Friday, 28 June 2013

India Taxes- Due Date Alert for the month July 2013


 

Sr No
Due Date
Related to
Compliance to be made
1
05.07.2013
Service Tax
Payment of Service Tax for the Month of June 2013
2
07.07.2013
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 June 2013.
· Deposit TDS from Salaries deducted during the month of June 2013
• Deposit TCS for collections made under section 206C including sale of scrap during the month of June 2013, if any
• Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of June 2013, if any
3
15.07.2013
TDS/TCS
(Income Tax)
Furnish quarterly statement of tax deducted at source (TDS) and tax collected at source (TCS) for the quarter ended June 2013 in Form 24Q / 26Q / 27Q / 27EQ.
4
20.07.2013
VAT
Payment of VAT & filing of monthly return for the month of June 2013
5
30.07.2013
TDS/TCS
(Income Tax)
Issue of TDS Certificate - Non Salary for Q1 FY 2013-14
6
31.07. 2013
Income Tax
Filing of return of income tax /Wealth Tax by non –corporate assesses who are not subject to Tax audit.
7
21.07.2013
STPI
Filing of Softex Form for the month ended June 2013

 

Understanding International payments with latest case laws : Part –IV.


We had earlier discuss in detail about the concepts of International taxation and payments  along with various case laws earlier in three  different articles. In case you want to refer, the same, please click on the link below:


Payment for VOIP Charges : Where assessee engaged in business of IT enabled services,

Supporting evidence must for claiming reimbursements to be at ALP

Tata AutoComp v ACIT
 
Recently, the Mumbai Bench of the Tax Tribunal has held that the documentary evidence (in the form of back to back invoices) is a critical requirement to substantiate the cost to cost nature of reimbursements.

Case Laws Update - June 2013

Direct Tax


High Court


Remuneration paid to non-resident employees for services rendered in India not taxable under India-Denmark Double Taxation Avoidance Agreement (“DTAA”)

Whether payment of one time custodian charges to NSDL pursuant to statutory obligation upon assessee to enter into agreement with depository for dematerialization of securities can be allowed as revenue expenditure - YES: HC

THE issues before the Bench are - Whether payment of one time custodian charges to NSDL pursuant to statutory obligation upon the assessee to enter into an agreement with the depository for dematerialization of securities can be allowed as revenue expenditure; Whether, if, the assessee has taken over the liability of the shareholders as a goodwill measure and has paid the said amount as one time custody charges, the said expenditure is not allowable u/s 37(1) of the Act; Whether such expenditure is effective in reducing the administrative expenses of the assessee on the account of handling physical share certificates and Whether such expenses incurred squarely falls within the phrase “laid out or expended wholly and exclusively for the purpose of business”. And the verdict partly goes in favour of the assessee.
F

New ITR-5S Is Required For 44AD Firms

The assessment of the Partnership firms under the Income tax Act, 1961 has very specific characteristics and the “Remuneration and interest to partners” are two very specific figures without which one cannot calculate the tax liability of a partnership firm.
See a very important section 44AD of the income tax Act, 1961 in which in case of assessee (Individual, HUF and Partnership firm) having turnover Rs. 1 Crore or Less then Rs. 1 Crore have to show 8% Net profit and this is a presumptive taxation clause in which these assessees are not

Thursday, 27 June 2013

Concepts of Withholding tax on foreign payments.


 

 

1.. Objective and coverage of Section 195

The objective of section 195 is justifiable as it seeks to avoid a revenue loss as a result of tax liability in the hands of a foreign resident, by deducting the same from payments made to them at source. This will obviate the difficulty in chasing such foreign nationals for recovery of their tax dues subsequently, due to jurisdictional and other operational difficulties. Further most such foreign nationals are likely to have nil or at best very meager assets in India which may be totally inadequate to recover the tax dues.

 

AS 15 - Employee Benefits - A Brief

To Read the article, click the link below.

http://taxbymanish.blogspot.in/2011/10/s-15-employee-benefits.html

Whether the fact that TDS was not deducted on certain payments, was declared so in return, even then AO can re-assess on ground of failure to make full and true disclosure of facts - NO: HC

THE issues before the Bench are - Whether reopening of assessment is warranted after the expiry of four years, although the assessee has, in pursuant to queries raised by the AO, disclosed all details of the dealers, who have received payments in excess of Rs 50 lakhs; Whether further assessment can be reopened on the alternate ground that the assessee has not provided details of payments below Rs 50 lakhs, when there is no distinction with respect to TDS liability due to the size of payments; Whether assessment can be reopened beyond the expiry of

Formalities of Appointment of Foreign Directors

The foreign nationals or foreign citizen or Non-Resident Indians residing abroad can be appointed as a Director on the Board of Indian companies. A foreign body corporate may have 100% subsidiary company in India, may nominate one or all its Directors on the Board of the subsidiary Indian company who are foreign nationals.
What are the Laws applicable to foreign Directors appointed in Indian companies?

Wednesday, 26 June 2013

Five common questions on US sales and use taxes


These laws may be imposed directly on a non-US seller or indirectly by requiring the non-US seller to collect taxes from a purchaser in the US. These levies represent asignificant revenue source for state and local governments, and accordingly, can represent a significant cost of doing business in the US.Forty-five states and the District of Columbia impose sales and use taxes. Alaska, Delaware, Montana, New Hampshire, and Oregon do not. Thousands of local governmentsalso impose sales and use taxes. These include counties, cities, municipalities, parishes, and school districts. While significant differences exist among the various jurisdictions,most localities impose taxes on the same items taxed by the state.This article provides general answers to five sales and use tax

Taxablility of Political Parties

Whether before bringing any interest expenditure under ambit of Rule 8D(2)(ii), it is necessary for AO to prove that such interest is not directly attributable to any particular receipt - YES: ITAT

THE issues before the Bench are - Whether it is necessary for the AO to record satisfaction if he proposes to invoke Sec 14A - Whether before bringing any interest expenditure under the ambit of Rule 8D(2)(ii), it is necessary for the AO to prove that such interest is not directly attributable to any particular receipt. And the verdict goes against the Revenue.
Facts of the case
Assessee is a company, which is doing business of rice processing, power generation and retail sale. During the year, the assessee had received dividend income of Rs.1,32,638/-, which was c

Tuesday, 25 June 2013

UNDERSTANDING USA SALES TAX FOR SERVICE INDUSTRY.

