Advocate B.S.K.RAO
1. Below are the accounting bodies of various country’s world over on date, In spite of this, they have separate bodies/legislation for regulation of Tax Professionals. Reason being, situation similar to that of latest Supreme Court verdict in the case of Bar Council of India Vs A.K.Balaji about Practice of Law by only Advocates/Attorneys arisen (See Exhibit-1). More over each professional body mentioned below possess members in the range of 1,00,000 to 5,00,000. In fact, in all below mentioned country’s, population is less & existing members are sufficient to meet the requirement of their economy. Indian position is different. India is highly populated, existing 65,570 practicing Chartered Accountants spread throughout India does not meet the requirement of our country (See Exhibit-2). Therefore, India needs Tax Practitioners Bill to generate Tax Professionals to support voluntary compliance for widening genuine tax base of assesses.
AICPA (USA), ACCA (UK), CICA(Canada), CGA (Canada), CICMA(Nigeria), CIMA(UK),CIPFA (UK), CPA (Australia), GCPAS (Germany), ICIA(Canada), HKICP (Hong Kong), ICAA (Australia), ICAEW (UK), ICAI (Ireland), ICAI (Financials-India), ICAI (Cost & Management-India) ICAS (UK), ICMAP (Pakistan), IFA (UK), MIA(Malaysia), NZICA (New Zealand), PICPA (Philippines), SAICA (South Africa), MIA(Malta)
2. Our esteemed Central Govt. should come out with subordinate legislation; introduce Tax Practitioners Bill covering all Tax Law Professionals in India also. Such Tax Practitioners Bill should be introduced with preamble stating that “Majority of person practicing tax law in India are Non-Advocates, in order to protect them & also in the interest of Govt. revenue, this Tax Practitioners Bill has been introduced”. Then such Tax Practitioners Law can not be struck down in view of SC verdict in the case of Bar Council of India Vs A.K.Balaji. Treasury Department Circular No.230 for regulations governing practice before the Internal Revenue Service in USA (See Exhibit-3) & Tax Agent Service Act of Australia (See Exhibit-4) are very good examples for kind consideration of Deptt. of Revenue, Ministry of Finance, Govt. of India to have similar Tax Practitioners Law in India also, to widen genuine tax base of assesses.
3. Among Legal Practitioners, Cost & Management Accountants, Company Secretaries, Chartered Accountants and Income-Tax Practitioners, who wants to practice tax law in India, should mandatory seek registration under Tax Practitioners Law, whatever their parent body say is immaterial & Tax Practitioners Law should recognizes the qualifications acquired by all five class of Tax Professionals mentioned above. Population wise India is a large country, Govt. can not relay on one professional body for seeking voluntary compliance under Indian taxation laws. Tax Practitioners Bill is well suited to India, required for India & need of the hour. Why can’t India have professional body to generate Tax Professionals to support voluntary compliance for very purpose of collection of revenue under all Indian taxation laws. I hope Deptt. of Revenue, Ministry of Finance, Govt. of India will consider this suggestion of mine working in the interest of all Tax Professionals and Govt. revenue since 2001.
Main primary motto of ICAI (Finacials), ICAI (Cost & Management), ICSI & BCI is to protect the interest of their members only. They are all least bothered about Govt. revenue & talk about only core competance & expertise of their members. On date there is no professional body to support voluntary compliance to protect the interest of Govt. revenue. Therefore, it is right time our esteemed Central Govt. should come out with subordinate legislation, introduce Tax Practitioners Bill to form Tax Practitioners Board covering all class Tax Professionals to meaningully widen genuine tax base of assessees in India. I am confident, if such bill is introduced in the parliament, definetly tax base in India will be widened. Similar Tax Practitioners Law is prevailing various country’s through out the world. I have already submitted copies of such Tax Practitioners Law of other country’s to Central Board of Direct Taxes for kind consideration.
R.Chandrakanthan ji.
I want explain here, There was 95% cases in which department made additions more than 2 lac covered u/s 44AB tax audit done by CA,s.In mostly cases addition sustained upto Supreme court. Than what is difference between CA’s & income tax officers. I think offices are doing their duty with more concentration. It will not be wrong if B.COM holder ITP’s given tax audit.
Except this CMA, ADVOCATES & CS role cann’t be denied reasons for it:-
Tax Aduit u/s 44ab comprises 70% interpretation of laws, so for Advocates role in tax audit can’t be ignored.
CMA ROLE: Audit u/s 44ab comprises valuation of assets & stock. Which is practice area of CMA’s.
For widen genuine tax base all practitioners u/s 288(2) should be authorised for tax audit.
Balancing and surprising actions will be there but will it be for tax law practices is a million dollar question.!
BALANCING AND SURPRISING ACTION OF MINISTRY OF FINANCE EXPECTED IN FORTHCOMING FULL FLEDGED BUDGET ABOUT THE ISSUE OF TAX LAW PRACTICE ?
