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Business Advisor (Fortnightly inputs for professionals and executives) Volume I Part 4

Volume I Part 4 December 10, 2012

December 10, 2012

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Contents Entertainment and amusement services - T. N. Pandey Duties of directors: Dos and don’ts - Dr S. Chandrasekaran IFRS convergence - Vidhyadhar Kulkarni Automatic stay of income-tax recovery - V. K. Subramani Second-hand implements (cartoon) - Bimbadhar Mishra Retail design and merchandising - Anand Chandrashekaran Service Tax: Negative List, positive codes - Dr Sanjiv Agarwal Corporate Social Responsibility (CSR): Business leaders’ views      

Suresh Thimri, CEO, QNet India SunGard Vidya Shankar, Trustee, Shriram Foundation Brotin Banerjee, MD and CEO, Tata Housing Kazutada Kobayashi, President and CEO, Canon India From press releases: o CII o Deloitte o KLM o ISQ

Case laws update - V. K. Subramani Subscriptions: http://bit.ly/ShriMagz

Disclaimer: "Management and editors do not necessarily agree with the views of the authors in their articles and of the readers in their letters, and of the query editors in their replies. The editors, authors and / or publishers shall not be responsible for any kind of result generated out of any action taken on the basis of suggestions, etc., made in any of the write ups, interviews contained in any part of the magazine or for any error, omission, commission to any person, whether subscriber or otherwise. The copyright of all the materials printed herein including articles, queries and replies etc., rests with the publishers". Volume I Part 4 December 10, 2012

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Corporate Social Responsibility (CSR): Business leaders’ views QNet Suresh Thimri, CEO QNet’s CSR arm ‘RYTHM foundation’ sponsors school libraries in Ladakh. QNet partners with Avalokitesvara Trust to establish RYTHM Libraries for fifteen schools in remote areas of Ladakh, in an effort to nurture and educate children in isolated villages of Ladakh, including those on the IndoPakistan and Indo-China borders. Most schools in this region do not have adequate facilities for educational support. Children in these schools have very limited access to reading material and their lives are typically limited to the remote, mountainous terrain where they live. With the establishment of the RYTHM libraries, QNet and Avalokitesvara Trust aim to enhance the joy of learning and empower these children with the gift of previously unavailable learning materials. The project is installing libraries and spaces for effective learning to support existing private, government, and monastic schools. Some of the key initiatives under the project are in the following areas: • Sourcing and collection of children’s books for libraries in schools. • Designing, installing and furnishing reading spaces in existing schools. • Conducting learning modules, art and drama workshops in schools. • Providing children with games, toys, sports equipment, art and stationery supplies. • Medical camps for vaccinations and treatment for respiratory and skin infections. • Sponsorship of individual children, including tuition fees, annual and boarding expenses.

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• Empowering Ladakhi teachers with educational resources, teaching aids and training opportunities. A key pillar of the RYTHM Foundation is education. There are a number of initiatives all over the country to promote education and learning, but very little reaches the remote areas of Ladakh. Avalokitesvara Trust has undertaken an admirable but uphill task to help these young children, many of whom travel several hours every day to reach their school, or stay in monasteries and meet their families only once a year. We would like to help ease that burden in some small way and support their thirst for knowledge through the RYTHM libraries. Quote of Abhigya Shukla, founder of Avalokitesvara Trust: “The project hopes to see children in the rural schools of Ladakh enhancing their learning experience and imagination through the activities and opportunities provided by these libraries. They will gain more insight into worlds beyond the standard curriculum in their schools and the isolated surroundings in which they live. We have already started to reach out to Changtang, an especially remote and deprived area of Ladakh, and hope to extend our work to similarly needy parts of Zanskar and Kargil district in coming years.” About QNet (www.qnetindia.in) QNet is one of the world’s fastest-growing online shopping and business communities, with upwards of five million customers and independent distributors around the world. The company offers an entrepreneurial network marketing business opportunity and a portfolio of lifestyle products that have been developed to enhance the lives of its customers through innovation, wellness and luxury. Established in Asia in 1998, QNet utilises the direct sales business model on a proprietary e-commerce platform to market and distribute its exclusive products. India is one of QNet’s fastest growing markets. About Avalokitesvara Trust ‘Avalokitesvara Trust’ works on improving educational opportunities and learning environments for children in rural schools in Ladakh. People interested in donating children’s books, stationery, educational games and

