Friday, 30 November 2012

Tax Liability on Medical Reimbursement, House Rent and Conv. Allowance for the Asstt. Year 2013-14.

When Employer paid salary to employee in breakup form like as Basic, Dearness allowance, House Rent Allowance, Conveyance Allowance and Medical Allowance etc. in the financial year 2012-13 or either in Private Sector or Public Sector, the question is arise that whether the paid salary or entire salary amount is taxable or exempted. How to calculate tax liability on drawn salary ? etc. thus the some clarification regarding such type of queries of Employer as follows:

1. Medical Allowance:
  • Only reimbursement of medical expenses up to Rs. 15,000/- is exempt from income tax. Amount received over and above Rs. 15,000/- is taxable as “Income From Salary”.
  • Fixed Medical allowance is taxable in the hand of employee. It is not plainly exempt from income tax even if it is actually expended for medical treatment by the employee.
2. House Rent Allowance (HRA):
In respect of HRA, the least of the following is exempt from tax u/s 10(13A):
  • 40% of salary (50% for Mumbai, Kolkata, Delhi and Chennai).
  • HRA for the period the house is occupied by the employee.
  • The excess of rent paid over 10% of salary. However, an employee living in his own house or where he does not pay any rent is not eligible for this exemption.
3. Conveyance Allowance:
Any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit is fully exempt from tax u/s. 10(14) read with Rule 2BB (1)(c). However, transport allowance for commuting between residence and place of duty is exempt up to Rs 800/- per month.


General Anti-Avoidance Rules The GAAR (General Anti-Avoidance Rule) provisions have not been put on hold. The Finance Act, 2012 had provided that these provisions shall be effective from the 1st day of April, 2014 and apply to Assessment year 2014-15 onwards.
One of the recommendations of the Parthasarathi Shome Committee is that GAAR should be deferred for 3 years. The Committee has cited the following reasons for suggesting this deferral:
‘The implementation of GAAR may be deferred by three years on administrative grounds. GAAR is an extremely advanced instrument of tax administration – one of deterrence, rather than for revenue generation – for which intensive training of tax officers, who would specialize in the finer aspects of international taxation, is needed’.
This was stated by the Minister of Finance, Shri S.S.Planimanickam in a written reply to a question in the Rajya Sabha today.

Supreme Court dismisses review petition on Excise Valuation

Excise valuation basis manufacturing cost plus profit upheld by Supreme Court where sales are made at below manufacturing cost to penetrate market

The Supreme Court (“Court”) has dismissed the review petition filed by Fiat India Private Limited on the issue of valuation under the Central Excise Act, 1944.  The Court, vide order dated November 27, 2012, observed that there was no reason to interfere with its original order dated August 29, 2012.

Key observations of the Court in the Original order

The Court had upheld the best judgement valuation by the revenue authorities (“RA”) on manufacturing cost plus profit basis, where the goods were sold at below manufacturing cost for market penetration, though no additional

Case laws Updates - November 2012

Direct Tax

High Court

Re-assessment proceedings valid basis information from competent authority of a treaty partner

The taxpayer filed its return of income (“ROI”) for Assessment Year (“AY”) 2006-07 declaring a total income of INR12.01 crores under the head income from other sources (“IFOS”), which was processed under section 143(1) of the Income tax Act, 1961 (“Act”) without any adjustment.  Subsequently, the Government of India received information from the Competent Authority of the Government of Japan under the Mutual Exchange of Information (as per Article 26 of the India-Japan tax treaty) that during the subject year, the taxpayer had received an amount equivalent to INR 11.28 lakhs from Japanese Company as interest.  Basis such information, the Assessing Officer (“AO”) issued a reassessment notice under section 148 of the Act with a reason to believe that the interest receipts

Wednesday, 28 November 2012

Whether when assesse is liable to TDS on salary, including perquisites, but fails to do so because of HC interim order, which was later vacated on basis of SC decision, assessee for period when interim order was in force, can be deemed to be assessee in default - NO: SC

THE issues before the Bench are - Whether when the assesse is liable to deduct tax at source on salary, including the perquisites as per Rule 3, but fails to do do because of an interim order passed by the High Court, which is later vacated on the basis of the Apex Court decision, the assessee for the period when interim order was in force, can be deemed to be an assessee in default and Whether while vacating the interim order the HC allows three months period for compliance of the provisions of the I-T Act, the assessee is to be held to be in default and is also liable to pay interest from such a date as allowed while dismissing the writ.
Facts of the case
RULE 3 of the Income Tax Rules, 1962 was amended by the Income Tax (Twenty-Second Amendment) Rules, 2001 and by the amendment, the method of fixation of the value of 'perquisites' under Section 17(2) of the Income Tax Act, 1961 was also amended. The Association of Scientific & Technical Officers of the Oil & Natural Gas Corporation Limited (ONGC) filed Writ Petition No. 155 of 1996 before the High Court, challenging the vires of the aforesaid method of valuation of

11 Rules for Finding Period of Holding of Capital Assets –

Period of holding of a capital asset is very important step in determination of liability of capital gains. If you are holding shares or mutual fund units or other securities  and sold through stock exchange , it shall be tax free if it is held for 12 months or more before sale . Similarly, other assets also become long term capital asset or short term asset based on the period for which it was held by the transferor  The tax rates for short

Do you have any grievance relating to Income-Tax?

