Tuesday, 31 July 2012

SEBI Guidelines - ESOP

The guidelines issued by the SEBI is known as “Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines, 1999”.

The guidelines for issue of ESOS by a listed company may be summarized as below:

1. Eligibility

Taxability of ESOP

A recent decision of the Income Tax Appellate Tribunal stated that Employee Stock Options (ESOPs), which give employees a right to buy shares of the company at a predetermined price should be considered as capital assets re-opens the controversy regarding taxation of ESOPs. Currently when shares are allotted to an employee under a Stock Option Plan at a concessional price or free of cost, the benefit arising to him is treated as taxable perquisite. When such shares are ultimately sold by such an employee, these become subject to capital gains taxation in the same manner as any other shares i.e. if the shares are held as short-term capital assets then capital gains tax is charged at the rate of 15 per cent; and if the shares are held as long-term capital assets then the capital gains is charged at the rate of 10 per cent if these are of unlisted companies and if the shares are of listed companies and transferred on a recognised Stock Exchange after payment of Securities Transaction Tax then there is no long term capital gains tax . The Tribunal has held that ESOPs should be considered as capital assets at both stages i.e. at the time of allotment by the employer and later on at the stage of their sale by the employee.
What are Employee Stock Options
Employee Stock Option is one of the several ways in which companies try to retain, reward, compensate and attract their employees. However, these HR practices pose interesting questions in lieu of perquisites so offered. 'Employees' Stock Option' refers to the option given to the whole time directors, officers or employees of a company which gives them the benefit or right to purchase or subscribe at a future date the securities offered by

Press Release Regarding Exemption From E-Filing Of ROI For AY 2012-13

 
PRESS RELEASE

Subject: Relaxation from compulsory e-filing of return of income for assessment year 2012-13 – for representative assesses of non-residents and in the case of private discretionary trusts -reg

Extension Of Due Date For Filing ROI From 31.07.2012 To 31.08.2012


Vide Notification issued u/s 139(1), the CBDT has extended the ‘due date’ for filing of returns of income for the Assessment Year 2012-13 to 31.08.2012 in respect of assessees who are liable to file such returns by 31.07.2012.

Sub.: Taxes- Due Date Alert for the month August 2012

Dear All,

         
Your kind attention is invited to the table given below which contains the due date for Tax

compliance in respect of TDS/TCS, IT/WT, ST/VAT on different dates during the month August  2012.


Sr No
Due Date
Related to
Compliance to be made
1
05.08.2012
(Sunday)
Service Tax
Payment of Service Tax for the Month of July 2012
2
07.08.2012
(Tuesday)
TDS/TCS
(Income Tax)
·        Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of July2012.

·        Deposit TDS from Salaries  deducted during the month of July 2012

•   Deposit TCS for collections made under section 206C including sale of scrap during the month of July 2012, if any

•    Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of July 2012, if any
3
20.08.2012
(Monday)
VAT
Payment of VAT & filing of monthly return for the month of July 2012
4
31.08.2012
(Friday)
Income Tax
Annual Information return under section 285BA for the financial year 2011-12 in form 61A.


Since, August 4 & 5 are not working days for us, please make the payment within August 6, 2012. It is advisable not to make any online payment on 8th as department will consider this as default for 1 Month payment.

Please do feel free to contact us for any further clarification/assistance in the above matter

What Are Non-Monetary Transactions, How Are They Accounted?

In simple words, non-monetary transactions are exchanges and nonreciprocal transfers that involve little or no monetary assets or liabilities. While monetary assets are assets whose amounts are fixed in terms of units of currency (e.g. cash, accounts receivable, and notes receivable), non-monetary assets are assets other than those mentioned assets. Examples are inventories, investments in common stock; and property, plant, and equipment.

Fixed Assets

Applicability & Nature
            Applicable        :           01-04-1993
            Nature              :           Mandatory

Meaning of Fixed Assets
            Fixed Assets are the assets which are acquired by the enterprise for the purpose of use but these assets are not acquired for the purpose of resale.
            Usage of Fixed Assets may be in production or in the supply of goods or services. On the basis of above definition, AS has covered all the usable assets of factory premises as well as administration or selling department.

