India Taxes- Due Date Alert for the month February 2014

 

No	Due Date	Related to	Compliance to be made
1	05.2.2014	Service Tax	Payment of Service Tax for the Month of January 2014
2	07.2.2014	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 January 2014. ·        Deposit TDS from Salaries  deducted during the month of January 2014 •   Deposit TCS for collections made under section 206C including sale of scrap during the month of January 2014, if any •    Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of January 2014, if any
3	20.2.2014	VAT	Payment of VAT & filing of monthly return for the month of January 2014

willful failure to file return - offence under Section 276CC - Pendency of appellate proceedings is not factor for not initiating prosecution: SC

THE assesse appellants are J. Jayalaithaa, N. Sasikala and their partnership firm Sasikala Enterprises, who have all been prosecuted under Section 276CC of the Income Tax Act for failure to file Income Tax returns. The accused appellants had filed discharge petitions with the trial court which was rejected. On appeal, the High Court also rejected the plea. The accused appellants are before the Supreme Court, actually in the second round of litigation.

Appellants' plea: The senior counsel appearing for the appellants, submitted that the High Court

Whether loss claimed is to be allowed even if assessee fails to produce documents on pretext that same were seized by Central Excise Department - NO: ITAT

THE issue before the Bench is - Whether loss claimed by the assessee can be allowed, when its documents were seized by the Central Excise department and could not be produced even though the assessee was provided a reasonable time period. And the answer goes against the assessee.

Carbon Credit receipts are not chargeable to tax as “income”. For s. 80-IA(8) if there are multiple “market values” assessee has the right to choose

(i) Carbon credit is in the nature of ‘an entitlement’ received to improve world atmosphere and environment reducing carbon, heat and gas emissions. The entitlement earned for carbon credits is a capital receipt and cannot be taxed as a revenue receipt. It is not generated or created due to carrying on business but it is accrued due to ‘world concern’. It has been made available assuming character of transferable right or entitlement only due to world concern. The source of carbon credit is world concern and environment. Due to that the assessee gets a privilege in the nature of transfer of carbon credits. Thus, the amount received for carbon credits has no element of profit or gain and it cannot be subjected to tax in any manner under any head of income. My Home Power Ltd 151 TTJ 616 (Hyd), Velayudhaswamy Spinning Mills 40 taxmann.com 141 (Chennai) & Ambika Cotton Mills Ltd (Chennai) followed. Also, in Vodafone International Holdings 341 ITR 1 the Supreme Court has held that treatment of any particular item in different manner in the 1961 Act and Direct Tax Code (“DTC”) serves as an important guide in determining the taxability of said item. Since DTC specifically provides for taxability of carbon credit as business receipt and Income Tax Act does not do so, it means that carbon credits are not taxable under the Act

For s. 14A/ Rule 8D(2)(ii), interest expenditure on loans taken for taxable business purposes has to be excluded

ITO vs. Narain Prasad Dalmia (ITAT Kolkata)

Rule 8D(2)(ii) is very clear that the expenditure on account of payment of interest would be covered in the said Rule only if it is not directly attributable to any particular income or receipt. If the assessee is able to demonstrate that the payment of interest is directly attributable to the assessee’s business, it cannot be considered under Rule 8D(2)(íi) of the I.T. Rules and has to be excluded while computing the disallowance u/s 14A

FAQs on various aspects related to Foreign Direct Investment in ESDM sector

Key Labor Requirements:

1	Maximum hours worked by employees	48 hours per week
2	Number of Indian employees which trigger employer obligation to provide employees state insurance	10
3	Number of Indian emloyees which triggers employer obligation under Provident Fund Scheme, Bonus Act	20
4	Number of years of continuous service which makes an employee eligible for gratuity	5 years
5	Minimum bonus to be paid to an employee drawing a basic wage of INR 10000 or less	8.33%
6	Prohibited age of employing young children in factories	14 years
7	In case of retrenchment due to/or closure, number of employees which trigger employer obligation to seek prior government approval	100
8	On retrenchment/lay off/closure	Compensation is payable to employee

TDS ON EMI OR HIRE PURCHASE

In recent times, not some by all most everybody is buying products on every month installment schemes. Even companies and business establishments opt of EMI or Hire Purchase transaction instead of one-time payment to the vendors. However, people are unaware about the applicability of TDS provisions on such transactions. Are TDS provisions applicable on EMIs and Hire purchase? Do you need to deduct TDS? If

PAN Allotment only after verifying documents with Original

DIRECTORATE OF INCOME TAX (SYSTEMS)

ARA Centre, Ground Floor, E-2, Jhandewalan Extension, New Delhi-110055

F.No: oPAN/1/3/2003/Part Dated: 24.1.2014

Sub: Change in procedure for PAN allotment.

1. The fee for processing a PAN application shall be Rs 105/- (inclusive of all taxes).

2. Subsequent to notification S.O.No 3794(E) dt 23.12.2013, the procedure for PAN allotment process will undergo a change w.e.f. 03.02.2014.

2.1 From 03.02.2014 onwards, every PAN applicant has to submit self-attested copies of Proof of Indentify (POI), Proof of Address (POA) and Date of Birth (DOB) documents and also produce original documents

e-Samadhan portal for resolving the professional queries raised by members of ICAI

The Committee for Capacity Building of CA Firms & Small and Medium Practitioners (CCBCAF& SMP) of ICAI as a part of its commitment to strengthen the Small & Medium Practitioners, has developed the 'ICAI Connect' portal which is a self service portal for the members of ICAI.

