Saturday, 31 January 2015

Understanding Advance Ruling under Income tax with latest case laws

In order to provide the facility of ascertaining the Income-tax liability of a non-resident, to plan their Income-tax affairs well in advance and to avoid long drawn and expensive litigation, a scheme of Advance Rulings has been introduced under the Income-tax Act, 1961. Authority for Advance Rulings has been constituted. A non-resident or certain categories of resident can obtain binding rulings from the Authority on question of law or fact arising out of any transaction/proposed transactions which are relevant for the determination of his tax liability.

India Taxes- Due Date Alert for the month February 2015


Due Date
Related to
Compliance to be made
Service Tax
Payment of Service Tax for the Month of January 2015
(Income Tax)
·        Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of January 2015.
·        Deposit TDS from Salaries  deducted during the month of January 2015
•   Deposit TCS for collections made under section 206C including sale of scrap during the month of January 2015, if any
•    Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of January 2015, if any
Payment of VAT & filing of monthly return for the month of January 2015
Filing of Softex Form for the month ended January 013

Must read tax tips for salaried individuals for FY 14-15

The following set of questions and answers will help every salaried employee to get answers to their problems relating to taxation of Salary Income for the financial year 2014-15.

Question 1: Please explain us in detail the provisions of a big circular of Central Board of Direct Taxes specially which has been issued for the salaried employees.      
Answer 1 : Yes,  a very very exhaustive Circular running into more than sixty six pages has been issued by the Central Board of Direct Taxes vide Circular No. 17 of 2014 dated 10th December

Online application for IEC Registration Mandatory from 1st Feb’15

In Nov’14, vide public notice no. 76, DGFT had made e-application for IEC(Import Export Code) mandatory from 1st Jan’15 onwards.  However, in Jan’15, vide public notice no. 80, the same was kept in abeyance till further notified date.
Now, vide public notice no. 83, dated 30th Jan’15, it has been notified that the e-application for IEC

Friday, 30 January 2015

Social Security Agreement between India and Norway enters into force

Social Security Agreement between India and Norway enters into force

The Social Security Agreement between India and Norway enters into force on 1 January 2015.


India has signed Social Security Agreements with 18 countries. However, 13 of these Agreements have entered into force. Agreements between India and the following countries are now active:

Whether when except advances shown against current asset for fiscal, there is no other evidence to prove that land was purchased for purpose of business, sale of such land attracts tax on capital gains - YES: ITAT

THE issue before the Bench is - Whether when except the advances shown against the current asset for the fiscal, there is no other evidence to prove that land was purchased for purpose of business, sale of such land attracts tax on capital gains. YES is the answer.
Facts of the case

Is penalty leviable when service tax along with interest is paid before issuance of Show Cause Notice?

Shriram RPC  Ltd.  vs. CST, Chennai 2014  (35) STR  564 (Tri.  -  Chennai)
On being pointed out by departmental auditor, service tax along with interest was paid. However, Show Cause Notice  was  issued  imposing  penalties.  Since  tax  along with  interest  was  paid  before  issuance  of Show  Cause Notice,  the  appellant  claimed  entitlement  of  benefit  of 73(3) of

Thursday, 29 January 2015

Understanding Income Tax Settlement Commission with latest case laws:

Income Tax Settlement Commission is a premier Alternative Dispute Resolution (ADR) body in India. Its mandate is to resolve tax disputes in respect of Indian Income Tax & Wealth Tax Laws between the two disputing parties, Income Tax Department on one side and litigating tax payer on the other.

Limit and Qualifying Investment for Deductions under Section 80C for Asstt. Year 2015-16

Under this section, you can invest a maximum of Rs 1.50 lakh (1 Lakh upto AY 2014-15) and if you are in the highest tax bracket of 30%, you save a tax of Rs 45000. The various investment options under this section include:

Public Provident Fund (PPF):  Interest earned is fully exempt from tax without any limit. Annual contributions qualify for tax rebate under Section 80C of income tax. Contributions to PPF accounts of the spouse and children are also eligible for tax deduction. Balance in PPF account is not subject to attachment under any order or decree of court. But, Income Tax authorities can attach the account for recovering tax dues. The highest amount that can be deposited is 1,50,000. Tax bracket for PPF is EEE (i.e. Exempt,Exempt,Exempt). So contribution is exempted under 80C, Interest earned is tax exempted and withdrawal is also tax exempted.

Sukanya Samriddhi Account deposit eligible for Section 80C Deduction

Dated- 21st  January , 2015
In exercise of the powers conferred by clause (viii) of sub-section (2) of section 80C of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies the ‘Sukanya Samriddhi Account‘ for the purposes of the said clause.

SFIS, Any amendments in new Foreign Trade Policy 2014-19?

The new Foreign Trade Policy 2014-19 is likely to be declared by end October, 2014.

Served From India Scheme SFIS is one of the reward schemes under Foreign Trade Policy. SFIS is provided to exporters on the basis of export of certain goods or services to certain specified countries. Served From India Scheme under Foreign Trade Policy is operationalized in September, 2009.