Whether when assessee claims expenses with respect to software development outsourced to another company and then exports the same, such expenses are eligible for deduction u/s 10B

THE issue before the Bench is - Whether when the assessee claims expenses on account of development of software outsourced to another company and then exports the same, such expenses are eligible for deduction u/s 10B. And the verdict goes in favour of the assessee.
Facts of the case

Monday, 30 July 2012

HOW TO RESET PASSWORD WWW.INCOMETAXINDIAEFILING.GOV.IN SITE

The posting had been move to another website. Please click the link below to get the access of the same 


https://taxofindia.wordpress.com/2015/11/26/how-to-reset-password-www-incometaxindiaefiling-gov-in-site/ 



Why The Verdict Of The Special Bench In All Cargo Global Requires Reconsideration

The nature and scope of assessment / re-assessment of total income u/s 153A in the case of a person who has been searched u/s 132 or in whose case requisition has been made u/s 132A has been an issue of debate and controversy. The issue as to what kind of additions can be made during assessment and re-assessment proceedings undertaken u/s 153A in the case of searched person has been put to judicial test  at different occasions and there have been contradictory judgments delivered by different benches of Income Tax Appellate Tribunal.

Taxation of Portfolio Investments referred to GAAR Committee

The Prime Minister’s Office has issued the following Press Release dated 30.07.2012


The Prime Minister had constituted an Expert Committee on GAAR under the Chairmanship of Dr. Partho Shome to engage in a widespread consultation process and finalise the GAAR Guidelines.

There is an additional issue relating to the taxation of portfolio investment, particularly in the context of the amendment made to the Income Tax Act relating to the taxation of non-resident transfer of assets where the underlying asset is in India. It is necessary to have clarity on the tax liability of portfolio investors and Foreign Institutional Investors as a result of this amendment particularly when the investment is made through a registered stock exchange in accordance with SEBI

Deduction u/s.80TTA in respect of Deposits in Saving Account


Finance Bill 2012 proposes to introduce new deduction in respect of interest received on deposits in saving account.
Deduction under new section 80TTA will be available to Individual and HUF only
Maximum Deduction will be Rs.10,000/-
Deduction will be allowed on deposits in saving account (not time/fixed term deposits) with
  1. Banks,
  2. Co-operative Society engaged in carrying on the business of banking, including a co-operative land mortgage bank or co-operative land development bank,
  3. Post office Saving Account. Deposit in other scheme of Post office will not be allowed
Where saving account is held in name of Individual on behalf of a firm, association of persons or body of individual no deduction shall be allowed to the partner of member of association or body of individual

The deduction u/s 80TTA will be available from financial year 2012-13.

ess Release Regarding Transfer Pricing “Safe Harbour Rules”



The following Press Release dated 30.07.2012 has been issued by the Prime Minister’s Office
Prime Minister sets up Committee to Review Taxation of Development Centres and the IT Sector

Safe Harbour Provisions to be Finalised soon

The Prime Minister has constituted a Committee to Review Taxation of Development Centres and the IT Sector. The Committee will engage in consultations with stakeholders and related
government departments to finalise the Safe Harbour provisions announced in Budget 2010 sector-by-sector. It will also suggest the approach to taxation of Development Centres.

when can you accrue an expense

Among many important judgment and decision that accounting people often take on daily basis, is whether to or not to accrue an expense. For some people, it may be an easy decision. But for many

others, such decision could be tricky—in considering the consequences that come along the decision.
An accounting staff of my client, last week, asked me about whether she should or should not accrue an expense.
The answer could be as short as YES/NO; or as lengthy as a book chapter, but I would rather give some hindsight—so that she really understands the matter in question, in-and-out. That way, I can avoid the possibility of answering the same question in the future—and save my own time. So, should or shouldn’t you accrue an expense? What expense should/shouldn’t you accrue? Why? Read on…

Accounting for Associates in Consolidated Financial Statements

Applicability & Nature
            Applicable        :           01-04-2002
            Nature              :           Mandatory*

*Mandatory: AS – 23 is applicable only if consolidated financial statements have been prepared as per AS – 21.
In the separate books of investor accounting for associates should be carried as per the provisions of AS – 13. On the basis of above explanation it can be said that AS – 23 can be applied only if application of AS – 21 exists.

