THE ISSUE BEFORE THE COURT IS - Whether the seized material must have some nexus or relevance to the additions sought to be made and must be relevant for the belief formed regarding income having escaped assessment. YES is the verdict.
Friday, 28 April 2017
Mandatory return-filing before due-date to claim tax-holiday not 'discriminatory'; Upholds Constitutional validity
Delhi HC dismisses
assessee’s (100% EOU) writ for AY 2007-08, upholds constitutional validity of
Sec. 80A(5) as well as fourth proviso to Sec. 10B(1) (the sections mandate
filing of return of income within prescribed due-date u/s 139(1) in order to
claim tax holiday u/s. 10A/10B); Assessee submitted that the provisions
discriminate between two sets of assessees – one, who file return u/s. 139(1)
but claim the deduction subsequently by way of revised return u/s. 139(5), and
another set of taxpayers, who could not file return within due date but claim
the deduction in the original return filed belatedly u/s. 139(4) and therefore
violative of Article 14 of the Constitution; HC observes that the provisions
did not curtail any vested rights of taxpayer but it only imposed an obligation
to claim deductions in a timely manner and in the return so filed; HC also
refers to SC ruling in Nallamilli Ramli Reddi to hold that Article 14 permits
reasonable classification if it is based on intelligible differentia and it has
reasonable connection with the object sought to be achieved; Noting that the
objective behind insertion of the two provisions was to defeat multiple claims
of deductions and to ensure better tax compliance, HC rules that “it is open to
legislate and prescribe different conditions in respect of those who claim
benefits, just as the substantive provisions which stipulate the conditions
(kind of accounts to be maintained, eligibility criteria, etc.).”; Also relies
on SC rulings in Kedarnath Jute Manufacturing Co. Ltd. and Sanjay Kumar Jain to
uphold the validity of fourth proviso, being merely a qualifying proviso, which
seeks to limit the general provision in Sec. 10B(1) with a further stipulation
or condition:HC
Sunday, 23 April 2017
Few Points on ICDS
(a) ICDS will decide the turnover required to be computed for Presumptive
taxation
(b) The CBDT issued a FAQ on March 23, 2017
and details of same available at
following link.
(c) ICDS applicable only to Income from
business/profession and Income from other sources
(d) The concept of prudence is no more
applicable and hence no expected loss being applicable
(e) Unlike accounting standard which uses
word “shall’, the ICDS uses the word “should” only.
(f) For 9 ICDS, there are transitional
provisions.
(g) In case there is no Tax audit, then
the disclosure of ICDS required to be
made at computation.
(h) For computation of service work in
progress, there are following method
Ø
Physical
measurement
Ø
Estimated
Cost
(i) Act & rules both will prevail over ICDS but the supreme court
judgement are debatable.
(j) For construction contract, the
transitional provision is that for
existing old pprojects, they can continue with their old method till their completion.
(k) Provide for interest income in case
the customer contract mention the same and in case same is debatable, then provide for bad debt u/s 36(1)(vi).
(l) Capitalise all interest expenses even
the duration of creation of asset is
less than 12 months.
(m) Provision of expenses must be
reasonable
(n) Recognition of contingent asset.
(o) Section 115A - Tax on special case - ICDS applicable
(p) Any change is accounting policy is
retrospective and any change in accounting estimate is prospective.
(q) ICDS not applicable to assesse who follow
cash system. Also not applicable to
Individual/ HUF who not subject to tax audit.
(r) No completed contracted method (CCM) now exist, only PCM ( Percentage
Completion Method).
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