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Saturday, March 30, 2013

Co-Panel Hosted

Co-Panel Hosted :-Visit http://sahakarayukta.maharashtra.gov.in in Auditor Section to view list of Empanelled auditors (Divisionwise) by Govt of Maharashtra.
-Regards
CA.C.V.PAWAR
M-9423961209
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Thursday, March 28, 2013

Section 272A(2)(k): ITAT Takes Liberal View On TDS Penalty

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, Mar 26, 2013 at 3:27 PM

 

Dear Subscriber,

 

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

Branch Manager, UCO Bank vs. ACIT (ITAT Cuttack)

S. 272A(2)(k): Delay in filing TDS return through NSDL is a technical breach

 

The AO imposed penalty u/s 272A(2)(k) for delay in filing the TDS return u/s 200(3). The assessee's argument that the delay was due to a shortage of staff was rejected on the ground that the same was not reasonable cause. The CIT(A) confirmed the penalty. On appeal by the assessee to the Tribunal, HELD allowing the appeal:

 

The penalty was levied by the department in a mechanical manner. The assessee would have filed the hard-copy of the quarterly statements but this is not accepted by the department. The computer has to generate a number for acknowledging receipt of such statements. The number is not generated till the computer tallies the PAN and the information available on AS-26. The late filing is caused by an administrative glitch. The delay occurs because the assessee-deductors are dependent on information of TDS and its deposit from the sub treasury of the Government and the filing of the e-return through the designated service provider of the Income-tax Department. The assessee-deductors have no technical competency to file the return by themselves without external aid. They are also not competent to do so by themselves as per rule 37B and "Filing of Return of Tax deducted at source" scheme 2003, which requires the submission of quarterly statement through NSDL or other approved agencies which are third parties and not under the control of the assessees. Penalty u/s 272(A)(2) cannot be levied in a routine manner. The late filing of TDS return cannot be said to be intentional or willful. It is only a technical or venial breach.


(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

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Latest:

CBDT Directive Regarding Adjustment of Refunds Against Demand


Special Bench Verdicts On Lease Finance Not Good Law: ITAT Mumbai


---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, Mar 26, 2013 at 4:38 PM
 

Dear Subscriber,

 

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

Development Credit Bank Ltd vs. DCIT (ITAT Mumbai)

S. 32: Special Bench verdicts on Sale & Lease Back & lease finance are not good law

 

The assessee, a Bank, bought assets from its customers and leased it back to them ("sale and lease back"). It also purchased assets identified by its customers and leased it to them ("finance lease"). The assessee claimed depreciation on the assets on the ground that it was the owner and had used the assets for business purposes. The AO, relying on MidEast Portfolio Management 87 ITD 537 (Mum) (SB) and IndusInd Bank 135 ITD 165 (Mum) (SB), disallowed depreciation on the ground that the transactions were an "eyewash" and "colourable device". The CIT(A) partly confirmed the disallowance. On appeal by the assessee to the Tribunal, HELD allowing the claim:

 

The issue of whether the lessor is entitled to claim depreciation in the case of a "sale and lease back" transaction as well as in a "finance lease" have been laid to rest by the judgements in ICDS 350 ITR 527 (SC), Kotak Mahindra Finance 317 ITR 236 (Bom) and Cosmo Films 338 ITR 266 (Del) where it was held that the lessor is eligible to claim depreciation. The judgements of the Special Bench in MidEast Portfolio Management 87 ITD 537 (Mum) (SB) and IndusInd Bank 135 ITD 165 (Mum) (SB) are impliedly overruled.


