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Thursday, June 28, 2012

Credit for Taxes - Guidelines for the Assessing Officers as regards due Verification for allowing credit of TDS and Taxes Paid



---------- Forwarded message ----------
From: Bombay Chartered Accountants' Society <km@bcasonline.org>
Date: 23 June 2012 12:37
Subject: Credit for Taxes - Guidelines for the Assessing Officers as regards due Verification for allowing credit of TDS and Taxes Paid
To: All Members <km@bcasonline.org>


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                                                                                                                         23rd June 2012

 

Dear Members,

Credit for Taxes

Section 199 of the Income Tax Act has been amended with effect from April 2008, whereby credit for taxes deducted at source is to be granted in accordance with rules made by the Central Board of Direct Taxes. The Central Board of Direct Taxes has been issuing instructions for the last few years, regarding acceptance of TDS claims and grant of credit for taxes paid. As per the instructions, in many cases, credit is to be given after due verification. What is the process of due verification has not been clarified by the CBDT. Each assessing officer has been taking his own view as to the process of due verification.

To reduce this problem of inconsistency in the process of due verification, BCAS and CTC have been in discussions with the Chief Commissioners of Income Tax in Mumbai. Accordingly, the Chief Commissioners of Income Tax in Mumbai have agreed upon a consistent process of due verification to be followed by assessing officers falling within their jurisdiction. The agreed upon process is given below for the benefit of members.

Guidelines for the Assessing Officers as regards "due Verification for allowing credit of TDS and Taxes Paid"

Credit for TDS

1.         The Assessing Officers may allow credit in respect of claim of TDS made in the return on the basis of original TDS Certificate after verification of validity of TAN of the deductor. 

It is clarified that prior to introduction of Annexure less return, the assessees were filing original TDS certificates with their returns.  If the acknowledgement of return or some other evidence furnished by the assessee shows that original TDS certificate was filed with the return or thereafter, the AO may allow credit on the basis of self certified copy of TDS certificate.

2.         Indemnity Bond shall be obtained from the assessee in respect of cases where amount of refund involved is Rs. 25,000 or more (no indemnity bond in a case not involving issue of refund).

Credit for Taxes paid

3.         Credit for Advance Tax, Self Assessment Tax and Regular Tax may be allowed on the basis of Original Challan alone in respect of an amount of less than Rs. 10,000.

4.         In a case where claim of credit of tax paid is Rs. 10,000 or more, apart from Original Challan, the claim shall be supported by some proof of payment of tax.  For example, the payment could be proved by the assessee by producing copy of bank account reflecting payment or a certificate from the bank to that effect.

5.         Indemnity Bond shall be obtained from the assessee in respect of cases where amount of refund involved is Rs. 25,000 or more (no indemnity bond in a case not involving issue of refund).

 

Regards,

 

Pradip Thanawala                            Gautam Nayak

President                                          Chairman, Taxation Committee

 

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ITR VOL 345 PART 3

 

INCOME TAX REPORTS (ITR)

Volume 345 Part 3 (Issue dated 2-7-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business expenditure --Deduction--Expenditure incurred on education of daughter of one of directors abroad--Finding by Commissioner (Appeals) as well as Tribunal that expenditure not wholly and exclusively incurred for purpose of business--Finding of fact--Income-tax Act, 1961, s. 37-- Natco Exports P. Ltd. v . CIT (Delhi) . . . 188

Income-tax --General principles--Procedure strictly according to law--Satisfaction of one authority cannot be substituted by satisfaction of another authority-- CIT v . SPL’s Siddhartha Ltd . (Delhi) . . . 223

International transactions --Arms length price--Determination--Payment for acquisition of use of technical know-how incurred for genuine business purposes--To be allowed even if assessee suffered continuous losses in business--Income-tax Act, 1961, s. 92CA--Income-tax Rules, 1962, r. 10B(1)(a)-- CIT v . EKL Appliances Ltd .  (Delhi) . . . 241

Penalty --Repayment of loans or deposits otherwise than by account payee cheque or draft--Provision mandatory--Repayment by debit of account through journal entries--Is in contravention of provision--But penalty can be avoided on showing reasonable cause--Assessee becoming liable to repay loan and receive similar sum towards sale price of shares sold to creditor--Account settled by journal entries--No finding that repayment not bona fide or attempt at evasion of tax--Reasonable cause shown--Penalty not leviable--Income-tax Act, 1961, ss. 269T, 271E, 273B-- CIT v . Triumph International Finance (I.) Ltd . (Bom) . . . 270

Perquisite --Salary--Tax on salary paid by employer--Is a perquisite--Tax component of such perquisite value cannot be included in computation of perquisite value of rent free accommodation--Income-tax Rules, 1962, r. 3--Income-tax Act, 1961, s. 17(2)(iv)-- CIT v. Telsuo Mitera (Delhi) . . . 256

----Valuation--Tax on salary paid by employer--Excludible while computing perquisite of rent free accommodation--Income-tax Act, 1961, s. 17(2)(iv)--Income-tax Rules, 1962, r. 3-- CIT v . Hidechito Shiga (Delhi) . . . 269

Reassessment --Notice--Assessing Officer initially holding transfer of equity shares investments but on reassessment as trade--Change of opinion--Notice to be quashed--Income-tax Act, 1961, ss. 147, 148-- Ritu Investments P. Ltd . v . Deputy CIT  (Delhi) . . . 214

----Notice--Jurisdiction--No universal proposition that notice can never be served when time for issue of notice under section 143(2) has not expired--Assessee deliberately keeping matter pending and continuing to appear and neither protesting nor objecting--Assessing Officer not prevented or barred from recording reasons in writing and issuing fresh notice under section 148--Undertaking by Department to withdraw notice with liberty to issue fresh notice--Income-tax Act, 1961, ss. 147, 148-- Acorus Unitech Wireless P. Ltd . v . Deputy CIT (Delhi) . . . 228

----Notice--Sanction of Joint Commissioner required--Sanction obtained from Commissioner--Notice not valid--Income-tax Act, 1961, ss. 148, 151, 292B-- CIT v. SPL’s Siddhartha Ltd. (Delhi) . . . 223

