Where NRI can Invest In India

 

 

In India, a no. of families have their relatives living abroad who have gone either for earning livelihood or otherwise, always have intension to send/ remit the money in India for starting any business or to put their money in some projects. But many laws and regulations of Indian Government and restrictions imposed by RBI restrict the NRIs, Foreign Nationals to invest the money. So For a Common Man/ Lay Man, there is always a question in mind whether NRIs can

UNDERSTANDING TAX DEDUCTED AT SOURCE WITH LATEST CASE LAWS: PART - II

To Read the complete article, click the link below.

http://taxbymanish.blogspot.in/2011/10/understanding-tax-deducted-at-source.html

 

Correction in OLTAS / Income Tax / TDS / Direct Tax Challan, Type of Correction and Period for correction

To Read the notifcation, click the link below


http://taxbymanish.blogspot.in/2011/10/correction-in-oltas-income-tax-tds.html

CBDT Directive Regarding Grant Of TDS Credit In Mismatched Cases

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. 5/2013 F.No.275/03/2013-IT(B), dated 8.07.2013 stating that when an assessee approaches the AO with requisite details and particulars in the form of TDS certificate as evidence against any mismatched amount, the AO will grant credit of TDS to the assessee after ascertaining whether the deductor has made payment of the TDS to the Government

Instruction No. 5/2013 F.No.275/03/2013-IT(B), dated 8.07.2013

Exchange Rate effective from 05/07/2013

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, PART-II, SECTION 3, SUB-SECTION (ii), EXTRAORDINARY]

S. 40(b): Appointment of an existing partner as representative partner for another party may circumvent the ceiling on number of partners

M/s Deloitte Haskins & Sells vs. DCIT (ITAT Chennai)

The assessee, a firm of Chartered Accountants, filed a return offering income of Rs. 17.70 crores which was accepted by the AO u/s 143(3). The CIT then passed an order u/s 263 stating that the assessee had amended its partnership deed pursuant to which Mr. Mukund Dharmadhikari, who was already a partner of the firm, was added once again as a partner in a representative capacity, to represent Deloitte Haskins & Sells, Mumbai. As Mr. Dharmadhikari had the right to share profit, both in the representative capacity as well as in his individual capacity, the CIT held that the number of partners exceeded 20, the maximum allowed under the Partnership Act, 1932, and that the assessee had, therefore, to be treated as an Association of Persons. He held that the assessee was not entitled to claim a deduction u/s 40(b) for the salaries paid to its’ partners.On appeal by the assessee to the Tribunal HELD:

What’s new with Income Taxes and e-Filing this year

As an Individual you are required by law to file your Income Tax Returns, if your total income without allowing deductions (such as Section80C etc) exceeds the basic exemption limit.

There’s good news for you because for this assessment year(2013-14), the exemption limit has been increased.

• For Individuals below the age of 60 (both men and women),the exemption limit is Rs. 2 Lakh.
• For senior citizens above the age of 60, the exemption limit is Rs. 2.5 Lakh
• And finally, for super senior citizens (Individuals above the age of 80), the exemption limit is raised to Rs. 5 lakh

revised Form 3BC Notification

In the Income-tax Rules, 1962, in Part II, in sub-part C, after rule 6DDB, the following rules shall be inserted, namely :—
“6DDC. Conditions that a recognised association is required to fulfil to be notified as a recognised association for the purposes of clause (e) of the proviso to clause (5) of section 43.— For the purposes of clause (e) of the proviso to clause (5) of section 43, a recognised association shall fulfil the following conditions in respect of trading in derivatives, namely:—

Major Mistakes to be avoided while filing Income Tax Return

As the 31 July deadline approaches to file your returns, here's how to ensure you don't commit errors and receive a tax notice.

1) Availing of deduction twice
This is a common error that many salaried taxpayers commit. If you had switched jobs during the previous financial year, you might have got the Form 16 from both employers. While the first company may have deducted the tax correctly, the second might have deducted very little. It would have considered only the income for the rest of the year and given you the basic exemption of Rs 2 lakh, as also the deduction under Section 80C. However, these must have already been factored in by the previous company. "You might have to pay additional tax in such a situation," says Sudhir Kaushik, co-founder of tax filing portal, Taxspanner. com.