IF GOVT. CONSIDER THE ABOVE SUGGESTION OF THE AUTHOR, MOTTO OF MODI GOVT. TO CREATE SELF EMPLOYMENT WILL BE SATISFIED WITH INCREASED REVENUE COLLECTION. NOW, DUE TO CERTIFICATION FROM ONE CLASS OF PERSONS IN ALL INDIAN TAXATION LAWS LEADING TO PROVIDING FULL EMPLOYMENT TO SUCH ONLY ONE CLASS OF PERSONS ONLY, ALSO CAUSING HURDLE FOR VOLUNTARY COMPLIANCE
SUGGESTION GIVEN BY THE AUTHOR SHOULD HAVE TO BE CONSIDERED BY THE GOVT. IN THE INTEREST OF ALL INCLUDING GOVT. REVENUE.
ICAI(FINANCIALS), ICAI(COST & MANAGEMENT), ICSI & BCI etc. like so many professional bodies are there in India to protect the interest of their members only. Why 2nd opinion for introduction of Tax Practitioners Bill for very purpose of collection of revenue to widen genuine tax base of assessees by generating Tax Professionals? Why Govt. should relay on one professional body for collection of revenue under Indian taxation laws ?
IN VIEW OF MANDATORY CA CERTIFICATES IN ALL INDIAN TAXATION LAWS, NEW NON-CA TAX PROFESSIONALS ARE NOT ENTERING TAX PROFESSION. ICAI (FINANCIALS) IN ORDER TO GIVE FULL EMPLOYMENT TO EXISTING MEMBERS, WIDENING THE DEMAND SUPPLY GAP OF CAS. THIS HAS RESULTED IN SHORTAGE OF CAS AT DISTRICT & TALUK LEVEL TO SUPPORT VOLUNTARY COMPLIANCE FROM NON-CORPORATE ASSESSEES COVERED BY TAX AUDIT WHO ARE DEALING IN AGRICULTURAL PRODUCE. THAT IS WHY COMBINED REVENUE FROM RETURN FILED IN ITR-4 & 5 COVERED BY TAX AUDIT IS STILL ONLY 40 THOUSAND CRORES. PRESUMING AGRICULTURAL & INDUSTRIAL OUTPUT RATIO OF 80:20 & NON-CORPORATES COVERED BY TAX AUDIT ALSO ENGAGED IN SERVICE SECTOR, COMBINED REVENUE FROM ITR-4 & 5 SHOULD HAVE CROSSED RS 15,00,000 CRORES. CBDT SHOULD CONSIDER THIS STRONG POINT BEFORE ACCEDING TO WISHES & SUGGESTION OF ICAI (FINANCIALS)GIVEN FOR FULL FLEDGED BUDGET 2014.
I have retired as Additional Commissioner of Commercial Taxes and enrolled as Advocate.I am also a post- graduate in Commerce and Business Administration.The Advocates Act and Bar Council Rules may be amended so that the Advocates can join the Limited Liabilty Companies of Chartered Accountants to practice together.Most of the officers of Tax Departments have neither done B.L./C.A. nor M.Com/M.B.A. but raise upto the top level and discharge their duties with the training and experience in their Department. Government may allow the B.B.A.,B.A(Corporate),B.Com.,A.C.S.,A.I.C.W.A., holders and others,to be practitioners provided they get through in the Departmental Examinations prescribed for the officers or Examinations prescribed as equivalent; but they can not be considered on par with C.A.s to conduct Audit and certify.Some States allow A.I.C.W.A.s to furnish Audit Certificates due to shortage of qualified C.A.s. and to reduce the cost.
SIR, I FULLY AGREE WITH YOUR VIEWS AND SUGGESATIONS,
OUR COUNTRY NEEDS THIS TYPE OF LEGISLATION,WHEN TAX PRACTIONERS CAN DO THE VAT AUDIT,WHY CAN”T INCOMETAX AUDIT. GOVT SHOULD THINK IN THIS ASPECT.
Very good suggestion.Completely agree with the author
you are right sir, we are always supporting you sir
PRACTICE OF LAW IN INDIA IS PREROGATIVE POWER OF ADVOCATES IN VIEW OF LATEST SUPREME COURT VERDICT IN THE CASE OF BAR COUNCIL OF INDIA VS A.K.BALAJI. THIS ALSO CONFIRMS TO SECTION 29 OF ADVOCATES ACT. HENCE, ADVOCATES ACT, 1961 ITSELF VERY WELL TAKES CARE OF UNAUTHORISED PRACTICE OF LAW IN INDIA. IN USA UNAUTHORISED PRACTICE OF LAW IS SUPERVISED BY PERMANENT COMMITTEE ON UNAUTHORISED PRACTICE OF LAW IN SUPREME COURT, BY ISSUING OPINION ON REGULAR INTERVALS ON EACH ACTIVITY REFERRED TO IT. THEREFORE, INDIAN POSITION OF CURBING UNAUTHORISED PRACTICE OF LAW IS VESTED IN STATUTE BOOK OF ADVOCATES ACT, 1961 & VERY MUCH POWERFUL. IF PERMANENT COMMITTEE ON UNAUTHORISED PRACTICE OF LAW IS SET-UP IN SUPREME COURT OF INDIA, NON-ADVOCATES CAN NOT PRACTICE INDIAN LAWS ANY MORE. THIS WILL HAPPEN IN FUTURE. THEREFORE, I STRONGLY SUGGEST TAX PRACTITIONERS BILL IN COMMON INTEREST OF ALL TAX PROFESSIONALS IN INDIA
Income tax audit u/s 44AB is a 70% legal Audit & 30% is a financial audit.
