Thursday, 31 October 2013

HAPPY DHANTERAS


India Taxes- Due Date Alert for the month November 2013


 


Sr No
Due Date
Related to
Compliance to be made
1
05.11.2013
 
Service Tax
Payment of Service Tax for the Month of October 2013
2
07.11.2013
 
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 October 2013.
 
·        Deposit TDS from Salaries  deducted during the month of October 2013
 
•   Deposit TCS for collections made under section 206C including sale of scrap during the month of October 2013, if any
 
•    Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of October 2013, if any
3
20.11.2013
 
VAT
Payment of VAT & filing of monthly return for the month of October 2013
4
30.11.2013
 
Income Tax
Return filing online along with submission of Form 3CEB in the case, assessee is subject to transactions with AEs and TP study required.
5
20.11.2013
STPI
Submission of Softex forms for the month ended October 2013

No TAN Only PAN for TDS on Purchase of Immovable Property w.e.f. 01 Jun. 2013.

Any person purchasing immovable property (other than rural agricultural land) of Rs. 50 Lac or more is required to deduct Tax @ 1% from the payment made to seller.

Deduct TDS
  • Deduct Tax @ 1% from the payment made to the seller.
  • Collect the PAN of the seller and verify the same with the origional PAN Card.

Under Explanation 1 to s. 271(1)(c), voluntary disclosure of concealed income does not absolve assessee of s. 271(1)(c) penalty if the assessee fails to offer an explanation which is bona fide and proves that all the material facts have been disclosed

MAK Data P. Ltd vs. CIT (Supreme Court)
 
The assessee filed a return of income for AY 2004-05 declaring an income of Rs.16 lakhs. During the course of the assessment proceedings, the AO noticed certain documents comprising of share application forms, bank statements, blank share transfer deeds etc had been impounded in the course of s. 133A

Whether when assessee, subsidiary of a foreign company, incures certain expenses for acquiring shares from parent for alloting the same under ESOP to employees, such expenses are to be allowed as revenue expenditure - YES: ITAT

THE issues before the Bench are - Whether when the assessee, a subsidiary of a foreign company, incures certain expenses for acquiring shares from the parent for alloting the same under ESOP to an employee, such expenses, which represent the difference with the fair market value, are to be allowed as revenue expenditure and Whether expenses incurred for the benefit of third party are not allowable if the same are incurred on account of commercial expediency. And the verdict goes in favour of the assessee.
Facts of the case

Whether voluntary disclosure of income for avoiding litigation and opting for amicable settlement can be a sufficient defence to avoid penalty u/s 271(1)(C) - NO: Supreme Court

THE issues before the Bench are - Whether a disclosure of income can be treated as voluntary when the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee; Whether voluntary disclosure can release an assessee from the mischief of penal proceedings; Whether in view of this, voluntary disclosure of income for avoiding litigation and opting for amicable settlement can be a sufficient defence to avoid penalty u/s 271(1)(C), in the absence of any explanation for concealment of particulars of income or furnishing inaccurate particulars of income and Whether the satisfaction to be recorded by the AO for initiation of penalty proceedings is required to be recorded in a particular manner or reduced into writing. And the verdict goes against the assessee.
Facts of the case

Wednesday, 30 October 2013

Classifying Asset and Liability Transactions under IAS 1

Classifying transactions into accounts is a crucial step in the accounting process. Asset and liability transactions are the biggest portion of the whole accounting data. Classifying transactions into asset and liability group, under the IAS 1, is a big challenge, for those who implement IFRS for the first time. This post helps starters to understand the process of classifying asset and liability transactions, under the IAS 1.
But before the main topic, let us have a look at a quick overview of statement of financial position.

Deduction of taxes on payment made to Non Residents would apply, even if the property is being sold by way of general power of attorney

Bangalore Tax Tribunal has upheld that the provisions of section 195 which mandates for deduction of taxes on payment made to Non Residents would apply, even if the property is being sold by way of general power of attorney executed in imagesfavour of a resident in India.

The Facts of Case is as below :

How to Calculate Income-Tax to be deducted from Salary for Asstt. Year 2014-15.

RCULAR NO : 08 /2013 F.No. 275/192/2013-IT(B)
Dated 10th October, 2013

Salary income for the purpose of section 192 shall be computed as follow:-

  • First compute the gross salary as mentioned in para 5.1 including all the incomes mentioned in para 5.2 and excluding the income mentioned in para 5.3.
  • Allow deductions mentioned in para 5.4 from the figure arrived at (a) above and compute the amount to arrive at Net salary of the employee
  • Add income from all other heads- House property, Profits & gains of Business or Profession, capital gains and Income from other Sources to arrive at the Gross

Whether when AO had no occasion to verify shares transactions, which were considered as bogus based on inputs from Investigation wing and for which full particulars were not furnished in original proceedings, it can still be stated that there was change of opinion while issuing notice u/s 148 - NO: HC

THE issue before the Bench is - Whether when the assessing officer did not have any occasion to verify the shares transactions, which were considered as bogus based on the information from investigation wing and for which full particulars were not furnished by the assessee in original assessment proceedings, it can still be stated that there was change of opinion while issuing notice u/s 148 of the Income tax Act. NO is the HC's answer.

