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rchgiri

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First topic message reminder :

Please find the following links of ICAI which are helpful for the students who are appearing for CS Executive/Professional December 2016 Examinations.

(A) [You must be registered and logged in to see this link.]

for CA Direct Tax Laws Supplementary Study Materials as amended by Finance Act 2015 [Relevant for May 2016 and November 2016 examinations]

(B) [You must be registered and logged in to see this link.] & [You must be registered and logged in to see this link.]

for CA Indirect Tax Laws Supplementary Study Materials as amended by Finance Act 2015 [Relevant for May 2016 and November 2016 examinations]

&

(C) [You must be registered and logged in to see this link.]

for Select Cases of Direct Tax Laws & Indirect Tax Laws [Relevant for CA May 2016 and CA November 2016 examinations]

published by The Institute of Chartered Accountants of India.

Have a happy Exam Preparation.



Last edited by rchgiri on Sun 3 Jul 2016 - 22:25; edited 16 times in total (Reason for editing : As amened as per Finance Act 2015)


rchgiri

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Six steps to e-filing your income tax return

July, 06th 2016

STEP 1. Register yourself
To e-file your income tax return, you will have you register on the income tax Department's online tax filing site (incometaxindiaefiling.gov.in). You have to provide your permanent account number (PAN), name and date of birth and choose a password. Your PAN will be your user ID.

STEP 2. Choose how you want to e-file
There are two ways of e-filing your income tax return. One is to go to the download section and select the requisite form, save it on your desktop and fill all the details offline and then upload it back on the site. Or you can choose to fill the form online by selecting the quick e-file option.

STEP 3. Select the requisite form
ITR-1: For individuals earning a salary, pension, or income from property or sources other than lottery.
ITR-2: For those earning capital gains. ITR 2A for those owning more than one house but no capital gains.
ITR 3, 4 and 4S: Professionals and business owners.

STEP 4. Keep the documents ready
Keep your PAN, Form 16, interest statements, TDS certificates, details of investments, insurance and home loans handy. Download Form 26AS, which summarises tax paid against your PAN. You can then validate your tax return with Form 26AS to check your tax liability.
If you earn more than Rs 50 lakh, from this year you will have to fill an additional column —"AL" or assets and liabilities. You will have to disclose the value of your assets and liabilities. Assets have to be declared at cost.

STEP 5. Fill form and upload
If you choose to fill the form offline, after you have downloaded the form and filled all the details, click on 'generate XML'. Then go to the website again and click on the 'upload XML' button. You will have to first log in to upload the XML file saved on desktop and click on submit.

STEP 6. Verify ITR V
On submitting your ITR form, an acknowledgement number is generated. In case the return is submitted using digital signature, you just have to preserve this number. If the return is submitted without a digital signature, an ITR-V is generated and is sent to your registered email ID.
The tax filing process is incomplete and ITR is invalid unless your ITR V is verified. You can electronically verify or mail the signed ITR V to the processing centre in Bengaluru within 120 days of filing the return.

Source: [You must be registered and logged in to see this link.]

rchgiri

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These things must be included in your income tax return

July, 06th 2016
The income tax return season is in full swing with 31st July approaching fast. While filing the income tax return salaried people only provide copy of the form No. 16 to the person preparing his income tax returns without any further details. This is due to the impression that interest on saving account is fully exempt and tax on their fixed deposits has already been deducted so they need not show these items while filing their income tax return. However, it is not correct approach.

Additionally there are many items which are taxable but are omitted due to oversight. With this article I have attempted to cover certain items of income which are taxable, but unknowingly we tend to ignore in our return of income.

Savings account and fixed deposits interest:

There are some other incomes which people normally presume to be tax free or not required to be included in the return of income. One of such items is interest on saving bank account. Though interest on saving bank account is eligible for deduction under Section 80 TTA up to Rs. 10,000 in a year but even if the amount of interest on saving bank account is less than Rs. 10,000 legally you are required to include it in your income under the head “Income from other sources” and claim deduction under Section 80 TTA. Likewise bank deducts tax on interest on your bank fixed deposits so you are under the impression that the tax liability in respect of such interest stands discharged, which is not true. Please bear in mind that even if tax is deducted at source on FD interest, the TDS rate and the rate which is normally applicable in your case is different. The tax is deducted @ 10% where tax rate applicable to you may be 20% or 30%. It is your liability to discharge the differential tax liability.

Also include interest in respect of fixed deposit with banks which have been renewed on maturity and are not reflected in your bank accounts. Do not forget to include the accrued income on NSC etc. purchased in the earlier years.

Income earned on investment of minor child:

Any income earned by a minor child is required to be clubbed with the income of the parent whose income is higher. Parents normally invest money belonging to their minor child received as gift on several occasions. The income/interest earned by the minor on these investments is required to be included in the income of the parent. The amount to be clubbed in the income of parents is over Rs. 1500/- per child so any interest/income of each minor is exempt up to Rs. 1,500.

Capital gains on switching of units of mutual funds during the year:
With more and more people opting the route of investing through the route of mutual funds, cases being discussed here would be on higher side. We as mutual fund investors shift from one scheme to another for various reasons without there being any corresponding entry in the bank statement. The switching may be due to below average performance or regular transfer of funds from one scheme to another scheme like Systematic Transfer Plan (STP) or Systematic Withdrawal Plan (SWP).

Since the units switched are of the same mutual funds house these do not get reflected in the bank account so your chartered accountant may not even come to know about it. It might escape your memory as well by the time you sit down to prepare your tax return.

The profit/loss on switching of units may be short-term or long-term entailing different tax treatment. Even tax treatment for debt fund is different from equity oriented funds. Disclose such switch over transaction to your Chartered Accountant for proper and correct treatment of loss or profit on such switch.

Notional rental income in case more than one house property is self occupied.

As per the income tax laws any income from your house property is taxable under the head “Income from house property”. For a self occupied house the taxable value of the same is taken at nil. However this option is available in respect of only one house property and in case you are occupying more than one house for yourself or your family members, you have to exercise the option to treat any one of the house as self occupied and the other/s are deemed to have been let out. In respect of such deemed to have been let out property you have to offer the notional rental income for tax. Please note notional rent is not the same as nominal rent. The income to be offered is rent which is expected to be received in respect of the property. Your Chartered Accountant will be in a position to help you in ensuring that your tax treatment of additional property is correct.

There are many people who own more than one house and the same are used either by themselves or by their parents. Since no rent is in fact received in majority of the cases, tax payers are under the impression that they are not liable to pay any tax on extra house property. Such situation may also arise in case you have a house property in your native place which is not let out and thus is deemed to be self occupied by you in addition to the property used for your residence at your work place.

Gifts or other promotional benefits received by you in case you carrying on business

This is the age of discounts and gifts in business. The same is offered not only to the customer but also to the businessman by the company manufacturing / distributing the product. So a few of you might have enjoyed tangible and valuable gifts from your business associates. Some of you would have been treated with foreign tours as incentives for achieving certain targets. Since such items are not reflected in the bank account and thus not accounted in your books and thus go unreported. Please disclose this to your Chartered Accountant to be fully compliant.

I am sure this discussion will help you better comply with the law and help you make your life easier.

Source: [You must be registered and logged in to see this link.]

78 5 ways to verify your income tax return on Thu 7 Jul 2016 - 12:08

rchgiri

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5 ways to verify your income tax return

July, 01st 2016
With just a little over 4 weeks left till the deadline for filing income tax returns (ITR), most people have started filing their ITR.

An ITR after being filed has to be verified by the assessee. It is not treated as valid until it is verified by the taxpayer. In the existing process, a taxpayer can verify his/her return electronically or physically (i.e by sending signed ITR-V to Centralized processing Center (CPC) in Bangalore).

