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ARTICLE MAY 2010

Code of Ethics for Members - Recent Decisions of the Ethical Standards Board
CA K.Raghu
Vice Chairman- Ethical Standards Board

Issue Regulations, 1988, and is, therefore permitted.


Whether an auditor of a Subsidiary Company can be a Issue
Director of its Holding Company Whether a Chartered Accountant firm can accept Branch
Decision Audit of a Bank when a partner has taken a loan from any
other Branch of the same bank.
The auditor of a Subsidiary Company cannot be a Director
of its Holding Company, as it will affect the independence of Decision
an auditor Independence of Auditors can neither be diluted nor any
Issue scope be left for dilution in the perception of stakeholders.
The term 'indebtedness 'must continue to be a qua an entity
What is the meaning of expression "Director Simplicitor"?
and not qua branch.
Decision
Issue
"Director Simplicitor" shall be constructed as ordinary /
Whether a firm of Chartered Accountant can print special
non-executive Director.
words 'celebrating 75 years in profession' on the letter heads
Issue and envelopes.
Whether members of ICAI practicing as an Advocate, can Decision
use CA Logo on his professional stationary.
No, as it will lead to the solicitation of professional work and
Decision result in violation of clause (6) & (7) of Part 1 of First
It is not permissible, as it appears to be unethical. Schedule to the CA Act, 1949.
Issue Issue
Whether a member in industry can print his letterhead for Whether the CA Logo can be used on professional letter
communication with ICAI or any other person. head as header for the presentation material put before the
prospective investors.
Decision
Decision
It is permissible, however such member using the
designation of 'Chartered Accountant' cannot use any other It is not permissible as it amounts to solicitation of
designation, whether in addition or in substitution thereof. professional work.
Issue Issue
Whether a CA Director of a Company should participate in a Printing of Rotary visiting card and the use of the
Board Meeting when the item relating to his client(s) is being designation (District Governor) therein.
considered by the Board. Decision
Decision The member who is in practice cannot use the designation
Based on an ethical point of view, the member should of 'District Governor' in his Rotary visiting card along with
withdraw himself from such a meeting. the term 'Chartered Accountant'.
Issue Issue
Whether a member holding Certificate of Practice can own Whether a member can take up the membership of
Agricultural Land and continue agricultural activity. Association of Mutual Funds in India (AMFI).
Decision Decision
Owning Agricultural Land and carrying out Agricultural The member may pursue such course and become a
activities by a member holding Certificate of Practice is member of the Association but he cannot register with it.
covered under activities "Permission Generally Granted" This restriction will be applicable to the members who are
under Appendix (9) of the Chartered Accountants holding COP, whether part-time or full- time.

NEVER FEAR SHADOWS.... THAT ALWAYS MEANS THERE IS A LIGHT SHINING SOMEWHERE 4
ARTICLE MAY 2010

Issue undertake from amongst:- Tax Audit, Tax representation,


Whether a Member or firm is allowed to design it's own Consulting, Advisory, IFRS conversion, Sox Certification,
Logo? If not, can the name of the firm/ 1st initial of the name designing of system, resource raising, day to day support to
of the firm be written in a different style. sourced business processes.

Decision Decision

This kind of stylish Initials is prohibitive as it will deem to be  Tax Audit and Sox Certification can be done only
a logo, since the logos have already been prohibited by the by the Statutory auditor
Council.  Designing of internal control systems and day to
Issue day support to outsourced business processes can
be done only by internal auditor.
Whether a Member can get his firm listed with a telephonic
service provider, if the service provider is not charging  Tax Representation, Consultancy, Advisory, IFRS
anything for the listing. Conversion and resource raising can be done by
both.
Decision
Issue
Members may avail the Just Dial services within the
guidelines laid down by the Council. Can the Institute ban the Quotations/Bids invited from
Chartered Accountants regarding empanelment for Audit work
Issue by Govt. Companies/Organizations/ PSU's/ Corporations.
Whether concurrent auditor of a bank can also undertake Decision
quarterly review of the same Bank.
Institute cannot interfere as the C A Amendment Act, 2006,
Decision has specifically allowed Chartered Accountants in practice
The Concurrent Audit and the assignment of Quarterly to respond to the tenders vide proviso(ii) to clause 6 of Part
review of the same entity cannot be taken simultaneously, I of schedule to the Chartered Accountants Act, 1949.
since Concurrent Audit is in the nature of an internal audit Issue
and the Quarterly review is in the nature of a Statutory Audit.
A member cannot undertake simultaneously since it is Whether internal auditor of an entity can be appointed as
prohibited under the provisions of 'Guidance Note on Tax Consultant of the same entity for a particular year.
Independence of Auditors'. Decision
Issue An internal auditor of an entity may be appointed as Tax
What role can a Statutory auditor and Internal auditor Consultant of the same entity for a particular year.