(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

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

Latest:

Branch Manager, UCO Bank vs. ACIT (ITAT Cuttack)

S. 272A(2)(k): Delay in filing TDS return through NSDL is a technical breach


_

Saturday, March 23, 2013

List of firms approved for allocation to various Public Sector Banks

Dear Friends,

Kindly follow following link for finding the "Firms Approved for Allocation to various Public Sector Banks"




(UPDATE ON BANK BRANCH AUDIT ALLOTMENT FOR FINANCIAL YEAR 2012-13) 

Regards,
-------
CA.C.V.PAWAR
PATIL DAWARE GIRASE PAWAR & ASSOCIATES
CHARTERED ACCOUNTANTS
0253-2319641. M-9423961209

INDIAN CA - NURTURED IN INDIA, GROOMED FOR THE WORLD

For latest Updates visit Blogspot : http://canews1.blogspot.in

Friday, March 22, 2013

CBDT Directive Regarding Adjustment of Refunds Against Demand


---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Thu, Mar 21, 2013 at 4:12 PM
Subject: Message from EGroup of SolapurCAs CBDT Directive Regarding Adjustment of Refunds Against Demand
To: editor@itatonline.org


 

Dear Subscriber,

CBDT Directive Regarding Adjustment of Refunds Against Demand

The Directorate of Income-tax (Systems) has issued a letter dated 21.03.2013 drawing attention to the judgement of the Delhi High Court in Court on Its Own Motion vs. CIT where directions were issued that the department has to follow the procedure prescribed in s. 245 before making any adjustment of refund payable by the CPC. As the Court has held that the assessee must be given an opportunity to file a response before any adjustment of refund is made, the Assessing Officers have been directed to comply with the High Court's order and communicate their findings on adjustable demand to the CPC which will then process the refund and adjust the demand.


(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

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

Latest:

Katira Construction Ltd vs. UOI (Gujarat High Court)

Explanation that s. 80IA(4) does not apply to "works contracts" is clarificatory and its retrospective operation is valid


CBEC Tax Recovery Circular is untenable, misconceived, wholly illegal and arbitrary

---------- Forwarded message ----------
From: CA. Rahul Bajaj <ca.rahulbajaj@gmail.com>
Date: Fri, Mar 15, 2013 at 3:49 PM


PML Industries Limited vs. UOI (P&H High Court)

CBEC Tax Recovery Circular is untenable, misconceived, wholly illegal and arbitrary

 

The High Court had to consider two issues: (i) whether the revenue is justified in initiating recovery proceedings on the basis of Circular dated 01.01.2013, even when an application for waiver of pre-deposit is pending before the Appellate Authorities for the reason that on such application for stay or waiver of pre deposit, no orders have been passed? And (ii) whether the second proviso in sub-section (2A) of s. 35C is directory and that the Tribunal in appropriate circumstances can extend the period of stay beyond 180 days? HELD by the High Court:

 

(i) The Circular is purported to be issued in terms of the judgement in Krishna Sales (73) ELT 519 (SC). Though in Krishna Sales it was held that mere filing of an appeal does not operate as stay or suspension of the order appealed against, the Board has overlooked the fact that the assessee is not seeking stay only on account of filing of an appeal, but for the reason that the assessee has sought dispensing with the pre-deposit of duty and penalty and has a right to demand decision on such application, a right which is created by the Statute. Therefore, the very basis of the Circular is untenable, misconceived, wholly illegal and arbitrary. Therefore, the condition of recovery, if no stay is granted within 30 days, is illegal, arbitrary, unjustified and consequently set aside (Larsen & Tuobro (Bom) referred);

 

(ii) As regards appeals pending before the Tribunal, the assessee has no control over the non-disposal of the appeal on account of non-availability of infrastructure; the members of the Tribunal and the workload. The vacation of stay for the reason that the Tribunal is not able to decide appeal within 180 days is a harsh, onerous and unreasonable condition. It burdens the assessee for no fault of his. Such a condition is onerous and renders the right of appeal as illusory. An order passed by a judicial forum cannot be annulled for no fault of the assessee. Therefore, s. 35C(2A) which provides for automatic vacation of stay on the expiry of 180 days has to be read down to mean that after 180 days the Revenue has a right to bring to the notice of the Tribunal the conduct of the assessee in delay or avoiding the decision of appeal, so as to warrant an order of vacation of stay. If the provision is not read down in the manner mentioned above, it suffers from illegality rendering the right of appeal as redundant.