The service industry covers a whole spectrum of different types of businesses, but a common element that they all share is the performance of activities in which there is little, if any, transfer of ownership or use of property. Service providers also share the common characteristic of generally not being subject to sales and use taxes on the services they provide. This exclusion

Doctrine of promissory estoppel not applicable to legislature – Withdrawal of tax exemption is not unconstitutional


The Karnataka High Court (“High Court”) has rendered a significant ruling in the case of MindTree Limited and Others (“Petitioners”) wherein important principles on judicial review by constitutional courts and the applicability of Doctrine of Promissory Estoppel to legislature and statutes have been articulated. The High Court confirmed the validity of the legislative amendments made to withdraw tax exemptions in this ruling which was pronounced in respect of a writ petition filed by various stakeholders of Special Economic Zones (“SEZ”) against the abrupt withdrawal of exemption from Minimum Alternate Tax[1] (“MAT”) and Dividend Distribution Tax[2] (“DDT”) on their profits.

Whether when a company sponsors gifts to winners of a TV Game Show, any TDS obligation arises on such gifts for assessee or TV Channel - Liability is on assessee: ITAT

THE issues before the Bench are - Whether when assessee makes emergency purchases for immediate consumption, clearing charges paid for the same are to be included in the value of closing stock; Whether first time insurance premium paid to register a vehicle purchased for business purposes is to be included in the actual cost of the asset and the same is to be treated as capital in nature; Whether when assessee sponsors gifts to winners of a game show on TV, any TDS obligation arises on such gifts and Whether TDS is deductible on stitching charges

Monday, 24 June 2013

Guide To The Law On Revision Of Assessments

Section 263 of the Income-tax Act, 1961 (the “Act”) confers the power upon the Commissioner to call for and examine the records of a proceeding under the Act and revise any order if he considers the same to be erroneous and prejudicial to the interests of the revenue. These are wide powers and have been subject to reasonable checks and balances to prevent their arbitrary use. For example, requirement of notice, opportunity of hearing etc. Section 263 of the current Act corresponds to section 33B of the Income-tax Act, 1922 and has been on the statute book since 1961, albeit with certain modifications. The law of section 263 has been comprehensively laid down by the judicial authorities in a number of decisions. The following paragraphs contain a gist of the law on the subject.

No s. 14A disallowance if satisfaction not recorded with reference to A/cs. Under Rule 8D(2)(ii) loans for specific business purposes cannot be included. Under Rule 8D(2)(ii) & (iii) investments which have not yielded income cannot be included

REI Agro Ltd vs. DCIT (ITAT Kolkata)


In AY 2008-09, the assessee invested Rs.103 crores in shares on which it earned tax-free dividends of Rs. 1.3 lakhs. The assessee claimed that though its borrowings had increased by Rs. 122 crores, the said investments were funded out of own funds like capital and profits. It claimed that no expenditure had been incurred to earn the dividends and no disallowance u/s 14A could be made. The AO applied Rule 8D and computed the disallowance at Rs. 4 crore. On appeal by the assessee, the CIT(A) reduced the disallowance to Rs. 26 lakh. On cross appeals, HELD by the Tribunal:

No need to submit LTA proofs to employer

From now on, Employee will not have to submit proofs as evidence, to their employers for getting LTA (leave travel allowance) reimbursement.
Supreme court of India gave ruling that employers, while reimbursing LTA claims of their employees, are under no statutory obligation to collect evidence and provide them to tax authorities.
As per Income tax rules of India, if transport bills for LTA are not provided, the amount will be taxed. E.g. If an employee has LTA allowance as Rs 50,000 in his CTC(cost to company), and he provides proofs of Rs 40,000 (boarding pass, air tickets, taxi vouchers) then income tax will be deducted for rest of the Rs 10,000. Does not matter whats the amount of LTA in an employee’s package, income tax laws only permits domestic air tickets only for LTA claim.

This court order came after a hearing of case between Larsen & Toubro and income tax department of India. Income tax department had argued that employer has to collect proofs from employee for LTA. Rejecting this, the supreme court in its order said: “The beneficiary of exemption under Section

New PAN Application Form 49AA for resident/non-resident Individual, LLP, Company, Firm, AOP, BOI

FAQs on NRI Taxation


Q1. Who is an NRI?
A1. an Indian staying abroad is known as an NRI i.e. Non-Resident Indian.
Q2. Who is a NRI under FEMA?
A2. FEMA defines ‘a person outside India’ and Income Tax Act defines NRI, though the term ‘NRI’ is used for both the purposes loosely.
Person Resident in India is —
A person residing in India for more than 182 days during the course of the preceding financial year but does not include,
i) Person who has gone out of India or who stays outside India, in either case

Friday, 21 June 2013

An Appeal to All Indian who possess Choppers.

Our India is under great trouble due to flash flood in Uttrakhand.

Thousands of peoples are still trapped and could not able to reach  safe destination or their home.

India Goverment is trying their best to save the people and India Army also doing their biggest rescue operation their to save lives.