Individuals/ HUFs who file their return in form ITR-4 and are required to get there accounts audited have to compulsorily file their returns using Digitally Signed Certificate. Consequently, they do not need to verify the returns as the returns are digitally signed. Taxpayers have the option to e-verify their respective returns at the time of uploading or after uploading. In case of an already-uploaded return, taxpayers can e-verify the same by clicking on the e-verify the same by clicking on the "e-Verify Return" option under the "e-file" tab after logging into the site.
T
axpayers can verify the return using any one of the following methods:

E-verification modes

1. EVC received on the registered mobile number and e-mail. Electronic Verification Code (EVC) is a 10 digit alphanumeric code which can be generated through an e-Filing portal and is valid for 72 hours.

2. Aadhaar OTP

3. Login to e-Filing through net banking.

4. Bank account-based validation

Physical Verification / Paper verification

5. Alternatively, you can verify your return by sending the physical acknowledgment (ITR-V) to CPC Bangalore.


How to e-verify through EVC: Under this alternative, two options are displayed to the taxpayers, which are:

1. "I already have an EVC to e-verify my return."

2. "I do not have an EVC and I would like to generate EVC to e-verify my return."

Under the first option, the user sees a screen where he has to enter the pre-generated EVC in the provided text box and click "Submit" to e-verify. No further action is required.

Under the second option, the user can get the EVC on his registered email ID and mobile number. (This option is available for taxpayers whose total income is less than Rs 5 lakh and there is no refund).

Also read: Step-wise filing of ITR & all the links you need

Click "EVC - to registered email ID and mobile number". Enter the EVC received in your mobile number and email ID in the provided text box and click "Submit". You will receive a system generated message that your return has been e-verified. You should keep a printout of this message. No further action is required.

How to e-verify through Net Banking:

You can log-into your net banking account and click on the "income tax e-filing tab" and subsequently you will be redirected straight to the income tax site.

After logging into the income tax site, click on the option "View Returns/ Forms" to see e-filed tax returns. Then select the option "Click here to view your returns pending for e-verification" and then click on "e-verify". No further action is required.

How to e-verify through Aadhaar OTP:
To generate Aadhaar OTP (One-Time-Password), the taxpayer's PAN and Aadhaar must be linked to the income tax website and your mobile number must be linked to your Aadhar.

If your Aadhaar is not linked to the income tax e-filing portal, then a pop-up will appear every time you log in to your account, which would ask you to link your Aadhaar with the e-filing portal. You just need to fill in your Aadhaar number in the box given in the pop-up and your Aadhaar will get linked to the e-filing portal.

OTP is generated and sent to the mobile number registered with Aadhaar. So make sure that your correct phone number is updated in your Aadhaar card details. Enter Aadhaar OTP in the text box provided and click on 'Submit'. Success page is displayed. No further action is required.
Note that the Aadhaar OTP as EVC is valid only for 10 minutes.

How to e-verify through Bank Account-based Validation System:

This is the most recent mode introduced by the Income Tax Department for the assessee to e-verify their return. Now taxpayers e-verify their ITRs by providing their banks details like account number, Indian Financial System Code (IFSC), email address and mobile phone number. These details will then be validated against the details with the bank. Electronic Verification Code (EVC) will be sent by the e-filing portal to the assessee's email ID and mobile number, which he or she can use to e-verify the return. This would help those assessees to e-verify their ITRs who do not have the Aadhaar card or Net banking facility, but do have a bank account. If you e-verify using any of the above methods you will receive a system generated message that your return has been e-verified. You should keep a printout of this message.

How to physically verify by sending ITR-V :

If the taxpayer is not able to e-verify immediately because of any reason, then he/she can download the ITR-V, sign it manually and send it to CPC through post. This ITR-V should reach CPC within 120 days from the date of upload of the return to be treated as a valid return.
ITR-V is a one page document which you need to sign in blue ink and send it via ordinary post or speed post. You cannot courier the ITR-V. If you've downloaded the ITR-V from the Income Tax Department's website, you'll need a password to open it.

Password to open ITR-V is your PAN number in lower letters along with DOB. If your PAN is "AAAPA1111F" and DOB is 01/01/1975, then your password will be "aaapa1111f01011975".

You do not need to send any supporting document along with the ITR-V. Just send the one page signed ITR-V.

When your duly signed ITR-V is received and entered in the records at CPC you will receive an email at your registered email ID that the ITR-V has been received and your return has been verified.

Source: [You must be registered and logged in to see this link.]

rchgiri

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Circular No. 35 of 2016
F No.275/29/2015-IT (B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

Dated: 13th October, 2016

Subject: Applicability of TDS provisions of section 194-I of the Income-tax Act, 1961 on lump sum lease premium paid for acquisition of long term lease-regarding.

TDS u/S. 194-I on lump sum lease premium paid for acquisition of long term lease

Section 194-I of the Income-tax Act, 1961 (the Act) requires that tax be deducted at source at the prescribed rates from payment of any income by way of rent. For the purposes of this section, “rent” has been defined as any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or machinery or plant or equipment or furniture or fittings

2. The issue of whether or not TDS under section 194I of the Act is applicable on ‘lump sum lease premium’ or ‘one-time upfront lease charges” paid by an assessee for acquiring long-term leasehold rights for land or any other property has been examined by CBDT in view of representations received in this regard.

3. The Board has taken note of the fact that in the case of The Indian Newspaper Society (ITA No. 918 & 920/2015), the Hon’ble Delhi High Court has ruled that lease premium paid by the assessee for acquiring a plot of land on an 80 years lease was in the nature of capital expense not falling within the ambit of Section 194-I of the Act. In this case, the court reasoned that since all the rights easements and appurtenances in respect of the said land were in effect transferred to the lessee for 80 years and since there was no provision in lease agreement for adjustment of premium amount paid against annual rent payable, the payment of lease premium was a capital expense not requiring deduction of tax at source under section 194-I of the Act.

4. Further, in the case Foxconn India Developer Limited (Tax Case Appeal No. 801/2013), the Hon’ble Chennai High Court held that the one-time non-refundable upfront charges paid by the assessee for the acquisition of leasehold rights over an immovable property for 99 years could not be taken to constitute rental income in the hands of the lessor, obliging the lessee to deduct tax at source under section 194-I of the Act and that in such a situation the lease assumes the character of “deemed sale”. The Hon’ble Chennai High Court has also in the cases of Tril Infopark Limited (Tax Case Appeal No. 882/2015) ruled that TDS was not deductible on payments of lump sum lease premium by the company for acquiring a long-term lease of 99 years.

5, In all the aforesaid cases, the Department has accepted the decisions of the High Courts and has not filed an SLP. Therefore, the issue of whether or not TDS under section 194-I of the Act is to be made on lump sum lease premium or one-time upfront lease charges paid for allotment of land or any other properly on long-term lease basis is now settled in favour of the assessee.

6. In view of the above, it is clarified that lump sum lease premium or one-time upfront lease charges, which are not adjustable against periodic rent, paid or payable for acquisition of long-term leasehold rights over land or any other property are not payments in the nature of rent within the meaning of section 194-I of the Act. Therefore, such payments are not liable for TDS under section 194-I of the Act.

Hindi version follows.

(Sandeep Singh)

Under Secretary to the Govt. of India

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Case Name : Mr. Nimain Charan Biswal (Securities And Exchange Board Of India)
Appeal Number : WTM/RKA/IMD/WRO/120/2016
Date of Judgement/Order : 07/09/2016
Related Assessment Year :
Courts : Securities Appellate Tribunal

In one of the recent rulings of the Securities Appellant Tribunal (’Tribunal’), Mumbai, the interim order passed by SEBI in the matter of Neesa Technologies Limited(‘Company’) has been quashed qua one of the directors i.e. Mr. Nimain Charan Biswal who had joined and resigned from the directorship of the Company before the issuance of Non-convertible Debentures (NCDs),the subject matter of the case.This write up contains a brief analysis of the aforesaid ruling of the Tribunal.

