Wednesday, 30 April 2014

India Taxes- Due Date Alert for the month May 2014

Sr No
Due Date
Related to
Compliance to be made
Service Tax
Payment of Service Tax for the Month of April 2014.
(Income Tax)
· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of April 2014.
· Deposit TDS from Salaries deducted during the month of April 2014
• Deposit TCS for collections made under section 206C including sale of scrap during the month of May April, if any
• Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of April 2014, if any
(Income Tax)
Furnish quarterly statement of tax deducted at source (TDS) and tax collected at source (TCS) for the quarter ended December 2011 in Form 24Q / 26Q / 27Q / 27EQ
Payment of VAT & filing of monthly return for the month of April 2014
Filing of Softex Form for the month ended April 2014
(Income Tax)
Issue of TDS Certificate - Non Salary for Q4 FY and Salary in FY 2013-14

Tax on Pension

Pension is nothing but a regular stipend given to an ex-employee in recognition of the service he has put in. The pension amount is fixed in advance by the employee and the employer. The pension amount received by a retired employee in India is treated as an income and so the norms of taxation are applied. There are however, different rules for different categories of people receiving different amounts of pension. Some of these are exempted from Income Tax, but most of them do not enjoy any exemptions. The provisions of the

Whether, for purpose of block assessment, it is necessary that name of assessee must figure in warrant of authorisation u/s 132 - YES: HC

THE issues before the Bench are - Whether Search as per the provisions of Sec 132 is always person-specific and not premise-specific; Whether, for the purpose of block assessment, it is necessary that the name of the assessee must figure in the warrant of authorisation u/s 132 and Whether mere presence of the assessee's name in the panchnama enables the Revenue to initiate block assessment. And the verdict goes against the assessee.

Tax Planning for Divorece

Having a fair and complete knowledge about your finances is the key to save you from a financial disaster. What you should aim is to get a fair and equitable settlement in divorce. For this, you need to have a strong legal support and stable mindset for quantifying and visualizing the proposed settlement. You need to assess your current assets and evaluate how much you need to spend on fighting to get them.

VAT not leviable on 40% of the restaurant bill, which is subject to service tax

Tax Alert which gives an update on the recent decision of the Uttarakhand High Court, in the case of Valley Hotels & Resorts vs. The Commissioner, Commercial Tax, Dehradun [TS-129-HC2014 (UTT)-VAT].

The High Court allowed the revision application filed by the assessee and held that, where the element of service has been declared and brought to tax vide notification dated 6 June 2012, by which Service tax is levied on 40% of the billed value in restaurant, no VAT can be imposed thereon.

The issue of double taxation seems to have been addressed and it has been held that VAT cannot be imposed on that portion of the restaurant bill, which has already suffered Service tax

S. 234E: High Court grants ad-interim stay against operation of notices levying fee for failure to file TDS statement

Rashmikant Kundalia vs. UOI (Bombay 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). A Writ Petition to challenge the validity of s. 234E has been filed in the Bombay High Court. The Petition claims that assessees who are deducting tax

Tuesday, 29 April 2014

Exposure Draft of the Accounting Standard for Local Bodies (ASLB) 3 on 'Accounting Policies, Changes in Accounting Estimates and Errors' for public comments.

As you would kindly be aware that the Institute of Chartered Accountants of India (ICAI), in the year 2005, constituted the Committee on Accounting Standards for Local Bodies (CASLB) with the primary objective of formulation of the Accounting Standards for Local Bodies (ASLBs). The CASLB has already issued 'Preface to the Accounting Standards for Local Bodies' which sets out the objectives and operating procedures of the Committee and explains the scope and authority of the Accounting Standards for Local Bodies. So far, the Committee has issued seven ASLBs which are available on the website of the ICAI, i.e., Apart from these Standards ASLB 31, 'Intangible Assets' is under consideration of Council and likely to be issued shortly.


Association for Democratic Reforms and another vs. Union of India and others is a very important decision not only because it came at the eve of Indian General Elections, not only because two powerful parties Indian National Congress and Bhartiya Janata Party are accused; but also because it comes on the eve of Indian transition on companies law. The decision is a result of a writ Petition and we can find original decision here. Before going to the decision, I refer relevant legal provisions here.
Section 4 of the Foreign Contribution (Regulation) Act, 1976 imposes prohibition on certain classes of

New Fees and Form under companies Act.

The e-filings have finally resumed and the traffic in MCA website speaks for itself. The e-filings were supposed to resume from 8 AM today, i.e. 28th April, 2014, which was postponed to 10 AM in order to cope up with the heavy traffic. The release of e-forms have been quiet successful and working in this environment will require an extensive knowledge of the form terminology. There has been a generous introduction of new forms and increase in Government fees by MCA.
The forms have been re-modeled and renamed to meet the new nomenclature of MCA forms. In order to

Sec-263 a thorough study!!