Then, take his help to redress your Grievances


Income-tax Ombudsman
4th Floor, ‘A’ Wing, Kendriya Sadan,
Koramangals, Bangalore – 560 034
Ph : 080-25538389, Fax : 080-25538390

You, or your authosized representative, can bring your Income-tax related complaints to the Taxpayer-friendly Income-tax Ombudsman, for redressal.  The Grievances may be :

How to Download Form-16 and Form 16-A from TIN-NSDL

On payment of Contractor, Publisher, Ad-Service Provider etc. above Rs. 20000/- in the financial year, then the TDS is must be deducted under section 94J, 94C as well as TDS on Salary must be deducted by employer from salaried employee u/s. 192. After deducting the tax the responsibility of Tax Deductor is that to submit Income Tax Return Quarterly in 26Q or 24Q in electronic Form (e-TDS Return). Now with the help of this data uploaded by you, Form No. 16A can be generated from TIN-NSDL site. It has been made compulsory by the Income Tax Department for all deductors to issue Form 16A generated through TIN-NSDL site. A Circular in this regard has been issued by the Department bearing no. 1/2012 dated

Notification for Rajiv Gandhi Equity Saving Scheme, 2012

Government of India
Ministry of Finance
Department of Revenue
New Delhi, the 23rdNovember , 2012.
S.O. 2777(E).— In exercise of the powers conferred by sub-section (1) of section 80CCG of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely:-
1. Short title, commencement and application. - (1) This Scheme may be called the Rajiv Gandhi Equity Savings Scheme, 2012.
(2) It shall come into force on the date of its publication in the Official Gazette.
(3) This Scheme shall apply for claiming deduction in the computation of total income of the assessment year relevant to a previous year on account of investment in eligible securities under sub-section (1) of section 80CCG of the Income-tax Act, 1961. 
2. Objective of Scheme.-The objective of the Scheme is to encourage the savings of the small investors in domestic capital market. 
3. Definitions.- In this Scheme, unless the context otherwise requires,-

(i) “Act” means the Income-tax Act, 1961 (43 of 1961);
(ii) “demat account” means an account opened with the depository participant in accordance with the guidelines laid down by the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(iii) “depository” means a company as defined in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996);
(iv) “depository participant” means a participant as defined in clause (g) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996);
(v) “eligible securities” means any of the following :-
(a) equity shares, on the day of purchase, falling in the list of equity declared as “BSE-100” or “ CNX-100” by the Bombay Stock Exchange and the National Stock Exchange, as the case may be;

(b) equity shares of public sector enterprises which are categorised as Maharatna, Navratna or Miniratna by the Central Government;
(c) Units of Exchange Traded Funds (ETFs) or Mutual Fund (MF) schemes with Rajiv Gandhi Equity Savings Scheme (RGESS) eligible securities as underlying, as mentioned in sub-clause (i) or sub-clause (ii) above, provided they are listed and traded on a stock exchange and settled through a depository mechanism;
(d) Follow on Public Offer of sub-clauses (i) and (ii) above;
(e) New Fund Offers (NFOs) of sub-clause (iii) above;
(f) Initial Public Offer of a public sector undertaking wherein the government shareholding is at least fifty-one per cent. which is scheduled for getting listed in the relevant previous year and whose annual turnover is not less than four thousand crore rupees during each of the preceding three years; (vi) “ financial year” means a year commencing on the 1st day of April and ending on the 31stday of March;
(vii) “Form” means the Form appended to the Scheme;
(viii) “investment” means investment by an assessee in any of the eligible securities in accordance with the Scheme;
(ix) “new retail investor” means the following resident individuals:-

(a) any individual who has not opened a demat account and has not made any transactions in the derivative segment as on the date of notification of the Scheme;
(b) any individual who has opened a demat account before the notification of the Scheme but has not made any transactions in the equity segment or the derivative segment till the date of notification of the Scheme,
and any individual who is not the first account holder of an existing joint demat account shall be deemed to have not opened a demat account for the purposes of this Scheme
(x) “Scheme” means the Rajiv Gandhi Equity Savings Scheme;
(xi) words and expressions used and not defined in this Scheme, but defined in the Act, shall have the meanings respectively assigned to them in the Act.
4. Eligibility .- The deduction under the Scheme shall be available to a new retail investor who complies with the conditions of the Scheme and whose gross total income for the financial year in which the investment is made under the Scheme is less than or equal to ten lakh rupees.