Punjab & Haryana HC holds deductibility of ”secret commission” and free specimen distribution require consideration in light of Explanation to S. 37

This Tax Alert summarizes a recent decision of the Punjab & Haryana High Court (HC) in the case of CIT v. Dhanpat Rai & Sons (Taxpayer) on the issue of deductibility of secret commission and expenditure incurred on distribution of free specimen books by a taxpayer engaged in the publication of books.

The HC noted that the Income Tax Appellate Tribunal (Tribunal) had not considered the Explanation to Section 37(1) of the Indian Tax Laws (ITL), inserted by Finance (No. 2) Act, 1998 retroactively from tax year 1961-62, which provides that expenditure incurred by a taxpayer for any purpose which is an offence or which is prohibited by law shall not be allowed as deduction from business income. Therefore, the HC remitted the matter to the Tribunal for considering the impact of the Explanation. However, while remitting the

Treatment of pre-incorporation expenses (whether dead loss or capitalisation with fixed assets)

Section 3 of the Income tax Act, 1961 define the first previous year being the period beginning with the date of setting up of the business or profession. Setting up is broadly narrated as the date on which the assessee is ready to commence business. Further in the context of a company assessee section 35D provide for allowance of certain expenses incurred before actual commencement of business. Sub-section (2) of section 35 D list out such categories of expenses as under:

“ (2) The expenditure referred to in sub-section (1) shall be the expenditure specified in any one or more of

Wealth tax on vacant land

The Wealth Tax Act provides for exemption from levy of tax on unused land only in a case where it was held for industrial purposes and the outer limit is only two years. Alternatively vacant land intended for industrial use will be treated as a taxable asset if building/ sheds are not constructed for more than two years. The other exception is that it should be held as stock-in-trade.

In the parallel office or commercial buildings per se are exempt from wealth tax as per specific exclusion under sub-clause (3) of clause (i) of section 2(ea) of the Wealth Tax Act, 1957. And yet further the land held in this regard for construction of office building too would find exclusion vide decision of the Cochin bench in

Some Tax Deductions are not allowed to claim from Income Tax Exemption

The tax season has kicked off. Yet again, taxpayers will be rushing to complete their formalities and more important, claim deductions. But there are many deductions or benefits the Income Tax ( I- T) Act offers that are not in line with the current expenses of individuals or in keeping with the pace of inflation. As an income tax consultant puts it, “ Some of the deductions are a joke.” The tax rates for various income brackets aren’t too high as compared to many other countries. But the inflation and interest rates are low in the latter. So, while one pays a higher income tax, they are not paying high equated monthly instalments or food prices have not gone through the roof. Most countries across Europe, including the United Kingdom, have the highest tax

Whether a single transaction can be construed as business transaction when motive behind such a transaction was to make Investment - NO: ITAT

THE issues before the Bench are - Whether a single transaction can be considered as business transaction when the motive behind such a transaction was to make Investment; Whether the amount received on sale of shares can be considered as LTCG when the period of holding of shares was more than two years and the valuation of such shares was at the cost price in the respective balance-sheets from the date of purchase and Whether disallowance u/s 14A is attracted even when the securities fetching exempt income are held as stock in trade. And the verdict partly goes in favour of Revenue.

Facts of the case

Message from Traces

Greetings from Team CPC(TDS)!

In our continuous endeavor to enrich end-user experience, we are glad to bring to you the convenience of online facility of filing corrections to the TDS Statements. With this feature, you will be able to breeze through submitting revisions with ease and confidence, when you complete your transactions on TRACES portal.

VOTE FOR BETTER INDIA



Dear Citizen, We write this email to you to discuss, debate and deliberate the enormity of challenges facing the country.

Latest Amendment in Settlement of Commission Rules by CBDT

The Central Board of Direct Taxes has been issued a notification regarding amendment in section 245D for Settlement of Commission adates.

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

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

CENTRAL BOARD OF DIRECT TAXES

Notification

New Delhi, the 15th January, 2014

S.O. 108 (E). - In exercise of the powers conferred by section 295 of the Income-Tax Act, 1961 (43 of

Whether interest income arising out of deposits with banks and EEFC account is eligible for deduction u/s 10A - YES: HC

THE issues before the Bench are - Whether interest income arising out of deposits with banks and EEFC account is eligible for deduction u/s 10A. And the answer goes in favour of the assessee.

Facts of the case

The assessee is a 100% EoU, engaged in exports of computer software. It earned interest income

क्या आपने अपने नोटों की जांच की? 2005 से पहले के नोट अब जुलाई के बाद नहीं चलेंगे

नई दिल्ली: भारतीय रिजर्व बैंक ने साल 2005 से पहले के जारी किए गए सभी करेंसी नोटों को 31 मार्च 2014 के बाद वापस लेने का फैसला किया है.

रिजर्व बैंक ने कहा कि लोग ऐसे करेंसी नोटों को बैंकों में बदल लें, जिनके पीछे जारी करने का साल नहीं दर्ज है.

आरबीआई ने कहा है कि करेंसी नोटों के बदलने का काम अगले आदेश तक जारी रहेगा.

आरबीआई ने साफ किया है कि 2005 से पहले के जारी किए गए करेंटी नोट पूरी तरह से मान्य होंगे. इसका मतलब यह हुआ कि लोगों को अपने करेंसी नोट बदलने की जरूरत होगी और बैंक अपने ग्राहकों के साथ-साथ आम जनता (गैर-ग्रहकों) के नोट को बदलेगा.