Monthly Digest Of Imp Case Laws (January 2013) Is Available For Download

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Mon, Mar 18, 2013 at 8:50 AM
Subject: Message from EGroup of SolapurCAs Monthly Digest Of Imp Case Laws (January 2013) Is Available For Download
To: editor@itatonline.org


 

Dear Subscriber,


The Monthly digest of important case laws (January 2013) is available for download


Click Here To Download The Digest



Highlights of the Digest:


- Arranged section-wise


- Contains only the Most Important judgements from several journals such as BCAJ, CTR, DTR, ITD, ITR, ITR (Trib), Income Tax Review, SOT, Taxman, Taxation, TLR, TTJ, BCAJ, ACAJ, www.itatonline.org


Tip: Store the Digest on your PDA/ Smart Phone for 24x7x365 access


We hope you will find the Digest useful.


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Editor,


itatonline.org
--------------------

Latest:

Court On Its Own Motion vs. CIT (Delhi High Court

Strict guidelines issued to end Dept's TDS credit & refund adjustment harassment



Scope of Disallowance Under Rule 8D Is Narrower Than That Of S. 14A: ITAT Kolkata

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Thu, Mar 14, 2013 at 4:32 PM


 

Dear Subscriber,

 

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

DCIT vs. Gulshan Investment Co Ltd (ITAT Kolkata)

S. 14A: Rule 8D(2)(ii) & (iii) do not apply to shares held as stock-in-trade

 

For AY 2008-09, the assessee, a dealer in shares, received dividend of Rs. 18.91 lakhs but did not offer any disallowance u/s 14A and Rule 8D on the ground that they were not applicable to shares held as stock-in-trade. The AO rejected the claim and computed the disallowance under Rule 8D at Rs. 21.45 lakhs. On appeal, the CIT(A) held that even if Rule 8D was not applicable to shares held as stock-in-trade, a disallowance had still to be made u/s 14A and this was estimated at Rs. 1.89 lakhs. On appeal by the department to the Tribunal HELD dismissing the appeal:

 

Though s. 14A applies to shares held as stock-in-trade, Rule 8D (2)(ii) & (iii) cannot apply if the shares are held as stock-in-trade because one of the variables on the basis of which disallowance under rules 8D(2)(ii) & (iii) is to be computed is the value of "investments, income from which does not or shall not form part of total income". If there are no such "investments", the rule cannot have any application. When no amount can be computed under the formula given in rule 8 D(ii) and (iii), no disallowance can be made under rule 8D (2)(ii) & (iii) either. As held in B. C. Srinivas Shetty 128 ITR 294 (SC), when the computation provisions fail, the charging provisions cannot be applied, and by the same logic, when the computation provisions under rule 8 D (2) (ii) and (iii) fail, disallowance there under cannot be made either as the said provision is rendered unworkable. However, this does not exclude the application of rule 8 D(2)(i) which refers to the "amount of expenditure directly relating to income which does not form part of total income". Accordingly, in a case where shares are held as stock-in-trade and not as investments, the disallowance even under rule 8 D is restricted to the expenditure directly relatable to earning of exempt income. The result is that the scope of disallowance under Rule 8D is narrower than that of s. 14A.

 

For the law that even s. 14A does not apply to shares held as stock-in-trade see India Advantage Securities (& the cases referred to therein) where Daga Capital 117 ITD 169 (Mum) (SB) was not followed


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Regards,


Editor,


itatonline.org

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Latest:

Siemens Limited vs. CIT (ITAT Mumbai)