5. Procedure at time of opening demat account.-The new retail investor shall follow the following procedure at the time of opening or designating a demat account :-

(a) the new retail investor shall open a new demat account or designate his existing demat account for the purpose of availing the benefit under the Scheme;
(b) the new retail investor shall submit a declaration in Form A to the depository participant who will forward the same to the depository for verifying the status of the new retail investor;
(c) the new retail investor shall furnish his Permanent Account Number (PAN) while opening the demat account or designating the existing account as a Rajiv Gandhi Equity Savings Scheme eligible account, as the case may be.

6. Procedure for investment under Scheme.- A new retail investor shall make investments under the Scheme in the following manner :-
(a) the new retail investor may make investment in eligible securities in one or more than one transactions during the year in which the deduction has to be claimed;

(b) the new retail investor may make any amount of investment in the demat account but the amount eligible for deduction, under the Scheme shall not exceed fifty thousand rupees;

(c) the eligible securities brought into the demat account, as declared or designated by the new retail investor, will automatically be subject to lock-in during its first year, as per the provisions of paragraph 7, unless the new retail investor specifies otherwise and for such specification, the new retail investor shall submit a declaration in Form B indicating that such securities are not to be included within the above limit of investment;

(d) the new retail investor shall be eligible for a deduction under sub-section (1) of section 80CCG of the Act in respect of the actual amount invested in eligible securities , in the first financial year in respect of which a

declaration in Form B has not been made, subject to the maximum investment limit of fifty thousand rupees;

(e)the new retail investor who has claimed a deduction under sub- section (1) of section 80CCG of the Act, in any assessment year, shall not be allowed any deduction under the Scheme for any subsequent assessment year;

(f) the new retail investor shall be permitted a grace period of three trading days from the end of the financial year so that the eligible securities purchased on the last trading day of the financial year also get credited in the demat account and such securities shall be deemed to have been purchased in the financial year itself;

(g) the new retail investor may also keep securities other than the eligible securities covered under the Scheme in the demat account through which benefits under the Scheme are availed;

(h) the new retail investor can make investments in securities other than the eligible securities covered under the Scheme and such investments shall not be subject to the conditions of the Scheme nor shall they be counted for availing the benefit under the Scheme;

(i) the investment under the Scheme shall consist of all eligible securities covered under the Scheme that are initially bought by the investor under the Scheme or that are bought subsequently by the investor as per the provisions of the Scheme;

(j) the deduction claimed shall be withdrawn if the lock-in period requirements of the investment are not complied with or any other condition of the Scheme is violated.

7. Period of holding requirements. - (1) The period of holding of eligible securities shall be three years to be counted in the manner detailed hereunder.

(2) All eligible securities are required to be held for a period called the fixed lock-in period which shall commence from the date of purchase of such securities in the relevant financial year and end one year from the date of
purchase of the last set of eligible securities (in the same financial year) on which deduction is claimed under the Scheme.
(3) The new retail investor shall not be permitted to sell, pledge or hypothecate any eligible security during the fixed lock-in period.
(4) The period of two years beginning immediately after the end of the fixed lock-in period shall be called the flexible lock-in period.
(5) The new retail investor shall be permitted to trade the eligible securities after the completion of the fixed lock-in period subject to the following conditions:-
(a) the new retail investor shall ensure that the demat account under the Scheme is compliant for a cumulative period of a minimum of two hundred and seventy days during each of the two years of the flexible lock-in period as laid down hereunder:-

(A) the demat account shall be considered compliant for the number of days where value of the investment portfolio of eligible securities , within the flexible lock-in period, is equal to or higher than the amount claimed as investment for the purposes of deduction under section 80CCG of the Act;
(B) in case the value of investment portfolio in the demat account falls due to fall in the market rate of eligible securities in the flexible lock-in period, then notwithstanding sub clause(A), -
(i) the demat account shall be considered compliant from the first day of the flexible lock-in period to the day any such eligible securities are sold during this period;
(ii) where the assessee sells the eligible securities mentioned in sub-clause (B) from his demat account, he shall have to purchase eligible securities and the said demat account shall be compliant from the day on which the value of the investment portfolio in the account becomes -