Whether when assessee has not been allowed any deduction u/s 43B in earlier years, provisons of Sec 41(1) will not apply in case of grant of waiver of interest - YES: ITAT

THE issue before the Bench are - Whether when the assessee has not been allowed any deduction u/s 43B in earlier years, provisons of Sec 41(1) will not apply in case of grant of waiver of interest to the assessee and Whether when the waiver of interest is a cash benefit, the provisions of Sec 28(iv) do not apply. And the verdict goes in favour of the assessee.

Facts of the case

Assessee is engaged in the business of manufacture of integrated circuits. The assessee had filed return of income for the assessment year 2005-06 declaring total loss of Rs.49,11,440/-.

Whether penalty is warranted, when revised return disclosing capital gains arising out of share transactions is filed, only when assessee was confronted with adverse evidence, during the process of investigation - YES: Madras HC

THE issues before the Bench are - Whether penalty proceedings are warranted, when the revised return disclosing the capital gains arising out of transaction in shares was filed, only when the assessee was confronted with adverse evidence, during the process of investigation and enquiry; Whether further, the fact that the assessee had filed revised returns and the same was accepted by himself, can efface the fact of non-disclosure of the income arising under the head of "capital gains" in the original return; Whether such conduct of assessee can be viewed as contumacious and mala-fide and Whether the application of penal provisions are not automatic and the levy itself depends upon the facts and circumstances of each case. And the verdict goes against the assessee.

Facts of the case

Assessee is an individual and had filed return of income on 29.07.2002, admitting salary income. On 11.03.2005, there was an enquiry in the assessee's wife's case as regards certain mutual fund transaction made by her. The wife was called upon to show the source of huge funding for investment in mutual funds. This led to further investigation. In the course of this enquiry and recording of statements, the assessee did not admit that the transactions in shares and the source of acquisition of shares, but later on the assessee admitted the same that he had filed revised return for the year 2002-03, wherein, he offered an amount of Rs.79,08,118 under the head of 'capital gains'. On 14.12.2005, a notice u/s 148 was issued, requesting revised return and on the assessee filing the revised returns, the assessment was completed, thereby assessing long-term capital gains. After completion of assessment, penalty proceedings were initiated on the incorrect particulars of income disclosed in the original returns.

The assessee objected and contended that the assessee had filed the details of the share transactions in its returns for the AY 2004-05 filed on 16.02.2005 and that even before the receipt of notice, he had paid the tax thereon in addition to the TDS. He submitted that there was no addition to the income to the revised returns for 2002-2003 filed by him on 09.05.2005 and hence, no concealment of income could be held to have been detected by the Authority. He pointed out that he had committed an error in the methodology of computing gains pertaining to transaction of shares, which should have been FIFO method. Based on this method corrected income was disclosed and since the original shares were acquired at very low rates, the revised calculation yielded large profits. The assessee also submitted that there was no concealment of income and the filing of revised returns was made voluntary to set right the error that had crept in the original returns.

However, the AO rejected the contention and observed that it was only when investigation was going on against assesse's wife, on the source of huge funding for investment in mutual funds, the assessee was confronted with the situation, where the Department had evidence against the assessee as regards the earning of income on the transaction in shares. It was observed that only then the assessee was forced to admit the same by filing revised returns. Thus, the AO concluded that there was no voluntary filing of revised return by the asseessee, and the penalty proceeding was rightly warranted.

On appeal, the CIT(A) agreed with the assessee that there was no justification for levy of penalty. Aggrieved, the Revenue had filed an appeal before the Tribunal.

The Tribunal, however, agreed with the contentions of the Revenue and pointed out that considering the fact that the second return itself came to be filed only after detection, the contumacious conduct of the assessee in not disclosing the gains earned in the share transaction certainly warranted levy of penalty. The Tribunal observed that mere filing of the revised return would not be sufficient to exonerate the conduct of the assessee in not originally disclosing the amount earned on capital gains on the sale of the shares. The Tribunal also observed that even if the Department had not come across any tangible evidence as regards concealment, yet, when admittedly the original return failed to disclose the assessable income and it was only after investigation, the revised income return was filed.

Aggrieved with this order of the Tribunal, the assessee has filed this present tax appeal before the High Court.

The counsel for the assessee contended that there was no allegation of concealment in the assessment order on the assessment made u/s 143(3) read with section 147. He further pointed out that there was a difference in the methodology of calculation of capital gains and hence, the correction was made out in the revised return. He further argued that the investigation referred to by the Revenue was only against the assessee's wife and there was no concealment of income by the assessee.