To do so Indian Army deployed their all Helicopters and Choppers to rescue the people from the danger places to safe places, however, the number of choppers are very limited.

Hence, there is an appeal to all Indian and Non resident who possess the choppers to provide help at Uttrakhand by deploying their choppers.

Hope, the message wil reach you shortly  to take necessary action.

Jai Hind.

INCOTERMS

To read the article, click the link below.


http://taxbymanish.blogspot.in/2011/10/incoterms.html

Income Tax Notification of Section 115

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

New Delhi, the 19 June, 2013
NOTIFICATION


S.O. 1768 (E).- In exercise of the powers conferred by sub-section (2) of section 115 of the Finance Act, 2013 (17 of 2013), the Central Government hereby appoints the 1st day of July, 2013 as the date on which Chapter VII of the said Act shall come into force.


[Notification No. 45/2013: F.No. 142/09/2013-TPL]
(Gaurav Kanaujia)
Director to the Government of India
 
 

Rate of exchange of conversion of each of foreign currency w.e.f. June 21, 2013

NOTIFICATION NO. 63/2013-CUSTOMS (N.T.)
DATED THE 20th June, 2013
S.O. (E). – In exercise of the powers conferred by section 14 of the Customs Act, 1962 (52 of 1962), and in super session of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.59/2013-CUSTOMS (N.T.), dated the 6th June, 2013 vide number S.O.1465(E), dated the 6th June, 2013, except as respects things done or omitted to be done before

Whether assessee-EoU is entitled to Sec 10B benefits on receipts from training activities when it has not received any foreign exchange in this repsect - NO: Madras HC

THE issues before the Bench are - Whether the benefit available u/s 10B is an exemption or a deduction; Whether the benefit u/s 10B can be allowed only in case an assessee is indulged in activities as pre-determined under the statute; Whether u/s 10B, which is a clear exemption provision, unless the assessee is in a position to show any ambiguity in the provisions of the Act, there can be any liberal interpretation given to the provisions of the Act, for the purpose of granting relief to the assessee and Whether an assessee is entitled for exemption u/s 10B with respect to receipts from training activity, when no foreign inward remittance has taken place. And the verdict goes against the assessee.
Facts of the case

Thursday, 20 June 2013

S. 56(2)(vii)(b): Controversies Arising After Amendment By Finance Act 2013

Finance Act, 2013 has substituted clause (b) of section 56(2)(vii) w.e.f. 1.4.2014 providing, inter alia, that where an individual or Hindu Undivided Family receives, in any previous year, from any person or persons any immovable property-

(i) Without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

(ii) For a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration

shall be chargeable to income tax under the head “Income from Other Sources”.

Temporary and Permanent Differences [Accounting for Income Tax]

 

Reporting entities are required to file income tax returns and pay income taxes in the domestic (federal, state, and local) and foreign jurisdictions in which they do business. GAAP requires that financial statements be prepared on an accrual basis and that, consequently, the reporting entity is required to accrue a liability for income taxes owed or expected to be owed with respect to income tax returns filed or to be filed for all applicable tax years and in all applicable jurisdictions.

Sec 10AA - Whether a roadmap to guillotine tax exemption is not a condition precedent for Parliament to introduce sunset clause - NO: Karnataka HC

THE issues before the Bench are - Whether the action of Finance Minister to move a bill seeking amendment of the SEZ Act, which comes under the domain of Ministry of Commerce, lacks legislative competence; Whether it is a settled principle that there can be no permanent tax exemption or incentive in fiscal legislation; Whether a roadmap to end the tax exemption is not a condition precedent for the Parliament to introduce sunset clause; Whether Doctrine of Promissory estoppel and Legitimate expectation are the offsprings of equity and flexible in nature; Whether there is a difference between the doctrine of promissory estoppel and Doctrine

Wednesday, 19 June 2013

G-8 agrees to exchange tax information

Leaders of the G8 countries agreed to steps to improve tax transparency at their summit in Lough Erne, Northern Ireland, on Tuesday. The eight-step proposal was submitted by the United Kingdom and agreed to by fellow G8 members Canada, France, Germany, Italy, Japan, Russia and the United States. The countries also agreed, in a separate declaration, that “[t]ax authorities across the world should automatically share information to fight the scourge of tax evasion.”
Under the agreement, the countries endorse core principles that the agreement describes as

TAXATION OF ROYALTY PAYMENTS IN INDIA


Introduction

Taxation of royalty has been a much debated subject in India. If an Indian company imports concept designs and drawings from a company incorporated in another country, e.g., the UK, various questions arise about the taxation of the payment for such designs and drawings. Is such a payment in the nature of a royalty payment, thereby subjecting it to withholding tax, or is it a payment for an outright purchase of the designs and drawings! The answer to this depends on the scope of the term “royalty.”

 

Income tax return for the assessment year 2013-14

Ministry of Finance has come up with many changes with regard to filing Income Tax Return for the Assessment year 2013-14 relating to the financial year 2012-13. Before discussing about the recent changes made in the details to be given in the Income Tax Return forms let us check out the most important thing i.e., selection of the Income Tax Return Forms. Finance Minister has changed certain norms in selecting ITR forms. These are as follows-
ITR-1 Form: -
SAHAJ or the newly ITR–1, has replaced SARAL Income tax return. The main motive behind this is to simplify the existing return forms to reduce return filing burden on the Individuals.

e-Payment complete procedure of TDS on Sale of Immovable Property.

What is the procedure for paying the TDS amount into the Bank subsequently, i.e. not immediately after furnishing the purchase transaction details online?
Using this facility deductor (Buyer) can furnish the details online and make the payment of taxes subsequently either through net-banking account or by visiting any of the authorized bank branches.