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toys, sports equipment, and health supplies can write to avalokitesvaratrust@gmail.com. Donations for sponsoring a child or a school library are welcome. The team is also on the lookout for volunteers with or without prior teaching experience to work with the children. For details, visit www.facebook.com/avalokitesvaratrust. SunGard SunGard has been named a 2012 Computerworld Honors Laureate for its work in supporting microfinance. The Honors program, founded in 1988, annually recognises organisations and individuals who have used information technology to promote and advance public welfare, benefit society and change the world for the better. Quote of John Amato, Vice President/Publisher of Computerworld magazine: “There’s no question technology plays a vital role in driving business forward. It ensures an organisation’s ability to compete, innovate, communicate and to thrive. What the Computerworld Honors Laureates so clearly demonstrate is technology’s role in moving society forward. Computerworld acknowledges and applauds the outstanding work being done by individuals and organisations who have successfully used

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technology to improve the quality of our lives and that of future generations.” Long-time SunGard client, Morgan Stanley, nominated SunGard for the award in the category of Economic Development, highlighting SunGard’s work with Mifos — the Grameen Foundation’s open source technology platform for microfinance institutions (MFI). The Grameen Foundation has a simple goal — to help poor people, especially those living in hard to reach areas, have access to microfinance and technology and as a result of this access, move themselves out of poverty. SunGard has been directly involved in supporting MFIs in India and SouthEast Asia by providing technology strategy assistance, product deployment and customisation and supporting ongoing reporting needs. Notable work in India has been done with Grameen Koota and Adhikar Microfinance who together work with over half-a-million families. In addition, SunGard has been working with organisations in the Philippines and Africa, benefitting more than 200,000 families. SunGard also provides technology strategy assistance to the growing number of MFIs who have needs beyond Mifos implementation. These interventions are mostly in the areas of building an IT investment and architecture roadmap that is lean and efficient. Most of our work has been in helping these institutions progressively integrate disparate data sources for better reporting to funding agencies and regulators, greater transparency to donors and better decision making ability for the institution. Congratulations to everyone involved in helping SunGard earn this prestigious honor, including core team members Seetha Rajagopalan and Chetan Bekkinkeri as well as the following SunGard employees who volunteered on their own time after hours and on weekends to contribute to this worthwhile cause: Aravind Deivendran, Arvind Rao, Kavitha Viswanathan from Asset Management; Aditya Yadav, Soundararajan Velu and Phaneesh Nagaraja from Advanced Technology Services (in Global Services and Distribution); Rajesh Kollam from Wealth Management; Satiya Prasath; Chetan Garga and Akila Krishnakumar. Many thanks also to Mack Gill, Michael Driscoll, Don Wood, and many others, for their active support of SunGard’s efforts in this area. The 2012 Laureates were selected by a panel of 22 distinguished judges — many of them Computerworld Premier 100 IT Leader Honorees from diverse industries — to evaluate the humanitarian benefits and measurable results of applying technology to meet a specific social need. Representatives from SunGard joined the other 2012 Laureates and industry luminaries for a black tie Awards Ceremony and Dinner on Volume I Part 4 December 10, 2012

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Monday, June 4 at the Andrew W. Mellon Auditorium in Washington, D. C. All Laureate case studies are inducted into the program’s International Archives and featured online at www.cwhonors.org. This is the second time SunGard has been recognised as a Laureate by the Computerworld Honors Program. In 2009, SunGard earned the award for its innovative Infinity Software-as-a-Service Solution. Your Acts of Kindness The eagerness with which brand new school bags are opened to reveal a fresh set of notebooks, and a gleaming new pencil box replete with colourful pencils and crayons is an experience that all of us cherished when we were young. Now, many underprivileged children will also be able to enjoy that experience, and take their first steps into learning. GSC employees in Pune and Bangalore participated in separate contribution drives to raise money for school kits, books and other basic school needs for underprivileged children in their communities. In SunGard Pune, a ‘School Kit’ charity drive was held over May and June to support the NGO Seva Sahayog, and saw many contribute wholeheartedly towards buying school kits for underprivileged children. These children come from families who struggle to meet their basic needs, and education for them would have remained a distant dream, if it was not for the efforts of organisations like Seva Sahayog that have taken up their cause. Through their association with socially conscious corporates and individuals, Seva Sahayog is helping children build a better future, and SunGard has been proudly supporting their efforts for the past three years. This time SunGard Pune employees contributed Rs 2,00,000 and with a matching contribution from the company, a total amount of Rs 4,00,000 was handed over to Seva Sahayog. The money will go towards providing school kits and other school needs and touching the lives of more than a thousand children. Quote of Shailesh Ghatpande, Director, Seva Sahayog Foundation: “To see the children’s faces light up with excitement at the sight of their new school kits is indescribable.” In SunGard Bangalore, the ‘Back to School’ drive in support of the organisation Vishwas raised Rs 81,000 from employees. The total amount of Rs 1,62,000 including the matching company contribution was handed over to Vishwas to help fund tuition fees, bags, books and other basic school needs for the children of Vishwas. SunGard Bangalore employees have been associated with various initiatives for Vishwas over the past few years. Volume I Part 4 December 10, 2012

