Tuesday, 31 December 2013


India Taxes- Due Date Alert for the month January 2014

Due Date
Related to
Compliance to be made
Service Tax
Payment of Service Tax for the Month of December 2013
(Income Tax)
·        Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of December 2013.
·        Deposit TDS from Salaries  deducted during the month of December 2013
•   Deposit TCS for collections made under section 206C including sale of scrap during the month of December 2013, if any
•    Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of December 2013, if any
(Income Tax)
Furnish quarterly statement of tax deducted at source (TDS) and tax collected at source (TCS) for the quarter ended December 2013 in Form 24Q / 26Q / 27Q / 27EQ.
Payment of VAT & filing of monthly return for the month of December 2013
Filing of Monthly Softex.
(Income Tax)
Issue of TDS Certificate - Non Salary for Q3 FY 2013-13

Free Download e-Book of Complied Summery of Income Tax Provisions for Asstt. Year 2014-15.

Tax exemptions are an important component of tax policies. A tax exemption is “…any tax provision that exempts, in whole or part, certain persons, income, goods, services or property from the impact of established taxes. The individual income tax is the largest generator of revenues for Government. Many income tax exemptions are based on consistency with federal tax policy. This e-book is written by CA Rahul Jain containing the fully complied summary of Income Tax Provisions and exemptions, which is as under:

New Pan Application Form-49A, 49AA and Documents required -Notification

New pan application form 49A 49AA Notifiied- Documents required to apply PAN card Modified, New Performa for ID Address Proof

CBDT has amended the rules regarding application of new pan card. New List of documents required to apply new pan or amend pan card has been notified. Aadhar card has also been added as ID as well as residential address proof for PAN application purpose. Further new pan application form 49A and 49AA has also been notified.

Taxation on New Pension Scheme who join on or after 1st January, 2004


New pension scheme (NPS) is applicable to new entrants to Government service or any other employer. As per the scheme, it is mandatory or persons who come under this scheme, to contribute 10 per cent of salary every month towards their pension account. A matching contribution is required to be made by the employer to the said account. The tax treatment under the new scheme is as follows -

Taxability of ESOP

ESOP is an option given to the employees of the company to purchase the company’s shares at a discounted price than the present market price. This option is generally given to high-ranking employees of the company. There is a Lock-in-period involved wherein after the expiry of the vesting period the shares can be exercised. The price paid to purchase the shares is termed as cost of acquisition of the share.

Monday, 30 December 2013

Whether to be eligible for Sec 72A(4) benefits, the undertaking being demerged ought to be a 'going concern' at time of demerger - NO: ITAT

THE issue before the Bench is - Whether for the eligibility to the benefits u/s 72A (4) of the Act, the under-taking being demerged ought to be a going concern at the time of demerger. And the answer favours the assessee.
Facts of the case

Transfer Pricing: CBDT Issues Important Directives On Safe Harbour Rules

Pursuant to the Safe Harbour Rules in Rules 10TA to 10TG, the CBDT has issued a letter dated 20.12.2013 in which it has laid down important directives and clarifications on the manner in which the Safe Harbour Rules are meant to be implemented. The directives and clarifications are as follows:

S. 40(a)(ia) TDS Disallowance: View in favour of the assessee should be followed

ITO vs. M/s.Theekathir Press (ITAT Chennai)
The assessee paid an amount without deducting TDS. The AO held that as there was no TDS, the deduction for the amount could not be allowed u/s 40(a)(ia). However, the CIT(A) reversed the AO on the ground that the word “payable” in s. 40(a)(ia) did not apply to amounts that had already been “paid” during the year. On appeal by the department to the Tribunal HELD dismissing the appeal:


 Case Study 1:
A search and seizure action u/s.132 of the Act was carried out in the business premises of M/s. Rich & Famous on 31/07/2010. M/s. Rich & Famous is engaged in the business of trading in readymade garments, dress material, etc. on retail and wholesale basis and the turnover of the assessee is much more than the limit prescribed u/s.44AB of the Act.

