Amendment in CENVAT Credit Rules, 2004, requiring reversal of CENVAT credit on input services used in the manufacture of goods, on which duty has been remitted

This Tax Alert gives an update on the recent amendment in the CENVAT Credit Rules, 2004 vide Notification No. 1/2014-Central Excise (N.T.) dated 8 January 2014, issued by the Ministry of Finance,

The amendment in Rule 3(5C) of the CENVAT Credit Rules, 2004 requires the reversal of CENVAT credit on input services used in the manufacture of goods, on which duty has been remitted under Rule 21 of the Central Excise Rules, 2002, due to loss or destruction

Eight simple way to plan your tax – Salary Employee

You have got only a few more months to complete this financial year. Very soon you will get a call from your company to submit the proofs for tax saving investments. So why don’t you spend some time on organising your tax plan.
1. Proper Allocation of Annual compensation
Restructuring your salary with some additional components can reduce your tax liability. This restructuring doesn’t require any additional cash outflow. The following components can be efficiently used to reduce your income tax liability.

Taxation of future & options

The experience says that the common taxpayers are very confused about the taxability of income from futures & options or treatment of lossses on same. They also ask us, how to calculate turnover of this, do we need to get the books audited. Please read on to clear all your doubts……
The provision of the Income Tax Act, 1961 treates income from futures & options (F&O) as normal business income. Moreover, on trading in F&O turnover for tax audit u/s 44AB turnover in such types of transactions is the grossing up of the difference of all the trades entered, whether positive or negative. Premium received on sale of option is to be added. Difference on reverse trades is also to be considered.

PAN – Online / Offline Verification & Pan Verification Certificate

There are Two types of PAN Verification procedure-
1. Online and
2. Offline.

The Online PAN Verification can be verified by filling out the core details mentioned in the PAN Card. This facility can be used by the entities who receive copy of PAN application for any purpose. This facility can also be used by the PAN applicant to know their PAN. For government users and financial institutions online bulk PAN verification facility is also available. Kindly write to the DIT(S)-III, Directorate of Income-tax(Systems), E-2, ARA Center, Ground Floor, Jhandewalan Ext., New Delhi – 110055.

Brief Notes for TDS on Property u/s. 194 (IA).

Section 194(IA) has been inserted by Hon’ble Finance Minister Mr. P. Chidambaram while presenting the Budget 2013 and would come into force with effect from 1st June 2013.

The main motive behind such action is to curb the laundering of black money through sale of immovable property (other than rural agricultural land).

The section burdens the buyer of the property to deduct tax @ 1% of the amount paid or payable to the seller in case of value of transaction exceeding Rs.50,00,000/-.

Whether Sec 54F benefit is not available merely because assessee had initiated construction of house property before sale of shares - NO: Delhi HC

THE issue before the Bench is - Whether Sec 54F benefit is not available merely because assessee had initiated construction of house property before sale of shares. And the answer goes against the Revenue.

Facts of the case

How to Save Capital Gains Tax (LTCG) when Selling Land / Plot

Buying and Selling of Property, Plots, Flats, Land, Independent Houses, Floors or any other form of residential property is a frequent activity in present scenario. Especially with so much activity in the real estate sector, it has been considered to have given good returns. The attractive home loan schemes have made it even more lucrative. However, the transactions are often subject to complicated income tax structure. Here is one case that may solve some of your queries.

Do's & Don't while e-Filing of ITR-I to VII.

e-Filing - Do's & Don't

Impact of Errors made while filing returns

• Returns can be classified as defective u/s 139 (9) and in some scenarios the return can be declared in valid / Non Est. ITD is not introducing this concept to cover certain types of errors in order to prevent future grievances
• Computation Errors - In electronic filing it has been noticed that most of the errors are due to data errors as filed by the assessee This includes non filling of key schedules, wrong details etc resulting in rectification requests etc which delay closure of processing
• Inability to pay refunds to the assessee

Whether while granting administrative approval u/s 158BG CIT is obliged to give a hearing opportunity to assessee - NO: HC

THE issues before the Bench are - Whether while granting administrative approval u/s 158BG CIT is obliged to give a hearing opportunity to assessee and Whether in case an assessee follows cash basis of accounting, interest income must be taken on receipt basis only. And the verdict partly goes in favour of Revenue.

Facts of the case

Both the assessees are doctors, carrying on medical profession. A search u/s 132 was carried out at the residence and the business premises of the assessee. During search, certain

India, Korea agree to expeditiously revise DTAA provisions; Indian Customs may notify Korean counterpart for speedy clearance of Indian goods

AT the 4th India-Korea Finance Ministerial Meeting here today, the Indian Finance Minister, Mr P Chidambaram, said that India and Korea share a common vision towards building an equitable and just politico-economic international order. Mr Chidamabaram said that relations between India and Korea are based on strong historical ties, shared cultural heritage, commitment to democracy and a mutual desire to establish and strengthen long-term comprehensive strategic partnership.