Taxability of Gifts.

We all love to give and receive gifts of all kinds. With the holiday season quickly approaching we takes a minute to look at the ‘cost’ of receiving and giving gifts and the effect it could have on your tax returns.
Taxable Gifts
On October 1, 2009, the Central Board of Direct Taxes (CBDT) put into effect that people receiving gifts, in cash or kind, will have to pay tax, if the value exceeds Rs 50,000. In the past, the income tax

What is Form 16

Form 16 becomes quite a topic of discussion in all office campuses during the tax filing season. Though we know that Form 16 is for tax filing, many of us still find it hard to understand the components of Form 16 while filing the return. Understanding Form 16 is the key to better tax planning.
If, after taking about form 16 the entire day in office, you wonder what it actually is while returning home, then this is the answer for you.

Amendments in ITR for AY 2013-14

Some recent amendments have been introduced by the Income Tax Department for filing Income tax Return by the assessees for the Assessment Year 2013-14. These rules have substituted old Income Tax Return Forms with new Income Tax Return Forms .
1. SAHAJ ITR1
Use by individual having Salary Income, house property income and income from other sources provided if he has got any loss under the head Income from Other Sources, then such person will not

Tuesday, 18 June 2013

Audit Report u/s 44AB amendment

An assessee required to furnish a report of audit specified under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10, section 10A, clause (b) of sub-section (1) of section 12A, section 44AB, section 80-IA, section 80-IB, section 80-IC, section 80-ID, section 80JJAA, section 80LA, section 92E or section 115JB of the Act, shall furnish the said report of audit and the return of Income electronically for AY 2013-14 and onwards [Refer Notification No:42/2013 dated 11/06/2013].


Audit Report u/s. 44AB latest amendment.

Whether when assessee holds securities as investment as per RBI norms, but shows same as stock-in-trade, deduction for loss from such stock at FY-end can be denied merely because it was shown as investment - NO: HC

THE issues before the Bench are - Whether the provisions of I-T Act, the Companies Act and RBI Directions with respect to taxability of income from securities operate in different fields and Whether when the assessee-bank holds its securities as investment in compliance with the RBI Regulations, but shows the same as stock-in-trade, deduction for any loss arising from such stock at the end of FY can be denied merely because it was shown as investment in books. And the verdict goes in favour of the assessee.
F

Whether if shareholders choose to transfer lands to purchaser of shares it would be valid transaction in law even if it avoids paying capital gains tax on such transaction - YES: HC

THE issues before the Bench are - Whether if shareholders choose to transfer lands to purchaser of shares it would be valid transaction in law; Whether when assessee is able to avoid payment of capital gains tax through such transaction, it can be said to be a colourable device; Whether the provisions of section 10(38) grant exemption on sale of long term shares only, or it can also apply in case of immovable property and Whether in case there is a doubt regarding nature of asset sold by an assessee, lifting of corporate veil is tenable as per law. And the verdict goes in favour of the assessee.
F

India Will Have The Best Tax Regime In The World: New CBDT Chief

 


The CBDT has issued Office Order No. 127/2013 dated 14.06.2013 stating that the President of India has appointed Ms. Sudha Sharma as Chairperson of the Central Board of Direct Taxes (CBDT) in the pay scale of Rs. 80,000 (fixed) with the status of Special Secretary to the Government. Upon taking charge, Ms. Sudha Sharma addressed a letter in which she pointed out that that the guiding principles of “non-intrusive” and “non-adversarial” tax administration as laid down by the Finance Minister has to be followed by the department in its day-to-day working. She also emphasized that the department has to create an environment for voluntary compliance. She pointed out that as tax collectors of the country, the tax department has a pivotal role to play in national growth and has to achieve the huge target of budget collection. She emphasized that the potential for tax collection is much higher given that there is a base of only about 3.5 crore assesses, a mere 2.9% of the national population, of which only 42,800 declares annual income over Rs. 1 crore. She stated that while the endeavour would be to promote voluntary compliance and provide hassle-free service to the honest tax payers, focus would need to be kept on non-filers and stop-filers in order in order to enhance the tax base and augment tax collection. She also stated that the department is aiming at achieving a tax regulation regimen in India which can match the best in the world.

Monday, 17 June 2013

Though s. 36(1)(v) requires direct payment to the gratuity trust fund, payment to the LIC Group Gratuity Scheme is also allowable

CIT vs. Textool Co. Ltd (Supreme Court)


The assessee set up a gratuity fund which was duly approved by the CIT. However, instead of making payment to the fund directly, the assessee paid an amount of Rs. 50 lakhs as initial contribution and an amount of Rs. 5 lakhs as annual premium to the Life Insurance Corporation (“LIC”) pursuant to the group Life Assurance Scheme framed by the LIC for the benefit of the employees of the assessee. The AO disallowed the claim for deduction on the ground that payment towards the gratuity fund was not made to an approved gratuity fund and was not allowable u/s 36(1)(v). The CIT(A), Tribunal and High Court (257 ITR 39 (Mad)) upheld the assessee’s claim on the basis that the payment to LIC under the Group Life Assurance Scheme was for the exclusive benefit of the employees of the assessee under the policy issued by it and that the conditions stipulated in s. 36(1)(v) had not been violated. On appeal by the department to the Supreme Court, HELD dismissing the appeal:

How to file online Income tax return

Withdrawal of MAT And DDT exemption to SEZs is not breach of promissory estoppel

Mindtree Limited vs. UOI (Karnataka High Court)