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SunGard Donates 60 Computers SunGard has recently donated 60 desktop computers to NGOs Swadhar and Chandraprabha Charitable Trust in Pune. The 50 computers donated to Swadhar have been set up by the NGO at three schools that they support Raosaheb Patwardhan School, Erandawane Madhyamik High School and VidyaVardhini High School. The 10 computers donated to Chandraprabha Charitable Trust have been set up at Prabhakar Rege Ashramshala, their own educational facility that helps students complete their school curriculums before taking their exams at state-run schools. These latest donations of computers are part of SunGard’s ongoing Digital Equaliser Program aimed at bridging the digital divide for children and students from less privileged sections of society. Shriram Foundation Vidya Shankar, Trustee Shriram Foundation (www.shriramfoundation.org) was started in 1993, inspired by JRD Tata ‘s statement of purpose for corporates, as a small project for destitute children. We moved into the area of education as a mode of empowering children and families especially in underserved communities. Soon the team realised that social transformation is tied to the school, its ethos and culture. It was not enough to have a child-centred, caring environment and a relevant pedagogy for children in schools, but the responsibility was far beyond that in rural villages. Shriram Foundation anchored these findings into real-time channels and strategies that provided for disseminating and receiving positive culture from the very milieu the schools were located. Our schools are aimed at being spaces of cultural negotiation and amalgamation, and a collective transformation of society. Our initiatives include small and medium Shriram schools in rural communities of Tamil Nadu and Andhra Pradesh, which have vocational curriculum built in from a very young age.

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Our expansion plans are partnership with schools that are ready for enhanced learning processes that we will install, anywhere in the country, where local youth and energies are waiting for a catalyst for start up of the social reform process, very much embedded in education of the whole community. Giving vocational education its due place has happened with the increasing and encouraging patronage for our Shriram Vocational and Community college courses in our various premises. Our successes are small, but we are confident of the track we have chosen. Tata Housing Brotin Banerjee, MD and CEO Tata Housing lays a strong emphasis on the Corporate Social Responsibility, by virtue of being part of group that believes in giving back to society they serve. In keeping with the Tata Group philosophy, we support and strengthen key communities around our project sites by contributing resources in the areas of infrastructure development, health, education, etc. These include by organising health camps, giving donations, forming trusts and giving a helping hand towards the needy. Towards this end we have earmarked 1% of our net profit at the corporate level, Rs 4 per square feet and Rs 6 per square feet of built-up area of each project in Smart Value homes and Tata Housing respectively. Our activities include sustainable construction, welfare of construction of workers and vocation skill training. Some the recent activities spearheaded by Tata Housing include: Infrastructure development, computer education, labour camps, neighbourhood ground water recharge activities etc. At Tata Housing we see it as a core deliverable and form a mandate for all our constructions. Be it value homes or high-end luxury villas, all projects of Tata Housing are sustainable green developments certified by IGBC. We have also launched a Green CSR initiative under the banner of BIG (Beautiful is Green). BIG is promoted as a national campaign to drive awareness on small changes leading to big difference, within the vision that acts of small green initiatives will bring in a greener sustainable tomorrow. Through this initiative we persuade people to share Green ideas, take the Volume I Part 4 December 10, 2012