Having heard the parties, the High Court held that,

++ we do not find any justifiable ground to set aside the order of the Tribunal, upholding the levy of penalty under Section 271(1)(c) of the Income Tax Act. We may immediately point out herein that the above decision of this Court referred to by the assessee, does not, in any manner, advance the cause of the assessee, since, on facts, this Court accepted the reasoning of the Tribunal and cancelled the levy of penalty. The addition in that case itself arose on account of the assessee agreeing on the addition of income on the percentage of profit. Thus, when the assessment itself was completed as per the direction of the appellate authority adopting 1% of profit, which is not based on any material but based on an offer to purchase peace, this Court held that penalty could not be levied. Contrary to the assertion of the assessee, the facts herein clearly point out to the contumacious conduct of the assessee that but for the investigation and the enquiry made by the Revenue, the revised returns would not have come as regards the income relating to the capital gains, arising on the sale of shares;

++ it is seen from the facts that the enquiry herein made by the DDI was initiated under letter dated 11.03.2005 and a statement was recorded on 11.04.2005. Based on the enquiry, the revised return was filed by the assessee on 09.05.2005, offering an income of Rs.79,08,118/- under the head of capital gains. The original return filed made no reference to the sale of shares at all and it merely indicated the salary income received by the assessee. It may be of relevance to point out herein that leaving aside the valuation on shares, there is hardly any indication as regards the transaction in shares, which, even accepting the assessee's case, had not been a loss. Thus, when confronted with the question on the source of funds on the investment made in mutual fund by the assessee's wife, the assessee took his opportunity first to file the revised returns to set his assessment in order. The fact that the assessee had filed revised returns and the same was accepted, by itself, however, does not efface the fact of non-disclosure of the income arising under the head of "capital gains" in the original return. In the background of this conduct, we do not find any acceptable ground to set aside the order of the Tribunal as held by the Apex Court in a series of decisions;

++ it is not that every case of addition warrants levy of penalty. The application of penal provisions are not automatic and the levy itself depends upon the facts and circumstances of each case. On the incorrectness of the returns originally filed, not disclosing the transaction in shares, the proceedings subsequent to the statement filed certainly indicates the conduct of the assessee. Thus in view of the decision of of the Apex Court in Union of India Vs. Rajasthan Spinning & Weaving Mills on the law propounded on penalty, we reject this Tax Case Appeal and thereby confirm the order of the Tribunal.

No s. 271(1)(c) penalty even for unsustainable/ non-debatable claims if there is disclosure in the return

CIT vs. Nalin P. Shah (HUF) (Bombay High Court)

Though the income from the transfer of units of a mutual fund is exempt u/s 10(33), the assessee claimed a deduction for the loss of Rs. 3.08 crores suffered by him on transfer of US 64 units. The AO disallowed the loss on the ground that the exemption in s. 10(33) applied to a loss as well and imposed penalty u/s 271(1)(c). The CIT(A) confirmed the penalty. On appeal by the assessee, the Tribunal allowed the appeal on the ground that as the assessee had disclosed the details with the return, he had not filed inaccurate particulars of his income and that the making of a wrong claim / incorrect claim did not attract penalty u/s 271(1)(c). On appeal by the department to the High Court, HELD dismissing the appeal:

As the assessee had disclosed all details in the return of income, at the highest it can be said that the claim of the assessee was not sustainable in law. But as there was no furnishing of inaccurate particulars or concealment of income on the part of the assessee. penalty u/s 271(1)(c) could not be levied (Reliance Petroproducts 322 ITR 158 (SC) referred).

Clarification on Tax Audit

Clarification Regarding Applicability of SA 700 on Tax Audit Report under Section 44AB of The Income-Tax Act, 1961. - (05-07-2013)

As the members are aware that all audit reports in respect of audits of financial statements for period beginning on or after 1st April 2012 are to be issued in accordance with the requirements of SA 700(Revised) - Forming an Opinion and Reporting on Financial Statements. In this regard, ICAI has been receiving mails seeking clarification regarding applicability of SA 700 on tax audit reports, i.e. Form No. 3CA/3CB. Considering the fact that all tax audit reports are now mandatorily required to be filed online and that the format of tax audit report is prescribed by the Central Government, the Council in its 325th meeting held from 1st June to 3rd June, 2013 decided to defer the applicability of SA-700 (Revised) on the tax audit report under section 44AB of the Income-tax Act,1961 by one year i.e. the requirements of SA-700(Revised) are not applicable for tax audit reports filed up to 31st March, 2014. ICAI is further taking up the matter with the appropriate authorities so that suitable changes can be brought in the forms relating to tax audit