Facts of the caseplaced before SEBI

Mr. Nimain Biswal (the “Appellant”) was appointed as a director of Neesa Technologies Limited[1] on November 7, 2013 and he had resigned from the directorship w.e.f. March 6, 2014. The Company had made an issue (public issue as alleged by SEBI in its order) of NCDs during the Financial Year 2013-14 from the period starting from April 8, 2013 to August 22, 2013.

SEBI via an interim order cum show cause notice dated June, 2, 2016[2] (‘Order’), made an allegation that the issue of NCDs made by the Company was in the nature of a ‘public issue’ as against the claim of the Company of the issue to be a private placement without complying with the norms that regulate such public issues, viz., Sections 56, 60, 73 and 117C of the Companies Act, 1956(“Act, 1956”) and the SEBI(Issue and Listing of Debt Securities)) Regulations (‘ILDS regulations’).

In terms of the Order,the Company and directors (collectively referred to as ‘noticees’) was directed to show cause as to why suitable directions/prohibitions under Sections 11(1), 11(4), 11A and 11B of the SEBI Act including the following, should not be taken/imposed against them:

A. Direction for refund of money collected through the offer of NCD salong with interest, if any, promised to investors therein;

B. Direction for not issuing any prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, for an appropriate period;

C. Direction for refraining from accessing the securities market and prohibiting them from buying, selling or otherwise dealing in securities for an appropriate period.

SEBI noted that the Company had defaulted in payment of interest in respect of the aforesaid NCDs during the directorship of Mr. Biswal and accordingly, by virtue of the aforesaid order,Mr. Biswal was

A. prohibited from issuing prospectus or any offer document or issue advertisement for soliciting money from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, till further orders;

B. directed to restrain from accessing the securities market and further prohibited from buying, selling or otherwise dealing in the securities market, either directly or indirectly, till further directions;

C. directed to provide a full inventory of all their assets and properties.

The Appeal

Being aggrieved by the aforesaid Order of SEBI, the Appellant had filed an appeal (Appeal No. 204/2016) before the Tribunal.The aforesaid order was quashed qua Mr. Biswal by the Tribunal vide its order dated July 14, 2016 on the following grounds and opinion-

A. The decision of the Whole-Time Member of SEBI goes beyond the interim order and the show cause notice and therefore, the interim order should be to set aside and fresh order on merits and in accordance with the law should be passed by SEBI.

B. Mr. Biswal was a director of the Company only for a period of approximately 4 months i.e. from November 7, 2013 to March 6, 2014 and the allotment of NCDs by the Company was completed on August 22, 2013 i.e. before Mr. Biswal joined NTL as a director. In view thereof, it was held that Mr. Biswal became a director after the offer, issue and allotment of NCDs was complete and therefore, he cannot be held responsible for violations of the Company regarding offer, issue and allotment of NCDs.

C. The documents of the Company do not show contrary to the claim made by Mr. Biswal of not attending or non receiving any notice of any Board Meeting during his tenure and of not involving in any decision making process related to the NCDs.

D. Even though Mr. Biswal was appointed in executive capacity but the records of the Company does not suggest the extent of his involvement in the affairs of the Company.

E. As alleged in the interim order of SEBI of default in payment of interest in respect of NCDs during the directorship of Mr. Biswal, however, the corresponding provisions of law violated by the Company on account of such default in payment of interest have not been alleged in the interim order. Further, the details / particulars regarding such default in payment of interest on NCDs have also not been brought out in the interim order. Thus, the charge against Mr. Biswal in the interim order is vague.

Conclusion

As discussed above, the decision of the Tribunal is primarily based on the fact that Mr. Biswal was not associated with the Company during the period in which the issuance of the NCDs had happened. Further, he was not involved in the affairs of the Company even after his appointment since he did not attend any of the Board meetings of the Company till his resignation and therefore was not involved in the decision making process of the Company. Therefore, it can be inferred that a director can only be held liable for the acts which takes place during his tenure of directorship or with his knowledge or connivance. Further, a director cannot be held responsible for merely holding an executive capacity unless he has an involvement in the affairs of the Company by taking policy decisions with respect to the Company.

[1] Source: [You must be registered and logged in to see this link.]

[2] Source: [You must be registered and logged in to see this link.]

rchgiri

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Central Board Of Direct Taxes Signs 2 Unilateral Advance Pricing Agreements

December, 30th 2016
The Central Board of Direct Taxes or CBDT has signed two more unilateral advance pricing agreements (APAs) with Indian taxpayers as it looks to reduce litigation by providing certainty in transfer pricing.

The two APAs signed on Thursday dated 29/12/2016 pertain to the information technology and automobile sectors. The international transactions covered in these agreements include software development services, IT enabled services, manufacturing and business support services, an official statement said.

With this, the total number of APAs entered into by the CBDT has reached 117. This includes 7 bilateral APAs and 110 Unilateral APAs.

In the current financial year, a total of 53 APAs (4 bilateral APAs and 49 unilateral APAs) have already been entered into.

The APA Scheme was introduced in the Income-tax Act in 2012 and the 'Rollback' provisions were introduced in 2014.

"The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance," the official added.

Since its inception, the APA scheme has evinced a lot of interest from taxpayers and that has resulted in more than 700 applications (both unilateral and bilateral) being filed in just four years, CBDT said.

The progress of the APA scheme strengthens the government's resolve of fostering a non-adversarial tax regime.

82 CBDT notifies PF investment pattern on Mon 2 Jan 2017 - 17:51

rchgiri

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CBDT notifies PF investment pattern

January, 02nd 2017
To provide tax certainty to private provident fund trusts, the Income Tax department has finally notified their new investment pattern. This comes more than a year after the Finance Ministry had tweaked the investment norms to allow up to 15 per cent of fresh accruals into EPF accounts into equity instruments.

“It shall be deemed to have come into force on April 1, 2016,” said the Central Board of Direct Taxes (CBDT) in a recent notification. Fresh accretions to the funds would include un-invested funds from the past and receipts like contributions to the funds, dividend, interest, commission, and amount received on the maturity of investments made before April 1, 2015 and reduced by the obligatory outgo or withdrawals and interest during that fiscal, it said.

The investment pattern for Non-Government Provident Funds, Superannuation Funds and Gratuity Funds was notified by the Finance Ministry on April 1, 2015, and then by the Labour Ministry in June 2015. It came into effect in 2015-16. However, the notification from the CBDT was pending.

Apart from the Employees’ Provident Fund (EPF), a number of companies choose to run their own PF trusts for employees for various reasons such as better returns and less hassle. However, they need to follow norms including the notified investment pattern for such schemes to be recognised under the Income Tax Act and receive the same tax treatment as the EPF.

Experts welcomed the move and said it was long pending. “While we were following the investment pattern of April 2015, the lack of an IT notification created a problem at the time of our annual audits. Though we were following the guidelines of the Finance Ministry, the investment pattern did not have the requisite backing of the tax laws. The issue was always flagged in the audit and compliance norms,” said a manager of a private PF trust.

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Income tax slab rates for the financial year 2016-17 (assessment year 2017-18)

December, 28th 2016

The tax an Indian pays every year is calculated on the basis of his/her gross total income. The tax is calculated according to the income tax slabs announced by the government every year in the Budget. The annual union budget is normally announced in the month of February.