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green pledge and also motivate them to make a green switch and be recognised as a green switcher by shifting from their normal non green practices of daily lives to greener and sustainable alternatives About Brotin Banerjee In a career spanning 13 years across key Tata Group companies, Brotin Banerjee has acquired an in-depth understanding of the Indian consumer. Banerjee joined Tata Housing Development Company Ltd (a 100% subsidiary of Tata Sons) in 2006 as Deputy Chief Executive Officer. In 2008 he was appointed as Managing Director and Chief Executive Officer of the company, giving him the distinction of being one of the youngest MDs of the Tata Group. Banerjee was the leading force behind the turnaround of a lossmaking company into a profitable organisation, with over 50 million sq ft under various stages of development. During his tenure, Banerjee has revolutionised the face of the real estate sector, by pioneering innovative concept of low-cost housing under Shubh Griha brand. He is also the proud recipient of the Pathfinders Award for the “Most Enterprising CEO” at the Realty Plus Excellence Awards 2010 for his contribution in shaping Tata Housing Development Co Ltd as one of the most innovative, customer centric and successful companies in real estate today. Apart from this, Tata Housing also pioneered Sustainable Integrated Green Township Development, by virtue of which, it is the only player today with a holistic approach to the real estate segment with a pan-India presence. Today, the company is recognised for its landmark projects, ethical business practices and a consumer centric approach. For innovative technology and design, the company has also won many awards such as the Top 10 Developers of India by Construction World, Developer of the Year by Construction Week, GIREM 2010 for Best Real Estate Developer, GIREM 2009 for Promising Future Company, Multiple awards at Asia Pacific Property Awards 2009 and 2010 among others, both at a domestic and International level. For a period of two years (2004-2005), Banerjee was deputed to Barista Coffee Company Ltd., in the role of Vice President – Marketing, Strategy and Corporate Communications. His role was to ensure the revival of the brand that was the pioneer in building the ‘out of house’ coffee culture in India. He was subsequently promoted to the role of Chief Operating Officer. Not only did he stabilise the company but during his time many innovations and new products were launched (Barista Crème, Barista Radio, Barista Smart Card etc.), which had helped Barista become an aspirational and premium brand. Pitch magazine in its anniversary issue in October ‘04 featured him in the Volume I Part 4 December 10, 2012

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list of top 50 marketing professionals in India. During his tenure, Banerjee ensured that Barista became one of the country’s most successful, premium and aspirational brands. Banerjee was placed in Tata Chemicals as a Product Manager – Branded Salt, where he was instrumental in the successful re-launch of Tata Salt Brand with the most popular campaign (Tata Namak – Desh Ka Namak) as well as in increasing its market share to its highest level till then. He had the vision to cater to the bottom of the pyramid and in the year 2001. Tata Chemicals launched a low-cost branded iodised salt ‘Samunder’ in order to reach the bottom of the pyramid and successfully convert the un-branded salt users to use Iodised Namak. Armed with a MA (International studies) from the School of International Studies, Jawaharlal Nehru University, New Delhi, Banerjee joined the prestigious TAS (Tata Administrative Services) in 1998. He also holds a BA Honours degree from St. Stephen’s College, University of Delhi. Banerjee was elected as a Professional Member of The Royal Institution of Chartered Surveyors in 2011. He is currently the Chairman of CREDAI’s Affordable Housing Committee and is also an active member of CII and FICCI’s real estate committees. Canon India P Ltd Kazutada Kobayashi, President and CEO At Canon India we have always believed that good values and good business go hand in hand. CSR is about growing our business responsibly. As a responsible business, Canon India takes pride in being socially inclined, and focuses on sustained and effective CSR projects. The CSR policy aligns with the corporate philosophy of ‘Kyosei’ which means living and working together for common good. We believe that organisations should focus not only on the economic well being of the nation it operates in but also upon its social fabric. Keeping up with its commitment of giving back to the community it operates in, Canon has been actively involved in various projects to reach out to less fortunate and contribute for their development. We recently announced the launch of our new CSR initiative - ‘Adopt a Village’ and adopted Ferozepur Namak village in Haryana. The programme aims to support the village with core interventions in eye care, education and environment for a period of three years.

