METRICS

Indices      
BSE SENSEX 58,254 2.08% !
NSE NIFTY50 17,354 2.18% !
NASDAQ
15,645 0.69% !
Composite
NIKKEI 225 28,792 3.49% !
Currency      
USD/INR 74.47 0.83% !
Euro/INR 84.65 0.55% !
GBP/INR 100.75 -0.92% ▼
JPY/INR 0.65 2.35% !

Note: The month-on-month movement as on December 31, 2021 is represented in percentages

Source: Yahoo Finance, Investing.com

CFO WATCH

Blurbs

ECB and TC Policy – changes due to LIBOR transition

New IFRS 17 transition option

RBI issues circular to make changes in the benchmark rate after LIBOR discontinuance
In view of the imminent discontinuance of LIBOR as a benchmark rate, the RBI has issued a circular making
changes to the all-in-cost benchmark and ceiling for foreign currency ECBs/ TC. Following are the key
changes made:
• Henceforth, benchmark rate in case of ECB/TC shall refer to any widely accepted interbank rate or
alternative reference rate (ARR) of 6-month tenor, applicable to the currency of borrowing.
• To consider differences in credit risk and term premia between LIBOR and the ARRs, the all-in-cost
ceiling for new ECBs and TCs has been increased by 50 bps to 500 bps and 300 bps respectively,
over the benchmark rates.
• To enable smooth transition of existing ECBs/ TCs linked to LIBOR whose benchmarks are changed
to ARRs, the all-in cost ceiling for such ECBs/ TCs has been revised upwards by 100 basis points to
550 bps and 350 bps respectively, over the ARR.

IASB provides transition option to insurers applying IFRS 17

The IASB has issued a narrow-scope amendment to the transition requirements in IFRS 17 on Insurance
Contracts. The amendment provides insurers with an option aimed at improving the usefulness of information
to investors on initial application of the new Standard. It also adds a new transition option to IFRS 17 (the
‘classification overlay’) to alleviate operational complexities and one-time accounting mismatches in
comparative information between insurance contract liabilities and related financial assets on the initial
application of IFRS 17. This amendment is effective for annual reporting periods starting on or after January
1, 2023.
 DIRECT TAX

Blurbs

Further extension of various time-limits

Valuation report rejected basis actual performance was not in consonance with projected one was quashed
Right of personal hearing under faceless assessment is a vested right

Notifications/Circulars

Further extension of various time-limits

Considering the difficulties reported by taxpayers due to Covid and in electronic filing of various reports of
audit, CBDT further extends due dates for AY 2021-22 as under:
Compliance Original Due Dates Extended Due Dates
Report of Audit September 30, 2021
February 15, 2022
October 31, 2021
From 3CEB
October 31, 2021 February 15, 2022

October 31, 2021

Return of Income March 15, 2022
November 30, 2021
Circular No. 01/2022 dated January 11, 2022
Judicial Rulings

Right of personal hearing under faceless assessment is a vested right

The Hon’ble Court in its landmark judgment held that personal hearing is assessee's vested right and must be
granted. That the word 'may' used in section 144B(7)(viii) should be read as 'must' or 'shall', and thus, the
requirement of giving a reasonable opportunity of personal hearing is mandatory.
Bharat Aluminium Company Ltd. v. Union of India (Delhi High Court)
Assessment order replica of draft order was quashed
Where final faceless assessment order was nothing but an exact reproduction of the draft assessment order,
without considering the submissions made by the assessee, the assessment order was quashed.
Darshan Enterprise v. ACIT (Gujarat High Court)
Revision cannot be invoked in case of full examination
The court held that, the specified authority was incorrect in invoking revision proceedings, in case where
complete examination of was done by the tax officer at the time of assessment proceedings.
Concern India Foundation v. DCIT (Mumbai ITAT)
Investment in property registered in spouse's name is eligible for exemption under section 54 and
cannot be treated as owned by the assessee under section 54F
Section 54F deals with exemption from capital gain on transfer of other capital assets if investment is made in
the property for residential use if assessee does not 'own' more than one residential house. Section 54F use
phrase “owns”, hence, the residential house purchased by the assessee in spouse’s name cannot be construed
as the property owned by the assessee.
Antony Parakal Kurian v. ACIT (Gujarat High Court)