Meaning of Associate
            Any Enterprise can be classified as an associate if investor is having significant influence in the enterprise.

Meaning of Significant Influence
            Significant influence is the power to participate in the operating & financial decisions of the enterprise but not to control these decisions.

Sunday, 29 July 2012

Can Loss in Commodities F & O Trade be Adjusted With Capital Gains

: Commodity Trading on MCX is Speculative Trade !Even after the recognition of MCX by CBDT for the purpose of section 43(5)(d) the commodities trades are speculative , because SCRA does not cover commodity trades
The derivative segments trades (Futures & Options )  in India are done in shares and commodities. While the trade in F & O segments of shares through NSE or BSE is considered business trade now . A confusion arises in mind of tax payers who indulge in F & O trades in commodities segment. commodityTradesFor example , Hitesh of Mumbai askes :
We are trading in derivatives on commodities (gold and silver) on MCX (Multi Commodity Exchange of India LTd ) and it is not an hedging transaction and have profits from the same.I have 2 queries
  1. is this income speculative or business income?
  2. can this income be set off against capital gains from equity shares or equity derivatives.
  3. is my assumption that commodities trading has now been removed from speculative ambit right if the transactions are carried out on MCX.

Act does not provide exemption on application of income outside India

NASSCOM in DIT v. NASSCOM (2012) 345ITR 362 having incurred an expenditure of over Rs.2 crores on events /activities held in connection with the exhibition in Hanover, Germany claimed such amount as an application of income and further therefore sought exemption u/s section 11 (1) (a) which was declined by the Delhi High Court pointing that exemptions on charity are possible for expenditure incurred in India for charitable purposes.

In a show of judicial restraint the High Court refused to unsettle the law despite assessee’s demand for a fresh look at the section having regard to the globalization of commerce and the vast strides in cross-border trade and flight of capital. The Court did not buy the idea of bold or innovative approach and instead used the judicial restraint to distant themselves from the matters of policy

Whether scissors of Sec 14A come into play only when an income is not included in total income and not when deductions are admissible as per Chapter VIA - YES

THE issues before the Bench are - Whether provisions of Sec 14A do not apply to deductions admissible to the assessee as per Chapter VIA; Whether scissors of Sec 14A come into play only when an income is not included in the total income as per the provisions of Chapter III and Whether no disallowance can be made against income which is not specifically exempt under the Income Tax Act. And the verdict goes in favour of the assessee.
Facts of the case

The
assessee is a cooperative society and comes within the administrative control of the Department of Fertilizers,

Saturday, 28 July 2012

DTAA between India and Lithuania

Section 90 of the Income tax Act, 1961 – Double Taxation Agreement – Agreement for Avoidance of double taxation and prevention of fiscal evasion with foreign countries – Lithuania
Notification No. 28/2012 [F. No. 503/02/1997-FTD-1], dated 25-7-2012
Whereas an Agreement and the Protocol between the Government of the Republic of India and the Government of the Republic of Lithuania for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital (DTAA) was signed at New Delhi on 26th July, 2011;

DTAA between India and Estonia

Section 90 of the Income-tax Act, 1961 – Double Taxation Agreement – Agreement for Avoidance of Double Taxation and Prevention of fiscal evasion with foreign countries – Estonia
Notification no. 27/2012 [F.NO.503/02/1997- FTD-1], DATED 25-7-2012
Whereas an Agreement and the Protocol between the Government of the Republic of India and the Government of the Republic of Estonia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income was signed at Tallinn, Estonia, on 19th day of September, 2011;

How the US foreign tax credit rule impacts Indian Americans

As an NRI in the US, you may have several of your investments in securities in India - equity shares, mutual funds, debentures, private equity investments etc. First let us look at how these investments are taxed in India.
Equity mutual funds and listed equity shares: Long term capital gain on sale of equity shares (that is if you sell after one year of holding) is tax free in India. Therefore, there will be no tax implication. Short term capital gain is taxed at a flat rate of 15%. For an NRI, the tax is deducted at source (TDS) before you receive your sale proceeds.

