ITR (TRIB) VOL 11 PART 2 & CHALLAN CORRECTION MECHANISM

 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 11 : Part 2 (Issue dated : 05-09-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Business expenditure --Assessee carrying on speculative and non-speculative business--Administrative expenses to be bifurcated--Splitting of expenditure on basis of turnover--Justified--Income-tax Act, 1961-- ITO v. TCFC Finance Ltd. (Mumbai) . . . 153

Business income --Remission or cessation of trading of liability--Liability not written off in accounts as required under section 41(1)--Non-availability of creditor and lack of any correspondence with them will not obliterate debt--Debts subsisting--Sections 41(1) and 28(iv) not applicable--Income-tax Act, 1961, ss. 28(iv), 41(1)-- Kaps Advertising v. ITO (Delhi) . . . 113

Capital gains --Acquisition of lands belonging to assessee's father--Assessee obtaining leasehold rights in land for sixty years under Government scheme--Assignment of rights by assessee--Cost of acquisition--Asset inherited by assessee not same asset assigned by assessee--Cost not to be taken as cost to previous owner--Cost of acquisition would be market value of lease rights for sixty years as on date of lease--Section 50C applies only to land or building or both--Income-tax Act, 1961, ss. 45, 49, 50C-- Atul G. Puranik v. ITO (Mumbai) . . . 120

Charitable purpose --Charitable trust--Registration--Trust running educational institutions--Profit earned--Not a ground for refusing registration--Finding that assessee was a charitable trust--Assessee entitled to registration--Income-tax Act, 1961, s. 12AA-- St. Mary's Christian Charitable Trust v. ITO (Chennai) . . . 205

----Exemption--Trust running educational institutions--Donations received from students accounted for and utilized for purposes of trust--No material to show assessee received capitation fees--Donations not taxable--Cash recovered from residence of chairman of trust--No material to show cash used for personal purposes of chairman--Not a case of violation of section 13(1)(d)--Trust entitled to exemption--Income-tax Act, 1961, ss. 11, 12, 13(1)(d)-- Asst. CIT v. Balaji Educational and Charitable Public Trust (Mad) . . . 179

----Voluntary contributions--Scope of expression--No distinction between voluntary and involuntary contributions--Application of funds alone material--Contributions treated as income if not used for charitable purpose--Income-tax Act, 1961, ss. 11, 12-- Asst. CIT v. Balaji Educational and Charitable Public Trust (Mad) . . . 179

Company --Computation of income under section 115JB--Provision for diminution in value of asset--Amount to be added to book profit--Income-tax Act, 1961, s. 115JB-- ITO v. TCFC Finance Ltd. (Mumbai) . . . 153

Loss --Speculation--Law applicable--Insertion of clause (d) in proviso to section 43(5)--Provision not retrospective--Applicable from assessment year 2006-07--Loss on account of transaction in derivatives in accounting year relevant to assessment year 2005-06--Speculative loss--Income-tax Act, 1961, s. 43(5)-- ITO v. TCFC Finance Ltd. (Mumbai) . . . 153

Penalty --Concealment of income--Assessee developing housing plots purchased on basis of power of attorney and selling them--Assessee not registered as owner and full cost not paid--Value of stock disclosed at nil in return--No discrepancy in valuation of land according to tax audit reports--Valuation of land based on past payments to prospective sellers before purchases fructified--Only estimate of valuation--Penalty cannot be levied--Income-tax Act, 1961, s. 271(1)(c)-- S and S Foundations P. Ltd. v. Asst. CIT (Chennai) . . . 136

----Furnishing inaccurate particulars of income--Export--Special deduction--Claim to deduction in respect of DEPB credit--Subsequent change of law with retrospective effect--Amendment not in force at time of filing of return--Assessee cannot be penalised on ground of furnishing inaccurate particulars of income--Penalty not leviable--Income-tax Act, 1961, ss. 80HHC, 271(1)(c)-- Asst. CIT v. Perfect Forgings (Chandigarh) . . . 166

----Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Deduction on account of export incentive--Assessee furnishing details regarding deduction--Difference of opinion among courts on issue at time of claim--Assessee not guilty of furnishing inaccurate particulars of income in respect of debatable claim--Penalty cannot be levied--Income-tax Act, 1961, ss. 80-IB, 271(1)(c)-- Asst. CIT v. Perfect Forgings (Chandigarh) . . . 166

Rectification of mistake --Assessment--Prima facie adjustments--Change of law--Scope and effect of amendment with effect from June 1, 1999--No power to rectify intimation to re-determine income--Power only to determine sum payable by or refund due to assessee on basis of returned income--Income-tax Act, 1961, ss. 143(1), 154-- Anshul Singal v. Asst. CIT (Delhi) . . . 143

Words and phrases --"Book profit", "diminution"-- ITO v. TCFC Finance Ltd. (Mumbai) . . . 153

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 11 --Charitable purpose--Exemption--Trust running educational institutions--Donations received from students accounted for and utilised for purposes of trust--No material to show assessee received capitation fees--Donations not taxable--Cash recovered from residence of chairman of trust--No material to show cash used for personal purposes of chairman--Not a case of violation of section 13(1)(d)--Trust entitled to exemption-- Asst. CIT v. Balaji Educational and Charitable Public Trust (Mad) . . . 179

----Charitable purpose--Voluntary contributions--Scope of expression--No distinction between voluntary and involuntary contributions--Application of funds alone material--Contributions treated as income if not used for charitable purpose-- Asst. CIT v. Balaji Educational and Charitable Public Trust (Mad) . . . 179

S. 12 --Charitable purpose--Exemption--Trust running educational institutions--Donations received from students accounted for and utilised for purposes of trust--No material to show assessee received capitation fees--Donations not taxable--Cash recovered from residence of chairman of trust--No material to show cash used for personal purposes of chairman--Not a case of violation of section 13(1)(d)--Trust entitled to exemption-- Asst. CIT v. Balaji Educational and Charitable Public Trust (Mad) . . . 179

----Charitable purpose--Voluntary contributions--Scope of expression--No distinction between voluntary and involuntary contributions--Application of funds alone material--Contributions treated as income if not used for charitable purpose-- Asst. CIT v. Balaji Educational and Charitable Public Trust (Mad) . . . 179

S. 12AA --Charitable purposes--Charitable trust--Registration--Trust running educational institutions--Profit earned--Not a ground for refusing registration--Finding that assessee was a charitable trust--Assessee entitled to registration-- St. Mary's Christian Charitable Trust v. ITO (Chennai) . . . 205

S. 13(1)(d) --Charitable purpose--Exemption--Trust running educational institutions--Donations received from students accounted for and utilised for purposes of trust--No material to show assessee received capitation fees--Donations not taxable--Cash recovered from residence of chairman of trust--No material to show cash used for personal purposes of chairman--Not a case of violation of section 13(1)(d)--Trust entitled to exemption-- Asst. CIT v. Balaji Educational and Charitable Public Trust (Mad) . . . 179

S. 28(iv) --Business income--Remission or cessation of trading of liability--Liability not written off in accounts as required under section 41(1)--Non-availability of creditor and lack of any correspondence with them will not obliterate debt--Debts subsisting--Sections 41(1) and 28(iv) not applicable-- Kaps Advertising v. ITO (Delhi) . . . 113

S. 41(1) --Business income--Remission or cessation of trading of liability--Liability not written off in accounts as required under section 41(1)--Non-availability of creditor and lack of any correspondence with them will not obliterate debt--Debts subsisting--Sections 41(1) and 28(iv) not applicable-- Kaps Advertising v. ITO (Delhi) . . . 113

S. 43(5) --Loss--Speculation--Law applicable--Insertion of clause (d) in proviso to section 43(5)--Provision not retrospective--Applicable from assessment year 2006-07--Loss on account of transaction in derivatives in accounting year relevant to assessment year 2005-06--Speculative loss-- ITO v. TCFC Finance Ltd. (Mumbai) . . . 153

S. 45 --Capital gains--Acquisition of lands belonging to assessee's father--Assessee obtaining leasehold rights in land for sixty years under Government scheme--Assignment of rights by assessee--Cost of acquisition--Asset inherited by assessee not same asset assigned by assessee--Cost not to be taken as cost to previous owner--Cost of acquisition would be market value of lease rights for sixty years as on date of lease--Section 50C applies only to land or building or both-- Atul G. Puranik v. ITO (Mumbai) . . . 120