बैंक ने साफ किया है कि 01 जुलाई, 2014 के बाद 500 और 1000 के 10 नोट के बदलने पर गैर ग्राहकों को अपने बारे में आईडी प्रूफ यानी पूरी जानकारी बैंक को देनी होगी.

आरबीआई ने जनता से अपील की है कि उन्हें घबराने की जरूरत नहीं है. उन्होंने आम लोगों से इस काम में मदद करने का आग्रह किया है.

UNDERSTANDING DISALLOWANCE UNDER SECTION 40 OF INCOME TAX ACT, 1961 WITH LATEST CASE LAWS.

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


https://taxofindia.wordpress.com/2015/11/26/understanding-disallowance-under-section-40-of-income-tax-act-1961-with-latest-case-laws/ 

Capital gain on buyback of shares held to be taxed as dividend

Now it’s common that any foreign investments coming into India are planned in a manner to lower the tax liability in India as possible.

As per The Business Standard report: The current legal position prevailing in India is that any planning which results in lowering of tax liability in India, which is within the four corners of law, is treated as valid planning permissible in law. (Refer AzadiBachaoAandolan263ITR706).

In this context, a recent judgment of Authority for Advance Ruling (AAR) in the case of A Ltd, in re dated 22.03.0212 is worth considering. The facts of the case are as under:

Process of TDS payment on property

From June 2013, purchaser of property with value of Rs50 lakh and above should deduct 1% TDS at the time of making payment. Here is the guide about making payments of TDS and obtaining form 16B for the buyer and form 26QB for the seller.

I would like to run the readers through the TDS payment process and the steps to be taken to obtain Form 16B (for the deductor or buyer) and Form 26QB for the (seller or deductee).

Legally, How to take wife’s Income Tax Return Copy ?

Friends, as you know that if a wife take Interim Maintenance from Husband, but wife submit their Income Tax Return to Income Tax Department, in that case the copy of Income Tax return is must need to relief from Interim Maintenance and that’s why every Divorcée Person need help to get a copy of wife's IT returns as filed with the IT department, to submit the same to the Hon’ble court for Interim Maintenance (IM) application under the DV Act. The facts are as follows:

1. Have definite information that she has filed different sets of numbers with the IT dept and the Hon’ble court and has therefore committed perjury to mislead the Hon’ble court and export money from me.

2. Her application for IM has already been dismissed by the Hon’ble Family court on the grounds that she has enough income to maintain herself and that she is highly educated (B.Com, LLB)

3. Her turnover in stock trading for the current year is around Rs. 19 crores ( yes that's 19 crores - up by almost 450% from the previous years)

Whether any adhoc disallowance of payment made u/s 40A(2)(b) to sister concern is warranted merely on basis that it was run by wife of Director of assessee company - NO: HC

THE issues before the Bench are - Whether any adhoc disallowance of payment made u/s 40A(2)(b) to a sister concern is warranted merely on the basis that it was run by the wife of the Director of the assessee company and Whether in such a case there would be a presumption of excessive claim. And the verdict goes against the Revenue.

Facts of the case

Delhi Tribunal rules on whether sales promotion activity of Liaison Office is taxable in India

This Tax Alert summarizes a recent ruling of the Delhi Income Tax Appellate Tribunal (Tribunal) in the case of Brown & Sharpe INC, (Taxpayer) on the taxability of sales promotion activities carried out by Liaison Office (LO) on behalf of its Head Office (HO).

Having regard to the facts of the case, the Tribunal ruled that the LO was engaged in promoting sales in India and, hence, income attributable to the LO is taxable in India.

Note on Transfer Pricing

Transfer pricing means the value or price at which transactions take place amongst related parties. Transfer prices are the prices at which an enterprise transfers physical goods and intangible property and provides services to Associated Enterprises.

POSITION IN INDIAA need was felt for a detailed and separate regulation for administering transfer pricing with globalisation of Indian economy. Absence of such Regulations not only results in litigation but loss of revenue to the exchequer. In absence of Transfer Pricing Regulations, India was losing its legitimate share of revenue.

Digital Signature Certificate (DSC)

Digital Signature Certificate (DSC) is an electronic signature that can be used to authenticate the identity of the sender of a message or the signer of a document. Digital Signature Certificate (DSC) is a digital equivalent of a hand written signature.

Whether employees' contribution to PF credited after statutory date under respective Provident Fund Acts but within due date of filing return u/s 139 is eligible for deduction u/s 36 - NO: HC

THE issues before the Bench are - Whether employees' contribution to provident fund credited after the statutory date under the respective Provident Fund Acts but within the due date of filing return u/s 139 is eligible for deduction u/s 36 of the Income Tax Act; Whether amendment in section 43B vide Finance Act, 2003 which deleted the second proviso can be applied for interpreting section 36(1)(va); Whether section 36(1)(va) and section 43B operate in two different fields with respect to two different contributions and Whether merely because with

S. 147: Failure to compute capital gains u/s 50C does not lead to escapement of income

ITO vs. Haresh Chand Agarwal HUF (ITAT Agra)

The assessee sold property for Rs.6 lakh and offered capital gains on that basis. The AO accepted the claim without examining the applicability of s. 50C. He later (within 4 years from the end of the AY) reopened the assessment on the basis that the stamp duty valuation was Rs. 25 lakhs and

TDS Disallowance For Income Made Taxable Under Retrospective Law

Infotech Enterprises Limited vs. ACIT (ITAT Hyderabad)

No s. 40(a)(i) TDS disallowance for amounts made taxable due to retrospective amendment. Also, concept of “business connection”u/s 9(1)(i) & “fees for technical services” u/s 9(1)(vii) explained

