Friday, May 26, 2017

Mauritius Apex Court disallows common expenditure on exempt capital gains

Facts:

a) The Mauritius Company derives income from dividends paid by the Indian investee companies. It had disposed off certain investment and earned capital gains, which is not an income as per Mauritius Income Tax Act (MITA).

b) It paid fees to custodians and sub custodians for the holding of the investment and same was claimed as deduction from gross total income.

c) Mauritius Revenue Authority (MRA) disallowed the expenditure to the extent that it was not exclusively incurred in the production of gross income by invoking section 18 of the MITA. However apportionment was done as per the following formula given under section 26 of the MITA:

Capital Gains x Allowable expenditure

Income + Capital Gains

d) Appellant contended that revenue authority could not resort section 26 which applies to ‘exempt income’ having characteristics different than capital gain.

e) It was also contended that only expenses directly attributable to capital gain such as commission payable to brokers were not allowable. However, custodian fees and sub-custodian fees which did not relate to the capital gains, were capital in nature and, therefore, to be allowed.

The Mauritius Supreme Court held as under: 

1) Section 26 of the MITA provides for disallowance of any expenditure to the extent to which it is incurred in the production of income which is ‘exempt income’. It also provides formula to calculate such disallowance.

2) Section 18 of the MITA provides that expenditure is allowable to the extent that it is exclusively incurred in the production of gross income. Exempt income is not chargeable to tax and capital gains on the other hand is not an income for tax purposes. Accordingly, both exempt income and capital gain are excluded from gross income.

3) If an expenditure produces both gross income and other income (which does not amount to gross income) then as rightly viewed by the MRA, only the part which produces gross income, is an allowable deduction.

4) Since both capital gains and exempt income are excluded from the definition of gross income. Therefore, capital expenditure and expenditure attributable to exempt income, although different in the nature, share the same characteristic of being not allowable under sections 18 and 26.

5) The activities of Mauritius Company are those of any investment company. The expenditure sought to be deducted, i.e., custodian and sub-custodian fees, therefore produced two types of income, revenue income during such time the company holds the securities and capital gain when the company decides that the time is right for disposal of securities. The total custodian and sub-custodian fees cannot therefore be exclusively or
solely incurred for the production of gross income and are not allowable under Section 18. Thus, we could not accept the submission that the expenses were incurred with the intention of producing revenue income and that the capital gain was only an indirect outcome and on that basis expenses should be totally deductible.

6) Further, section 18 and 26 are not mutually exclusive sections and, hence, recourse can be made to section 26 if section 18 is silent on any issue. Therefore, MRA had rightly disallowed expenditure incurred to earn capital gains. - [2017] 81 taxmann.com 386 (SCM)

Mere loan confirmation letters from lenders couldn’t prove sanctity of loan transaction: ITAT

Facts:

a) Assessee was owner of a proprietorship concern and claimed to have received unsecured loans of Rs 10 lakhs each from Natasha Enterprises (NE) and Mohit International (MI).

b) Assessment was initially completed but subsequently the Assessing Officer (AO) came to know that NE and MI were shell entities. He accordingly reopened assessment.

c) During reassessment proceedings, assessee filed the loan confirmations, copies of ledger account and other supporting evidences to justify the transactions but same were rejected by the AO. Accordingly, loan amount was added to income as unexplained cash credit u/s 68.

d) CIT(A) confirmed the additions, Aggrieved-assessee filed the instant appeal before the Tribunal.

The Tribunal held in favour of revenue as under:

1) Merely because loan transactions were though cheques, which were duly evidenced from the bank statements of the lenders, copies of loan confirmations and statements of accounts could not prove that the initial onus of demonstrating the bonafides of loan transactions was duly discharged by the assesse.

2) It was pointed out that the lenders were shell entities and this fact was duly brought to the notice of the assessee but the assessee did not have anything to say on this point. He was neither able to produce any of the lenders nor gave sufficient information about the nature of relationship with them.

3) In order to demonstrate valid transaction, it was not the completion of paper work but genuineness of transactions which was crucial. Thus, onus had not been discharged by the assessee. Accordingly, loan transaction was rightly treated as unexplained credit as per section 68. - [2017] 81 taxmann.com 308 (Ahmedabad - Trib.)