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As part of our 2012 initiatives, Canon India had earlier organised eyescreening camps across 6 states of India. We also partnered with UNICEF ‘Awaaz Do’ campaign to promote the right to education in India. We have successfully adopted two green belts to support plantation of trees and organised blood donation camps in Bangalore and Hyderabad, where more than 300 employees of Canon had donated blood. Starting 2013, Canon India will be partnering with Rapid Metro Rail and will be adopting six green belts for a greener environment. In addition, it also aims at adopting more and more villages across India to touch the lives of millions. About Kazutada Kobayashi Kazutada Kobayashi joined Canon in 1980 after his graduation from Keio University’s Political Science Faculty in Tokyo. He has spent 25 of the past 32 years working in the company’s various overseas operations in Germany, the Netherlands, and Hong Kong. Kobayashi was appointed as President and CEO of Canon Hong Kong Co Ltd in 2008 and was responsible for the company’s strategic management and direction. Besides Hong Kong, Kobayashi was also responsible for Canon’s business in the Philippines, Taiwan, Macau and Mongolia. Now, Kobayashi is steering the helm at Canon India P Ltd w.e.f. January 2012 as President and CEO, overseeing the Chief Executive function of the overall management of the company and leading the company to growth in the Indian sub-continent. Kobayashi is a keen sportsman who enjoys playing tennis, golf and fishing. He also likes cooking very much and is a passionate traveller who has visited more than 30 countries around the world. 1980 - Joined Canon Inc., after University Graduation 1981 - 1982 Appointed as trainee to Canon USA, Camera Sales Operations 1982 - 1983 Canon Inc., Video Product Marketing 1984 - 1991 Canon Europa NV in Amsterdam, Video Product Operations 1991 - 1992 Canon Euro-Photo GmbH in Dusseldorf, Germany, Assistant Product Manager for Video and Camera Marketing 1993 - 1995 Canon Inc., Manager of Sales and Marketing for Solar-Cell Product Operations in Ecology Laboratory at Kyoto Volume I Part 4 December 10, 2012

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1995 - 1998 Canon Europa NV, Manager of Sales for Solar-Cell Product Operations 1999 - 2000 Canon Europa NV, Marketing Manager for Inkjet Printer and Scanner Department 2001 - 2004 Canon Europa NV, General Manager of Sales Division in Canon Consumer Imaging Business Unit 2005 - 2008 Canon Inc., General Manager of Strategic Market Development Division, Inkjet Product Operations 2008 - 2011 Canon Hong Kong Co. Ltd., President and CEO 2012 Canon India Pvt. Ltd., President and CEO ** From press releases CII Chandrajit Banerjee, Director General CII, welcomed Sachin Pilot’s assurance that the Ministry of Corporate Affairs will consider and work with the Finance Ministry in allowing the 2 per cent post tax CSR spend for offset under the IT provisions so that this expense did not tantamount to be another surcharge. The Minister’s proactive measure on this front is very appreciable. While the comply or explain provision is part of the Bill, the Minister’s initiative in getting a tax set off on the CSR spends, will come as a positive measure in boosting Industry’s sentiment on this subject. Banerjee further mentioned that CII had all along maintained that mandatory provisioning of CSR expenses could actually be counterproductive. Indian Industry, according to various surveys, was already engaged in productive CSR activities which were not in the nature of merely writing cheques but have made true value additions to society. CII is happy that the Minister intends giving a free hand to Industry in working out and implementing their CSR initiatives and encouraging selfreporting of CSR activities. CII also welcomes the Minister’s statement to involve industry in framing the Rules related to CSR provisions under the proposed Act, so that necessary flexibilities may be incorporated in its implementation. Volume I Part 4 December 10, 2012

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Deloitte Deloitte’s impact in community development • Over 17000 employees to take to the streets • Working in over 432 projects • 8,42,000 people impacted in 10 years With a strong belief in inclusion and social responsibility, over 17,000 Deloitte employees took to the streets on November 23, 2012 spanning 9 cities, aimed at touching and contributing to lakhs of people. Working in over 432 projects, professionals at all levels in Deloitte were involved in various aspects of education, health care, sanitation, environment, sensitisation camps, refurbishing orphanages, cleaning archaeological sites and monuments, besides many of the programmes that they have associated themselves with. They provide skillsbased volunteering and a helping hand to hundreds of NGOs where they share their knowledge and expertise. Speaking on this occasion, Impact Day, Hari Kumar, Principal, Deloitte LLP, USA said: “It is an opportunity for Deloitte’s people to put their passion, determination, and skills to use for the benefit of their communities. In the first year of this initiative in 2003, Deloitte started with 600 volunteers who reached out to and touched the lives of 5000 people. Ten years later, Deloitte has over 17,000 professionals across nine cities devoting time and energy to impact over 2,40,000 people. We have come a long way and still have a long journey before us.” Rani Desai, Chief People Officer, Deloitte in India, said, “We have always encouraged our people to volunteer and be a part of such initiatives. The best part about this day is the fact that it is completely planned and executed by our professionals. It is their passion that results in impacting more than 2,40,000 people in a single day.” Over the last 10 years, around 40 percent of Deloitte’s overall community involvement effort has been dedicated towards the betterment of education in the country. Through Impact Day’s continuous education initiatives, Deloitte professionals have helped underprivileged students learn vocational Volume I Part 4 December 10, 2012