The assessee entered into an agreement with its associated enterprises (AEs) outside India pursuant to which it sub-contracted some of the work that it had obtained from its customers. The assessee incurred an expenditure of Rs.19 crore towards “technical consultancy charges” paid to the said AEs. The AO &

S. 2(47)(v): A development agreement by which possession is transferred to developer is not a “transfer”for capital gains purposes if developer’s willingness to perform his part of the contract is not ascertainable with certainty

The assessee entered into a Development Agreement-cum-GPA with MAK Projects on 15.12.2006 (AY 2007-08). The agreement provided the MAK would construct a villa township in 30 months and that the assessee was entitled

Branch Offices in India

INTRODUCTION OF BRANCH OFFICE As the name suggest the BRANCH office is setup by a foreign company in India to carry out the BRANCH activity for its business. The foreign company can have any revenue from the Indian Branch office only from the activity allowed by the Reserve Bank of India; It has to meet all its expenses of Indian office through remittances from the Head office or through the revenue generated from the Indian operation permitted by the Reserve Bank of India.

What is Foreign Branch Office India

A Foreign Branch Office is really a 100 % functional branch of the parent company in India. It may carry out any business activity within India as permitted by Reserve Bank of India, except manufacture of items.An International Branch Office is responsible to pay income tax on any income produced through its operations in India.

Income tax now require to issue Certificate u/s 197 in one month.

The CBDT has issued an instruction No. 1/2014 Dated 15/01/2014 regarding Certificate of Lower Deduction or Non-Deduction of Tax at source u/s. 197 of the Income-tax Act to All the Chief Commissioners & Directors General of Income Tax which is as under:

SEBI - New FPI Regulations

On January 7, 2014, the Securities and Exchange Board of India (‘SEBI’) notified the SEBI (Foreign Portfolio Investors) Regulations, 2014 (‘FPI Regulations’), which are relevant to all foreign investors that conduct, or propose to conduct portfolio investments in Indian securities. On January 8, 2014, SEBI issued Operational Guidelines for implementation of the new regulations. The FPI Regulations will come into effect as soon as the corresponding amendments are brought about to the Indian exchange control regulations. Until then, SEBI continues to keep live

Exchange Rate

[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. 3/2014-Customs (N.T.)

Dated the 16^th January, 2014

26 Pausa, 1935(SAKA)

Road constructed on Build-Operate-Transfer (“BOT”) terms is eligible for depreciation even though assessee is not the legal owner of the road

The assessee, a SPV, was awarded a contract by the NHAI for widening, rehabilitation and maintenance of an existing two lane highway into a four lane one on the Tada-Nellore section of NH-5 on BOT basis. The entire cost of construction of Rs. 714 crore was borne by the assessee. The construction was completed during the FY 2004-05 after which the highway was opened to traffic for use and the assessee started claiming depreciation from AY 2005-06 onwards. The AO rejected the claim on the ground that the assessee had no ownership, leasehold or tenancy rights for the asset in question, i.e., the roads. On appeal, the CIT(A) reversed the AO. On appeal by the department to the Tribunal HELD dismissing the appeal:

CBDT relaxes withholding on service tax component on payments to residents

This Tax Alert summarizes a recent Circular No. 1/2014 dated 13 January 2014 issued by the Central Board of Direct Taxes (CBDT), the highest administrative body under the Indian Tax Laws (ITL). Circular No. 1/2014 has relaxed withholding requirement on service tax component on all payments to residents where service tax component, comprised in the amount payable to a resident, is indicated separately. Accordingly, withholding shall apply on the amount payable excluding such service tax component. As a corollary, withholding may apply on full amount where the amount payable is inclusive of service tax and is not separately indicated.

Circular No. 1/2014 seeks to settle doubts and controversy on the applicability of withholding on service tax component on all payments to residents. This will be welcomed by the taxpayers.

However, it is important to note that the relaxation from withholding on service tax component applies only where service tax component is indicated separately in the invoice. By implication, the relaxation may not apply where the amount payable is inclusive of service tax without separately indicating the service tax component.

Further, applicability of withholding on indirect tax levy components on payments to non-residents and/or on indirect tax levies other than service tax (like VAT, Excise, Customs duty etc.) on payments to residents remain unaddressed by Circular No. 1/2014 and will be required to be separately evaluated by the taxpayers.

WHT on payment made to foreign consultants outside India

In the times of globalization, transnational organizations, having operations in multiple countries need to employ individuals across countries. The global mobility of employees has become even more critical in the wake of the requirement of specialized technical skill and expertise . Today a company, located in country A is in a position to employ a person from country C for its operations in country B. The company may or may not have a subsidiary or a permanent establishment in country B only to perform certain functions and hence

Whether when assessee engaged in real estate business lets out part of property to beat slowdown in business and to reduce interest on borrowed funds, such rental income takes colour of business receipt - YES: HC

THE issue before the Bench is - Whether when the assessee engaged in the real estate business lets out part of property to beat the lull in business and to reduce interest on borrowed funds, such rental income takes the colour of business receipt. And the verdict favours the assessee.