Income tax slab rates for the financial year 2016-17 (assessment year 2017-18)

Tax Rates

1. In case of an Individual (resident or non-resident) or HUF or Association of Person or Body of Individual or any other artificial juridical person

Assessment Year 2016-17

Taxable income Tax Rate
Up to Rs. 2,50,000 Nil
Rs. 2,50,000 to Rs. 5,00,000 10%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
Less: Rebate under Section 87A [see Note]

Add: Surcharge and Education Cess [see Note]

Assessment Year 2017-18

Taxable income Tax Rate
Up to Rs. 2,50,000 Nil
Rs. 2,50,000 to Rs. 5,00,000 10%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
Less: Rebate under Section 87A [see Note]

Add: Surcharge and Education Cess [see Note]

2. In case of a resident senior citizen (who is 60 years or more at any time during the previous year but less than 80 years on the last day of the previous year)

Assessment Year 2016-17

Taxable income Tax Rate
Up to Rs. 3,00,000 Nil
Rs. 3,00,000 - Rs. 5,00,000 10%
Rs. 5,00,000 - Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
Less: Rebate under Section 87A [see Note]

Add: Surcharge and Education Cess [see Note]

Assessment Year 2017-18

Taxable income Tax Rate
Up to Rs. 3,00,000 Nil
Rs. 3,00,000 - Rs. 5,00,000 10%
Rs. 5,00,000 - Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
Less: Rebate under Section 87A [see Note]

Add: Surcharge and Education Cess [see Note]

3. In case of a resident super senior citizen (who is 80 years or more at any time during the previous year)

Assessment Year 2016-17

Taxable income Tax Rate
Up to Rs. 5,00,000 Nil
Rs. 5,00,000 - Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
Add: Surcharge and Education Cess [see Note]

Assessment Year 2017-18

Taxable income Tax Rate
Up to Rs. 5,00,000 Nil
Rs. 5,00,000 - Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
Add: Surcharge and Education Cess [see Note]

Note:

Assessment Year 2016-17

a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

b) Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by education cess calculated at the rate of two per cent of such income-tax and surcharge.

c) Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by secondary and higher education cess calculated at the rate of one per cent of such income-tax and surcharge.

d) Rebate under Section 87A: The rebate is available to a resident individual if his total income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or Rs. 2,000, whichever is less.

Assessment Year 2017-18

a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 15% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

b) Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by education cess calculated at the rate of two per cent of such income-tax and surcharge.

c) Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by secondary and higher education cess calculated at the rate of one per cent of such income-tax and surcharge.

d) Rebate under Section 87A: The rebate is available to a resident individual if his total income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or Rs. 5,000, whichever is less.

4. Partnership Firm

For the Assessment Year 2016-17 and 2017-18, a partnership firm (including LLP) is taxable at 30%.

Add:

a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

b) Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by education cess calculated at the rate of two per cent of such income-tax and surcharge.

c) Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by secondary and higher education cess calculated at the rate of one per cent of such income-tax and surcharge.

5. Local Authority

For the Assessment Year 2016-17 and 2017-18, a local authority is taxable at 30%.

Add:

d) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

e) Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by education cess calculated at the rate of two per cent of such income-tax and surcharge.

f) Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by secondary and higher education cess calculated at the rate of one per cent of such income-tax and surcharge.

6. Domestic Company

For the Assessment Year 2016-17 and 2017-18, a domestic company is taxable at 30%. However, for Assessment year 2017-18, tax rate is 29% if turnover or gross receipt of the company does not exceed Rs. 5 crore.

Add:

a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 7% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 12% of such tax, where total income exceeds ten crore rupees. However, the surcharge shall be subject to marginal relief, which shall be as under:

(i) Where income exceeds one crore rupees but not exceeding ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

(ii) Where income exceeds ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of ten crore rupees by more than the amount of income that exceeds ten crore rupees.

b) Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by education cess calculated at the rate of two per cent of such income-tax and surcharge.

c) Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by secondary and higher education cess calculated at the rate of one per cent of such income-tax and surcharge.

7. Foreign Company

Assessment Year 2016-17 and Assessment Year 2017-18

Nature of Income Tax Rate
Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964 but before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government 50%
Any other income 40%

Add:

a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 2% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 5% of such tax, where total income exceeds ten crore rupees. However, the surcharge shall be subject to marginal relief, which shall be as under:

(i) Where income exceeds one crore rupees but not exceeding ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

(ii) Where income exceeds ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of ten crore rupees by more than the amount of income that exceeds ten crore rupees.

b) Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by education cess calculated at the rate of two per cent of such income-tax and surcharge.

c) Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by secondary and higher education cess calculated at the rate of one per cent of such income-tax and surcharge.

8. Co-operative Society

Assessment Year 2016-17 and Assessment Year 2017-18

Taxable income Tax Rate
Up to Rs. 10,000 10%
Rs. 10,000 to Rs. 20,000 20%
Above Rs. 20,000 30%

Add:

a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

b) Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by education cess calculated at the rate of two per cent of such income-tax and surcharge.

c) Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by secondary and higher education cess calculated at the rate of one per cent of such income-tax and surcharge.

84 Highlights of Case Laws on Thu 5 Jan 2017 - 9:33

rchgiri

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Highlights of Case Laws

Service Tax: After availing the option of the volunteer payment of service tax, interest and penalty appellant cannot claim that the payment was wrongly made consequently cannot claimed the refund. - Tri

Service Tax: Refund of unutilized credit - Registration not compulsory for refund - non-registration of premises is not sufficient ground for rejection of refund. Appellant is eligible for refund of claim. - Tri

Service Tax: Rejection of refund claim - N/N. 41/2007 - The time limit prescribed in notification issued from time to time is to supplement the provision of mere act - as the appellant has complied with condition of the notification. Therefore, merely on the ground of limitation refund cannot be rejected - Tri

Central Excise: Reversal of Cenvat credit on input services - Rule 6 (3A) of CER - merely because appellant has failed to exercise option and follow procedural prescribed under Rule 6(3A), proportionate reversal cannot be denied - Tri

Central Excise: Faulty show cause notice - It can be seen that the various infractions pointed out above, had resulted in evasion of duty. However, since there was no demand raised in the show-cause notice, the same should not be confirmed. - Tri

Central Excise: The manufacture and removal of boiler in part consignments shall be regarded as boiler in complete form - the boiler even if cleared in CKD/SKD condition to the customers site, the same is regarded as boiler and is eligible for exemption. - Tri

Central Excise: Manufacture - Fly Ash - Whether 'fly ash' as formed during the production of electricity is a product, which falls within the meaning of manufacture as defined under Sections 2 (f) of the Central Excise Act? - Held No - HC

Central Excise: Levy of penalty - the appellant is squarely covered by Section 11A(2B) - after payment of duty along with interest by the appellant, the department should have concluded the matter and no penalty was imposable - Tri

Customs: Import of Boric acid - end use - no evidence has been placed on record to establish that the material has been used for insecticidal purposes and therefore it cannot be said that registration under Insecticide Act is needed. - Tri

Customs: Valuation - Obviously the value of refined naphthalene is higher than the crude naphthalene, therefore the enhancement of the value was correctly done by the lower authority - Tri

Customs: Benefit of export incentive - shipping bills did not contain declaration which was required - The omission to file the declaration of the kind we are concerned with, when all other relative materials are present was not vital to the appellant’s case - amendment to the shipping bill allowed - HC

VAT and Sales Tax: Classification of goods - candy, namely “Swad” - classified as Ayurvedic medicine and taxable at 6% or as confectionery item taxable at 10%? - The burden was on the Assessing Officer if according to the AO it was a confectionery item, and it did not lead any evidence or produced any material or evidence to discharge the onus. - HC

Income Tax: No show cause notice was given to the assessee before making the order proposing conduct of special audit u/s 142(2A) - Accordingly, the assessment order passed in the facts of present case is beyond the period of limitation and hence, the same is invalid and bad in law. - Tri

Income Tax: 100% EOU - disallowance u/s 40(a)(i) of the Act is a statutory disallowance and the hence enhanced profits due to disallowance shall be considered for deduction u/s 10B of the Act. - Tri

Income Tax: Since the Company had not commenced its business of development of SEZ/Real Estate, the expenditure claimed could not have been treated as the expenditure incurred for the purpose of business - Since the expenditure was not allowable expenditure, it amounted to irregular allowances of loss. - HC

Income Tax: Deduction of commission payments made to doctors - even if it is true that in the previous years similar claims were allowed by the AO, in so far as the assessment year in question is concerned since the assessee has miserably failed to substantiate the claim, claim of expenditure not allowed - HC