Tax Rates / Reckoner for Financial Year 2012-13

A. Applicable Income Tax RatesInvestments in Mutual Fund Schemes
Tax rates  for  Financial  Year 2012-13
Tax Implication on Dividend received by Unitholders

 
Resident Individual/HUF
Domestic Corporates
NRI**
Dividend
Equity Oriented Schemes
Tax Free
Tax Free
Tax Free
Other than Equity Oriented Schemes
Tax Free
Tax Free
Tax Free

ITR -7 For A.Y. 2012-13 / F.Y. 2011-12

Income-tax (Eighth Amendment) Rules, 2012 – Substitution of Form ITR-7
NOTIFICATION No. 29/2012 [F.NO. 142/31/2011-TPL]/SO 1705(E), DATED 26-7-2012
In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called the Income-tax (8th Amendment) Rules, 2012.
(2) They shall come into force from the date of its publication in the Official Gazette.
2. In the Income-tax Rules, 1962, in Appendix-II, for Form ITR-7, the following Form shall be substituted, namely:-

 INDIAN INCOME TAX RETURN
[For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)]
(Please see rule 12 of the Income-tax Rules,1962)
(Also see attached instructions for guidance)
Assessment Year
2012-13

 (Ashis Chandra Mohanty)
Under Secretary to the Government of India
Note.- The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (ii) vide notification number.S.O.969(E), dated the 26 th March, 1962 and last amended by Incometax (7 th Amendment) Rules, 2012 vide notification S.O. No.1453(E) dated 2/07/2012.

Help for NRIs on how global income is taxed

If you a US resident or US citizen (whether NRI, PIO or OCI), you must pay taxes in the US on your global income. Before we proceed, let us quickly look at the definition of US resident.
A person is said to be a resident of the US if he meets either of these two tests:
1. The first test is the 'green card test'. If at any time during the calendar year you were a lawful permanent resident of the United States according to the immigration laws, and this status has not been rescinded or administratively or judicially determined to have been abandoned, you are considered to have met the green card test.

How to get retrive Password for Income tax portal



Income Tax Department has today enabled the password reset facility for alternate email ID also in addition to Registered EMail id. So now assessee can request password on new Email ID in addition to Registered Email ID.  Message Hosted on Incometaxindia.gov.in in respect of Password reset is as follows :-
In view of last date approaching and for timely resetting of password, users are advised to use “Forgot Password” utility on homepage for resetting password instead of e-mailing to validate@incometaxindia.gov.in


Friday, 27 July 2012

How To Account Vendor Deposits and Prepaid Expenses

Vendor Deposit and Prepaid Expenses are two typical accounts that could be easily slipped and

ignored among hundred of daily accounting tasks. Vendor deposit is company’s check that made out of its box to vendors before receiving merchandizes or services company request.

Segment Reporting

 

Applicability & Nature
            Applicable        :           01-04-2001
            Nature              :           Mandatory for Level I enterprises
Objective

AS 17 require disclosure of information relating to product and areas in which the company is involved. Information of products should be disclosed separately and information of areas should also be prepared separately only to improve the financial statement presentation and comparison.