Whether if assessee or its representative is not present at time of hearing, Tribunal has authority to dismiss the case for default - NO: Bombay HC

THE issues before the Bench are - Whether in case assessee or its representatives were not present at the time of hearing, Tribunal has the authority to dismiss the same for default. And the answer is NO.
Facts of the case

Benefits under MAP Process

The Taxpayer had initiated MAP under India-USA Double Tax Avoidance Agreement (US DTAA) through its US Competent Authority (US CA) in respect of its Indian transactions for certain specific tax years. Having regard to the Memorandum of Understanding regarding Deferment of Assessment and/or Suspension of Collection of Taxes during Mutual Agreement Procedure (MOU) entered into between CAs of India and the US, the Indian Tax Authority had, for these tax years, passed orders confirming nil tax withholding while making payments to the Taxpayer. The Taxpayer thereafter requested CA of the US to include one more tax y

Tuesday, 29 October 2013

Forex Rate for Service tax

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, PART-II, SECTION 3, SUB-SECTION (ii), EXTRAORDINARY]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS

Notification  No.105/2013-Customs (N.T.)

Dated the 17th October, 2013
25 Asvina, 1935(SAKA)

Whether when assessee makes huge investment for acquiring controlling stake in loss-making company, its expenditure warrants disallowance u/s 14A for lack of earning dividend income - NO: ITAT

THE issue before the Bench is - Whether when the assessee makes huge investment for acquiring controlling stake in a loss-making company, its expenditure warrants disallowance u/s 14A for the lack of earning dividend income. And the verdict favours the assessee.

Whether if assessee or its representative is not present at time of hearing, Tribunal has authority to dismiss the case for default - NO: Bombay HC

THE issues before the Bench are - Whether in case assessee or its representatives were not present at the time of hearing, Tribunal has the authority to dismiss the same for default. And the answer is NO.
Facts of the case

Conversion of firm into company held taxable since revaluation profit recorded as loanConversion of firm into company held taxable since revaluation profit recorded as loan


 
In a recent decision in the case of KTC Automobiles Private Limited (“KTC” or “the taxpayer”), the Cochin Income Tax Appellate Tribunal (“ITAT” or “the Tribunal”), has denied capital gain exemption upon conversion of partnership firm into private limited company under section 47(xiii) of the Income‑tax Act, 1961 (“the Act”). The taxpayer-firm had converted into a company and treated the balance in the partners’ current account as loans in the books of the company in this case and hence, the Tribunal ruled that the exemption conditions listed down under section 47(xiii) of the Act for non-taxability of the capital gains were violated.
 

Monday, 28 October 2013

TDS on Provident Fund and Superannuation Fund for Asstt. Year 2014-15

The trustees of a Recognized Provident Fund, or any person authorized by the regulations of the Fund to make payment of accumulated balances due to employees, shall in cases where sub-rule(1) of Rule 9 of Part A of the Fourth Schedule to the Act applies, at the time when the accumulated balance due to an employee is paid, make therefrom the deduction specified in Rule 10 of Part A of the Fourth Schedule to the Act. The accumulated balance is treated as income chargeable under the head “Salaries”.

Where any contribution made by an employer, including interest on such contributions, if any, in an approved Superannuation Fund is paid to the employee, tax on the amount so paid shall be deducted by the trustees of the Fund to the extent provided in Rule 6 of Part B of the Fourth Schedule to the Act. TDS should be at the average rate of tax at which, the employee was liable to be taxed during the preceding three years or during the period, if that period is less than three years, when he was member of the fund.

The deductor shall remain liable to deduct tax on any sum paid on account of returned contributions (including interest, if any) even if a fund or part of a fund ceases to be an approved Superannuation fund.
 

Incomes not included under the head "Salaries" (Exemptions).

Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpose of section 192 of the Act :-

The value of any travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his proceeding (a) on leave to any place in India or (b) after retirement from service, or, after termination of service to any place in India is exempt under Section 10(5) subject, however, to the conditions prescribed in Rule 2B of the Rules.
For the purpose of this clause, "family" in relation to an individual means:

Getting PAN Card in India by Foreign Nationals or Non Resident Indian

If you are an NRI or foreign national and you have a taxable income in India then buck up and get a PAN card. Getting PAN Card in India by Foreign Nationals or Non Resident Indian is not that difficult. Okay, now even if you don’t have a taxable income but you are into share trading through broker or depository or you invest in mutual funds or are purchasing any land or property in India, then you need a PAN card issued by the Government of India. download (8)

Now, if you do not know how to get a PAN card keep on reading. It is quite simple to get a PAN

A Co-op Hsg Society is not a mutual association because its members can earn income from its property. The transfer fee and TDR premium charged by the Society from its members is a commercial transaction and not eligible for exemption on grounds of mutuality

Hatkesh Co-op Housing Society Ltd vs. ACIT (ITAT Mumbai)
 
The assessee, a co-operative housing society, received transfer fee and TDR premium from its members which it claimed was exempt on the ground of mutuality. This stand was upheld by the Tribunal for the earlier years relying on the judgements in Sind Co-op Housing Society 317 ITR 47 (Bom), Mittal Court Premises Co-op Society 320 ITR 414 (Bom) & Jai Hind CHS Ltd 349 ITR 541 (Bom). In the present year, the Department argued that this view was not correct and that the transfer fee and TDR premium were not exempt on the

Friday, 25 October 2013

Deductions u/s. 80CCG (New Equity Saving Scheme) for Asstt. Year 2014-15.

Newly inserted Section 80CCG provides deduction wef assessment year 2013-14 in respect of investment made under notified equity saving scheme. Rajiv Gandhi Equity Savings Scheme 2012 has been notified vide SO No 2777 dated 23.11.2012 as a scheme under this section. The deduction under this section is available if following conditions are satisfied:

Free supplied materials includible in the valuation of taxable services vide Circular No. 80/10/2004- ST dated 17-09-2004 read with Notification No. 15/2004-ST dated 10-09-2004.

 
Paharpur Cooling Towers ltd. vs. Commissioner of C. Ex. Raipur – (2013 (31) STR 227 (Tri.-Del)
Facts:
The appellant did not include the value of free supplied materials in the gross amount of taxable services and claimed abatement under commercial orindustrial construction videNotification No.1S/2004-ST dated 10-09-2004. The appellant further did not pay service tax on advances received and also availed the benefit of CENVAT credit.

Whether income received by assessee by sub-leasing of leased out property and from maintenance and airconditioning hire charges has to be assessed as income from House Property or business income - HC partly rules against Revenue

THE issues before the Bench are - Whether the income received by the assessee by sub-leasing of already leased out property and from maintenance charges and air conditioning hire charges, is to be assessed as Income from House Property and not income from business; Whether when the rental income falls within the specific head of "income from house property", the mere fact of the assessee having business in letting out the property as stated in its memorandum, by

Service tax is payable on equity research as market research agency.

 
M/s. Kotak Security Ltd. vs. CST, Mumbai-I. (2013 – TIOL – 1054- CESTAT-MUM)
Facts:
The Appellant conducted equity research and prepared research reports on the financials of listed companies for their affiliate company M/s. Kotak Mahindra Capital Company Ltd. (KMCC) and received research fees on which no service tax was paid. An SCN demanding tax, interest and penalties was issued to the Appellant under the category Market Research Services".

Tribunal has no power to dismiss appeal for non-appearance of appellant. It has to deal with the merits. An application for recall of an ex-parte dismissal order is under s. 254(2) & must be filed within 4 years from the date of the order. The Tribunal must permit “mentioning” of matters

Bharat Petroleum Corporation Ltd vs. ITAT (Bombay High Court)
 
The assessee’s appeal was fixed for hearing before the Tribunal on 4.12.2007. As nobody appeared for the assessee, the Tribunal dismissed the appeal for want of prosecution. The assessee filed a Miscellaneous Application before the Tribunal on 6.8.2012 seeking to recall the exparte order. The Tribunal dismissed

Thursday, 24 October 2013

Madras HC rules income under time charter arrangement for ships as “royalty”

 
This tax alert summarises a recent ruling of the Madras High Court in the case of Poompuhar Shipping Corporation Ltd. (PSCL) and West Asia Maritime Ltd. (WAML) on the issue of whether hire charge for chartering Indian coastal shipping vessels (ships) for plying within Indian ports under time-charter arrangement (TCA) and bare-boat charter-cum-demise (BBCD) arrangement, with various foreign shipping companies (FSCs), is taxable in India as“royalty”, under the Indian Tax Laws (ITL) as well as under the Double Taxation Avoidance Agreement (DTAA). While determining taxability under TCA and BBCD, the HC dealt with a number of issues, viz., (a) whether a ship qualifies as equipment, (b) whether charges under TCA and BBCD are for the “use” or “right to use” such equipment and, consequently, taxable as royalty, (c) availability of benefit of Article 8 of the DTAA dealing with shipping income, (d) trigger of permanent establishment (PE) for FSCs by virtue of presence of ships in India, (e) whether parallel proceedings, as payer-in-default and representative agent (Agent) against the payer, is permissible under the ITL.

