CIRC at Bhilwara 04.12.2010 Full Day Seminar of CIRC hosted by Bhilwara CA. M.L. Patodi, CA. Sushil Jalan, CA. Pawan Parashar - 6
Branch Annual Return and Audit under VAT Member CIRC, CA. Rajiv Sogani.
Duration, Improve your Working Capacity, New
Company Bill – 2009, Survey under Income Tax Act,
1961,
63 CIRC at Bareilly 06.12.2010 Central India Regional Seminar on the topics CA.Kemisha Soni, Chairperson CIRC, CA. Manu Agrawal, 3
Issues in Scrutiny Assessment, Financial Treasurer CIRC, CA. Ankush Golechha, Member CIRC ,
Derivatives- Overview, Accounting and Taxation CA. Sharat Kumar Gupta, Chairman Bareilly Branch of
hosted by Bareilly Branch of CIRC CIRC, CA. Ravindra Kumar Agarwal - Past Chairman
Bareilly Branch .
64 CIRC at Kanpur 07.12.2010 Full Day Seminar on Taxation and Company Laws CA. Nripendra K. Gupta -Past Council member, CA. 6
followed by Hasya Kavi Sammelan Kemisha Soni -Chairperson CIRC, CA. Anuj Goyal- Council
Member, CA. Vivek Khanna - Chairman CICASA , CA. K .
Sampath, CA. R P Garg, CA. Debasish Mitra, CA Ankush
Golechha, Member CIRC
65 CIRC at Noida 18.12.2010 S. Vidaynath Aiyar Memorial Lecture CA. K. N. Gupta, CA. Yogesh Malik; CA. Avinash Gupta, CA. 6
Mukesh S. Kushwah
66 CIRC at Lucknow 19.12.2010 Full Day Seminar on Direct Taxes and Accounting CA. Anil Kr Saxena, CA. Ruchi Arora ,CA. Anjani Khetrapal , 6
Standards of CIRC hosted by Lucknow Branch of CA. Girish Ahuja, CA. Rohit Bhalla- Chairman Lucknow
CIRC Branch
67 CIRC at Agra 24-25 Dec.2010 National Conference on Excellence in professional CA. Amarjit Chopra - President ICAI, CA. G. Ramaswamy - 12
Approaches Vice President ICAI, & Council Members - CA. Sanjeev
Mahewshari, CA. Santhanakrishnan, CA. V. Murali, CA.
Ved Jain - CA. Ravindra Holani, CA. Manoj Fadnis, Dr..
Girish Ahuja, CA. Akshay K. Gupta - Past Council Member.
68 CIRC at Ghaziabad 25 - 26 Dec. 10 National Conference organized by the Committee CA. K Rahman Khan, Hon’ble Dy. Speaker, Rajya Sabha, 12
on Public Finance and Government Accounting, Shri Yashwant Sinha, MP, CA. Vinod Jain, Chairman BOS,
hosted by the Central India Regional Council and CA. Kemisha Soni - Chairperson CIRC, CA. Arvind Chawla,
Ghaziabad Branch of CIRC. Theme of the CA. Bharat Jee Agarwal, CA. Girish Ahuja, Dr. Rajesh
Conference - Rising to the Challenges in Public Gupta,
Finance and Government Accounting.

You would achieve more, if you don`t mind who gets the credit 8
CA. Ankush Golechha - Member CIRC, CA. Kemisha Soni - Chairperson CIRC, CA. O. P. CA. Ankush Goleccha - Member CIRC, Shri Arjunram ji Meghwal - MP Bikaner, CA. Kemisha
Maheshwari - Secretary CIRC & CA. S D Kalani - Branch Chairman, Addressing at Pali Branch Soni - Chairperson CIRC, CA. Manoj Sipant - Chairman o Bikaner Branch, CA. O P
on 16.12.2010 Maheshwari- Secretary CIRC.

