Opinion Of CA Bharat Pahelvani (Efforts Student)

He is working with ICICI Bank. His views on Efforts.....

"Because of proper guidance and coaching of Efforts Academy , I can become a CA.

I am always thankful to Efforts team"

Opinion Of CA Abhay Gujarathi ( Efforts Student)

He is working with ICICI bank. His views on Efforts....

"I would like to thank Efforts Academy for my success as a student and as a professional. The credit of passing CA Final exam goes to Efforts Academy only.

Because of the supports of faculty members of Efforts Academy I was able to make thorough analysis of all subjects. The material provided by the Efforts Academy has helped me a lot. It has worked as a confidence builder in my exam.

Systematic teaching and systematic learning is the main Goal of Efforts."

Opinion of CA Shruti Patil ( Efforts Student)

Currently she is working with KPTL. Her views on efforts...

"I give credit of my success to god, my parents and efforts academy. Because of the support and guidance of faculty members of efforts academy, today I am a chartered accountant. To become a chartered accountant apart from theoretical knowledge, practical knowledge and logical understanding of subject is a pre-requisite. At Efforts academy, I have been able to get both. Coaching provided at Efforts Academy is excellent and I have no hesitation to say that efforts is the best coaching class for CA in GUJARAT. I am thankful to this great institute for making me a sound Charactered Accountant."

Opinion Of CA Vidhi Shukla ( student of May 11 batch)

" WHERE SUCCESS IS A TRADITION"

This is what efforts academy means. They aim this success from their every student. The rule I learned here is " NEVER WIN BY ARGUMENT, WIN BY ACHIEVEMENT"

Opinion of CA Hemant Kanojia (May 2011 batch)

My result is devoted to my parents and faculty members of EFFORTS ACADEMY. You can find best faculties at EFFORTS compared to any other coaching institute.

IFRS Lectures By CA. Brijesh Thakar

Dear Students,
We are happy to announce that all IFRS lecture videos are available for reference of CA Final students at Efforts Academy. Total size of the videos is 35 GB. Efforts students can access this videos at any time. We have put one sample video on IAS 40 ( 1st part of total 4 parts) here for your reference. To watch the video click here

CA. Brijesh Thakar's Speech at efforts seminar

To View video of CA. Brijesh Thakar's Speech Part 1 at efforts seminar click here
For 2nd Part click here

CA IPCC Costing lecture video

To view CA IPCC Costing lecture video (Chapter: Material), by CA Brijesh Thakar, Click here.

Budget Discussion By Efforts

We are pleased to announce that Efforts is organizing Budget discussion soon after budget. Those who want to participate can give their consentby way of comment

Notification 86 214

NTF. NO. 214/1986-CE, DT. 25/03/1986

Exemption to specified items if manufactured in a factory as a job work and used in the manufacture of final products


In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), (herein after referred to as Special Importance Act), and sub-section (3) of section 136 of the Finance Act, 2001 (14 of 2001), the Central Government [OLD-the Central Government ], being satisfied that it is necessary in the public interest so to do [OLD - sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Govt.] hereby exempts goods specified in column (1) of the Table hereto annexed (herein after referred to as the "said goods") manufactured in a factory as a job work and:-

(In opening paragraph part "and sub-section (3) of section 136 of the Finance Act, 2001 (14 of 2001), the Central Government" has been substituted vide Ntf. No. 54/2004-CE, Dt. 09/11/2004)

(In opening paragraph bold part has been substituted vide Ntf. No. 20/2003-CE, Dt. 25/03/2003)

(a) used in relation to the manufacture of final products, specified in column (2) of the said Table,
(i) on which duty of excise is leviable in whole or in part; or

(ii)for removal to a unit in a free trade zone or to a hundred per cent. export-oriented undertaking or to a unit in an Electronic Hardware Technology Park or Software Technology Parks or for supply to the United Nations or an international organisation for their official use or for supply to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) Ntf. No. 108/95-C.E., dated the 28th August, 1995, or

(iii) for removal under bond for export, or

(iv) by a manufacturer of dutiable and exempted final products, after discharging his obligation in respect of said goods under rule 6 of the CENVAT Credit Rules, 2002; or