Facts of the case

The assessee is an Individual. During AY 1983-84, it had constructed a Commercial Complex known as "Nirman Sahu Business Complex" Sitapur Road, Lucknow where the shops on the ground floor and a few residential flats were constructed at the first floor. All the units including

Employees’ PF/ ESI Contribution is also covered by s. 43B & allowable as a deduction u/s 36(1)(va) if paid by the “due date”for filing ROI

CIT vs. Jaipur Vidyut Vitran Nigam Ltd (Rajasthan High Court)

In AY 2001-02 etc, the assessee claimed a deduction for payment of (employees’ contribution) to GPF, CPF and ESI u/s 36(1)(va) read with s. 43B of the I.T. Act. The basis of the claim was that though the amount was not paid on or before the due date under the respective Act, the same was deposited on or before the due date of furnishing of the Income-tax returns

CBEC circular with respect to the implementation of the decision in Fiat case

We are pleased to release a Tax Alert which gives an update on the recent Circular No. 979/03/2014-CX dated 15 January 2014, issued by the Central Board of Excise and Customs (CBEC), which clarifies certain issues with respect to the implementation of the Supreme Court decision in the Fiat India case.

It has been directed by the CBEC that the extended period of limitation of 5 years should not be invoked to reopen the cases where the show cause notice has been issued solely on the grounds of the Fiat judgment.

It has been further clarified that the judgment in the Fiat case cannot be applied in all cases where goods are sold at a price below the manufacturing cost and profit and due care must be taken at the level of the Commissioner to determine whether the facts of the case are similar to the Fiat case in order to apply the ratio of the decision.

CBDT Directs Assessing Officers To Respect Citizens Charter In TDS matters

The CBDT has issued Instruction No. 1/2014 dated 15.01.2014 to the Chief Commissioners stating that though the Citizens Charter prescribes a time limit of one month for a decision u/s 197 on application for no deduction of tax or deduction of tax at lower rate, there is considerable delay in issuing the lower/non deduction certificate. The CBDT has directed that the commitment to tax payers as per the Citizens Charter must be scrupulously adhered to by the Assessing Officers and all applications for lower or no deduction of tax at source filed u/s 197 of the Income-tax Act, 1961 must be disposed of within the stipulated time frame. 

Foreign Reimbursement of Expenses.

S.40(a)(i): Amounts not deductible-Deduction at source–Professional fees and reimbursement of
expenses-Outside India-Non-resident –Not necessary to pay tax in contracting State to a
resident of contracting State. Mere right of contracting state to tax such person by reason of
domicile, place of management or incorporation is sufficient-DTAA-India-UAE. [S.90, Art 14 ]
Professional fees to non–resident as no PE in India-services is not liable to tax India-DTAAIndia-
UAE, USA-UK [S.9(1),9(1)(vii), 195,Art. 4(1),7, 12, 13, 15 ]
The asssessee made reimbursement of expenses to V of U.A.E. It claimed that “V “had not stayed in

S.37(1): Business expenditure-Master copy of software- Expenditure on acquiring master copy of software subject to obsolescence is deductible as revenue expenditure.

The assessee entered into a license agreement with Oracle Corp under which it acquired a nonexclusive
& non-assignable right to duplicate software products which were owned by Oracle Corp
and to sub-license the same to parties in India. The assessee paid recurring royalty of 30% for the said
right. In addition to the royalty, the assessee periodically paid an amount towards “expenditure on
import of software master copy”. The said master copy was used to replicate the software. The

Section 80G for NGO's

Any NGO in India, that is Registered under Section 80G, then donations done to that NGO by individuals is Exempt from Income Tax. This article is about, what an NGO has to do to qualify for this section.

Tax Notices.

The most common coffee discussion these days is about Income Tax Notices, it seems the IT department is in love with sending tax notices to tax payers for host of reasons, which were never heard off in past.



Usually notices sent are in relation to issues in the income tax returns filed. Notices can also be for initiating scrutiny or for opening of assessment of past years.

DTAA with Macedonia

India and the Government of Republic of Macedonia Signed an Agreement for The Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.

Republic of India and Republic of Macedonia signed the new Agreement for the avoidance Of Double Taxation and the prevention of fiscal evasion (DTAA) with respect to taxes on income . The Agreement was signed here today by Mr. Salman Khurshid, the Minister of External Affairs on behalf of India and Mr.

Whether when assessee accepts loan in cash, exceeding limit u/s 269SS, and when source of funds is not withdrawal from banks, such loan may be construed as black money and same attracts penalty u/s 271D - YES: HC

THE issue before the Bench is - Whether when the assessee accepts loan in cash, exceeding the limit u/s 269SS, and when the source of funds is not withdrawal from banks, such loan may be construed as black money and the same attracts penalty u/s 271D. And the answer goes against the assessee.

Facts of the case

The assessee, an individual, had filed its return of income for the AY 2007-2008 declaring total

Subrato Ray Sahara Gets 1800 Cr Breather from ITAT In Bogus Deposits Case

A bank, NBFC etc is not required to give conclusive proof of the identity, credit worthiness etc of the depositor. Practical view has to be taken of deficiencies in KYC norms, absence of PAN card etc

The assessee, a RNBFC, received a large volume of deposits of small and medium value through a wide network of rural agents. The AO appointed a special auditor to verify the new deposits collected during the year in terms of

How to reduce DDT.

1. Introduction

This year big corporate have borne the brunt of additional revenue mobilization exercise of the Finance Minister. Chidu has slapped a surcharge of 10% on corporates having taxable income above Rs. 10 crores. Simultaneously, 10% surcharge has also been imposed on an already high Dividend Distribution Tax (DDT) of 15%. This was one of the prime factor responsible for 290-point in the stock market on the budget eve.

The corporates shall be caught in a catch 22 situation- either to prune dividend and get investor unfriendly image or pay higher income tax and reduce the amount transferable to the shareholders' fund, which itself is utilised for the issue of bonus shares.

Duty & Tax Payment of ST is mandatory by Internet Banking.