When cannot section 263 be evoked?

Section 263 cannot be evoked in the following cases:-

 An assessment order can not be re-opened if there is no jurisdictional error in the order.
 The order of the AO can not also be revised if it has been passed after application of mind.
 Merely because the opinion of the CIT is different from that of AO this section cannot be resorted to.

When can section 263 be evoked?

Whether when assessee makes a payment of Rs 20,000/- and above by crossed cheque but fails to add the word a/c payee only, such expenditure warrants disallowance u/s 40A(3)(a) - YES: HC

THE issues before the Bench are - Whether when the assessee makes a payment of Rs 20,000/- and above by crossed cheque but fails to add the word a/c payee only, such expenditure warrants disallowance u/s 40A(3)(a) and Whether the banks are under directive from the RBI not to deposit the cheque amount in favour of any person other than the drawee of the cheque. And the answers go against the assessee.
Facts of the case

Entire law on formation of AOP & taxability of off-shore supply & services explained

Linde A. G. vs. DDIT (Delhi High Court)

(d) As regards taxability, the principle of apportionment of income on the basis of territorial nexus is now well accepted. Explanation 1(a) to section 9(1)(i) of the Act also specifies that only that part of income which is attributable to operations in India would be deemed to accrue or arise in India. It necessarily follows that in cases where a contract entails only a part of the operations to be carried on in India, the assessee would not be liable for the part of income that arises from operations conducted outside India. In

If it is held by the dept that no income arose to the recipient then notices to payer for TDS default u/s 201 & s. 40(a)(i) disallowance are bad

Samsung India Electronics Pvt. Ltd vs. DDIT (Delhi High Court)

(b) Thus the basis of both the notices (section 148 and 201) has been knocked out of existence by the DRP’s order in the reassessment proceedings of SEC for the same assessment year. On the date on which notices were issued to the petitioner under Sections 148 and 201(1)/(1A), there was an uncontested finding by the revenue authorities (i.e., the DRP) in the case of SEC that SEC cannot be taxed in respect of the sales made in India through

Monday, 28 April 2014

Excise duty paid on Inputs and Service Tax paid on Input services used in the construction of immovable property can be taken and utilized for discharging ST liability on the renting of such immovable property

Facts of case:
The appellant, M/s. Oberoi Mall Limited, Goregaon, Mumbai are engaged in rendering the taxable service of ‘renting of immovable property' and they discharge service tax liability on these services. They availed CENVAT credit of various services used for construction of the said mall and utilized the credit for payment of service tax on renting of immovable property services. The CBEC vide a Circular No. 98/1/2007-S.T., dated 04/01/2008


S. 80JJAA --Industrial undertaking--Special deduction--Deduction in respect of employment of new workmen--Assessee engaged in development and manufacture of software covered within definition of industrial undertaking--Payments to workmen not employed in supervisory capacity--Assessee entitled to deduction-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . .31 ITR  348 (ITAT)

Latest RPU 3.9 Ver. for e-TDS/TCS Return Preparation & Correction w.e.f. 26.04.2014

NSDL has developed software called e-TDS/TCS Return Preparation Utility (RPU) to facilitate preparation of e-TDS/ TCS returns. This is a freely downloadable VB based utility. Separate utilities are available for preparation of each type of return.

Latest FVU version 4.2 and FVU 2.138 released for e-TDS return Q-4 applicable w.e.f. 26.04.2014

TIN-NSDL has provided latest FVU ver. 4.2 & 2.138 w.e.f. 26.04.2014 with new features. This new version contains NIL challans in TDS/TCS Statements, Relaxed for Form 24Q, Q4. As you may aware with the old features of FVU 4.1 ver. Salaried Deductors is deduct TDS or Non-Deduct TDS in amy of first three Quarter i.e. Q1, Q2, Q3 for the Financial Year 2013-14 by any way but Q4 is madatory e-TDS return even if no TDS has been deducted from any Employee in Q4.

How to avoid default in TDS Return ?

