CC April 2012

Consultants’ Corner Volume 5 | Number 68 | April 2012 | Page 1– 12

Innovation Fortnight Your participation solicited!

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Suresh CS

Finance Bill 2012 – was it a “Retrospective” exercise?

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NCR Consultants Limited www.ncrcl.com An Associate of

Our Mission is to apply our professional capabilities with a holistic approach for the happiness of clients, through values and social commitment.

Finance Bill 2012 – was it a “Retrospective” exercise?

Inside

Basically, budget is an annual exercise that takes into account the year gone by and plans for the financial year ahead. Lo! The budget presented by our FM Pranab Mukherjee this year can be coined as a “Retrospective” budget with 24 retrospective amendments to various direct and indirect tax laws.

-read more...page 4

Events of March

see more..page 8

Risk and Insurance Management Consulting Services The expression “consulting services” defines services of an intellectual and advisory nature provided by consultants using their professional skills to study, design, ……. read more..page 6

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Message from Dr. RSM

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Finance Bill 2012 – was it a “Retrospective” exercise?

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Risk and Insurance Management Consulting Services

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Mystery Murder! Find out who is the victim and who is the Culprit - What a Awesome Coincidence!

8 What’s up at NCRCL? 9 An Exclusively Talk 10 Parichay 11 Knowledge Snippet 11 Birthday Greetings 11 Just for Laughs 11 Round Table An Exclusively talk with Pradeep see more..page 9 Parichay Karnataka Institute of Public Auditors

CC has a new look!!

see more..page 10

CC is another year old and it is that time of the year for CC to don a new look.

New Sections like 'Parichay' and 'Round Table' have been introduced and some of your favourite sections have been given new names. CC is now published as an e-newsletter which you can view online and perform tasks like clicking on hyperlinks, zooming, turning pages and so on.

Thanks to all who have contributed to the new look of CC. As always the editors invite you to send in your feedback on the new CC. You can now send in your feedback to our new email 'cc@ncrcl.com'.

P. S: You will need Adobe Flash Player to read the e-newsletter. Adobe Flash Player can be downloaded freely from the web. If you have any difficulty in viewing the e-newsletter, please contact the editors.

Consultants’ Corner

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Going to the next level - the Innovation Fortnight !!!

Dr.R.S. Murali muralirs@ncrcl.com

This being the first week of the financial year 2012-13, we need to take stock. Take stock of everything that is official, personal and also that are common to all of us. One third of our life we all are spending together and so we need to be very clear about what we need to do the next year, which starts from this Sunday.

For the last three years, we have been working at various things, we have treaded upon new areas with good success, we have acquired new clients, we have got new set of youngsters who are committed, we have upgraded our technology, the works of our staff are getting published, we have made our values get noticed by others, etc. But in terms of our overall performance we are still in the same bracket. While the credit goes to all of you for having consolidated various specialized works we do at NCRCL, I would say that we have not taken off in a big way as we should have.

There are several reasons for the same; but I know one strong reason for this: it is me. Yes, I feel that I might not have contributed in areas which I should have.

When I look back, and take stock, I feel I am still part of delivery and quality control. I am not real time into strategy or marketing. Though we need not do hardcore marketing for the type of work we are churning out, we need to increase the visibility of NCRCL in industry and professional circles. For this I need to be sure and clear that all the works are being handled correctly and professionally. This is important for us to go to the next level!

Going to the next level means so much: in thought, word and deed. We now need to think big, we need to speak big and we need to act big; big not just quantitatively but qualitatively also. For this we need to establish our name in the market visibly. We need to be seen, heard and felt more by the market. This requires a lot of creative approaches. Our size is not an issue. A thirty-five member consultancy organization is definitely not tiny, it could be between small and medium.

Only innovation can help us to move to the next level.

In the next two weeks i.e. between 1st of April and 14th of April, we will have “Innovation Fortnight” (IF) so that there is no ifs and but in our future! I expect from you creative ideas that will scale us up to the next level in a positive way without compromising on our values or our work culture. The best ideas will be rewarded.

Wear your thinking cap! Awaiting innovative ideas from every one of you!

A work of art is a gift, not a commodity.

Where there is no gift, there is no art.