(I) at least equivalent to the investment claimed as eligible for deduction under section 80CCG of the Act or;
(II) the value of the investment portfolio under the Scheme before such sale,

whichever is less.
(6) The new retail investor’s demat account created under the Scheme shall, on the expiry of the period of holding of the investment, be converted automatically into an ordinary demat account.
(7) For the purpose of valuation of investment during the flexible lock-in period, the closing price as on the previous day of the date of trading, shall be considered.
(8) While making the initial investments upto fifty thousand rupees, the total cost of acquisition of eligible securities shall not include brokerage charges, Securities Transaction Tax, stamp duty, service tax and all taxes, which are appearing in the contract note.
(9) Where the investment of the new retail investor undergoes a change as a result of involuntary corporate actions like demerger of companies, amalgamation, etc. resulting in debit or credit of securities covered under the Scheme, the deduction claimed by such investor shall not be affected.
(10) In case of voluntary corporate actions like buy-back, etc. resulting only in debit of securities, where new retail investor has the option to exercise his choice, the same shall be considered as a sale transaction for the purpose of the Scheme.
(11) The Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) shall notify the corporate actions, referred to in sub-paragraph (9), allowed under the Scheme in this regard.
8. If the new retail investor fails to fulfil any of the provisions of the Scheme, the deduction originally allowed to him under sub-section (1) of section 80CCG of the Act for any previous year, shall be deemed to be the income of the assessee of such previous year and shall be liable to tax for the assessment year relevant to such previous year.

9. (1) The depository shall certify the new retail investor status of the assessee at the time of designating his demat account as demat account for the purpose of the Scheme.

(2) The depository participant shall furnish an annual statement of the eligible securities invested in or traded through the demat account to the demat account holder.
10. The depository shall provide a consolidated statement of details in the electronic format, as specified in Form C, on all the Rajiv Gandhi Equity Savings Scheme beneficiaries to the Director General of Income Tax (Systems) or any other person authorised by him, within a period of thirty days from the end of the relevant financial year.

11. For the purpose of paragraph 10, the Director General of Income Tax (Systems) shall determine the procedures, formats and standards for furnishing of the report in electronic format in Form C by the depositories.

12. Assessees shall be liable to submit the relevant records to the income-tax authorities for verification, as and when required.

[ Notification No. 51 /2012 F. No. 142/35/2012 –TPL)
(Raman Chopra)
Director (TPL-II)
Form A
[See paragraph 5(b)]
Declaration to be submitted by the investors to the depository participants for availing the benefits under the Rajiv Gandhi Equity Savings Scheme.
Name of the Investor:
(first holder)
Address of the investor:
Permanent Account Number (PAN):
1. It is hereby certified that* ---

(a) I do not have a demat account and I have not traded in any derivatives.
(b) I have demat account no _________________ in ____________________ depository participant but I have not traded in any equity shares or derivatives in this account.
(c) I have a joint demat account no _________________ in ____________________ depository participant but I am not the first account holder.
2. I hereby declare that I have read and understood all the terms and conditions of the Rajiv Gandhi Equity Savings Scheme.
3. It is hereby verified that I am an eligible new retail investor for availing the benefits under the Rajiv Gandhi Equity Savings Scheme.
4. I undertake to abide by all the requirements and fulfill all obligations under the Scheme, and will comply with all the terms and conditions of the Scheme.
5. I understand that, in case I fail to comply with any condition specified in the Scheme, the benefits availed there under will be withdrawn and the tax shall be payable by me accordingly.

Signature of the Investor
* Tick which ever is appropriate.
Form B
[See paragraph 6(c) and (d)]
Declaration to be submitted by the new retail investor to the depository participant on purchase of eligible securities.
Depository participant
It is hereby informed that I have demat account no _________________ in ____________________ depository participant and the following securities

(e) purchased in the aforesaid demat account on ______________are not to be included as investment for the purpose of the Rajiv Gandhi Equity Savings Scheme.

Name of the Investor:
(first holder)
Address of the investor:
Permanent Account Number (PAN):
Form C
[See paragraphs 10 and 11]
Annual report to be submitted by the depository to the Income Tax Department in Electronic Format before 30th April.
(For 80 CCG benefits of Financial Year 2012-13) 2012-13
Report to be furnished by 30thApril 2013
Report to be furnished by 30thApril 2014
Report to be furnished by 30thApril 2015
Report to be furnished by 30th April 2016
Date of opening A/c
Date of investment for the Purpose of lock-in (date of making the last investment in RGESS# eligible scrip)

Limit for Tax Claim u/s. 80D, 80DD and 80U of IT by Senior Citizen and Other Individuals.

As per Income Tax Law the Income Tax Deduction Limit u/s. 80D, 80DD and 80U for Senior Citizen and Individuals to claim Income Tax Exemptions for Assessment Year 2013-14 are as follows:

Section 80D enables an assessee to claim deduction from Gross Total Income the following payment:
  • Payment of health insurance premium of assessee or his family or his parents
  • Contribution to the Central Government Health Scheme
  • Payment for preventive health check up of the assessee or his family or his parents.
Amount of Deduction:
Deduction can be claimed by an individual in respect of the medical insurance premium paid up to Rs 15,000/- for himself and his spouse and dependent children. Additionally, he can also claim deduction for the medical insurance premium up to Rs 15,000 for his parent(s). The aforesaid deductions shall be Rs 20,000 in case the premium is paid for senior citizen (60 years or more from the FY 2012-13).

