Note on 80 CCG

Finance Act 2012 has inserted a new section 80 CCG, This will be applicable for the A.Y. 2013-14.

Following conditions must be fulfilled to claim this deduction:

i. The gross total income of the assessee for the relevant Assessment Year should not exceed Rs. 10,00,000. 

Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for Exchange of Information with respect to Taxes with Guernsey

Whereas, an Agreement between the Government of the Republic of India and the States of Guernsey for the exchange of information with respect to taxes was signed at London on the 20th day of December, 2011 (hereinafter referred to as the said Agreement)

Whether when tax-exempt bonds were not available during entire period of six months after the accrual of long-term capital gains, assessee cannot claim Sec 54EC benefits on investments made later in REC bonds - No, it can: Bombay HC

THE issues before the Bench are - Whether when the tax-exempt bonds were not available during the entire period of six months after the accrual of long-term capital gains, the assessee cannot claim Sec 54EC benefits on investments made in REC bonds made later; Whether the assessee can be expected to perform the impossible and Whether Revenue can force the assessee to invest only in the bonds of one in preference to the other. And the verdict goes in favour of the assessee.

Facts of the case

Is Office Artwork Depreciable Property?

Depreciation

Many professional offices contain decorations (artwork, knickknacks, sculptures, memorabilia, etc.). Whether that office belongs to a Fortune 500 company, a professional services firm, or a family-owned business, some decorations are usually around to make customers feel comfortable and to give the business an air of success. Or they could be there just because the decorator said they were necessary. Whatever the

How Do I Calculate Fixed Assets Depreciation Under IFRS?

IAS 16 (of the IFRS) provides for two acceptable alternative approaches to accounting for fixed assets. The first of these is the cost model, under which an item of fixed asset is carried at its cost minus its accumulated depreciation. “So, how do I calculate fixed assets depreciation under the IFRS?” you may ask.
Before answering the question, let’s first have a look at what depreciation is, according to IFRS.

Depreciation under the IAS 16

Simply put. A company uses fixed asset (also known as “property, plant and equipment” abbreviated as “PP&E”) to run its business. Since they’re used overtime, the function of the fixed assets got declined as well as their value. The declined value (of the fixed asset) is called “depreciation”.
IAS 16 describes depreciation as,

Gift by company to subsidiary are dubious & not tax neutral – AAR

In  the context of section 47(i) and (iii), this gift referred to therein, is a gift by an individual or a Joint Hindu Family or a Human Agency. Section 47(iii) speaks of ‘any transfer of a capital asset under a gift, or will or an irrecoverable trust’. Execution of a will involves a human agency. Cannot the expression gift take its colour from a will with which it is juxtaposed, especially in the background of clause (i) of section 47 and clause (ii) which earlier existed. A gift by a corporation to another corporation (though a subsidiary or an

AAR not bound by own rulings. Transfer pricing & ROI filing provisions apply despite no income. Foreign company is liable for MAT u/s 115JB

In Re Castleton Investment Ltd (AAR)

The applicant, a Mauritius company, sold shares of Burroughs Wellcome (India) Ltd. The resultant capital gains were not chargeable to tax under the India-Mauritius DTAA. The AAR had to consider whether, as the Applicant had no income chargeable to tax in India, (a) the transfer pricing provisions were applicable to its, (b) section 115JB (MAT) was applicable to it and (c) it was liable to file a return of income. The AAR had to also consider whether it was bound by its own earlier rulings. HELD by the AAR:

Understanding Business Expenses

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http://taxbymanish.blogspot.in/2012/06/understanding-allowability-of-business.html

happy independence day

The link is the video of  song Maa Tujhe Salam

http://www.youtube.com/watch?v=OWeIBEKY3S4

Register online to view your EPF Account Passbook.

1. Register online to view your EPF Account Passbook.

2. The facility at present is only for the members for whom the employer has uploaded the Electronic Challan Cum Return for the wage month of May 2012 onwards.

3. There is no need to create and remember any user id and password. You have to use your mobile number and any of your following identification proof number such as PAN, AADHAR, NPR (National Population Register), Bank Account, Voter ID, Passport or Driving License to register and thereafter to login.