Assessees are properly abiding Section 40A(3)a & other deductions is a legal opinion. It should be covered under legal audit as per Hon’ble SC judgement. Only Advocates should be authorised for this kind of opinion.
Other parts of audit u/s 44ab to verify gross sales & purchases.
2) Verify expenses with vouchers.
3) verify sources of addition in Capital a/c.
4) verify household expenses.
also easily done by Income tax practitioners & audit power should be given to all.
As I read all views in respect of Tax practioner bill should be on legal formation.In my opinion CA ,those student who cleared CPT ,or those who have partial tests have been passed but not cleared the final examination of CA,CS ,MBA,Graduate in commercial subjects,and overall who complete the graduation in commerce subjects will be Tax practioner.
Here is no question about he is capable knowledge or not ,but he has knowledge of commerce subjects.
Recognition is the best as per law ,which is helpful for any one who have knowledge .
Clear CA and practice tax! No shortcuts pls!
REGULATION GOVERNING ADVOCATES IN ADVOCATES ACT,1961 IN INDIA IS VERY POWERFUL WHEN COMPARED TO REGULATION GOVERING ATTORNEYS IN OTHER COUNTRY’S. IN FACT, PREROGATIVE POWER TO PRACTICE LAW HAS BEEN VESTED ON ADVOCATES IN ADVOCATES ACT. SUCH PREROGATIVE POWER NOT VESTED ON ATTORNEYS IN OTHER COUNTRY’S. UNAUTHORISED PRACTICE OF LAW IS MONITORED BY PERMANENT COMMITTE ON UNAUTHORISED PRACTICE OF LAW OF RESPECTIVE SUPREME COURT IN USA. IF SUCH PERMANENT COMMITTEE IS ALSO FORMED IN SUPREME COURT OF INDIA, ONLY ALTERNATIVE IS THE SUGGESTION GIVEN BY THE AUTHOR IN THE ABOVE ARTICLE. FURTHER, U/S 35(1) OF ADVOCATES ACT, LEGAL PRACTITIONERS MAY BE PUNISHED NOT ONLY FOR PROFESSIONAL MISCONDUCT, BUT ALSO FOR OTHER MISCONDUCTS TO MAINTAIN THE DIGNITY OF PROFESSION.
The C.B.D.T should have to conduct one or two examination for tax Professional as per the standard they want to fix. Any Post Graduates Like M.com, M.B.A, C.A, C.S, C.M.A and Advocates are Authorise to appear in that Examination and this examination should purely relates to Income tax law. The Person who pass the Said Examination and that person is Authorise to do any act relates to income tax for any Clients. This thing will reduce the burden on C.B.D.T whether C.A, C.S. Advocates etc and out of which who is more competent to handle the income tax law and regulations.
Further the certificate of Practice registered under the C.B.D.T is given to the Concerned person by the Tax Department.
It is evident the practiceners and professionals are finding ways and means of oprtimising the income of their clients which tantamounts to manipulation. This is not public interest but jugglery with complex rules and regulations. It is time legal luminaries read the text below which has gone without comments.
Everything is fine except the contention of the writer in the concluding sentace of the main text, in the ‘interest of tax professionals and govt. revenue’. The governments interest should always be people at large, ‘aamadmi’ first and the rest later. All legal professionals are fighting for their clients and to save them, nothwithstanding the facts of the case. The time has come to shift the goal of the legal professionals from ‘the interest of their clients’ to the ‘truth and facts’. It is not uncommon to see how the cases are won on technical grounds, not properly mashalling the witness, time bar, etc etc.,. The legal system needs a thorough revamp, where, once the facts of the case is established, the arguments must invariably for quantum of punishment etc. The cases are to be won by merits and not by the nack of the advocates/arguments. Most of the cases are persued on ‘prestige’ issue, be by govt., or a ‘party’, and the judgements come after prolonged time.
Every citizen should be permited to defend his case by himself, if he so desires, like in Administrative Tribunals and not to make it mandatory to engage a legal luminary/practisioner. How many persons are there who collect legal fees from their clients and show the income properly? What is the difference between official receipt and actual receipt. Time to introspect. – See more at: https://taxguru.in/chartered-accountant/tax-practitioners-bill-required-india.html#comments
The C.B.D.T should has to fix one or two examination as per the standard as they want to fix. Any Post Graduate like M.com, M.B.A , C.A, C.S, C.M.A and Advocates were authorise to appear in that examination and the person who pass that examination and then the person is authorise to do any type of Income tax Practice for any client. This Examination is based on only topics related to Income Tax law.