A Precaution:
  • Ensure to make the payment by cheque only.
  • There is a max ceiling of Rs. 5,000/- on preventive health check up from the FY 2012-13 within the overall limit mentioned above.
Further, you may examine the availability of deduction u/s 80DD of the Income Tax Act-1961 as under:

Deduction U/s 80DD
Deduction under this section is available to an individual/HUF who incurs any expenditure for the medical treatment, training and rehabilitation of a disabled dependent or Deposits any amount in schemes like Life Insurance Corporation for the maintenance of a disabled dependant. A deduction admissible u/s 80DD is of Rs 50,000/- in normal course. Where the dependant is a person with a severe disability, a higher deduction of Rs 1,00,000/- is allowed. The term 'dependent', as mentioned above, refers to the spouse, children, parents and siblings of the assessee who are dependent on him for maintenance and who themselves haven't claimed a deduction for the disability in computing their total incomes u/s 80U. The dependant for the purpose of section 80DD has to be a “person with a disability”.

Saturday, 24 November 2012

Infrastructure Projects in Tamil Nadu – New Regulations and incentives

The Tamil Nadu Government (“TN Government”) has introduced The Tamil Nadu Infrastructure Development Act, 2012 (“the Act”) effective from June 15, 2012 to promote infrastructure projects including projects under the Public Private Partnership (“PPP”) mode.  The Tamil Nadu Infrastructure Development Rules, 2012 (“Rules”) have been notified from November 7, 2012 for implementing the Act.  The Act provides for State support in the form of equity, subsidies etc and levy of cess and user fees. 


The objective of the Act is as follows:

Get full TDS Refund without matching Form 26AS, How?

The TDS (Tax) Deductor is bounded to issue TDS Certificate as well as deposit Deducted TDS (Tax) into Central Government Treasury through Bank by appropriate Challan. Secondly TDS Deductor is also mandatory to file TDs Return in respect to deduct TDS by fining of Return Quarterly within Due Date.

For non compliance of each and every part mentioned above, there is a separate penalty and consequences under the Income Tax Act-1961 as under:
  1. For non issuance of TDS Certificate within a prescribed time, penalty is imposable u/s 272A (2) @ Rs. 100/- per day during which the failure continues. However, the amount of penalty cannot exceed the amount of tax deductible/deducted.
  2. For non filing of TDS Return also, there is a penalty provision of Rs 100 per day. The recent Finance Act-2012 has imposed a fee of Rs. 200/- per day for late filing of TDS Return. Besides, a penalty of Rs. 10,000/- to Rs. 1,00,000/- is there for non filing or inaccurate filing of TDS return. The amendment is w.e.f 01.07.2012.

Importance of PAN quoting for below Transactions

Taxpayee or other Depositor/Investor some time do transaction without PAN quoting, it is harmful or gives trouble in features.  PAN (Permanent Account Number) is necessary while doing the below transaction.
  • To Sale or purchase of any immovable property valued 5 Lakh rupees or more.
  • To Sale or purchase of any motor vehicle (other than two wheeler) which requires registration under motor vehicle act 1988.
  • To Fixed deposit more than 50000 rupees with a bank.
  • To Deposit exceeding Rs. 50000 in any bank or post office.
  • To Sale or purchase of shares, debentures exceeding Rs. 1 lakh.
  • To Opening a current or saving account in bank.
  • To Making an application for installation of a telephone connection including cellular connection.

Receipt of Gift from NRI Son should be Shown in Return

Since the gift is given by your son, it is not taxable as per the new amended provision u/s 56 of the I T Act. If you forgot to show this amount , its not big fault because the fact is that you have rceived the gift from Son. But , in my opinion , you should show the receipt of gift from son and claim the exemption of the amount . For this , i suggest you get a letter from son whereby he gives all details what he does i.e what is his source of income and the mode of payment of gift.There is no limit for receiving the money from your relatives residing outside India , as far as my knowledge goes.

Friday, 23 November 2012

Tax Planning for Divorece

Whether Proceeds From Jeevan Aastha Policy Tax Exempt?

Whether maturity proceeds under LIC’s Jeevan Aastha policy are eligible to earn exemption u/s 10(10)d. if yes,under which circular.Salunkhe j b , Jalgaor
Jeevan Aastha policy is single premium and period is 5 or 10 Years. The sum assure is six times of first years premium and two times of second year premium.
The  provision u/s 10(10D ) says any sum received under a Life Insurance Policy is free from tax except certain types given there in –
i.                     keyman insurance policy and
ii.                    insurance policy where premium in a year exceeds 20 % of insured value or
iii.                   insurance receipt u/s 80DD
Para 10.3  of (CBDT) Circular No. 7/ 2003 dated September 5, 2003 .  says
10.3 The insurance policies with high premium and minimum risk covers are similar to deposits