Benefits under Served From India Scheme

We provide consultancy services in India and abroad. We wish to import certain equipment for our office in Mumbai from where we operate. The equipment would be used for our domestic as well as export business. Can we obtain benefits under the Served From India Scheme of the Foreign Trade Policy (FTP) for importing such equipment, even if the equipment is used for our domestic business.
Served From India Scheme is applicable for Indian service providers rendering services listed in Appendix 41 of Handbook of Procedures 2009-14 (we understand that consulting services are covered under this Appendix) and having free foreign exchange earning of at least R10 lakh in the current financial year. The eligible service providers are entitled to a Duty Credit Scrip equivalent to 10% of the free foreign exchange earned during current financial year which may be used for import/domestic procurement of eligible capital goods, including spares, office equipment, professional equipment, office furniture, etc. Further, the imports of goods may relate to any service sector business of the applicant. Accordingly, you should be entitled to avail of the benefit of the Duty Scrip under the SFIS scheme for import of office equipment provided such equipment is being used for your eligible service business (irrespective of whether domestic or exports). However, we would like to highlight that a meeting of the Policy Interpretation Committee of the Directorate General of Foreign Trade was held in December 2011 wherein it was decided that benefits of SFIS are not available to brands created outside India as the objective of the FTP is to encourage only Indian Brands and not incentivize any brand created outside India. Accordingly, even though the FTP itself does not specifically debar availability of SFIS to brands created outside India, the above interpretation is likely to be followed by the authorities to deny the SFIS Scrip to non-Indian brands.

Whether for purpose of computing depreciation, only written down value of transferred assets of demerged company as per books maintained shall constitute WDV of block of assets of resulting company - YES: ITAT

THE issue before the Bench is - Whether for the purpose of computing depreciation, only the written down value of the transferred assets of the demerged company as per the accounts maintained under the Act shall constitute the written down value of the block of assets of the resulting company. And the verdict favours the Revenue.
Facts of the case

Wednesday, 28 January 2015

Income-tax Settlement Commission – Consequences of abatement provisions and some remedies

Should There Be Cut In the Income Tax Rates?

The Income-tax Settlement Commission was set up, w.e.f. 1st April, 1976, under Chapter XIX-A of the Income-tax Act, 1961(‘the Act’) for the purpose of quick settlement of cases, by the Taxation Laws (Amendment) Act, 1975. This was done consequent upon the recommendations made by Wanchoo Committee in paras 2.32 and 2.33 of Chapter 2 of its Report titled “Black Money and Tax

Settlement Commission and penalty : A (biased?) perspective

THE Settlement Machinery is meant for providing a chance to the taxevader who wants to turn a new leaf, as recommended by the Direct Taxes Inquiry Committee, popularly known as the Wanchoo Committee. To achieve this objective, the Commission, so constituted, was empowered to grant partial or full waiver from imposition of penalty and interest and so also grant immunity from prosecution so as to lure the taxevader to “come clean”.  Almost six years since its inception, Settlement Commission for Customs & Central Excise has continued to serve this purpose of an alternative channel for resolution of disputes.

The Law on Taxability of Gifts under The Income-tax Act, 1961


It is always a pleasure to give gifts and more pleasure to receive it. Gifts means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money’s worth. Thus a gift does not have the character of income. Accordingly, in the hands of donee, ordinarily a gift does not come within the definition of “Income”. Generally gift receiving was not subject to income tax. But it was found that many individuals used the loopholes in this act, to launder money. Therefore, Ministry of Finance introduced a New

The Entire Law Relating To Hindu Undivided Family (HUF) Explained

1. What is Hindu Undivided Family
The expression “Hindu Undivided Family” has not defined under the Income Tax Act  or in any other statute.  When we dissect – essentials are (1) One should be Hindu, Jains, Sikhs and Buddhists are considered as Hindus  but not Muslims or Christians; (ii) There should be a family i.e group of persons – more than one and (iii) They should be undivided i.e living jointly and having commonness amongst  them.  All these three essentials are  cumulative.  It is a body consisting of persons lineally descended from a common ancestor and  include their wives and unmarried daughters, who  are living together, joint in food, estate and, worship (not now  necessary).  The daughter, on her marriage, ceases to be a member of her father’s HUF and becomes a member of her husband’s HUF. However, after  1-9-2005, daughter married or unmarried, is a co-parcener like a son.  

The Entire Law On The Making Of Wills Explained

Considerable confusion prevails in the minds of even educated persons and some time even amongst Tax Practitioners as to the law of Wills in India.
Every person who has assets and property and a family should make a Will whether he is young or aged. It is an erroneous impression in the minds of persons that one should make a Will only when he is aged and not in good health.

The Entire Law Relating To Family Settlements Explained

1. What is Family Settlement?

Halsbury’s Laws of England, Volume 18, Fourth Edition, deals with this subject at length.
Para 301 defines a family arrangement as follows :-
A family arrangement is an agreement between members of the same family, intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed right or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honour”.

In case of invoices paid after availing discounts, is CENVAT Credit available in full or proportionately?

Patel  Air Freight   vs. Commr. Of C.Ex. & Service Tax, Vadodara [2014  (35) STR  529 (Tri.  - Ahmd.)
The appellants had availed full CENVAT Credit on discounted invoices.   The   Revenue    contended    that CENVAT credit should be allowed proportionally. The appellants  relied on

Six types of disallowances for which A.O Can’t Charge interest u/s234B !