At the meeting, both sides agreed to make an effort to conclude the revision of the Korea-India

S. 234E: High Court grants interim stay on levy of fee for failure to file TDS statement

Namath Mapila LP School vs. UOI (Kerala High Court)

S. 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day’s delay in filing the statement of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). The constitutional validity of s. 234E has been challenged in the Kerala High Court. Vide an interim order dated 18.12.2013, the High Court has admitted the Petition and granted a stay of proceedings for a period of two months. 

Section 35-D - Amortisation of Preliminary Expenses

Where an Indian Company or non- corporate resident assessee incurs any expenses at the time of commencement of business or on extension of existing undertaking or setting up of new unit, then deduction is allowed in respect of such preliminary expenditure.

Deduction of Interest on House Loan u/s. 24(b) for Asstt. Year 2014-15.

With reference to circular issued by Income Tax Department No. 8/2013 dated 08.10.2013, deduction of House Loan Interest claiming condition u/s. 24(b) are as follows:

Whether when assessee converts premises into gym by installing necessary equipments, even then its income is to be treated as rental income from house property - NO: ITAT

THE issues before the Bench are - Whether rental income can be considered as business income when this was not a case of simple letting out of a premises but the assessee had developed and prepared the premises as a fitness centre/gymnasium by installing the all requisite equipments, machines and other facilities and Whether disallowance of Municipal taxes by invoking section 43B is justified when the amount has been paid on or before the due date of filing the return of income u/s 139. And the verdict goes against the Revenue.

Facts of the case

Whether when assessee receives interest on additional compensation in lieu of his land acquired by the State after Supreme Court decision, interest is to be charged retrospectively - NO: HC

THE issue before the Bench is - Whether when the assessee receives interest on additional compensation in lieu of his land acquired by the State after the Supreme Court decision, interest is to be charged retrospectively. And the answer goes in favour of the assessee.

Facts of the case

upholding the levy of penalty

the Mumbai Income-tax Appellate Tribunal (‘ITAT’) has recently issued an important ruling in the case of Asia Pacific Performance SICAV (‘APP’) upholding the levy of penalty for concealment of income and furnishing of inaccurate particulars because the tax payer wrongly set-off its exempt long-term capital losses (‘LTCL’) against taxable long-term capital gains (‘LTCG’).

Important Transfer Pricing Controversy Referred To Special Bench

Vide order dated 06.01.2014 the Special Bench in the case of Maersk Global Service Centres (India) Pvt. Ltd has directed that the questions referred to it be reframed as follows:

(1) Whether for the purpose of determining arm’s length price of international transactions of the assessee-company, providing back office support services to their overseas associated enterprises, companies performing KPO functions should be considered as comparable?
(2) Whether, in the facts of the assessee’s case, companies earning abnormally high profit margin should be included in the list of comparable cases for the purpose of determining the arm’s length price of an international transactions?

The matter is placed for hearing on 8.1.2014. It has also been directed that assessees desiring to intervene in the matter may contact the Registry of the ITAT, Mumbai. 

RBI Notification with respect to put and call options

We are pleased to release an alert which summarizes the notification issued by the Reserve Bank of India (RBI) with respect to “put and call options” associated with the Equity shares and Compulsorily Convertible Debentures treated as instruments of Foreign Direct Investments (FDI) in India. This notification is in line with the notification issued by the Securities Exchange Board of India (SEBI) on 3 October 2013 whereby it legitimised the instruments issued with “put and call options”.It is a positive step to streamline the SEBI notification, the intent as captured in the Companies Act 1956 and the Foreign Exchange Management Act 1999 along with the FDI policy.

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SUMMARY OF FINANCIAL ACCOUNTING RATIO

 

PROFITABILITY RATIO:

Financial Ratio	Formula	Measurements
Return on Total Assets	Operating profit before income tax + interest expense/ Average total assets	Measures rate of return earned through operating total assets provided by both creditors and owners
Return on ordinary shareholders’ equity	Operating profit & extraordinary items after income tax minus Preference dividends / Average ordinary shareholders’ equity	Measures rate of return earned on assets provided by owners
Gross Profit Margin	Gross Profit / Net Sales	Profitability of trading and mark-up
Profit Margin	Operating profit after income tax / Net Sales Revenue	Measures net profitability of each dollar of sales