Definitions



<!--[if !supportLists]-->(i)                  <!--[endif]-->Meaning of Segment Reporting: Segment reporting is a disclosure statement which is prepared to disclose two types of segments.
<!--[if !supportLists]-->(a)    <!--[endif]-->Business Segment
<!--[if !supportLists]-->(b)   <!--[endif]-->Geographical Segment

Salary components which are exempt

There are two types of Salary which gives to employee i.e. 1. Admissible Basic and 2. Admissible Allowance with Other Allowance monthly or annually. As per Income Tax Acts, there are some allowances which are taxable if no specific exemption is given under the income tax rules.There is a list of almost all the allowances to the salary holder and income tax treatment to it.

House Rent Allowance (HRA):
House rent allowance is exempted form the view of income tax act u/s 10(13A). Minimum of these are exempted from the view of house rent allowance received from the following.
  • House rent actually received.
  • House rent paid – 10% of the salary.
  • 50% of the salary if the house is on four Metros.
  • 40% of the salary if the house situated on other places. More Details about House Rent Allowance and HRA Exemption Click Here
City Compensation Allowance:
  • the city compensation allowance is fully taxable.
Foreign allowance:
  • Foreign allowance is exempt if the amount paid outside India by the government to Indian citizen for his services outside India.
Medical Reimbursment:
  • Employees get fixed medical reimbursment - Rs. 15000/- for the different medical expenses to his or his family. It is fully taxable from the income tax point of view.
Project Allowance:
  • Project Allowances are generally taxable but for the SUPREME COURT AND HIGH COURT JUDGES they are not taxable and exempted.
Servant Allowances:
  • If the servant is used for household then it is taxable but if used for office purposes exempted from income tax.
Transport allowances:
  • Transport expenses allowances are the allowances to meet the expenses to the route of home to office and office to home expenses. They are exempted from the income tax point but to the maximum of 800 Rupees per month.  Rs. 1600/- for Handicapped employees
Transfer Expenses:
  • If an employee’s transfer from one place to other, the allowance for this transfer is exempted from the income tax including the leave on the office for this transfer as well as personal expenses if any.
Conveyance allowances:
  • Conveyance is the daily requirement of the office and for the employee any expenses on conveyance for the office work is fully exempted.
Uniform Allowance:
  • Fully exempted for office use only.
Children Education Allowances:
  • one hundred rupees per child per month and exemption is for maximum for 2 children. If the children are in hostel there is an addition of 300 rupees per month exemption for maximum of 2 children.
Allowance granted to employee working in transport system where no daily allowance has not been allowed to meet daily expenses ,done to meet his personal expenses during duty performance from one place to other place :70 % of such allowable exempted maximum up to 6000 per month

There are some allowances to encourage research and academic performances and the exemption is full for office purposes.

Exemption rates are sometime differ for transport and other allowances for one palace to other such as hill area or border area or special area where life is not such easy, the rate of exemption are somewhere higher.

Other allowances are generally taxable

Whether voluntary cash assistance received from non-resident parent for recouping losses and restoring negative net worth, is a capital receipt, exempt from tax - YES: Delhi HC

THE issues before the Bench are - Whether voluntary cash assistance received from parent company for recouping losses and restoring negative net worth, is a capital receipt, exempt from tax; Whether only assistance or voluntary payments received from government out of public funds and not from private parties, is considered as capital receipt and whether it is only the purpose of the assistance and not the mechanism, is the conclusive test to determine the nature of such receipts. And the verdict goes in favour of the assessee.
Facts of the case

The assessee is a 100% subsidiary of a BHW Holding AG, Germany ('Holding Company') and is engaged in the activity of

Verification of high value transactions (investments/deposits/expenditure) of persons who are not assessed to income tax

Press Release No. 402/92/2006-MC (03 of 2012)
The Central Board of Direct Taxes has directed the Income Tax department to launch a special drive, from 20th January to 20th March, 2012, for verifying high value transactions (investments/deposits/expenditure) from persons who are not assessed to income tax or who have not furnished their PAN while entering into such transactions. In an instruction issued today, the CBDT issued proforma for query letters and responses to be issued to the high value

Guidelines for engagement of Standing Counsels to represent the Income-tax Department before High Courts and other judicial forums; revision of their Schedule of fees and related matters