(Sub-clause (iv) has been inserted vide Ntf. No. 49/2002-CE, Dt. 16/09/2002)
(b) cleared as such from the factory of the supplier of raw materials or semi-finished goods -
(i) on payment of duty for home consumption (on which duty of excise is leviable whether in whole or in part); or

(ii) without payment of duty under bond for export; or

(iia) by a manufacturer of dutiable and exempted final products, after discharging his obligation in respect of said goods under rule 6 of the CENVAT Credit Rules, 2002; or

(Sub-clause (iia) has been inserted vide Ntf. No. 49/2002-CE, Dt. 16/09/2002)

(iii) without payment of duty to a unit in a free trade zone or to a hundred per cent. export-oriented undertaking or to a unit in an Electronic Hardware Technology Park or Software Technology Parks or supplied to the United Nations or an international organisation for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) Ntf. No. 108/95-C.E., dated the 28th August, 1995,


from whole of the duty of excise leviable thereon, which is specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), the additional duty of excise leviable thereon, which is specified in the Schedule to the said Special Importance Act and National Calamity Contingent duty leviable under sub-section (1) of section 136 of the Finance Act, 2001 (14 of 2001). [OLD-which is specified in the Schedules to the Central Excise Tariff Act, 1985 ( 5 of 1986), the additional duty of excise leviable thereon, which is specified in the Schedule to the said Special Importance Act. ]

(Above part has been substituted vide Ntf. No. 54/2004-CE, Dt. 09/11/2004)

(Above part has been substituted vide Ntf. No. 20/2003-CE, Dt. 25/03/2003)

[OLD -
from the whole of the duty of excise leviable thereon, which is specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986).]

(2) The exemption contained in this notification shall be applicable only to the said goods in respect of which, -
(i) the supplier of the raw materials or semi-finished goods gives an undertaking to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise having jurisdiction over the factory of the job worker that the said goods shall be
(a) used in or in relation to the manufacture of the final products in his factory; or

(b) removed from his factory without payment of duty -(i) under bond for export; or
(ii) to a unit in a free trade zone or to a hundred per cent. export-oriented undertaking or to a unit in an Electronic Hardware Technology Park or Software Technology Parks or supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) Ntf. No. 108/95-C.E., dated the 28th August, 1995;or

(iii) by a manufacturer of dutiable and exempted final products, after discharging his obligation in respect of said goods under rule 6 of the CENVAT Credit Rules, 2002; or

(sub-clause (b)(iii) has been inserted vide Ntf. No. 49/2002-CE, Dt. 16/09/2002)
(c) removed on payment of duty for home consumption from his factory; or

(d) used in the manufacture of goods of the description specified in column (1) of the Table hereto annexed by another job worker for further use in any of the manner provided in clause (a), (b) and (c) as above.

(ii) the said supplier produces evidence that the said goods have been used or removed in the manner prescribed above; and

(iii) the said supplier undertakes the responsibilities of discharging the liabilities in respect of Central Excise duty leviable on the final products.

(Above Bold Word (1) & (2) has been amended vide Exc.Ntf. No.35/2000, Dt. 4-5-2000)

Explanation I. - For the purpose's of this notification, the expression "job work" means processing or working upon of raw materials or semi-finished goods supplied to the job worker/ so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process.
Description of inputs Description of final products
(1) (2)
All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than polyester filament yarn falling under heading 5402 and tariff item 54060010 [OLD- 54061000 ] [OLD- heading No.54.02 ], light diesel oil [OLD - light diesel oil ], high speed diesel oil and motor spirit, commonly known as petrol All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986).

[OLD -
All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than matches.]

[OLD -
All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely, -
i. matches
ii. fabrics of cotton or man-made fibres falling under chapter 52, chapter 54 or chapter 55 of the First Schedule to the said Act.
iii. fabrics of cotton or man made fibres falling under heading No. 58.01, 58.02, 58.06 (other than goods falling under sub-heading No. 5806.20), 60.01 or 60.02 (other than goods falling under sub-heading No. 6002.10) of the First Schedule to the said Act.]
(In above column (1) the figures "54060010" has been substituted vide NTF. NO. 48/2006-CE, DT. 30/12/2006)

(In above column (1) the figures and words "heading 5402 and tariff item 54061000" has been substituted vide NTF. NO. 20/2006-CE, DT. 01/03/2006)