4. You can add multiple id numbers (one id against each of the listed types) and any one along with the mobile number can be used for the login.

Note:

•  One mobile number can be used for one registration only.

•  A registered member can view only one account details under one establishment. In case you are having more than one account under    one establishment, please apply for transfer through the Form 13.

•  One member can view up to a maximum of 10 accounts under different establishments. The 10 accounts can be viewed any number of    times. Get your old accounts transferred to the current one by using the Transfer Form 13.

•  Facility to display the accounts of inoperative accounts will be provided later through a request mode.

•  The facility is not for the current members of establishments having exemption under the EPF Scheme 1952.

  1. What is Member Portal?

 

Comparision between India and US GAAP

There are significant differences between Indian GAAP and US GAAP.  US GAAP stipulate stringent accounting treatment as well as disclosure norms, whereas their Indian GAAP in many cases have relaxed requirements ( AS 18,17,AS 3). Similarly, there are several areas where no Accounting Standard have been issued by ICAI . These differences lead to wide variations when Financial Results of Indian Companies are computed under US GAAP and it is found that Profits computed under US GAAP are generally lower

Some of these major differences between US GAAP and Indian GAAP which  give rise to differences in profit are highlighted hereunder: 1.      Underlying assumptions: Under Indian GAAP, Financial statements are prepared in accordance

Whether provisions of Sec 14A are applicable to expenditure incurred for earning dividend income from investments in foreign companies -

THE issues before the Tribunal are - Whether when assessee receives dividend both from foreign and domestic companies, interest expenditure incurred can be averaged and disallowed in terms of section 14A to the proportion of dividend income received from domestic companies, even though investement in shares were out of substantial free reserves and not from borrowings and Whether provisions of Sec 14A are not applicable to expenditure incurred to earn dividend income from investments in foreign companies. And the verdict goes in favour of the assessee.

Facts of the case

Assessee claimed dividend income of Rs.33,06,831 as exempt u/s 10(33) of the Act. The AO observed that the expenditure

S.54E exemption available on gain on sale of depreciable Assets

Exemption under section 54E of the Income-tax Act cannot be denied to the assessee on account of the fiction created in section 50. It is true that section 50 is enacted with the object of denying multiple benefits to the owners of depreciable assets. However, that restriction is limited to the computation of capital gains and not to the exemption provisions. In other words, where the long-term capital asset has availed of depreciation, then the capital gain has to be computed in the manner prescribed under section 50 and the capital gains tax will be charged as if such capital gain has arisen out of a short-term capital asset but if such capital gain is invested in the manner prescribed in section 54E, then the capital gain shall not be charged under section 45 of the Income-tax Act. To put it simply, the benefit of section 54E will be available to the assessee irrespective of the fact that the computation of capital gains is done either under sections 48 and 49 or under section 50. The contention of the Revenue that by amendment to section 50 the long-term capital asset has been converted into a short-term capital asset is also without any merit. As stated hereinabove, the legal fiction created by the statute is to deem the capital gain as short-term capital gain and not to deem the asset as short term capital asset. Therefore, it cannot be said

S. 143(1) assessment cannot be reopened u/s 147 in absence of “new material”

Telco Dadajee Dhackjee Ltd vs. DCIT (ITAT Mumbai Third Member)

The assessee filed a ROI in which it claimed deduction for non-compete fees and depreciation on leased premises which was accepted by the AO vide Intimation u/s 143(1). Thereafter, he issued a notice u/s 148 seeking to reopen the assessment on the ground that the expenses were not allowable. The assessee challenged the reopening on the ground that (a) the AO had not given a copy of the recorded reasons and (b) there was no fresh material to justify the reopening. Before the Tribunal, though the division bench agreed that there was no new material, the AM held that in the case of a s. 143(1) intimation, new material was not required while the JM took the contrary view. On a reference to the Third Member HELD by the Third Member:

Whether, for purpose of availing Sec 80IA(4) benefits, it is necessary for assessee to own infrastructure facility - NO, rules ITAT

THE issues before the Bench are - Whether, for the purpose of availing Sec 80IA(4) benefits, it is necessary for the assessee to own the infrastructure facility; Whether when the assessee is a contractual developer, which owns the construction activity and executes the development work, it suffices for the assessee to claim Sec 80IA(4) benefits and Whether when the assessee develops, operates and maintains an infrastructural facility, it meets the conditions for claiming Sec 80IA benefits. And the verdict goes in favour of the assessee.