The disallowance on account of non deduction of tax at source is now very common form of disallowance by the assessing officer. Such disallowance is done u/s 40(a)(i) and 40(a)(ia)  of the I

Know the exact amount that is being earned as tax benefit

There are two aspects to a tax saving investment. First one deals with the amount that has to be invested in order to save some tax. Second it more important. It is the actual amount of tax saved in the whole process. This is significant because in most cases the figure would not be the same for all individuals and hence one would have to look at the entire situation and how this would be applicable to them. The working for this purpose thus becomes significant and here is a way in which a person

Highlights of IFRS in India.

  • Companies can comply with the new norms voluntarily from 1st April, 2015 but following classes of Companies will have to comply mandatorily with the New Ind AS from the prescribed dates, as mentioned below:

Whether for purpose of Sec 158BD, a satisfaction note is sine qua non and must be prepared by AO before he transmits records to other AO who has jurisdiction over such other person - YES: HC

THE issue before the Bench is - Whether for the purpose of Section 158BD, a satisfaction note is sine qua non and must be prepared by the AO before he transmits the records to the other AO who has jurisdiction over such other person. YES is the answer.
Facts of the case
The assessee is, Sh. Manoj Bansal whose premises was searched which led to seizure of various

Tuesday, 27 January 2015

Binding force of a Supreme Court Judgment:

·         1.Binding force of a Supreme Court Judgment:

·         2. The following propositions are well-settled with regard to the binding nature of a judgment of the Supreme Court: ¡ Under art 141 of the Constitution, „The law declared by the Supreme Court shall be binding on all courts within the territory of India‟. Once there is a pronouncement of the highest Court of the land, the same is binding on all courts, tribunals and all authorities in view of this article [CIT v. Vallabhdas 253 ITR 543 (Guj.)]. If the Supreme Court has construed the meaning of a section, then any decision to the contrary given by any other authority must be held to be erroneous and such error

Treatment of unexplained cash credit under Sec 68 of Income Tax Act : A tale of fallacies!

I would like to begin this piece with a simple poser to TIOL netizens - Name the Section in the Income Tax Act which is least understood by both the Income Tax authorities as well as practitioners and that generates maximum litigation? Most Netizens may prefer naming Section 68. If they do it, they cannot be faulted with. This Section provides that if the cash credit is unexplained, it would be treated as income.

Survey- Under Income Tax Act


According to Concise Oxford Dictionary, "survey" means general view, casting of eyes or mind over some things, inspection or investigation of the condition, amount, etc. of something, account given of result of this etc.

Survey has not been defined in the Income Tax Act 1961( In short “Act”). 'Survey' in context of the Income Tax Act means collection of data or information for the purposes of  detection of

Treatment of Cash Credit under Section 68 of Income Tax Act, 1961

Subject of cash credits has been a major area of litigation in taxation. The provision relating to cash credit, as in section 68, was provided for the first time in the Income Tax Act 1961 as there was no corresponding provision in the Income Tax Act 1922. Section 68 has been introduced in order to plug loopholes and in order to place certain situations beyond doubt even though there were judicial decisions covering some of the aspects. For example, even long prior to the introduction of s. 68 in

Monday, 26 January 2015



Income Tax Exemption on Gratuity

Gratuity may be one of the components of your CTC.  It is taxed under the head Income from Salaries. Some portion of gratuity received is exempt from tax as per Section 10(10) of the Income Tax Act and we will see how exemption is calculated.
Rules relating to Gratuity which are applicable to an Employer are set out in Payment of Gratuity Act 1972.

Penalty for late filing of the e-forms under Companies Act, 2013

Beware friends!! Don’t delay the filing of e-forms under companies act by more than 270 days from the last date of filing the form!!

Let’s start with discussing the charging section of penalties.

Section 403:

Tax benefits from under construction flat

If you avail of a home loan for buying an under-construction apartment, the tax law provides for a deferred deduction on interest payable during the pre-construction period. The total amount can be availed of as deduction in equal installments over five years starting from the financial year in which the construction is completed. 

Saturday, 24 January 2015

ICAI doubles stipend payable to CA students


Final Notification – Amendment in Regulations 28E, 48 (stipend to articled assistants) and 204 of the Chartered Accountants Regulations, 1988. – (23-01-2015)
New Delhi,the 23rd January, 2015
No. 1-CA(7)/167/2014.- Whereas certain draft regulations further to amend the Chartered Accountants Regulations, 1988, were published as required by sub-section (3) of section 30of the Chartered Accountants Act, 1949 (38 of 1949), in the Gazette of India, Extraordinary,Part III, Section

Whether denial of CENVAT Credit on the ground that invoice did not contain service tax registration number of service provider is Valid?

Bharat   Sanchar Nigam   Ltd.  vs. Comm.   of C.Ex.,  & ST, Allahabad [2014  (35) STR  397 (Tri.-Del.)
CENVAT credit  was  denied  on the  ground  that  service tax registration number of service provider was not mentioned  on the  invoice. Adjudicating  authority  though observed the fact of deposit of tax by service provider in the ST-3 returns denied CENVAT Credit.

Friday, 23 January 2015

Two Important High Court Verdicts On Charitable Purpose And Deemed Dividend

India Trade Promotion Organization vs. DGIT (E) (Delhi High Court)

S. 2(15)/ 10(23C)(iv): If the definition of "charitable purpose" is construed literally, it is violative of the principles of equality & unconstitutional. If the dominant object is not to carry on business or trade or commerce, then an incidental or ancillary activity for which a fee is charged does not destroy the character of a charitable institution

Business expenditure - Excise and additional custom duty MODVAT credit-Held to be allowable

S. 37(1) : Business expenditure - Excise and additional custom duty MODVAT credit-Held to be allowable.

Operational Expenses are alowable.