One can avoid defaults in the TDS statements, by way of adherence to the following basic principles:
  • Timely Payment of total taxes deducted/ collected
  • Correct Reporting with regard to PANs, Tax Rate and Challans
  • Complete Reporting for all Deductees
  • Timely filing of TDS Statements

Whether any disallowance u/s 40A(2) is warranted even assessee proves higher payment of salary to one of its key employees running critical business operations - NO: HC

THE issues before the Bench are - Whether any disallowance u/s 40A(2) is warranted even the assessee proves the higher payment of salary to one of its key employees running critical business operations; Whether such disallowance can be made even if it is pointed out that the individual assessee has paid higher taxes on such income in its individual return of income; Whether payments made to sub contractors by way of account payee cheques, can be disallowed merely on the basis that the amount is excessive and Whether amount disallowed after considering all the material facts and circumstances by the Tribunal, can be altered by the High

Even a solitary transaction of redemption of (non-tradeable) mutual fund units amounts to a business activity for an assessee dealing in securities

CIT vs. Pooja Investment Pvt. Ltd (P&H High Court)

Merely because deposits in mutual funds are not traded in the nature of sale and purchase of equity shares and such transactions are different in effect and consequences is no ground to treat those differently. Frequency of dealings in deposits of mutual funds with the strategy of firstly investing in tenurial plans and then getting redemption within the same year of deposit and at times resulting in huge profits while at other times in loss, has been usual business activity of the assessee. Such before term redemption, is done in the usual

Not keeping separate books together with frequent transactions means that gains from shares has to be assessed as business profits instead of as STCG

CIT vs. M/s D&M Components Ltd (Delhi High Court)

The AO and CIT(A) held that separate books were not used. Amounts were freely transferred from the profits gained to business and vice-versa. However, perhaps the single-most telling circumstance is the volume, frequency, duration (of holding) of the transactions. Apart from the above significant aspect, the AO and the CIT (A) observed that the assessee had been purchasing and selling a large number of shares of a few companies. It was also held that the transactions involved large or substantial sums of money. Whenever any share is purchased with the intention of investment, it cannot

VAT on BOT contracts - A view point

The concept of Public-Private partnership in  infrastructural  development has given rise to the concepts of BOT contracts. BOT contract means Build-Operatre-Transfer, i.e. the contractor is given a contract to build some infrastructure out of his own funds and thereafter he is given right to operate such infrastructure and recover his cost of funds and profits therefrom for a certain period and thereafter the  infrastructure is transferred to the Government.

Saturday, 26 April 2014

ST – Commercial Training or Coaching Centre

M/s. Opportunities (India) Business Solutions Pvt. Ltd Vs CST (2014-TIOL-636-CESTAT-MUM)

Show-cause notices were issued to the appellants raising demand of service tax on the ground that the appellants are providing commercial training and coaching services. The appellants M/s. Opportunities (India) Business Solutions Pvt. Ltd. paid service tax as per the direction of the Revenue. Subsequently, they filed refund claim on the ground that the appellants are not providing any taxable service. In appeal, the demand was confirmed on the ground that the appellants are providing commercial training & coaching services. The

CPC(TDS) communication regarding Short Deduction defaults in 24Q FY 2012-13 TDS Statements

Dear Deductor,

CPC(TDS) has observed from its records that the 24Q TDS statements submitted by you for Financial Year 2012 -13, have Defaults on account of Short Deduction.

This may be noted that Annexure II of Q4 TDS statement must be completed with correct and complete detailsto avoid above Default. It is further requested to refer to Circular 8dated October 10, 2013 in the context of Tax Deduction at Source on Salary Income for Computation of Income and Manner of deductionof tax at source.

Deduction u/s 80E is Unlimited

There is no limit prescribed under the I T Act. However, Deduction is limited to Gross Total Income .Section 80E is given below and give attention to word ANY in RED
In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education.
(2) The deduction specified in sub-section (1) shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to in sub-section (1) is paid by the assessee in full, whichever is earlier

S. 40A(3): There is a difference between “crossed cheque” and “account payee cheque”. Payment by crossed cheque attracts s. 40A(3) disallowance

Rajmoti Industries vs. ACIT (Gujarat High Court)

The expression earlier used in s. 40A(3)(a) was a “crossed cheque or a crossed bank draft”. This was amended by the legislature to be replaced by the expression “an account payee cheque or account payee bank draft”. This was done in the background of the experience that even crossed cheques were being endorsed in favour of a person other than the drawee making it difficult to trace the constituent of the money. To plug this possible loophole the requirement of section 40A(3) was made more stringent. If we accept the contention of counsel for the assessee that there was no distinction between a crossed cheque and an account payee cheque, we would be obliterating this amendment brought in the statute with specific purpose in mind. Accordingly, payment by a crossed cheque is subject to disallowance u/s 40A(3) (Anupam Tele Services vs. ITO distinguished)

Concept of “manufacture” explained. Non-claiming of s. 80-IB deduction in return is no bar for claiming it before CIT(A)

CIT vs. Mitesh Impex (Gujarat High Court)