Valuation report rejected basis actual performance was not in consonance with projected one was
quashed
The court held that, under the Law, an option is given to the assessee which cannot be withdrawn. The
method of valuation is always the option of the assessee, both the methods have different approaches and
methodologies therefore there are bound to be differences, but it does not give any authority to the tax officer
to pick and choose one of the methods and make the addition. If both the methods gives the same result, there
would have been no need to prescribe the two methods in law. DCF method is based on projected figures and
on availability of the actual figures, if the future projections are not met, it cannot be said that the projections
were wrong.
DCIT v. Credtalpha Alternative Investment Advisors Pvt. Ltd. (Mumbai ITAT)

INDIRECT TAX
Blurbs
Due date for GSTR-9 and 9C extended
ITC to be available only if reflected in GSTR-2B of recipient
AAAR rules against applicability of GST on notice pay recoveries

Circulars / Notifications

Implementation of provisions of Finance Act, 2021

Various provisions of the Finance Act, 2021 have been made effective from January 01, 2022. The key
provisions are:
• No ITC shall be available unless the supplier has actually furnished the details in GSTR-1
and the same has been communicated to the recipient in Form GSTR-2B.
• No appeal can be filed against an order in respect of detention or seizure of goods or
conveyance, unless a sum equal to 25% of the penalty has been paid by the appellant.
• Self-assessed tax shall include to mean the tax payable as per GSTR-1 but not included in
GSTR-3B.
Notification No. 39/2021-Central Tax dated December 21, 2021

Due date for filing Annual return extended

For the FY 2020-21, the date of filing annual return in Form GSTR-9 and self-certification statement in Form
GSTR-9C has been extended till February 28, 2022.
Notification no. 40/2021-Central Tax dated December 29, 2021

GST on services supplied by restaurants through ECO

Clarificatory circular has been issued in respect of Notification no. 17/2021 dated 18.11.2021. The key
clarifications include ECO made liable to pay GST on restaurant services provided through it. Such liability
to be paid in cash only. The invoice towards such services shall be raised by the ECO. GST would be
applicable and charged by the ECO even if an unregistered person supplies such services through the ECO.
This would be effective from January 1, 2022.
Circular No. 167/23/2021-GST dated December 17, 2021

Judicial Rulings
Recovery from employees
The definition of business under the GST Act includes any activity which is incidental to the main object of
the company. Therefore, the recoveries made from employees for canteen facility, insurance policy and
telephone charges shall be considered as supply by employer to employee in course or furtherance of business
and taxable under GST.
M/s Bharat Oman Refineries Ltd (AAR Madhya Pradesh) 

In another case, it was held that the nominal charges recovered by employer from employee towards bus
transportation facility shall not be taxable under GST since the employer is not providing any services to its
employees and is also not in the business of providing transport / leasing services.
M/s Dr Willmar Schwabe (I) Pvt Ltd (AAR Uttar Pradesh) and M/s Integrated Decisions and Systems India
Pvt Ltd (AAR Maharashtra)

Refund of ITC on export

The petitioner shall be eligible to claim refund of unutilized ITC on export of goods, even if the said goods
are subject to tax at NIL rate of tax under GST.
M/s B.S. Minerals (Orissa High Court)

ITC on electrical works etc.

ITC is specifically restricted on any goods or services used for construction of immovable property.
Therefore, ITC in relation to central air-conditioning, electrical works, plumbing, external and internal
sewage system, shall not be eligible since such fittings, after installation, becomes a part and parcel of
immovable property.
M/s Tianyin WorldTech India Pvt Ltd (AAR Uttar Pradesh)

Notice pay recovery from employees

Merely because the employer is being compensated does not mean that any service has been provided by him
or that he has tolerated any act of the employee. Therefore, the said recovery shall not be subject to tax under
GST.
M/s Bharat Oman Refineries Ltd (AAAR Madhya Pradesh)

CORPORATE & ALLIED LAWS

Blurbs
Further extension to hold AGM through VC/OAVM
Waiver of additional fees on specified forms

Circulars / Notifications

Waiver of additional fees on specified forms of all the Companies

No additional fees shall be levied on Financial Statements, AOC-4, AOC-4 (CFS), AOC-4 XBRL,
AOC-4 Non XBRL) until February 15, 2022 and Annual Returns (Form MGT-7, MGT-7A) until
February 28, 2022 for the FY ended on March 31, 2021.
Circular No. 22/2021/MCA/dated December 29, 2021