Instruction No. 3/2012

With a view to improve the quality of representation and to streamline the process of engagement of Standing Counsels for the Department to represent before various High Courts and other judicial forums and in supersession of the existing Instructions of the Board on the subject in general, and Board's letter in F. No. 20/20/67-ITJ (1) dated 08.01.1968, Board's letter in F. No. 20/20/67-ITJ (4) dated 11.01.1968, Board's letter in F. No. 20/20/67-ITJ (13) dated 07.03.1968, Instruction No. 1/273 dated 03.03.1971, Instruction No. 1828 dated 13.09.1989, Instruction No. 1806 dated 03.02.1989/ Instruction No. 1986 dated 03.07.2000 and Instruction No. 8 of 2007 dated 30.08.2007, in particular, the following Instructions are issued herewith for compliance by all concerned:

Now get PAN by submitting Verification Certificate signed by MP / MLA / MC / Gazetted officer



A format has been prescribed for verification certificate under provisions of Rules 114(4) of IT Rules, 1962. An individual / HUF PAN Applicant who files certificate of MP / MLA / MC / Gazetted officer as proof of his / her identity or address is to file the same in prescribed format only.
 
To download the link - click here
 

Thursday, 26 July 2012

Mumbai High Court held reopening of assessment based on “change in opinion” to be invalid.

The Hon‟ble Mumbai High Court (“HC”) recently pronounced its judgment in the case of Rabo India Finance Limited (“the taxpayer”), wherein the HC held that reopening of the assessment proceedings based on mere “change of opinion” is not valid. HC also observed that when any material / information is furnished by the taxpayer, it is reasonable to presume that an Assessing Officer (“AO”) has considered all such material before making the assessment order.

Transactional Net Margin Method based on internal comparable accepted.

Executive Summary
The Chennai bench of the Income Tax Appellate Tribunal (“the Tribunal”) recently pronounced its ruling in case of
Greenland Exports Private Ltd (“the taxpayer”), wherein the Tribunal held the following:
 The fact that a taxpayer with international transaction exceeding Rs. 15 crores has not been subjected to compulsory scrutiny, in accordance with internal guidelines of Income Tax Department, cannot in any way be deemed as a reason to believe that there was escapement of income.

Reimbursement of secondment's salary by 'economic employer' to parent co. has no profit element and involves no FTS

The assessee, an Indian company, ("A Ltd") entered into an agreement for secondment of staff with its overseas parent company ("A Plc."). Under the agreement it was agreed as under:
a) A Plc. shall not be responsible for and shall not be liable for any loss or damage occasioned by the Secondees' work;
b) Authority to instruct the Secondees shall lie with A Ltd.; and
c) Secondees' work shall be performed at such place as A Ltd. may instruct.
However, in consideration of the Secondment of Staff, A Ltd. would make payments to A Plc. equivalent to

Amount received by trustee-cum-beneficiary on dissolution of trust is not 'gift' to be taxed under sec. 56



In this case, the trustees were the parents and the beneficiaries were their two daughters. Subsequently, the parents were added as additional beneficiaries, when the original beneficiaries relinquished their rights. The said trust was dissolved and the assets were equally distributed among the parents.
The AO made addition of amount received by parents to their total income. On appeal, CIT(A) held that the amount received by parents would be taxable as gift under Sec. 56(2)(v), on following grounds:
a) Neither there was specific transfer nor gift by both the daughters to their parents;
b) As the sum was received without consideration and the said trust did not fall within the ambit of the word "Relative".
On further appeal, the Tribunal held that undisputedly, the assessee had received the amount on dissolution of trust in the capacity of beneficiaries. Therefore, the amount received by the parents could not be termed as amount received by the beneficiaries "without consideration". Therefore, addition made by AO was deleted and assessee's claim has been allowed - ASHOK C. PRATAP v. ACIT[2012] 23 taxmann.com 347 (Mumbai - Trib.)