Income Tax: TDS u/s 194J - Revenue has not been able to demonstrate the use of any technical information or skill which is required to perform such fumigation activities and, therefore, invoking of Sec. 194J of the Act in the present case is unwarranted - Tri

Income Tax: Additions made u/s. 68 - main reason for making the addition was that the shareholders have deposited cash in some other bank account which have come to the depositors with banking channel, and then transferred to assessee thus the genuineness of the transactions was doubted - ITAT deleted the additions

Income Tax: Disallowance of expenditure - The method followed by the assessee in the instant case amounts to claiming of the expenditure twice, i.e. in the year when the assessee has debited such expenses to the cost of the flats as there was no profit and again during the impugned assessment year when there is profit. This definitely amounts to double deduction - Tri

Income Tax: Benefit of depreciation - vehicles leased out - As the owner, it used the assets in the course of its business, satisfying both requirements of Section 32 of the Act and hence, is entitled to claim depreciation in respect of additions made to the trucks, which were leased out. - HC

Income Tax: TDS u/s 194H or u/s 194J - applicability u/s 40(a)(ia) - No TDS on Services Charges made to RCDF - we are not confirming the reasoning adopted by the Tribunal but confirming only the conclusion drawn by the Tribunal. - HC

85 Highlights of Case Laws on Fri 6 Jan 2017 - 9:24

rchgiri

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Service Tax: Composite contract with foreign supplier - erection, commissioning or installation services and consulting engineering service - levy of service tax on the service elements by vivisecting the composite contract cannot be upheld. - Tri

Service Tax: CENVAT credit on unregistered premises - reverse charge mechanism - As the tax has been discharged on ‘reverse charge’ mechanism, the identity of provider of service is irrelevant - credit allowed - Tri

Service Tax: Renting of Immovable Property service - collection of excess amounts from clients - deduction of the amount of the property tax - he appellants have not got the invoices reassessed for the revised value - It is possible that the clients would have taken the credit of service tax shown in the invoices - no relief to the assessee - Tri

Central Excise: Iron ore fine being a waste emerging during the process of crushing and screening of iron ores and cleared without payment of duty would not call for payment of 10% of the sale value of the product - Tri

Central Excise: Interest for delayed reversal of credit - This case is revenue neutral inasmuch as had the cenvat credit been reversed, the same would have been eligible for credit to the sister unit - there is no loss of Revenue to the Government Exchequer, and as such, there is no question of compensating the Government for loss of any Revenue. - Tri

Central Excise: Reversal of CENVAT credit - certain inputs shown the input as waste and value of the input was shown reduced - So long the input is lying in the factory credit cannot be asked to be reversed. Needless to say that as and when the input is cleared from the factory it will be liable for duty in terms of Rule 3(5B) of Cenvat Credit Rules, 2004. - Tri

Central Excise: Reversal of Cenvat Credit - Restructuring of business - transfer of ownership of their captive power plant, installed within the factory - no amount is required to be paid under Rule (4) on capital goods as there has been no removal - Tri

Central Excise: Valuation - The extra consideration received by the appellant over and above on actual insurance charges, is required to be added in the assessable value of the finished goods - Tri

Central Excise: Valuation - designing and engineering charges collected from buyers under separate debit notes were deemed to be part of invoice price irrespective of fact that they were not shown in the invoice but in separate debit notes. - Demand confirmed invoking extended period of limitation - Tri

Central Excise: 100% EOU - Eligibility of concessional rate of duty on domestic clearances - the condition stipulated for eligibility to excise duties, instead of half of the aggregate of duties of customs, that ‘raw materials’ be domestically procured does not permit the latitude of treating ‘consumables’ as ‘raw materials.’ - Tri

Central Excise: Eligibility of CENVAT credit - cement and TOR steel cannot be considered as inputs which are used in the fabrication or manufacture of capital goods - credit disallowed - Tri

Central Excise: The stampers used for manufacture of CDs are capital goods falling under Chapter 85 - benefit of exemption under N/N. 67/95-CE dated 16/03/1995 available even if CDs are exempted from duty of excise - Tri

Central Excise: Refund claim - duty paid under protest - unjust enrichment - Time bar - benefit of ‘payment of duty under protest’ made by the manufacturer cannot be extended to the buyer - Tri

Customs: Refund of provisional ADD - Rules are very clear and unambiguous and they provide for refund of provisionally collected anti-dumping duty if the said provisional anti-dumping duty is withdrawn in accordance with the Rules - Tri

Customs: Valuation - enhancement of 20% of declared value - related party transaction - merely because Foreign and Indian company having 50-50 percent equity in the Indian entity. It does not fall under the definition of related person as provided under Rule 2(2) of the Customs Valuation Rules, 1988. - Tri

Customs: Valuation - related party transaction - know how agreement - it was considered that royalty is not the condition of sale of the imported goods, royalty not included - Tri

VAT and Sales Tax: Condonation of delay - the court cannot interpret the law in such a manner so as to read into the Act an inherent power of condoning the delay by invoking Section 5 of the Limitation Act, 1963 so as to supplement the provisions of the VAT Act which excludes the operation of Section 5 by necessary implications. - SC

Companies Law: Winding up petition - the company admitted its liability to repay the term loan but failed and neglected to repay the same or any part thereof - Willful defaulter - HC passed the interim order against the company.

Income Tax: Deemed dividend u/s 2(22)(e) - HUF - share certificates were issued in the name of the Karta - it is no gainsaying that since HUF itself is not the registered shareholder, the provisions of deemed dividend are not attracted - SC

Income Tax: Revision u/s 263 - when a partner retires from the partnership firm, whatever amount received by the partner over and above his capital account is not liable for capital gain tax - CIT was not correct in coming to the conclusion that the order passed by the A.O. is prejudicial to the interest of the revenue - Tri

Income Tax: TDS u/s 194C - even if payment is made to an Agent so long as the payment is meant for meeting the expenditure in the form of payment to the railways, it stands excluded from the provisions of Section 194C - Tri

Income Tax: Deduction u/s 54 - assessee has utilized other funds (apart from sale consideration) for constructing residential house and for this reason only he cannot be denied deduction u/s 54 - Tri

Income Tax: There is no statutory provision under the Income Tax Act, 1961, which provides that in case search was conducted/assessment proceeding under Section 153A has been initiated then the tax, which remains unpaid by the assessee for the same period cannot be recovered from the assessee. - HC

Income Tax: Stay on recovery of demand - If the person has the capacity to pay, may be by out of his movable or immovable properties and inspite of that the ground is contended as of hardship, same cannot be termed as genuine hardship - HC

Income Tax: Deduction u/s.80JJA - whether baggase/husk is not a waste but is a by-product of agriproduce processing industry - circular cannot override the clear words of Section 80JJA of the Act which provides deduction in respect of profits and gains derived from the business of collecting and processing/treating of biodegradable waste i.e. bagasse into briquettes for fuel - Tri

Income Tax: Levy fo Penalty - AO failed to strike off either of the limbs of section 271(1)(c), which are not satisfied by the assessee and consequently, notice issued under section 274 r.w.s. 271(1)(c) of the Act is bad in law and order levying penalty for concealment thereafter, is infructuous - Tri

Income Tax: TDS u/s 194C - nature of composite contract - supply contract or works contract - supply of main plant at Chandrapur TPS extension project - Held as supply contract not liable to TDS - Tri

Income Tax: Disallowance u/s 37(1) on account of any allocation of cost - The cost of the services provided by the AEs has been allocated on a formula which has been followed form year to year and there is no merit in disallowance of the cost incurred on receipt of support services from its AE - Tri

Income Tax: TDS u/s 194C OR 194J - availing of composite set of services such as stevedoring, loading and unloading, etc. - assessee has rightly made deduction of tax at the rates applicable u/s 194C - Tri

Income Tax: TDS u/s 194H - non deduction of TDS to milk societies from whom milk was purchased in lieu of services rendered by them in the form of collection of milk from the cattle owners and supply of the same to the assessee - not in the nature of commission or brokerage - No TDS - HC.