Further the Certificate of practice as registered under the C.B.D.T is given to concerned person by Tax Dept.
A Very nice post, sir. And a good suggestion,indeed.
K.S.Balasubramanya Sir,
I have got proof to show CA making Op. Bal. Plus Payments = Receipts Plus Cl. Bal. in Receipts & Payments Account of an educational institution, if you provide your e-mail address, I will send the same.
My e-mail : raoshimoga@gmail.com
Furnishing Certificate & Reports in Income-Tax Act require both interpretation of facts & law. Interpretation of facts is not a tough job, but interpretation of law is a tough job. Practice of law is the Prerogative Power of Advocates in India. Whereas practice of Cost Accounts, Management Accounts & Financial Accounts are only powers vested, but not the prerogative powers of respective professional body. Because, penalty has been prescribed U/s 45 of Advocates Act, 1961 for persons illegally practicing the Profession of Law. Under Indian Constitution CAG are the Auditors with wide powers, carrying out meaningful job. Due to T.D.Venkat Rao (SC) case only Chartered Accountant issue Tax Audit Certificate in Income-Tax Act. In view latest verdict in the case of Bar Council of India Vs A.K.Balaji (SC) Section 288(2) of Income-Tax Act require deletion from the the statute. In the result only CAs will conduct Tax Audit & only Advocate will plead & act before the Income-Tax Authorities. Can any one imagine the ill effect of this situation to Govt. revenue & troubling assessees to approach more than one Tax Professional to give compliance in Income-Tax Act.
IF TAX ADVOCATES THROUGH OUT INDIA ISSUE SECTION 80 CPC NOTICE TO MINISTRY OF FINANCE GOVT. OF INDIA OBJECTING THE ISSUE OF ACCOUNTANT PRACTICING INCOME-TAX, CENTRAL EXCISE & SERVICE TAX LAW BECAUSE OF RETAINING APPEARANCE CLAUSE SECTION 288(2) OF INCOME-TAX ACT READ WITH RULE 12A OF INCOME-TAX RULES (HERE NON-ADVOCATES AUTHORISED TO PREPARE RETURN ON BEHALF OF ASSESSEES), SC WILL ISSUE CONTEMPT ORDER RESULTING IN DELETION OF APPEARANCE CLAUSE IN ALL INDIAN TAX LAW STATUTE. ONLY REMEDY IS INTRODUCTION OF TAX PRACTITIONERS LAW IN INDIA ALSO. I HOPE THAT EVERY BODY WILL UNDERSTAND THE SERIOUS ISSUE IN QUESTION AND SUGGEST THE GOVT. TO COME OUT WITH TAX PRACTITIONERS BILL IN INDIA ALSO.
Practicing Law Without a License ?
By Michael A. Gould, CPA/ABV/CFF, ASA, CFE, CVA
September 2, 2011
As the lines of many professional services continue to blur, CPAs are often called upon to extend their roles into practice areas that bump dangerously close into another profession’s turf. The pressure to create “value- added” services has led CPAs to become facilitators for solving just about everything, from technology, capital requirements and real estate, to mergers and acquisitions, insurance and investments. However, when our role as “most trusted advisor” leads to performing services that many consider the practice of law, serious concerns arise. For example, it is not uncommon for CPAs to assist in the formation of new entities, such as corporations, partnerships and Limited Liability Companies (LLCs) using internet incorporation services or directly with the New Jersey Department of Treasury. Some CPA firms even employ an attorney who performs such legal services, as the drafting of wills and trusts.
Are these services crossing the line? Is it wise to have an attorney on staff ? By performing certain legal services for the client, do CPAs put themselves at risk, or are they merely redefining/expanding the role of the profession?
Forming Corporations, Partnerships and LLCs
When it comes to helping a client form or reform a legal entity, the law was modified on June 13, 2011 with the issuance of Opinion 47 from the Committee on the Unauthorized Practice of Law (“Committee”), appointed by the New Jersey Supreme Court. However, while a little gray, still is fairly well-defined on its position regarding CPA restrictions.
Prior to Opinion 47:
The Committee ruled in Opinion 2 (May 15, 1969) on the following question:
“May an accountant, not a member of the bar of New Jersey, acting for another, prepare a Certificate of Incorporation for filing with the Secretary of State of New Jersey?” The opinion states:
“It is the opinion of this committee that such action constitutes the unauthorized practice of law.” The opinion goes on to state, “The preparation of the corporate charter, by-laws and resolutions and related activities such as merging, consolidating and dissolving corporations, issuing corporate securities, increasing and decreasing capital stock all require expert legal skill and knowledge, and constitute the practice of law.”