25 Key Takeaways of Final GST Rules passed by GST Council

In its 14th meeting in Srinagar on 18th and 19th May,2017 the all-powerful GST council cleared seven rules pertaining to different aspects of GST. These rules relate to Registration, Input Tax Credit, Payment, Refund, Invoice, Valuation and Composition and have paved the way for the rollout of GST from July 1, 2017.

The key highlights of these final GST Rules are as follows:

1) PAN is mandatory for taking registration under GST. PAN will be validated by CBDT. After successful validation, registration will be granted.

2) Physical verification of place of business will not be conducted to grant registration under GST. But officer can do physical verification after granting of registration, if he is satisfied that it is necessary to do the same. He must upload verification report on GST Portal within 15 working days after verification.

3) Tax invoice in case of supply of taxable services must be issued within 30 days of date of supply of services. However, time limit for banking company, insurance company or financial institutions is 45 days.

4) Electronic Liability Register shall be maintained for each person liable to pay tax on the GST Portal.

5) A separate formula is prescribed for Maximum Refund in case of inverted duty structure, i.e., GST rate is higher on Inputs than on Output Supply.

6) The person eligible to take credit in respect of input of goods held in stock after registration is required to file a declaration on GST Portal that he is eligible for input tax credit within 30 days.

F1 Circuit—A Fixed Place PE!

Thanks to the burgeoning fan base of various sporting events globally. Now several sporting bodies are organising various series across borders. However, tax policies of the nations are not so sweet for the taxpayers. This is more so because of the current global wave of preventing the unintended application of the tax provisions. The Supreme Court of India's decision in the case of Formula One World Championship Ltd. v. CIT1 is a perfect illustration wherein the Apex Court has given a new dimension to the concept of permanent establishment ("PE").

Exposure of a foreign company (F Co.) having PE in the source country has always been a contentious issue. India follows "source based taxation". Under source based taxation principle, income earned by a non-resident is taxed in the country in which such income has accrued or arisen, even by way of a deeming fiction.

In this article we will dwell upon the Supreme Court's ruling and also other rulings on similar issue on the existence of Fixed Place PE in India, more particularly as to whether F Co.'s presence for a short duration in a source State/country can be considered to its PE?

Sale of business without transfer of trademark held as slump sale as buyer was in same line of business

The issue before the Tribunal was as under:

Whether sale of manufacturing unit by assessee without transferring his trademark could be held as slump sale?

The Tribunal held in favour of assessee as under:

1) The definition of slump sale' u/s 2(42C) read with the explanation (1) to sec. 2(19AA) of the Income-tax Act makes it clear that 'slump sale' means transfer of one or more undertakings as a result of sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sale.

2) In the instant case, assessee sold its manufacturing unit of edible oil as a going concern on slump sale basis to the buyer who was already in same line of business. Consideration was decided without assigning value to individual assets and liabilities.

3) Buyer of the manufacturing unit of the edible oil was already in the same business and wanted to sell the products manufactured from manufacturing unit in their own name and brand. They were not keen to buy the name/trade name/logos/trademark/ product name, etc., of the assessee, so, the assessee excluded the same from the transaction.

4) Therefore, mere exclusion of the said intangible assets could not in any way affect the slump sale of the manufacturing unit of assessee. - [2017] 81 taxmann.com 305 (Kolkata - Trib.)

28% GST on cinema halls, race clubs and 5% on economy class air travel

On May 18, 2017 the GST Council had finalised seven GST rules and GST rates on goods (1211 items approx). Today, the GST Council has finalised the GST rates on services. The key takeaways of 14th GST Council meeting are given hereunder:

1. GST rate will be 28% for race clubs, betting and cinema halls. Transport and Financial services will be taxed at 18%.

2. Economy class air travel and rail travel will attract 5% GST rate, but the business class air travel will attract higher rate of 12%.

3. No GST will be levied on hotels charging tariff below Rs 1,000 whereas the GST rate will be 18% for hotels with tariff in the range of Rs 2,500-5,000.

4. GST rate will be 5% for Cab operators like Ola and Uber.

5. Healthcare and Education Services have been exempted from GST. Services that are currently exempt would continue to be exempted under GST.