S. 37(1) : Business expenditure – Operational expenses- Held to be allowable.

The assessee-company was engaged in business of mobilization of deposits from the General public at

large. The assessee-company had entered into an MoU with Sahara India whereby Sahara India agreed to

Claim Depreciation on Road under BOT Scheme.

S. 32 : Depreciation -Owner assets– Road constructed by assessee on BOT basis - Eligible for

depreciation ,even though he is not legal owner of the road.

Assessee a Special Purpose Vehicle (SPV) was awarded contract by NHAI for widening, rehabilitation

and maintenance of existing two lane highways into a four lane one on BOT basis. Entire cost of

Property held for Charitable Purpose.

Property held for charitable purposes–Investment in specified securities-Shares of cooperative
banks were subscribed only for purposes of obtaining loan for furtherance of objects of trust, section 11/12 exemption could not be denied.[S.12, 13]
The assessee claimed exemption u/s 11. The Assessing Officer held that the assessee was not entitled /

eligible to claim exemption under section 11 on the basis that the assessee had purchased shares of certain

Amendments for Mutual funds Trust in Income Tax Rules.

First Amendment in Income-Tax Rules, 2015 by insertion of Rule 12CA and Forms No. 64A and 64B

NOTIFICATION NO. 3/2015 [F.NO. 142/10/2014-TPL]/ SO 180(E), DATED 19-1-2015

CBDT issued Explanatory Notes to the Provisions of the Finance (No.2) Act, 2014

Just before a day, Government of India, Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) has released "EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE(No.2) ACT, 2014" vide F.No. 142/13/2014-TPL, Circular No. 01/2015 on 21st January, 2015.  This circular explain and introduce that The Finance (No.2) Act, 2014 (hereafter referred to as ‘the Act’) as passed by the Parliament, received the assent of the President on the 6th day of August,

Interest Rate @ 9.1% for Investment in 'Sukanya Samridhi Account' During 2014-15

Recently, Hon'ble Prime Minister declared by Office Memorandum dated 20-01-2015 the Interest Rate on Investment in "Sukanya Samridhi Account" during Fin. Year 2014-15 is 9.1%.  The scheme of "Sukanya Samridhi Account" is specially for Girl Child which announcement by Finance Minister

All about Sukanya Samriddhi Account

(Department of Economic Affairs)
New Delhi, the 2nd December. 2014
G.S.R.863(E).— In exercise of the powers conferred by section 15 of the Government Savings Banks Act,
1873 (5 of 1873) , the Central Government hereby makes the following rules, namely:‑
1.                    Short title and commencement .- (1) These rules may be called the Sukanya Samriddhi Account Rules,2014.
(2)            They shall come into force on the date of their publications in the Official Gazette.
2.    Definitions In these rules, unless the context otherwise require . ‑
(a)     ‘account’ means an account opened by a depositor in accordance with the provisions of

Whether LCD Monitor is an information and communication technology device and its manufacturer is eligible to claim Sec 80IC benefits - YES: HC

THE issue before the Bench is - Whether LCD Monitor is an information and communication technology device and its manufacturer is eligible to claim Sec 80IC benefits. And the answer favours the assessee.
Facts of the case
The assessee is proprietor of entity carrying on the business in the name and style of M/s Concept Industries engaged in the manufacturing of electronic goods. It had claimed deduction u/s 80-IC. A notice u/s 143(2) was served on him. The assessment order was passed by the AO

S. 143(1) assessment cannot be reopening u/s 147 in absence of “new material”

HV Transmissions Ltd vs. ITO (ITAT Mumbai)

The AO accepted the ROI filed by the assessee u/s 143(1). He thereafter issued a notice u/s 148 on the ground that the assessee had claimed a deduction for ERP software and that although only 20% of the said expenses was debited to the P&L A/c, the entire amount was claimed as a deduction. The assessee claimed that the reopening was not valid as there was no “new material” in the AO’s possession. HELD upholding the plea:

Thursday, 22 January 2015

Transfer –Capital gains- Registration of sale deed alone of completes transfer–Capital


Assessee entered into an agreement of sale on 7-12-1999 with a company for sale of his property and

received full sale consideration on 21-12-2002. Thereafter, 16 sale deeds were registered in favour of

nominees of company on various dates between 27-2-2003 and 23-3-2004. Possession of the above

S. 2(14) : Capital asset – Agricultural land –Beyond 8 kms of local limits of the Municipality- land sold to non-agriculturalist-It would not loose its character as agricultural land –Not liable to be taxed as short term capital gains.[S.45

The Assessing Officer made addition of Rs. 4,56,83,750 on account of short-term capital gain on the

ground that assessee had sold agricultural land to one SICC which was non-agriculturist and as per the

Three Imp Verdicts Of ITAT

ITO vs. Pioneer Radio Training Services Pvt. Ltd (ITAT Delhi)

S. 14A/ Rule 8D: (i) Expenditure (like audit fees) required to be incurred irrespective of income cannot be disallowed, (ii) investments in subsidiaries are not to earn dividend income and cannot be considered for disallowance