The answer was clear: CPAs should steer clear of the formation of new entity service, or risk being found practicing law without a license. In addition, using internet services providers for formation services, according to Opinion 2, also violated the New Jersey Supreme Court’s ruling. The Court’s Opinion 2 states:
“The fact that the certificate of incorporation follows a prepared form available to the public generally will not mitigate the offense of unlawful practice, since the discretion and judgment exercised in determining the proper contents and the consequences thereof fall within the province of an attorney.”
The Committee reiterated its Opinion 2 in Opinion 12 (January 4, 1973) when the same Supreme Court Committee was asked “May a corporation, engaged in the business of selling pension plans to professional organizations, offer, for a stated fee, payable to the corporation, to have all incorporation papers prepared by the corporation’s attorney and to complete and file with theInternal Revenue Service a qualified corporation trust agreement ?”
The committee’s response was definitive:
“… it is clear that the offer of a corporation to form a corporation constitutes the unauthorized practice of law. The fact that the corporation may have the incorporation papers prepared by its attorney does not mitigate the offense, as the attorney would be acting for the corporation by which he was retained, not for the principals who were interested in the formation of the corporation.”
This statement is of particular interest, as it infers that even a CPA firm with an attorney on staff — just as the in-house attorney of the pension plan service provider — would be improperly practicing law when forming a corporation for a client other than his employer.
The Supreme Court’s findings under Opinion 2, from a strict reading, also state that dissolving a corporation for a client would be considered an unlawful practice of law.
The Committee issued Opinion 40 on this topic —“Businesses and Individuals Providing Services to the Public in the Preparation and Filing of Paperwork Sold in ‘Do-It-Yourself’ kits,” issued on June 21, 2004. It is interesting to note that the committee explains that the opinion arose “… from multiple grievances received from sitting judges and from other persons who complained about kits, or were given services beyond the mere purchase of the kits, or who were provided with legal assistance or advice by lay persons or non-New Jersey admitted attorneys.” This opinion reinforces opinions 2 and 12 when it states:
“Although non-lawyers who sell ‘do-it-yourself’ kits may help the purchaser by typing, transcribing, or translating, they are not permitted to counsel, advise, analyze, or otherwise help the purchaser complete the forms in the kits.”
In a letter to the New Jersey Society of CPAs in October 2004, the committee referenced Opinion 40, making the following request:
“It is our hope that you would undertake to acquaint your members with the Opinion’s holding. We want to avoid wherever possible having New Jersey Certified Public Accountants brought before our committee charged with the unauthorized practice of law.”
New Rules based on Opinion 47 issued on June 13, 2011 !
Opinion 47 modifies and reaffirms certain portions of Opinion 2. This opinion was issued in response to an inquiry by a New Jersey lawyer requesting an opinion on non-lawyers drafting corporate documents. The lawyer stated that he frequently encounters “poorly drafted operating agreements prepared by accountants or other laypeople.” In “balancing the public interest” the Committee both reaffirmed and modified certain parts of Opinion 2.
It is important to first state what Opinion 47 reaffirmed that constitutes the unlawful practice of law without a license. The opinion states:
“The Committee hereby reaffirms this prior opinion [Opinion 2] in part: preparing corporate operating agreements, by-laws, resolutions, and similar legal documents is the practice of law and may only be performed by lawyers.”
The Committee determined that these documents “set forth the internal procedures and rules for the corporation” or any other type of entity. Specifically, Opinion 47 states “Drafting such documents requires discretion and sound legal judgment to anticipate potential problems and protect the client. The legal expertise of a lawyer is required.”
So it is still clear, preparing corporate operating agreements, by-laws, resolutions, and similar legal documents by non-lawyers, including CPAs, is the unlawful practice of law without a license. CPAs should stay away from drafting these documents.
However, Opinion 47 gives accountants some relief to provide certain entity formation services. The Committee modified Opinion 2 by allowing non-lawyers to:
“…present to customers prepared, fill-in-the-blank certificates of incorporation, certificates of formation, statements of qualification, and certificates of limited partnership (collectively referred to as “certificates”) and type, transcribe, or translate the customers’ information in the form documents. Non-lawyers, however, may not advise or counsel the customer as to the appropriate contents of the certificates.”
In addition, Opinion 47 singles out CPAs for what appears to be some additional leeway when it states:
“…accountants who are licensed (i.e., certified public accountants) may advise clients as to the appropriate contents of certificates provided the licensed accountants inform their clients that assistance of counsel in the drafting of such documents is advisable.”
This provision is similar to modified Opinion 10, referenced below, that permits CPAs to prepare and file New Jersey inheritance tax returns as long as the client is notified, in writing and before the CPA commences work on the return, that a review of the return by an attorney may be desirable due to the possible application of legal principles related to the preparation of the inheritance tax return.
The CPA can now provide entity creation services to their clients as long as he/she informs the client that the assistance of an attorney is advisable regarding the preparation of these documents. The CPA should continue to steer clear of preparing corporate operating agreements, by-laws, resolutions, and similar legal documents which the Committee considers the practice of law that can only be performed by lawyers.