SALES TAX COURT


Compiled by : CA Saraf Satish

SALE TO EXPORTER NOT SALE IN COURSE OF EX- Globules (Sugar Pills) to be classified as Sugar and exempted
PORT: from tax.

Raw materials purchased from a dealer by manufacturer and Ramakrishna Homeo Pharmacuticals PVt. Ltd Vs. State of
in term the finished products are exported. Exemption on A. P. (2010) 50 APSTJ 36 (STAT, Hyd)
purchases is not permitted under section 5 of CST Act, 1956
SALE PRICE:
because the raw materials are not exported in the same form.
The amount relatable to the value of silver content and the
Neeru Interprises Vs. Deputy Commissioner (Asst.)-II (2010)
battery container which is deductible from the sale value of
29 VST 225 (ALL)
the new batteries forms part of 'sale price' and forms part of
SUGAR PIILS USED FOR HOMEOPATHIC MEDICINE: taxable turnover liable to tax.

Globules (Sugar Pills) which are prepared by Sugar mixed HBL Nife Power Systems Ltd Vs. State of A. P. (2010) 50
with syrup, which contain 99% Sugar and is soluble in wa- APSTJ 1 (STAT, Hyd)
ter, which is used as a medium for homeopathic medicine.

THE ROOTS OF EDUCATION ARE BITTER, BUT THE FRUIT IS SWEET. 5


ANNOUNCEMENTS MAY 2010
that the VAT registration certificate of the dealer is cancelled,
RMC:
though the fact, it is in existence.
The contract for manufacture, transportation, spreading and
Yellanki Rajesham Vs. State of A. P. (2010) 50 APSTJ 149
quality check of the RMC is an indivisible contract. Only
(STAT, Hyd)
the RMC manufacturer has the expertise to transport RMC
mixed with required solvents witch will prevents its VAT UPDATE
premature setting and hardening. Therefore, the freight and
ITEM NO: 125 OF SCHEDULE - IV OF APVAT ACT, 2005.
the pumping charges for transpiration of RMC to the site of
the customer is a pre-sale expenditure liable to tax. The Government of Andhra Pradesh, vide G.O.Ms. No: 361,
Dated: 24-04-2010, with effect from 01-09-2005, inserted a
Larson & Turbo Limited Vs. State of A. P. (2010) 50 APSTJ
new entry No: 125 in Schedule IV of APVAT Act, 2005,
123 (STAT, Hyd)
taxable @ 4%, the entry is: "125. Lime, Burnt Lime, Lime
INPUT TAX CREDIT: Stone, Products of Lime, Dolomite and other White washing
materials including Cem Powder other than White Cement."
Input Tax Credit can not be redistricted on the assumption

ANNOUNCEMENTS
Multipurpose Empanelment Application Form for the year 2010-11 would be hosted on www.meficai.org
as per following schedule:

Hosting of on line MEF application form for the year 2010-11 on the website 1st May, 2010
www.meficai.org
Last date of submission of the MEF form for the year 2010-11 15th June, 2010 (05.30 PM)
Last date of receipt of duly signed declaration 30th June, 2010

Certificate Course on
IFRS IN HYDERABAD STARTS ON 14TH MAY 2010
for details contact Hyderabad Branch Ph : 30638600

ISA: Next batch proposed to commence on 15th May 2010


For detailed schedule and venue contact Branch - 30638600
or
CA China Mastan T, Coordinator ISA phone: 9849864289

Appointment of ISA Qualified Members for Review of ITT Centres of


ICAI - (07-04-2010)
see Institutes website for details.
For application follow this link : http://www.icai.org/isaqmaf.html

Resource persons for coaching classes for students of Chartered Accountancy Course
Hyderabad Branch is making efforts to revive the coaching classes for students of CA
Course . We invite members interested in teaching and in providing quality education to our
future CA's as faculty for the coaching classes.
For details contact Branch or Email your details to chairman.hyd@icai.in

PERHAPS TIME'S DEFINITION OF COAL IS THE DIAMOND 6