Have a nice learning!

86 Highlights of Case Laws on Sat 7 Jan 2017 - 17:20

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Service Tax: The premises of the SEZ is to be construed as “the port of export” - refund benefits allowed to the appellant on the GTA services utilized for transportation of goods to the SEZ Unit - Tri

Service Tax: When classification for services was not questioned by the revenue, the denial of refund of service tax paid by them is only thwarted attempt to deny legitimate rights of the respondent for which respondent is correctly entitled to - Tri

Service Tax: BAS - service tax is not leviable on the commission earned by the distributor on the basis of the volume of the purchases made by the group of second level of distributors appointed by FSL on being sponsored by the distributor - Tri

Central Excise: Valuation - Rule 9/10(a) are not applicable to interconnected undertakings being related persons, therefore, the proceedings initiated against the appellants are not sustainable - Tri

Central Excise: CENVAT credit - retention of part of invoice as performance guarantee - in case of any amount retained or discounted after the invoices were issued, the credit need not be changed and full credit of service tax paid to the service provider will be eligible for credit - Tri

Central Excise: Price escalation clause - provisional assessment - appellant is owned and managed by the Government of India - the exemption provided therein for non-execution of Bond and payment of Bank Guarantee for clearance of goods on provisional basis should be available to the appellant - Tri

Central Excise: CENVAT credit - fake invoices - non-existent dealers - In fact when the goods were procured by the assessee, the dealer was registered with the department - credit allowed - Tri

Central Excise: Whether the appellant is entitled to avail cenvat credit on capital goods which are installed outside the factory or not? - Benefit of Cenvat Credit allowed - Tri

Central Excise: CENVAT credit - area based exemption - N/N. 50/2003-C.E - respondents are not required to reverse the credit already availed by them - Tri

Central Excise: Valuation - selling of goods through depot - The short payment of duty has been calculated based on the details of clearances effected from the factory gate to the depots and those effected further from the depot - demand confirmed - Tri


Customs: Classification of Graphistone-Love - metal piece printed with a motif on a crystal - articles made of glass - classification under Chapter 701890 as done by authorities below is approved and that under Chapter 49 is rejected - Tri

Customs: Micro SD/Mine storage cards are classifiable under CTH 8523.51 as non-volatile storage devices and the assessees are entitled to the benefit of exemption Notification No. 6/2006 - Tri

Customs: Imposition of ADD - Purified Terephthalic Acid - The dumping margin in the case of China is 20 to 30% and the quantum of export is above 3%. The subject goods imported from China are in direct competition with the like articles made in India. As such, the conditions for commutations are met. - Tri

Customs: It is not clear that the boric acid imported have been used for insecticidal purpose. In such circumstances, importation of boric acid may not require registration from the concerned authorities under the Insecticide Act, 1968. - Tri

VAT and Sales Tax: Lease line charges - VAT or service tax - since a subscriber of a lease line does not become the owner of the line either by control or by possession and hence such charges are only for services rendered and there is no element of sale therein - No VAT - HC

VAT and Sales Tax: SIM replacement charges - VAT or service tax - once it has been held that no sales tax can be charged for providing a SIM, the question of charging it on replacement of a SIM, does not arise - HC

VAT and Sales Tax: Levy of differential tax - Merely mentioning by the AO that exemption certificate was wrongly allowed, is no reason to reopen the case - HC

VAT and Sales Tax: Input tax credit - If the selling dealer has not deposited the amount in full or a part thereof, it would be for the Revenue to proceed against the selling dealer. But thereby the benefit of input tax credit cannot be deprived to the purchaser dealer. - HC

Income Tax: AO has to satisfy at the time of initiation of penalty proceeding and issuing notice U/s 274 of the Act that whether penalty is for concealed particulars of income or furnishing of inaccurate particulars of income. - Tri

Income Tax: Carry forward of the loss - loss as claimed by the assessee treating the same as excess application of loss u/s.11 - set off allowed - Tri

Income Tax: Interest charged u/s.234B - advance tax - the revenue can levy the interest only on the total income declared in the returns and not on the income assessed and determined by the A.O. to that extent - Tri

Income Tax: Interest income - new source of income - to be taxed as income from other sources and not as business income - AO rightly denied the application of provisions of section 44AF - Further the assessee has not satisfied the conditions of section 57(iii), so interest expenditure is not to be allowed as deduction - Tri

Income Tax: It will be unjustified to impose penalty u/s 271(1)(c) as the assessee had only committed an undoubtful bona fide error and it certainly had no intention of concealing any income or furnishing inaccurate particulars of income - Tri

Income Tax: TPA - in the event it is held that aggregation is permissible in the facts of this case, the findings of the Revenue authorities and the Tribunal that the TNMM method was warranted, would not be disturbed. - HC

Income Tax: Merely because assessee had claimed expenditure which was not accepted or not acceptable to Revenue that by itself would not attract a penalty u/s 271(1)(c) - Tri

Income Tax: Disallowance of bad debts - the balance of the parties in assessee’s books were not tallying with the books of the respective parties - here were infirmities in the balance / accounts - claim not allowed - Tri

Income Tax: Disallowance of deduction u/s. 80P(2)(c) - there is not even a remote link between the interest income earned on deposits with nationalized banks and the activities of the assessee - deduction not allowed - Tri

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1. Smt. Chalasani Naga Ratna Kumari Vs. ITO, I.T.A. No. 639/Vizag/2013, Date of Order: 23.12.2016, ITAT - Visakhapatnam

Issue: 1
Whether an agricultural land held by assessee, which is suitable for agricultural operation, loses the characteristics of agricultural land merely because no agricultural operation was carried by assessee on such land?

Held_No

Brief Facts:
During the assessment proceedings, the Ld. AO noticed that the assessee had sold vacant land and has not offered capital gains on the said transaction/ Therefore, the Ld. AO issued a show cause notice and asked to explain why capital gains income was not offered to tax on sale of land. In response to notice, the assessee submitted that land sold is agricultural land. However, the Ld. AO held that “though assessee claims to have sold agricultural lands, the land sold by the assessee is only a vacant land not suitable for agricultural operations and there are no agricultural operations carried out for past several years”.
Held:

In this regard, The Hon’ble ITAT held that “though there is no agricultural operation carried out by the assessee, the lands held by the assessee are classified as agricultural lands in the revenue records and also suitable for agricultural operations. Therefore, impugned lands cannot be held as non-agricultural lands, just because the assessee has not carried out any agricultural operations”.

Issue: 2
Whether for the purpose of Section 50C, stamp duty value on the date of agreement to sale is to be considered, instead of stamp duty value as on the date of sale deed.

Held: Yes

Brief Facts:
The assessee entered into an agreement for sale of land for a consideration of Rs. 3,40,00,000/- on 15/12/2007 and received an advance of Rs.2,52,00,000/-. As on the date of agreement, the market value of the property for the purpose of payment of stamp duty is less than the consideration shown in the sale agreement. Such land has been conveyed through a registered sale deed on 1.9.2008 for a consideration of Rs. 3,40,00,000/-, whereas the stamp duty valuation of the land was fixed at Rs. 4,12,30,000/-. Therefore, the ld. AO considered the stamp duty value as on the date of registration of sale deed as sale consideration for the purpose of computing capital gain and invoke the provision of Section 50C of the Income Tax Act, 1961.
Held:

The Hon’ble ITAT placed reliance on the judgment of Hon’ble Ahmedabad ITAT in the case of Dharma Sibai Sonani Vs. DCIT in ITA No.1237/Ahd/2013, wherein it was held that “the proviso to section 50C of the Act inserted by the Finance Act, 2016 w.e.f. 1.4.2017 is curative in nature and intended to remove an undue hardship to the assessee and accordingly given retrospective effect from 1st April, 2003 i.e. the date effective from which section 50C of the Act was introduced. Accordingly, as per the proviso, the stamp duty value of the property on the date of execution of the agreement to sale should be adopted instead of value on the date of execution of sale deed”.