As a corollary to the Special Economic Zones Act, 2005 (‘SEZ Act’), s. 115JB(6) and s. 115-O(6) was inserted to exempt SEZs from payment of minimum alternate tax (“MAT”) on book profits and tax on distributed profits [Dividend Distribution Tax ("DDT")]. By the Finance Act, 2011, the exemption granted by s. 115JB(6) and 115-O(6) was made inoperative w.e.f. 1.4.2012 and 1.06.2011 respectively. The Petitioners claimed that they had established SEZs on the basis of the promise made by the Government that SEZs would enjoy an exemption from payment of MAT and DDT and that the amendments by the Finance Act 2011 withdrawing the said exemption was opposed to the Doctrine of Promissory Estoppel and the Doctrine of Legitimate Expectation. HELD by the High Court dismissing the Petition:

Sunday, 16 June 2013

TDS E Tutorial

TDS is one of the modes of collection of taxes, by which a certain percentage of amounts are deducted by a person at the time of making/crediting certain specific nature of payment to the other person and deducted amount is remitted to the Government account. It is similar to "pay as you earn"

Can an NRI claim Tax benefit under section 80C?


Tax Benefits which NRI can claim under section 80C
Tax Benefits which NRI can claim under section 80C – A non-resident Indian (NRI) is a citizen of India who holds an Indian passport and has temporarily emigrated to another country for six months or more for work, residence or any other purpose.

Whether existence of belief can be challenged by assessee but not sufficiency of reasons for belief - HC rules against assessee

THE issues before the Bench are - Whether an assessment order can be declared as void in case it does not mention any detail about the core issue to be adjudicated; Whether an assessing officer is only an adjudicator or it is an investigator also; Whether the existence of belief can be challenged by the assessee but not sufficiency of reasons for belief; Whether at the time of issue of notice u/s 147, mere ‘reasons to belief’ that an income has escaped assessment are sufficient

Friday, 14 June 2013

How To Ensure Expenditure On Director’s Relative’s Education Is Deductible


Section 37(1) of the Income Tax Act, 1961 allows such expenses against the taxable business profits, which inter alia are not personal expenses and are incurred wholly and exclusively for the purpose of business. There are certain types of expenses which on the face of it appear to be personal expense or at least an expense not incurred wholly and exclusively for the purpose of business. Such expenses invite incisive inquiry during the course of assessment proceeding. One such expense is the expense incurred by an assessee carrying on the business, on the higher education of the son(s)/daughter(s) of the directors/partners/proprietor and which is claimed as deduction by that assessee against the taxable business profits. Attempt of the Revenue remains to find holes in the explanation furnished by the assessee during the course of assessment proceeding showing the business nexus of the said expenditure and to disallow it. Once the expenditure so claimed is disallowed in assessment, matter is taken into appeals at various stages with all sorts of uncertainties creeping in. In fact such claim is a sensitive claim from the stand point of the Revenue and if such claim is disallowed, such situation is fraught with severe consequences for the assessee

Foreign Direct Investment in Limited Liability Partnership


After 2 years of notification of the Limited Liability Partnership Act 2008, and after 5 months of issuing a discussion paper on allowing Foreign Direct Investment (FDI ) in the Limited Liability Partnership (LLP) , the Government of India , has approved the much awaited policy on FDI in Limited Liability Partnership. FDI in LLP is allowed in sectors activities where 100% FDI is allowed under the automatic route and there are no FDI-linked performance related conditions, subject to approval of government .

Benefits of LLP

Limited Liability Partnership entities, the world wide recognized form of business organization has now been introduced in India by way of Limited Liability Partnership Act, 2008. A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization.
LLPs also have many advantages over proprietorships, partnerships and limited companies, as elaborated below.

TDS on Sale of Immovable Property, e-Payment, e-Tutorial & FAQs.

As per Finance Bill of 2013, TDS is applicable on sale of immovable property wherein the sale consideration of the property exceeds or is equal to Rs 50,00,000 (Rupees Fifty Lakhs). Sec 194 IA of the Income Tax Act, 1961 states that for all transactions with effect from June 1, 2013, Tax @ 1% should be deducted by the purchaser of the property at the time of making payment of sale consideration. Tax so deducted should be deposited to the Government Account through any of the authorized bank branches.

How to Save Taxes on Capital Gains arising on sale of house or flat


Increasing opportunities in real estate:-
save-tax-the-capital-gains-accounts-scheme-advantage An estimate shows that the present 1.1 billion India’s population would touch 1.5 billion by 2030, thus edging out China as the most populous country in the world. Coupled with the significant rise in the working population and dependency ratio below 50per cent, it is expected it would generate higher personal savings and stronger investments, resulting boosting the growth of real estate.
Indian real estate boom has been partly backed by the revolution brought about by private banks in the Home Loans business as it has proved to be the most lucrative segment for the Indian banking industry as well.
Tax benefits associated with the sale and purchase of house/building/flat
Timing is critical in finance, especially if you want to make a profit. Of course, you need to pick a good time to take advantage of the appreciation in value, but it’s equally important to keep an eye on the calendar to avoid paying a hefty amount as tax. Residential real estate investment tax benefits are

FAQ on Income Tax Return Filing and more..