S. 9(1)(vii): Services rendered by machines is not "fees for technical services"



Thursday, March 21, 2013

RBI Notifications

---------- Forwarded message ----------
From: Saiprasad Bagrecha <saiprasadbagrecha@gmail.com>
Date: Tue, Mar 19, 2013 at 4:49 PM
Subject: {jalgaoncas} RBI Notifications
To:


http://rbidocs.rbi.org.in/rdocs/notification/PDFs/KYC12032013FL.pdf
Anti-Money Laundering (AML)/Combating of Financing of Te
rrorism (CFT)-Standards



http://rbidocs.rbi.org.in/rdocs/notification/PDFs/FPS180313FL.pdf
Prudential norms on Advances to Infrastructure Sector

http://rbidocs.rbi.org.in/rdocs/notification/PDFs/CTSAFC180313.pdf
Standardization and Enhancement of Security Features in Cheque Forms/Migrati
ng to CTS
2010 standards



NEW TATKAL CHARGES

---------- Forwarded message ----------
From: Ramachandran Mahadevan <ramachandran.mahadevan@gmail.com>
Date: Tue, Mar 19, 2013 at 10:42 PM


, MAR 19:  

As announced in the Railway Budget 2013-14, the Railway Board has raised the Tatkal charges to 10 per cent of basic fare for reserved second class and 30 per cent of basic fare for all other classes subject to minimum and maximum as follows: Reserved second sitting - minimum Tatkal charges Rs 10 and maximum Tatkal charges Rs 15; Sleeper - Rs 90 and Rs 175; AC Chair Car - Rs 100 and Rs 200; AC 3-tier - Rs 250 and Rs 350; AC 2-tier - Rs 300 and Rs 400; Executive - Rs 300 and Rs 400. According to South Western Railway (SWR) release, these charges will be applicable for journey starting on April 1.


--

High Court Issues Strict Guidelines To End TDS Refund Harassment By Dept

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Sat, Mar 16, 2013 at 9:44 AM
 

Dear Subscriber,

 

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

Court On Its Own Motion vs. CIT (Delhi High Court)

Strict guidelines issued to end Dept's TDS credit & refund adjustment harassment

 

Anand Parkash, FCA, addressed a letter dated 30.4.2012 to the High Court in which he set out the numerous problems being faced by the assesses across the Country owing to the faulty processing of the Income Tax Returns and non-grant of TDS credit & refunds. He claimed that because of the department's fault, the assessees were being harassed. The High Court took judicial notice of the letter, converted it into a public interest writ petition and directed the CBDT to answer each of the allegations made in the letter and certain other queries that the Court raised. The Court also appointed eminent senior counsel to assist it. The department accepted that tax payers are facing difficulties in receiving credit of TDS & refunds on account of adjustment towards arrears. Thereafter, as an interim measure to provide immediate relief to the assessees, the Court passed an order dated 31.08.2012 by which it gave detailed directions. After further hearing, HELD by the Court:

 

(i) Re Uploading of wrong or fictitious demand: The CBDT has accepted that incorrect and wrong demands have been uploaded on the CPC arrears portal. In his letter dated 21.08.2012, the CIT, CPC, has expressed his concern and anguish on account of uploading of incorrect and wrong data in the CPU and the problem faced by them and by the assesses. The CBDT has issued Circular No. 4 of 2012 in which the burden is put on the assessee to approach the AOs to get their records updated and corrected by filing s. 154 applications. While this may be the easiest option available, it should not be a ground for the AO not to suo motu correct his records and upload correct data. Each assessee has a right and can demand that correct and true data relating to the past demands should be uploaded. Asking the assessee to file s. 154 applications entails substantial expenses and defeats the main purpose behind computerisation. Also, the AO's do not adhere to the time limit prescribed for disposal of the s. 154 applications. To ensure transparency (and accountability), a register must be maintained with details and particulars of each application made u/s 154, the date on which it was made, date of disposal and its fate. The s. 154 application has to be disposed of by a speaking order and communicated to the assessee. There must be full compliance of the said requirements;

 