Sec. 35ABB doesn’t deem sums paid on telecom licenses as capital exp., it is operative when exp. is of capital nature

The High Court held as under:

1) Section 35ABB does not stipulate or mandate that any expenditure for a right to operate telecommunication services or payment made for the said license as per the section is deemed to be a capital expenditure;

holding & subsidiary relationship in the term of the section 2(87)

The Ministry is hereby clarified that the shares held by a company or power exercisable by it in another company in a Fiduciary Capacity shall not be counted for the purpose of determining the holding & subsidiary relationship in the term of the section 2(87) of the Company Act 2013. (General Circular No. 20 /2013).


CBDT expands list of documents acceptable for issue of PAN. Aadhar card is to be accepted as Address proof and Identity for issue of PAN.

Tuesday, 24 December 2013


The Blessings of Peace
The Beauty of Hope
The Spirit of Love
The Comfort of Faith
May these be your gifts this Christmas Season.


S.199: Deduction at source-Credit for tax deducted - TDS Credit must be given even if TDS

Certificate is not available/ entry is not shown in Form 26AS. [S.26AS]

The assessee claimed credit for TDS which was denied by the AO on the ground that the claim did not

match the entries shown in Form No. 26AS and that there was a discrepancy. On appeal, the CIT(A)

held that the assessee would be entitiled to credit to the extent shown in the computer system of the

department. On further appeal by the assessee to the Tribunal HELD:


We had earlier discuss in detail about the concepts of exemption of section 37 along with various case laws earlier in part –I. In case you want to refer, the part –I, please click on the link below:  http://taxbymanish.blogspot.in/2011/08/understanding-allowability-of-business.html
Over a period of time, there are number of judgements comes from various levels of courts from different locations of India and hence it is very important to know the same for the correct treatment of exemption of section 37.





Monday, 23 December 2013

The National Pension System (NPS) – De-Mystified

The National Pension System is a retirement planning option that has been made available to the citizens of India in the year 2009. Not many people know what it is and how it can be used for retirement planning. The purpose of this article is to elaborate on that scheme and help people understand and use the National Pension System in their retirement plan.

Diferred Tax Liability on Special Reserve Created u/s. 36(1)(vii) of the Income Tax Act.

The Income Tax Department has issued a circular regarding ‘Deferred Tax Liability’ on special reserves created section 36(1)(vii) of the Income Tax Act which is as under:


CIRCULAR DBOD. NO.BP.BC.77/21.04.018/2013-14, DATED 20-12-2013

Please refer to our mailbox clarification dated November 6, 2009 with respect to the 'Special Reserve' created by banks under Section 36(1) (viii) of Income Tax Act, 1961 (hereinafter referred to as 'Special Reserve'), in terms of which, only the net amount of such Special Reserve (net of tax payable) should be taken into account for the purpose of computation of Tier-I capital.

Whether when assessee has declared income from partnership firm he is right in pleading for exclusion of income from property occupied by firm - NO: ITAT

THE issue before the Tribunal is - Whether when the assessee has declared the income from the partnership firm he is right in pleading for exclusion of the income from the property occupied by the firm. And the verdict goes in favour of the Revenue.
Facts of the case

Law Ministry Takes Stern View Of Defective Filings By Professionals


The Ministry of Corporate Affairs has addressed a letter dated 19.12.2013 to all the professional bodies stating that the Ministry has taken serious view of the pendency of eforms in various offices of the MCA in South East Region caused due to defective filings by the certifying professionals (CA / CS / CMA).

S. 132: Copy of search warrant should be given to the searched person. Defects in the panchnama do not invalidate the search or the s. 153A assessment proceedings

MDLR Resorts Pvt. Ltd vs. CIT (Delhi High Court)

A search u/s 132 was conducted on the premises of the assessee and its group concerns. Though a panchnama was prepared, the assessee’s name did not appear therein. An assessment order u/s 153A was passed to assess the alleged undisclosed income. The assessee claimed that as s. 153B imposed a limitation for passing of a s. 153A order by reference to the last panchnama drawn in relation to the searched person, the absence of the assessee’s name in the panchnama meant that the s. 153A assessment order could not be passed. A Writ Petition was filed to challenge the assessment. HELD by the High Court dismissing the Petition:

All You Wanted To Know About Public Provident Fund

PPF scheme introduced by Central Govt is a very popular and easy to invest scheme. The scheme enables the members of public to make contribution to the fund and obtain income tax benefit. Central Govt has started this scheme to provide old age income security to the workers in the unorganized sector and for the self employed individuals. PPF account is effective tax saving vehicle which gives you amazing return for the sunset years with zero risk.