Revision --Avoidance of tax--International transactions--Circular stating that reference must be made to Transfer Pricing Officer where value exceeds Rs. 5 crores--Circular binding on Assessing Officer--Failure to make reference to Transfer Pricing Officer--Order can be revised--Income-tax Act, 1961, ss. 92CA, 263--Circular No. 3, dated 20-5-2003-- Ranbaxy Laboratories Ltd . v. CIT (Delhi) . . . 193

AUTHORITY FOR ADVANCE RULINGS

Non-resident --Taxability in India--Fees for technical services--Indian company rendering technical services to overseas group companies--Shared services company incorporated in the Netherlands to support global finance functions of group--Branch office in Philippines performing the back office finance services--Philippines branch providing business support services to Indian company--Services rendered by Netherlands company though Philippines branch--DTAA between India and Philippines not applicable--Consideration for financial services received by Indian company not fees for technical services--Payment received by Netherlands company not chargeable to tax in India--No obligation on Indian company to withhold tax--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Agreement between India and the Netherlands, arts. 5, 12-- Shell Technology India Private Limited, In re . . . 206



Monday, June 25, 2012

ITAT Explains Impact Of Vodafone Law On Offshore Supply Contracts


---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Mon, Jun 25, 2012 at 1:45 PM
Subject: Message from EGroup of SolapurCAs ITAT Explains Impact Of Vodafone Law On Offshore Supply Contracts
To: editor@itatonline.org


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.


Dongfang Electric Corporation vs. DDIT (ITAT Kolkota)

Law on taxability of "turnkey contracts" for offshore & onshore supply explained

 

The assessee, a Chinese company, entered into two contracts with WBPDCL, one for the offshore supply of equipment and the other for onshore supplies, design, engineering and construction etc. Separate consideration was specified for each activity. The assessee claimed, relying on Ishikawjima-Harima 288 ITR 408 (SC), that the profits from offshore supply was not taxable in India. The AO rejected the claim on the ground that the project was a "turnkey" one with "cross-fall breach clause" and "single point responsibility" and that the split contracts were entered into only for convenience. It was held that the project office PE played a role in the offshore supplies. He referred the matter of determination of ALP of the onshore supplies to the TPO who determined a profit of Rs. 24 crores as against the loss of Rs. 67 crores offered by the assessee. This was upheld by the DRP. On appeal by the assessee to the Tribunal, HELD:


(Click Here To Read More)


Regards,


Editor,


itatonline.org

---------------------

Latest:

Awards Scheme For the Income-tax Department's Officers & Staff



Section 14A dis-allowance if there is no tax-free income: Bombay High Court

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Mon, Jun 25, 2012 at 1:47 PM
Subject: Message from EGroup of SolapurCAs No S. 14A disallowance if there is no tax-free income: Bombay High Court
To: editor@itatonline.org


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.



CIT vs. M/s.Delite Enterprises (Bombay High Court)


No s. 14A disallowance if there is no tax-free income

 

The assessee, a partner in a firm, borrowed funds and advanced it to the firm on terms that the firm would pay interest if it made a profit. For one year, the firm paid interest which was offered as income by the assessee while for the second year it did not pay interest as it made a loss. The assessee claimed the interest paid on the borrowing as a deduction u/s 36(1)(iii). The AO disallowed the claim on the ground that as the borrowings had been invested in the firm and the income from the firm was exempt u/s 10(2A), the interest expenditure was not allowable u/s 14A. This was reversed by the CIT (A). On appeal, the Tribunal upheld the CIT (A) on the ground that as there was no exemption claimed u/s 10(2A) by the assessee and there was no tax-free income, s. 14A could not apply. The department filed an appeal in the High Court in which it argued that as the profits derived by the assessee from the firm was exempt u/s 10(2A), the interest on the borrowed funds used to invest in the firm was disallowable u/s 14A. HELD by the High Court dismissing the appeal:


(Click Here To Read More)


Regards,


Editor,


itatonline.org

---------------------

Latest:

Dongfang Electric Corporation vs. DDIT (ITAT Kolkota) Law on taxability of "turnkey contracts" for offshore & onshore supply explained


ITR VOL 345 PART 2 AND ITR (TRIB) VL 16 PART 5

 

INCOME TAX REPORTS (ITR)

Volume 345 Part 2 (Issue dated 25-6-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Appellate Tribunal --Findings of fact--Finality--Finding not based on evidence--Can be set aside--Income-tax Act, 1961-- S. K. Bahadur v. Union of India  (Delhi) . . . 95

----Findings of fact--Whether perverse--Finding that holding company paid for entire share capital of assessee by cheque--Finding that shares held by individuals as nominees of holding company--Finding that violations of Companies Act not to affect benefit under Income-tax Act--Not sustainable--Matter remanded for decision afresh-- CIT v . Sunaero Limited (Delhi) . . . 163

Assessment --Notice--Notice not served on correct address mentioned in return--Assessment not valid--Income-tax Act, 1961, s. 143(2)-- CIT v. Mascomptel India Ltd . (Delhi) . . . 58

Business income --Remission or cessation of trading liability--Brokerage liability outstanding written back into profit and loss account and tax paid--No remission or cessation of liability in relevant assessment year--Income-tax Act, 1961, s. 41(1)-- CIT v. Enam Securities P. Ltd . (Bom) . . . 64

Capital gains --Long-term capital gains--Set off of loss against gains on sale of shares--Genuineness and credibility of transaction not disputed in past years--Non-cumulative redeemable preference shares could not be equated with debentures or bond--Assessee entitled to benefit of indexation--Income-tax Act, 1961, s. 48-- CIT v. Enam Securities P. Ltd . (Bom) . . . 64

----Transactions not regarded as transfers--Transfer by subsidiary to holding company--Subsidiary must be wholly owned--Income-tax Act, 1961, ss. 45, 47(v)--Companies Act, 1956, ss. 49, 187C-- CIT v. Sunaero Limited (Delhi) . . . 163

