JUNE 2019 ,ISSUE 06

THE INSTITUTE OF CHARTEREDACCOUNTANTS OF INDIA

( S E T U P B Y A N A C T O F P A R L I A M E N T )

OFFICE BEARERS: CA. Jaykumar N. Patil CA. Satish M. Mehta CA Nitin R. Nimbalkar Chairman Vice Chairman Secretary

CA. Rahul V. Adake CA M S Tigadi Treasurer SICASA Chairman

BELGAUM BRANCH OF ICAIE-NEWS LETTER

From the Desk of Chairman, Respected Members,

Greetings. At the outset I express my sincere thanks to all the members who have registered for GST Certificate Courseand undergoing the said course from 4th May 2019. Course is running efficiently and the speakers are alsogood. Feedback from participants has enthused the branch for conducting more of such events. Not to stop at this, we have planned a Residential Refresher Seminar at Goa from 21st to 23rd June 2019. Thetopics for this Seminar are of relevance. The speakers invited are of repute and their knowledge willdefinitely help the participants. I request all the members to kindly register in large numbers. This Seminaralso has a variety of activities for the family members of the participants. The program is designed to gainKnowledge and pleasure as well. The preparations for this seminar are in full swing.The events lined up are Workshop on Co-operative & NGO/NPO, DISA Course, Sporting events for membersetc.It is a proud moment for the citizens of Belagavi that our MP Shri Suresh Angadi ji has been honored withan important portfolio in the Union Cabinet Ministry as Ministry of Railways for the State. It was a greatmoment for all the members from the fraternity to honor him on his success. I thank all the members whogathered on a short notice to honor the minister at his residence. The Budget Amendment suggestions givenby us have been handed over to the minister who has in turn sent it to the Finance Ministry, New Delhi. Allsuch achievements are not possible without the support of my team and all you members. Committee for Capacity Building of Members in Practice (CCBMP) of ICAI has revised the minimumrecommended scale of fees for the professional assignments done by the Chartered Accountants, details ofwhich are provided in this newsletter. Members are requested to make the use of the same.  1st July is Chartered Accountants Day. To mark this occasion, various programs are being chalked out andwill soon be made known to you. Let us celebrate the forthcoming Platinum Jubilee CA Day with adifference. For this event I request the whole hearted support from Members. I look forward for more andmore knowledge enriching events and fun filled activities for the members and students in the days to come. Thanking You.With regards.CA Jayakumar N Patil

YA AESHUSUPTAESHUJAGRUTI 

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TECHNICAL PRECAUTIONS TO BE TAKEN WHILE FILING GSTR-9 & GSTR-9C

- CA TEJAS MEHTA

Dear Professional colleagues, We all have sighed a relief and welcomed the Removal of Difficulty (ROD) order no. 7/2019-Central Taxdtd 26.08.2019 extending the due date of filing form GSTR-9 and GSTR-9C from 31st August 2019 to30th November 2019. As per the CBIC Chairman Mr. Pranab K Das statement on 9th August 2019, noteven 1% of all the registered persons have filed Form GSTR-9C (Reconciliation Statement) and only 15%have filed GSTR-9 (Annual Returns) for the FY 2017-18 as per data available as on 3rd August 2019. One of the major reasons for this is various technical glitches faced by the professionals and registeredpersons in uploading the said forms. In this article, I would like to discuss the precautions to be takenfor ease of filing and uploading these returns. 1. System requirements for using offline utility of GSTR-9 & GSTR-9C: The most common mistake that a professional commits while carrying out GST audit is that he/shedoes not check the system requirements for carrying out smooth generation and uploading of the files.Following are the system requirements:

a. The Windows operating system (OS) must be version 7 and above.

b. With respect to MS Excel, it is mentioned on the GSTN portal, under the download’s tab of GSTR-9and GSTR-9C offline tools, MS Excel version 2007 and above is required. However, the utilities workonly MS excel version 2010 and above and not in version 2007.

c. Internet Explorer 10+ is required and JAVA 1.6 and above is prerequisite to be able to upload thejson file on the GST portal.

d. Once the latest Internet Explorer is downloaded, then the following changes are required to bemade in its setting.

Tools -> Internet Option -> Security -> Custom level -> Enable “Automatic prompting for Activecontrol” and also prompt “Download unsigned ActiveX Controls

e. Also make sure that GST website is added to trusted website and check antivirus settings also.

2. Digital signature Certificate (DSC) and GST emsigner: The next most common error that a professional faces is while digitally signing the form GSTR-9C. Inorder to avoid these errors, make sure the following things are followed:

a. Make sure that the DSC is PAN based and in format PKCS7. It must be valid and not corrupted. b. Download and install the latest GST emsigner from www.gst.gov.in

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3. Generation of json file from the Offline Utility: The main precautions to be taken while generating the json file of GSTR-9C offline utility is asfollows: a. When the offline utility is downloaded, 4 files are available in the folder. One of which is a ‘wsweb’file. Make sure that this file is saved in the same folder where the GSTR-9C offline utility is saved. b. The offline utility must be stored on the local disk of the system and not on the network. c. On clicking on the “Create json file” button on the home page of the offline utility, an internetexplorer pop-up opens. Click on “Allow block content” appearing on the bottom of the screen. Thenclick on “Initiate signing” button and then click on “open emsigner” button. d. Here, mostly the following error message is displayed “Please check the server connection1 (Objectevent)”. This occurs when the emsigner is not started. Therefore, kindly start the emsigner and run itas administrator and redo the above mentioned steps. Beware that no other application should berunning in the background while signing the json file. e. Once the json file is created, it must be saved in the same folder where the offline utility is stored.

f. Then upload the json file on the GST portal and proceed with the filing.