Are you an Innocent Tax Evader?

I have added the word Innocent because, a majority of us are law abiding citizens, who earn a salaried income (all-white) and pay the due taxes against our income. However, we may be evading taxes unknowingly. The law does not discriminate against wanted/intentional tax evasion and unintentional tax evasion. Anyone who doesnt pay all the taxes due from them, is a Tax Evader. I wouldn't want to be one. Do you? If you don't want to get into trouble with our IT Officials, then you must definitely read this post carefully.

How Transfer Pricing Techniques Improve Profitability

There are five transfer pricing techniques a corporation can choose from to improve profitability of not only business unit level, but the corporate-wide level. Each of the technique has strengths and weaknesses that, any incorrect transfer pricing can cause considerable dysfunctional purchasing behavior and could suffer profitability on corporate-wide level—thus selecting the most suitable transfer pricing techniques is critical.

IASB Documents for Public Comments

Dear Sir/Madam,
Sub: IASB Documents for Public Comments
As you are kindly aware, that the existing Accounting Standards (AS) and the Indian Accounting Standards (Ind AS) are based on the IAS/IFRS issued by the International Accounting Standards Board (IASB). The IASB, before issuing the new/amendments to IASs/IFRSs, issues the Exposure Drafts for public comments. The Accounting Standards Board (ASB) with the aim to provide an opportunity to the various stakeholders in India to raise their concerns at the Exposure Draft stage itself so that these concerns are appropriately addressed, invites comments on the Exposure Drafts issued by the IASB. At present the following documents issued by IASB are open for comments:

(i) Equity Method in Separate Financial Statements (Proposed amendments to IAS 27) (Last date for sending comments: January 20, 2014)
(ii) Annual Improvements to IFRSs 2012–2014 Cycle (Last date for sending comments: January 28, 2014)
The text of the Exposure Drafts is available at the following links on the web-site of the Institute:

  1. http://www.ifrs.org/Current-Projects/IASB-Projects/IAS-27-Separate-Financial-Statements/Exposure-Draft-December-2013/Documents/Equity-Method-in-Separate-Financial-Statements-December-2013.pdf
  2. http://www.ifrs.org/Current-Projects/IASB-Projects/Annual-Improvements/Exposure-Draft-December-2013/Documents/Exposure-Draft-Annual-Improvements-2012-2014-December-2013.pdf

A copy each of the abovementioned documents are enclosed herewith. May we request you to kindly send your views and suggestions on the Exposure Drafts on or before the above mentioned dates, to the Secretary, Accounting Standards Board, The Institute of Chartered Accountants of India, ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi-110002. Comments can also be sent by e-mail at asb@icai.in or commentsasb@icai.in.

Saturday, 21 December 2013

Interest on IT refund not taxable at concessional rate of 10% as per Treaty if NR has PE in India.

FORAMER SAS (2013) 40 taxmann.com 100 (Uttarakhand)]

Interest earned by a non-resident on
income-tax refund is not taxable
in India at concessional rate of 10% as per India-France treaty if such non-resident has a PE
in India.

Rajiv Gandhi Equity Savings Scheme - 2013 Notification.


PAN is compulsory of Landlord if rent paid above 1 Lakh.

The Income Tax Department clarify regarding Quoting of PAN number of landlord is must when the salaried Employee (Taxpayee) claming rent exemption from Income Tax, amount of Rs. 100000 annualy or monthly Rs. 8334 or more in a current financial year under "House rent allowance" tax benefits.