Student at GMCS & Orientation Programme closing ceremony held at Bikaner Branch on From Rt. - CA. Kemisha Soni is addressing - sitting on the dias - CA. Vinay Krishna - Secy.
15.12.10 Branch, CA. Ankush Golechha & CA. Manu Agrawal at Bareilly Br. Seminar on 6th Dec., 2010

Address by bCA. Amarjit Chopra - President ICAI From left : CA. Ashish Vyas - Chairman Kota Branch of CIRC of ICAI, CA. O. P. Maheshwari -
From Lt. : CA. D. S. Juneja, CA. Vivek Khanna - Chairman CICASA, CA. Anurag Maheshwari - Secretary CIRC, CA. Ashish Goyal - Member CIRC, CA. Siddharth Mittal - Member CIRC, CA.
Chairman Saharanpur Br. of CIRC at felicitatian function of President at Saharanpur Branch Kemisha Soni - Chairperson CIRC at Seminar held on 27.11.2010 at Kota Branch

CA. Winners of ‘ICAI Regional Sports Meet’ with Council Member CA. Manoj Faduis, CA. From Lt. - CA. Vivek Khanna - Chairman CICASA, Ms. Bhula Ganguli - Regional Sports Officer,
Kemisha Soni - Chairperson CIRC CA. Ankush Golechha - Member CIRC, CA. Manu Agrawal - Green Park, Kanpur, CA. Kemisha Soni - Chairperson CIRC of ICAI, CA. O P. Maheshwari -
Treasurer CIRC and Indore Br. Chairman CA. Vijesh Khandelwal on 14.12.2010 at Indore. Secretary CIRC of ICAI at Sports event held on 26th & 27th November 2010 at Kanpur.

From Left : CA. Bisheshwer Lal Raju - Secretary Patna Branch of CIRC, CA. Arun Kumar - Bhilai Br. Building Opening Ceremony on 27.12.2010 CA. Amarjit Chopra - President & G.
Member, CA. Anju Sharma - Chairperson Patna Branch of CIRC, Shri Arun Kumar Sinha - MLA Ramaswamy - Vice President ICAI, Council Members - CA. Rajendra Kumar P, Anuj Goyal,
(Kumbrar)Patna, CA. Vivek Khanna - Chairman CICASA, CA. Ashok Kumar Pandey - Chairman Manoj Fadnis & Chairperson CIRC Kemisha Soni - flanked by Shripal Kothari - Br. Chairman
CICASA Patna Branch at CA. Student Regional Conference held on 23rd & 24th Dec. 2010 and others.’
 LICENCE NO. RO/KP/PC-47 DATED 30-10-2008 R. No. 33039/Registered : Misc-2/CPM/KPHO/09-09-11
POSTAGE PREPAID IN CASH Date of Posting 1st, 2nd & 3rd of Every Month

President & CIRC Chairperson meet with CA. Students at Lucknow. CA. Amarjit Chopra - From left : CA. Manu Agrawal - Treasurer of CIRC, CA. Vivek Khanna - Chairman CICASA CA.
President ICAI, CA. Kemisha Soni - Chairperson CIRC of ICAI, CA. Anuj Goyal - Central Council Kemisha Soni - Chairperson CIRC of ICAI, CA. Amarjit Chopra - President ICAI, Chief Guiest H.E.
Member, CA. Vivek Khanna - Chairman CICASA, CA. Rohit Bhalla - Chairman Lucknow Branch, Shri B. L. Joshi - Governor of Uttar Pradesh, CA. Raj Kumar S. Adukia - Council Member, CA.
CA. Shashank Mishra, Chairman CICASA Lucknow Branch at All India Conference held on 2nd Rohit Bhalla- Chairman & CA. Avichal S. N. Kanpur - Vice Chairman of Lucknow Br. of CIRC of
& 3rd December 2010 at Lucknow ICAI at All India Conference held on 2nd & 3rd December 2010 at Lucknow.