Condition to Claim Deduction of House Loan Interest u/s. 24(b) for Asstt. Year 2014-15

There are two main benefits which are available under Income Tax Act, 1961 in relation to Purchase or Construction of House Property which are described as under:

Penalty for failure TDS Return in Time or Incorrect Information u/s. 271H.

If a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) or furnishes an incorrect statement, in respect of tax deducted at source on or after 1.07.2012, he shall be liable to pay, by way of penalty a sum which shall not be less than Rs. 10,000/- but which may extend to Rs 1,00,000/-. However, the penalty shall not be levied if the person proves that after paying TDS with the fee and interest, if any, to the credit of Central Government, he had delivered such statement before the expiry of one year from the time prescribed for delivering the statement.

Whether even if assessee does not claim expenditure of interest liable to TDS u/s 194A, it cannot escape the rigour of Sec 40(a)(ia) - YES: ITAT

THE issue before the Bench is - Whether even if the assessee does not claim the expenditure of interest liable to tax deduction at source u/s 194A, it cannot escape the rigour of Sec 40(a)(ia). And the answer goes against the assessee.
Facts of the case

Tax Audit due date extented


F.No. 225/117/2013-ITA.II
Government of IndiaMinistry of FinanceDepartment of RevenueCentral Board of Direct Taxes


Dated : October 24, 2013




Order under Section 119 of the income-tax Act. 1961




In exercise of powers conferred under section 119 of the Income-tax 1961, the Central Board of Direct Taxes, in continuation to order u/s 119 dated 26.09.2013 in F.No. 225/117/2013/1TA.II, hereby directs that in cases where the 'due date' of furnishing reports of audit and corresponding income-tax returns was 30th September, 2013 and where the same are furnished electronically on or before 31st October, 2013, such reports of audit and returns of income shall be deemed to have been furnished within the 'due date' prescribed under section 139 of the Income-tax Act, 1961.

(Rohit Garg)Deputy-Secretary to Govt. of India




Members in practice - Annual eFiling

Kind attention : Members in practice - Annual eFiling

Members in practice may kindly note that the Ministry of Corporate Affairs, Govt. of India has recently advised that it would not entertain/accede to any request for extension of last date for e-Filing beyond the expiry/specified date concerned. In this regard in an advisory issued by the Ministry, it has been emphasized that suitable steps be taken to expedite filing of balance sheet and annual return to avoid last minute rush and system congestion in MCA 21 towards the end of October and November, 2013. In other words, request to all professionals and corporates concerned is that one should not wait for the last date of the month concerned for Annual Filing. Members concerned are accordingly requested to do the needful.

Wednesday, 23 October 2013

Confused about taxes on income from shares?

Confused about taxation of any income arising in respect of shares, be it capital gains on sale of such shares or dividends received? People generally think that any income received in respect of shares is exempt from tax. This is really not so.

Is import export code for export of services is also required ?

Service providers, who are also rendering services outside India always had this doubt, whether they also need to get themselves registered and get Import Export Code. This article would address whether import export code for export of downloadservices is also required.


IEC stands for Import Export Code. It is a 10 digit number which is allotted by the director general of foreign trade (DGFT), Ministry of Commerce.

Check service tax applicability on online services rendered outside India

Say, a person in Mumbai is in the business of producing films and has a website on which the films are uploaded. Now, if a person sitting in USA downloads the film and makes the payment in foreign exchange, will it be an export of service? Well, think about the place of provision of service for the given case study! In case of online information and database access or retrieval services, the place of provision of service is the location of service provider. So, as per the said rule, the place of provision of service is Mumbai. Consequently, there is no export of service. This article will check service images (1)tax applicability on online services rendered outside India.

Now, which services would constitute as an online information and database access or retrieval

Re-opening of Income Tax assessment and Things to keep in Mind

n this article we would discuss Re-opening of Income Tax assessment and Things to keep in Mind, as this has become one of the crucial subject in the area of income tax. Frankly speaking, an authority is not permitted to revise an earlier order merely on the basis of whims or fancies or upon change of opinion due to subsequent events.However, we know that to err is human. So the same holds for the income tax department. Despite care and diligence, there can be instances where after passing the assessment order it may come to the light that income which should have been charged to tax had escaped assessment. images


So, let us know when can an assessing officer re open an assessment. An AO should comply with all the following requirements before re opening an assessment:

Form 15CA and Form 15CB – Accountant’s certificate for foreign payments

In this article, for the benefit of our reader’s we have come up with detailed FAQ on procedures of issuance, requirement of Form 15CA and Form 15CB – Accountant’s certificate for foreign payments images (2)


Q: CBDT has revised the guidelines on form 15CA and form 15CB.From when did the revised forms come into force?