(ii) Re Adjustment of refund contrary to s. 245: S. 245 postulates two stage action; first a prior intimation to the assessee and then, if warranted, the subsequent adjustments of the refund towards arrears. This is not being followed by the CPC because the computer itself adjusts the refund due against the existing demand. To prevent this breach of the law, the department must follow the procedure prescribed u/s 245 and give the assessee an opportunity to file a reply which should be considered by the AO before giving the direction for adjustment. As regards the cases where such (illegal) adjustment has been made in the past, the cases must be transferred to the AOs for issue of notice to the assessee seeking adjustment of refund. The assessees will be entitled to file a reply to the notice and the AO will then pass an order u/s 245 allowing the refund. The CBDT has to fix a time limit and schedule for completing the said process. Though the process involves expenditure and paper work, the situation has arisen due to the lapses on the part of the AOs and the assessees cannot be made to suffer for the wrong uploading of arrears and wrong adjustment of refund. The question of the assessee's entitlement to interest on the SA tax is left open though when the delay is due to the fault of the Revenue, interest should be paid u/s 244A. False uploading of past arrears and failure to follow the mandate of s. 245 is a lapse on the part of the AO;

 

(iii) Re non-communication of adjusted s. 143(1) intimations: The non-communication of s. 143(1) intimations, where adjustments on account of rejection of TDS or tax paid has been made, is a matter of grave concern. When there is failure to dispatch the intimation within a reasonable time to the assessee, the return shall be deemed to have been accepted and the intimation will be treated as non est or invalid for want of service. The onus to show that the order was served on the assessee is on the Revenue and not upon the assessee. If a TDS or tax credit claim has been rejected on a technicality but there is no communication to the assessee of the order/intimation u/s 143(1), the AO cannot enforce the demand created by the said order/intimation;

 

(iv) Re non-grant of credit for TDS: The problem regarding rejection of TDS credit is in two categories. The first is those where the deductors fail to upload the correct particulars of the TDS which has been deducted and paid and the second is where there is a mismatch between the details uploaded by the deductor and the details furnished by the assessee in the ROI. As regards the first, the CBDT had earlier directed that the AOs to accept the TDS claims without verification where the difference between the TDS claimed and the TDS as per AS26 did not exceed rupees one lakh. This figure has now been reduced to a mere Rs.5,000. Ex-facie, there is no justification for the reduction because credit is being given only if the three core fields match. The CBDT must re-examine this aspect and take suitable remedial steps if they feel that unnecessary burden or harassment will be caused to the assessees. As regards cases of mismatch because of different methods of accounting, or offering income in different years, the department must take remedial steps and ensure that in such cases TDS is not rejected on the ground that the amounts do not tally. The department should also fix a time limit within which they shall verify and correct all unmatched challans. An assessee as a deductee should not suffer because of fault made by deductor or inability of the Revenue to ask the deductor to rectify and correct. Once payment has been received by the Revenue, credit should be given to the assessee. The CBDT should issue suitable directions in this regard. The department's response on the action taken against deductors for non-compliance is unfortunate and unsatisfactory and it purports to express complete helplessness on the part of the Revenue to take steps and seeks to absolve them from any responsibility. Denying benefit of TDS to a taxpayer because of the fault of the deductor causes unwarranted harassment and inconvenience. The deductee feels cheated. The Revenue cannot be a silence spectator, wash their hands and pretend helplessness. S. 234E has now been inserted by the Finance Act, 2012 to levy a fee of Rs.200 per day for default of the deductor to file TDS statement within due date. It is unfortunate that the Board did not take immediate steps after even noticing lacuna and waited till FA 2012. The stand of the Revenue that they can only write a letter to the deductor to persuade him to correct the uploaded entries or to upload the details is not acceptable. The AO must use his power and authority to ensure that the deductor complies with the law.