6. The tax rates for gold, bidis and cigarettes will be decided in next meeting to be held on June 3, 2017.

Mergers and acquisitions: The evolving Indian landscape

Just recently, the largest ever FDI transaction in India was announced, with the Russian government owned Rosneft and its partners acquiring Essar Oil for 13 billion USD. This is indeed a watershed moment for India and a re-validation of global faith in the potential and attractiveness of its economy. With FDI inflows into India already hitting a high in the last fiscal year, this marquee transaction will only provide a fillip to India’s already burgeoning M&A landscape.

There has been a spate of high-profile transactions in India in the last few years, whether domestic or international, and both inbound and outbound. With the government continually working towards reforms on all fronts, be it in its regulatory policies to attract foreign investors, providing an impetus to the manufacturing sector with Make in India, improving India’s Ease of Doing Business rankings, or providing solace to the much beleaguered infrastructure sector by paving the path for real estate investment trusts (REITs)/infrastructure investment trusts (InvITs), there is no looking back.

Ever since the Vodafone tax litigation took the Indian M&A landscape by storm in 2007, tax aspects surrounding any M&As in India came to the forefront—so much so that corporate have now started taking tax insurance to insulate themselves from the uncertainties and vagaries of interpretation of Indian tax laws. Of course, while the government is making strides in trying to deliver the comfort of certainty to the investor
community (such as by issuing clarifications on various aspects of indirect transfers), it is also tightening the screws on various fronts—the renegotiation of India’s tax treaties, the looming advent of General Anti- Avoidance Rules (GAAR) in 2017 and the adoption of Base Erosion and Profit Shifting (BEPS) action plans.

Click here to download PwC India’s Report on 'M&A'

Benefit of IDS wasn’t available even if search proceedings was initiated after launch of IDS

Facts:

a) The Central Government had come with an Income Declaration Scheme, 2016 (IDS) which was made effective from 1-6-2016 to 30-9-2016.

b) Assessee had faced proceedings under section 132, search warrant was issued and search was also carried out from 30-6-2016 to 2-7-2016. In the meantime before 30-9-2016, he applied for benefit of IDS.

c) Assessee contended that he was entitled to benefit of IDS since raid and search proceedings under section 132 were initiated after the launch of scheme.

d) Assessing Officer rejected the claim of assessee, aggreived-assessee filed the instant appeal before the High Court.

The High Court held in favour of revenue as under:

1) Clause 196(e)(ii) to IDS provides that the provisions of this scheme shall not apply where a search has been conducted under section 132 or requisition has been made under section 132A or a survey has been carried out under Section 133A of the Incometax Act in a previous year.

2) It was a case where the Central Government had granted benefit of IDS only to the persons who were not covered under section 132 and other proceedings. If a particulars class had been debarred to opt for IDS, such person cannot avail the benefit in any circumstances even if search had been conducted after the launch of scheme.

3) The IDS will not override the provisions of the Income Tax Act and the scheme which has come by way of limited purpose cannot prevail over the Income Tax Act 

4) Therefore, even though search proceedings was inititated after the lauch of IDS, assessee won‘t be entitled for benefit of IDS. - [2017] 81 taxmann.com 213 (Rajasthan)

Tuesday, May 16, 2017

SAT lifts ban on Satyam’s Raju from accessing capital market

Whole Time Member of SEBI by impugned order had restrained Satyam Computer founder, Ramalinga Raju and his associates (appellants) from accessing securities market for 14 years and had directed appellants to disgorge unlawful gains arising on sale/pledge of Satyam’s shares.

Now, the Security Appellate Tribunal (SAT) has set aside the SEBI’s order from barring appellants from accessing capital market. Further, SAT has asked SEBI to pass fresh order on applicants’ punishment. [2017] 81 taxmann.com 201 (SAT - Mumbai)

Govt. notifies rules for depositing old Rs. 500 or Rs. 1000 notes confiscated on or before 30/12/2016

The Specified Bank Notes (Cessation of Liabilities) Act, 2017 provides for holding, transfer and receiving of old 500 and 1000 rupee notes as an offence. It provides for fine of Rs. 10,000/- or five times the cash held, whichever is higher on holding of more than 10 demonetized notes. It also ends the liability of RBI and the Central Government on the currency notes demonetized on 08-11-2016.