Take double deduction on your housing loan interest

In a recent judgment by the Chennai Tribunal in the case of ACIT v C. Ramabrahmam (2012) 27 104 (Chennai – Trib.), interest on housing loan which was claimed as a deduction under section 24(b) [while computing income from house property] was also deducted by the assessee under section 48 [as cost of acquisition while computing capital gains from sale of such house property].  Such treatment was upheld by the Tribunal.  This article attempts to give a broad overview of the case and some consequences that could emerge out of this judgment. Brief facts of the case:
The assessee had purchased a house property in the year 2002-03.  He sold such property in the AY

Whether when assessee submits revised return after making self-assessment u/s 140A, he is liable to pay interest u/s 220(6) from date of his filing revised returns - NO, from date of determination of his final tax liability: HC

THE issues before the Bench are - Whether when the assessee submits revised return after making self-assessment u/s 140A, he is liable to pay interest u/s 220(6) from the date of his filing revised returns or from the date of determination of his final tax liability and Whether a notice u/s 156 is obligatory if any interest liability is determined to be due from the assessee. And the verdict goes in favour of the assessee.
Facts of the case
Assessee had filed his self-assessed ROI quantifying at Rs.1,44,74,480/-, which was assessed at Rs.1,45,40,721/- u/s 143(3). Subsequentally it was reopened u/s 148 and ex parte order was passed. Then the assessee submitted another ROI of Rs.1,96,91,399/-. After several rounds of appeals etc., ultimately the tax liability of the assessee was determined by the appellate order. As the facts of the case were clear the decisions of the lower authorities were not reiterated by the High

•Unhedged Foreign Currency Exposure of Corporates

To Read the notification click here

Thursday, 22 November 2012

How to Upload Income Tax return at new Income tax website.

In respect of filing of India Income Tax return, request you to kindly register the DSC by following the simple steps.

Save the HTML File at desired location at computer system.

Login to the website

No s. 2(22)(e) “Deemed Dividend” if loans & advances given as quid pro quo

ACIT vs. G. Sreevidya (ITAT Chennai)

The assessee, a substantial shareholder of a closed held company, availed of a loan from the company. She claimed that the said loan was not assessable as “deemed dividend” u/s 2(22)(e) as she had given a personal guarantee and collateral security to a third party to enable the company to avail of credit facilities and in return she was entitled to withdraw funds from the company as and when required by her for personal purposes. The AO rejected the claim though the CIT(A) accepted it. On appeal by the department, HELD

Extension of period to submit ITR-V can't validate a time-barred Sec. 143(2) notice

Extension of period to submit ITR-V can't validate a time-barred Sec. 143(2) notice

In this case, the return was e-filed by the assessee on 25-09-2009. The ITR-V for the same was received by CPC on 29-11-2010 i.e., within the period as extended by Circular No. 3/2009. Consequently, the AO issued a section 143(2) notice on 26-08-



Is Medical Reimbursement Taxable ?

As per section  17(2) of the I T Act , medical reimbursement by an employer is not taxable in hand of an employee as perquisite if  treatment of the employee or his family member is done in any of the following hospitals
  1. Hospital maintained by employer.
  2. Central Govt or state or municipal maintained hospital
  3. Any hospital approved by Govt for its employees
  4. For prescribed diseases or ailments, hospitals  approved by Chief Commissioner of Income Tax .
Thus , if the treatment of govt employee’s son was done in govt hospital or approved hospital, reimbursement of any expense without limit is exempt from tax.
You can get the list of approved hospitals list from Circular No. 603, dated 6-6-1991


To read the article click the link given below:

Higher Rate 20% on TDS Deduction if Deductee have not PAN

If the assessee or Salaried Employee did't have PAN, then the deductions of TDS by the Deductor, how to deduct TDS from Assessee or Salaried Employee. In this matter the Income Tax Department pass new section 260AA of Income Tax, the TDS Deductions Rate is 20% from assessee or Salaried Employee. The section 260AA of Income Tax Act provides to deduct TDS at higher end, 20% from TDS Deductee.

But what’s in the case when the deductee has the income below the exemption limit under income tax. If the dedcutee has not PAN number and has the income below exemption limit of income tax, will the tax be deducted at higher level?
  • If the assessee furnished form 15G or 15H for the declaration that his income is below the exemption level, He needs to attach a photocopy of PAN.
  • Does having a PAN number is must in india that without that card one can’t have a fixed deposit in banks.
  • What income tax rules say about PAN number? Is it necessary for every individual either having any income or not.
Income tax section 139A provides that it is not necessary to have PAN card for the people whose income is below the exemption level. In this regard Karnataka High court gives the decision that TDS can’t be deducted at higher level on the person who have not PAN number and having income below the exemption level. Honourable High court adds some points which are as under.
  • Section 206AA makes it conditional for every person who wishes to have a transaction in bank/FIs including small investors/depositors (i.e., investors/depositors with income below taxable limit) to invariably have a PAN. This runs counter to section 139A according to which such persons need not have a PAN.
  • Section 206AA hinders and discourages such small investors from coming forward to invest their money for secured reasons and their secured future. This is also not desirable for country's economy.
  • Further section 206AA is unreasonable as it invalidates Form 15G which does not mention PAN.
  • Section 206AA which overrides section 139A is discriminatory against small investors . Section 139A has withstood scrutiny of Article 14 of the Constitution for reasonableness.
  • In the result, section 206AA read down and made inapplicable to those with incomes below taxable limits. Banks and FIs not to insist on PAN for opening accounts of below taxable limit income-earners. - [2012] 22 157 (Karnataka)

Check Carefully Form 26AS Statement or PAN Ledger and avoid IT Notices.