 


Section 37(1): No Disallowance For Compensatory Payments: Bombay High Court

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Fri, Mar 15, 2013 at 10:30 AM


 

Dear Subscriber,

 

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

CIT vs. Regalia Apparels Pvt. Ltd (Bombay High Court)

Explanation to S. 37(1): No disallowance for compensatory payments

 

The assessee, a manufacturer of garments, was granted an entitlement by the Apparel Export Promotion Council (APEC) for export of garments and knit wares. In consideration for the export entitlement the assessee furnished a bank guarantee in support of its commitment that it shall abide by the terms and conditions and produce proof of shipment. It was also provided that failure to fulfill the export obligation would render the bank guarantee to being forfeited/encashed. The assessee did not utilize the export entitlement which led APEC to encash the bank guarantee. The assessee recorded the said payment as penalty in its books of account and claimed deduction u/s 37(1). The AO rejected the claim on the ground that as the payment was by way of "penalty" it could not be allowed under the Explanation to s. 37(1). However, the CIT(A) and ITAT allowed the claim. On appeal by the department to the High Court, HELD dismissing the appeal:

 

The assessee took a business decision not to honour its commitment of fulfilling the export entitlement in view of loss being suffered by it. The genuineness of the claim of expenditure being for business purpose is not disputed. The assessee has not contravened any provision of law and the forfeiture of the bank guarantee is compensatory in nature and does not attract the Explanation to s. 37(1).

 

See also Stock and Bond (Bom), Khemchand Motilal Jain (MP), Rajrani Exports (Kol) and Article

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Editor,


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Latest:

DCIT vs. Gulshan Investment Co Ltd (ITAT Kolkata)

S. 14A: Rule 8D(2)(ii) & (iii) do not apply to shares held as stock-in-trade


ITR VOL 351 PART 5


 

INCOME TAX REPORTS (ITR)

Volume 351 Part 5 (Issue dated 25-3-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Right to information --Exemption from disclosure--Invasion of privacy of individual--Return of income--Information found in income-tax return--Personal and exempt--No case of public interest in disclosure made out--Information not to be disclosed--Right to Information Act, 2005, s. 8(1)(j)-- Girish Ramchandra Deshpande v . Central Information Commissioner . . . 472

HIGH COURTS

Advance tax --Interest--Notice of demand--No direction in assessment order for charging interest--Notice of demand cannot be issued levying interest under section 234B--Income-tax Act, 1961, ss. 143(3), 156, 234B-- CIT v . Dehradun Club Ltd .
(Uttarakhand) . . . 396

Appeal to High Court --Competency of appeal--Circular prescribing monetary limits for appeals by Department--Net tax effect less than prescribed limit--Appeal not maintainable--Income-tax Act, 1961, s. 260A-- ITO v . Ramdas Alva (Karn) . . . 471

Business expenditure --Lease rent--Hire of machinery by assessee--Ownership of machinery remaining with lessor--Assessee having no right to transfer or alienate machinery and obliged to re-deliver equipment upon termination of lease agreement--Agreements accepted as real and genuine--Lease rentals paid on hired machinery allowable as business expenditure--Income-tax Act, 1961, s. 37-- CIT v . Banswara Syntex Ltd . (Raj) . . . 419

Capital or revenue expenditure --Repairs and maintenance--Necessary not only for achieving optimum utilization of machinery but also to extend its economic life--Increase of life of existing assets beyond their original estimated economic life--Increase of profitability of a concern--Not relevant to determine nature of repairs and maintenance--Expenses on repairs and maintenance--Revenue expenditure--Income-tax Act, 1961-- CIT v. Vishal Paper Industries (P&H) . . . 478

Charitable trust --Charitable purpose--Donation for charitable purposes--Exemption--Renewal of exemption--Exemption once granted shall continue in perpetuity--Exemption cannot be withdrawn without issuing notice--CBDT Circulars Nos. 5 of 2010, dated 3-6-2010 and 7 of 2010, dated 27-10-2010--Income-tax Act, 1961, s. 80G-- CIT v. Bhhola Bhandari Charitable Trust (P&H) . . . 469

Exemption --Newly established 100 per cent. export oriented undertaking--Law applicable--Amendment in 1998 extending period of exemption to ten years--Assessee enjoying exemption prior to amendment--Eligible for extended period if eligible for exemption on 1-4-1999--Income-tax Act, 1961, s. 10B-- CIT v . DSL Software Ltd .
(Karn) . . . 385

