FAQ on ICDS

01.   ICDS is not for purpose of maintainace of books of accounts but for the purpose of taxable income. 

02.   ICDS will over and above all earlier judicial precedents. 

03.   ICDS  applicable to all taxpayer who require to pay tax under  Business Income and Income from other source.

04.   Income tax act will prevail over ICDS in case of any conflict.

05.   ICDS not applicable in the case of MAT but applicable in the case of AMT.

06.   MTM loss now cannot be allowed as expenditure.

07.   Retention money  recognition now cannot be deferred on receipt basis.

08.   ICDS also applicable to real estate companies as applicable to other construction companies.

09.   Interest and Royalty now require to  book under accrual basis.

10.   Expenditure on P&M before commencement of production will be capitalised.

11.   Taxation of government grant include subsidy in any form.  – if relate to capital item then reduce the cost, otherwise P&L.

12.   Revenue Recognition – Service -  percentage completion method.

Forex rules regarding valuation of foreign branch transactions

FAQ ON MAT COMPUTATION UNDER IND AS.

(A) MAT Computation in the first year of adoption of Ind AS The Phase I companies are adopting Ind AS during the current financial year ending 31 March 2017 with comparative year 31 March 2016 and transition date of 1 April 2015. For accounting purposes on account of first time adoption of Ind AS, transition adjustments are recorded in opening equity as at 1 April 2015. However, for MAT purposes, the transition adjustments as of 31 March 2016 shall be considered for computation of MAT liability for the previous year 2016-17 (assessment year 2017-18) and thereafter. The transition adjustments will be included in the book profit for the purpose of computation of MAT liability as follows:

Imp Verdicts On S. 271(1)(c) And S. 14A/ Rule 8D

Wadhwa Estate & Developers India Pvt. Ltd vs. ACIT (ITAT Mumbai)

S. 271(1)(c): Penalty cannot be levied if the omission to offer income, and the wrong claim of deduction, was by oversight and the auditors did not point it out. Also, the failure of the AO to specify the limb under which penalty u/s 271(1)(c) is imposed is a fatal error
Undisputedly, in the return of income assessee has failed to offer interest on fixed deposit amounting to ` 5,92,186 and loss claimed on account of fixed asset written–off amounting to Rs 1,82,242. It is also a fact on record that in the course of assessment proceedings, the assessee accepted the taxability of these items of income and offered them to tax. The assessee has explained that non–disclosure of aforesaid two items of income is due to oversight and due to the fact that neither in the tax audit nor in the statutory audit such omission was pointed out. We find merit in the aforesaid explanation of the assessee

Sections 50C /56(2)(vii)(b) can be invoked in cases of differences in rates charged by builder/developer from their customers in respect of similar flats

ISSUE IS - Whether Sections 50C / 56(2)(vii)(b) can be invoked in cases of difference in the rates charged by a builder company from its customers in respect of similar flats. NO is the verdict.

Facts of the case:

Claiming set-off of losses suffered during amalgamation is no valid reason to deny depreciation to amalgamating company on brand value acquired: ITAT

THE ISSUE IS - Whether mere claiming set off of loss suffered during amalgamation, cannot be a reason to disallow the depreciation claimed by amalgamating company upon acquisition of brand value of such amalgamated company. YES is the answer.