Understanding deductions of section 80-IA & IB with Latest Case Laws

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Circular 76/2013: Reporting under Foreign Exchange Management Act, 1999 (FEMA)

RBI/2012-13/383 A.P. (DIR Series) Circular No. 76 January 17, 2013
In terms of Section 11 (2) of FEMA, 1999, the Reserve Bank may, for the purpose of ensuring the compliance with the provisions of the Act or of any rule, regulation, notification, direction or order made thereunder, direct any authorized person to furnish such information, in such manner, as it deems fit. Accordingly, RBI has entrusted to the Authorised Dealers (ADs) the responsibility of complying with the prescribed rules/ regulations for the foreign exchange transactions and reporting the same as per the directions issued from time to time.

Shares Can Be Owned For the Purpose Of Investment And/or For The Purpose Of Trading

The assessee was maintaining separate portfolios for shares in the trading account and for those in the investment account. This was accepted by the department in the earlier years. In AY 2007-08, the assessee sold all the shares in the investment portfolio and offered the gains to tax as long-term and short-term capital gains. The AO held that as the volume (Rs. 52 crores) and frequency of transactions was large, the LTCG & STCG were assessable to tax as business profits. The CIT(A) and Tribunal (order attached) reversed the AO by relying on CBDT Circular No. 4 of 2007 dated 15.06.2007 (291 ITR (Stat) 35). On appeal by the department to the High Court, HELD dismissing the appeal:

The intent and purport of Circular No. 4 of 2007 dated 15.06.2007 is to demonstrate that a tax payer could have two portfolios, i.e., an investment portfolio and a trading portfolio. In other words, shares can be owned by the assessee for the purposes of investment and/or for the purposes of trading. In the former case whenever the shares are sold and gains are made the gains would be capital gains and not profits of any business enterprise. In the latter case any gains would amount to profits in business. This has been made clear by the CBDT circular in the remaining portion of the circular itself. On facts, the finding of the CIT(A) & Tribunal that the short term capital gains and long term capital gains were out of the investment account and were not related to the trading account does not call for any interference.

How to Compliance, What are Penalties and Check Form 26AS in easy way?

The TDS (Tax) Deductor is bounded to issue TDS Certificate as well as deposit Deducted TDS (Tax) into Central Government Treasury through Bank by appropriate Challan. Secondly TDS Deductor is also mandatory to file TDs Return in respect to deduct TDS by fining of Return Quarterly within Due Date.

For non compliance of each and every part mentioned above, there is a separate penalty and consequences under the Income Tax Act-1961 as under:

Whether when assessee is given option to convert land into industrial unit after approval, which was obtained after a long gap, profits from sale of such converted land, treated as stock-in-trade is to be treated as capital gains - YES: ITAT

THE issue before the Bench is - Whether when the assessee is given the option to convert the land into industrial unit after approval, which was obtained after a long gap, the profits from sale of such converted land, treated as stock-in-trade is to be treated as capital gains - Whether such land is to be treated as agricultural prior to its conversion into industrial unit. And the verdict goes in favour of the assessee.

Facts of the case

The assessee Company is engaged in the business of manufacturing of specialized chemicals and in development of real estate and was owner of certain land allotted to it by Govt of Maharastra. The land was allotted to the assessee on condition that the assessee will obtain n

"RELATIVE" - A brief study as dealt by the Companies Act, 1956

1. Sec 2(41) --> "Relative" means with reference to any person, any one who is related to such person in any of the ways specified U/s 6 and NO others.
2. Sec 6 -->
   a) This is substituted by sec.4, Act 65, 1960.
   
   b) "A Person shall be deemed to be a relative of another if and only if:
   
   i) they are members of a Hindu Undivided Family,
   ii) they are husband & wife,
   

Assessee can file appeal against CPC actions related to TDS statement

CBDT has vide notification No. Notification No. 3/2013, dated 15-1-2013 introduced ‘Centralised Processing of Statements of Tax Deducted at Source Scheme, 2013′ for centralised processing of statements of tax deducted at source. Vide clause 8 of the notification CBDT has specified that Assessee can file an appeal against the actions of the CPC. The appeal can be filed with the Commissioner of Income-tax (Appeals) having jurisdiction over the Assessing Officer who has jurisdiction over the deductor.