Central Board of Direct Taxes --Circulars--Binding nature--Scope of-- CIT v. Nagesh Knitwears P. Ltd . (Delhi) . . . 135

Company --Shareholder--Presumption that registered shareholder holds share in own right--Claim that shares held as nominee--Burden of proof on person claiming-- CIT v . Sunaero Limited (Delhi) . . . 163

Export --Special deduction--Business income--Premium on sale of export quota--Not covered by clauses 28(iiia) to 28(iiie)--Not to be considered for deduction--Income-tax Act, 1961, ss. 28(iiia), (iiic), 80HHC(3)-- CIT v . Nagesh Knitwears P. Ltd.  (Delhi) . . . 135

Industrial undertaking --Development of infrastructure--Industrial park or special economic zone--Special deduction under section 80-IA--Condition precedent--Industrial undertaking should get notified under a gazetted scheme--No scheme in existence between 1st April, 2006, and 8th January, 2008--Application for notification under section 2002 Scheme in September, 2006--Rejection of application--Justified--Income-tax Act, 1961, s. 80-IA-- Regency Soraj Infrastructures v . Union of India  (Delhi) . . . 105

----Special deduction--Activity requiring more than ten workers--Casual or contractual workers are workers--Conditions under section 80-IB fulfilled--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB(2)(iv)-- CIT v. Nanda Mint and Pine Chemicals Ltd . (Delhi) . . . 60

Interpretation of taxing statutes --Provisos-- CIT v. Mohair Investment and Trading Co. P. Ltd . (Delhi) . . . 51

Loss --Carry forward and set off--Petition filed beyond time--Finding that return had been filed within extension of time granted by Assessing Officer--Carry forward and set off of loss--Valid--Income-tax Act, 1961-- CIT v . Arunajothi Balasubramanian  (Mad) . . . 81

Penalty --Acceptance of loan or deposit in cash exceeding prescribed limit--Whether amount received loan or deposit--Tribunal failing to examine specific findings of Assessing Officer and Commissioner (Appeals)--Matter remanded--Income-tax Act, 1961, s. 271D-- CIT v. Numero Uno Financial Services P. Ltd. (Delhi) . . . 84

----Limitation--Law applicable--Effect of proviso to section 275(1)(a)--Penalty levied within six months of receipt of order from Tribunal--Not barred by limitation--Income-tax Act, 1961, s. 275(1)(a)-- CIT v . Mohair Investment and Trading Co. P. Ltd . (Delhi) . . . 51

Reassessment --Notice after four years on ground assessee acted as a facilitator for its parent company and not a manufacturer or exporter--Failure to disclose all material facts not set out in reasons--Notice not valid--Income-tax Act, 1961, s. 148-- Sitara Diamond Pvt. Ltd. v . Deputy CIT (Bom) . . . 91

----Validity--Capital gains--Reassessment on ground that rate of tax applicable to long-term capital gains wrong--Reasons for notice not recording that proviso to section 112 was not applicable--Reassessment not valid--Income-tax Act, 1961, ss. 112, 147-- Director of Income-tax (International Taxation) v . May and Baker Ltd .  (Bom) . . . 87

Recovery of tax --Stay of recovery proceedings--General principles--Recovery proceedings against member of association of persons--Appeal by association of persons against its assessment pending--Rejection of application for stay--Not justified--Income-tax Act, 1961, s. 220-- UTI Mutual Fund v . ITO (Bom) . . . 71

Revision --Erroneous and prejudicial to Revenue--Order holding assessee entitled to deduction in respect of premium of sale of export quota--Is erroneous and prejudicial to Revenue--Revision justified--Income-tax Act, 1961, ss. 28(iiia), (iiic), 80HHC(3), 263-- CIT v. Nagesh Knitwears P. Ltd. (Delhi) . . . 135

Search and seizure --Block assessment--Undisclosed income--Assets in name of wife of assessee--Wealth-tax return submitted by wife of assessee before search proceedings--Explanation regarding assets not considered--Addition of income from assets belonging to wife of assessee in his total income--Not justified--Income-tax Act, 1961-- S. K. Bahadur v . Union of India (Delhi) . . . 95

AUTHORITY FOR ADVANCE RULINGS

Non-resident --Composite turnkey contract--Contract carried out in India and risk continuing with non-resident till commissioning and acceptance--Offshore services or supplies not to be separately considered--Profits taxable in India--Consortium bidding for contract--Assessable as association of persons--Double Taxation Avoidance Agreement between India and Germany--Income-tax Act, 1961, ss. 2(31), 9(2), Expln ., 44C, 44DA-- ABC , In re . . . 119

 

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

Volume 16 : Part 5 (Issue dated : 25-06-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Business expenditure --Depreciation--Exemption--Disallowance of expenditure incurred in earning income not includible in total income--Share of profit from firm exempt in hands of partner--Disallowance of expenses in proportion to that income --Proper--Depreciation not an expense but an allowance--Provision for disallowance not applicable to depreciation--Income-tax Act, 1961, ss. 10(2A), 14A, 28(v)-- Vishnu Anant Mahajan v. Assistant CIT [SB] (Ahmedabad) . . . 621

Double Taxation Avoidance Agreement --Set-off of losses--Assessee entitled to set off of losses of foreign branch against other business income--Double Taxation Avoidance Agreement Between India and Sweden, art. 7-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

Exemption --Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm--Depreciation not an expenditure but an allowance--Does not come within scope of disallowance--Special deduction allowed from profits for premium on health insurance--Not to be included within scope of insurance--Other expenses allocated in proportion which share income bears to remuneration--Income-tax Act, 1961, ss. 14A, 37(1), 80D-- Hoshang D. Nanavati v. Assistant CIT (Mumbai) . . . 614

----Export--Change of law--Amendment extending period of exemption from five to ten years--Undertaking existing prior to date of amendment--Entitled to exemption for extended period of years--New independent unit--Factors to be considered--Income-tax Act, 1961, s. 10B-- Maral Overseas Ltd. v. Additional CIT [SB] (Indore) . . . 565

----Export--Computation of exemption--Formula--Based on entire profits of undertaking--Export entitlements and special import licence--Income to be included for exemption --Income-tax Act, 1961, s. 10B-- Maral Overseas Ltd. v. Additional CIT [SB] (Indore) . . . 565