Friends, do you check you PAN Ledger, Form 26AS Statement, Tax (TDS) Credits before submitting Income Tax Return?, If, Yes, there is no any problem, but if your answer is No, then there are too difficult to face more problems. Therefore Tax payee or Assessee must know about PAN Ledger.

From which financial year will the Annual Statement under Sec. 203AA (Form No. 26AS) be issued?

•Non-Performing Assets and Restructuring of Advances

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Service Tax - Accounting Code reintroduced

After the introduction of Negative List, department has prescribed single accounting code for payment of service tax vide Circular 161/12/2012 dated 6th July, 2012. In Service Tax Registration also only one description of service is available. However after examination of suggestions from field formation, department vide Circular No. 165/16/2012-ST dated 20th November, 2012 has issued a list of 120 descriptions of services for the purpose of registration and accounting codes corresponding to each description of service for payment of tax is provided. 

Unabsorbed depreciation

In the instant case, the assessee's claim to set off brought forward unabsorbed depreciation against current year's long-term capital gain was rejected by the AO on the basis of following reasoning:

Wednesday, 21 November 2012

Understanding Value Concepts in Impairment Testing

Impairment testing was introduced to ensure that the carrying amount of an asset recognized on the balance sheets does not exceed its recoverable amount. Therefore, basically all assets are subject to a test for impairment, under either IAS 36 (Impairment of Assets), or another standard.
An academically sound standard, IAS 36 sets out sets of rules covering how tangible and intangible assets, including goodwill, have to be tested for impairments. However, in applying it, due to two different value concepts, several issues lead to difficulties and ambiguity, especially with goodwill. Those two value

How to Compute Tax In Case You Have Agricultural Income?

While clubbing the agricultural income with non-agricultural income for tax purpose , whether non- agricultural income to be taken at gross income or net taxable income after deduction u/s. 80C ?Mahesh
The non-agricultural income is the total incomewithout consideration of agricultural income. The total incomeis found out by gross total income minus deduction u/s 80C.
For example , for asst yr 2007-08 if an Individual male person has net agricultural income of R 40,000 and

No TDS on Interst on delayed compenation / Award under Motor Vehicle Act

The award under the Motor Vehicle Act is like a decree of the court. It do not come within the definition of income as mentioned in Section 194A(1) read with Section 2(28A) of the Income Tax Act. Proceedings regarding claim under Motor Vehicle Act are in the nature of a garnishee proceedings under which the MACT has a right to attach the judgment debt payable by the insurance company. Even in the MAC award, there is no direction of any court that before paying the award, the insurance company is required to

Business & Corporate Gifts

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Reverse Charge under Service Tax

Normally, service tax is payable by service provider by charging it in invoice raised upon the service recipient. Section 68(2) makes the person receiving the service liable to pay tax. In certain cases, liability to pay service tax has been partly shifted upon the service recipient whilst in some cases it is fully shifted. This method of service tax payment is called service tax payable under reverse charge mechanism vide Notification No. 30/2012-ST dated 20-6-2012. Person who is liable to pay service tax under RCM is required to take service tax registration as service recipient.
Service tax is payable only on taxable services. Any activity is a taxable service if following two conditions

Tuesday, 20 November 2012

How Forensic Accountants Differ From Auditors

Forensic accountants are uniquely suited to help in-house counsel address issues involving financial reporting, accounting and internal controls. Understanding what forensic accountants do, and how their role differs from other accounting and auditing functions, can help in-house lawyers best utilize their skills.

Interest paid on borrowing for acquiring house deductible u/s 24(b) & 48

ACIT vs. C. Ramabrahmam (ITAT Chennai)

The assessee borrowed funds for purchasing a house. The interest paid on the said loan was claimed as a deduction u/s 24(b). When the house was sold, the interest paid on the said loan was treated as “cost of acquisition” and claimed as a deduction u/s 48 in computing the capital gains. The AO held that as the interest had been allowed as a deduction u/s 24(b), it could not allowed again in computing capital gains. The CIT(A) allowed the claim. On appeal by the department to the Tribunal, HELD dismissing the appeal:

Deduction u/s 24(b) and computation of capital gains u/s 48 are altogether covered by different heads of income i.e., income from ‘house property’ and ‘capital gains’. Neither of them excludes the other. A deduction u/s 24(b) is claimed when the assessee computes income from ‘house property’, whereas, the cost of the same asset is taken into consideration when it is sold and capital gains are computed under section 48. There is no doubt that the interest in question is an expenditure in acquiring the asset. Since both provisions are altogether different, the assessee is entitled to include the interest at the time of computing capital gains u/s 48.