Therefore, we are of the view that the A.O. was erred in adopting value of the property as on the date of sale deed to determine deemed consideration u/s 50C of the Act.


2. CIT Vs. M/s Bhushan Steels & Strips Ltd., I.T.A. No. 314/2003, Date of Judgement: 01.12.2016, High Court of Delhi

Issue:
Whether the assessee is entitled to depreciation under Section 32 of the Income Tax Act even when the assessee was not the owner of the property in question and was in possession thereof as a lessee during the year under consideration?

Held: Yes

Brief Facts:
The facts of the case are that the assessee for the Assessment Year (AY) 1994-95 had reported that it had entered into a lease agreement on 16.04.1993. It also stated that on the next day i.e. 17.04.1993 the parties had entered into a lease arrangement under which assessee had the option to purchase the leased property on expiry of three years from the commencement of the lease upon payment of Rs. 3.36 crores. In the event it chose not to exercise the option the amount of security deposit (i.e 3.16 cr) would become refundable. The assessee claimed depreciation under Section 32(1) of the Income Tax Act, 1961 (in short the Act) contending that the improvements made and the cost of acquisition is depreciable. The AO rejected assessee’s claim based on his contention that the term 'Owner' in the context of depreciation shall mean the full legal owner i.e. when the law recognises that the title has vested into such owner.
Held:
In the case of “CIT vs. Podar Cement (P) Ltd. (1997) 226 ITR 625” The Hon’ble Supreme court had held “For the purpose of Section 9, the owner must be that person who can exercise the rights of the owner, not on behalf of the owner but in his own right.” Relying on the above decision of the supreme court it was held that the Tribunal was correct in holding that non-registration of the agreement did not imply that the benefit otherwise available under Section 53A of the Transfer of Property Act, 1882 of being entitled to continue in possession in part performance of an agreement to sell, had to be denied.
The appeal of the revenue is denied.

88 Highlights of Case Laws on Tue 10 Jan 2017 - 16:30

rchgiri

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Service Tax: Classification of taxable services - Commissioner (Appeals) put the responsibility of classification only on the appellant without giving his finding on the claim made by the appellants - the matter needs reconsideration. - Tri

Service Tax: BAS - The motor vehicle department is assigned a statutory obligation to issue registrations; such statutory activities are not, even remotely, describable as service rendered which the appellant is required to promote or as service of the department procured for the customers. - Tri

Central Excise: SSI exemption - value of clearances exceeding ₹ 300 lakhs - Revenue has not taken any pain to determine the value of food prepared and cake and pastries prepared by the respondent in their kitchen - the benefit of exemption notification cannot be denied blindly - Tri

Central Excise: CENVAT credit - input procured for intended to be used in export but actually used - a manufacturer who adopts the strategy of procurement for export, on the strength of interpretation as proposed by appellant, would be misusing this facility to deprive exchequer of taxes in excess of normal offset of credit on inputs - Tri

Central Excise: Classification of nylon/viscose fabrics - As the product of appellant contains nylon, it cannot be classified in the heading that relates to use of staple fibre - only plausible heading is 5409 - Tri

Central Excise: CENVAT credit - the appellants have failed to prove transport, receipt and consumption of impugned goods in their factory - demand confirmed - Tri

Central Excise: Levy of additional duty first time - Once the levy is not there at the time when the goods are manufactured or produced in India, it cannot be collected at the stage of removal of the said goods - Tri

Central Excise: Manufacture - excisability of food flavours - Valuation - inclusion of amount paid for Royalty - the food flavours were “prepared” by mixing of various essences (odoriferous substances) - tribunal has returned a cryptic finding - matter remanded back - SC

Customs: Classification of imported item - Fused Silica cannot be considered as Glass microsphere or for that purpose, as glass beads to be classified under chapter 7018 - the classification declared by chapter heading 2505 1019 is correct. - Tri

Customs: Classification of Network Security Device - Since as per the application and function of the product, it is used for communication and transmission of the data, the subject goods is correctly classifiable under CTH 8517 and not under CTH 8543 - Tri

Customs: Classification of imported goods - Monotype Machine - eligibility of exemption N/N. 114/80-Cus - the machine imported namely Monotype Machine imported by the appellant is nothing but Hot Metal Monotype Machine and entitled for the exemption - Tri

Customs: Valuation of imported goods - related party - enhancement of value - The restrictive clauses are general clauses, always agreed upon by the seller and the purchaser in order to have healthy business relations and cannot be considered as a clause which denotes the relationship - Tri

Customs: Confiscation - penalty - illegal attempt to export of Dal to Nepal - The allegation of an attempt to export to Nepal cannot be made merely on assumption and presumption because so far as the said trucks were stationed at a place near Muzaffarpur - Tri

Companies Law: The removal of petitioner as Director of the company does not stand to judicial review. Therefore, Respondent no. 2 giving cheque power to another Director in the place of petitioner by itself cannot be canvased as one of the ground in support of the plea of mismanagement.

Income Tax: Renewal of approval u/s 80G(5) / 12AA denied - genuine charitable / education activity u/s 2(15) - as for the previous three years, the assessee has shown surpluses - whether the activities of the assessee were in the nature of commercial enterprises - Held No - registration allowed - HC

Income Tax: Reopening of assessment - Reason to believe - Application of mind by the sanctioning authority - the instant case is not that of mere rubber stamping - He himself wrote “I am satisfied that it is a fit case for issue of notice u/s 148” - validity of notice upheld - HC

Income Tax: Exemption u/s 11 - Condonation of delay for extending the due date of filing of the return of the income - There is no prohibition for condoning delay even if the deposit is made belatedly - revenue directed to reconsider the application u/s 119(2)(b) - HC

Income Tax: Unaccounted purchases - since these purchases too were made outside the books of account and proper accounting or reconciliation could not be made by the assessee, the value of the investment and the estimated profits on the basis of the undisputed rate i.e. 4.5 % GP had to be adopted - HC

Income Tax: Section 44BB is a complete code in itself and the amount received, be it by way of reimbursement, is not, in any way, excluded from the ambit of Section 44BB. Therefore, placing reliance on Section 2(45) or Section 5(2) cannot advance the case of the appellant. - HC

Income Tax: Rental receipts from letting out commercial properties is assessable under the head income from profits & gains of business or profession and not as income from house property - Tri

Income Tax: Allowability of commission payment - proof that the services rendered to the assessee by the payees - assessee has placed on record all possible details in order to discharge its onus on the one hand whereas the commission payments have been held to be excessive without any such comparison on the other - entire deduction allowed - Tri

Income Tax: Mere fact that the assessee has also quickly sold shares in some instances within the short interval would not ipso facto lead to a conclusion that the assessee was a trader in the shares. The action of the CIT(A) in bifurcating the gains based on the period of holding of less than 30 days and more than 30 days is not supportable by the scheme of the Act. - Tri

89 Highlights of Case Laws on Tue 10 Jan 2017 - 16:34

rchgiri

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Service Tax: Whether the appellant M/s Maharashtra State Electricity Distribution Co. Ltd. is liable to be taxed for the services rendered by them to their client in respect of inspection of site material and testing of transformer, stage wise supervision over the line erection and electricity connection, scrutiny of feasibility of customers requirement? - Held NO - Tri

Service Tax: 100% EOU - export of services - reverse charge mechanism - Utilization of services which are patently in relation to goods/services that have already been exported, it goes against the grain of procedural simplicity to collect the tax by deeming fiction merely for refunding it subsequently. - Tri