Though the assessee did not raise a claim in the return for deduction u/s 80IB & 80HHC, it was entitled to raise the claim before the CIT(A) for the first time. If a claim though available in law is not made either inadvertently or on account of erroneous belief of complex legal position, such claim cannot be shut out for all times to come, merely because it is raised for the first time before the appellate authority without resorting to revising the return before the AO. Courts have taken a pragmatic view and not a technical one as to what is required to be determined in taxable income. In that sense assessment proceedings are not adversarial in nature. The decision in Goetze (India) Ltd. vs. CIT (SC)is confined to the powers of the AO and accepting a claim without revised return and does not affect the power of the CIT(A) or the Tribunal to entertain a new ground or a legal contention

Retention money received, after TDS, but subject to bank guarantee, is not chargeable to tax as income till all conditions are satisfied

Amarshiv Construction Pvt. Ltd vs. DCIT (Gujarat High Court)

Mere receipt of income is not the sole test of chargeability. Receipt of income refers to the first occasion when the recipient gets the money under his own control. The words “accrue” or “arises” do not mean actual receipt of profits or gains. Both these words are used in contradistinction to the word “receive” and include a right to receive. Thus, if an assessee acquires a right to receive the income, the income can be said to accrue to him though it may be received later on

All about Long Term Capital Gain on Sale of Any Residential House Property.

Tax on Long Term Capital Gain (LTCG) on sale of any residential house property can be saved (U/s 54 of the Income Tax Act-1961) if the LTCG is invested within a prescribed time for purchase/ construction of a house property. The exemption u/s 54 would be available even if the taxpayer already owns another residential house property (i.e., exemption would be admissible even if second house property is purchased). Another option to save LTCG tax could be by investing the amount of LTCG within a period of 6 months from the date of transfer in the specified bonds issued by Rural Electrical Corporation (REC) or National Highway Authority of India (NHAI).

No TDS on Payment made by Indian Branch to Foreign branch for use of software, if there is no transfer of right

Facts of the Case :
The assessee was a bank incorporated in Belgium and was a tax resident of Belgium. The assessee was operating through branch in India. The assessee had acquired its main banking application software from an Indian software company. Later on, when the branch was setup in India, the software license was amended to allow the branch to use same software by making it accessible through the server located at Belgium.

CBDT clarifies on tax treatment of expenditure for developing infrastructure facility under BOT arrangement

This Tax Alert summarizes a recent Circular issued by the Indian tax administrative authority, the Central Board of Direct Taxes (CBDT), on the treatment of expenditure incurred by a taxpayer for developing infrastructure facility under a Build-Operate-Transfer (BOT) arrangement. The Circular clarifies that the taxpayer is not entitled to claim depreciation on such expenditure as the taxpayer is not the owner of such facility. Instead, the expenditure incurred may be amortized evenly over the period of BOT arrangement, and claimed as allowable expenditure under the Indian Tax Laws (ITL).
A circular issued by the CBDT is only binding on the Tax Authority and does not bind the taxpayers nor the Courts/Tribunal.
The view espoused by the CBDT in the present Circular is contrary to certain Indian rulings which have held that a right to collect tolls is a depreciable asset under the ITL.Further, under the proposed Direct Taxes Code, 2013 (DTC), any infrastructure facility

CPC(TDS) communication regarding Short Deduction defaults in TDS Statements

Date of communication : 25/04/2014

Dear Deductor,

CPC(TDS) feels glad to bring to you easy tips to avoid Defaults in your TDS statements, by way of adherence to the following basic principles:

Friday, 25 April 2014


Shipping business of non-residents.

Applicable section – Section 172
Shipping business of non-residents.
172.     (1) The provisions of this section shall, notwithstanding anything contained in the other provisions of this Act, apply for the purpose of the levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India .
(2) Where such a ship carries passengers, livestock, mail or goods shipped at a port in India, seven

What can be maximum saving on tax by some one earning salary above Rs 7 lacs?

Friend , first of all , you should know that salaried class has very few options when it comes to save on tax. As you have asked for saving tax by investing in ASSETS , maximum saving of tax ,generally can be of Rs 1 lakh under 80C,80CCC & 80 CCD, Rs. 20,000/- under section 80CCF  and however in case of investment on house property it can go upto Rs2.5 Lakh.

No need to PAN No. register to view Tax Credit Statement or Form 26AS Statement.

The TRACES has provided new advance features, to view 26AS Statement or Tax Credit Statement for Asstt. Year 2014-15 without register PAN No. With this features, Taxpayee can view their Tax Credit or For 26AS Statement by the providing of mandatory field i.e. PAN of Deductee*, TAN of Deductor*, Financial Year*, Quarter* and Type of Return* etc.

Updated Form 16 Software for Employee for Asstt. Year 2014-15 Free Download.