----New industrial undertaking in free trade zone--Loss can be set off against normal business income of assessee--Income-tax Act, 1961, s. 10A-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

----New industrial undertaking--Computation--If turnover of foreign branches reduced from "export turnover", also excludible from "total turnover"--Income-tax Act, 1961, ss. 10A, 80HHE---- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

----New industrial undertaking--Finding that three units separate and distinct from existing units and fulfil conditions prescribed under section 10A(2)--Assessee entitled to deduction--Income-tax Act, 1961, s. 10A-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

Export --Computer software--Special deduction under section 80HHE--Assessee taking benefit of sections 10A and 80HHE in relation to same unit--To consider 10 per cent. of profit of undertaking covered under section 10A--Assessee entitled to special deduction under section 80HHE--Income-tax Act, 1961, s. 80HHE-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

Interest --Computation of interest under section 234B--Credit available under Double Taxation Avoidance Agreement--To be taken into account--Amendment of section 234B--Matter remanded--Income-tax Act, 1961, s. 234B-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

International transaction --Determination of arm's length price--Extension of credit to associated enterprises beyond stipulated credit period--Cannot be construed as "international transaction"--No adjustment required for ascertaining arm's length price --Income-tax Act, 1961, s. 92B(1)-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

Transfer pricing --Arm's length price--Cost incurred on consultancy charges to be apportioned between assessee and associated enterprises--No justification on apportionment of cost incurred on conduct of studies--Income-tax Act, 1961-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement Between India and Sweden :

Art. 7 --Double Taxation Avoidance Agreement--Set-off of losses--Assessee entitled to set off of losses of foreign branch against other business income-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

Income-tax Act, 1961 :

S. 10(2A) --Business expenditure--Depreciation--Exemption--Disallowance of expenditure incurred in earning income not includible in total income--Share of profit from firm exempt in hands of partner--Disallowance of expenses in proportion to that income --Proper--Depreciation not an expense but an allowance--Provision for disallowance not applicable to depreciation-- Vishnu Anant Mahajan v. Assistant CIT [SB] (Ahmedabad) . . . 621

S. 10A --Exemption--New industrial undertaking in free trade zone--Loss can be set off against normal business income of assessee-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

----Exemption--New industrial undertaking--Computation--If turnover of foreign branches reduced from "export turnover", also excludible from "total turnover"-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

----Exemption--New industrial undertaking--Finding that three units separate and distinct from existing units and fulfil conditions prescribed under section 10A(2)--Assessee entitled to deduction-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

S. 10B --Exemption--Export--Change of law--Amendment extending period of exemption from five to ten years--Undertaking existing prior to date of amendment--Entitled to exemption for extended period of years--New independent unit--Factors to be considered-- Maral Overseas Ltd. v. Additional CIT [SB] (Indore) . . . 565

----Exemption--Export--Computation of exemption--Formula--Based on entire profits of undertaking--Export entitlements and special import licence--Income to be included for exemption-- Maral Overseas Ltd. v. Additional CIT [SB] (Indore) . . . 565

S. 14A --Business expenditure--Depreciation--Exemption--Disallowance of expenditure incurred in earning income not includible in total income--Share of profit from firm exempt in hands of partner--Disallowance of expenses in proportion to that income --Proper--Depreciation not an expense but an allowance--Provision for disallowance not applicable to depreciation-- Vishnu Anant Mahajan v. Assistant CIT [SB] (Ahmedabad) . . . 621

----Exemption--Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm--Depreciation not an expenditure but an allowance--Does not come within scope of disallowance--Special deduction allowed from profits for premium on health insurance--Not to be included within scope of insurance--Other expenses allocated in proportion which share income bears to remuneration-- Hoshang D. Nanavati v. Assistant CIT (Mumbai) . . . 614

S. 28(v) --Business expenditure--Depreciation--Exemption--Disallowance of expenditure incurred in earning income not includible in total income--Share of profit from firm exempt in hands of partner--Disallowance of expenses in proportion to that income--Proper--Depreciation not an expense but an allowance--Provision for disallowance not applicable to depreciation-- Vishnu Anant Mahajan v. Assistant CIT [SB] (Ahmedabad) . . . 621

S. 37(1) --Exemption--Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm --Depreciation not an expenditure but an allowance--Does not come within scope of disallowance--Special deduction allowed from profits for premium on health insurance--Not to be included within scope of insurance--Other expenses allocated in proportion which share income bears to remuneration-- Hoshang D. Nanavati v. Assistant CIT (Mumbai) . . . 614

S. 80D --Exemption--Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm --Depreciation not an expenditure but an allowance--Does not come within scope of disallowance--Special deduction allowed from profits for premium on health insurance--Not to be included within scope of insurance--Other expenses allocated in proportion which share income bears to remuneration-- Hoshang D. Nanavati v. Assistant CIT (Mumbai) . . . 614

S. 80HHE --Exemption--New industrial undertaking--Computation--If turnover of foreign branches reduced from "export turnover", also excludible from "total turnover"-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

----Export--Computer software--Special deduction under section 80HHE--Assessee taking benefit of sections 10A and 80HHE in relation to same unit--To consider 10 per cent. of profit of undertaking covered under section 10A--Assessee entitled to special deduction under section 80HHE-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

S. 92B(1) --International transaction--Determination of arm's length price--Extension of credit to associated enterprises beyond stipulated credit period--Cannot be construed as "international transaction"--No adjustment required for ascertaining arm's length price-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

S. 234B --Interest--Computation of interest under section 234B--Credit available under Double Taxation Avoidance Agreement--To be taken into account--Amendment of section 234B--Matter remanded-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533

 

 


Wednesday, June 20, 2012

ITR VOL 345 PART 2 AND ITR (TRIB) VOL 16 PART 4



 

INCOME TAX REPORTS (ITR)

Volume 345 Part 2 (Issue dated 25-6-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Appellate Tribunal --Findings of fact--Finality--Finding not based on evidence--Can be set aside--Income-tax Act, 1961-- S. K. Bahadur v. Union of India  (Delhi) . . . 95

