April 2017

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April 2017 Volume 4, Issue 2
FOCAL POINT
Newsletter from Raju and Prasad Chartered Accountants

Page 3Raju and Prasad Chartered Accountants Page 1
Dear Reader,
Our editorial comments for this month are on the ‘Why or why
not Aadhar be linked with IT Returns’.
This month we have covered the Leather Industry in our Industry
Review.
We have also included an article on the amendments to the
Income Tax applicable from 1st
April, 2017 written by Sri. Avinash
T Jain, FCA
Please give your views and also send this newsletter to your friends.
Regards
For Raju& Prasad
Chartered Accountants
M Siva Ram Prasad
Partner

Book Release
We are glad to inform you that Articles from our newsletter of
first two years were compiled into a book ‘My Views and Reviews`
and was released by Sri. V.K Saraswat, Member NITI Aayog on 11th
of March, 2017. The meeting was presided over by Sri. P.S Rama
Mohan Rao, former governer of Tamil Nadu. The book was
introduced by Dr. N Bhaskar Rao chairman Center for Media
Studies (New Delhi).

Contents
Book Release..................................................................................................................................................2
Contents.............................................................................................................................................................3
Editorial...............................................................................................................................................................4
Aadhar, why and when mandatory?............................................................................................................. 4
Why and Why not Income tax return be linked with Aadhar................................................................................................ 5
Industry Review...........................................................................................................................................6
Leather Industry ...................................................................................................................................................... 6
History................................................................................................................................................................................................................................ 6
Leather processing................................................................................................................................................................................................... 7
Process Flowchart ..................................................................................................................................................................................................... 8
Government Initiatives......................................................................................................................................................................................... 9
Present Policies .........................................................................................................................................................................................................10
Research and Development............................................................................................................................................................................11
Challenges.....................................................................................................................................................................................................................11
INCOME TAX AMENDMENTS APPLICABLE W.E.F 01.04.2017.......................................................13
Changes in Income Tax Return Form for FY 2016-17 relevant to AY 2017-18:.................................................13
Policy Watch................................................................................................................................................. 16
SEBI...............................................................................................................................................................................16
Revision of limits of investments by FPIs in Government Securities ...........................................................................16
Company Law ..........................................................................................................................................................16
Powers of Registrar of Companies to strike off the names of companies under section 248(1) of the
Companies Act, 2013...........................................................................................................................................................................................16
Amendment in Schedule III ...........................................................................................................................................................................16
Indirect Taxes..........................................................................................................................................................17
Service tax on service rendered by a person located in a non-taxable territory to a person located
in non-taxable territory by way of transportation of goods by a vessel from a place outside India
up to the customs station of clearance in India............................................................................................................................17
Verdicts............................................................................................................................................................ 18
Direct Taxation .......................................................................................................................................................18
Profit on sale of Shares that are converted into investment from stock-in-trade and sold at a later
stage shall be exempted u/s 10(38) .......................................................................................................................................................18
►►► PHOTOGRAPH OF THE MONTH ..................................................................................... 19

Editorial
Aadhar, why and when mandatory?
he Finance Bill introduced in the
parliament is amended in the last leg of the
Parliament Session and was passed on 30th
March, 2017.
The bill was amended to make Aadhar
compulsory for filing Income Tax Returns filed
on or after 1st July, 2017.
The Income Tax Returns filed before 1st July,
2017 need not mention Aadhar Number. The
Aadhar Act, 2016 was enacted with the title
Aadhar (Targeted Delivery of Financial and
other Subsidies, benefits and services) Act,
2016. Without going into the nitty-gritties of
whether it is money bill or not, the name
suggests that the Act is meant for overseeing
or monitoring the various subsidies, financial
benefits and public distribution system.
Essentially it is to make sure that there is no
misuse of various government schemes which
are meant for targeted population. It is an
open secret that every state government
weeded out fake ration cards.
T