Now, Govt. notifies the Specified Bank Notes (Deposit of Confiscated Notes) Rules, 2017 which provides that if specified bank notes (i.e. old Rs. 500 or Rs. 1000 notes)have been confiscated or seized by a law enforcement agencies or produced before a court on or before the 30-12-2016. Such bank notes may be deposit in a bank account or exchange with legal tender at any office of the RBI or a nationalized bank if following conditions are satisfied:-

1) In case confiscated specified bank notes are returned by the court to a person who is a party in case pending before that court, then, the person shall be entitled to deposit or exchange such specified bank notes:-

a. The serial numbers of which have been noted by the law enforcement agency which confiscated or produced them before the court; and are mentioned in the direction of the court.

2) In case specified bank notes are placed in custody of any other person by an order of the court on or before the 30th day of December, 2016, then, the person shall be entitled to deposit or exchange such specified bank notes:-

a. The serial numbers of which have been noted by the law enforcement agency which confiscated or produced them before the court; and are mentioned in the direction of the court. 

3) In case specified bank notes are forfeited in favour of the Central Government or the State Government by an order of the court. The Government shall be entitled to deposit or exchange such specified bank notes - F. No. S-10/05/2017, dated 12-05-2017

Quoting of Aadhar number in return of income isn’t mandatory for non-residents and super senior citizens

The Finance Act, 2017 had inserted a new Section 139AA under the Income-tax Act, 1961 requiring every person to quote Aadhaar number in the return of income with effect from 1st day of July, 2017. If any person does not possess the Aadhaar Number but he had applied for the Aadhaar card then he can quote Enrolment ID of Aadhaar application Form in the ITR.

It may be noted that firms are also required to Quote Aadhaar number of their Partner/members in new ITR 5. Further, in case of trust Aadhaar number of Author(s) / Founder(s) / Trustee(s) / Manager(s), etc., are required to be specified in new ITR 7. However, the Central Government has issued a Notification No. 37, Dated 11/5/2017 whereby it has been notified that the provisions of section 139AA shall not apply to an individual who does not possess the Aadhaar number or the Enrolment ID and is:-

(i) residing in the States of Assam, Jammu and Kashmir and Meghalaya;

(ii) a non-resident as per the Income-tax Act, 1961;

(iii) of the age of 80 years or more at any time during the previous year, i.e., super senior citizen;

(iv) not a citizen of India.

Retrospective amendment to limit exemption to CMA paper for 3 consequent attempt isn't arbitrary: HC

FACTS

The petitioner-individual, final year student of C.M.A. course, appeared in the final year examination conducted by the Institute and scored more than 60 % marks in the Business Valuation paper of Group IV but could not clear the other papers in the same group. The petitioner was granted with an exemption from appearing in the Business Valuation paper in the subsequent exams/attempts.

Thereafter, in May 2012 an amendment was carried out by the Institute in the Regulation 41(2) vide Cost and Works Accountants (Amendment) Regulations, 2012 and the said exemption was revoked. Thereafter, petitioner availed exemption for three consecutive terms and when he appeared for forth term, exemption had been denied to him.

The petitioner filed writ on ground that the Institute arbitrarily and mala fidely revoked the exemption granted to the petitioner from appearing in subsequent attempts.

The High Court held that:

An apparent reading of the Hindi and English version of the regulation show they are at variance, in as much as the Hindi version refers to the exemption being applicable to three consecutive years, whereas the English version depicts, the same is applicable to three consecutive terms.

In any case, the said plea would be of no help to the petitioner, inasmuch as it is not the  case of the petitioner that he is entitled to the benefit of exemption for a period of three years and not three consecutive terms and, hence it would not be necessary, to go into an issue as to which version would prevail. - [2017] 81 taxmann.com 7 (Delhi)

Dependent Personal Services and its applicability in the context of Liaison office

Generally, a liaison office ("LO") set up by a foreign enterprise in India is not subject to tax in India as it is not allowed to undertake any commercial activities. However, the controversy of taxing an LO as a Permanent Establishment ("PE") of the foreign enterprise in India has gained momentum in the past few years. The tax authorities generally argue that an LO is an extension of the foreign enterprise in India through which the foreign enterprise is doing its core business, commercial and marketing activities in India.

Consequentially, the foreign parent company defaults in tax withholding on payment made to expatriates assigned on a short-term basis to the Indian LO on the fair (general) assumption that liaison office is not treated as a PE, and, hence, there is no liability to withhold tax on his remuneration. The income-tax department has become quite aggressive with regard to withholding tax compliances, and, therefore, the possible implications may be considered before deputing a person to the Indian LO.