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skills that make them more employable and help in deciding the right career path. Deloitte has been featured in the Limca Book of Records since the 2007 edition for the maximum number of community hours delivered in a single day. A brief on the various Impact Day projects in India Hyderabad • 270 projects in Hyderabad • 3 big threads with over 500 volunteers • Focus areas: Infrastructure developments in underprivileged schools, transformation of AIDS patients building, developing a unique herbal garden. Mumbai • 60 projects in Mumbai. • Focus areas: Health camps and educational workshops for street children, environmental awareness, health camps to check cancer patients in slums, spending time with elderly in old-age homes, refurbishing of old school rooms, book donation. Delhi • 42 projects in Delhi • Focus areas: Sensitisation camps on eye donation, promotion of sustainable development in society, spending time with underprivileged children by engaging them in games and educational workshops, camp for animal lovers. Bangalore • 45 projects in Bangalore • Focus areas: Public awareness on health issues, cleaning up a lake, cleaning up a public park, improvement of underprivileged school facilities. Volume I Part 4 December 10, 2012

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Pune • 2 projects in Pune • Focus areas: Setting up solar lights for tribal children while studying, create a story wall for blind students. Kolkata • 2 projects in Kolkata • Focus areas: Games and activities for physically challenged children, education camps for children in slum areas. Ahmedabad • 5 projects in Ahmedabad • Focus areas: Awareness programmes on evils of tobacco, alcohol addiction, spending day with children afflicted with leprosy, environmental protection. Chennai • 6 projects in Chennai • Focus areas: Sensitisation programme on mental disabilities in educational institution, spending a day with children in an orphanage, spending a day with cancer patients. KLM For the third year in a row, KLM organised the “From Holland” food and wine festival on board all KLM flights from Amsterdam in the month of October and November. During the festival, we introduce our passengers to typically Dutch produce, meals and traditions. The theme in Business Class is “from Dutch sea and soil” treating our guests to Dutch produce. “The festival and theme ‘from our own soil and sea’ fits in well with KLM’s approach to Corporate Social Responsibility. The produce is really Dutch and really fresh. With this festival, KLM draws attention to the distinctive character of the Netherlands and gives passengers the opportunity to experience as much of ‘Holland’ as possible during their journey,” explains Erik Varwijk, Managing Director KLM.

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This year the festival focused extra attention on local Dutch produce and farming. The meals KLM served on intercontinental flights in World Business Class (WBC) during the festival are made from ingredients produced by Dutch farms, fisheries and suppliers: William of Orange potatoes from Flevopolder, Reypenaer cheese from Woerden, and pike-perch with the Zuiderzeezilver label, which are caught in the lakes of Holland. As a snack, passengers get to enjoy a classic Dutch favourite: a croquette in a roll. In Economy Class passengers were able to savour typically Dutch snacks and meals. Regional favourites such as “stroopwafel” syrup biscuits and bread rolls filled with Beemster cheese, or red cabbage with minced-beef meatballs followed by traditional cream-filled, chocolate-coated “Bossche” balls were all on the menu. Besides these special treats, passengers were also able to enjoy Dutch films, music and programmes using the Inflight Entertainment System. (www.klm.com) About Air France - KLM Air France KLM, the result of a merger between Air France and KLM in 2004, is one of the leading European air transport groups. Its main activities are the air transport of passengers and cargo as well as aircraft maintenance. In 2011, Air France KLM carried 75.8 million passengers and 1.1 million tonnes of cargo. The group’s fleet comprises more 586 aircraft, including 173 regional aircraft operated by its partners Brit Air, City Jet, Regional and KLM Cityhopper. Its network covers 230 destinations in 113 countries from its hubs at Paris-Charles de Gaulle and AmsterdamSchiphol. The Flying Blue frequent flyer programme is leader in Europe and has over 21 million members. With their partners Delta and Alitalia, Air France and KLM operate the biggest transatlantic joint venture with more than 250 daily flights. Air France and KLM are members of the SkyTeam alliance which has 18 member airlines, offering customers access to a global network of nearly 15,000 daily flights to 993 destinations in 186 countries. Indian Society for Quality (ISQ) Indian Society for Quality (ISQ) awarded L. Lakhsman, Executive Chairman, Rane Group with Jamshetji Tata Award for his outstanding contribution to the Indian society through his exceptional leadership and his holistic focus Volume I Part 4 December 10, 2012