CBDT has recently changed the Format of Form-16 and this New format of form 16 have in 2(two) Parts, One is Part A which is mandatory to download from the Income Tax TRACES Portal and another is Part B which must be prepare manually for employee by employer.

In the Part A of Form 16 have the details of Tax deduction from the source and deposited in to the Central Govt and in the Part of Form 16 Part B where the details of employees Salary. Most of the concerned have not known about this new amended of CBDT.

On the basis of above amendment by CBDT this is the updated version for Tax Calculation, "Form-16", Computation of Income Tax, Month-wise Salary Statement etc. for the Asstt. Year 2014-15.

Facility of this software:

This utility is very easy to use for Calculation of Income Tax, Month-wise Salary Statement and Form 16 with Annexure "A" and "B" etc. in new amended format. All Salaried Employee can maintain their personal data i.e. under Chapter -VIA Deductions and other applicable Deduction like as House Loan Interest, HRA Exemption, Income from Other Source etc.

This utility provide another facility regarding Income Tax Deductions i.e. u/s. 80G, 80E, 80D as well as u/s. 89(i) it Calculate accurate Income Tax and surcharge there on. It suggest to Salaried Employee (Taxpayee) whether he is Tax payable or Refundable.

This Software is based on Income Tax circular dated 08.10.2013 issued by Income Tax Department for Assessment Year 2014-15.

Physical Requirements:
  • OS required Windows-2000, XP, Vista, Windows-7, Windows-8 etc.
  • MS Office-7 or Above Version is required.
  • Printing Facility Provides on Inkjet, Ledger Printer and other printers.
  • Required Standard A4 Size Paper Sheets.
  • Costs of Rs. 1 lakh levied on dept for “gross abuse of process of Court“. Later revoked on assurance that judicial orders would be abided

    CIT vs. Kisan Ratilal Choksey Share & Securities (Bombay High Court)

    It is unfortunate that the Revenue insists in arguing Appeals in this manner and for subsequent Assessment Years. The Revenue ought to have been fair and brought to the notice of this Court the fact that its Appeal challenging the very findings and conclusions for prior Assessment Years has been dismissed by this Court on merits. The reasons assigned ought to have been pointed out to us and thereafter, any explanation should have been offered for admission of this Appeal … It is a gross abuse of the process of this Court. It is dismissed with costs quantified at Rs.1,00,000/ (Rupees One lakh). Costs be paid to the assessee within 4(four) weeks from today

    Dept given “last opportunity” and warned of “heavy costs” for wasting judicial time by filing appeal on covered matters

    CIT vs. Kirloskar Oil Engines Ltd (Bombay High Court)

    We are afraid that if the Revenue persists with such stand and as has been turned down repeatedly, that would defeat the very object and purpose of the schemes and packages devised by the States. That would also result in frustrating the entrepreneurs and defeating the purpose of setting up new industries and particularly in backward areas. The Revenue, therefore, should bear in mind that in every such case and whenever the funds or receipts are from the schemes and packages devised by the State, it should note the object and purpose of the same. If that is of the nature specified in the judgments of this Court and equally that of the Hon’ble Supreme Court, then, the Revenue must act accordingly. We hope that this much is enough so as to dissuade the Revenue from bringing such matters repeatedly to this Court. Ordinarily and for wasting judicial time and which is precious, we would have imposed heavy costs on the Revenue while dismissing this Appeal, but we refrain from doing so by giving last opportunity to the Revenue

    Important CBDT Circular On Depreciation/ Amortisation Of Intangible Assets

    The CBDT has issued Circular No. 09/2014 dated 23.04.2014 in which it has dealt with the important issue of treatment of expenditure incurred for development of roads & highways in Build-Own-Transfer (BOT) agreements.
    The CBDT has expressed the view that as the assessee does not hold any rights in the project except recovery of toll fee to recoup the expenditure incurred, the assessee cannot be treated as the “owner” of the property and cannot be allowed depreciation u/s 32(1)(ii) of the Act.

    Whether when land is taken on lease for longer period against lumpsum payment and transfer is in perpetuity, such expenditure can still be construed as revenue in nature - NO: HC

    THE issue before the Bench is - Whether when a land is taken on lease for longer period against lumpsum payment and the transfer is in perpetuity, such expenditure can still be construed as revenue in nature. And the verdict goes against the assessee.
    Facts of the case

    Wednesday, 23 April 2014

    Decoding the income tax rules for NRIs

    Income tax rules applying to non-residents are slightly different from those for residents. When it comes to tax sops, investment options and TDS, they are less favourable. Read about some significant income tax aspects relating to NRIs.
    No differential tax slabs for non-residents
    For NRIs, income is the only differentiator in tax slabs. There are no special slabs based on gender, age etc like is the case for residents.