No s. 271(1)(c) penalty if wrong claim caused by “bona fide mistake”



CIT vs. Societex (Delhi High Court)


The AO levied s. 271(1)(c) penalty in respect of two issues: (i) claim of depreciation in respect of properties that were assessed under the head “house property” and (ii) claim of deduction in respect of provision for
income-tax. The CIT (A) & Tribunal deleted the penalty on the ground that the claim for deduction in respect of income-tax was a “human bonafide clerical mistake” as the assessee was a firm not having expert chartered accountants on its payroll. In appeal before the High Court, the department relied on Zoom Communication 327 ITR 510 and Escorts Finance 328 ITR 44 where it was held that as under no circumstances could an assessee have claimed provision for tax as a deduction, penalty was imposable. HELD by the High Court dismissing the appeal:

Business Profit & Business Loss

Can Long Term Capital Gains Arise On Selling Flats Before Possession

So many times tax payers have asked whether the booking date is at all material for determining the capital gains  or possession date or registration date is crucial. taxworry.com has posted numerous article on this topic . For example , Flat Allotment Date is Crucial for the Capital Gains  and second article  was Can Date of Sale Agreement Be Taken As The Date of Purchase of Right in A Flat?House-Sale-Capital-Gains
Same confusion is faced by Sri Bhupinder of Gurgaon who asks
I booked from builder under construction flat in Aug 2006 . It will be ready for possession in Oct 2012 . I want to know the following .
1) If I sell before possession , will the gain be LTCG ?
2)  If I sell immediately after possession ( means after registry in my name ) ,  will the gain still be LTCG or I have to wait another 3 year after possession to avail LTCG ?
Please clarify
So without elaborating more , the specific answer to his question is as that if he sells the flat before taking

Accounting for Lease Transactions

Definitions

Meaning of Lease
Lease is an agreement whereby Lessor conveys to the Lessee right to an asset for agreed period of time in return of a payment or series of payments.

Types of Lease
As per AS, Lease agreement can be classified under two separate heading as follows.

Operating Lease: Operating Lease agreement is the agreement which can’t be recognized as finance lease.

Finance Lease: Finance Lease is the agreement whereby all the risks and rewards incidental to ownership are transferred by Lessor to Lessee.

When Should I Recognize Revenues?

Basically, by the rule, you should not recognize revenue until it has been earned. So, when is, exactly, a revenue considered as earned? You may ask. There are a number of rules regarding

exactly when revenue can be recognized, but the key point is that revenue occurs at the point when substantially all services and deliveries related to the sale transaction have been completed.
If you’re around, in the accounting field, for long enough, you may find the term mentioned above is quiet broad.
I mean, you may find that, in certain circumstances, the rule seems to be unfits your specific situation. Through this post, I will overview various revenue recognition methods, all of which can be used under specific circumstances. You should be aware of which of the revenue recognition scenarios are most applicable to your situation, and report revenues accordingly. At the end of the post, I also will cover the revenue presentation. But before that, let’s have a look at the essential rules of the revenue recognition. Read on…

Wednesday, 25 July 2012

How Carry Spot Trading Guarantees Future Cost Certainty

A Hedging Scenario

This scenario uses a carry spot trade to hedge out a U.S. company’s exposure to a future purchase from Germany.

The Scenario

Assume that a U.S. company enters into a contract to purchase a 100,000 euro machine from a German company with an expected delivery date in eight months. The company would like to obtain cost certainty

Advanced Forex Trading Techniques



Forex trading can be as simple or as complicated as you want it to be. In the beginning forex trading seems like it is simple. It seems like your only job as a trader is to pick what direction a currency pair is going to go
and collect your profit. Or, maybe you are thinking of trying to find a 100 percent accurate forex trading system on the internet. If only it were that simple.

Forex Hedging

Hedging is simply coming up with a way to protect yourself against big loss. Think of a hedge as getting insurance on your trade. Hedging is a way to reduce the amount of loss you would incur if something unexpected happened.