Prior to 1.1.14, a manufacturer/service tax payer was required to pay duty of Central Excise/Service tax through internet banking (e-payment) if the total duty paid by the assessee exceeded rupees ten lakhs in the previous financial year as per Rule 8 of the Central Excise Rules, 2002 and Rule 6 of the Service Tax Rules, 1994 respectively.

Whether when assessee pays excess tax, interest on refund is to be calculated from date of payment of tax till date of grant of refund - YES: HC

THE issues before the Bench are - Whether when the assesse pays excess tax, the refund and the interest thereof arise automatically and no claim is to be filed; Whether interest is to be calculated from the date of an order passed u/s 244 and Whether the assessee is entitled to interest on refund from the date of payment of excess tax till the date of grant of refund. And the answers go against the Revenue.

S. 272B penalty on deductor for wrong/ non-stating of PAN in TDS return is not applicable if information is not furnished by deductee. Penalty is Rs. 10000 per deductor and not per wrong PAN

CIT vs. DHTC Logistics Ltd (Delhi High Court)

The assessee filed a TDS return in which the PAN of 30,706 deductees was either missing or was incorrectly stated. The AO held that as penalty of Rs. 10,000 u/s 272B was levaible for the non-mentioning of the PAN, the penalty had to be computed per PAN/deductee. He accordingly levied penalty of Rs. 30.70 crore at the rate of Rs. 10,000 per deductee. The CIT(A) restricted the

RBI recognizes put and call options on instruments held by non-residents; move impacts PE funds in a big way

In line with changes introduced by Securities and Exchange Board of India (“SEBI”)vide notification dated October 3, 2013[1] and provisions of Section 58 of the Companies Act, 2013 (“2013 Act”), which came into force from September 12, 2013, the Reserve Bank of India (“RBI”) vide notification published in Official Gazette dated December 30, 2013[2] (“Notification”)amended the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (“Regulations”)to permit Indian companies to issue shares

Securities and Exchange Board of India notifies regulations to ease and rationalize Foreign Portfolio Investments

The Securities and Exchange Board of India (SEBI) has recently notified the SEBI (Foreign Portfolio Investors) Regulations, 2014 (FPI Regulations). These Regulations shall come into force with effect from 7 January 2014. Further, the SEBI has also vide a Circular dated 8 January 2013 (Circular) issued operating guidelines for Designated Depository Participants who would grant registration to Foreign Portfolio Investors.

Provident Fund Interest Rate rising to 8.75% for Fin. 2013-14.

Retirement fund body EPFO on Monday decided to increase the rate of interest on Provident Fund deposits to 8.75% for 2013-14, a move that will benefit about 5 crore subscribers.

"We have decided to recommend to the government 8.75% rate of interest for 2013-14 to its subscribers," labour minister Oscar Fernandes told reporters after a meeting of the EPFO trustees.

Advantage of Converting Pvt Limited into LLP

Transfer of assets and liabilities on conversion of a Private Limited Company into a Limited Liability Partnership (LLP) does not attract any capital gain tax on such transfer. Other key benefits upon conversion are mentioned below:
Tax Implication

important directives and clarifications on the manner in which the Safe Harbour Rules are meant to be implemented.

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.

“In cases where an assessee has not opted for safe harbour or the option has not been found to be valid and a regular transfer pricing audit is considered necessary, such transfer pricing audit will be carried out without regard to the safe harbour rates or margins,” said a CBDT letter to chief commissioners.

Amendment in CENVAT Credit Rules, 2004, requiring reversal of CENVAT credit on input services used in the manufacture of goods, on which duty has been remitted

We are pleased to release a Tax Alert which gives an update on the recent amendment in the CENVAT Credit Rules, 2004 vide Notification No. 1/2014-Central Excise (N.T.) dated 8 January 2014, issued by the Ministry of Finance,

The amendment in Rule 3(5C) of the CENVAT Credit Rules, 2004 requires the reversal of CENVAT credit on input services used in the manufacture of goods, on which duty has been remitted under Rule 21 of the Central Excise Rules, 2002, due to loss or destruction of such goods.

High Court irked at in-fighting between the Bench and Bar of the ITAT Lucknow Bench and advises restraint, dignity and decorum to be maintained

Pradeep Kumar Kapoor vs. ITAT (Allahabad High Court)

Two ARs, Mr. S. K. Garg, Advocate and Mr. Pradeep Kumar Kapoor, CA, evidently had a running feud with Mr. Sunil Kumar Yadav, Judicial Member, Lucknow Bench. Apparantly, in the case of Sumit Kumar Rastogi, Garg had made a representation to the President of the ITAT containing “contemptuous

Managerial Remuneration as per the Companies Act, 1956

Definition:

The term remuneration covers the following types of expenditure incurred by the company for its Director or his family –

• Rent free accommodation;
• Any benefit or amenity in respect of accommodation free of charge;
• Any other benefit or amenity free of charge at a concessional rate;
• Any personal obligation; and
• Insurance on the life of, or to provide any pension, annuity or gratuity for, any of the director or his /her spouse or child.