Whether exemption u/s 10B can be denied merely on the basis that confirmation regarding export sale has not been received till date of making such claim - NO: HC

THE issues before the Bench are - Whether exemption u/s 10B can be denied merely on the basis that confirmation regarding export sale has not been received till the date of making such claim; Whether exemption can be denied, even if assessee has made complete disclosure in its books of accounts and Whether penalty for concealment can be warranted in such a case. And the verdict goes against the Revenue.
Facts of the case

Tuesday, 22 October 2013

Bangalore Tribunal rules on deductibility of employee share reward discount cross-charged by foreign parent company

 
This Tax Alert summarizes a ruling of the Bangalore Income Tax Appellate Tribunal (Tribunal) in the case of Novo Nordisk India Pvt. Ltd.(Taxpayer) on the issue of deductibility of expenditure incurred on providing shares of the Taxpayer’s parent company, being a foreign company (FCo), to the Taxpayer’s employees under an Employee Share Purchase Scheme (ESPS). The Tribunal held that the ESPS discount cross-charged by FCo was an employee cost, wholly and exclusively incurred for the purpose of the Taxpayer’s business and hence, to be allowed as revenue expenditure, irrespective of the fact that FCo stood to benefit indirectly by such an expenditure.

Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted for Asstt. Year 2014-15

If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he shall be liable to action in accordance with the provisions of section 201 and shall be deemed to be an assessee-in-default in respect of such tax and liable for penal action u/s 221 of the Act. Further Section 201(1A) lays down that such person shall be liable to pay simple interest

Deductions of Higher Education Loan u/s. 80E for Asstt. Year 2014-15.

Section 80E allows deduction in respect of payment of interest on loan taken from any financial institution or any approved charitable institution for higher education for the purpose of pursuing his higher education or for the purpose of higher education of his spouse or his children or the student for whom he is the legal guardian.

Whether in case manufacturing activity is performed by a third party, assessee can claim deduction u/s 80I in respect of such manufactured items: HC

THE issues before the Bench are - Whether service charges received from Department of Atomic Energy can be considered as profit derived from the industrial undertaking to qualify for deduction u/s 80I; Whether crane hire charges would also be covered under equipment hire charges; Whether transportation activities can be a part of manufacturing process, hence eligible for deduction u/s 80I and Whether in case manufacturing activity is performed by a third party, assessee can claim deduction u/s 80I in respect of such manufactured items also. And the answers to all the questions go against the Revenue.
Facts of the case

Whether Revenue is under obligation to allow TDS Credit even if deductors have not issued TDS Certificates nor properly uploaded details in Form 26AS - YES: ITAT

THE issue before the Bench is - Whether Revenue is under obligation to allow TDS Credit even if deductors have not issued TDS Certificates nor properly uploaded details in Form 26AS. And the verdict goes in favour of the assessee.
Facts of the case

Monday, 21 October 2013

Is tax to be withheld on payments made by Indian company to a foreign company?

In this article we would analyse whether tax needs to be deducted on payments made to foreign companies. In this world of globalization, where cross-border transactions are the order of the day, there is often confusion and ambiguity with regards to deduction or withholding of tax on payment made to foreign companies.
Take, for example, a company situated in Bangalore, engaged in rendering IT and ITES services to their clients worldwide, which needs to pay marketing and business development fees to a company situated in Denmark. Now, the question is whether the Indian company should deduct or withhold taxes on payment made to the Denmark company.

Advance Pricing Agreement

The world’s taxing authorities are worried about multinational corporations using intercompany transactions to shift earnings among subsidiaries to avoid taxation.5 Similarly, corporations have been concerned about double taxation that is, paying taxes on the same income to two or more countries.

Whether in case manufacturing activity is performed by a third party, assessee can claim deduction u/s 80I in respect of such manufactured items: HC

THE issues before the Bench are - Whether service charges received from Department of Atomic Energy can be considered as profit derived from the industrial undertaking to qualify for deduction u/s 80I; Whether crane hire charges would also be covered under equipment hire charges; Whether transportation activities can be a part of manufacturing process, hence eligible for deduction u/s 80I and Whether in case manufacturing activity is performed by a third party, assessee can claim deduction u/s 80I in respect of such manufactured items also. And the answers to all the questions go against the Revenue.
Facts of the case

Due Date for Filing Service Tax Return for April-September 2013 is 25th October 2013

Service tax is charged on the taxable amount of services rendered by the service provider. Every assessee, whether Individual, Partnership firm, Company or others are required to file a service tax return within the due date if they are holding a Service Tax Registration Number and Certificate. The return filing is mandatory irrespective of taxable service provided during the period or not. Thus, an assessee who has no taxable service is also required to file a NIL Service Tax Return. Due Date for Filing Service Tax Return for April-September 2013 is 25th October 2013. images


DUE DATE FOR FILING SERVICE TAX RETURN

The filing of the Service Tax Return is done on half yearly basis. The due date is 25th of the succeeding month of the half year end.