    How is an NRI’s foreign salary taxed?

    Many non-resident Indians (NRIs) want to keep their earnings in India, though they may be earning abroad. In case of an NRI, only income accruing in India or received in India or deemed to accrue in India is taxable in India, unlike in the case of a resident, whose worldwide income is taxable in India. Therefore, for an NRI who earns abroad, it is very important to ensure that her salary is not received directly in India, so that it is not taxable in India. Usually, one opens a bank account abroad in which the salary is first deposited before

    FAQ on Loss carried forward

    Everybody tries to earn profit, but sometime even best of effort produces losses. Income Tax Act has provisions to adjust the losses from one head to another , within own head and if losses still remain, facility of carry forward to specified years and adjusting in any future years . These provisions are contained in Chapter VI of the I T Act titled "Aggregation of Income And set off or carry forward and set off of losses" .

    Whether when assessee holds substantial shares in partnership firm and also company, any trade advance given by company to firm is to be treated as deemed dividend in hands of assessee - NO: ITAT

    THE issue before the Bench is - Whether when the assessee holds substantial shares in a partnership firm and also a company, any trade advance given by the company to the firm is to be treated as deemed dividend in the hands of the assessee u/s 2(22)(e). And the verdict goes against the Revenue.
    Facts of the case

    Tuesday, 22 April 2014

    Reimbursable expenses not in the nature of remuneration/commission cannot form part of gross amount for clearing and forwarding agent's services

    2014 (33) STR 137 (Mad) Commissioner of S.T., Chennai vs. Sangamitra service Agency.

    The question put forth before the High Court was whether reimbursable expenses such as freight, labour,   electricity,   telephone    etc.  received by the   assessee at actuals should not be added to the  taxable   value  related to clearing and forwarding agent's services inview of Rule 6(8)  of   the  Service Tax  Rules,  1994,  providing   for  service   tax   levy  on gross  amount   of  remuneration.

    Frequently asked questions on tax deducted as source (TDS)

    Clarifications to issues some of the issues relating to TDS:
    1) Whether capitalization of interest payable attracts TDS U/S 194A?
    A) Yes, Capitalization of interest payable attracts the provisions of TDS.

    Seven Answers A Resident Must Know Before Buying Property From A Non Resident?

    Since the immovable property sale by non resident entails payment of sale consideration by the buyer who is resident Indian , tax has to be deducted at source and paid to government as per section 195 of the I T Act before paying the sum to the non resident seller of the property .
    1. Who is responsible for deduction of tax?
    As per section 195 of the I T Act , the person who is paying any sum to non resident , is responsible for deducting tax before making payment or crediting the payment in his accounts. So, the buyer of the property is responsible for deducting tax.

    5 Easy Steps for e-TDS/e-TCS Return Filing for Asstt. Year 2014-15

    "Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003". It is applicable to all deductors furnishing their TDS/TCS return in electronic form. As per this scheme:

    Whether when serious irregularities are pointed out in Special Audit Report and fact that assessee was also given opportunities to inspect records seized during Search but it did not avail it, penalty is inescapable consequence in such a case - YES: Delhi HC

    THE issue before the Bench is - Whether when serious irregularities are pointed out in Special Audit Report and the fact that the assessee was also given opportunities to inspect records seized during Search but it did not avail it, penalty is inescapable consequence in such a case. And the verdict goes in favour of Revenue.

    Monday, 21 April 2014


    3900TH POST 

    Taxation of real estate development transactions is a very complex subject. Income tax and Service tax issues concerning both the landowner and developer are discussed here.


    The issues can be categorized under the following heads

    1        To be taxed as capital gain or business income
    2        Point of accrual of income
    3        Amount of income
    4        Whether any exemptions are available

    Steps for filing Rectification request on receipt of demand notice due to mis-match of Income Tax

    The CBDT has noted that many taxpayers are committing mistakes while furnishing their tax credit claims in the return of income.

    Such mistakes include:


    Typically, taxpayers tend to focus on ways of reducing only their own tax burden. This is a normal thing to do, but far greater tax savings are possible when the family as a whole is considered as a tax paying unit.
    By combining the leeway offered by non-taxpaying members of a family, and judiciously sharing the family income and wealth among all its members, you will find additional ways of reducing your family's tax burden. Here is how:
    You may like to explore the following possibilities of sharing of income and wealth within the members of your family in order to lower the overall tax liability.