Further extension in timelines to hold AGM through VC/ OAVM for FY 2020-21
Considering the difficulties and hardships faced by the stakeholders in conduct of AGM due to the
second wave of COVID-19 and consequent lockdown etc., Ministry had earlier extended the
timeline to hold AGMto November 30, 2021 and the same could be conducted through VC or OAVM
modes as well.
The ministry has now further extended the timeline to June 30, 2022 through VC or OAVM.
Circular No. 21/2021/MCA/dated December 14, 2021

Extension in holding EGM through VC/OAVM

Ministry has allowed Companies to hold EGM through VC/OAVM or through postal ballot upto June
30, 2022.
Circular No. 19/2021/MCA/dated December 08, 2021

Reserve Bank of India

RBI has issued clarification that NRIs/OCIs do not require prior approval of RBI for acquisition and
transfer of immovable property in India, other than agricultural land/ farm house/ plantation property.
Press Release 1439/RBI/2021-22/dated December 29, 2021

MERGERS & ACQUISITIONS

India's M&A volume in 2021 at an all-time high

M&A volume in India was near its highest level with 85 strategic deals valued at more than $75 million in
2021. M&A deals were also more broad-based than ever with more mid-sized deals ranging from $500
million-$1 billion, rather than the $5 billion+ megadeals that drove activity in 2017-2019.
This is largely driven by more and more companies using M&A to transform their business. Surplus liquidity
fuelled by low interest rate and FDI is helping companies to look at transformational deals where the
objective is not just increasing scale but building new engines of growth and new capabilities, beyond the
company’s core business.
Key M&A Deals in 2021
Months Target Acquirer Deal Size
April Aakash Institute Byju’s $1 Billion
May BigBasket Tata Digital $1.7 Billion
June Thyrocare PharmaEasy $612 Million
Aug BillDesk Prosus $4.7 Billion
Sept DHFL Piramal Group $4.7 Billion
Sept Zee Entertainment Sony Pictures $1.5 Billion
Oct Air India Tata Sons $2.39 Billion
Oct SB Energy India Adani Holding $3.5 Billion

2022 Outlook
We foresee this trend continuing and another exceptional year for Indian M&A in 2022. With many claiming
that Omicron variant is leading us towards an endemic stage, and macroeconomic factors supporting India as
a preferred investment destination, outlook for M&A is looking even stronger than before.

IN THE NEWS

Other Webinars

th
Audit Documentation during Pandemic and Critical Analysis of Arrest Provisions under GST – 24
January, 2022
Speaker: Parveen Kumar, National Head, Assurance
Parveen was invited to speak at a Virtual CPE Meeting on different issues around the challenges in audit
documentation during the Pandemic and how to overcome them.

st th
Technology as Enabler on Internal Audit – 1 and 29 January 2022
Speaker: Parveen Kumar, National Head, Assurance
Parveen was invited to speak at two virtual CPE meetings organized by The Institute of Chartered
Accountants of India on Technology as an Enabler on Internal Audit where he covered the key
challenges in internal audits and how technology could help.

st
Succession Planning in CA firms – A perspective – 31 January 2022
Speaker: Parveen Kumar, National Head, Assurance
Parveen was invited to be a speaker at a webinar organized by the Strategy Perspective Planning &
Monitoring Committee of The Institute of Chartered Accountants of India on Succession Planning in CA
firms where he discussed his opinions and experience on creating value in CA firms in India through
strong succession planning.

Book:
th
Doing Business in India – 27 January 2022
Authors– Himanshu Srivastava, Partner – Business Advisory, Sundeep Gupta, Partner – Accounting and
Business Support, Sunil Arora, Partner – Accounting and Business Support, Kim Collaco, Executive Director
– Enterprise Strategy
We launched our Doing Business in India Guide this month. In addition to the key regulatory issues to keep in
mind when entering India, we also incorporated practical insights from over 30 years of successfully assisting
foreign corporates enter India.
https://www.asa.in/insight/doing-business-in-india-guide/ (This needs to go with an image of the front page of
the book)

GLOSSARY

AY Assessment Year
CBDT Central Board of Direct Taxes
DCF Discounted Cash Flow
DCIT Deputy Commissioner of Income Tax
ITAT Income Tax Appellate Tribunal