Tax Liability if the Sale proceeds is utilized for purchase of a Residential House property

Subject to various other terms / stipulations, Tax on Long Term Capital Gain (LTCG) arising from the transfer of plot or urban agricultural land can be saved u/s 54F if the sale consideration is used for purchase of a residential house property within a prescribed period. The time limit prescribed for the purpose is:

Whether when EoU Unit acquires whole business of medical transcription and claims deduction u/s 10B, benefit of Sec 10A allowed by higher appellate forums is legally sustainable - YES: Madras HC

THE issues before the Bench are - Whether when an EoU Unit acquires the whole business of medical transcription and claims deduction u/s 10B, the benefit of Sec 10A allowed by higher appellate forums is legally not sustainable; Whether the provisions of Sec 10A(2)(iii) will apply to this case and Whether when the assessee has been allowed the benefit of Sec 10A, any merit can be found in the AO's order to allow benefit of Sec 80HHE. And the verdict goes against the Revenue.

Facts of the case

S. 32: Sale & lease transactions by banks are genuine and eligible for depreciation

UTI Bank Limited vs. ACIT (ITAT Ahmedabad)

 

The assessee, a Bank, purchased windmills worth Rs. 27 crore in a sale-and-lease-back transaction and claimed depreciation thereon. The AO & CIT(A) rejected the claim and held that the transaction was not one of purchase but was a finance transaction in which the windmills were received as security on the basis that (a) under the Banking Regulation Act, 1949, the assessee was not permitted to engage in any business other than banking, (b) the lease rentals were fixed on the basis of interest on advances and other charges receivable by the assessee as a financier and were not co-related to the projected income on

Mumbai ITAT rules that additional consideration received under an open offer agreement is taxable as capital gains and not interest

 

The Mumbai Income-tax Appellate Tribunal (ITAT) has in the case of Genesis Indian Investment Company Ltd (Taxpayer) pronounced a ruling on the issue of whether additional consideration received by the Taxpayer, in respect of delay in completion of the process of buy back of shares under an open offer arrangement, was in the nature of capital gains or in the nature of interest income.

The ITAT based on the facts of the case held that the amount of additional consideration received is taxable as capital gains as the same relates to the period prior to the tendering and acceptance of shares and hence is consideration received against the shares tendered under the open offer.

There are not many judicial precedents rendered in respect of treatment of additional consideration received under an open offer agreement.

In an earlier ruling in the case of Dai Ichi Karkaria Ltd, the Mumbai ITAT based on the facts held that interest received in respect of delay in payment of offer price cannot be treated as part of sale consideration of shares.

However, the current ruling pronounced by the Mumbai ITAT is based on facts which are different from those which existed in the case of Dai Ichi Karkaria Ltd.

Taxpayers may consider using the principle outlined in the current case based on their individual facts.

S. 50-C: Extent to which reliance can be placed by AO on stamp duty valuation explained

CIT vs. Chandra Narain Chaudhri (Allahabad High Court)

 

The assessee sold property for Rs. 25 lakhs. The AO held that as the property was valued by the stamp valuation officer at Rs. 78.48 lakhs and as the purchaser had paid stamp duty on that basis, the capital gain had to be worked out on that basis applying s. 50C(2). The assessee claimed that the property was tenanted and produced valuation reports to justify the sale consideration. On appeal by the assessee the CIT(A) held that the AO ought to have referred the matter to the DVO and directed him to adopt the value arrived at by an approved valuer. This was approved by the Tribunal. On appeal by the department to the High Court, HELD:

Understanding Allowability of Business Expenditure under section 37 of the Income Tax Act, 1961 with latest case laws

To Read the article, click the link below:

http://taxbymanish.blogspot.in/2011/08/understanding-allowability-of-business.html

Tax saving options for NRIs

The Income Tax Act, 1961 defines a non-resident Indian as an individual, being a citizen of India or a person of Indian origin, who is not a resident. A person is of Indian origin if he or either of his Indian parents or any of his grandparents was born in undivided India.

Over the years, the number of Indians moving abroad has been increasing steadily. People leave the country for better prospects of work or study, or even on business and holiday.

Many of the people who go abroad maintain bank accounts in India to either invest here or save money here or just for ease of transactions to and fro. But if you are a Non Resident Indian (NRI) with a bank account in the country, it is advisable that you are aware of all the existing tax rules as far as NRIs are concerned.