----Findings of fact--Whether perverse--Finding that holding company paid for entire share capital of assessee by cheque--Finding that shares held by individuals as nominees of holding company--Finding that violations of Companies Act not to affect benefit under Income-tax Act--Not sustainable--Matter remanded for decision afresh-- CIT v . Sunaero Limited (Delhi) . . . 163

Assessment --Notice--Notice not served on correct address mentioned in return--Assessment not valid--Income-tax Act, 1961, s. 143(2)-- CIT v. Mascomptel India Ltd . (Delhi) . . . 58

Business income --Remission or cessation of trading liability--Brokerage liability outstanding written back into profit and loss account and tax paid--No remission or cessation of liability in relevant assessment year--Income-tax Act, 1961, s. 41(1)-- CIT v. Enam Securities P. Ltd . (Bom) . . . 64

Capital gains --Long-term capital gains--Set off of loss against gains on sale of shares--Genuineness and credibility of transaction not disputed in past years--Non-cumulative redeemable preference shares could not be equated with debentures or bond--Assessee entitled to benefit of indexation--Income-tax Act, 1961, s. 48-- CIT v. Enam Securities P. Ltd . (Bom) . . . 64

----Transactions not regarded as transfers--Transfer by subsidiary to holding company--Subsidiary must be wholly owned--Income-tax Act, 1961, ss. 45, 47(v)--Companies Act, 1956, ss. 49, 187C-- CIT v. Sunaero Limited (Delhi) . . . 163

Central Board of Direct Taxes --Circulars--Binding nature--Scope of-- CIT v. Nagesh Knitwears P. Ltd . (Delhi) . . . 135

Company --Shareholder--Presumption that registered shareholder holds share in own right--Claim that shares held as nominee--Burden of proof on person claiming-- CIT v . Sunaero Limited (Delhi) . . . 163

Export --Special deduction--Business income--Premium on sale of export quota--Not covered by clauses 28(iiia) to 28(iiie)--Not to be considere  for deduction--Income-tax Act, 1961, ss. 28(iiia), (iiic), 80HHC(3)-- CIT v . Nagesh Knitwears P. Ltd.  (Delhi) . . . 135

Industrial undertaking --Development of infrastructure--Industrial park or special economic zone--Special deduction under section 80-IA--Condition precedent--Industrial undertaking should get notified under a gazetted scheme--No scheme in existence between 1st April, 2006, and 8th January, 2008--Application for notification under section 2002 Scheme in September, 2006--Rejection of application--Justified--Income-tax Act, 1961, s. 80-IA-- Regency Soraj Infrastructures v . Union of India  (Delhi) . . . 105

----Special deduction--Activity requiring more than ten workers--Casual or contractual workers are workers--Conditions under section 80-IB fulfilled--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB(2)(iv)-- CIT v. Nanda Mint and Pine Chemicals Ltd . (Delhi) . . . 60

Interpretation of taxing statutes --Provisos-- CIT v. Mohair Investment and Trading Co. P. Ltd . (Delhi) . . . 51

Loss --Carry forward and set off--Petition filed beyond time--Finding that return had been filed within extension of time granted by Assessing Officer--Carry forward and set off of loss--Valid--Income-tax Act, 1961-- CIT v . Arunajothi Balasubramanian  (Mad) . . . 81

Penalty --Acceptance of loan or deposit in cash exceeding prescribed limit--Whether amount received loan or deposit--Tribunal failing to examine specific findings of Assessing Officer and Commissioner (Appeals)--Matter remanded--Income-tax Act, 1961, s. 271D-- CIT v. Numero Uno Financial Services P. Ltd. (Delhi) . . . 84

----Limitation--Law applicable--Effect of proviso to section 275(1)(a)--Penalty levied within six months of receipt of order from Tribunal--Not barred by limitation--Income-tax Act, 1961, s. 275(1)(a)-- CIT v . Mohair Investment and Trading Co. P. Ltd . (Delhi) . . . 51

Reassessment --Notice after four years on ground assessee acted as a facilitator for its parent company and not a manufacturer or exporter--Failure to disclose all material facts not set out in reasons--Notice not valid--Income-tax Act, 1961, s. 148-- Sitara Diamond Pvt. Ltd. v . Deputy CIT (Bom) . . . 91

----Validity--Capital gains--Reassessment on ground that rate of tax applicable to long-term capital gains wrong--Reasons for notice not recording that proviso to section 112 was not applicable--Reassessment not valid--Income-tax Act, 1961, ss. 112, 147-- Director of Income-tax (International Taxation) v . May and Baker Ltd .  (Bom) . . . 87

Recovery of tax --Stay of recovery proceedings--General principles--Recovery proceedings against member of association of persons--Appeal by association of persons against its assessment pending--Rejection of application for stay--Not justified--Income-tax Act, 1961, s. 220-- UTI Mutual Fund v . ITO (Bom) . . . 71

Revision --Erroneous and prejudicial to Revenue--Order holding assessee entitled to deduction in respect of premium of sale of export quota--Is erroneous and prejudicial to Revenue--Revision justified--Income-tax Act, 1961, ss. 28(iiia), (iiic), 80HHC(3), 263-- CIT v. Nagesh Knitwears P. Ltd. (Delhi) . . . 135

Search and seizure --Block assessment--Undisclosed income--Assets in name of wife of assessee--Wealth-tax return submitted by wife of assessee before search proceedings--Explanation regarding assets not considered--Addition of income from assets belonging to wife of assessee in his total income--Not justified--Income-tax Act, 1961-- S. K. Bahadur v . Union of India (Delhi) . . . 95

AUTHORITY FOR ADVANCE RULINGS

Non-resident --Composite turnkey contract--Contract carried out in India and risk continuing with non-resident till commissioning and acceptance--Offshore services or supplies not to be separately considered--Profits taxable in India--Consortium bidding for contract--Assessable as association of persons--Double Taxation Avoidance Agreement between India and Germany--Income-tax Act, 1961, ss. 2(31), 9(2), Expln ., 44C, 44DA-- ABC , In re . . . 119