It is also evident from the balance sheet of the Appellant Co., its investments in shares were only in two subsidiary companies. Such investments in subsidiary companies were made by the Appellant to acquire/promote the subsidiary companies which are in the media business and were not made purely for

CBDT issued Explanatory Notes to the Provisions of the Finance (No.2) Act, 2014

Just before a day, Government of India, Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) has released "EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE(No.2) ACT, 2014" vide F.No. 142/13/2014-TPL, Circular No. 01/2015 on 21st January, 2015.  This circular explain and introduce that The Finance (No.2) Act, 2014 (hereafter referred to as ‘the Act’) as passed by the Parliament, received the assent of the President on the 6th day of August,

Whether proviso to Sec 2(15) automatically gets attracted merely because assessee cricket association chages fees for matches - NO: ITAT

THE issue before the Bench is - Whether mere charging of fees means that the assessee is carrying out its activity in the nature of trade, commerce and business and thus the Proviso to Section 2(15) is not automatically attracted. NO is the answer.
Facts of the case
The assessee is a section 25 company, incorporated with an aim to promote the game of Cricket in and around Delhi. It is affiliated to the Board of Control of Cricket in India (BCCI). It was registered u/s 12A. Subsequently, the DIT(E) had issued a show cause notice to the assesse


Recently, The Ministry of Corporate Affairs ha issued a notification regarding amendment in companies (Accounts) Rules, 2014.  This amendment notification is issued on 16th Jan., 2015.  The amendments effects as following :

delay in payment of service for many periods - penal action may attract

Facts of case:
appellants having Service Tax Registration No. DL-1/ST/R-I/13/2004-05 in form ST-2 under Section 69 of the Finance Act, 1994 (34 of 1994), were engaged in the business of Cargo Handling Services. As per the provisions of section 68 of the Finance Act, 1994 read with Rule 6(1) & (2) of

Wednesday, 21 January 2015

TAT Explains Entire Law On Taxation Of Charities + Four Imp Verdicts

Delhi & District Cricket Association vs. DIT (E) (ITAT Delhi)

S. 11 (charity) and 12AA (cancellation of registration): Important propositions of law laid down

s.12AA(3) has no retrospective effect as it is neither explanatory nor clarificatory in nature and the CIT has no power to rescind the order passed by the CIT prior to 1st Oct.2004. For an assessee to be classified as charitable under the residuary category i.e. “advancement of any other object of general public utility” u/s 2(15) of the Act, the following four factors have to be satisfied


Maintaining Books of accounts at Place other than Registered Office- Legal Provision

Now-a-days, almost all the private limited companies have directors’ residences or consultants’ offices as its registered office address for receiving all communications from stakeholders/Income-tax jurisdiction etc. However the actual place of business is a place different from registered office where all business activities are carried on. Entire books of accounts and records are also kept at

Latest amendment in Companies (Accounts) Rules, 2014.

Recently, The Ministry of Corporate Affairs ha issued a notification regarding amendment in companies (Accounts) Rules, 2014.  This amendment notification is issued on 16th Jan., 2015.  The amendments effects as following :

Taxpayee Employee get exemption of EPF even if paid after due date.

As per the section 43B of Income Tax Act, 1961 taxpayee Employee can get benefit of Exemption of Employee's contribution even if paid after due date of fund but before due date of filing Income Tax Return under the head Profits and gains of business or profession.

Section 43B

Whether rental income derived from temporary sublease of office premises is to be treated as part of business profits eligible for Sec 10A benefits - YES: HC

THE issue before the Bench is - Whether rental income derived from temporary sublease of office premises is to be treated as part of business profits eligible for Sec 10A benefits. And the answer favours the assessee.
Facts of the case
The assessee is a public limited company engaged in the business of development of software

Procedure for trans-shipments of goods to SEZ units - JNCH Issues Instructions

AT present, Importer/Customs House Broker (CHB) submits a sealed cover in Import Noting Section, which is opened by ACAO. The documents forwarded by SEZ include the fifth copy of assessed B/E, which is treated as permission for TP of the cargo to the concerned SEZ, and the same is processed by Import Noting Section.
It seems that the procedure of granting permission to trans-shipment (TP) of cargo from Gateway port to Specified Export Zone (SEZ), on the basis of the fifth copy of assessed bill of entry (B/E), is being misused by unscrupulous persons.
So, the Commissioner has directed that the Import Noting Section should take the following

Tuesday, 20 January 2015

Central Government Employees must file Immovable Property Return by 31.01.2015.

Day after tomorrow, Ministry of Personnel, Public Grievances and Pensions Department of Personnel & Training has issued an office memorandum stating that Central Government Employees will be required to file annual property return as per existing provisions of CCS (Conduct) Rules, 1964 also. According to this Office Memorandum dated 16th January, 2015 all CSS Officers of Central Government are directed to file immovable property return by 31.1.2015.  The Office Memorandum

Saving Private Assets

Investor Education and Protection Fund is a permanent parking lot of all unclaimed shares and dividend under the Companies Act. Unending hunger of fund by government results its claim on everything unclaimed with help of hurriedly drafted laws. Yes, for all legal purpose, government is not going to own such money and keep it in trust but fund so transferred help to arrange mileage for government as administrator of such fund.