Who is assessee in default under the Income Tax Act and its consequences thereof

Any assessee if fails to pay off whole or part of the demand raised by the Income Tax Authorities under section 156 within 30 days of its receipt, is usually termed as assessee in default.

Consequences of being an Assessee in Default :-

download 1) Interest u/s 220: Simple interest @ 1% per month is payable on the amount remaining unpaid. The interest shall be charged for the period beginning from the day immediately following the 30 days as aforesaid and ending on the date on which payment is made. (here part of the month is considered as full month)

The interest under section 220 can be reduced or waived by the Chief CIT or CIT subject to certain conditions. This section also provides that if Chief CIT or CIT issues order to reduce the amount to be payable as tax due then the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded.

Whether when assessee fails to receive alimony and then settles her past and future claims for lumpsum amount, such receipt is capital in nature - YES: ITAT

THE issues before the Bench are - Whether when the assessee fails to receive her alimony and then she settles her past and future claims for certain lumpsum amount, such receipt is to be treated as capital receipt and Whether accumulated monthly installments of alimony can be taxed u/s 56(2)(vi). And the verdict goes against Revenue.
Facts of the case

High Court irked by apathy of Government towards the (non) working of the Sales-tax Tribunal despite 4000 pending appeals with revenue effect of Rs. 4,500 crore

Sales Tax Tribunal Bar Association vs. State (Bombay High Court) (No. 2)
 
The Sales Tax Tribunal Bar Association filed a Writ Petition seeking certain directions relating to appointment of Members of the Sales Tax Tribunal. The High Court passed an order dated 06.09.2013 in which it expressed surprise that despite revenue of about Rs.4,500 crores which was locked up on account of pending litigation, the Government had not bothered to fill vacancies in the post of Members. The Government sought 4 weeks to consider the matter. Now HELD by the High Court:

Wednesday, 16 October 2013

Understanding Carry Forward of Losses:



Introduction  :

It is an inherent feature of a tax system that collects tax on profits but does not provide full relief for losses (i.e. does not pay out an equivalent ‘negative tax’ on negative profits) that provision needs to be made to allow unrelieved losses to be carried over and offset against past and future profits if manifest inequity is to be avoided. A rational system of taxation has

SALE OF IMMOVABLE PROPERTY OWNED BY NRI

Legalities involved in the purchase of immovable assets by NRIs have been discussed in the earlier column. Here we will discuss the legal requirements and formalities to be complied with for sale off immovable assets owned by NRIs.

US GAAP - PHILOSOPHY

 

The philosophy of accounting is the conceptual framework for the professional preparation and auditing of financial statements and accounts. The issues which arise include the difficulty of establishing a true and fair value of an enterprise and its assets; the moral basis of disclosure and discretion; the standards and laws required to satisfy the political needs of investors, employees and

CHANGES IN ESUGAM - KARNATAKA VAT

 NEW NOTIFICATION

In exercise of the powers vested under Sub-section 2-A of Section 53 of the Karnataka Value Added Tax Act, 2003(Karnataka Act No. 32 of 2004) and in suppression of the Notification No. ADCOM (I&C)/P.A./CR-31/2011-12 dated 23- 12-2011, Karnataka Commercial Tax Department has issued Notification dated 09/10/2013 and it will come into effect from 01-11-2013.

HOW TO AVOID SCRUTINY

Every year date for submitting of ITR-V is extended beyond 30th Sep. This year CBDT has extended the date for for receipt of ITR-Vs in CPC, Bengaluru, for the cases of AY 2012-13 and 2011-12 received in e-filed in FY 2012-13 to 31St October 2013.

Whether legal fiction created u/s 50 can also curb application of Sec 54EC if assessee makes investment in tax-free bonds - NO: Gujarat HC

THE issues before the Bench are - Whether the legal fiction created u/s 50 can also curb application of Sec 54EC if assessee makes investment in tax-free bonds and Whether exemption benefit u/s Sec 54EC available for depreciable assets can also be availed on short term capital gains. And the verdict goes against the Revenue.
Facts of the case

Tuesday, 15 October 2013

No tax on FTS if service utilized for business carried abroad; upgradation of existing website is revenue exp.