 

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

Volume 16 : Part 4 (Issue dated : 18-06-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Assessment --Limitation--Assessment order and demand notice served 130 days after assessment--Order barred by limitation--Income-tax Act, 1961-- Asst. CIT v. Dr. Tulsi Prasad Mohapatra and Another (Cuttack) . . . 449

----Limitation--Order of assessment served after 85 days from date of order--Assessment barred by limitation--Income-tax Act, 1961, s. 148-- Asst. CIT v. Orissa Stevedores Ltd. (Cuttack) . . . 431

----Order of assessment served belatedly--Assessee filing appeal upon receipt of demand notice and returns for subsequent years--No prejudice caused to assessee--Assessment order proper--Income-tax Act, 1961, s. 143(3)-- Torsteel Ltd. v. Asst. CIT (Cuttack) . . . 425

Business expenditure --Disallowance--Payments subject to deduction of tax at source--Assessee complying with provisions of section 40(a)(ia)--Entitled to claim deduction--Income-tax Act, 1961, s. 40(a)(ia)-- Torsteel Ltd. v. Asst. CIT (Cuttack) . . . 425

Depreciation --Leased assets--Assessee paying tax on lease rental--Entitled to depreciation--Income-tax Act, 1961, s. 32--Circular No. 2 of 2001-- Asst. CIT v. GMAC Financial Services India Ltd. (Chennai) . . . 422

Fringe benefit tax --Assessee offering gifts to customers at time of taking club membership--Finding that gifts having inbuilt condition--On cancellation of membership, sums refunded after deducting value of such gifts--To be considered as sales promotion expenses, not gifts--Income-tax Act, 1961, s. 115WB(2)(D)-- Mahindra Holidays and Resorts India Ltd. v. Asst. CIT (Chennai) . . . 412

Income --Guarantee commission paid to holding company--Cannot be considered as income from debt claim--Double Taxation Avoidance Agreement between India and the U. S. A., art. 11-- Asst. CIT v. GMAC Financial Services India Ltd. (Chennai) . . . 422

Income from undisclosed sources --Unaccounted sales--No infirmity found--Addition to be deleted--Income-tax Act, 1961-- Torsteel Ltd. v. Asst. CIT (Cuttack) . . . 425

International transactions --Arm's length price--Adjustment in respect of interest not charged on debit balances, overdue beyond thirty days, of assessee's associated enterprises--Continuing debit balance per se, with associated enterprises does not amount to international transaction--Addition not justified--Income-tax Act, 1961, s. 92B-- Nimbus Communications Ltd. v. Asst. CIT (Mumbai) . . . 477

----Arm's length price--Dispute Resolution Panel--Draft assessment order--Duty to pass speaking order dealing with objections of assessee and giving reasons for not accepting them--Income-tax Act, 1961, s. 144C(5)-- Iljin Automotive P. Ltd. v. Asst. CIT (Chennai) . . . 481

Loss --Speculation business--Transaction in derivatives on notified stock exchange--Loss allowable--Income-tax Act, 1961, s. 43(5)(d)-- Smt. Vibha Goel v. Joint CIT (Chandigarh) . . . 418

Reassessment --Jurisdiction--Assessment under section 143(3) treating income from dividend and interest as business income in consonance with view taken in preceding as well as succeeding year--Reopening based on audit objection without independent application of mind and without recording that income had escaped assessment--Not permissible--Income-tax Act, 1961, ss. 147, 148-- GMR Holdings P. Ltd. v. Deputy CIT (Bangalore) . . . 457

Transfer pricing --International transaction--Determination of arm's length price--Reference to Transfer Pricing Officer--Dispute Resolution Panel--Non-speaking order--Matter remanded--Income-tax Act, 1961, s. 144C-- Evalueserve.com P. Ltd. v. ITO (Delhi) . . . 442

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and the U. S. A. :

Art. 11 --Income--Guarantee commission paid to holding company--Cannot be considered as income from debt claim-- Asst. CIT v. GMAC Financial Services India Ltd. (Chennai) . . . 422

Income-tax Act, 1961 :

s. 32 --Depreciation--Leased assets--Assessee paying tax on lease rental--Entitled to depreciation-- Asst. CIT v. GMAC Financial Services India Ltd. (Chennai) . . . 422

s. 40(a)(ia) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Assessee complying with provisions of section 40(a)(ia)--Entitled to claim deduction-- Torsteel Ltd. v. Asst. CIT (Cuttack) . . . 425

s. 43(5)(d) --Loss--Speculation business--Transaction in derivatives on notified stock exchange--Loss allowable-- Smt. Vibha Goel v. Joint CIT (Chandigarh) . . . 418

s. 92B --International transactions--Arm's length price--Adjustment in respect of interest not charged on debit balances, overdue beyond thirty days, of assessee's associated enterprises--Continuing debit balance per se, with associated enterprises does not amount to international transaction--Addition not justified-- Nimbus Communications Ltd. v. Asst. CIT (Mumbai) . . . 477

s. 115WB(2)(D) --Fringe benefit tax--Assessee offering gifts to customers at time of taking club membership--Finding that gifts having inbuilt condition--On cancellation of membership, sums refunded after deducting value of such gifts--To be considered as sales promotion expenses, not gifts-- Mahindra Holidays and Resorts India Ltd. v. Asst. CIT (Chennai) . . . 412

s. 143(3) --Assessment--Order of assessment served belatedly--Assessee filing appeal upon receipt of demand notice and returns for subsequent years--No prejudice caused to assessee--Assessment order proper-- Torsteel Ltd. v. Asst. CIT (Cuttack) . . . 425

s. 144C --Transfer pricing--International transaction--Determination of arm's length price--Reference to Transfer Pricing Officer--Dispute Resolution Panel--Non-speaking order--Matter remanded-- Evalueserve.com P. Ltd. v. ITO (Delhi) . . . 442

s. 144C(5) --International transactions--Arm's length price--Dispute Resolution Panel--Draft assessment order--Duty to pass speaking order dealing with objections of assessee and giving reasons for not accepting them-- Iljin Automotive P. Ltd. v. Asst. CIT (Chennai) . . . 481

s. 147 --Reassessment--Jurisdiction--Assessment under section 143(3) treating income from dividend and interest as business income in consonance with view taken in preceding as well as succeeding year--Reopening based on audit objection without independent application of mind and without recording that income had escaped assessment--Not permissible-- GMR Holdings P. Ltd. v. Deputy CIT (Bangalore) . . . 457

s. 148 --Assessment--Limitation--Order of assessment served after 85 days from date of order--Assessment barred by limitation-- Asst. CIT v. Orissa Stevedores Ltd. (Cuttack) . . . 431

