ICAI raises four major issues

Posted on    15 May 2009

CA. Uttam Prakash Agarwal, President, ICAI issues Press Release on 4 major issues




Last week, the High Powered Committee set up by the Council of the Institute of Chartered Accountants of India, had sought certain details/information from 12 CA firms having affiliations with international entities. Today, CA. Uttam Prakash Agarwal, Chairman, High Powered Committee (currently President of ICAI) has written to 11 more CA firms asking them to furnish following details and information:


a.         Agreement/contract with the multinational entity


b.         Terms and conditions for usage of name of multinational entity


c.         Arrangement for sharing of fees/profit with other Indian CA firms with similar/identical name and with the multinational entity


d.         Arrangement for sharing of human resources and infrastructure with other Indian CA firms with similar/identical name and with the multinational entity


e.         Details of remittances made to and received from the multinational entity


f.          Partnership deed


g.         Income-tax assessment orders for the last 3 years. If assessment orders have not been received, then they may submit computation of income and copies of returns.


h.         Copies of letterheads and visiting cards generally used.


With this, the total number of firms being asked to furnish information has gone up to 23.


The details have been sought in the backdrop of a meeting held with the Ministry of Corporate Affairs sometime back, wherein many issues were discussed, including those relating to public image about auditor’s role, manner in which surrogate firms hold out to the public, use of international brand name and host of other related issues.


The Committee will deliberate on the responses received and formulate its recommendations to be submitted to the Council shortly.


It may be recalled that pursuant to disclosure of financial irregularities in Satyam Computers Services Ltd. by its then Chairman, the Council of ICAI had constituted a High Powered Committee under the Chairmanship of CA. Uttam Prakash Agarwal (currently President of ICAI) to look into the entire gamut of financial reporting, accounting and auditing aspects with regard to Satyam fiasco, including helping/coordination with the investigation being carried out by various agencies, going into the roots of the problem, effectiveness of the system in place, systemic issues; to identify the root causes including persons involved/associated; and to suggest change(s), wherever required, for the purpose of making appropriate recommendation(s) to the Central Government, SEBI and other Regulators.




The Institute had initiated disciplinary action in the matter of GTB for the years 2000-01, 2001-02 and 2002-03. The hearing for the years 2000-01 and 2001-02 has been concluded and the reports have been included in the agenda of the meeting of the Council for its consideration. In the first year, namely, 2000-01, the Respondents have sought adjournment and accordingly the same would be most likely taken in the forthcoming Council meeting(s).


The hearing for the year 2002-03 has been concluded by the Disciplinary Committee of ICAI on 23.03.2009. Thereafter, the Respondents have filed a writ petition in the Mumbai High Court. The Hon’ble High Court has passed its order which is under examination and further course of action to be taken by the Disciplinary Committee would be intimated in due course of time.


III.   ICAI seeks clarification from CBDT regarding TDS challan to be filled in Form No. 17 or 281


The Income-tax Rules relating to time and mode of payment to Government account of -


(1) tax deducted at source; or


(2) tax paid under Chapter XVII-B; or


(3) tax collected at source under Chapter XVII-BB


have been amended vide the Income-tax (8th Amendment) Rules 2009 with effect from 1st April, 2009.


The two significant requirements arising as a consequence of such amendments are as follows –


(1) The new Rules [namely, Rule 30(4) and Rule 37CA(2)], inter-alia, mandatorily require the person responsible for making deduction, or payment of tax, under Chapter XVII-B, and the person responsible for making collection under Chapter XVII-BB, to electronically furnish an income-tax challan in new Form No.17 within the specified time.


(2) Further, new Rules 30(1)(b) and 37CA(1) provide that all sums deducted in accordance with the provisions of Chapter XVII-B and all sums collected in accordance with the provisions of Chapter XVII-BB should be paid to the credit of the Central Government within one week from the end of the month in which the deduction or collection is made.


From a combined reading of both the requirements [i.e. (1) and (2)] above, it is clear that remittances have to be made by the 7th of the succeeding month in new Form No.17. Therefore, the tax deducted and collected during the month of April, 2009 have to be remitted latest by 7th May, 2009 in new Form No.17.


However, the new Form No.17 has not yet been uploaded in the payment gateway on the site www.incometaxindia.gov.in. Only the old challan 281 is available on the website.

In this regard Institute of Chartered Accountants of India has sought clarification from the CBDT as to whether remittances can be made using the old challan No. 281. This clarification has been sought on an urgent basis since the new rules make it mandatory to furnish income-tax challan in new Form No.17 and only two more days are available to comply with this requirement.


IV.   Cases Referred by FRRB to Regulatory Authorities


The Financial Reporting Review Board was established in July 2002 as a non-standing Committee of the Council of the Institute with a view to bring an overall improvement in the quality of services being rendered by the members of the profession.


Accordingly, it may be mentioned that till March 2009, the FRRB has taken up the review of 199 companies, out of which it has decided to file 32 cases, refer 77 cases to the Director (Discipline) of the Institute and 80 cases to the relevant regulators viz. MCA, SEBI and RBI.



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