Relevant Potion of the above Circular is as follows :-

Appeal

8. (1) Where a statement of tax deducted at source is processed at the Cell, the appeal proceedings relating to the processing of the statement shall lie with the Commissioner of Income-tax (Appeals) having jurisdiction over the Assessing Officer who has jurisdiction over the deductor and any reference to Commissioner of Income-tax (Appeals) in any communication from the Cell shall mean such jurisdictional Commissioner of Income-tax (Appeals).

(2) The Assessing Officer who has jurisdiction over the deductor shall submit the remand report and any other report to be furnished before the Commissioner of Income-tax (Appeals) and an order, if any, giving effect to appellate order shall be passed by such Assessing Officer.

CBDT Circular Clarifying Issues Relating To Export Of Computer Software

 

The CBDT has issued a comprehensive Circular No. 01/2013 dated 17.01.2013 in which it has provided clarifications on various issues relating to the export of computer software and the allowance of deduction under sections 10A, 10AA and 10B of the Income-tax Act, 1961. The Clarifications seek to address and resolve the several disputes that have arisen between the software

Form 15G & 15H

Normally, when interest amount goes to near about TDS Deducted amount, then the Depositor Deduct TDS on Depositee Amount. But on the request of Depositee the depositor did not deduct TDS on the Interest or Commission amount and in place of TDS issuing the Depositee submit Form 15G or 15H. It is high time to give form 15G and 15H of income tax to the deductor of TDS on your deposit. Form 15G and 15H are the declaration to the deductor that his/her income falls below the income tax taxable limit. Income tax has various acts in which tax is deducted even the assessee has

Whether expression 'business of the undertaking' is wider in ambit than words ‘profit of the undertaking' used in Section 10B - YES: ITAT

THE issues before the Bench are - Whether the words 'business of the undertaking' are wider in ambit than the words ‘profit of the undertaking' used in Section 10B; Whether determination of quantum of profits derived by 100% E.O.U. from the relevant exports, has to pass through multiple steps as prescribed u/s 10B, for being eligible for deduction; Whether the word 'derived' in section 10B would continue to control or guide the word 'profits' in the deduction provision;

ENTRALISED PROCESSING OF STATEMENTS OF TAX DEDUCTED AT SOURCE SCHEME, 2013

NOTIFICATION NO. 3/2013[F.NO.142/39/2012-SO(TPL)], DATED 15-1-2013

In exercise of the powers conferred by sub-section (2) of section 200A of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following scheme for centralised processing of statements of tax deducted at source, namely:-

Short title and commencement

1. (1) This scheme may be called the Centralised Processing of Statements of Tax Deducted at Source Scheme, 2013.

(2) It shall come into force on the date of its publication in the Official Gazette.

Definitions

S. 254(2A) Third Proviso: Tribunal has the power to grant unlimited stay of demand

Vodafone West Ltd vs. ACIT (ITAT Ahmedabad)

The assessee’s appeal was not disposed of by the Tribunal as a similar issue was pending in the case of another assessee before the Supreme Court. The Tribunal had granted a stay on recovery of the demand. On the expiry of 365 days, the assessee filed an application seeking extension of the stay for a further period. The assessee relied on Ronuk Industries 333 ITR 99 (Bom), Tata Communications Ltd 138 TTJ 257 (Mum)(SB) and Qualcomm Incorporated (ITAT Del) where it had been held that despite the Third Proviso to s. 254(2A), the Tribunal had the power to grant stay of demand beyond 365 days if the assessee was not at fault. The Department opposed the application by

CBEC Circular On Recovery Dated 01.01.2013 & Connected Legal Developments

 

The Bombay High Court today (17.01.2013) granted ad-interim stay against coercive recovery pursuant to Circular No. 967/01/ 2013 – CX dated 01.01.2013 issued by the Central Board of Excise and Customs. The orders were passed in the case of Uhde India Pvt. Ltd vs. UOI WP 380 of 2013, Exide Industries Ltd vs. UOI WP No. 381 of 2013 and connected matters. The Petitions are now listed for admission on 31.01.2013 to enable the Department to file a reply. The Andhra Pradesh High Court has already granted on 09.01.2013 a stay in the matter in the case of Ultratech Cement Ltd vs. UOI W.P. No. 736 of 2013.