Raju and Prasad Chartered Accountants
In all its good sense while allotting the number
government does not seek information on
caste, creed or religion. Especially the income
particulars are not collected which is the key
parameter to understand the distribution of
benefits and if the purpose of the scheme is to
give benefit on income basis. Perhaps it is the
late thinking to link IT Returns with Aadhar.
Why and Why not Income tax return
be linked with Aadhar
The question is whether Aadhar card is
voluntary or mandatory. It was always
mentioned that Aadhar is voluntary, Apex
Court also confirmed the same. While every IT
assesse is allotted a PAN, Aadhar is an
additional option to oversee certain financial
misdeeds. The Finance Act 2017 also makes
PAN invalid if Aadhar particulars are not
mentioned. Aadhar being mandatory was
triggered when it was made compulsory for
Mid-Day Meal Scheme and for pensioners,
government may exercise caution in such
situations.
It is voluntary for individuals who seek benefits
but government has always a right to make it
compulsory for certain purposes. If the
government wants to link Aadhar with IT
returns it is only to have better surveillance
over financial transactions. Whether any legal
recourse is required to make it mandatory
should be examined.
The next fear is whether the information is kept
secret. The UIDAI specifically mentions that the
information available with the authorities will
not be disclosed to anybody except in special
circumstances under National Security. There
is no great information available since the
application does not seek any sensitive
information. There is no need for unnecessary
apprehension about secrecy.
Under the RTI Act there is no obligation to give
any information by any authority, any personal
information which has no relevance to any
public activity or interest. Under section 8(1) J
of the RTI Act demographic and biometric
data of a person cannot be disclosed except
to the respective person.
Above all what we should bother about is
whether Cyber Security is enough for the
information available with the authorities and
various agencies working under the act?
-M Siva Ram Prasad

Raju and Prasad Chartered AccountantsRaju and Prasad Chartered Accountants Page 6
Industry Review
Leather Industry
History
here is no real evidence of the use of
leather in ancient times, but it is known to
be used by Indians. The references to use were
mentioned in certain scriptures. Lord Shiva
used a drum called `Damarukam’ which had
leather surface, various tribals are known for
drum beating, Indian sages using animal skins
for sitting are all known sources that hides and
skins were in use.
Marco Polo in 1290 AD mentioned about the
presence of leather industry in India and its
trade with other countries. The basic footwear
was made of leather in villages and the
activities remained as an artisan oriented work
in certain areas. The processing of the basic
skin was made out of vegetable based juices
or smoking process through certain leaves and
barks of plants like oak, chestnut, tanoak,
hemlock, mangroves, accacia etc. Chemical
T

processing was known only from 18th / 19th
century.
Leather processing
Raw hides and skins are first cured to avoid
decay by different methods like salting,
chilling, freezing etc. The cured material is
soaked in water for number of days in case of
vegetable processing and for a lesser time in
case of chemical processing.
The soaked hides are further processed by
liming, for removal of hair and painting for
removal of wool. After liming, deliming is done
to remove alkaline chemicals and make
leather softer.
Further process is called bating in which
enzyme treatment is given to make it soft and
stretchable by removing chemicals remaining
after deliming.
After this, the hides are passed through acid
salt pickle liquor to make it ready for tanning.
Tanning is a process to make the hide into
leather by stabilising the collagen structure.
The word tanning is derived from `tannara’,
Latin word for oak bark. The process can be
done either through plant bark and leaves or
chrome salts and sulphuric acid. The
chromium salts are neutralised in neutralisation
process with sodium bicarbonate, sodium,
calcium formate, etc.
Then the semi-finished leather is retanned
through retanning agents in case of chrome
tanning for getting uniform thickness. After
tanning, splitting is done through machine split
where the leather is split into two layers, one
with grain surface and the other without grain
surface. The lower layer can be further made
into Suede Leather. The split leather is then
dyed to get the required colour.
The hides and skins are taken from various
animals like cows, calves, buffaloes, sheep,
and goat. Special skins are also taken from
other animals like rabbits, deers, alligators and
snakes.
The various finishes that are known as nappa,
suede, nubuck, arethe, sumin finishes. The

other finishes include fully pigmented finish,
antique finish, wiper finish, grain finish etc.The
industry is originated mainly due to meat
industry and helped the growth of fashion
industry. The industry can be classified into
trade in hides and skins and then into leather
goods. Leather goods can further be classified
into footwear including shoe uppers and soles,
leather goods like handbags, travel bags,
leather garments, saddlery and
harness, upholstery furniture etc. A major
consumer of leather footwear is Indian Army.
Process Flowchart
Hides
and
Skins
Curing Soaking liming Deliming Bating Pickling
Depickling
Vegetable
Tanning Splitting
Retanning
Dyeing
Finished
Leather
Trading Goods
Manufacturing
Mineral
Tanning
Neutralisation