Dividend income to attract Sec. 14A disallowance even if DDT is paid on it, rules Apex Court

The issue before the Supreme Court was as under:

Whether dividend income would attract Section 14A disallowance even if Dividend Distribution Tax is paid as per Section 115-0

The Supreme Court held in favour of revenue as under:-

1) The object behind the introduction of Section 14A is clear and unambiguous. The legislature intended to check the claim of allowance of expenditure incurred on exempt income in a situation where an assessee has both exempted and non-exempted income or includible or non-includible income.

2) If the income in question is taxable and, includible in the total income, the deduction of expenses incurred in relation to such an income must be allowed. Such deduction would not be permissible on dividend income merely on the ground that the dividend distribution tax paid on dividend.

3) A plain reading of Section 14A would go to show that the income must not be includible in the total income of the assessee. Once the said condition is satisfied, the expenditure incurred in earning the said income cannot be allowed to be deducted.

4) Thus, the phrase "income which does not form part of total income under this Act" appearing in Section 14A includes within its scope dividend income on shares in respect of which tax is payable under Section 115-O. [2017] 81 taxmann.com 111 (SC)

Petitions are to be transferred to NCLT if norms of service of notice have been complied within prescribed time

If service of notice of company petition under Rule 26 of Companies (Court) Rules, 1959 has not been complied before 15-12-2016, such petitions shall stand transferred to NCLT whereas all other company petitions would continue to be heard and adjudicated upon only by the High Court

Now, two sets of winding up proceedings would be heard by two different forum, i.e., one by NCLT and another by High Court depending upon date of service of notice, before or after 15-12-2016. - [2017] 80 taxmann.com 359 (Bombay)

President gives his assent to ordinance on Nonperforming Assets

The President has approved an ordinance on Non-performing Assets (NPA) which gives the powers to RBI to issue directions to any banking company to initiate Insolvency resolution process in respect of default under Insolvency and Bankruptcy Code. This amendment will help the banking companies to deal effectively with bad loan problems.


Friday, May 5, 2017

No sec. 68 additions on cash deposited in bank account if assessee wasn't maintaining books of account

Facts:

a) On the basis of information from the CIT that during the year under consideration assessee had made a 'cash deposit' in her saving bank account with Punjab and Maharashtra Co-operative Bank, the case of the assessee was reopened.

b) During the course of the assessment proceedings, the Assessing Officer (AO) called upon the assessee to put forth an explanation as regards the nature and source of the cash deposit in her saving bank account.

c) The assessee placed on record substantial documentary evidence in form of summarized cash analysis to explain the genesis of the cash deposit.

d) AO was not in agreement with the explanation of the assessee and, hence, rejected the same and held the said cash deposit as an 'unexplained cash credit' and added the same to the returned income of the assessee by invoking the provisions of section 68.

e) On appeal, CIT(A) upheld order of AO. Aggrieved-assessee filed instant appeal before Tribunal.

Tribunal held in favour of assessee as under:-

1) A bare perusal of the section 68 reveals that an addition under the said statutory provision can only be made where any sum is found credited in the books of an assessee maintained for any previous year. Thus, the very sine qua non for making of an addition under section 68 presupposes a credit of the aforesaid amount in the 'books of an  assessee' maintained for the previous year.

2) A credit in the 'bank account' of an assessee could not be construed as a credit in the 'books of the assessee', for the very reason that the bank account could not be held to be the 'books' of the assessee.

3) Bombay High Court in the case of CIT v. Bhaichand N. Gandhi [1982] 11 Taxman 59 held that a bank pass book or bank statement cannot be considered to be a 'book' maintained by the assessee for any previous year, as understood for the purpose of section 68.

4) Giving a thoughtful consideration to the scope and gamut of the aforesaid statutory provision, viz., section 68, it was to be held that an addition made in respect of a cash deposit in the 'bank account' in the absence of the same found credited in the 'books of the assessee' maintained for the previous year, could not be brought to tax. - [2017] 80 taxmann.com 311 (Mumbai - Trib.)

ITAT allows Sec. 54 relief for property purchased jointly with brother

Facts:

a) Assessee was co-owner of flat jointly with his wife. He sold said flat and invested his share in another property and claimed long-term capital gain exemption under section 54. 

b) While making assessment, Assessing Officer (AO) observed that the new property purchased was in the name of two persons, namely, the assessee and his brother. He restricted deduction u/s 54 to the extent of 50% value of new property,

c) On appeal, CIT(A) disallowed entire exemption. Aggrieved-assessee filed the instant appeal before Tribunal.