Some common myths and misconceptions about personal tax:

Gifts received: Gifts received from specified relatives are exempt from income tax, and there is no upper limit also. Similarly, gifts of any amount and from anyone received during your marriage are totally tax-free. Similar is the case with the gifts received under a Will or by way of an inheritance, or from a registered charitable or education organisation or in contemplation of death of the donor. Also, in case an individual

Whether when pipeline is owned by third party, connectivity charges paid for transportation of gas are to be construed as carriage of goods and are thus covered by provisions of Sec 194C - YES: ITAT

THE issues before the bench are - Whether acquiring the right of displaying advertisement at hoarding site and making payment to hoarding site owners involve lease, sub-lease or tenancy arrangement; Whether deduction of TDS u/s 194-I is applicable in such case; Whether connectivity charges paid as per the agreement for using of pipeline connection for gas transportation, is in the nature of carriage of goods and covered u/s.194C; Whether it would be considered differently, in case the pipeline was owned by a third party and was opened for

Employees’ PF/ ESI Contribution is not covered by s. 43B & is only allowable as a deduction u/s 36(1)(va) if paid by the “due date” prescribed therein

CIT vs. Gujarat State Road Transport Corp (Gujarat High Court)

In AY 2005-06 the assessee collected Rs.51 crore from its employees as their contribution to the provident fund but deposited an amount of Rs.21 crore with the provident fund trust within the time allowed under the Provident Fund Act. The shortfall was deposited with the PF trust before the due date for

Article 7 of DTAA: Even in a composite contract, Dept cannot assess off-shore profits without showing how it is attributable to the permanent establishment

Samsung Heavy Industries Co. Ltd. vs. DIT (Uttarakhand High Court)

The assessee entered into a consortium contract with ONGC and L&T to carry the work of surveys, design, engineering, procurement, etc. It opened a project office in India for co-ordination and execution of the project. The assessee claimed that a portion of the work was carried out inside India and a portion was carried out outside India. It claimed that it had suffered a loss on

Notices under the Indian Income Tax Act 1961

In a layman’s term any communication received from the Income Tax Department is commonly referred to as “Notice”. It is a word that sometimes creates nervousness and fear among the taxpayers. With the government focusing on increasing compliance and zero in on the tax evaders, it is highly likely that salaried classes will be receiving notices, intimation under various section of the Income Tax Act, 1961.
Mentioned below are various notices, intimations that are received by salaried individuals:

How to Download ITR-V who are not audited u/s 44AB ?

For Income Tax Returns e-Filed without using Digital Signature Certificate (DSC), submission of ITR-V is mandatory.

Amendment in CENVAT Credit Rules, 2004, requiring reversal of CENVAT credit on input services used in the manufacture of goods, on which duty has been remitted

This Tax Alert gives an update on the recent amendment in the CENVAT Credit Rules, 2004 vide Notification No. 1/2014-Central Excise (N.T.) dated 8 January 2014, issued by the Ministry of Finance,

The amendment in Rule 3(5C) of the CENVAT Credit Rules, 2004 requires the reversal of CENVAT credit on input services used in the manufacture of goods, on which duty has been remitted under Rule 21 of the Central Excise Rules, 2002, due to loss or destruction

Eight simple way to plan your tax – Salary Employee

You have got only a few more months to complete this financial year. Very soon you will get a call from your company to submit the proofs for tax saving investments. So why don’t you spend some time on organising your tax plan.
1. Proper Allocation of Annual compensation
Restructuring your salary with some additional components can reduce your tax liability. This restructuring doesn’t require any additional cash outflow. The following components can be efficiently used to reduce your income tax liability.

Taxation of future & options

The experience says that the common taxpayers are very confused about the taxability of income from futures & options or treatment of lossses on same. They also ask us, how to calculate turnover of this, do we need to get the books audited. Please read on to clear all your doubts……
The provision of the Income Tax Act, 1961 treates income from futures & options (F&O) as normal business income. Moreover, on trading in F&O turnover for tax audit u/s 44AB turnover in such types of transactions is the grossing up of the difference of all the trades entered, whether positive or negative. Premium received on sale of option is to be added. Difference on reverse trades is also to be considered.

PAN – Online / Offline Verification & Pan Verification Certificate

There are Two types of PAN Verification procedure-
1. Online and
2. Offline.

The Online PAN Verification can be verified by filling out the core details mentioned in the PAN Card. This facility can be used by the entities who receive copy of PAN application for any purpose. This facility can also be used by the PAN applicant to know their PAN. For government users and financial institutions online bulk PAN verification facility is also available. Kindly write to the DIT(S)-III, Directorate of Income-tax(Systems), E-2, ARA Center, Ground Floor, Jhandewalan Ext., New Delhi – 110055.

Brief Notes for TDS on Property u/s. 194 (IA).

Section 194(IA) has been inserted by Hon’ble Finance Minister Mr. P. Chidambaram while presenting the Budget 2013 and would come into force with effect from 1st June 2013.

The main motive behind such action is to curb the laundering of black money through sale of immovable property (other than rural agricultural land).

The section burdens the buyer of the property to deduct tax @ 1% of the amount paid or payable to the seller in case of value of transaction exceeding Rs.50,00,000/-.

Whether Sec 54F benefit is not available merely because assessee had initiated construction of house property before sale of shares - NO: Delhi HC

THE issue before the Bench is - Whether Sec 54F benefit is not available merely because assessee had initiated construction of house property before sale of shares. And the answer goes against the Revenue.

Facts of the case

How to Save Capital Gains Tax (LTCG) when Selling Land / Plot

Buying and Selling of Property, Plots, Flats, Land, Independent Houses, Floors or any other form of residential property is a frequent activity in present scenario. Especially with so much activity in the real estate sector, it has been considered to have given good returns. The attractive home loan schemes have made it even more lucrative. However, the transactions are often subject to complicated income tax structure. Here is one case that may solve some of your queries.