IT Department Sets Procedure for Rectification under section 154 for timely disposal of rectification filed

IT Department Sets Procedure for Rectification under section 154 for timely disposal of rectification filed

If there is one thing, common taxpayers always complained of was non-disposal or delayed action on rectification requests filed by an assessee. Rectification under section 154 is filed , when there is an apparent mistake on record, which the assessee wants to get it rectified post filing of tax return.

Full text of the instruction is produced below:

INSTRUCTION NO.3/2013, DATED 5-7-2013

Hon’ble Delhi High Court vide Judgment in case of Court On its Own Motion v. UOI and Ors. in W.P. (C) 2659/2012 dated 14.03.2013 has issued several Mandamuses for necessary action by income-tax Department one of which is regarding maintenance of “Rectification Register” in which details like receipt of applications under

CBDT Instructions On S. 143(1) Intimations And S. 154 Rectifications

INSTRUCTION NO.3/2013[F.NO.225/76/2013/ITA.II], DATED 5-7-2013

Hon’ble Delhi High Court vide Judgment in case of Court On its Own Motion v. UOI and Ors. in W.P. (C) 2659/2012 dated 14.03.2013 has issued several Mandamuses for necessary action by income-tax Department one of which is regarding maintenance of “Rectification Register” in which details like receipt of applications under section 154 of the IT Act, their processing and disposal are to be maintained. (Reference: Para 16 to 18 of the order).

Rate of exchange of conversion of each of the foreign currency WEF July 05, 2013

Notification No.70/2013-Customs (N.T.)

DATED THE 4^th July, 2013

S.O. (E). – In exercise of the powers conferred by section 14 of the Customs Act, 1962 (52 of 1962), and in super session of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.63/2013-CUSTOMS (N.T.), dated the 20^th June, 2013 vide number S.O.1771 (E), dated the 20^th June, 2013, except as respects things done or omitted to be done before such super session, the Central Board of Excise and Customs hereby determines that the rate of exchange of conversion of each of the foreign currency specified in column (2) of each of Schedule I

How to make income tax rectifcation application online

Receiving  notice from income-tax department becomes common today. Thanks to technological improvements and automated world of software coding. Often these software coding require modifications (rectification) that triggers mismatches and issues in the CPC Processing of income-tax returns. We could see that tax payers are saying that they are not getting the refund as claimed, or

exemption - Whether the word 'aggregate annual receipts' of other educational institution is to be understood as clubbing of annual receipts of all educational institutions run by an assessee society - NO: HC

THE issues before the Bench are - Whether once an educational society has been incorporated under the Societies Registration Act, it assumes the character of a juridical person; Whether when the status of such society is described as an association of juridical person in the return of income, the question of treating the assessee as an association of persons does not arise; Whether the real test for application of exemption benefits u/s 10 is the assessee, who claiming these exemptions is running educational institutions solely for education purposes and not for purpose of profit; Whether the word “aggregate annual receipts” of other educational institution

Whether interest received for delayed payment from customers can be said to have direct nexus with sales of the Undertaking, and hence would be eligible for deduction u/s 80IA - YES: ITAT

THE issues before the Bench are - Whether the interest received by the assessee from delayed payment from customers can be said to have direct nexus with such sale and hence would be eligible for deduction u/s 80IA; Whether the provision of leave encashment is ascertained liability and therefore, need not to be added back to the book profits u/s 115JB of the Act; Whether interest on FDRs could not be said to have been derived from eligible business, and therefore, the assessee is not entitled to deduction u/s 80IA of the Act in respect of such interest and Whether scrap generated out of stores and from repair of plant cannot be said to have been generated during the process of manufacture for the purpose of deduction u/s 80IA. And the verdict partly goes in favour of the Revenue.

Facts of the case

New Service tax refund procedure in case of services provided to SEZ unit/Developer:

CBEC has issued a Notification No. 12/2013-ST dated 01.07.2013 with a view to simplify the procedure of exemption of service tax, by way of refund, paid on the specified services received by the SEZ unit or the Developer, used for the authorised operation.