S. 2(22)(e): Inter-corporate deposits (“ICDs”) are not “loans and advances” and are not assessable to tax as“deemed dividend”

IFB Agro Industries Ltd vs. JCIT (ITAT Kolkata)

The assessee received an inter-corporate deposit of Rs.11.20 cr from IFB Automotive Pvt. Ltd, a company in which it held 18% of the shares. The AO and CIT(A) held that the said ICD constituted “loans and advances” and was assessable as “deemed dividend” in the assessee’s hands u/s 2(22)(e). On appeal by the assessee to the Tribunal HELD allowing the appeal:

Friday, 20 December 2013

Severe strictures passed on the AO for acts of “malfeasance by pleading apparent ignorance and acting in subterfuge and an underhand manner“. CBDT requested to train officers properly to avoid them taking the law into their own hands with complete impunity and disregard for the law

DCIT vs. Motorola Solutions India Pvt. Ltd (ITAT Delhi)

The AO made a transfer pricing adjustment for the AMP expenditure incurred by the assessee and raised a demand of Rs. 210 crore. The assessee filed an appeal before the Tribunal and a stay application. The Tribunal granted a stay on recovery of the demand on the condition that the assessee would not seek an adjournment of the hearing. When the matter came up for hearing, the assessee pointed out that a similar issue was pending before the Special Bench (now decided as L. G. Electronics 152 TTJ 273) and so the Bench adjourned

Transfer Pricing: TNMM under Rule 10B(1)(e) contemplates ALP determination with reference to the relevant factors (cost, assets, sales etc.) of the assessee and not those of the AE or third party. Assessee’s study report cannot be discarded without showing how it is wrong. Finding that assessee is a risk bearing entity should be based on tangible material

Li And Fung India Pvt. Ltd vs. CIT (Delhi High Court)
The assessee, a wholly owned subsidiary in India of Li & Fung (South Asia) Ltd., Mauritius, was set up as a captive offshore sourcing provider. It entered into an agreement with Li & Fung (Trading), Hong Kong, an associated enterprise, for rendering “sourcing support services” for the supply of high volume & time

New Procedure of challan correction by banks Assessing Officers.

Under OLTAS (On Line Tax Accounting System), the physical challans of all Direct Tax payments received from the deductors / taxpayers are digitized on daily basis by the collecting banks and the data transmitted to TIN (Tax Information Network) through link cell. At present, the banks are permitted to correct data relating to three fields only i.e. amount, major head code and name. The other errors can be corrected only by the assessing officers.

Whether when there is no approved layout plan and any instance of sale, resorting to development method is 'most appropriate method' for purpose of valuation of property - YES; HC

 THE issue before the HC is - Whether when there is no approved layout plan and any instance of sale, resorting to development method is the 'most appropriate method' for purpose of valuation of property. And the verdict goes against the assessee.

Facts of the case

Sunder Deep Educational Society vs. ACIT (ITAT Delhi)

S. 11: Law on taxability of voluntary donations as “anonymous donations” u/s 115BBC or as “cash credit” u/s 68 in hands of charitable trust explained

S. 260A(4): High Court has power to hear the appeal on questions not formulated at the stage of admission of the appeal

CIT vs. Mastek Limited (Supreme Court)

The department filed an appeal u/s 260A in the High Court in which it raised several questions. The High Court admitted the appeal and framed two substantial questions of law. The Department filed a SLP claiming that by necessary implication, the other questions raised in the memo of appeal before the High Court had been rejected. HELD by the Supreme Court dismissing the SLP:

S. 153A/ 153C: Important principles of law relating to search assessments explained

V. K. Fiscal Services Pvt. Ltd vs. DCIT (ITAT Delhi)

Pursuant to a search u/s 132 conducted on the premises of another person, the AO issued a notice u/s 153C upon the assessee and thereafter passed an assessment order. The assessee claimed that the said assessment was not valid