I have changed my job during the Financial Year. What should I do?
It is seen in most of the cases that when an individual switches a job, he/she forgets to mention income received from previous employment to the current employer. Each employer provides a Form

Whether existence of belief can be challenged by assessee but not sufficiency of reasons for belief - HC rules against assessee - also imposes costs

THE issues before the Bench are - Whether an assessment order can be declared as void in case it does not mention any detail about the core issue to be adjudicated; Whether an assessing officer is only an adjudicator or it is an investigator also; Whether the existence of belief can be challenged by the assessee but not sufficiency of reasons for belief; Whether at the time of issue of notice u/s 147, mere ‘reasons to belief’ that an income has escaped assessment are sufficient and Whether failure to give reasons amounts to denial of justice. And the writ is dismissed.
Facts of the case

Conversion of a firm into a Limited Liability Partnership – Clarification

General Circular No 09/2013 – Dated 30.4.2013
Subject: Conversion of a firm into a Limited Liability Partnership Clarification.
The Ministry has been examining some of the issues raised by stakeholders with regard to clarifications on the provisions of the Limited Liability Partnership (LLP) Act, 2008 with regard to

Download ITR-5 , ITR 6, ITR 7 for A.Y. 2013-14 / FY 2012-13 with Instructions

Income Tax Department has notified vide Notification No. 42/2013 Dated- 11th day of June, 2013 ITR for Assessment Year 2013-14 or Financial Year 2012-13. E-Filing Utility of these also be expected to be released soon. Department has already released E-filing Utility for ITR-1, ITR-2, ITR-3, ITR-4 and ITR 4S.
Download ITR-5 , ITR 6, ITR 7 for A.Y. 2013-14 / FY 2012-13 in PDF Format
ITRApplicabilityITRInstructions
ITR-5For firms, AOPs and BOIsDownloadDownload
ITR-6For Companies other than companies claiming exemption under section 11DownloadDownload
ITR-7For persons including companies required to furnish return under Section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)]

Double Taxation Agreement with Monaco

U/s 90 of the Income Tax Act, 1961 – Double Taxation Agreement – Agreement for Exchange of Information to Taxes with Foreign Countries – Principality of Monaco
NOTIFICATION NO. 43/2013
DATED 12/06/2013
SO 924(E) - Whereas an Agreement (hereinafter referred to as the said Agreement) between the Government of the Republic of India and the Government of the Principality of Monaco for the exchange of information relating to tax matters was signed at Monaco on the 31st day of July, 2012 ;
And whereas, the date of entry into force of the said Agreement is the 27th day of March, 2013, being

Rules of REVERSE CHARGE MECHANISM under Service tax

1. INTRODUCTION OF REVERSE CHARGE MECHANISM
Reverse charge mechanism is not a new concept in service tax. Under the reverse charge mechanism, instead of service provider, the service receiver is liable to pay service tax. But with effect from 1.7.2012 a new scheme of taxation is being brought into effect whereby the liability of payment of

Thursday, 13 June 2013

S. 5 & 9: No income is attributable to Liaison Office’s activity of sourcing mfgd products from India even if fee for service is received from overseas buyer

CIT vs. Nike Inc (Karnataka High Court)






The assessee, a USA company, set up a liaison office in India whose main activity was to liaise with Indian manufacturers for purchase of apparels from India by the assessee’s HO and overseas subsidiaries. It employed a large variety of staff whose task was to create awareness amongst the Indian manufacturers of the need to maintain quality control and adhere to standards. The price for each apparel was negotiated with the manufacturer and the samples were forwarded to the US office.

S. 194C TDS does not apply to contract manufacturing agreements






The assessee, a manufacturer of pharmaceutical products, entered into agreements with various manufacturers who manufactured the said items according to the specifications provided by the assessee. The AO held that the transaction between the assessee and the manufacturer was in the nature of a “works contract” and fell within the purview of s. 194C and that the assessee ought to have deducted TDS thereon. The assessee was held to be in default and liable to pay the tax and interest u/s 201(1) & 201(1A). On appeal by the assessee, the Tribunal held that the transaction was one of sale simplicitor and was not in the nature of a work contract and that the assessee was not liable to deduct TDS u/s 194C. The department’s appeal to the High Court was dismissed by following Reebok India 306 ITR 124 (Del). On appeal by the department to the Supreme Court, HELD dismissing the SLP:

 

FAQ on Mediclaim deduction under section 80D

To read the article, click the link given below.

http://taxbymanish.blogspot.in/2011/10/faq-on-mediclaim-deduction-under.html

 

File Your ROC Returns Before You Get Notice from MCA

imagesFile Your ROC Returns Before You Get Notice from MCA. Recently Ministry of Corporate Affairs (MCA) is inquiring by sending notices to companies, as to  whether a company is still continuing its business operation or not.  MCA  is sending these notices to those companies which-
(i) have not started their operations within 1 year from the date of Incorporation
(ii) have not filed balance sheet, profit and loss account and other necessary documents with Registrar of Companies (ROC) for more than 1 year.
What is the requirement of filing documents with the ROC ?

Whether participation of assessee-trust in chit funds amounts to investment, which results in disentitlement to exemption u/s 11 - NO: ITAT

THE issues before the Bench are - Whether the assessee-trust loses entitlement to exemption u/s 11 merely because it placed some funds with chit funds and Whether such participation by the assessee can be construed as investments or utilisation of surplus funds. And the verdict goes in favour of the Trust.
Facts of the case

Notification on Document Free IT Return of Trust & e-filing of audit report

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
[CENTRAL BOARD OF DIRECT TAXES]
NOTIFICATION No. 42/2013
New Delhi, the 11th day of June, 2013
Income-tax
S.O.1513(E).─ 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 (Seventh Amendment) Rules, 2013.
(2) They shall be deemed to have come into force with effect from the 1st day of April, 2013.
2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), in rule 12,─

Transfer Pricing – Audit Report Format for international & specified domestic transactions with additional disclosures

The CBDT has notified vide Notification No. 41 dated 10 June 2013,  new Form 3CEB which includes reporting on specified domestic transactions. The said notification also amends Rule 10A, 10AB, 10B, 10C, 10D and 10E.
Following are the additional international transactions required to be reported in new Form 3CEB:
  •  International transaction(s) in the nature of guarantee
  • Purchase or sale of marketable securities, issue and buyback if equity shares, optionally convertible  debentures/preference shares
  • transactions arising out of business restructuring or reorganization
  • Transactions having a bearing on the profit, income, losses or assets 