 

Phrase ‘may be taxed’ does not provide exclusive taxing rights: Mumbai ITAT

 

The Mumbai Bench of the Income Tax Appellate Tribunal (“ITAT”) has delivered an important ruling in the case of Essar Oil Limited, wherein the phrase ‘may be taxed’ in the other contracting State appearing in Tax Treaties has been interpreted as not taking away the right of the Country of residence to tax the income, after introduction of section 90(3) of the Income-tax Act, 1961 (“Act”) with effect from Financial Year (“FY”) 2003-04.

Facts of the case

Revised form notified for furnishing information on remittances made to non-residents

   

In supersession of an earlier notification[#_ftn1][1]dated August 5, 2013 issued by the Central Board of Direct Taxes (“CBDT”), the CBDT has further substituted the Income-tax Rules, 1962 (“Rules”)[#_ftn2][2]vide a recent notification[#_ftn3][3]dated September 02, 2013.

Transportation of empty containers from CFS to factory of exporter held to be “in relation of exporter held to be “in relation to export goods” and thus eligible for refund

 

CCC&E, Visakhapatnam vs. R.A.K. Ceramics India Pvt. Ltd. 2013 (30) STR 609 (Tri-Bang.)

Facts:

A manufacturer of ceramic tiles cleared such goods for export as well as for home consumption. It incurred freight for transport of goods by road which also included transportation of empty containers from CFS to the respondent’s factory and claimed refund vide Notification No. 41/2007-S.T against freight towards export. After allowing the refund claim, the amount representing transportation of empty containers from CFS to the factory was demanded back treating it as erroneous and contending that such service are not for transportation of goods for export. Since the service were utilized by them for transportation of goods for export, it was contended by the assessee that on service tax was payable by them and relied upon the decision of CCE, Madhuri vs. Tata Coffee Ltd. [2011 (21) S.T.R. 546 Tri- Chennai].

Held:

Relying on Tata Coffee Ltd., it was held that the expression used in Notification No. 41/2007 “in relation to transport of export goods” was wide enough to cover event of transport of empty containers from the yard to the factory for stuffing the goods.

Banks to remain open upto 16.09.2013 to deposit Advance Tax.

Tax is paid in advance when the liability of advance tax is Rs.5, 000 or more. The provisions of advance tax are applicable on all types of persons irrespective of the residential status of the person. The advance tax is paid in the previous year itself. Thus, the tax is paid in the year of earning of income, in other words the earning of income and payment of tax goes simultaneously. Thus, the tax is paid as income is earned. This scheme of advance payment of tax is also called pay as you earn scheme, i.e., pay tax as you earn income.

Ministry of Corporate Affairs issues Notification for Commencement of 98 Sections of the New Act

 

The Companies Act, 2013 as passed by the Parliament and assented to by the President of India is available on the Ministry of Corporate Affairs’ website at www.mca.gov.in. The Ministry has initiated the process to implement the new Act in consultation with concerned regulatory authorities, Ministry of Law & Justice and other stakeholders. The first set of draft rules has also been placed on the Ministry’s website on 9th September, 2013. The relevant Forms under such rules and remaining draft rules/forms are also being released for public comments shortly.

It has therefore been decided to enforce the provisions of the new legislation in phases. The provisions of the new Act which require statutory/regulatory consultation or functioning of new bodies or prescription of relevant rules/forms will be brought in force after the preparatory action is completed. In the first instance it has been decided to notify those provisions of the Act which do not require such preparations. Accordingly, a notification for commencement of 98 sections of the new Act has been issued by the Ministry today i.e. 12th September, 2013. The details of provisions brought in effect are available on the web-site of the Ministry of Corporate Affairs.

Download Commencement Notification Of Companies Act 2013, Dated 12.09.2013 issued by MCA

Notification for Extension of date for receipt of ITR-Vs in cPC, Bengalure, for the cases of Asstt. Year 2012-13 and 2011-12 received in e-filed in Fin. Year 2012-13

 

There are many taxpayers who have uploaded their Income Tax Returns electronically (without digital signature Certificate) for A.Y. 2011-12 (filed during F.Y. 2012-13) and for ITRs of A.Y. 2012-13 (filed on or after 01.04.2012), but have either not filed the corresponding ITR-V or have filed it with the loacal Income Tax Office. ITR-V is accepted only at the Centralized Processing Center (CPC) of the Income Tax Department at Bengaluru by ordinary or speed post. Therefore, a final opportunity is being given to such taxpayers to regularize their Income Tax Returns.

Clarity between gratuity eligibility service (5 or 4.8 yrs)?