-Lewis Hyde

Consultants’ Corner

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Finance Bill 2012 – was it a “Retrospective” exercise?

-Suresh C S sureshcs@ncrcl.com

Now, it is clarified that persons engaged in specified professions or carrying out agency business or earning income in the nature of commission or brokerage will not be eligible to avail this presumptive tax regime. This amendment will take effect retrospectively from 1 April 2011.

The basic meaning of the word “Retrospective” as per dictionary is: “Looking back on, contemplating, or directed to the past; Looking or directed backward.”

Basically, budget is an annual exercise that takes into account the year gone by and plans for the financial year ahead. Lo! The budget presented by our FM Pranab Mukherjee this year can be coined as a “Retrospective” budget with 24 retrospective amendments to various direct and indirect tax laws. This is a record of sorts when compared to 5 such amendments in the 2011 budget. Normally when such amendments are introduced it relates back to a period of couple of years at the maximum. However, this year, there are quite a few which goes deep into the past and some key ones to periods as early as 1962 when the IT Act 1961 was conceptualized for the first time under the Republic India.

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6. Taxation of transactions without consideration or for inadequate consideration

Amendment to definition of “Commissioner”

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Presently, any sum or property, the aggregate value of which exceeds INR 50,000 in a year, received by an individual or HUF without consideration is taxable in the hands of the individual or HUF unless it is received from a “relative” as defined under the Income-tax Act. The definition of the term “relative” has been amended to include members of the HUF. This amendment will be effective retrospectively from 1 October 2009.

Denial of exemptions to charitable organizations in certain cases An activity in the nature of trade, commerce or business in the sphere of advancement of general public utility carried out by a charitable organization is not regarded as charitable purpose if the gross receipts from such activities exceed INR 2.5 million in that financial year. It is now clarified that such a charitable organization will not be entitled to a tax exemption in such financial year even if the approval granted to the charitable organization is not withdrawn. This amendment will be effective retrospectively from 1 April 2009.

Presumptive tax regime for small businesses not applicable to specified professionals and businesses

Cost of acquisition in case of certain transfers Presently, for the purpose of capital gains, there is no reference with regard to the cost to be taken for assets which are acquired pursuant to succession of a sole proprietary concern or firm in a company not regarded as transfer. Now, in such cases, the cost of acquisition of asset in the hands of the company will be same as that in the hand of the sole proprietary concern or the firm. This amendment will be effective retrospectively from 1 April 1999.

The definition of “Commissioner” will also include Director of Income-tax. This amendment will be effective retrospectively from 1 April 1988.

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Now, it is provided that the hotel owner will be considered to have been carrying on specified business, even if it transfers the operation of such hotel to another person. This amendment will be effective retrospectively from 1 April 2011.

This article highlights few of the key retrospective ones ventured by our FM this year: 1.

100% deduction for capital expenditure engaging in building and operating a hotel

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Order in respect of assessee in default for withholding tax.

-cont‟d on next page

Wisdom is a love affair with questions.

Knowledge is a love affair with answers.

-Julio Olalla

Consultants’ Corner

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Time limit for passing order for deeming an assessee to be in default of withholding tax from payments to resident payees is increased from four years to six years. This amendment will be effective retrospectively from 1 April 2010.

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10. Examination of transactions not referred to Transfer Pricing Officer TPOs empowered to examine additional international transactions (which were not formerly referred by the Assessing Officer), if identified subsequently in the course of proceedings before him provided such international transactions were not reported by the taxpayer. No reopening of any proceedings would be undertaken only on account of such amendment. This amendment will be effective retrospectively from 1 June 2002.

11. Time limit for assessment in search cases referred to Dispute Resolution Panel The time limit for completion of assessment under DRP provisions shall override the time limits applicable for assessment in case of search and seizure. This amendment will be effective retrospectively from 1 October 2009.

12. Specific amendments to section 2(14), 2(47) and 9 keeping in mind the Historic Supreme Court Judgment which turned out to be big blow to the exchequer to the tune of Rs. 11,000 crores of tax demand on Vodafone by IT department:

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“Explanation 4: For the removal of doubts, it is hereby clarified that the expression “through” shall mean and include and shall be deemed to have always meant and included “by means of”, “in consequence of” or “by reason of”.”