Service Tax: Whether the payment received for allotment of time-slots to music companies by the assessee as fillers in programmes broadcast from outside the country is liable to service tax in the hands of the appellant as provider of ‘broadcasting agency service? - There is a lack of precise conclusion on this submission in the impugned order. - matter remanded back - Tri

Service Tax: Rejection of refund claim - denial of CENVAT credit - Rule 5 of Cenvat Credit Rules, 2002 - the value of service provided by the overseas branch office of the appellant to the foreign base service recipient is neither includible in the export turnover nor in total turnover of the appellant. - Tri

Central Excise: Refund - Unjust enrichment - the deposit was against the show cause notice which was set aside by Hon’ble High Court of Delhi - the said amount never became duty and therefore the provisions of unjust-enrichment are not applicable - Tri

Central Excise: 100% EOU - import and use of potassium permanganate - There is no allegation of misuse of material imported and subjected to the present proceedings. The application for issue of certificate has also not been denied. - Tri

Central Excise: SSI exemption - clubbing of clearances - use of brand name of others - The appellant claims to be a job-worker for the second unit M/s Hem Agro Industries (trader) in addition to manufacturing tractor-trailors on its own account - benefit of exemption not allowed - demand confirmed - Tri

Central Excise: Where the appellant could not give any satisfactory evidence to show that the product in respect of which duty was paid was used as an intermediary product for the manufacture of the final product, credit cannot be allowed - SC

Central Excise: Interest - delay in payment of differential duty - captive consumption - valuation finalized after the year end on cost construction method - Since no sale is involved question of issuance of supplementary invoice does not arise - the interest is correctly payable by the appellant on the delayed payment of duty - Tri

Central Excise: CENVAT credit - subject goods were imported under ‘SFIS’, and Basic Customs Duty, Additional Duty of Customs and cess were paid through debit in Duty Credit Scrip/Certificate issued by DGFT and not in cash - Credit of CVD allowed - Tri

Central Excise: SSI exemption - The brand name (unregistered) is owned by Rolling Industries Pvt. Ltd. and the present appellant has used the brand name of the other company for clearing the goods manufactured by them. Therefore, the appellant is not eligible for exemption. - Tri

Customs: Overvaluation of export of Woven Powerloom Men's Shirt readymade garments under claim of duty drawback - No material placed on record by the Revenue to suspect export price of the appellants and also the export is to non sensitive country i.e. USA - Tri

Customs: Revocation of Courier licence - the named employees of the appellant courier have committed gross violations on their own accord to satisfy their own greed without knowledge of the appellant courier - there is no reasonable justification to subject the appellant to any further punishment by extending benefit of doubt - Tri

Customs: Rejection of refund claim - Advance Licence scheme - unjust enrichment - the Government does not want the exporter to suffer by exporting the goods. In view thereof, we find that there is no question of unjust enrichment arises. - Tri

Income Tax: The belated filing of return of income by the assessee does not disentitle it from the benefit of deduction u/s 80P(2) of the Act. - Tri

Income Tax: Revision u/s 263 - non deduction of TDS - opinion of the departmental authorities on applicability of section 194J to payment of bandwidth charges are also different - the assessment order cannot be held to be erroneous and prejudicial to the interests of revenue - Tri

90 Highlights of the Case Laws on Wed 11 Jan 2017 - 16:59

rchgiri

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Service Tax: CENVAT credit - Whether bills of entry in the name of M/s Godfrey Phillips India Ltd. and not bearing the endorsement of proper office of Customs are valid documents under Rule 9 of the CENVAT Credit Rules, 2004 - once goods are received and accounted for, credit cannot be denied - HC

Service Tax: CENVAT credit - Cargo handling services - Courier services - nexus with output service - such services, have been used for purposes of repair and maintenance services rendered during warranty period - credit allowed - Tri

Service Tax: Refund claim - the appellant in the capacity of recipient of service, can file refund application before the authorities having jurisdiction over the service recipient or before the jurisdictional authorities of the service provider u/s 11B - Tri

Central Excise: 100% EOU - The levy of duty u/s 3 of Central Excise Act, 1944 on clearances effected domestically includes all duties leviable under all the statutes relevant to imported goods and, hence, domestic area clearance cannot be excused from leviability. - Tri

Central Excise: Reversal of CENVAT credit on capital goods wrongly taken - when the Cenvat credit are availed on the inputs or capital goods, the credits get merged and as such, lose their identity. In such situation, considering the credit balance of inputs and capital goods separately is not legally sustainable - Tri

Central Excise: Valuation - captive consumption - Since the transaction value of the excisable goods is available and not all the excisable goods are captively consumed, the provisions of Rule 8 as prevailing during the relevant time will not apply to the assessee. - Tri

Central Excise: 100% EOU - there is no such stipulation that the input services must be provided or received in the factory of manufacture - the appellant is entitled to refund of cenvat credit in respect of Renting of Immovable Property Services. - Tri

Central Excise: Manufacture - process of tinting - The appellant have entertained a bona fide view that process of tinting may not be liable to excise duty in the light of long standing practice in the industry and CBEC clarification - Demand beyond the normal period of one year set aside - Tri

Central Excise: Interest on differential duty - Supplementary invoices - when the normal time limit prescribed is one year from the relevant date for recovery of the principal amount, it is reasonable to adopt the same period for recovery of interest as well. - Tri

Central Excise: Job work - credit on capital goods - semi-finished goods removed by the job worker from its unit to the principal, without payment of duty, would not come within the scope of expression exempted final product - Tri

Customs: Valuation - High Seas Sale - no evidence was produced regarding the nature of the administrative charges, therefore so called administrative charges, in our view is nothing but Sales profit only of the High Sea seller which at par with High Sea Sale commission. Therefore the same is clearly includible in the assessable value. - Tri

Customs: Refund claim - the appellant right from filing of bill of entry have protested the denial of exemption notification - The adjudicating authority must pass a speaking order thereafter process the refund application of the appellant - Tri

Income Tax: Nature of income - Income received from Strand Book Stall for providing warehousing, binding, shrink wrapping, supervision charges and mailing charges - taxable as business income and not as income from house property - Tri

Income Tax: Mere failure to file the relevant vouchers as required by the AO cannot be the basis for disallowance unless it is found that the expenditures were not incurred wholly and exclusively for the purpose of business - Tri

Income Tax: Disallowance u/s 40 A(2)(b) - payment to the specified person - excessive and unreasonable expenditure - is clear that double filter oil is more costly than the filter oil and it also fetch more price in the market than the filtered oil - no additions - Tri

Income Tax: Reopening of assessment - it is a settled law that an assessment could not be reopened only on the basis of difference in TDS certificate and receipts shown in the P&L account - Tri

Income Tax: Disallowance of foreign travel expenditure - it was not open to AO to deny any part of deduction for these expenses particularly when there is no material to hold that the visit was for personal purposes of the Director - Tri

Income Tax: Disallowance of alleged unverified purchases/expenditure - Absence of receipt of any reply from the suppliers cannot by itself demonstrate any bogus claim by the assessee unless any of the attendant facts bear out any bogus nature of the claim of expenditure by the assessee. - Tri

Income Tax: Penalty u/s 271(1)(c) - addition made on protected assessment - addition in this case was made on protected assessment/addition on estimated basis which is against the law - Tri

Income Tax: TPA - If all the public sector undertakings are to be treated as ‘associated enterprises’, the inter se transactions between all the public sector undertakings will be subject to arm’s length price determination- something which is seemingly quite incongruous and contrary to the scheme of the transfer pricing legislation. - Tri

Income Tax: TPA - Associate companies - scope of section 92A - An artificial juridical person is a creature of law but the President of India is a creation of the constitution. - The shares are held by the Union of India in the name of President which is a sovereign, cannot be held as associated company - Tri

Income Tax: Benefit of exemption 11 - assessee's trust can promote its charitable objects by giving donation to other charitable organizations and such donations will amount to application - Tri

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