    Whether Delhi Sikh Gurudwara Committee has powers to create a Trust or Society to run a hospital, eligible for exemption u/s 12A - NO: Delhi HC

    IN a major setback to the Delhi Sikh Gurudwara Management Committee the Delhi High Court has held that since the Act, 1971 does not empower the Committee to create a new body like a Trust or a Society to run a hospital on its own or in joint venture, such a body cannot be allowed exemption u/s 12A.
    Facts of the case

    Mumbai Tribunal rules write-down of investment loss allowable if a “direct and proximate” nexus exists with a business

    This Tax Alert summarizes a recent ruling of the Mumbai Income Tax Appellate Tribunal (Tribunal) in the case of Tata Communications Ltd. (Taxpayer). The Taxpayer is in the business of providing international telecommunication services in India and holds investments in the shares of a company incorporated in the UK (UKCo). UKCo was set up to establish and operate a satellite-based mobile telecommunication system which would provide connectivity in any part of the world. However, due to inadequacy of

    Standard Operating Procedure (SOP) for verification and correction of demand by the AOs.

    U/s 139D of the Income-Tax Act, 1961 – Extension of Facility to Taxpayers in Filing of Return in Electronic Form to Verify if Demand In their Case is Due to Tax Credit Mismatch On Account of Incorrect Furnishing of Specified Particulars and Submit Rectification Requests With Correct Particulars Of TDS/Tax Claims for Correction of these Demands

    Saturday, 19 April 2014

    Registration on TRACES and Downloading of TDS Certificates mandatory

    As per the records of Centralized Processing Cell (TDS), the TDS Statements have been filed by many deductors for different quarters. However, many of them have not yet registered on TRACES ( In this regard, your attention is invited to the CBDT circulars 04/2013 dated

    Steps to create a HUF (Hindu Undivided Family)

    An assessee is always concerned about the tax structure in relation to any form of business organization be it a sole proprietorship, company or a firm. In this regard HUFs are also a form of business organization through which an assessee can save taxes. Creating HUF is the best way to save taxes by an assessee. Forming an HUF does not involve huge legal or procedural formalities to be followed.
    HUFs – Hindu Undivided Families are the form of organizations has separate legal entity for the purpose of tax assessment. The HUFs have been defined under the Hindu law as a family, which consists of male lineally

    CPC (TDS) brings to you the convenience of Online Corrections without Digital Signature

    Date of communication : 19/04/2014

    Dear Deductor,

    CPC (TDS) is glad to provide you with enhanced features, to further add to the convenience of online facility of filing corrections to the TDS Statements. With this feature, you will be able to submit Online Corrections at TRACES without even having a Digital Signature. Currently over 20,000 deductors are already using the online facility for corrections.


    Language is one of the most complex and important tools of International Trade. As in any complex and sophisticated business, small changes in wording can have a major impact on all aspects of a business agreement.
    Word definitions often differ from industry to industry. This is especially true of global trade. Where such fundamental phrases as "delivery" can have a far different meaning in the business than in the rest of the

    Friday, 18 April 2014

    The Department has to follow prescribed monetary limits for filing appeal in various Courts having regard to the Circulars in place which are binding on the department.

    2014(33) STR 124 (Guj) Commissioner of C. Ex. & coustoms vs. Stovec industries Ltd.

    The  respondents    were   engaged   in the  manufacture and export of Rotary Printing Machinery and part thereof aggrieved by the order of CESTAT with  respect to rejection of CENVAT Credit of around Rs. 2,02,472/-, the  department was  in appeal.  The appeal was filed on 5th  August, 2011. The  respondents

    Tax Planning for HRA

    S.10(13A): House rent allowance-Payment of rent to his wife –Entitled to exemption satisfied
    the condition of occupation and payment.
    Assessee's claim for exemption under section 10(13A) was disallowed on ground that rent was paid
    by assessee as tenant to his wife who was landlord and both were living together. Tribunal held that
    since house was owned by wife of assessee and assessee had paid rent to her through bank transfer

    entry, assessee had fulfilled twin requirements of section 10(13), i.e., occupation of house and
    payment of rent and, thus, would be entitled to exemption under section 10(13A).(AY.2009-10)
    Bajrang Prasad Ramdharani .v. ACIT(2013) 60 SOT 66 (URO) (Ahd.)(Trib.)

    The tax implications for NRIs buying property in India

    The falling rupee and the lull in the property market in many cities are attracting Indians settled abroad to consider property investments in India. Non-resident Indians are allowed to purchase residential or commercial property in India but not agricultural land / plantation property / farm house, says Amarpal S. Chadha, Tax Partner, EY. There are no upper limits for inward remittances and normal banking channels and NRE, NRO or FCNR accounts can be used.