Simple Forex Hedging

Some brokers allow you to place trades that are direct hedges. Direct hedging is when you are allowed to place a trade that buys a currency pair and then at the same time you can place a trade to sell the same pair. While the net profit is zero while you have both trades open, you can make more money without incurring additional risk if you time the market just right.
The way a simple forex hedge protects you is that it allows you to trade the opposite direction of your initial trade without having to close that initial trade. It can be argued that it makes more sense to close the initial trade for a loss and place a new trade in a better spot. This is part of trader

What is Hedging - A Concept



Although it sounds like your neighbor's hobby who's obsessed with his topiary garden full of tall bushes shaped like giraffes and dinosaurs, hedging is a practice every investor should know about. There is no
arguing that portfolio protection is often just as important as portfolio appreciation. Like your neighbor's obsession, however, hedging is talked about more than it is explained, making it seem as though it belongs only to the most esoteric financial realms. Well, even if you are a beginner, you can learn what hedging is, how it works and what hedging techniques investors and companies use to protect themselves.

What Is Hedging? The best way to understand hedging is to think of it as insurance. When people decide to hedge, they are

Whether transfer of shares at cost by Indian subsidiary to non-resident parent as part of group restructuring scheme can be construed as bogus transaction: NO: ITAT

THE issues before the Bench are - Whether Service tax paid in pursuance of a show cause notice can be disallowed on the ground that the liability has not crystallized; Whether the cost of acquisition accepted in previous years is to be re-

computed on account of high premium paid to associated enterprise and whether transfer of shares at cost by the Indian subsidiary to its non-resident parent as part of a group re-structuring scheme can be construed as a bogus transaction. And the verdict partly goes in favour of the assessee.
Facts of the case

A) The assessee company is engaged in rendering range of communications services including advertising, sales promotion, direct marketing, corporate communications and public relations. It had got registered for payment of service tax under the category “advertising agency services” and paid service tax only on the income from creation of advertisement and commission received from customers for placement of advertisements in media. However, it had not paid service tax on the renegotiated prices and also on discounts/incentives received as the assessee was of the belief that these incomes were not liable to service tax. In pursuance of a survey carried out by the service tax authorities on 11-8-2006 a show cause notice was issued to the assessee on 19-10-2006, as to explain why the service tax was not paid on a difference and liabilities written back under “advertisement agency services” and on annual volume discount under “business auxiliary services”

Reverse charge mechanics

As you are aware that, various new service have been added under the New reverse charge mechanism with effective from 1 July 2012 wherein service tax liability shall be discharged both by the service provider & recipient and in some cases wholly by the service recipient. Relevant notification issued by the Central Government is attached herewith for your reference:
 
Further, there are various issues wherein we would like to address the following:

1.      Liability for invoices raised till 30-06-2012: The new reverse charge mechanism is effective from 1-07-2012 and therefore will apply to invoices issued w.e.f 1-07-2012. In respect of invoices issued upto 30-06-2012, the liability to pay service tax will be on the service provider and not with us.

Further, with respect to invoices post 1-07-2012, service tax under reverse charge is payable on payment of invoices.  However, if such payments are not made within a period of six months from the date of invoice, the point of taxation get shifted to the date of invoice and therefore service tax along with interest would be required to be paid (ie interest from date of invoices till the date of such payment).

Income Tax Department Starts Two More Taxpayer Friendly Initiatives : ‘Register for Home Visit’ and ‘Online Tax Help’


In order to make the Income Tax Return filing experience even more convenient, the Income Tax Department has started two more taxpayer friendly initiatives ‘Register for Home Visit’ and ‘Online Tax Help’. To avail these facilities, a taxpayer must visit the website http://www.trpscheme.com/ and take help of trained professionals either online or at their homes. The taxpayer can choose between ‘online help’ or ‘home visit’.





On choosing the option of online tax help, the taxpayer can fill in his tax related query along with his contact details. The online query will be resolved by tax experts through Email or Phone within 24 hours.