Government Initiatives
An artisan oriented activity has grown into a
cottage industry and remained for a long time
in that stage. The excise regulations on
turnover and restrictions on usage of power up
to 2 horse power, motors and employees not
to exceed 50, made the industry growth
stunted. This sector largely remained as a
trade in hides and skins.
Trend in Production of hides and Skins (In million Pieces)
S.No. Category 2000 2004 2008 2012
1 Bovine Hides and
Skins
38 38.6 41.6 43.1
2 Sheepskins and
Lambskins
29.8 31.2 36.2 37
3 Goatskins and
Kidskins
71.3 74 83.7 88.9
Total 139.1 143.8 161.5 169
Source: FAO
The industry is in small and medium scale
sectors; large scale units are few in the
country. The first industrial policy resolution
which was adopted after independence in
1948 also emphasised the need for protection
of the industry. The industry was reserved for
small scale units for a long time. Government
initiatives for export promotion started from
1970, export policy resolution and
encouragement was given for exports of
value added products instead of trading hides
and skins. In 1973 the industry is dereserved
and imports of capital goods and
consumables were allowed and the duty
structure is liberalised.
Indian Leather development programme
(ILDP) was initiated in ninth five year plan and
is being implemented to modernise the
technologies and production facilities with
expanded capacities. The programme also
helps the rural artisans to upgrade their skills.
The programme also has a sub-plan,
Integrated Development of Leather Sector
(IDLS) to promote parks, clusters design
facilities, Intech Mart Scheme etc. Tannery
Modernisation scheme is another scheme
initiated under ILDP to improve the tanneries in
the year 2000.

Leather technology mission is initiated to
create awareness about the latest
technologies available for the industry.
Present Policies
 Presently central excise is not levied on
certain foot wear and there is
concessional duty on certain foot wear
manufactured including shoe uppers.
 Capital goods can be imported without
duties under EPCG with export obligations.
 3% Interest equalisation scheme is
available for 5 years from 1st April, 2015.
 Skill Development and Skill upgradation
programmes are available from National
Skill Development Corporation and
Pradhan Manthri Kaushal Vikas Yojana
(PMKY)
 100% FDI is allowed in the sector under
automatic route.
 Market access initiative scheme and
market development assistance schemes
of Department of Commerce are
available to support marketing.
Fact Sheet
The leather industry of India has a prominent
place in the world’s leather industry which is
evident from the following:
 India is the second largest producer of
footwear in the world.
 India produces 2.5 billion Sq. Feet of
leather which is 13% of the world
production.
 Leather industry is the eighth major foreign
exchange earner for the country.
 India’s cattle population is 20% of world’s
cattle (cows and buffalos) and 11% of
world’s goat and sheep population.
 The industry employs nearly 2.5 million
people.

Indian Export of leather and leather products during the last 5 years (Value in Million USD)
Product 2011-12 2012-13 2013-14 2014-15 2015-16
Finished Leather 1024.69 1093.73 1284.57 1329.05 1046.44
Footwear 2079.14 2066.91 2557.66 2945.58 2737.85
Leather Garments 572.45 563.54 596.15 604.25 554.29
Leather Goods 1089.71 1180.82 1353.91 1453.26 1369.00
Saddlery& Harness 107.54 110.41 145.54 162.70 146.38
Total 4873.53 5015.41 5937.97 6494.84 5853.96
% Growth 22.80% 2.91% 18.39% 9.37% -9.86%
Source: DGCI&S
Research and Development
Research and development in leather sector
was started by Central Leather Research
Institute (CLRI) set up as early as in 1948. This is
the world’s biggest research laboratories in this
sector and has developed number of new
technologies like waterless chrome tanning
which will use titanium tanning. This will help
reducing the effluents. The other
environmental friendly technologies
developed by the institute are less salt curing
system, sludge free liming process, total lime
and sulphide free deliming of hides and skins.
In addition the CLRI conducts many skill
development courses and training
programmes.
Other institutions involved in development of
leather and leather goods include Central
Footwear Training Institute (CFTI), National
Institute of Fashion Technology (NIFT), Foot
wear Design and Development Institute (FDDI)
and Council for Leather Exports (CLE).
Challenges
The industry which has a role in socio-
economic development of the country suffers
from certain challenges.
 Environmental pollution is a major threat
from the industry to the society and is not
encouraged in a big way.
 The competition from synthetic substitutes
is a major challenge and awareness about

