Page 415 - CA Final PARAM Digital Book.

removed from membership for a specified period shall not be entitled to have his name entered in
the Register until the expiry of such period.

In addition, failure on the part of a person to disclose the fact that he suffers from any one of the
aforementioned disabilities would constitute professional misconduct. The name of the person, who
is found to have been subject at any time to any of the disabilities discussed in section 8, can be
removed from the Register of Members by the Council.

In the given case, it is clearly stated that Mr S was discharged insolvent, and he has also obtained
from the court a certificate stating that his insolvency was caused by misfortune without any
misconduct on his part. Hence, Mr S has not violated the provisions of Section 8, and he is not
debarred from having his name entered in the Register of Members.

QNO First Schedule, Part I, Clause 11 Sale of Domain Old Course – (N23R)
713.700 TITANIUM CNO -- PE.1280

CA Sumati is a practicing chartered accountant having office in Mumbai. CA Sumati is owner of domain
cap.net. In order to generate additional revenue CA Sumati sold this domain name to XYZ Limited for
earning royalty of ₹ 2,25,000. One of the directors of XYZ Limited contended that CA Sumati has violated
the Code of Conduct. CA Sumati responded that there is no violation of Code of Conduct as selling of domain
name is not related to any professional assignment which requires approval of the Institute
Answer As per Clause (11) of Part I of Schedule I to the Chartered Accountants Act, 1949, a member in practice is
deemed to be guilty if he engages in any business or occupation other than the profession of chartered
accountant unless permitted by the Council so to engage. Provided that nothing contained herein shall
disentitle a chartered accountant from being a director of a company (not being a managing director or a
whole-time director) unless he or any of his partners is interested in such company as an auditor.

As per Regulation 190A, a chartered accountant in practice not to engage in any other business or occupation
other than the profession of accountancy except with the permission granted in accordance with a resolution
of the Council.

In the given case, CA Sumati is a practicing chartered accountant having office in Mumbai. CA Sumati is owner
of domain cap.net. In order to generate additional revenue, CA Sumati sold this domain name for earning
royalty of ₹ 2,50,000 to XYZ Limited. One of the directors of XYZ Limited contended that CA Sumati has violated
the Code of Conduct. CA Sumati responded that there is no violation of Code of Conduct as selling of domain
name is not related to any professional assignment which requires approval of the Institute. As per Regulation
190A, the activity of selling domain name for earning Royalty would amount to “other business/occupation”
without approval is prohibited.

Hence, CA Sumati is guilty of professional misconduct under Clause 11 of Part I of Schedule I to the Chartered
Accountants Act, 1949 for selling domain name for a royalty.

First Schedule, Part I,Cl,11 Directorship in Holding Company where he is Old Course – (M08E, PM17)
QNO
714.000 auditor in Subsidiary
TITANIUM CNO – PE.1280

M, a Chartered Accountant in practice, is the Statutory Auditor of S Ltd. for the year ended 31st March
2015. In January 2015, he was appointed as a Director in H Ltd., which is the holding Company of S
Ltd.

Answer Part I -- Relevant Laws
▪ Clause (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949

Part II -- Requirements of Relevant Laws
➢ A CA in practice cannot engage (unless permitted by the council) in any business or occupation other
than the profession of Chartered accountant, but he can be a director of a company wherein he or
any of his partners is not interested in such company as auditor.

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