Whether when Revenue finds during investigation that assessee is beneficiary of accommodation entry it is sufficient to conclude absence of true and full disclosure of all facts by assessee - YES: HC

THE issue before the Bench is - Whether the fact revealed during investigation that the assessee is a beneficiary of an accommodation entry is sufficient for the AO to prima-facie conclude the absence of true and full disclosure of all facts - Whether a disclosure even if full may not be true. And the answer favours the Revenue.

Monday, 19 January 2015

Whether limited access granted can be considered as transfer of right to use, chargeable to VAT?

Indus Towers Ltd. VS. UOI [2014  (35) STR  459 (Dei.)]
The  petitioners   provide  access  to  telecom  towers,  to telecom operators as well as provide passive infrastructure services and related operations and maintenance services on sharing  basis.  The  active  infrastructures  are owned by  the  telecom  operators.  The  sharing  operator  has a non-extensive   right  of  site  access  availability  on  "use only basis" for installation,  operation and

Six Important Judgements Of The ITAT On Current Topics

National Horticulture Board vs. ACIT (ITAT Delhi)

S. 2(15): Fees or consideration received for rendition of a service to business, trade or commerce will not attract the disability under first proviso to s. 2(15) if such service is subservient to the charitable cause and is not in the nature of business itself

Even in a situation in which an assessee receives a fees or consideration for rendition of a service to the business, trade or commerce, as long as such a service is subservient to the charitable cause and is not in the nature of business itself, the disability under second limb of first proviso to Section 2(15) will not come into play


Tax Planning & Saving for Retirement

Government has not specified any specific retirement plans and benefits, it’s on our part to take full benefits of the different provisions of the Income Tax Act and utilize savings in a manner to financially secure post retirement life. Planning for retirement is needed to everyone whether he is an employee or engaged in any business or profession.
Planning for retirement should be done considering present tax implication and future taxability. Here

Tax- Holding period matters a lot in property transactions

WHen an individual takes the benefit of the repayment of the capital on a housing loan then there is an additional condition that comes into play. This is the holding period of the property as a sale of the property before completion of the specific time period would ensure that there would have to be reversal of the earlier tax deduction and this could lead to a tax implication for the individual. The

Download Latest e-Book for All Taxpayee by TRACES TDS (CPC).

Reentry Centralized Processing Cell (TDS) has published e-Book on TDS (CPC) working for All category Taxpayee.  CPC (TDS) introduces transparency in the processes through online display of information. Thus, it forms the backbone of overall TDS administration of the Income Tax Department.  The deductor is obliged to report the following details:

Whether benefit of deduction u/s 32AB can be extended to term loans taken against trucks and tankers - YES: HC

THE issue before the bench is - Whether the benefit of the deduction u/s 32AB cannot be extended to term loans taken against trucks and tankers. And the verdict goes against the Revenue.
Facts of the case

assessee firm is engaged in the business of manufacturing detergent. For AYs 1990-91, 1

Whether VAT is leviable on service portion, in sale of food and drinks, which is considered to be value of services under service tax law?

Hotel  East Park   VS. Union  of India [2014  (35) STR  433 (Chhattisgarh)]

The  points  for  determination   in the  writ  petition  were whether  any service tax could be charged  on sale of an item or vice-versa   and whether under Article 366(29A)(f) of the Constitution  of India, service  is subsumed  in sale of food and drink.  Further, whether  section  66E(i) of the Finance Act,  1994 was volatile  of Article  366(29A)(f)  of the Constitution  of India?

Friday, 16 January 2015

Understanding High Court Appeal under Income Tax with latest case laws

The Finance (No. 2) Act, 1998 has given a go by to the procedure of Reference Application provided u/s.256 to u/s.260(1) from 1-10-1998. It has inserted new S. 260A providing a direct appeal against any order passed in appeal by the Appellate Tribunal after 1-10-1998. The legislative intent as per the notes on clauses [231 ITR St. 175 (207)] and Memorandum explaining the provisions of the Finance Bill (No. 2), 1998 [231 ITR St. 228 (246)] is to simplify the existing reference application procedure. There is a reference in the Memorandum explaining the provisions to the observations of Karnataka High Court in the case of CIT v. Wandoor Jupiter

S. 264: ITAT entertains appeal against order passed by CIT u/s 264

The assessee sought revision of its assessment, finalized u/s.143(3) on 03.12.2008, accepting the returned income of Rs.35,19,179/-, u/s.264 of the Act on the ground that the deduction u/s.80-IB, to which it was entitled, had not been allowed per the impugned assessment. The deduction, for which it was otherwise eligible since the first year of operating a cold storage, i.e., A.Y. 1998-99, could not be claimed up to the immediately preceding year on account of continued losses. The assessee returning profit for the first time for the current year, forgot to prefer the claim u/s.80-IB, and hence its petition u/s.264. The ld. CIT, as a

Save income tax with help of donations under section 80GGA

There is a tax deduction available for donations made by an individual for charitable purposes. This is very well known and quite a few people would have taken the benefit of this route for the purpose of the contributions that they have made.