From Left : CA. Sheetal Jain, CA. Vijesh Khandelwal, CA. Manoj P. Khandelwal, CA. Vinod Jain - From Left : CA. Manu Agrawal - Treasurer CIRC, CA. Kemisha Soni - Chairperson CIRC, Chief
Chairman BOS, CA. Amarjit Chopra - President ICAI, CA. Kemisha Soni - Chairperson ICAI, CA. Guest CA. Nripendra K. Gupta - Past Council Member, CA. Umesh Garg - Vice Chairman CIRC,
CA. Ankush Golechha - Member CIRC & CA. Vivek Khanna - Chairman CICASA at Full Day
Vivek Khanna - Chairman CICASA of CIRC, CA. Manoj Fadnis - Council Member at National Seminar held on 07.12.2010 at Kanpur
Conference for CA. Students held on 18th & 19th December, 2010 at Indore

CA. Virendra Kalara presenting momento to CA. Amarjit Chopra - President ICAI, flanked with CA. Students Address by CA. Amarjit Chopra - President ICAI at National Conference for CA.
CA. Vivek Khanna - Chairman CICASA & CA. Pawan Gupta - Chairman of Dehradun Branch at Students held on 18th & 19th December, 2010 at Indore
felicitation function of President at Dehradun .

From Left : CA. Sunil Agrawal, CA. Hemant Arora, CA. Amarjit Chopra - President ICAI, CA. Address by CA. Amarjit Chopra - President ICAI
Vivek Khanna - Chairman CICASA, CA. Anurag Maheshwari at felcitation function of President From Left : CA. Vikas Sharma - Secretary Raipur Branch of CIRC, CA. Manoj Fadnis - Council
on 25.12.2010 at Roorkee. Member, CA. G. Ramaswamy - Vice President ICAI, CA. Bankim Shukla - Chairman Raipur Branch
of CIRC, CA. Anuj Goyal - Council Member & CA. Kemisha Soni - Chairperson CIRC of ICAI at CPE
Seminar - Raipur on 27.12.2010

Industrial Visit of CA IPCC students to automatic leather shoe manufacturing co. at Kanpur CA. Alok Agarwal - Treasurer Agra Branch of CIRC, CA. Deepak Khandelwal - Secretary Agra
jointly held by CICASA & KCA Society held on 20.12.2010 Branch of CIRC, CA. K G Agarwal - Chairman Agra Branch of CIRC, CA. Kemisha Soni -
Chairperson CIRC, Ms. Archana Ranjan - Commissioner (Income Tax) Agra, CA. Amarjit Chopra
- President ICAI, Dr. Shankar Katheria - M.P. Agra, CA. Ravindra Holani - Council Member, CA.
Umesh Garg - Vice Chairman CIRC at National Conference held on 24th & 25th
December,2010 at Agra
Disclaimer : The views and opinions expressed or implied in this Newsletter are those of the authors and do not necessarily reflect those of CIRC of ICAI.
Address : CIRC of ICAI, ICAI BHAWAN, 16/77 B, Civil Lines, Kanpur-208 001 • Phones : Chairperson : 3011151 • Mr. E. P. James, Sr. Assistant Secretary : 3011153 • EPABX :
(Reliance No.) 3989398 Fax : 3011193 • e-mail : circ@icai.in • Website : www.circ-icai.org
EDITORIAL BOARD :
CA. Kemisha Soni, Editor-in-Chief
CA. Ankush Golechha, Editor
CA. Manoj Fadnis, Council Member
CA. Vivek Khanna, Member
CA. Umesh Garg, Member
CA. O. P. Maheshwari, Member
CA. Nitin Vyas, Member
CA. Manish Dafria, Indore, Member
CA. Ashima Sukhani, Jodhpur, Member
CA. Dilip Gupta, Kanpur, Member
PUBLISHER & PRINTER :
Mr. E. P. James, Sr. Assistant Secretary on behalf of Central India Regional Council
of The Institute of Chartered Accountants of India, ICAI BHAWAN, 16/77 B, Civil
Lines, Kanpur - 208001 If undelivered please return to :
Phones : (0512) 3989398, 3011153, 3011181, 3011156; Fax No. : 0512 - Central India Regional Council of
3011193 • Gram : CIRCA, Kanpur; E-mail : cro@icai.in; circ@icai.in; •Website : The Institute of Chartered Accountants of India
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