Tribunal held in favour of assessee as under:-

1) In the given case, the name of the assessee's brother was added in the Agreement of new property so purchased for the sake of convenience. The entire investment for the purchase of new property along with stamp duty and registration charges were paid by the assessee.

2) There was no justification in the AO's action, in so far entire investment was made by the assessee and only for the safety reason he had included the name of his brother. 3) The issue was also covered by the decision of hon'ble Delhi High Court in the case of CIT v. Ravinder Kumar Arora [2011] 15 taxmann.com 307 (Delhi) wherein High Court held that the assessee was entitled to full exemption u/s. 54F when the full amount was invested by the assessee, even though the property was purchased in the joint names of the assessee and his wife.

4) Therefore, assessee was entitled to full exemption under section 54, even though property was purchased in joint names of assessee and his brother. - [2017] 81 taxmann.com 16 (Mumbai - Trib.)

Tuesday, May 2, 2017

Accretion of Hyundai brand due to its usage on Cars manufactured in India isn’t brand promotion: ITAT

Facts: 
a) Assessee-company was fully owned subsidiary of South Korean automobile giant Hyundai Motor Company (HMC). It was manufacturing cars under the brand name 'Hyundai'- a brand which is legally owned by the HMC.

b) As per the agreement entered into by assessee with HMC Korea, it was mandatory to use the badge with trademark Hyundai in every vehicle manufactured by it.

c) Transfer Pricing Officer (TPO) was of the view that by doing so "the assessee had significantly contributed to the development of Hyundai brand in Indian market" and the HMC Korea is, thus, "benefited due to brand promotion activity carried out by the assessee company".

d) TPO faulted the assessee for not having benchmarked "the international transactions relating to brand development. IT proposed ALP adjustment in respect of compensation that the assessee should have received for brand development.

e) Aggrieved by this draft proposal, assessee appealed before the Dispute Resolution Panel (DRP) which confirmed order of TPO. Assessee filed instant appeal before Tribunal.

Tribunal held in favour of assessee as under:-

1) It was an undisputed position that the foreign AE owns a valuable brand, i.e. Hyundai, and this brand had a certain degree of respect and credibility all over the globe including, of course, in the Indian market. When assessee used this brand name in the name of the models of vehicles manufactured by him, it do indeed amount to an advantage to the assessee.

2) Use of brand name owned by the AE in the motor vehicles manufactured by the assessee did not amount to a benefit to the AE of the assessee. An incidental benefit thought in the sense that increased visibility to this trade name does contribute to increase in brand valuation of the brand name.

3) Undoubtedly, 'provision for services' is included in the definition of 'international transaction' under section 92B, but then accretion in brand value due to use of foreign AEs brand name in the name of assessee's products could not be treated as service either.

4) An accretion in the brand valuation of a brand owned by the AE did not result in profit, losses, income or assets of the assessee-company. Therefore, and it could not result in an international transaction. [2017] 81 taxmann.com 5 (Chennai - Trib.) 

Changes proposed in Ind AS 101 First-time adoption of Indian Accounting Standard

An exposure draft on Ind AS 101 First-time adoption of Indian Accounting Standard has been recently issued. Key changes proposed in Ind AS 101 are as follows:-

1. Present standard

Para D7AA of Ind AS 101 provides that a first-time adopter to Ind ASs may elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind ASs, measured as per the previous GAAP. Further, such carrying value can be used as its deemed cost as at the date of transition after making necessary adjustments in accordance with paragraph D21and D21A, of this Ind AS. If an entity avails the option under this paragraph, no further adjustments to the deemed cost of the property, plant and equipment so determined in the opening balance sheet shall be made for transition adjustments that might arise from the application of other Ind ASs.

2. Proposed scenario

The exposure draft proposes that an entity can make further adjustments to the deemed cost that might arise from the application of other Ind AS. Accordingly there is no such requirement in the exposure draft that if an entity avails the option under para D7AA then no further adjustment can be made in the deemed cost.

3. Applicability date

Proposed changes, if accepted, can be applied from annual periods beginning on or after1st April, 2017.