Attorneys Employed by a CPA Firm
The court must have had some kind of vision of the professional world converging in the future, for as early as 1964, it set rather interesting ground rules into place for the cross-employment restrictions of Legal and CPA professionals. In Opinion 23 (January 9, 1964), the court was asked: “May a member of the Bar of New Jersey engage in the practice of law in this State simultaneously with the practice of public accounting?” In response, the court’s opinion states:
“… we find that the dual practices of law and accounting … by lawyers would not violate the Cannons of Professional Ethics. Nor does it appear to us that any other rules of our Supreme Court would be violated by such dual practices.”
While one would expect this finding would permit CPA firms to hire lawyers to serve in practice while at the same time permit law firms to employ attorneys who also hold CPA licenses to serve dual masters, the opinion, unfortunately, does not cover CPA firms who hire attorneys. The opinion specifically addresses lawyers practicing law in New Jersey who are also CPAs and practicing public accounting. If a CPA firm employs an attorney, in order for that attorney — assuming he or she is a member of the New Jersey bar — to perform and bill legal services for clients, he or she must do so under the banner of a New Jersey law firm, not the CPA firm.
Inheritance Tax Returns
While it would appear that our law firm colleagues hold the winning position with respect to dual-practice issues, there is one area where the NJSCPA successfully reclaimed a small square of turf involving tax returns.
In its Opinion 10 (November 1972), the Committee on the Unauthorized Practice of Law ruled that “… the preparation of an inheritance tax return requires the application of a gamut of legal principles, and that its preparation by a non-lawyer, acting for another, would constitute the unauthorized practice of law.”
However, in 1986, in the matter of the Application of New Jersey Society of Certified Public Accountants, 102.N.J. 231, 242 (1986), the Supreme Court modified the ruling to allow a limited exception that permits CPAs to prepare and file inheritance tax returns as long as the client is notified, in writing and before the CPA commences work on the return, that a review of the return by an attorney may be desirable due to the possible application of legal principles related to the preparation of the inheritance tax return.
Conclusion
The CPA is clearly at a disadvantage in regard to extending his or her practice into areas concerning legal matters, with the exception of entity creation services. CPAs should exercise caution and keep to our roles as trusted advisors, discussing options but referring the legal work to a qualified law firm. In the end, distancing yourself from offering legal services will likely yield a referral to your firm, rather than a fine or lawsuit for practicing law without a license.
_________________________________________________________________________
Michael A. Gould, CPA/ABV/CFF, ASA, CFE, CVA, is Director of Litigation Support and Valuation Services at Rotenberg Meril Solomon Bertiger & Guttilla, P.C.. He currently serves on the NJSCPA Professional Conduct Committee. Gould can be reached at mgould@rmsbg.com or 201-490-2077.
(1) Indian legislature provided special class of persons called Advocates in Advocates Act, 1961 to practice all Indian laws. Therefore, appearance clause not yet all required in any Indian statute. Bar Council of India Vs A.K.Balaji [SLP (Civil) No(s) 17150-17154/2012] Dt.04.07.2012 (SC) and A.K.Balaji Vs Govt. of India (2012) 35 KLR 290 21.02.2012 (Madras HC) it was clearly held by Hon’ble Supreme Court & Madras High Court that Advocates alone are entitled to practice the Profession of Law both in litigious & non-litigious matters, nullifying the effect of Section 33 of Advocates Act. This also confirms to Section 29 of Advocates Act. The verdict of Supreme Court is the declared law of land, binding on all throughout the territory of India under Article 141 of Indian Constitution & contravention liable for action under Article 129 read with Article 142(2) of Indian Constitution. Income-Tax Act being “LAW” Advocates alone are entitled to Practice, Plead & Act before the assessing officers of Income-Tax Deptt. On date appearance clause in Section 288 of Income-Tax Act has been subjected to review of Apex Court, if still retained in statute book, situation may arise that order of assessing officers passed against the representation of non-advocate become in-fructuous, bad in law, null & void. Further, such orders cannot be enforced/appealed.
(2) Appearance of Chartered Accountants in scrutiny proceedings U/s.288, other than CPC/Evidence Act against summons issued U/s 131, is also bad in law for the reason that CAs conducting Tax Audit U/s 44AB for revenue can not appear for same assessee in scrutiny proceedings by the strength of power of attorney U/s 288 of Income-Tax Act. This is comparable to same Advocate appearing both for Petitioner & Defendant. This position of Chartered Accountants prevailing in Income-Tax Act, requires kind attention of Tax Policy Division of Central Board of Direct Taxes.
(3) In Opinion No.23 of Committee on the Unauthorised Practice of Law appointed by New Jersey Supreme Court states as under:-
“…we find that the dual practices of law and accounting…by lawyers would not violate the Cannons of Professional Ethics. Nor does it appear to us that any other rules of our Supreme Court would be violated by such dual practices.”