Export --Special deduction--Computation--Unabsorbed depreciation and carried forward losses of earlier years to be considered to arrive at profits of business--Cash assistance--Only actual sums received to be considered, not notional receipts--Income-tax Act, 1961, ss. 28(iiib), 72(2), 80HHC, Expln. (baa) -- J. K. Industries Ltd . v. Joint CIT (Karn) . . . 454

----Special deduction--Computation of profits of export--Unabsorbed depreciation of earlier years to be set off for arriving at profits--Income-tax Act, 1961, s. 80HHC-- J. K. Industries Ltd. v . Asst. CIT (Karn) . . . 434

Offences and prosecution --Wilful attempt to evade tax--Provisions of Income-tax Act have overriding effect over criminal law--Framing of charge--Guilt of accused need not be proved--Books of account containing false entries--Proceedings can be initiated under section 276C--Income-tax Act, 1961, s. 276C--Code of Criminal Procedure, 1973, ss. 227, 228, 397, 482-- Dy. CIT v . General Sales P. Ltd . (Delhi) . . . 410

Reassessment --Notice--Industrial undertaking--Pet bottles--Special deduction--Pet bottles not falling within negative list--Assessing Officer allowing deduction after examining evidence--Notices on ground pet bottles falling within negative list--No prima facie view that there were reasons to believe that income had escaped assessment--Notices not valid--Income-tax Act, 1961, ss. 147, 148-- Ajay Kumar Sharma v . CIT (Delhi) . . . 428

----Notice after four years--Conditions precedent--Commission paid to directors allowed after examining nature of payments and agreements with directors--Reopening on ground payment not eligible for deduction as payment could have been made to director who is shareholder as disbursement of profit or dividend--No suppression on part of assessee or failure on part of assessee to state fully and truly all material facts necessary for assessment--Notice not valid--Income-tax Act, 1961, s. 148-- OHM Stock Brokers Pvt. Ltd. v . CIT (Bom) . . . 443

----Notice within four years--No power in Assessing Officer to review assessment--Commission paid to directors--Assessee explaining basis on which decision taken to make payment of commission--Amounts paid to directors assessed as salary income in their hands--Reopening of assessment on change of opinion without tangible material not valid--Income-tax Act, 1961, ss. 36(1)(ii), 148-- OHM Stock Brokers Pvt. Ltd . v. CIT (Bom) . . . 443

Search and seizure --Block assessment--Conditions precedent--Search in premises of father of assessees--Seizure of documents not belonging to assessees--No authorisation of search or search warrants against assessees--Block assessments in hands of assessees under section 158BC--Not valid--Provisions of section 158BD applicable--Income-tax Act, 1961, ss. 158BC, 158BD-- CIT v. Ram Singh (P&H) . . . 391

Writ --High Court--Petitions against assessment orders--Appeals pending before Commissioner (Appeals) or before Tribunal--Challenge to charging of interest--Court will not gone into legal pleas taken by assessee--Remedy in appellate forums--Income-tax Act, 1961, ss. 234B, 234C--Constitution of India, art. 226-- Super Spinning Mills Ltd . v. Asst. CIT (Mad) . . . 401

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Code of Criminal Procedure, 1973 :

S. 227 --Offences and prosecution--Wilful attempt to evade tax--Provisions of Income-tax Act have overriding effect over criminal law--Framing of charge--Guilt of accused need not be proved--Books of account containing false entries--Proceedings can be initiated under section 276C-- Dy. CIT v . General Sales P. Ltd .
(Delhi) . . . 410

S. 228 --Offences and prosecution--Wilful attempt to evade tax--Provisions of Income-tax Act have overriding effect over criminal law--Framing of charge--Guilt of accused need not be proved--Books of account containing false entries--Proceedings can be initiated under section 276C-- Dy. CIT v . General Sales P. Ltd .
(Delhi) . . . 410