    Wealth tax

    1 Introduction
    Wealth tax is not a very important or high revenue tax in view of various exemptions. Wealth tax is a socialistic tax. It is not on income but payable only because a person is wealthy.
    Wealth tax is payable on net wealth on ‘valuation date’. As per Section 2(q), valuation date is 31st March every year. It is payable by every individual, HUF and company. Tax rate is 1% on amount by which ‘net wealth’ exceeds Rs 15 lakhs. No surcharge or education cess is payable.
    No wealth-tax is chargeable in respect of net wealth of any company registered under section 25 of the Companies Act, 1956; any co-operative society; any social club; any political party; and a Mutual fund specified under section 10(23D) of the Income-tax Act [section 45]

    When should NRIs file India tax returns?

    July 31st, 2014  is the last date for filing your Indian income tax returns for the financial year 2013-2014. If you are a Non Resident Indian (NRI) and are trying to figure out if you need to file a tax return in India, this guide will help you.
    Should you file returns in India?

    Save Taxes by Investing In House Property/ Residential house

    A home loan facility provides many tax benefits to the individual assessee under the Income Tax Act, 1961 (“the act”). They can avail deduction for principal and interest components of a loan. Interest payable on capital borrowed for acquisition, construction or renovation of house property is eligible for deduction u/s 24(b) of the act.

    S. 234E: High Court issues notice on challenge to notices for levy of fee for failure to file TDS statement. Recovery of fee is subject to outcome of Petition

    Om Prakash Dhoot vs. UOI (Rajashthan 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). A Writ Petition to challenge the validity of s. 234E has been filed in the Jodhpur Bench of the Rajasthan High Court. Vide an order dated 15.04.2014 the High Court has directed that notice should be issued to the CBDT and the UOI as to why the Petition should not be accepted. It has also been held that in the meanwhile, if any recovery is made from the Petitioner, that shall be subject to the final decision of the Writ Petition.

    Thursday, 17 April 2014

    Taxation of Real Estate Transactions: A Treatise

    1.      Introduction

    Income-tax Act, 1961 (hereinafter referred to as ‘The Act’) is the only legislation of our country which contain reference to several Central Acts and numerous State Legislations. It becomes very essential therefore, to know the provisions of general law with special reference to Transfer of Property Act, Registration Act, Stamp Act, Development Control Regulations, etc. so as to understand the various taxation issues relating to Real Estate Transactions. Some of the very important taxation issues relating to Real Estate Transactions and implication of s. 50C of the income-tax Act are also discussed in this paper.

    Penalties, Prosecution & Interest Calculation on Late filing of TDS Return for Asstt. Year 2014-15.

    The various provisions of TDS as discussed in the preceding chapters are statutorily required to be strictly complied with. Any default in compliance can attract, levy of interest, penalty and in certain cases initiation of prosecution proceedings. In this chapter a brief discussion of the possible defaults and the consequential proceedings is being done.

    Whether assessee can claim deduction u/s 80HHC, ignoring the deduction already claimed and allowed u/s 80IA - NO: High Court

    On Appeal before the HC the Revenue Counsel submitted that once a deduction has been claimed, and allowed u/s 80IA, no deduction under Chapter VI under the heading `C. Deductions in respect of certain incomes' is to be allowed to that extent. The Counsel further submitted that Effect of sub-section (9) cannot be restricted to limiting the deduction to hundred per cent of the profit of the eligible business. It also submitted that Board's circular No. 772 dated 23rd December 1998 does not restrict the scope of sub-section (9) of section 80IA. The Assessee Counsel submitted that sole intention of the Legislature in introducing subsection (9) of section

    Wednesday, 16 April 2014

    Whether Sodexho meal vouchers promote sale of goods/services and are similar to credit/debit cards?

    Sodexho pass service India Pvt. Ltd. vs. Commissioner of service Tax, Mumbai (TIOL - 1838 2013 CESTAT – MUM)

    The Appellant is in the business of issuing meal/gifcoupon vouchers after entering into an agreemenwith affiliates such as restaurants, eating placesother establishments etcand issue such coupons to the customers, generally in corporate who in turn would distribute among its employees as fringe benefit. The Appellant received service charges from its affiliates as well as from customers whicthedepartment contended to levtaon and thus issued a show-cause notice. The department held a view that the assessee promoted the business of the affiliates inasmuch a user/employee had to purchase goods and services from one of the affiliates and cannot use these vouchers in any other establishments or for any other purposes and thus taxable under "Business Auxiliary Services". The assessee contended that their services were similar to debit/credit cards and therefore, such transactions were covered under "Business Support Service" and thus not-taxable prior to 01-05-2006. Further, they also contended that providing a list of affiliates would not amount to promotion or marketing of affiliates as it was merely a facilitating mechanism.

    observing the definition of "Business Auxiliary Services" effective from 10-09-2004, the Hon. Tribunal also upholding penalty held that the service charges received from affiliates were taxable and rejected the contentions of the assessee that the same were similar to credit/debit cards.