(Entry in column (2) has been substituted vide NTF. NO. 02/2006-CE, DT. 13/02/2006)

(In column (1) words "light diesel oil" has been substituted vide NTF. NO. 26/2004-CE, DT. 09/07/2004)

(Column (2) has been substituted vide Ntf. No. 20/2003-CE, Dt. 25/03/2003)

(In column (1) words "light diesel oil, high speed diesel oil" has been substituted vide Ntf. No. 16/2003-CE, Dt. 01/03/2003)



Notification No. 214/86-C.E., dated 25.3.1986 as amended by Notifications no. 218/86-C.E., dated 2-4-1986; No. 350/86-C.E., dated 20-6-1986; no. 12/87-C.E., dated 23-1-1987; No. 81/87-C.E., dated 1-3-1987; No. 204/87-C.E., dated 9-9-1987; No. 145/90-C.E., dated 17-9-1990; No. 79/91-C.E., dated 25-7-1991; No. 60/94-C.E., dated 1-3-1994; No. 117/94-C.E., dated 27-6-1994; No.133/94-C.E., dated 21-10-1994; No. 68/95-C.E., dated 16-3-1995; No. 91/95-C.E., dated 18-5-1995; No. 96/95-C.E., dated 26-5-1995; No. 20/96-C.E., dated 23-7-1996; No. 59/97-C.E., dated 30-8-1997, 60/97-C.E., dated 1-9-1997; Ntf. No. 33/2000-C.E., dated 31-3-2000; Ntf. No. 35/2000-C.E., dated 5-4-2000; and Ntf. No. 31/2001-CE(NT), dated 21-6-2001 & Ntf. No. 5/2002-CE(NT), Dt. 1/3/2002.


(Please refer Cir No.637/28/2002-CX,Dt.08/05/2002)

Cenvat on Mobile phones

The judgment, that the entire India Inc has been keenly waiting for is finally out. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled in favour of the industry and held that service tax paid on mobile phones is eligible for availing Cenvat credit.
Earlier, the Ministry of Finance had clarified that “Credit of Service Tax paid on Telephones: In regard to credit of service tax on telephone connection, queries have been raised as to whether service tax credit would be admissible on telephone sets installed only in the business premises. The answer is in the affirmative, and credit will be allowed only on telephone sets installed in the business premises. Mobile phones are not covered.”
But who will challenge the ministry circular, more so since the service tax component on such mobile phone usage is very small and appeals to the tribunal involving meagre amounts always face the risk of being shown the door.
Fortunately, despite such a situation, CESTAT in the present case felt it appropriate to entertain the appeal of the company and pass an order on the same, as it was a recurring issue.
The period involved in the case was December 2004 to February 2005 and after hearing both sides, the tribunal observed that the old circular dated of 2003 on which sole reliance has been placed to deny the credit of service tax was relevant under the old service tax credit rules, 2002 which required the telephones to be installed in the business premises of the service provider.
Further, CESTAT said that since no such stipulation exists in the new Cenvat Credit Rules, 2004, the old circular could not be pressed into service. Also, rule 4(1) of the Cenvat Credit Rules, 2004 states that credit in respect of inputs may be taken on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of the output service and there is no stipulation regarding receipt of input service, which is separately defined under the rules.
That is not all the tribunal clarified that sub-rule (7) of rule 4 merely provides that Cenvat credit in respect of input service shall be allowed on or after the date on which the payment is made for value of input service and service tax paid or payable is indicated in the invoices, bills or challans.
The tribunal observed...
: that there is no provision anywhere in the rules disallowing credit of service tax paid on mobile phones, which in any case is fast replacing fixed line phones in many establishments. And in the absence of any express prohibition under the new Cenvat Credit Rules, 2004, service tax paid on mobile phone is available as credit to eligible service providers of output service and manufacturers. CESTAT set aside the order of the lower appellate authority and the appeal was allowed.

Rule 4 of the Cenvat credit rules clearly defines that the credit available on any service can be utilised while paying duty on output service or product. We can very well adjust the credit available on mobile bills PROVIDED THE MOBILES ARE REGISTERED ON THE SAME NAME OF THE COMPANY ETC. WHO IS LIABLE TO PAY THE OUTPUT DUTY

CA Institute should provide copy of answersheet to students- Says Court

The Delhi High Court on Thursday directed the Institute of Chartered Accountants of India (ICAI) to provide students with certified copies of answersheets under the Right to Information Act.