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on quality. The award was presented by Dr V. Krishnamurthy, Chairman, National Manufacturing Competitiveness Council at a gala function held in Delhi. Jamsetji Tata Award is given to industry leaders who have made a significant contribution to the Indian society through their work of leading an organisation with exceptional and holistic focus on quality. They are persons with humility, constancy of purpose and determination. The Award is given to those who have demonstrated outstanding results and are role models. Accepting the award L. Lakshman said, “To be nominated for an award named after the greatest of industrial builders of India and the visionary who established the Indian Institute of Science is a great honour indeed. That it relates to quality management, a discipline close to my heart makes it even more special. Over the years, Rane has won a few awards relative to quality management. But this I consider very special and will cherish.” L. Lakshman (LL) steered the Rane Group during a very challenging and exciting phase in the automobile industry’s evolution and transformation in India. Under his leadership, Rane Brake Lining Limited, Rane Engine Valve Limited, Rane TRW Steering Systems Limited and Rane (Madras) Ltd won the coveted Deming Prize. In 2011, Rane TRW Steering Systems Limited (SGD) won the prestigious Japan Quality Medal, the highest milestone of TQM. In 2012, Rane (Madras) Limited also won the Deming Grand Prize (formerly Japan Quality Medal). Rane Holdings Limited is the apex company of the Rs 26.5 billion (US$ 500 million) Rane Group, an acknowledged leader in the auto component industry. Rane Group works with a number of overseas companies, TRW Inc. USA and NSK from Japan being the major partners. LL is a Mechanical Engineer from the PSG College of Technology, University of Madras and an alumnus of London Business School, UK. Joining one of the group companies as a Management Trainee in 1970, he worked his way up to become the Chairman of the group in 1992. Even as a high school student, at vacation times LL used to go around the Rane factories. It stood him in good stead when LL started working for Rane. Right from day one he had the reputation of a person who will not hesitate to work hands on.

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On joining Rane Brake Lining Limited, LL went to work with the collaborator DON International in Manchester, UK. This was a tremendous exposure. Not only a new cultural experience, but also an exposure to the scientific step-by-step approach to problem-solving and management. Besides, whatever he learnt from his father and uncle, there were two mentors. The first was F. P. Parkes, the Managing Director of DON International in Manchester, UK. The other gentleman was R. V. L. Thathachari, a member of Rane board. A lawyer by background, he had incisive knowledge of laws and statutes and had uncanny ability to get to the heart of issues. In addition to being a Director in Rane group of Companies, LL serves as an Independent Director in public limited companies such as Automotive Stampings and Assemblies Limited, DCM Engineering Limited, Force Motors Limited, SRF Limited and Tata Auto Comp Systems Limited. LL has been spearheading the CSR initiatives of Rane Group and is the Managing trustee of Rane Foundation (RF), a public charitable trust founded by Rane Companies. Under the aegis of RF, Rane Polytechnic Technical Campus (RPTC) has been established in Tiruchirapalli District in 2011 to augment human capital formation in vocational skills. He chairs the RPTC Governing Council. LL is also a member of the Governing Council of The Banyan, Chennai, a long-standing NGO engaged in rehabilitating destitute women. LL’s passion has been People and Processes. He firmly believes that a well developed human resource talent base coupled with robust processes form the foundation for an organisation’s long term sustainability and growth. He continues to mentor the HR, TQM and IT leaders in the group. Apart from being a former president of ASSOCHAM, ACMA and Madras Chamber of Commerce, LL has also been an active member in various industry forums. LL is a keen sportsman. His interests are Tennis, Cricket and Swimming. A voracious reader, books and journals on philosophy, management and physics are of specific interest to him. He is also an ardent lover of Indian classical music. (Inviting inputs from business leaders/CEOs on how they are fulfilling CSR in their enterprises. More particularly the projects/ initiatives falling under CSR in the current year, with details about the money set apart for the purpose. Also, the plans for the coming year. Mail to dmurali@outlook.com). Volume I Part 4 December 10, 2012