Facts of the case

Assessee Company is engaged in the development of irrigation canals and Railways tracks including conversion of gauge. It filed its ROI claiming deduction 80IA(4) on the ground that it was a developer and had developed and

Reverse Charge Mechanism of Service Tax

Reverse charge mechanism is not a new concept in service tax. Under the reverse charge mechanism, instead of service provider, the service receiver is liable to pay service tax. In that case, the service receiver will register himself with service tax authorities and file the required returns. The general exemption of Rs. 10 lacs is not available for that. The government has imposed the liability on service receivers before that also such person receiving services by goods transport agencies but these requirements are mandatory for companies and government authorities receiving the services in old days.

The Government has issued Notification no 30-2012 dated 20/06/2012 where it has given complete list of services that are covered under reverse charge mechanism. In some cases both service receiver and service provider has to pay service tax in prescribed ratio. The complete list is as under:-

Sr. No.	Description of service	Percentage payable by service provider	Percentage payable by service receiver
1	Insurance Agent	Nil	100%
2	Goods transport agency (Applicable to transport by road)	Nil	100%
3	Sponsorship	Nil	100%
4	Arbitral Tribunal	Nil	100%
5	Support services by government or local authorities	Nil	100%
6	Hiring of motor vehicle to carry passenger on abated value	Nil	100%
	Hiring of motor vehicle to carry passenger on Non-abated value	60%	40%
7	Individual Advocate	Nil	100%
8	Supply of man power or security services (wide notification no 45-46 wef 7-8-12)	25%	75%
9	Works Contracts	50%	50%
10	Import of Services	Nil	100%
11	Services by director to company (wide notification no 45-46 wef 7-8-12)	Nil	100%

 However there are certain conditions and exemption, where satisfaction of those conditions will attract liability of service tax under reverse charge mechanics.

1. Insurance Agents:- Any service provided by insurance agents to insurance companies will be liable for service tax without any exemption or amount limit.

2.    Goods transport agency:- The reverse charge is applicable only when consignor or consignee is a factory registered under factory act, registered society, co-operative society, any dealer registered for under central excise act, any body corporate or any partnership firm.

3.    Sponsorship:- where service receiver is a body corporate or a partnership firm.

4.    Arbitral tribunal:- where service provider is arbitral tribunal and service receiver is a business entity having turnover more than Rs. 10 lacs in preceding financial year.

5.    Advocate :-   where service provider is individual advocate or firm of advocate and service receiver is a business entity having turnover more than Rs. 10 lacs in preceding financial year.

6.    Support services to government or local authorities:- Where service receiver is any business entity.

7.    Hiring of any motor vehicle:- where service provider is Individual/ proprietorship/ partnership/ HUF and service receiver is company registered under companies act 1956 or business entity registered as body corporate in taxable region.

8.    Supply of manpower or security services:- where service provider is Individual/ proprietorship/ partnership/ HUF and service receiver is company registered under companies act 1956 or business entity registered as body corporate in taxable region.

9.    Work Contract:- where service provider is Individual/ proprietorship/ partnership/ HUF and service receiver is company registered under companies act 1956 or business entity registered as body corporate in taxable region.

10. Import of services:- Any servicers provided by any service provider to any service receiver.

11. Services of Director to company:-  The services provided by any director (Individual) to the said company. However it is clear now that services provided by director in employee employer relationship do not attract service tax.

However some other explanations are also there. In case of goods transport agency, a person who is liable to pay freight shall be treated as person who receives the service. In case of work contract services, if both service provider and service receiver is liable to pay tax then service recipient has option to choose the valuation method independent of service provider.