Different ways of ensuring tax benefits for your income

There are different ways in which an individual can ensure that certain income is not taxable in their hands. It is important to look at the manner in which this happens so that any unpleasant surprises are avoided. There are a couple of ways in which income would not be considered for the purpose of taxation and hence one has to look at how this is actually witnessed so that there is a proper

15 tax and investment planning tips for 2015

Well, the year 2015 has just started and for the benefit of our readers we will like to share with them ‘Fifteen important tips for Tax and Investment Planning’. These tips will surely help every tax payer to save some portion of his income-tax and also proper planning  for his investment. Here are these fifteen tips :-

Understanding tax inefficient instrument

There are many tax inefficient instruments that are available in the market. Many people invest in them which ends up being a drag as far as the overall tax planning efforts are concerned. The question that most people grapple with is what is the meaning of tax inefficiency and how can one actually understand that they are faced with such a situation. This is crucial because once the problem is identified then the individual can ensure that he stays clear of these and choose more appropriate investments which are actually suitable for his tax saving requirements. Here is a closer look at how this can be defined for easier use by the individual.

No tax deduction
One of the tax benefits that a lot of investments possess is that they provide a tax deduction to the individual when the amount is actually invested. The deduction is nothing but a reduction of the taxable income of the individual so that the final base for the calculation of the taxes is low. This ensures that they are getting a tax relief every time the investment is made. A lot of people actually end up not completing the total deduction limits that they are eligible for under the Income Tax Act and this can lead to a missed opportunity. This is the first step in which the inefficiency starts. However one has to understand that not all instruments will have a tax deduction and just because this is absent does not mean that the investment is not suitable for the individual. This kind of analysis is valid only when one is looking at the investment efficiency from the tax point of view and not when evaluating it from the overall suitability point of view where the tax benefit does not matter or is not primary in the whole scheme of things.

Earnings are taxable
Another way in which the inefficiency creeps into the tax aspect is that the earnings that are given by the instrument are actually taxable in the hands of the individual. This would mean that there is no tax relief of any kind when the earnings are considered and this results in the full amount of the tax burden coming on them. There are several routes like tax free bonds on the debt front and long term equity holdings where the tax rate is zero and this can make a huge difference to the final rate of return that is actually earned by the individual especially for those who fall into the higher tax brackets. Most instruments will have their earnings taxable but this does not make them unfit for selection but one has to see carefully the kind of impact that these would have on the overall decision making process.

No cash outflow
There can be a double hit for the investor if the earnings are fully taxable and at the same time these are not paid out till the maturity of the instrument. This means that every year the individual would have to include the amount that is earned in their tax returns and actually pay tax on this amount while the earnings come into their hands years later when the instrument actually matures. This can lead to a mismatch in terms of the cash flow for the individual because they are forced to make the tax payment from other sources while the income is actually locked up for quite some time to come. This is another way in which inefficiency comes into the investment. At the end of the day just the presence of an inefficiency does not make an investment worthless but one has to ensure that all the conditions are considered carefully while making an investment especially when the aim is to save taxes.

Guidance on disclosure of overseas assets when preparing to file income tax returns in India

A fair amount of work is under way amongst financial intermediaries in preparing income tax returns for filing in India. Given the renewed sensitivity and scrutiny of overseas assets of those filing income tax returns in India, it is worthwhile to reiterate the items that require mandatory disclosure:



The amendment of Sec 56(2) of the income tax act has intensely changed the scenario of the tax treatment of gifts received by an assessee. The amended provision states that

Whether when assessee is engaged in business of race horses and has betting income it cannot set off losses incurred in earning such income - YES: HC

THE issue is - Whether when the assessee is engaged in the business of race horses, and has betting income it cannot set off losses incurred in earning such income. And the answer is YES.
Facts of the case
The assessee is a breeder and owner of race horses. The assessee had shown betting income and while computing the total income, the assessee had adjusted the losses suffered under the head 'business' against the income earned under other heads, including betting income, and after setting off such losses, and the betting income was brought to tax by the assessee at the f

Whether Show Cause Notice (SCN) issued under 73(1)(a) of erstwhile provision for a reason of failure to disclose all material facts was valid when SCN was issued on the basis of details gathered from earlier two notices on same issue for the same period?

Naresh   Kumar & Co. Pvt.  Ltd.  vs. CCEx.  &   ST [2014  (35) STR  257 (Allahabad)]
The appellants   were  engaged   in  handling  operations (cutting/bending  iron&   steel products and transportation) for TISCO  from  1998 onwards  and were  under a belief that  service  tax was  not applicable  on the said  activity. However, due to persuasion of the authority, they obtained service  tax registration  under  C & F agent, filed  returns and 

Thursday, 15 January 2015


Indian Ministry of Corporate Affairs brought an amendment in the Companies (Appointment and Qualification of Directors) Rules 2014 with effect from 18th       September 2014.
Now data bank shall not ask for income – tax Permanent Account Number (PAN), [Rule 6(2)(c)]

CBDT Clarify that Refund is not issued if case is selected for scrutiny.

Recently, CBDT has issued a clarification about "No processing of return for refund, if case is selected for scrutiny" under section 143(1D) of the Income tax Act.  The CBDT states that where a notice has been issued to a taxpayer under sub-section (2) of section 143 of The Act, it shall not be necessary to process the return in such a case.  The details of Instruction No. 01-2015 Dated 13.01.2015 is as under :

Whether finding that there was no distribution of assets leads to conclusion that there was no transfer of assets at all - NO: HC

THE issue before the Bench is - Whether finding that there was no distribution of assets leads to conclusion that there was no transfer of assets at all. NO is the answer.
Facts of the case
The assessee, a partnership firm, was undertaking the activity of analyzing chemical compounds

Mumbai ITAT rules Service PE created by activities of employees deputed to India, not taxable as FIS

This tax alert summarizes a recent ruling of the Mumbai Income Tax Appellate Tribunal (ITAT) in the case of Morgan Stanley International (Taxpayer) on the issue of taxability of payments received under a secondment arrangement. The ITAT held that the employees deputed to India were “real” employees of the Taxpayer who

Wednesday, 14 January 2015

5000TH POST: Understanding ITAT appeal under income tax

Today on the day of Makar Sakranti, I am  happy to post 5000th Post and for this I am thankful to all my well-wishers and patrons of  Taxbymanish

Now let us review few recent case laws which enable yourself in respect of ITAT procedure knowledge.