the health hazards for such products on
humans is not propagated.
 The price factor between synthetic
product and natural leather makes a
normal customer to go for synthetic
product.
 Raw material collection and processing
poses a challenge since the raw material
source is scattered and quality of material
is not consistent because of the quality of
the aminals and animal husbandry
practices prevailing.
 Industry which is mostly in small scale sector
faces the problems of funding, marketing
and technology upgradation and
modernization.
 The cluster approach to have common
facilities will solve many problems including
effluent treatment.
 Recent laws banning the cow slaughter
may impact the raw material supply.
Using modern technologies to reduce the
water usage, sludge free limig etc, will solve
the environmental isssues. As per the UNIDO
study the industry has a promosing future both
in domestic market and export market.
-Team at Raju and Prasad

INCOME TAX AMENDMENTS APPLICABLE W.E.F
01.04.2017
Changes in Income Tax Return
Form for FY 2016-17 relevant to AY
2017-18:
1. As per the forms notified by the Income Tax
Department, the assesse is required to
disclose cash deposit over Rs.2,00,000/-,
deposited during demonetization period
(i.e. 08.11.2016 to 31.12.2016)
2. The government has introduced a new
schedule requiring individuals and HUF to
declare the value of Assets and Liabilities if
their total income exceeds Rs. 50 Lakhs.
Now taxpayers are also required to
disclose address of immovable property
and description of movable properties
under new ITR forms. Further, a new field
has been introduced for the disclosure of
‘Interest held in the assets of a firm or AOP
as a partner or member’. Such members or
partners are also required to disclose
name, address, PAN of the firm or AOP.

Kindly make note of the following changes in
IT law that come into effect from 1-4-2017 -
(1) Limit for payment of expenses by cash
(both, capital and revenue expenditure)
reduced from Rs.20,000/- to Rs.10,000/-
per day in aggregate per person. Capital
expenses paid in cash beyond the said
limit will not be taken into account for
depreciation purposes. However, the
cash payment limit for lorry fright etc.
remains the same at Rs.35,000/-.
(2) No person shall receive an amount of 2
lakh rupees or more, by cash (Sec. 269ST)-
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to
one event or occasion.
The penalty for violation of above is to be a
sum equal to the amount of such receipt.
Examples for above -
i) If one sells goods worth Rs. 2,00,000/-
through two different bills of Rs.100000
each to one person and accepts cash in
single day at different times then section
269ST(a) will get violated.
ii) If one sells goods worth Rs. 2,00,000/-
through single bill to another person and
receives cash of Rs.1,00,000/- on day 1
and another Rs.1,00,000/- on day 2 then
section 269ST(b) will get violated, since it
pertains to single transaction.
iii) If one accepts cash of Rs.180000 for sales
and Rs.20000 for freight charges, then
section 269ST(c) will get violated even if
cash is accepted on different dates, since
they pertain to a single sales event.
iv) If one sells his car for Rs.2,00,000/- and
receives the amount in cash, then penalty
levied on him will be Rs.2,00,000/-.
(2A) In view of the newly introduced above
said penal provisions relating to cash
sales, the existing provisions (in vogue from
1.6.2016) relating to collection of TCS @ 1%
on cash sales exceeding Rs.2 lakhs (Rs.5
lakhs, in the case of jewellery) are
deleted. Consequently, there is no need
to collect TCS on cash sales exceeding
Rs.2 lakhs. Straight away it will attract
equal amount penalty now.
(3) For below Rs.2 crores turnover cases -
A. For Non Cash Sales (through Digital,
Online, cheque, Bank etc.) : Net Profit
will be taken as 6% of Turnover/Gross
Receipt.
B. For Cash Sales : Net Profit will be taken as
8% of Turnover/Gross Receipt.
(4) Tax Exemption limit is Rs.2,50,000/- (same as
earlier) -
1. After that, upto Rs.5 lakh, Tax Rate is 5%
(earlier it was 10%). Tax rebate of
maximum Rs.2500 will be allowed, for total
income upto Rs.3.50 lakhs.
2. Individuals having total income
exceeding Rs.50 lakhs but below Rs.1
crore, are to pay surcharge @ 10% of the
tax. Those having total income