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“Explanation 5: For the removal of doubts, it is hereby clarified that an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share of the interest derives, directly or indirectly, its value substantially from the assets located in India.” Both these explanations are being introduced to take care of the loophole in definition of “transfer of an asset” under section 9.

 Methods, programmes, systems, procedures, forecasts, customer lists etc;

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 Data processing, engineering, customer, contract, human capital related intangible assets;

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“Explanation 2: For the removal of doubts, it is hereby clarified that “transfer” includes and shall be deemed always to have included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterized as being effected or dependent upon or flowing from the transfer of a share or shares of a company incorporated outside India.” This amendment is to take care of the loophole in definition of “transfer” under section 2(47).

 Marketing, technology, artistic related intangible assets;

The above amendment will retrospectively from 1 April 2002.

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The term intangible property has been introduced to include all kinds of:

 Any other similar item that derives its value from its intellectual content rather than its physical attributes.

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“Explanation- For the removal of doubts, it is hereby clarified that „property‟ includes and shall be deemed to have always included any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever” This amendment is to take care of the loophole that “controlling interest” is not a Capital Asset as per sec 2(14).

Definition of intangible property

 Location and goodwill related intangible assets;

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Meaning assigned to a “term” used in Double Taxation Avoidance Agreement The Central Government is empowered to assign a meaning to any “term” used in a DTAA by way of a notification if such term has not been defined in the DTAA or in the Income-tax Act. It is clarified that such notified meaning of the term will relate back to the date on which the DTAA came into force. This amendment will be effective retrospectively from 1 October 2009.

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All the above amendments to sections 2(14), 2 (47) and 9 are with retrospective effect from 1 April 1962.

At this rate, a day is not far off when we can witness a budget session in which our Finance Minister decides to amend the definition of the term “Retrospective” with retrospective effect!

Walk around feeling like a leaf. Know you could tumble any second. Then decide what to do with your time.

-Naomi Shihab Nye

Consultants’ Corner

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Risk and Insurance Management Consulting Services Pradeep Kumar pradeepkumar@ncrcl.com

The expression “consulting services” defines services of an intellectual and advisory nature provided by consultants using their professional skills to study, design, and organize specific projects, advise clients, conduct training, and transfer knowledge. Borrowers engage consultants principally for the following reasons:  Consultants offer Borrowers a more efficient allocation of resources by providing specialized services for limited amounts of time without any obligation of permanent employment on the part of the Borrower.  Consultants, engaged for their superior knowledge, transfer skills and upgrade the knowledge base of their client while executing the assignment. Knowledge transfer from consultants to the Borrower often forms an important part of the assignment.  Consultants can offer independent advice to their client on the most suitable approaches, methodologies, and solutions for their projects.

Consulting services in Insurance domain should satisfy the following requirements:  Meet the highest standards of quality and efficiency;  Be unbiased, that is, delivered by a consultant acting independently from any affiliation, economic or otherwise, which may cause conflicts between the consultant‟s interests and those of the client; and  Be proposed, awarded, and executed according to the ethical principles of the consulting professions.

Types of Consulting Services currently used in Insurance Related projects may be grouped as follows: Preparation services Sector studies

Project services Implementation services Tender documents

Advisory services Policy and strategy

Master plans

Procurement assistance

Reorganization/privatization

Feasibility studies

Construction supervision

Institution building

Design studies

Project management

Training/knowledge transfer

Quality management

Management advice

Commissioning

Technical/operating advice

Poorly handled insurance can have disastrous consequences, but few people who enjoy dealing with insurance issues or feel qualified to do so are Risk and Insurance Management Consultants. They provide clients with the expertise needed to make informed decisions about insurance-related problems. While acting as a consultant on an account, the person should avoid playing the role of an Insurance broker or captive agent.

The Service

Functions

Audit the client‟s risk exposures and insurance pro-

Exposes uncovered risks and uncompetitive

gram

Premiums. Recommends ways to reduce claims so that the client can reduce costs. Determines when there are better solutions than purchasing insurance -cont‟d on next page

Service doesn't start when you have something to give - it blossoms naturally when you have nothing left to take.