 


In the instant case, two moot questions were raised before the ITAT which were as under:

Procedure for filing TDS returns with insufficient deductee PAN

As per instructions issued by the Central Board of Direct Taxes (CBDT), it is mandatory for deductors to file TDS/TCS returns with a threshold limit of Permanent Account Number (PAN) of deductees. To facilitate deductors who face problem in filing TDS returns because of insufficiency of PAN of the deductees and also to accommodate the deductees who have intimated their PAN, the Income Tax Department (ITD) has specified the following procedure for filing TDS/TCS returns:

STEPS TO BE TAKEN AFTER FILING OF E-TDS RETURN



Back up of Files
Deductor should take back-up of all the files generated after successful filing of E TDS return, more importantly back up of *.fvu file ( upload file ). *.fvu is the file which eventually is filed with the ITD through TIN FC. If the tds return is required to be revised at a later date, *.fvu file is required for making the necessary corrections.

Judgment on cargo handling services

lAC Air Services Pvt. Ltd. vs. CST, Delhi 2013 (31) STR 155 (Tri-Del.)

The appellant in this case had agreement with AAI for Cargo Handling Services at Delhi International Airport. They pleaded that, since tax is paid by main contractor they are not liable to pay any tax. The Tribunal observed that, various circulars and trade notices clarifyingseparate duty liability not to be carved out against assessee where principal service provider has discharged duty liability on entire value. It is held that, second time confirmationof duty cannot be upheld and therefore demand is set aside.

Non-residents are eligible for the benefit of 10% tax rate on long-term capital gains under the Proviso to s. 112. The AAR should avoid giving conflicting rulings

Cairn UK Holdings Ltd vs. DIT (Delhi High Court)
 
The assessee, a company based in Scotland, sold 4,36,00,000 equity shares of Cairn India Ltd to Petronas International, Malaysia, for consideration of US$ 241 Million. The sale was not through a stock exchange and resulted in long-term capital gain of US$ 85 Million in the hands of the assessee after applying the benefit under first proviso to s. 48. The assessee filed an application for advance

S. 10A/10B (when an “exemption” provision): Unabsorbed depreciation (and business loss) of same (s. 10A/10B) unit brought forward from earlier years have to be set off against the profits before computing exempt profits

Himatasingike Seide Ltd vs. CIT (Supreme Court)
The assessee set up a 100% EOU in AY 1988-89. For want of profits it did not claim benefits u/s 10B in AYs 1988-89 to 1990-91. From AY 1992-93 it claimed the said benefits for a connective period of 5 years. In AY 1994-95, the assessee computed the profits of the EOU without adjusting the brought forward unabsorbed depreciation of AY 1988-89. It claimed that as s. 10B conferred “exemption”for the profits of the EOU, the said brought forward depreciation could not be set-off from the profits of the EOU but was available to be set-off against income from other sources. It was also claimed that the profits had to be computed on a “commercial”basis. The AO accepted the claim though the CIT revised his order u/s 263 and directed that the exemption be computed after set-off. On appeal by the assessee, the Tribunal reversed the CIT. On appeal by the department, the High Court (CIT vs. Himatasingike Seide Ltd 286 ITR 255 (Kar)) reversed the Tribunal and held that the brought forward depreciation had to be adjusted against the profits of the EOU before computing the exemption allowable u/s 10B. On appeal by the assessee to the Supreme Court HELD dismissing the appeal:
Having perused the records and in view of the facts and circumstances of the case, we are of the opinion that the Civil Appeal being devoid of any merit deserves to be dismissed and is dismissed accordingly

Best CA Firms (Transfer Pricing) In India: International Tax Review

International Tax Review, the prestigious publication on global transfer pricing and international taxation issues has released a publication in which it has identified the best CA firms in India specializing in transfer pricing matters.



Interestingly, the publication notes that India is among the “most aggressive” countries in making transfer pricing adjustments aggregating $9.5 billion. It also notes that India presents “special problems” in the transfer pricing world and refers to the recent unsavory incident in which the US competent authority had to state in public that it was “frustrated” by the position taken by his Indian counterpart and that the competent authority process between the US and India was “broken”.

Anyway, on the aspect of the best transfer pricing CA firm in India, the top roost is occupied, not surprisingly, by the Big 4 CA firms – Deloitte, E&Y, KPMG and PWC.

These firms were noted for employing several partners and staff specialists including economists, tax practitioners, legal experts and former officials of the income-tax department. International Tax Review noted that the team available with these firms have a variety of experience and skills and are able to deliver proficient advice in transfer pricing matters.


However, what is heartwarming is that a number of “desi” CA firms were also noted for their path breaking work in transfer pricing matters. T. P. Ostwal & Co came in for special mention for having a “notable presence” in the Indian transfer pricing market. T. P. Ostwal was complimented as a “very knowledgeable and notable” practitioner in this area.

K. C. Mehta & Co also came in for mention as a “key player” of transfer pricing practice in west India and for serving large multinational clients such as Schaeffeler, Panasonic etc.

The other CA firms which came into the radar for their top-quality transfer pricing work were GM Kapadia & Co, Khaitan & Co, MZSK & Associates, Nangia & Co & Majmudar & Partners.