Rate of exchange of conversion of each of the foreign currency with effect from June 13, 2013

Notification No. 60/2013-Customs (N.T.)
DATED THE 12th June, 2013
In excise of the powers conferred by section 14 of the Customs Act, 1962 (52 of 1962), the Central Board of Excise & Customs (CBEC) hereby makes the following further amendments in the Notification of the Government of India, Ministry of Finance (Department of Revenue ) No. 59/2013-CUSTOMS (N.T.) dated the 6th June, 2013 published in the Gazette of India, part II, Section 3, Sub-section (ii), Extraordinary vide number S.O.1465[E], dated 6th June, 2013, namely:-

Wednesday, 12 June 2013

Recent rulings that can affect your portfolio

A look at recent rulings which can affect you -

BANKING

The Reserve Bank of India has said that banks may assign zero risk weight for the portion of home loans guaranteed under the Credit Risk Guarantee Fund Trust for Low Income Housing scheme. The balance loan amount would attract a risk weight as appropriate to the counter-party. If the loan amount covered by the credit guarantee scheme becomes nonperforming, no provision need be made towards it.

Free e-Book on Compilation of Works Contract Provisions under VAT of all States

Works contract taxation is considered to involve a lot of complexities and controversies which in the short term may not get resolved. Since the time when the concept of deemed sale was introduced under sales tax, transactions that would be liable to tax under the guise of works contract have always been a matter of debate and dispute.

Whether expression 'a residential house' mentioned in Sec 54 effectively means one flat - NO, AP High Court upholds Karnataka HC decision

THE issues before the Bench are - Whether the expression 'a residential house' mentioned in Sec 54 effectively means one flat and Whether when assessee purchases two adjoining flats from two different sellers under two separate sale deeds, the same is to be treated as a single house for the purpose of Sec 54 benefits. And the verdict favours the assessee.

Whether when partners in a firm make capital contribution in a company by relinquishing rights and such a company is succeeded by another company, which finally sells entire share-holding at book value, such transactions can be construed as colourable device - NO: ITAT

THE issue before the Bench is - Whether when partners in a firm make capital contribution in a company by relinquishing their rights and such a company is succeeded by another company, which finally sells entire share-holding at book value, such a series of transactions can be construed as colourable device to avoid capital gains tax. And the answer favours the assessee.
Facts of the case

The Sarbanes-Oxley Act 2002 -part - A

The Sarbanes-Oxley Act 2002 also known as the ‘Public Company Accounting Reform and Investor Protection Act. An Act passed by U.S. Congress in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations. The Sarbanes-Oxley Act (SOX) mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud.
Background :-
The Sarbanes-Oxley Act was enacted in response to the accounting scandals in the early 2000’s. Scandals such as Enron, Tyco and Wordcom shook investor confidence in financial statements and required an overhaul of regulatory standards. These Scandals, which cost investors billions of dollars

CST FORMS AND PROCEDURES

PROCEDURE:
Every dealer who effects inter-state sale is required to register with State sales tax authorities who are empowered to grant registration under CST Act. Application should be in form ‘A’. Security has to be furnished. Certificate of registration will be in form ‘B’.
PROCEDURE FOR REGISTRATION
 1. The dealer must make an application to the concerned authority in the appropriate state, in Form A within 30 days of the day when he becomes liable to pay tax. The form contains the following details.
(i) Name of the manager of business
(ii) Name and addresses of proprietor or partner of the business.
(iii) Date of establishment of business.
(iv) Date on which first inter-state sale was made.
(v) Name of the Principal place and other places of business in the appropriate state.
(vi) Particulars of any license held by the dealer.
 2. Single Place of business – If a dealer has single place of business in the appropriate State and he is registered in that state, he shall apply to the sales tax authority of that state only for obtaining

Tuesday, 11 June 2013

Shock & Anguish expressed at mal-administration by AO & CIT. CBDT directed to take action against erring officials

Fateh Chand Charitable Trust vs. CIT (Allahabad High Court)





The assessee, a charitable trust registered u/s 12A, received donations of Rs. 5.23 crore in AY 2006-07. The assessee filed a ROI offering Nil income and the same was accepted by the AO u/s 143(3). Subsequently, the CIT initiated proceedings u/s 12A for cancellation of registration of the assessee as a charitable trust. However, this was dropped. Thereafter, the AO issued a notice u/s 148 seeking to reopen the assessment on the ground that the said donation was bogus as the donor had no financial capacity to give the donation. The assessee filed a Writ Petition to challenge the reopening. HELD by the High Court dismissing the Petition:

Journal Entry For Inventory Transactions

 

The major objectives of accounting for inventories are the matching of appropriate costs against revenues in order to arrive at the proper determination of periodic income, and the accurate representation of inventories on hand as assets of the reporting entity as of the date of the statement of financial position.
Under any system of accounting, financial statements should be fully articulated (i.e., the statement of financial position and income statement are linked together mechanically).
And, to achieve the goal, accounts would need to record every single event—related to inventory, in this case—along the inventory cycle: raw material received, raw material moved to the line of production, finished goods moved to the finished good warehouse, obsolescence, stolen, and finished goods sold out or moved to other warehouses.
So here we go with journal entries…
 

"Tax Your Brain" - TV Quiz Show by Income Tax Department

The Directorate of Income Tax (PR , PP & OL) has produced a twelve episode quiz show on NDTV 24 x 7 called "Tax Your Brain" with a view to communicate with the school children and youth of the country on the "need for taxation in civil society".