Q. What is the minimum eligibility to appear for a CPA exam?
A. CPA Exam is most suitable for CA, ICWA, CS, LLB, MBA (Finance), M.com and Commerce Graduates (from recognized University)
• M.com or Post Graduates: Most of the states in the US require 150 semester hours in order to apply for CPA. A MCom/PG Degree from recognised Universities in India is equivalent to these 150 semester hours, so they are eligible to write the exam.
• BCom: Students who are BCom can apply for the US CPA, however the number of states accepting a BCom Degree will be relatively very less. So the candidate will have to send their academic credentials to a relevant state, if they are accepted the candidate is eligible for the Exam.
• Chartered Accountants: If you have also done Post-graduation or M.com from recognised University than you are eligible, incase you are just a B.com Candidate, the procedure will be similar to that of a B.com above.
Article 141.
Law declared by Supreme Court to be binding on all courts.- The law declared by the Supreme Court shall be binding on all courts within the territory of India.
In foreign countries CPA are practicing accountancy. There is a board which takes examination for enrolled as an CPA. Nobody can practice of accountancy unless he is registered as CPA. ADVOCATES, CS, CMA & CHARTERED ACCOUNTANTS required to pass CPA examination for Practice of accountancy.
CPA role is limited for representation to assessees before revenue agencies. High level cases are represented before courts by only Advocates.
CA Sanbarta Koley ji.
FOR YOUR KIND KNOWLEDGE ORDER OF SUPREME COURT UNDER ARTICLE 141 OF CONSTITUTION IS A LAW. IF YOU TILL TODAY REPRESENTING ASSESSEES u/s 288(2) ON LAW POINT THAN ITS CONTEMPT OF COURT.
Only 65570 practising chartered accountants in India and still they are underemployed; Therefore, it is the call of the day that make Income Tax Practice their exclusive domain. There is no need for other professionals to come into tax practice. It has been time and again accepted by the Government that CAs are best equipped for tax practice. Only CAs are elevated as “Accountant Members” to ITAT because they understand accounts better than any body else and accounts is the main thing in Income Tax Practice. By establishing one another army of so called “Tax Practitioner”, there will be another unemployed army of purported professionals. Moreover, by their wrong advice, the general public will suffer.
The view expressed by Sri. Balakrishna is not correct. Just because he is CA, he can not say that the other professionals or M.Com degree holders are giving sub-standard service is not correct. Many practisioner and who are not qualified CA are giving good service and many CA’s are not giving the service in a professional way.
I really appreciate the posting done by Advocate Mr. B.S.K.RAO.
Being a registered Income and Sales Tax Practitioner in Bangalore, Karnataka, India, I strongly recommend some recognition shall be given to Tax Practitioners.
We Tax practitioners have remained so for as un-organised, unrecognised individual tax professionals. We should be created and given equal opportunity and responsibility in serving the society in general and government in particular on assignment basis. So that all the pending works with the government will clear quickly and nation can go ahead further fast at required speed. I request let the government – HRD shall initiate and make use of ample experience and exposure of every tax practioners in India.
I am a B.A. Corporate Secretaryship degree holder, from University of Madras during 1984-1987. subjects like Income Tax Law, company law, Statistics, cost Accountancy, Advanced Accounts, Industrial Law, Commercial Law, Economics, Institutional Training etc. I am practising and representing before the Income Tax Authorities and Commercial Tax Authorities. Whether I can be enrolled as Income Tax Practitioner? Since the Income Tax Law specifies the educational Qualification as a “Degree in Commerce”, where as my degree says Bachelor of Arts (Corpororate Secretaryship).
SIR
NEED OF THE HOUR.
TO INCREASE THE TAX BASE INDIA NEEDS THE BILL.
DEPENDING ON ONLY ONE CLASS OF TAX PROFESSIONALS WILL BE AVOIDED.
JOB CREATION
ALL UNDER EMPLOYED TAX PROFESSIONALS WILL BE EMPLOYED AND EARN THE MONEY TO CONTRIBUTE TO THE NATIONAL EX-CHECKER.
THE DEPENDENCY ON ONLY ONE CLASS OF TAX PROFESSIONALS IS ROOT CAUSE FOR ALL THE FINANCIAL SCAMS IN INDIA.
It is rediculous that demand is being made for promulgation of tax practitioners bill.The practitioners other than CA’s and legal experts are providing substandard services to clients.Bcom,Cs,CMA and Mcom graduates should be barred from tax practice
Our Government at Centre is determined to work for the people.
I therefore request to bring the legislation in the Budget Session and allow Advocate, Company Secretary and Cost Accountant for Tax Audit.
When Advocate, Company Secretary and Cost Accountant for Tax Audit are considered competent professional to represent case before Tribunal then why they can not do Tax audit work. I request Honourable Finance Minister to kindly do the necessary amendment in the Tax audit legislation and expand the tax audit so that tax payers could choose better and cost efficient professional among Advocate, CA, CS and CMA
As considering practical experience Tax Practitioners should given some rights for audit purpose also.