Latest updates on requirement of documents for PAN Card.

We all are very well known, Income Tax Department (since June 2004) provide PAN Card facility to Taxpayee.  The Income Tax Department notified Forms w.e.f. 1st Nov., 2011 for submitting applications for allotment of new PAN  namely :-

FORM 49A: - To be filled by Indian citizens including those who are located outside India.

FORM 49AA: - To be filled by foreign citizens.

How to Apply

Whether inter-corporate deposits can be considered as part of loans and advances and same attracts provisions of Sec 2(22)(e) - NO: ITAT

THE issues before the Bench are - Whether inter-corporate deposits can be considered as a part of loans and advances and Whether section 2(22)(e) can be invoked when an assessee involved in financing businesss has taken such deposits from its subsidiary company. And the verdict goes against the Revenue.
Facts of the case

Tuesday, 13 January 2015

Tax Havens- An overview

A tax haven is a country or territory where certain taxes are levied at a low rate or not at all. Individuals and/or corporate entities can find it attractive to move themselves to areas with reduced or nil taxation levels. This creates a situation of tax competition among governments. Different jurisdictions tend to be havens for different types of taxes, and for different categories of people

PAN Verification in TDS Statements filed for Fin.Year 2011, 2012 and 2013 by Deductor.

Recently, Centralized Processing Cell (TDS) has issued an advisory communication after observed with respect to your TAN in the "TDS claimed by the taxpayers in their Income Tax Returns" vis-á-vis "Tax Credits available as per 26AS Statements", for the Financial Years 2011, 2012 and 2013 to all the deductors stating about the verification of PAN in TDS Statements filed. The details are as under :

Verification of TAN's TDS Statements filed for Fin.Year 2011, 2012 and 2013

In the last week, the Centralized Processing Cell (TDS) has issued an Advisory Communications to all TDS Deductors regarding Verification of TAN's TDS Statements filed for Fin.Year 2011, 2012 and 2013.  The CPC (TDS) have been observed that many TDS Deductor's have not put TAN correctly and due this Tax Credits are not shown in 26AS statements of their TDS Deductee.  This cell advice to TDS Deductor with respect to your TAN in the "TDS claimed by the taxpayers in their Income Tax Returns" vis-á-vis "Tax Credits available as per 26AS Statements", for the Financial

Whether, for purpose of TDS u/s 194A, decision of Special Court would prevail over ITAT order - YES: HC

THE issue before the Bench is - Whether, for purpose of TDS u/s 194A, decision of Special Court would prevail over ITAT order. YES is the answer.
Facts of the case
The assessee company entered into an agreement with Fairgrowth Financial Services Ltd. (FFSL), as per which Loan of different amounts were sanctioned by the FFSL in favour of assessee and the same were accepted. The said loan was against the pledge of 3,28,000 shares

Whether assesse is entitled to the CENVAT Credit in respect of catering services received when consideration is recovered from the beneficiaries/assessee's own employees?

Cerna Electric   Lighting   Products    India   (p.) Ltd.  vs. Commissioner     of Central   Excise [2014]  48     232 (Gujarat)
The  appellant,  a  manufacturer   availed  CENVAT  Credit of entire  payment  made to the canteen  contractor  even though the amount is recovered from its employees/ beneficiaries  of canteen service. The demand was confirmed under  Rule  14 of the  CCR 

Monday, 12 January 2015

EZ Rules amended to allow dual use of Non Processing Area by both SEZ entities and DTA entities

With a view to further promote development of Special Economic Zones (SEZ) in the country, Ministry of Commerce (MoC), has initiated a two-step approach – first it reduced the minimum area requirement for setting up SEZ’s in 2014 and then at the break of 2015, permits dual use of non-processing areas allowing developers to set up social infrastructure such as schools, hospitals and hotels, which can be accessed by people from within and outside the zones. This is a step in the right direction, as it promotes creation of smart zones, where entrepreneurs will get access to world class social infrastructure, along with processing area, thereby getting the ability to attract talent.

Jabalpur Tribunal rules on interplay between provisions of PE and FTS for taxing installation/commissioning activities in composite contracts (Birla Corporation)

We are pleased to release a Tax Alert which summarizes a recent ruling of the Jabalpur Income Tax Appellate Tribunal (Tribunal), in the case of Birla Corporation Ltd. (Taxpayer) , on the issue of taxability of installation and commissioning charges of machinery in India under the Indian Tax Laws (ITL) and the seven applicable double taxation avoidance agreements (DTAAs). The installation and commissioning activities were in connection with machinery/equipment supplied by vendors from outside India. The Tribunal held that such activities do not create an installation permanent establishment (PE), since the activities did not exceed the threshold provided in the DTAAs. Furthermore, the payments would not be covered under the fees for