----Reassessment--Jurisdiction--Assessment under section 143(3) treating income from dividend and interest as business income in consonance with view taken in preceding as well as succeeding year--Reopening based on audit objection without independent application of mind and without recording that income had escaped assessment--Not permissible-- GMR Holdings P. Ltd. v. Deputy CIT (Bangalore) . . . 457

 



Tuesday, June 19, 2012

"एलबीटी'साठी महापालिका प्रशासनाचेच प्रयत्न LOCAL BODY TAX NASHIK सकाळ वृत्तसेवा

"एलबीटी'साठी महापालिका प्रशासनाचेच प्रयत्न- सकाळ वृत्तसेवा

http://www.esakal.com/esakal/20120617/4817982088372667414.htm

नाशिक - महापालिकेत स्थानिक संस्था कर (एलबीटी) लागू करताना तत्कालीन प्रभारी आयुक्त पी. वेलरासू यांनी महासभेवर प्रस्ताव न ठेवता निमा व आयमा या उद्योजकांच्या संघटनांच्या ठरावाचा आधार घेऊन परस्पर शासनावर निर्णय सोपविल्याने नाशिककरांवर एलबीटी लागू झाल्याचे स्पष्ट झाले आहे. एरवी शासनाकडून प्राप्त आदेशावर अंमलबजावणीस टाळाटाळ करणाऱ्या महापालिका प्रशासनाने एक दिवसात एलबीटीचा प्रस्ताव शासनाकडे पाठविल्याने तत्कालीन आयुक्तांच्या भूमिकेवर संशय व्यक्त केला जात आहे.

नाशिक शहरात 1 जुलैपासून एलबीटी कर लागू करण्याचा निर्णय शासनाने घेतला आहे. याबाबत राजपत्रात अधिसूचनाही जारी केली आहे. एकीकडे शासनाने एलबीटी लागू केला असला तरी एलबीटीला विरोध करण्यासाठी सर्वपक्षीय गटनेते एकत्र आले आहेत. एलबीटी संदर्भात शासनाने परस्पर निर्णय घेतल्याचे सांगितले जात असले तरी निमा व आयमा या उद्योजकांच्या संघटनांनी त्यांच्या बैठकींमध्ये एलबीटी लागू करण्याचा ठराव संमत केला होता. 8 मेस ठराव संमत झाल्यानंतर शासनाच्या नगरविकास विभागाकडे पाठविण्यात आला होता. नगरविकास विभागाचे उपसचिव गो. अ. लोखंडे यांनी 16 मेस महापालिका आयुक्तांना पत्र पाठवून एलबीटी संदर्भात अहवाल मागविला होता. शासनाकडून प्राप्त झालेले पत्र महासभेसमोर ठेवण्याची आवश्‍यकता असताना वेलरासू यांनी 16 मेस रात्री उशिरा महापालिकेचे जकातीचे उत्पन्न, मुद्रांक शुल्कातून प्राप्त होणारे उत्पन्न याचा सविस्तर अहवाल नगरविकास विभागाकडे पाठवून शासनानेच एलबीटी संदर्भात निर्णय घेण्याचे सुचविले होते. शासनाने निमा, आयमाचे पत्र व प्रभारी आयुक्तांनी सादर केलेला स्वयंस्पष्ट अहवालाचा आधार घेऊन नाशिक महापालिकेत एलबीटी लागू करण्याचा निर्णय घेतल्याचे स्पष्ट झाले आहे.

एलबीटीची कायद्यात तरतूद
महापालिकेत स्थानिक संस्था कर (एलबीटी) लागू करताना शासनाने राजपत्रात नोंद तर केलीच, शिवाय कायद्यातही रूपांतर केल्याने महासभेने विरोध केला तरी तो विरोध नोंदवून घेण्याइतपत सीमित राहणार असल्याचे सांगितले जात आहे. महापालिकेसंदर्भात निर्णय घेताना महासभेत त्यावर चर्चा होणे आवश्‍यक असल्याचे मत महापौर ऍड. यतीन वाघ यांच्यासह सर्वपक्षीय गटनेत्यांनी व्यक्त केले होते. या संदर्भात पुढील आठवड्यात महासभा बोलाविण्यात आली असून, त्यात एलबीटीला विरोध करण्याचे धोरण अवलंबिले जाणार असल्याचे सांगितले जाते. स्थानिक लोकप्रतिनिधींनी एलबीटीला विरोध दर्शविला असला तरी शासनाने मुळातच कायद्यात एलबीटी लागू करण्यासंदर्भात तरतूद केली आहे.


Regards,
-------
CA.C.V.PAWAR
0253-2319641. M-9423961209


Cancel octroi, levy local body tax instead' industry, trade bodies eye LBT

Cancel octroi, levy local body tax instead' industry, trade bodies eye LBT

NASHIK: Following the cancellation of privatisation of octroi recovery, trade bodies across the city are now hoping to bring into effect Local Body Tax (LBT) as a substitute for octroi.

The Nashik Municipal Corporation (NMC) have been at loggerheads with industry assiociations over the octroi issue for several years, with the latter demanding that octroi be scrapped.

The NMC had privatised the recovery of octroi which further annoyed trade groups and they threatened an indefinite stir iover the issue. Even as the newly-elected governing body of the NMC cancelled privatization of octroi recovery, trade groups are now demanding that octroi itself be cancelled and replaced with LBT.