S. 49 --Capital gains--Acquisition of lands belonging to assessee's father--Assessee obtaining leasehold rights in land for sixty years under Government scheme--Assignment of rights by assessee--Cost of acquisition--Asset inherited by assessee not same asset assigned by assessee--Cost not to be taken as cost to previous owner--Cost of acquisition would be market value of lease rights for sixty years as on date of lease--Section 50C applies only to land or building or both-- Atul G. Puranik v. ITO (Mumbai) . . . 120

S. 50C --Capital gains--Acquisition of lands belonging to assessee's father--Assessee obtaining leasehold rights in land for sixty years under Government scheme--Assignment of rights by assessee--Cost of acquisition--Asset inherited by assessee not same asset assigned by assessee--Cost not to be taken as cost to previous owner--Cost of acquisition would be market value of lease rights for sixty years as on date of lease--Section 50C applies only to land or building or both-- Atul G. Puranik v. ITO (Mumbai) . . . 120

S. 80-IB --Penalty--Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Deduction on account of export incentive--Assessee furnishing details regarding deduction--Difference of opinion among courts on issue at time of claim--Assessee not guilty of furnishing inaccurate particulars of income in respect of debatable claim--Penalty cannot be levied-- Asst. CIT v. Perfect Forgings (Chandigarh) . . . 166

S. 80HHC --Penalty--Furnishing inaccurate particulars of income--Export--Special deduction--Claim to deduction in respect of DEPB credit--Subsequent change of law with retrospective effect--Amendment not in force at time of filing of return--Assessee cannot be penalised on ground of furnishing inaccurate particulars of income--Penalty not leviable-- Asst. CIT v. Perfect Forgings (Chandigarh) . . . 166

S. 115JB --Company--Computation of income under section 115JB--Provision for diminution in value of asset--Amount to be added to book profit-- ITO v. TCFC Finance Ltd. (Mumbai) . . . 153

S. 143(1) --Rectification of mistake--Assessment--Prima facie adjustments--Change of law--Scope and effect of amendment with effect from June 1, 1999--No power to rectify intimation to re-determine income--Power only to determine sum payable by or refund due to assessee on basis of returned income-- Anshul Singal v. Asst. CIT (Delhi) . . . 143

S. 154 --Rectification of mistake--Assessment--Prima facie adjustments--Change of law--Scope and effect of amendment with effect from June 1, 1999--No power to rectify intimation to re-determine income--Power only to determine sum payable by or refund due to assessee on basis of returned income-- Anshul Singal v. Asst. CIT (Delhi) . . . 143

S. 271(1)(c) --Penalty--Concealment of income--Assessee developing housing plots purchased on basis of power of attorney and selling them--Assessee not registered as owner and full cost not paid--Value of stock disclosed at nil in return--No discrepancy in valuation of land according to tax audit reports--Valuation of land based on past payments to prospective sellers before purchases fructified--Only estimate of valuation--Penalty cannot be levied-- S and S Foundations P. Ltd. v. Asst. CIT (Chennai) . . . 136

----Penalty--Furnishing inaccurate particulars of income--Export--Special deduction--Claim to deduction in respect of DEPB credit--Subsequent change of law with retrospective effect--Amendment not in force at time of filing of return--Assessee cannot be penalised on ground of furnishing inaccurate particulars of income--Penalty not leviable-- Asst. CIT v. Perfect Forgings (Chandigarh) . . . 166

----Penalty--Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Deduction on account of export incentive--Assessee furnishing details regarding deduction--Difference of opinion among courts on issue at time of claim--Assessee not guilty of furnishing inaccurate particulars of income in respect of debatable claim--Penalty cannot be levied-- Asst. CIT v. Perfect Forgings (Chandigarh) . . . 166

 

Revised Procedure from 1st September 2011 to get Income Tax , TDS, Self Assessment Tax, Advance Tax, Wealth Tax  and Other Direct tax Payment Challan corrected / Rectified which were  paid at bank in Physical Mode and time period within which correction request can be made along with conditions , Procedures for the same and Format of the letter to bank.