The quiz show will feature 32 teams from 32 different cities of the country. These cities have been divided into 8 zones. Written tests were conducted in 32 cities, covering nearly 10,000 schools and the winner teams are representing their respective cities. Mr. Saurav Ganguly, ex-India cricket captain is the quiz master.

The show will be telecast every Saturday at 7.30 PM on NDTV 24x7.

 

Whether settlement amount paid to Microsoft for violation of copyright can be termed as penalty - NO: ITAT

KOLKATA, JUNE 10, 2013: THE issues before the Bench are - Whether salaries paid to part time teachers can be professional fees for the purpose of invoking the provision of section 194J when a perusal of Form NO.16 clearly shows that what was paid by the assessee was only salary and Whether settlement amount paid to Microsoft for violation of copyright can be termed as penalty. And the verdict goes in favour of assessee.
Facts of the case

The
AO pointed out that though the assessee had paid Rs.34,95,441/- to the faculty members

Whether when partners in a firm make capital contribution in a company by relinquishing rights and such a company is succeeded by another company, which finally sells entire share-holding at book value, such transactions can be construed as colourable device - NO: ITAT

THE issue before the Bench is - Whether when partners in a firm make capital contribution in a company by relinquishing their rights and such a company is succeeded by another company, which finally sells entire share-holding at book value, such a series of transactions can be construed as colourable device to avoid capital gains tax. And the answer favours the assessee.
Facts of the case

Monday, 10 June 2013

Penalty u/s 271 (1)(c) cannot be levied in respect of an addition made u/s 50C

Calcutta High Court decision in the case of CIT vs. Madan Theatres Ltd.

The facts of this case were that the assessee sold property for a consideration of Rs. 2.50 crore. However, for the purpose of stamp duty, the property was valued at Rs. 5.19 crore and stamp duty was paid on that value. In its return of income, the assessee declared capital gains on the basis of the sale consideration of Rs. 2.50 crore. The Assessing Officer, invoking the provisions of section 50C, held that the transfer consideration has to be taken at Rs. 5.19 crore and computed the assessee’s capital gains on this basis. The Assessing Officer imposed penalty u/s 271(1)(c) in respect of the capital gains’ income enhanced in the assessment. The penalty was however deleted by the Commissioner (Appeals) and the Tribunal.

Ishikawajima-Harima survives the retrospective amendment in section 9 (1) (vii) – Income from Offshore Services not taxable despite PE in India:



The decision of the Tribunal, according to me, should serve sufficient notice to crafty law makers that domestic laws should not be amended to usurp jurisdictions which are internationally forbidden. The sanctity of taxing according to one’s own territorial jurisdiction is well protected in the international law contained in tax treaties
The decision of the Mumbai Tribunal in the case of IHI Corporation vs. Addl. Director of Income Tax (International Taxation} [2013] 32 taxmann.com 132 {Mumbai –Trib} presents an interesting study regarding the impact of the retrospective amendment in section 9 (1)(vii) retaliating the decision of the Supreme Court in Ishikawajima-Harima Heavy Industries Ltd. vs. DIT (2007) 288 ITR 408 (SC).

Is There No Respite From The Dept’s TDS And Refund Harassment?


Recently, Hon’ble Delhi High Court was seized of, inter alia, the matter under consideration in a case where one Sri Anand Prakash, FCA addressed a letter to the Hon’ble High Court raising various issues facing the helpless assessees and claimed that because of the fault of the department, assessees are being harassed. The Hon’ble High Court took judicial notice of the letter, converted it into a PIL and made CBDT a party. The said case has now been reported as Court On Its Own Motion vs. CIT 352 ITR 273 (Del.)

Service Tax case law - May 2013


1. Services:

 

Renting of Immovable Property Service:

 

1.1  Mohan Clothing Company Pvt. Ltd. vs. UOI 2013 (30) STR 236 (Kar.)

 

The High Court in this case held that, tenant, who is not a service provider cannot challenge levy to service tax. He is only subject to the conditions imposed in contract.

 

Whether settlement amount paid to Microsoft for violation of copyright can be termed as penalty - NO: ITAT

THE issues before the Bench are - Whether salaries paid to part time teachers can be professional fees for the purpose of invoking the provision of section 194J when a perusal of Form NO.16 clearly shows that what was paid by the assessee was only salary and Whether settlement amount paid to Microsoft for violation of copyright can be termed as penalty. And the verdict goes in favour of assessee.
Facts of the case

The
AO pointed out that though the assessee had paid Rs.34,95,441/- to the faculty members being professionals for their services but the TDS had not been deducted u/s 194J. The CIT(A) held that what was paid to the faculty members was salary and the TDS was not liable to be

E-Filling of Audit Report for A/Y 2013-2014

CBDT has notified Income-tax (3rd Amendment) Rules, 2013 vide NOTIFICATION NO. 34/2013 [F.NO.142/5/2013-TPL]/SO 1111(E), DATED 1-5-2013.Under these rules ,various rules regarding Income tax return for assessment year has been amended.
It is mandatory to file audit reports u/s 44AB, 92E, 115JB through online facility .once the information is filled with such forms. It would not be possible to change or modify in any way. Following are some details regarding same.
  • U/s 44 AB where total income exceeds Rs.1cr——Form 3CA,3CB,3CD—–due date is 30.09.2013 or 30.11.2013 if sec92E applies.
  • U/s 92E in case of international transactions or specified domestic transactions—Form 3CE —-due date is 30.11.2013.
  • U/s 115JB where provisions of mat applies—–Form 29B —–due date is 30.09.2013 or 30.11.2013 if Sec 92 E applies.