The view that is taken by the High Courts in these matters will have considerable bearing in income-tax matters as well.

Procedure of Alteration in Articles of Association

The articles of association of a company are its by-laws or rules and regulations which govern the management of its internal affairs and the conduct of its business. They are framed with the object of carrying out the aims and objects as set out in the Memorandum of Association. According to Section 2(2) of the Companies Act, 1956 ‘articles’ means the articles of association of a company as originally framed or as altered from time to time in pursuance of any previous companies laws or of the present Act, i.e. the Act of 1956. It regulate the internal management of the company

Meaning of Alteration of Articles of Association

Sec. 31 of the Companies Act, 1956, provides that a company may by passing a special resolution;

Whether when assessee-club places surplus funds in form of FDs with its member-banks to earn interest income, since such funds are loaned out to third parties for earning higher interest income, it violates privity of mutuality - YES: SC

THE issues before the Bench are - Whether when the assessee-club places its surplus funds in the form of FDs with its member-banks to earn interest income, since such funds are loaned out to third parties for earning higher interest income, it violates the privity of mutuality; Whether in such a case there is a lack of identity between the contributors and the participators and Whether when the banks loan out the funds placed by the assessee to third parties it can be said that the funds were not utilied for the benefit of its members and thus went beyond the principle of mutuality. And the verdict goes in favour of the Revenue.

Facts of the case

Whether when assessee is a leasing and finance company, it gets deprived of depreciation benefits on assets leased out to third parties - NO: SC

THE issues before the Bench are - Whether when the assessee-club places its surplus funds in the form of FDs with its member-banks to earn interest income, since such funds are loaned out to third parties for earning higher interest income, it violates the privity of mutuality; Whether in such a case there is a lack of identity between the contributors and the participators and Whether when the banks loan out the funds placed by the assessee to third parties it can be said that the funds were not utilied for the benefit of its members and thus went beyond the

Explanation of Law on Valuation of Shares of A Closely Held Company

As per the ITATONLINE.ORG – The assessee held 50% of the shares in L&T Infocity Asendas Ltd (“LTIAL”) while the rest were held by L&T Infocity Ltd. The assessee and L&T Infocity agreed to sell their entire holding in LTIAL to Ascendas Property Fund India (“APFI”), an AE of the assessee for a consolidated price of Rs. 79 crores. The assessee also held shares in Ascendas (India) IT Park Ltd (“AITPL”) which was also separately sold to APFI. The assessee claimed that the shares were

When Does A Company Require A Whole Time Company Secretary?

Company Secretary is an important member of corporate management and acts as an advisor to the management of a company on legal and business matters. Company Secretary is an indispensable professional in the efficient management of an organization, whose affairs are conducted by board of directors or a council or any other corporate structure.

Only those persons who are Company Secretaries within the meaning of Section 2(1)(c) of the

S. 32: A “Financier” satisfies the “ownership” & “user” test for depreciation

. C. D. S. Ltd vs. CIT (Supreme Court)



The assessee, a NBFC, bought vehicles and leased it out to its customers. The vehicles were registered in the names of the customers. The AO held that as the vehicles were registered in the names of the customers and were used by them, the assessee was not eligible for depreciation u/s 32 as it was not the “owner” of the vehicles nor had it “used” the vehicles for purposes of business. The

INTEREST EARNED BY CLUB

M/s Bangalore Club vs. CIT (Supreme Court)

Interest earned by a mutual association from deposits placed with member banks is not exempt on the ground of “mutuality”



The assessee, a mutual association, claimed that the interest earned by it on fixed deposits kept with the bank (which was a corporate member) was not taxable on the basis of mutuality. The AO rejected the claim though the CIT(A) and Tribunal upheld the claim. The High Court reversed the Tribunal