Challan Correction Mechanism

Under OLTAS (On Line Tax Accounting System), the physical challans of all Direct Tax payments received from the deductors / taxpayers are digitized on daily basis by the collecting banks and the data transmitted to TIN (Tax Information Network) through link cell. At present, the banks are permitted to correct data relating to three fields only i.e. amount, major head code and name. The other errors can be corrected only by the assessing officers.

New Procedure of challan correction by banks (for physical challans):

To remedy this situation, a new Challan Correction Mechanism for physical challans has been put in place. Under this mechanism, for income tax payments made on or after 1.9.2011, the following fields can be got corrected through the concerned bank branch:

> Assessment Year

> Major Head Code

> Minor Head Code

> TAN/PAN

> Total Amount

> Nature of payment (TDS Codes)

The time window for the correction request by tax payer is as follows :

S.No	Correction required in Field name	Period of Correction Request (from Challan Deposit Date)
1	TAN/PAN	7 days
2	Assessment Year	7 days
3	Amount	7 days
4	Other fields (Major head, Minor head, Nature of payment)	Within 3 months

The time window for correction by the bank is 7 days from the date of receipt of correction request from the tax-payer.

Conditions:

The changes can be made by the banks, subject to following conditions:

1. Correction in Name is not permitted.
2. Any combination of correction of Minor Head and Assessment Year together is not allowed.
3. PAN/TAN correction will be allowed only when the name in the challan matches with the name as per the new PAN/TAN.
4. The change of amount will be permitted only on the condition that the amount so corrected is not different from the amount actually received by the bank and credited to Govt. Account.
5. For a single challan, correction is allowed only once. However, where ₁st correction request is made only for amount, a 2^nd correction request will be allowed for correction in other fields.
6. There will be no partial acceptance of change correction request, i.e. either all the requested changes will be allowed, if they pass the validation, or no change will be allowed, if any one of the requested changes fails the validation test.

Procedure:

i. The tax-payer has to submit the request form for correction (in duplicate) to the concerned bank branch.

ii. The tax-payer has to attach copy of original challan counterfoil.

iii. In case of correction desired for challans in Form 280, 282, 283, the copy of PAN card is required to be attached.

iv. In case of correction desired for payments made by a tax-payer (other than an individual), the original authorization with seal of the non-individual tax­payer is required to be attached with the request form.

v.  A separate request form is to be submitted for each challan.

Procedure of challan correction by Assessing Officers (both physical and e-payment challans)

After the window period available to banks for challan correction, the assessee can make a request for correction to his or her assessing officer, who is authorized under the departmental OLTAS application to make such correction in challan data in bonafide cases, to enable credit of the taxes paid, to the concerned assessee.

Format of application to bank for challan correction to be requested by the taxpayer

To

The Branch Manager,

——————————  (Address of Branch)

Taxpayer Details :

Taxpayer Name :

Taxpayer Address :

Taxpayer TAN/PAN :

Name of Authorized Signatory :

(in case of non-individual taxpayer)

Sub : Request for Correction in Challan No: 280/281/282/283 [Strike out which ever is not applicable]

Sir/Madam,

I request you to make corrections in the challan data as per following details : Challan Details:

BSR Code		Challan Tender Date (Cash/Cheque Deposit Date)			Challan Sl. No.
Sl. No.	Fields in which correction required		Please Tick	Original Details		Modified Details
1.	TAN/PAN (10 digit)
2.	Assessment Year (YYYY)
3.	Major Head code (4 digit)
4.	Minor Head code (3 digit)
5.	Nature of Payment (3 digit)
6.	Total Amount (13 digit)

 

 Note: Please tick against the relevant fields where changes are required.

Tax payer/Authorized Signatory

Date

Note:

1. Attach copy of original challan counterfoil.
2. In case of correction to challan 280, 282, 283 attach copy of PAN card.
3. In case of a non-individual tax payer, attach the original authorization with seal of the non-individual tax-payer.
4. The request form for correction is to be submitted in duplicate to the bank branch. 
5. A separate request form is to be submitted for each challan.

 CA. RAJU SHAH