Tuesday, 17 December 2013

S. 40(a)(ia) TDS Disallowance: CBDT Issues Circular To Clarify Stand

The CBDT has issued a Circular No. 10/DV/2013 dated 15.12.2013 in which it has analyzed the controversy created by recent judgements on the question whether the term “payable” in s. 40(a)(ia) includes the amounts that have already been paid during the year or it refers only to the amounts outstanding as at the year end. It is noted that while the Special Bench of the Tribunal in Merilyn Shipping 136 ITD 23 (SB) and the Allahabad High Court in Vector Shipping has taken the view that the disallowance in s. 40(a)(ia) does not apply to amounts that are already paid, a contrary view has been taken by the Calcutta High Court in Crescent Export Syndicate/ Md. Jakir Hossain Mondal and the Gujarat High Court in Sikandarkhan Tunvar.

S. 143(1): CBDT Relaxes Time Period For Issue Of Refund Intimations

The CBDT has issued Instruction No. 18/2013 dated 17.12.2013 stating that there are several instances where die to technical or other reasons the intimation in refund cases could not be sent to the assessees within the time limit prescribed in the second proviso to s. 143(1) of the Act. To alleviate the grievance caused to the assessee, the CBDT has exercised its powers u/s 119(2)(a) of the Act to extend the time frame prescribed in the second proviso to s. 143(1) and directed the AOs to grant the refund subject to conditions.

Avoidance of tax-Transfer pricing-Arms’ length price-Selection of comparables.

S.92C: Avoidance of tax-Transfer pricing-Arms’ length price-Selection of comparables.


Assessee was an indirect subsidiary of Rhodia S.A. France. Assessee-company, incorporated in India,

was primarily involved in canvassing of Rhodia Products from and around the world to the various

customer of India. AO referred the matter to TPO. TPO rejected most of the assessee's comparable

Hotel accommodation and Mandap Keeper are distinct services

Rambagh Palace Hotels Pvt. Ltd. vs. CCE, Jaipur - 2013(31)STR 480 (Tri.-Del.)
The Appellants provided mandap keeper's services and convention services and discharged service tax on banquet charges, banquet sundries and banquet food. The Appellants, however, did not discharge service tax on the value of room charges booked by them for the purpose of marriage, conference, meetings etc. The department contended to include such room charges in the value of mandap keeper services.

CAG Exposes Defects In Law And Procedure Of Taxation Of Charitable Trusts

The Comptroller and Auditor General of India (“CAG”) has issued a hard-hitting report in which it has conducted a detailed study of the law and procedure relating to charitable trusts and identified all the short-comings therein.
The revenue loss due to the lapse runs into several thousands of crores.

S. 10A/10AA/10B: CBDT Takes Stern View On Non-Compliance By AO Of Circular

The CBDT has issued Instruction No. 17/2013 (F.No.178/84/2012-ITA.I) dated 19.11.2013 in which it has noted that the Assessing Officers are not following the clarifications given in Circular No. 01/2013, dated 17.1.2013. In the said Circular, the CBDT has clarified various contentious issues relating to export of computer software and claim of deduction under sections 10A, 10AA and 10B of the Income-tax Act, 1961. In a stern tone, the CBDT has “advised”the Assessing Officers to follow the contents of Circular in letter and spirit and not to take a divergent view. It has also directed the Assessing Officers not to file further appeals in cases where orders were passed prior to the issue of the Circular.

S. 32(1)(ii): Any right (including leasehold rights) which enables carrying on business effectively and profitably is an “intangible asset” & eligible for depreciation

Tirumala Music Centre (P) Ltd vs. ACIT (ITAT Hyderabad)

The assessee paid a sum of Rs. 60 lakhs to acquire leasehold rights to premises. The assessee claimed that the said leasehold rights were an “intangible asset” and eligible for depreciation u/s 32(1)(ii). The AO & CIT(A) rejected the claim of the assessee. On appeal by the assessee to the Tribunal HELD allowing the appeal:

S.80-IA: Industrial undertakings-Infrastructure development–Developer –Contractor:



Assessee-company was in business of construction and had carried out construction of bridges of

certain Government Organizations. As per assessee, income from eligible business was 100 percent

exempt in view of provisions of section 80-IA. AO held that assessee was not a "Developer" but