-Nipun Mehta

Consultants’ Corner

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Prepare specifications for an insurance bidding

Ensures that the client is provided the most desirable coverage and that all insurers are providing quotations on the same basis so that the client can make informed decisions

Analyze self-insurance options

Determines which type of insurance program is advantageous from a captive, pool, high deductible or other self-insurance program

Analyze proposals and recommend the best program

Frees the client of this time consuming, conflict ridden and maddeningly complex task

Review insurance programs for possible mergers and acquisition

Determines if the insurance and risk management program of a possible merger/acquisition target exposes the client to hidden liabilities

Mystery Murder! Find out who is the victim and who is the Culprit - What a Awesome Coincidence!

Lakshminarayanan M N Lakshmi.n@ncrcl.com

At the 1994 Annual Awards dinner given for Forensic Science(AAFS), President Dr. Don Harper Mills astounded his audience with the legal complications of a bizarre death.

Here is the story: On March 23, 1994 the medical examiner viewed the body of Ronald Opus and concluded that he died from a shotgun wound to the head. Mr. Opus had jumped from the top of a 10-storey building intending to commit suicide. He left a note to the effect indicating his despondency.

As he fell past the ninth floor, his jump was interrupted by a shotgun blast passing through a window, which killed him instantly. Neither the shooter nor the deceased was aware that a safety net had been installed just below the eighth floor level to protect some building workers and that Ronald Opus would not have been able to complete his suicide the way he had planned.

The room on the ninth floor, where the shotgun blast emanated, was occupied by an elderly man and his wife.

They were arguing vigorously and he was threatening her with a shotgun! The man was so upset that when he pulled the trigger, he completely missed his wife and the pellets went through the window, striking Mr. Opus.

When one intends to kill subject „A‟ but kills subject „B‟ in the attempt, one is guilty of the murder of subject „B.‟ When confronted with the murder charge, the old man and his wife were both adamant, and both said that they thought the shotgun was not loaded. The old man said it was a long- standing habit of his to threaten his wife with the unloaded shotgun.

He had no intention to murder her. Therefore, the killing of Mr. Opus appeared to be an accident; that is, assuming the gun had been accidentally loaded.

The continuing investigation turned up a witness who saw the old couple‟s son loading the shotgun about 6 weeks prior to the fatal accident. It transpired that the old lady had cut off her son‟s financial support and the son, knowing the propensity of his father to use the shotgun threateningly, loaded the gun with the expectation that his father would shoot his mother.

Since the loader of the gun was aware of this, he was guilty of the murder even though he didn‟t actually pull the trigger. The case now becomes one of murder on the part of the son for the death of Ronald Opus.

Now for the exquisite twist…

Further investigation revealed that the son was, in fact, Ronald Opus. He had become increasingly despondent over the failure of his attempt to engineer his mother‟s murder. This led him to jump off the 10 storey building on March 23rd, only to be killed by a shotgun blast passing through the ninth storey window. The son, Ronald Opus, had actually murdered himself.

So the medical examiner closed the case as a suicide.

This is a true story from Associated Press.

Most powerful is he who has himself in his own power.

-Seneca

Consultants’ Corner

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What’s up at NCRCL? Article by Ashok Rao and U. S Mohanty on 'XGRL: XBRL for reporting in Government' is published in The Chartered Accountant magazine March 2012 issue. See the full article at: http://www.ncrcl.com/ assets/264/XGRL-XBRL%20for%20Reporting%20in% 20Gover nment_CA%20Journal _Mar%202012. pdf

Rekha Murali's views on 'Is the celebration of women's role at workplace limited to women's day?' was published in an article in The Hindu. See the full article at: http:// www. t hehi ndu. com/todays - paper/t p -f eatur es/ t p opportunities/article2968214.ece

Rekha Murali and Dr. R S Murali were invited as chief guests for the inaugural and valedictory functions respectively of “Concurrence”, an inter departmental academic meet at Swami Vivekananda College on 15th & 20th March 2012.

"RSM And Kishore visited Malaysia for valuation of a palm oil plantation.

A fire fighting demo was conducted on March 13, 2012 at our Chennai Office. An expert took the employees through a detailed demonstration on various types of fires caused and types of extinguishers used for each type of fire. The employees were allowed to individually douse the fire using the extinguishers.