4. Mentioning of Chartered Accountant’s membership number: Once the json file is uploaded on the GST portal, many times an error report is generated but the same isnot available for download. One of the reason for this is error while mentioning of the CharteredAccountant’s membership number. The CBIC has mentioned in their guidelines that CA membershipnumber starting with ‘0’ (zero) must ignore the ‘0’ (zero) while mentioning it in the offline utility. For eg, if the CA’s membership number is ‘012345’, then he should mention the same as ‘12345’ in therequired cell and then generate the json file. This error is not highlighted while creation of the json file in the offline utility. I have tried to address the common technical issues with the possible solutions that I have come acrosswhile filing the forms GSTR-9 (Annual Returns) & GSTR-9C (Reconciliation Statement) for FY 2017-18. I hope this would help you save some time and energy (and also frustration to a certain extent).

Author can be reached at tjsmehta16@gmail.com

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Disallowance under section 40A (3) when income is estimated.Q: In the scrutiny assessment of assessment year 2016-17, the Assessing officer rejected the books of accountand estimated income at 6% of the total turnover. Besides such estimation, he referred to the books anddisallowed expenses which were incurred in contravention of section 40A (3) . Also, he applied disallowanceunder section 40(a) (ia). Is such an assessment valid in law? A: From the facts given by you, it is obvious that the Assessing Officer has found some defects in the books of accountand rejected then. It seems that the taxpayer has no grievance as regards the rejection of books of account. The AssessingOfficer estimated the income @ 6% of the total turnover. Here the Assessing Officer has to give some reasons for adoptingthe said rate of 6% It could be an intra-year comparison of income of the assesses or the normal trend  of similar businesscarried out by other taxpayers and justifying the same in the assessment order. In case the taxpayeris having turnoverbelow Rs. 200 lakhs, Assessing Officer may take note section 44AD and justify the adoption of 6% for estimating theincome. The Action of Assessing Officer in rejecting the books of account is debatable and contestable. After having rejected thebooks the  Assessing Officer cannot advert to the same books of account for applying disallowance under section  40 A(3)or section 40 (a) (ia). Hence, the action of the Assessing Officer in rejecting the books for making further upward revision ofincome is not tenable in law. However, the Assessing Officer is justified in taking note of the factual aspects as regards Non-deduction of tax atsources under section 40(a)(ia) which could be used by the tax authorities for penalizing the assesses for not following theprovision of Chapter XVII-B  viz., TDS provision , which is independent and separate from determination of income andassessment.

Tax on income Surrendered during Survey Q: A survey was conducted in our firm’s premises. During the course of survey, it was concluded that there isundervaluation of stock by Rs.30 lakh as on 31.03.2017 and a statement was recorded on oath. We filed a revised returnfor the assessment year 2017-18 and admitted the closing stock with enhancement in value of Rs.30 lakhs. Wecomputed working partner‘s salary and interest capital on resultant net profit / book profit. In the assessment, theAssessing Officer says that the amount admitted is taxable under the head ‘Other Source’ and is not eligible fordeducting working partner’s salary and interest on capital. Please advise us. A: From the facts given by you it could be inferred that there was no unaccounted stock or purchase. It is a case ofundervaluation of stock. Probably, the year –end purchase is not matched by sales and yet was not shown as closing stock.Such increase in closing stock would be tax neutral as that would become the opening stock of the subsequent year. Aclear destination is required to be maintained in understanding the unaccounted purchase (Stock) Vis-a-Vis theundervalued stock. The unaccounted stock would altogether stand on a different footing in view of section 115 BBE.The increase in the closing stock and the resultant increase in net profit will not deprive the benefit of working partner’ssalary and interest on capital subject to limits and other condition as may be applicable. The view of Assessing Officer totax the undervalued closing stock as income under the head ‘Other Sources‘is also not tenable in law.

FREQUENTLY ASKED QUESTIONS

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EVENTS IN IMAGES02-05-2019 – RECENT DEVELOPMENT IN TAXATION OF

CO-OPERATIVE AND SOUHARDA CO-OPERATIVE.

EVENTS IN IMAGES04-05-2019 TO 02-06-2019 – GST CERTIFICATE COURSE.

EVENTS IN IMAGES13-05-2019 – CPE SEMINAR ON GST ANNUAL RETURNS AND AUDIT REPORTS.

EVENTS IN IMAGESORIENTATION PROGRAMME FOR NEWLY ELECTED MANAGING COMMITTE AT KOCHI.