How to register DSC at New Income tax website

Login to the website

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Can You Claim Exemption For Two Separate Years For Investment In same House ?

Before I express my opinion, let us see what the exemption provison says u/s 54 F of the I T Act. The conditions for claim of exemption u/s 54F are
  • The gain should be long term .
  • The asset sold should be other than a residential house .
  • The investment should be for buying or constructing a house.
  • The investment should be within one year before the sale of asset on which log term gain arisen or
  • The investment should be within two years after the sale of asset on which log term gain arisen or
  • There should not be more than one residential house at the time of purchase or construction of new house.
If someone fulfills all the aforesaid conditions , he/she will get exemption u/s 54F of the I .T. Act.
Issue of investment in one house of long term gains arisen in two years?
It is clear that the condition of “one year before” can be fulfilled by an assessee for long term gains arising in consecuitive two years. There is nothing expressly written in the I T Act , that such LTCG of two years can not be claimed for same house. The condition is LTCG should be utilised for purchase of residential house.In your specific case , ESOP share is long term capital asset as they were held for more than one year and the gain on sale of those shares were utilised for same residence purchase. If action to invest has been done within time limit , I feel you are certainly eligible for claim of exemption u/s 54F of the I T Act.

New Amendment in Sec. 10(15) for Exemptions on Interest of Bond/Debentures



NOTIFICATION no. 50/2012-IT [F.NO.178/60/2012-(ITA.1)], DATED 15-11-2012

In the notification of the Government of India in the Ministry of Finance, Department of Revenue, (Central Board of Direct Taxes) number S.O. 2685(E), dated the 6th November, 2012 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), dated the 6th November, 2012, in the table, for "Rural Electrical Corporation", read "Rural Electrification Corporation Limited".

Whether when insurance, banking and electricity generation and distribution companies are treated as special class as per Sec 211 of Companies Act, they can be treated like any other assessees for purpose of Sec 115JB - NO: ITAT

THE issues before the Bench are - Whether at the time of computing the taxable income of the company engaged in the business of general insurance, once the profit on sale of investment is included in the P&L account prepared as per the Insurance Act, then no adjustment is required to be made as per the provisions of sec. 44 r.w. First Schedule of Income Tax Act and Whether when insurance, banking and electricity generation and distribution companies are treated as a special class as per Sec 211 of Companies Act, they can be treated like any other assessees for the purpose of Sec 115JB. And the verdict goes in favour of the assessee.

Monday, 19 November 2012

Surrender via revised ROI before issue of formal notice does not necessarily avoid s. 271(1)(c) penalty

CIT vs. Usha International Ltd (Delhi High Court)

The assessee filed a ROI claiming deduction u/s 35CCA for a donation made to another party. The department had information that the donation was bogus and so a survey was conducted on the assessee’s premises. Pursuant to the survey, the assessee filed a revised return of income in which it withdrew the claim for deduction and paid up the taxes thereon. The AO imposed penalty u/s 271(1)(c) on the ground that the

Leave Travel Concession (LTC) Rules and Benefits

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In case HUF Assessee, How plan to save Income Tax?

In our Tax System there are 3 types of Taxpayee i.e. 1. Individual, 2. HUF and 3. Sr. Citizen. All are search to saving Income Tax. In this connection the HUF Taxpayee save their Income Tax as per following guidelines:

Claim reasonable salary etc. to Karta as expenses:
HUF should allow reasonable salary etc. to Karta in respect of his services in the conduct of business of the family.

However, such remuneration must be under a valid agreement which is bonafide in the interest of the business of the family. Such payment must be reasonable and genuine. In Jugal Kishore Baldeo Sahai vs.

New Website for e-Filing of ITR by Income Tax Department

The New Website for E-Filing of Income Tax Return has launched by Income Tax Department.  The new website of e-filing of Income Tax Return contains too many new features.  Now, Tax Professionals (C.A.) can upload their forms electronically like as Form 3CA, Form 3CB, Form 3CD, Form 3CEB and Form 29B. Taxpayers can option for Higher Security,  alerts, reminders, notification, download .xml file and specifically online submission of ITR-1 return form.  Earlier in old website there was only facility to download the excel file and generate/enter data offline and upload xml file, but now data can be entered online and there is no need to enter TDS/Tax details manually.

New website for e-Filing of Income Tax Return with new amendments and easy steps. To visit New Webiste of e-Filing of ITR Click Here.