exceeding Rs. 1 crore shall continue to
pay surcharge @ 15%.
(5) Payment of Rent - Rs.50,000 per month by
any Individual or HUF (not subject to Tax
Audit requirements) - deduct TDS @ 5%.
(6) Capital Gain in respect of Land &
Buildings-
– Periodicity for long term Capital Gain is
reduced from 3 years to 2 years.
– Base year shifted from 01.04.1981 to
01.04.2001 for all assets including
Immovable property.
(7) Corporate tax rate for the account year
2017-18 for companies with annual
turnover upto Rs. 50 crores (in the account
year 2015-2016) is reduced to 25%. No
change in firm tax rate of 30%.
(8) Donations made exceeding Rs.2000 will
be not be eligible for deduction under
section 80G, unless these are made using
modes other than cash. Consequently,
trusts accepting 80G donations may
advise their donors to give donations
exceeding Rs.2000 vide cheque / RTGS /
digital modes.
(9) Sale of unquoted shares to be taxed at
(deemed) fair value.
(10) In absence of PAN of the buyer of
specified goods, the rate of TCS will be
twice of the extent rate or 5%, whichever
is higher.
(11) From financial year 2017-18, if Return is not
filed within due date, late fee of Rs.5,000/-
for delay up to 31st December, and Rs.
10,000/- thereafter.
(12) Every person who is eligible to obtain
AADHAR number, should quote such
number, on or after 1 July 2017, in the
Return of income. Furthermore, every
person who has been allotted PAN as on
1st July 2017 must intimate the AADHAR
number to the Tax Authority, failing which,
PAN allotted to such person shall be
deemed to be invalid. Kindly note that
linking of AADHAR with PAN is not possible,
unless name as per AADHAR and PAN
match perfectly. Hence, please take
steps to rectify your name as per AADHAR
to match as per PAN.
(13) Every person has to link AADHAR number
with all 1their bank accounts on or before
30.04.2017. In case of failure, the banks
may block bank accounts. (More
clarification is awaited on the same)
(14) Where Sec.12AA registered trusts modify
their objects clause, they need to apply
within 30 days to CIT for approval of the
modified clauses.
- Avinash T Jain, FCA

Policy Watch
SEBI
Revision of limits of investments by
FPIs in Government Securities
SEBI vide circular no. IMD/FPIC/CIR/P/2017/30
date 3rd April, 2017 has revised the limit of
investment by Foreign Portfolio investors in
Government Securities for the quarter April to
June 2017 as follows:
Type of
Instrument
Upper cap
as on
31/03/2017
(INR Cr)
Revised
upper cap
with effect
from
03/04/2017
(INR Cr)
Government
Debt
1,52,000 1,84,901
Government
Debt-Long
Term
68,000 46,099
State
Development
Loans
21,000 27,000
Total 2,41,000 2,58,000
http://www.sebi.gov.in/cms/sebi_data/attac
hdocs/1491222641815.pdf
Company Law
Powers of Registrar of Companies to
strike off the names of companies
under section 248(1) of the
Companies Act, 2013
Ministry of Corporate Affairs vide
notification dated 12th April, 2017 has
empowered the registrar of companies to
remove/ strike off the names of
companies, whose names are listed on the
Ministry’s website and have not
commenced their business within one year
of their incorporation or have not been
carrying on any business or operation for a
period of two years immediately
preceding and have not made any
application within such period for
obtaining the status of dormant company
under section 455 of the Companies
Act,2013.
https://www.taxmann.com/filecontent.aspx?
Page=CIRNO&id=104010000000050613&isxml
=Y&search=&tophead=true&tophead=true
Amendment in Schedule III