Do's & Don't while e-Filing of ITR-I to VII.

e-Filing - Do's & Don't

Impact of Errors made while filing returns

• Returns can be classified as defective u/s 139 (9) and in some scenarios the return can be declared in valid / Non Est. ITD is not introducing this concept to cover certain types of errors in order to prevent future grievances
• Computation Errors - In electronic filing it has been noticed that most of the errors are due to data errors as filed by the assessee This includes non filling of key schedules, wrong details etc resulting in rectification requests etc which delay closure of processing
• Inability to pay refunds to the assessee

Whether while granting administrative approval u/s 158BG CIT is obliged to give a hearing opportunity to assessee - NO: HC

THE issues before the Bench are - Whether while granting administrative approval u/s 158BG CIT is obliged to give a hearing opportunity to assessee and Whether in case an assessee follows cash basis of accounting, interest income must be taken on receipt basis only. And the verdict partly goes in favour of Revenue.

Facts of the case

Both the assessees are doctors, carrying on medical profession. A search u/s 132 was carried out at the residence and the business premises of the assessee. During search, certain

India, Korea agree to expeditiously revise DTAA provisions; Indian Customs may notify Korean counterpart for speedy clearance of Indian goods

AT the 4th India-Korea Finance Ministerial Meeting here today, the Indian Finance Minister, Mr P Chidambaram, said that India and Korea share a common vision towards building an equitable and just politico-economic international order. Mr Chidamabaram said that relations between India and Korea are based on strong historical ties, shared cultural heritage, commitment to democracy and a mutual desire to establish and strengthen long-term comprehensive strategic partnership.

At the meeting, both sides agreed to make an effort to conclude the revision of the Korea-India

S. 234E: High Court grants interim stay on levy of fee for failure to file TDS statement

Namath Mapila LP School vs. UOI (Kerala High Court)

S. 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day’s delay in filing the statement of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). The constitutional validity of s. 234E has been challenged in the Kerala High Court. Vide an interim order dated 18.12.2013, the High Court has admitted the Petition and granted a stay of proceedings for a period of two months. 

Section 35-D - Amortisation of Preliminary Expenses

Where an Indian Company or non- corporate resident assessee incurs any expenses at the time of commencement of business or on extension of existing undertaking or setting up of new unit, then deduction is allowed in respect of such preliminary expenditure.

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

With reference to circular issued by Income Tax Department No. 8/2013 dated 08.10.2013, deduction of House Loan Interest claiming condition u/s. 24(b) are as follows:

Whether when assessee converts premises into gym by installing necessary equipments, even then its income is to be treated as rental income from house property - NO: ITAT

THE issues before the Bench are - Whether rental income can be considered as business income when this was not a case of simple letting out of a premises but the assessee had developed and prepared the premises as a fitness centre/gymnasium by installing the all requisite equipments, machines and other facilities and Whether disallowance of Municipal taxes by invoking section 43B is justified when the amount has been paid on or before the due date of filing the return of income u/s 139. And the verdict goes against the Revenue.

Facts of the case

Whether when assessee receives interest on additional compensation in lieu of his land acquired by the State after Supreme Court decision, interest is to be charged retrospectively - NO: HC

THE issue before the Bench is - Whether when the assessee receives interest on additional compensation in lieu of his land acquired by the State after the Supreme Court decision, interest is to be charged retrospectively. And the answer goes in favour of the assessee.

Facts of the case

upholding the levy of penalty

the Mumbai Income-tax Appellate Tribunal (‘ITAT’) has recently issued an important ruling in the case of Asia Pacific Performance SICAV (‘APP’) upholding the levy of penalty for concealment of income and furnishing of inaccurate particulars because the tax payer wrongly set-off its exempt long-term capital losses (‘LTCL’) against taxable long-term capital gains (‘LTCG’).

Important Transfer Pricing Controversy Referred To Special Bench

Vide order dated 06.01.2014 the Special Bench in the case of Maersk Global Service Centres (India) Pvt. Ltd has directed that the questions referred to it be reframed as follows:

(1) Whether for the purpose of determining arm’s length price of international transactions of the assessee-company, providing back office support services to their overseas associated enterprises, companies performing KPO functions should be considered as comparable?
(2) Whether, in the facts of the assessee’s case, companies earning abnormally high profit margin should be included in the list of comparable cases for the purpose of determining the arm’s length price of an international transactions?

The matter is placed for hearing on 8.1.2014. It has also been directed that assessees desiring to intervene in the matter may contact the Registry of the ITAT, Mumbai. 

RBI Notification with respect to put and call options

We are pleased to release an alert which summarizes the notification issued by the Reserve Bank of India (RBI) with respect to “put and call options” associated with the Equity shares and Compulsorily Convertible Debentures treated as instruments of Foreign Direct Investments (FDI) in India. This notification is in line with the notification issued by the Securities Exchange Board of India (SEBI) on 3 October 2013 whereby it legitimised the instruments issued with “put and call options”.It is a positive step to streamline the SEBI notification, the intent as captured in the Companies Act 1956 and the Foreign Exchange Management Act 1999 along with the FDI policy.

THANKS FOR 8 LAKHS HITS

SUMMARY OF FINANCIAL ACCOUNTING RATIO

 

PROFITABILITY RATIO:

Financial Ratio	Formula	Measurements
Return on Total Assets	Operating profit before income tax + interest expense/ Average total assets	Measures rate of return earned through operating total assets provided by both creditors and owners
Return on ordinary shareholders’ equity	Operating profit & extraordinary items after income tax minus Preference dividends / Average ordinary shareholders’ equity	Measures rate of return earned on assets provided by owners
Gross Profit Margin	Gross Profit / Net Sales	Profitability of trading and mark-up
Profit Margin	Operating profit after income tax / Net Sales Revenue	Measures net profitability of each dollar of sales