"We are not against octroi but are against the manner in which it is recovered. Traders and industrialists are regularly harassed at octroi check posts. We are ready to pay taxes but they should be free from hassles at octroi check posts. LBT is therefore the best alternative to octroi," said Sanjay Bodke, senior vice-president, MaharashtraChamber of Commerce, Industry and Agriculture (MCCIA).

"We are making efforts to understand how LBT can be implemented within the city of Nashik. We have also met with CM Chavan on the issue and were informed that the state has decided to implement LBT in those municipal corporations where such a demand is made from industry groups," Bodke said. But he also shed light on why the NMC may not be responding to the LBT issue.

"It would be expected that the NMC would send a proposal to the government seeking LBT implementation but this is not possible due to vested interests operating within the civic body. We are therefore planning to meet the CM in Mumbai on April 23, and plan to further urge the NMC to send a proposal regarding LBT to the state as well," Bodke added.

In the last week of March, all 35 industries and trade associations had come together and jointly decided to appeal to the state government to cancel octroi and introduce LBT as a substitute. Dhananjay Bele, president, Nashik Industries and Manufacturers' Association said an internal meeting was being planned to determine further course of action.


Regards,
-------
CA.C.V.PAWAR
0253-2319641. M-9423961209

OPPOSITION IS EXPECTED FROM POLITICAL LEADER TO LOCAL BODY TAX(LBT)

NASHIK: A day after a delegation of industrialists from Nashik were told by the secretary of the urban development department of the state government that the local body tax (LBT) would be introduced from July, political parties and the administration, including some traders, voiced their opposition.

Nashik Municipal Corporation (NMC) officials have pointed out many loopholes in the collection of the LBT. "People would evade LBT or pay less by showing less turnover. Moreover, our inspectors will have to go to their doorsteps to check their documents, registers, receipts, etc.," said an official.



Ajay Boraste of the Shiv Sena said, "Octroi is the main reason why Nashik developed the way it did for so long. LBT cannot be an alternative to octroi. We are expecting more than Rs 600 crore revenue from octroi. If the state government gives assurance that LBT can fetch us Rs 600 crore, then we are ready for LBT." He said that LBT is another form of tax like house tax, water cess, etc. "Our experience is that the revenue generated from house and water taxes is always less. It is difficult to understand the role and policy of the government in this," he said.

Dinkar Patil of the Congress said that there was no need to have LBT or privatization of octroi collection. "The NMC has started with octroi collection, let them do it. LBT is even more dangerous than privatisation of octroi. Who will pay LBT sincerely? The people who are advocating LBT are wrong. I strongly oppose it," said Patil.

Seema Hiray of Bharatiya Janata Party (BJP) said that the decision of whether to implement LBT or not will depend on the decision of her party. "With LBT we will be getting lesser revenue than octroi. This policy is not right. It needs to be discussed in the general body meeting," she said.

City chief of Nationalist Congress Party (NCP) said, "A policy decision needs to be taken on the issue in the general body meeting. Even if LBT is enforced, the revenue should not be less. But there are loopholes in LBT. NMC would be in loss. I feel that if privatisation has been cancelled and the NMC has shown readiness to collect octroi then they should be allowed to do it. It was decided by the government that till the projects under Jawaharlal Nehru National Urban Renewal Mission is completed octroi be collected. I feel that at least for a year octroi be collected or at least till the NMC becomes financially stable."

Shashikant Jadhav of Maharashtra Navnirman Sena feels that it is important to alert the citizens about LBT and for the NMC to study it well . "I don't think the citizens will accept it so easily. The MNS has kept its word and has accepted the proposal of the industrialists, now by going to the chief minister they have shown their opposition for MNS. LBT has many loopholes and the NMC will lose revenue. For a couple of years more octroi shuld be collected and maximum revenue collected so that when central government cancels octroi we wont have problems," he said.




Regards,
-------
CA.C.V.PAWAR
0253-2319641. M-9423961209


Special Bench Resolves Controversy On Search Assessment Time Limit

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From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, Jun 19, 2012 at 9:54 AM
Subject: Message from EGroup of SolapurCAs Special Bench Resolves Controversy On Search Assessment Time Limit
To: editor@itatonline.org


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.


ACIT vs. Shree Ram Lime Products Ltd (ITAT Jodhpur Special Bench)

S. 158BE: A panchnama which does not record a search does not extend limitation

 

The AO issued two authorizations for search, one dated 17.2.2002 and the other 20.12.2002. In respect of the first authorisation, the last panchnama was drawn on 3.1.2003 while in respect of the second authorization, the last panchnama was drawn on 27.2.2002. The s. 158BC assessment order was passed on 31.1.2005 on the basis that the "last panchnama" was drawn on 3.1.2003. The assessee claimed that as the panchnama dated 3.1.2003 was merely for revocation of a s. 132(3) order, it was not a "panchnama of search" and so could be taken into account. The "last panchnama" was the one dated 27.2.2002 according to which the assessment order was barred by limitation u/s 158BE read with Explanation 2 thereof. HELD by the Special Bench upholding the plea:


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A Kowsalya Bai vs. UOI (Karnataka High Court) S. 206AA PAN law read down to not apply to assessees without taxable income



Section 206AA TDS Law Is Unconstitutional: Karnataka High Court

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, Jun 19, 2012 at 9:54 AM
Subject: Message from EGroup of SolapurCAs S. 206AA TDS Law Is Unconstitutional: Karnataka High Court
To: editor@itatonline.org


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.


A Kowsalya Bai vs. UOI (Karnataka High Court)

S. 206AA PAN law read down to not apply to assessees without taxable income

 

The assessee, whose income was below taxable limit, filed Form 15G and requested that no TDS be deducted on the interest on fixed deposit. However, she was informed that in view of s. 206AA inserted by FA 2009, TDS would have to be deducted in the absence of PAN. The assessee filed a writ petition to challenge s. 206AA as being arbitrary and unconstitutional to the extent that it compelled persons with no taxable income to obtain a PAN. HELD upholding the challenge:


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Van Oord ACZ Marine Contractors BV vs. ADIT (ITAT Chennai) Fact that third party invoices are paid does not necessarily show "reimbursement"