However the government has issued the notification and made the reverse charge liable on some entities where turnover exceeds Rs. 10 lacs. In such cases that entities has to register itself with service tax authorities even the amount of service received from such persons is in hundred of Rupees. Once the person has registered under service tax, he has to file the return half yearly even if the taxable turnover is Nil.

In case of advocate, they have to indentify which of their clients has turnover of more than Rs. 10 lacs and ask them to deduct and pay service tax and for others they have to pay service tax. It is also not clear what happen when the service receiver will not follow the provisions. In that case whether the service provider is liable for payment of taxes.

In case of hiring of vehicle, the provisions are applicable to companies whether Indian companies or foreign companies. If they receive any kind of service by hiring of any vehicle they have to deduct service tax and register themselves with service tax authorities.

However the intention of government is very clear for this type of arrangement. They want to collect the tax from the person receive the services and apply the concept of tax deduction at source so that the concealment of tax revenue could minimize. The intention and formula applied by the government is no doubt a good one but there are practical difficulties also. The companies or entities which are not providing any kind of service but receiving any of the above mentioned services shall get themselves registered and pay the service tax. Even in case they have stop receiving such services they have to file a nil return with the authorities.

Today is my First Birthday

Dear Readers
Today our Blog turns One . means completed one complete year.

The small tax & accounting blog which started just one year back had achived good success across the globe in sharing the knowledge.

This happens only because you all had supported and share the same to others .

We know that knowledge is a happiness which increases with sharing only.

I still need you support in sharing the same so that we can provide to the society with all kinds of quality knowledge in tax & accounts.

The blog now reaches to the great mass of tax & accounting professional not only in India but across the globe and able to spread the positive vibration of knowledge with sharing to all of them.

I  also request you to sent your thoughts or any article on tax & accounting to the e mail ID taxbymanish@yahoo.com .  I will publish the same on your favourite blog.

once again thanks for your love and support and please party today.

Whether, in view of amendment vide Finance Act, 2002, w.e.f 1.4.2003, brought forward capital loss can still be set off against short-term capital gains in AY 2003-04 - YES: ITAT Special Bench

THE issues before the Bench are - Whether the words and phrases of technical legislation should be construed according to the rules of grammer; Whether, in view of the amendment vide Finance Act, 2002, w.e.f 1.4.2003, the brought forward capital loss cannot be set off against short-term capital gains; Whether the relevant amendment to Sec 74(1) refers to capital loss of the current year only and not brought forward capital loss ; Whether income tax refund is chargeable to tax under the head 'income from other sources' and Whether, in view of the clarificatory amendment vide Finance Act, 2012, interest u/s 234D is leviable in the case of an assessment year commencing before the first day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date. And the verdict partly goes in favour the assessee.

ITAT asks to check availability of exemption under DTAA between India & UAE

Hon’ble Jurisdictional High Court has held that income in this case is chargeable u/s. 44D read with section 115A of the Act. However, I also note that tribunal in earlier round remitted the issue to the file of the Assessing Officer to give the finding as to whether the assessee is entitled to exemption under DTAA between the India and UAE. In this view of the matter, I find considerable cogency in the submissions of the assessee’s counsel that the matter needs to be referred back to the Assessing Officer to consider the same. Accordingly, I remit the issue to the file of the Assessing Officer to look into matter and give a finding as to whether the assessee is entitled for relief under Article 22 of the DTAA and if so, grant the same, as per law. Needless to add the assessee should be given adequate opportunity of being heard.

Anaysis of reverse charge on director fees and security service

BRIEF: In the absence of mention of any date in the notification, it shall be effective from the date of publication in official gazette i.e. 7th August, 2012. For services provided between1st July, 2012 to 6th August, 2012, directors will be liable to charge service tax.

Nature of service	% of ST payable by service Provider	% of ST payable by service Recipient
Services  by a director of a company to the said company from 7th August, 2012	Nil	100%
Services  by a director of a company to the said between1st July, 2012 to 6th August, 2012	100%	NIL