Ministry of Corporate Affairs vide notification
no. GSR 308(E) [F.NO.17/62/2015-CL-V-(VOL.I)]
dated 30th March, 2017 has made an
amendment in Schedule III, in Division I and
Division II of the Companies Act, 2013 which
specifies that every company shall disclose
the details of Specified Bank Notes (SBN) held
and transacted during the period 08/11/2016
to 30/12/2016 as provided in the table below.
SBNs Other denomination notes Total
Closing cash in hand as on 8-11-2016
(+) Permitted receipts
(-) Permitted payments
(-) Amount deposited in Banks
Closing cash in hand as on 30-12-2016
https://www.taxmann.com/filecontent.aspx?Page=CIRNO&id=104010000000050533&isxml=Y&sear
ch=&tophead=true&tophead=true
Indirect Taxes
Service tax on service rendered by
a person located in a non-taxable
territory to a person located in non-
taxable territory by way of
transportation of goods by a vessel
from a place outside India up to the
customs station of clearance in
India.
CBDT vide notification no. 13/2017-Service Tax
has made an insertion of sub-rule (7C) under
rule 6 of the Service Tax Rules, 1994 which gives
an option to a person located in a non-
taxable territory rendering service to a person
located in non-taxable territory by way of
transportation of goods by a vessel from a
place outside India up to the customs station
of clearance in India to pay an amount
calculated at 1.4% of the sum of Cost,
Insurance and Freight value of such imported
goods.
http://www.cbec.gov.in/resources//htdocs-
servicetax/st-notifications/st-notifications-
2017/st13-updated-2017.pdf
trortation ofulated at 1.4% of the sum of cost,

Verdicts
Direct Taxation
Profit on sale of Shares that are
converted into investment from
stock-in-trade and sold at a later
stage shall be exempted u/s 10(38)
-vide decision of high Court of Calcutta, in the
case of Deeplok Financial Services Ltd V.
Commissioner of Income-tax-II, Kolkata
The honorable High Court of Calcutta vide
Deeplok Financial Services Ltd V.
Commissioner of Income-tax-II, Kolkata held
that where the assesse converted the stock-in-
trade of shares into investment and sells them
at a later stage, profit arising from such sale of
shares shall be deemed to be capital gains
and not business incomes. If such shares are
held with the assesse as long term capital
assets, the profit arising from sale of such
shares shall be exempt from tax u/s 10(38).
https://www.taxmann.com/filecontent.aspx?
Page=CASELAWS&id=101010000000174646&is
xml=Y&search=&tophead=true&tophead=true
Capital gains shall not be levied on
sale of agricultural land though
agricultural operations are not
carried on regularly on such land
-vide decision of High Court of Bombay, in the
case of Shankar Dalal v. Commissioner of
Income Tax, Goa.
The honorable High Court of Bombay vide
Shankar Dalal v. Commissioner of Income Tax,
Goa held that where the assesse sold a piece
of land on which he had planted various fruit
bearing trees (on an irregular basis) and used
the produce for personal consumption and
moreover had not filed an application for
conversion of land for non-agricultural
purpose, in such case the land still remains as
an agricultural land agricultural operations
were not carried on that land regularly and
the agricultural produce is being used for
personal consumption.
https://www.taxmann.com/filecontent.aspx?Pa
ge=CASELAWS&id=101010000000174518&isxml=
Y&search=&tophead=true&tophead=true
Disclamer
Information in this Newsletter, charts, articles,
or any other statements regarding market or
any other financial information, is obtained
from the sources, which we feel reliable. We
do not warrant or guarantee the timeliness or
accuracy of the information.The reader shall
not take any decision based on the facts or
figures of the newsletter without professional
advice.

►►► PHOTOGRAPH OF THE MONTH
Flock of Sand Pipers in low tide of Arabian Sea
- Clicked by M Siva Ram Prasad
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April 2017

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