The gratuity eligibility service as per Gratuity Act 1972 is 5 years.

But as per the judgment from Supreme Court below and the quotation from the book quoted below it seems that the gratuity eligibility service is 4 years 240 days.

"Judgment from Supreme Court:

"Yes, by virtue of the judgment of Supreme Court rendered under the provisions of the Industrial Dispute Act in Surendra Kumar Verma vs. Central Govt. Industrial Tribunal,[(1980) (4) S.C.C.433)], it is enough that an employee has a service of 240 days in the preceding 12 months and it is not necessary that he should have completed one whole year’s service. As the definition of continuous service in Industrial Dispute Act and Payment of Gratuity Act are synonymous, the same principal can be adopted under the act also and hence an employee rendering service of 4 year 10months 11days is considered to have completed 5 years continuous service under sec.4(2) and thereby is eligible for gratuity."

Quotation from the book:

Law Book (Bare Act,2004) i.e. The Payment of Gratuity Act,1972 (Publisher: Law Publishers () Pvt.Ltd. 18A-S.P.Marg,Post Box-1077,Allahabad-211 001. Phone:623735,623741 Fax-0532-622276.website: lawpublishersindia.com

1. 4 years and 6 months (190 days = 1 year) where the company follows 5 day a week.

2. 4 years and 8 months ( 240 days = 1 year) where the company follows 5 day a week.

Is eligible for gratuity.The payment of gratuity ( second amendment) act, 1984 clarifies this. One needs to calculate the no of years and service completion as follows.

A company which follows 5 day week

Doj 1.05.2000 -

01.05.2000 to 30.04.2001 - worked for 190 days
01.05.2001 to 30.04.2002 - worked for 190days

If we go by the above formula and if the person does not have any break in service he will be eligible for gratuity on 01.11.2004 "

Non clarity of this rule has created confusion among a lot of employees. As some hear that some companies are following the 4 years 240 days rule, while some follow the 5 year rule. Please help remove this confusion so that nobody rights of gratuity are being compromised on. Expert Lawyer may please give his comments and advice.

Gratuity Calculator

 

Basic Pay = Dearness Allowance (D.A) = Number of years of Service = Gratuity =

Whether when CIT has not disposed off application of assessee u/s sec 12AA within 6 months, registration would be deemed as granted to trust - Issue goes to Larger Bench of High Court

THE only issue before the Bench is - whether when the CIT is yet to decide the application filed u/s 12AA, the registration would be deemed as granted to the trust. And the issue goes to the Larger Bench.

Facts of the case

CBDT Instruction On Procedure For Adjustment Of Refund Against Demand

Pursuant to the judgement of the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273, the CBDT has issued Instruction No. 12/2013 (F. NO. 312/55/2013-OT) dated 09.09.2013 stating that no refund should be adjusted without following the procedure prescribed in s. 245 of the Act of intimating the assessee of the proposed adjustment and considering his objections thereto.

Delhi HC reiterates subvention by holding company to its WOS to recoup losses is a non-chargeable capital receipt

 

This tax alert summarizes a recent ruling of the Delhi High Court (HC) in the case of Handicrafts and Handlooms Export Corporation of India Ltd. (Taxpayer) on the taxability of subvention payments received by the Taxpayer from its holding company, under the Indian Tax Laws (ITL).

The HC, while placing reliance on its own earlier rulings in the Taxpayer’s own case, held that the amount received by the Taxpayer was to recoup its losses, and not for supplementing its trading receipts. Having regard to the “purpose” test espoused by the Supreme Court (SC) in various rulings, the HC held that the receipt was capital in nature and not taxable under the ITL.

Whether remedial amendments are normally not retrospective in effect and thus amendment to Sec 40(a)(ia) is not retrospective - YES: Delhi HC

THE issues before the Bench are - Whether the amendments made to Section 40(a)(ia) by Finance Act, 2010 is retrospective in effect as it is only a procedural change in the Act and Whether remedial amendments are normally not retrospective in nature. And the verdict goes against the Revenue.

Facts of the case

Non-Resident Indian (NRI) - Definition under Income Tax Act and Tax Implication of Residency

“To be, or not to be, that is the question” – thus pondered Shakespeare in Hamlet. Well there isn’t really a choice we have “To be, or not to be” Resident or Non-Resident, but for a person moving outside India or traveling frequently to India, residency is of paramount importance, since that is what determines what Income is taxable and also what sort of bank accounts he can open and operate.