Justice S Ravindra Bhat dismissed contentions raised by the institute that answersheets fell beyond the purview of the RTI, holding that students were well within their rights to access them.

ICAI is an institute. You should apply pragmatism and set examples for others. You should start by yourself... Many institutes do that and allow students to inspect their copies," Justice Bhat told the ICAI, which had challenged a Central Information Commission verdict to provide certified copies of papers to students who failed the exams.

Additional Solicitor General Parag Tripathi, appearing for ICAI, submitted that the Supreme Court in its order of 2007 rejected the candidates' right to demand answersheets.

Inclusion of Interest in Closing Stock Valuation- By CA. Brijesh Thakar

A question has been raised by many of you whether interest can be included in closing stock valuation?

I would like to reply to this question with reference to AS-2, AS-16 and ASI-1.

As per AS-2, interest can not be included in Cost of inventory, except to the extent permissible under AS-16. AS-16 says that borrowing cost can be capitalized on qualifying asset if recognition criteria given in AS-16 is fulfilled.

As per AS-16, qualifying asset means an asset which necessarily takes substantial period of time to get ready for intended use.

Hence if inventory takes substantial period of time to get ready for intended use, interest can be capitalized on cost of inventory.

Note: As per ASI-1 there is a rebuttable assumption that substantial period of time means a period of more than 12 months.

PHOTOS OF EFFORTS SEMINAR

Dear friends,

The photos of seminar organised by Efforts, at Ambedkar Hall, Sector-12, Gandhinagar on 16th February, are now available online.

To view the album, Click here.

Yes, We have done it. Efforts CS Final Result 100 %.

Team Efforts is extremely pleased to share with all that Efforts first CS Final Batch Result is 100 %. Overall result of India is around 9 % and Ahmedabad Chapter result is around 13 %. This great achievement is a result of dedicated hard work of team members of Efforts.

Efforts is always committed to deliver the best. This is just a beginning. There is a lot to come.

Treatment Of Prior Period Item under Indian Accounting Standard and IFRS- By CA. Brijesh Thakar

As per AS-5, Prior Period Item has been defined as,

“Prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more prior periods.”

AS-5 requires separate disclosure of prior period item in financial statements of current year, whereas as per IFRS we have to restate comparative figure of prior period in case of prior period item.

Lets take an example to understand the treatment under Indian accounting standard and IFRS.

X ltd is having monthly salary expenditure of Rs. 10000. However due to omission it did not provide for salary expense of March, 2008. This omission was detected in 2008-09. Hence as per Indian Accounting standard, salary expense will be shown in financial statement as

2007-08
Salary Expense 110000 (10000*11)
2008-09
Salary Expense 120000(10000*12)
Prior Period Item 10000

Under IFRS instead of showing Rs. 10000 as prior period item, we will restate the comparative figure of 2007-08. Hence we will show salary expenses of Rs. 120000 in 2008-09 and related comparative figure of 2007-08 will be made Rs. 120000.

Treatment of Extra-ordinary items in case of EPS- By CA. Brijesh Thakar

Many times a question has been asked by students that when there is an extraordinary item in the statement of profit and loss account, whether Earning Per Share should be disclosed including extra ordinary item or excluding extra ordinary item?

This question is of significant importance because profit or loss arising from extra ordinary items may affect investors decision making. Let me explain the significance of this question with the help of an example

Profit/loss attributable to equity share holders 1,000,000 ( 2005-06) 1,500,000(2006-07) 1,575,000 (2007-08)
(before extraordinary item)

Loss due to fire (Extra-ordinary item) - - 1,000,000 (2007-08)

Profit/loss attributable to equity share holders
(after extraordinary item) 1,000,000 ( 2005-06) 1,500,000 (2006-07) 575,000 (2007-08)

Weighted Average No of Shares Outstanding 100,000( 2005-06) 100,000 (2006-07) 100,000 (2007-08)

EPS 10( 2005-06) 15(2006-07) 5.75(2007-08)

In the above mentioned example, EPS in 2007-08 is significantly lower in comparison to previous years. This has happened because of loss due to fire which is an extra ordinary item, which is not expected to recur again. Hence Showing EPS including extra-ordinary item may show a misleading picture.