It is most important and very good suggestion. AIFTP(SZ) member.
A TAX PRACTICE PROFESSIONAL INSTITUTE TO BE FRAMED UNDER THE BILL, SO THAT MIN. QUALIFICATION IS PRESCRIBED, PROPER TRAINING IS IMPARTED AND MEMBERSHIP IS ATTAINED, SO AS TO PRACTICE TAX LAW IN INDIA AND ABROAD
In view of the fact that the government had already constituted a TRP Scheme, the Bill is not required in my opinion.
Besides that, legal professionals and those with commerce degrees are allowed to act as Authorised Representative under section 288 read with rule 51. Also there is no bar on anyone in this country to work as tax practitioner or tax consultants. So what will a new bill do? Except being added to long list of laws in India.
THE NEW GOVT. SHOULD SERIOUSLY THINK DO THE NEEDFUL FOR THE INCOME TAX PRACTITIONERS, IT WILL NOT GENERATE REVENU ALSO THE PRACTITIONERS CONFIDENTLY COME FORWAD WITH THE LEGAL ISSUES.
Sir, I totally agree with the author,s views. It is to expand the perview of the Tax practitioners It is need of the hour to take up such enactments at the earliest for health Tax environment.
very good suggestion
I DO AGREE WITH THE OPINION OF AUTHOR IN THIS ARTICLE, BUT ALSO FEEL THAT ADVOCATES DOES NOT WANT COME WITHIN THE DEFINITION OF “ACCOUNTANT” IN DTC-2013, WHICH MAY DOWN-GRADE THE STATUS OF ADVOCATES ?
I agree with you Advocate B.S.K.RAO,
It would be a great move……………if is does happened practically
Rider: Instantly comes to mind one such instance of property-related / -connected tax issues, taken up to the highest level of judiciary – the apex court for final adjudication; that is, in re. Podar Cement Ltd.’s case.
To supplement (for profoundly the common good of one and all)
Anyone professionally qualified e.g he be a lawyer or CA (or cum CA), in one’s own experience ,exposure, apart from going by long standing well considered conviction, firmly believes that in order to be honestly expected to offer and render truthful service as a “tax practitioner” ought to additionally have the following principal requisites:
1. Reasonable knowledge and practical exposure to, besides purely the tax law, at least the particular chosen area of practice. For instance, anyone choosing to practice in the realm of tax issues inter- related or -connected to “property law” must have such knowledge and experience, nay adequate specialization,in that area, in general.
2. To be more precise, if the issue is essentially related or connected to a particular kind of “property” e.g. flats or apartments governed by a special law, then the knowledge, experience and exposure to the general property law i.e TP Act and other allied enactments e.g. Reregistration Act, Stamp Act, and the like, in isolation , might not prover adequate.
In short, it is not merely truly knowing or having incisive familiarity with what the tax law says but also what the other law(s) says must be known or be familiar with.
May be, the field reality being what it is, to take a strictly puritanical view might seem impractical or turn out to be a non-stater. But, even so, the point made is that, should, as suggested in the write-up, there is need / urge for a separate enactment, then that should necessarily keep in the backdrop, preferably in sharp focus, and suitably cover the foregoing and similar angles in as prudent a manner as feasible.
Expectantly, the tax and property (in its all embracing meaning) law Experts , at large in field practice, should be in a better position to share own thoughts and ideas with the rest, with a view to improving upon the presently obtaining state of affairs, as commonly observed.
Completely agree with the author. Tax agents are a need of the hour.
Why restriction to these CA/CS/CMA. Tax laws allows persons holding certain qualifications to practice like M.Com, MBA, etc. These persons are also practicisng.
Tax practice cannot and should not be the domain only of the CA/CMA/CS.
The Govt needs to include qualifications such as MBA/M.Com etc to practice and represent before the tax authorities.
Regards,
S. Ramaswamy
Everything is fine except the contention of the writer in the concluding sentace in the ‘interest of tax professionals and govt. revenue’. The governments interest should always be people at large, ‘aamadmi’ first and the rest later. All legal professionals are fighting for their clients and to save them, nothwithstanding the facts of the case. The time has come to shift the goal of the legal professionals from ‘the interest of their clients’ to the ‘truth and facts’. It is not uncommon to see how the cases are won on technical grounds, not properly mashalling the witness, time bar, etc etc.,. The legal system needs a thorough revamp, where, once the facts of the case is established, the arguments must invariably for quantum of punishment etc. The cases are to be won by merits and not by the nack of the advocates/arguments. Most of the cases are persued on ‘prestige’ issue, be by govt., or a ‘party’, and the judgements come after prolonged time.
Every citizen should be permited to defend his case by himself, if he so desires, like in Administrative Tribunals and not to make it mandatory to engage a legal luminary/practisioner. How many persons are there who collect legal fees from their clients and show the income properly? What is the difference between official receipt and actual receipt. Time to introspect.
Very good suggestion.