Welcome!!

Sandhya M H joins NCRCL® Bangalore as Project Executive.

We extend a very warm welcome to Sandhya!

If you're really mind-full, and if you underline that aspect of fullness, wholeness, or wholeheartedness, it reveals the gift character of everything.

Consultants’ Corner

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An Exclusive Talk with Pradeep

Rajendran Pradeep Kumar B.Com (Bank Management). MLFSCM, Dip. BPR Working as Consultant Trainee Born on 9th April Email: pradeepkumar@ncrcl.com Mob No: +91 9500114478

CC. The meaning of your name.

Pradeep: 'Light, lantern; glory'.

CC. Nickname.

Pradeep: Pradi* CC. Your dream job.

Pradeep: Risk Analyst

CC. Team work vs Individual work – your comments.

CC Your first impression of NCRCL.

Pradeep: It depends on situations

Pradeep: Simple and organized work space and network.

CC. Do you make efforts to get others to laugh and smile?

CC. What personal/emotional characteristic of yours do you want to change?

Pradeep: Tendency to get carried away by others words.

CC. Money or job satisfaction?

Pradeep: Job satisfaction CC. Your Stress buster.

Pradeep: Social networking CC. Do you have a small circle of close friends, rather than a large number of friends?

Pradeep: Yes I Do CC. Your heart rules your head or your head rules your heart?

Pradeep: Head rules my heart CC. What kind of special talent you have?

Pradeep: Photography and video presentation CC. What are your hobbies?

Pradeep: Blogging, travelling

Pradeep: Small circle CC. What do you most like about a person?

Pradeep: Knowledge sharing CC. What do you most hate in a person?

Pradeep: Corruption and not abiding laws

What we need is more people who specialize in the impossible.

-Theodore Roethke

Parichay

Know our Associates!

Karnataka Institute of Public Auditors KIPA is an association of retired officers of Karnataka State Accounts Department formed in 2001-02. The Controller, State Accounts Department is the Chief Patron of the Institute. The members of the institute have rich experience in the audit of government departments, local bodies & autonomous institutions and in training the employees of government departments and local bodies.

KIPA has people with more than three decades experience in various government departments at different levels.

KIPA specializes in the field of accounts and audit of government departments, local bodies, public undertakings and other government organizations. KIPA has also advised government departments on policy and administration matters. KIPA has executed a number of consulting assignments for The Controller, State Accounts Department, Directorate of Municipal Administration, Expenditure Reforms Commission, PWD and Finance Department, Government of Karnataka and Karnataka State Pollution Control Board.

NCRCL速 and KIPA have signed a Memorandum of Understanding to jointly undertake consultancy assignments including research and training in the government sector. In this regard, a team from NCRCL along with KIPA is now working on capacity building project for Taluk Panchayats in Karnataka as well as preparation of finance and accounting manual, and audit manual for Karnataka State Pollution Control Board.

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Knowledge Snippet Which is the river which carries maximum quantity of water into the sea?

Send in your answers to the editor at cc@ncrcl.com

The right answer was given by Answer To last month’s Knowledge Snippet question: Which company delivered the first ever Android phone and also the first ever 4G phone?

R Bhavana

!!! Congratulations !!!

Answer: HTC (High Tech Computer Corporation) First android phone – HTC Dream First 4G phone – HTC sprint )

Round Table A section to elicit readers‟ opinions on various matters!

Topic of the month What would be a change that you want to see immediately implemented at NCRCL ?

Send you comments to cc@ncrcl.com For feedback If you have any comment/suggestion for the editors, please write to us at cc@ncrcl.com Your views and comments on articles featured here are also welcome!

Happy Birthday!

Ha Ha Ha !!!

CC wishes many happy returns of the day to the April born.

R Pradeep Kumar - 9st April

Lakshminarayanan M N - 21st April

Kishore D - 28th April

We can chart our future clearly and wisely only when we know the path which has led to the present.

-Adlai E. Stevenson

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Contact

Registered Office: 2nd Floor, New No. 4, Old No. 23, C P Ramasamy Road, Alwarpet, Chennai - 600 018 Ph: +91 44 2466 0955 Fax: +91 44 4218 5593 Email: chennai@ncrcl.com

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