Here, I wish to mention two para of AS- 20. First is Para 12 which says that All items of income and expense which are recognised in a period, including tax expense and extraordinary items, are included in the determination of the net profit or loss for the period. Hence EPS should be shown including Extra- ordinary item. Second is para 48 which says that “In addition to disclosures as required by paragraphs 8, 9 and 44 of this Statement, an enterprise should disclose the following:
(i) where the statement of profit and loss includes extraordinary items (within the meaning of AS 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies), the enterprise should disclose basic and diluted earnings per share computed on the basis of earnings excluding extraordinary items (net of tax expense);

Hence whenever there is an extra ordinary item, EPS should be disclosed including extra ordinary item and excluding extra-ordinary item also.
In the above mentioned example, during the year 2007-08, EPS of Rs. 5.75 (including Extra-ordinary item) as well as EPS of Rs. 15.75 (Exluding Extra-ordinary item) both will be disclosed.

Note: In case of IFRS, this question will not arise because under IFRS concept of Extra-ordinary item is not there.

Accounting of Machine Spares- By CA. Brijesh Thakar

According to Accounting Standard Interpratation-2, there are two types of machine spares. First are those which cannot be used as in connection with a particular item of a fixed asset and whose use is not irregular. This kind of spares are called revenue spares and they should be treated as inventories as per AS-2. The second type of spares are those which can be used only in connection with particular item of fixed asset and whose use is expected to be irregular. Such spares should be accounted for as per AS-10. These spares are called capital spares.

Capital spares should be capitalized separately, whether purchased along with principal fixed asset or purchased subsequently. Depreciation should be charged on these spares on a systematic basis over a period not exceeding the useful life of the asset to which they relate.

Now , here I wish to mention a very specific point raised by recent EAC opinion. In case of accounting for machine spares in addition to para 4 of AS-2 and para 8.2 of AS-10, para- 23 of AS-10 also plays a significant role. According to this para, Subsequent expenditures related to an item of fixed asset should be added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Hence, whenever capital spare replaces the worn out part part of particular asset the written down value of the capital spare at the date of replacement should be immediately written off. This is done because replacement of the spare does not increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Let me explain the whole treatment with the help of an example.

X ltd purchased some capital spares on 1st January, 2005 for Rs. 200000. These spares can be used with an item of fixed asset whose outstanding useful life on 1/1/2005 is 10 years. Till 1/1/2008 this spare was not used in the fixed asset. Now suppose on 1/1/2008 this spare was used to replace a worn out part of fixed asset.

In the above mentioned example we can clearly see that annual depreciation on capital spare will be Rs. 20000 (200000/10years). Hence every year X ltd will write off Rs. 20000 to profit and loss account. On 1/1/2008 this spare is used to replace a worn out part in fixed asset. 3 years depreciation on this spare will be Rs 60000 ( 20000*3) On 1/1/2008 WDV of the spare will be Rs. 140000 (200000-60000). This WDV of Rs. 140000 should be written off to profit and loss account on the date on which the capital spare replaces the worn out part i.e. on 1/1/2008. This is done because replacement of the spare does not increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Important Announcement from ICAI

Following Announcement has been made by the ICAI on its web site regarding CA Examination to be held in the month of May 2009: Since the Elections to the Lok Sabha and Legislative Assemblies of some States are likely to be held in the months April and May, 2009, it has been decided to hold the next Chartered Accountants PE-II, PCE, Final (Old and New course), IRM, MAC (Part I), TMC (Part I), CMC (Part I), ITL & WTO Examinations tentatively from 1st to 15th June, 2009 instead of May, 2009. Similarly, the next Common Proficiency Test (CPT) in paper-pencil mode is likely to be held tentatively on Sunday, the 28th June, 2009. The detailed Examination Notification containing the exact date schedule for the various examinations and the examination Centres will be issued shortly and hosted on the Institute's website.

Efforts seminar for commerce students

Efforts is pleased to announce that we have arranged career guidance seminar for commerce students on 16th february, 2009 (monday) at Ambedkar Hall, Sector- 12 at 4.00 pm.

Efforts will shortly announce detailed schedule and contacts from where entry pass can be obtained.