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Case laws update V. K. Subramani Expenditure on a project abandoned not eligible for depreciation Superfil Products Ltd v. Asst. CIT (2012) 20 ITR (Trib) 171 (Chennai): Expenditure incurred towards expansion of project was held as capital expenditure and when the project was abandoned, still it cannot be allowed as revenue expenditure. Similarly, machinery procured for the abandoned new project when not put to use is not eligible for depreciation. Duty drawback equal to duty paid is includible as income derived from industrial undertaking Suzlon Energy Ltd v. Dy. CIT (2012) 20 ITR (Trib) 391 (Ahd): Refund of duty drawback is of two types. One, being the drawback equal to the amount originally paid on raw material or on import. Such drawback, when refunded, would form part of the income derived from the industrial undertaking. Where the drawback is based on All Industry Rates (AIR) and the refund could not be linked to the exact amounts paid but is a fraction or a proportion of the duty paid earlier, then such refund cannot be said to be derived from eligible industrial undertaking. Date of uploading return reckoned for issue of notice u/s 143(2) E.K.K And Co v. Asst. CIT (2012) 20 ITR (Trib) 325 (Cochin): When the return is uploaded electronically and the form ITR-V was received later by the Centralised Processing Centre (CPC), the return filing date must be with reference to date of uploading return. Receipt of ITR-V by CPC is not to be considered for reckoning time limit for issue of notice under section 143(2). Deduction under section 80-IA without reducing losses of eligible units Jindal Aluminium Ltd v. Asst. CIT (2012) 54 SOT 283 (Bang): Where the assessee is engaged in more than one eligible business in terms of section 80-IA, loss from one unit would not go to reduce the benefit of deduction of the entire profits of any other unit or units. In other words, where a unit makes profit and is eligible for the deduction, such deduction is not to be reduced by the loss suffered in any other eligible unit. Technical repair is different from technical service Addtl. DIT (Intl. Taxation) v. BHEL-GE-Gas Turbine Servicing (P) Ltd (2012) 77 DTR (Hyd) (Trib) 29: Where gas turbines were sent abroad for repairs and the Volume I Part 4 December 10, 2012

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amounts were paid towards repair charges to the party outside India, there will not be any income which is deemed to accrue or arise in India. The tribunal held that ‘technical repairs’ could not be equated to ‘technical services’. Payment made to non-residents towards such repairs is not liable for tax deduction under section 195. Exchange fluctuation form part of export turnover Mainetti India (P) Ltd v. Asst. CIT (2012) 77 DTR (Chennai) (Trib) 60: While computing deduction under section 10AA any exchange gain or loss from export realisation must be considered as forming part of export turnover. In CIT v. Amba Impex (2006) 282 ITR 144 (Guj), it was held that foreign exchange fluctuations are to be treated as part of sale proceeds and hence liable to be adjusted in the export turnover for the purpose of computing deduction under section 10AA. It is change of opinion if AO had applied his mind during assessment but reopens the case on the basis of audit objection. GMR Holdings (P) Ltd v. Dy. CIT(2012)75 DTR (Bang) (Trib) 439: Where the AO had considered the materials furnished by the assessee and completed the assessment, later based on audit objection, if the assessment is sought to be reopened it is tantamount to change of opinion on same facts and material – which is not permissible in law. (The author is a Chartered Accountant, Erode)

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List of contributors to this issue T. N. Pandey, Former Chairman, Central Board of Direct Taxes Dr S. Chandrasekaran, Senior Partner, Chandrasekaran Associates, Delhi Vidhyadhar Kulkarni, Chartered Accountant, Mumbai V. K. Subramani, Chartered Accountant, Erode Bimbadhar Mishra, Senior Manager at Andhra Bank, Hyderabad Anand Chandrashekaran, Executive Director, The Gormei Market, Chennai Dr Sanjiv Agarwal, Partner, Agarwal Sanjiv & Company, Jaipur Suresh Thimri, CEO, QNet India SunGard Vidya Shankar, Trustee, Shriram Foundation Brotin Banerjee, MD and CEO, Tata Housing Kazutada Kobayashi, President and CEO, Canon India CII, Deloitte, KLM, ISQ

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Business Advisor On finance, accounting, controls, risk management, taxation, and more‌

Published by: Shrinikethan, Chennai http://bit.ly/ShriMap Edited by: D. Murali http://bit.ly/dMurali http://bit.ly/TopTalk December 10, 2012 Volume I Part 4 December 10, 2012

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Business Advisor - December 10, 2012 - Contents  

Entertainment and amusement services-T. N. Pandey; Duties of directors: Dos and don’ts-Dr S. Chandrasekaran; IFRS convergence-Vidhyadhar Kul...

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