We hope the day is not far when the local CA firms will be able to occupy the “Tier 1” position of transfer pricing advisers in India

Monday, 14 October 2013

HAPPY DASHERA

 

Preparation, Validation and e-Filing of e-TDS Return

e-TDS return has to be prepared in accordance with the file format prescribed by the Income Tax Department. NSDL has provided free downloadable utility at http://tin.nsdl.com for the purpose of preparation of e-TDS return. Alternatively, various softwares are available for preparation of TDS returns.

Failure to deduct or remit TDS /TCS.

Interest: Interest at the rates in force (12% p.a.) from the date on which tax was deductible /collectible to the date of payment to Government Account is chargeable. The Finance Act 2010 amended interest rate wef 01.07.2010 and created a separate class of default in respect of tax deducted but not paid to levy interest at a higher rate of 1.5 per cent per month, i.e. 18 per cent p.a. as against 1 per cent p.m., i.e. 12 per cent p.a., applicable in case the tax is deducted late after the due date. The rationale behind this amendment is that the tax once deducted belongs to the government and the person withholding the same needs to be penalized by charging higher rate of interest Penalty equal to the tax that was failed to be deducted/collected or remitted is leviable.

"Nil TDS Return" no Needs to submit after 01.10.2013 by CPC.

With effect from 01.10.2013 new version of FVU i.e. 4.00 is published by the TIN-NSDL in place of FVU 3.7 with latest new key features. The latest FVU Ver. 4.00 contains "NIL" TDS/TCS Return but while generating validation through FVU Ver. 4.00, TDS/TCS statement can not be filed without quoting any valid Challan or deductee row. It means that NIL TDS Return no needs to submit TDS/TCS Return and thus cpc has also released important instructions on 07.10.2013 in the interest of deductors about submission of TDS/TCS return which is as under:

Runways not equivalent to roads

and thus not covered by any exemption notification or any section under the Finance Act, 1994
D.P. Jain Co. Infrastructure Pvt. Ltd. vs. CCE, Nagpur. (2013-TILO-1029-CESTAT-MUM)
Facts:

Saturday, 12 October 2013

HAPPY DURGA ASTAMI


Transportation of baggage is not an individual or a separate service, but it is a component of the principal service of “Transportation of passengers' service by air”

 
M/s KINGFISHER TRAINING& AVIATION SERVICES LTD Vs CCE, Mumbai (CESTAT, Mumbai) 2013-TIOL-1463-CESTAT-MUM
Facts of case:
T

Delhi HC rules that nonresident is entitled to concessional rate of 10% on long-term capital gains on sale of shares


 
This Tax Alert summarizes a recent ruling of the Delhi High Court (HC) in the case of Cairn UK Holdings Ltd. (Taxpayer) on the issue of whether a nonresident (NR) is taxable in India at the concessional rate of 10%, under proviso to Section 112 of the Income Tax Act (ITA), on long-term capital gains from sale of shares of an Indian company in an off–market transaction.

TDS ON SALARY FOR AY 2014-15

Provisions of TDS on Salary as applicable on Income from Salary for Financial year 2013-14 / Assessment year 2014-15. This includes how to calculate TDS on Salary for Financial year 2013-14 and taxability of various components of Salary, Eligible deduction for Salaried Employees, TDS Due Date and TDS return and deduction provisions.
INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2013-14

Sub : Penal provisions for the members of the Institute who had not complied with their CPE Hours requirements for the block period of 3 years (1-1-2011 to 31-12-2013)

For kind information of the members




In order to function the system of mandatory CPE effective, the Council of the Institute of Chartered Accountants of India has decided that the members who fail to comply with their CPE Hours requirement for the current block of 3 years (1-1-2011 to 31-12-2013) are appropriately sanctioned. Therefore, the Council of the Institute has decided as under :


  • All the members are required to complete their CPE hours requirements for the block period of 3 years (1-1-2011 to 31-12-2013) by 31st December, 2013.
  • Any shortfall in the CPE credit for the calendar years 2011, 2012 and 2013 should be met by the members by 31st December, 2013.
  • The names of the members who fail to comply with their CPE hours Requirements for the block period of 3 years by 31st December, 2013 would be hosted on the website of the ICAI for information of public at large.
  • Further, the ICAI will not be responsible in any way for any action taken by any of the regulatory authorities on the basis of the names hosted on the website for allotting the professional work to them as sole proprietor or to their partnership firm.
  • To strike out the name/s from the list so hosted on the website, the member/s shall have to make up any shortfall in their CPE credit hours for the above block period of 3 years by obtaining twice of the amount of the shortfall. Such addition shall be in addition to the regular CPE hours requirement for the particular Calendar year in which they are making up the shortfall.


The members are requested to note the above. The members are also requested to comply with the CPE Hours requirements for the current year by 31st December, 2013.