S. 397 --Offences and prosecution--Wilful attempt to evade tax--Provisions of Income-tax Act have overriding effect over criminal law--Framing of charge--Guilt of accused need not be proved--Books of account containing false entries--Proceedings can be initiated under section 276C-- Dy. CIT v . General Sales P. Ltd .
(Delhi) . . . 410

S. 482 --Offences and prosecution--Wilful attempt to evade tax--Provisions of Income-tax Act have overriding effect over criminal law--Framing of charge--Guilt of accused need not be proved--Books of account containing false entries--Proceedings can be initiated under section 276C-- Dy. CIT v . General Sales P. Ltd .
(Delhi) . . . 410

Constitution of India :

Art. 226 --Writ--High Court--Petitions against assessment orders--Appeals pending before Commissioner (Appeals) or before Tribunal--Challenge to charging of interest--Court will not gone into legal pleas taken by assessee--Remedy in appellate forums-- Super Spinning Mills Ltd . v. Asst. CIT (Mad) . . . 401

Income-tax Act, 1961 :

S. 10B --Exemption--Newly established 100 per cent. export oriented undertaking--Law applicable--Amendment in 1998 extending period of exemption to ten years--Assessee enjoying exemption prior to amendment--Eligible for extended period if eligible for exemption on 1-4-1999-- CIT v . DSL Software Ltd . (Karn) . . . 385

S. 28(iiib) --Export--Special deduction--Computation--Unabsorbed depreciation and carried forward losses of earlier years to be considered to arrive at profits of business--Cash assistance--Only actual sums received to be considered, not notional receipts-- J. K. Industries Ltd . v. Joint CIT (Karn) . . . 454

S. 36(1)(ii) --Reassessment--Notice within four years--No power in Assessing Officer to review assessment--Commission paid to directors--Assessee explaining basis on which decision taken to make payment of commission--Amounts paid to directors assessed as salary income in their hands--Reopening of assessment on change of opinion without tangible material not valid-- OHM Stock Brokers Pvt. Ltd . v. CIT
(Bom) . . . 443

S. 37 --Business expenditure--Lease rent--Hire of machinery by assessee--Ownership of machinery remaining with lessor--Assessee having no right to transfer or alienate machinery and obliged to re-deliver equipment upon termination of lease agreement--Agreements accepted as real and genuine--Lease rentals paid on hired machinery allowable as business expenditure-- CIT v . Banswara Syntex Ltd . (Raj) . . . 419

S. 72(2) --Export--Special deduction--Computation--Unabsorbed depreciation and carried forward losses of earlier years to be considered to arrive at profits of business--Cash assistance--Only actual sums received to be considered, not notional receipts-- J. K. Industries Ltd . v. Joint CIT (Karn) . . . 454

S. 80G --Charitable trust--Charitable purpose--Donation for charitable purposes--Exemption--Renewal of exemption--Exemption once granted shall continue in perpetuity--Exemption cannot be withdrawn without issuing notice--CBDT Circulars Nos. 5 of 2010, dated 3-6-2010 and 7 of 2010, dated 27-10-2010-- CIT v. Bhhola Bhandari Charitable Trust (P&H) . . . 469

S. 80HHC --Export--Special deduction--Computation of profits of export--Unabsorbed depreciation of earlier years to be set off for arriving at profits-- J. K. Industries Ltd. v . Asst. CIT (Karn) . . . 434

S. 80HHC, Expln. (baa) --Export--Special deduction--Computation--Unabsorbed depreciation and carried forward losses of earlier years to be considered to arrive at profits of business--Cash assistance--Only actual sums received to be considered, not notional receipts-- J. K. Industries Ltd . v. Joint CIT (Karn) . . . 454

S. 143(3) --Advance tax--Interest--Notice of demand--No direction in assessment order for charging interest--Notice of demand cannot be issued levying interest under section 234B-- CIT v . Dehradun Club Ltd . (Uttarakhand) . . . 396

S. 147 --Reassessment--Notice--Industrial undertaking--Pet bottles--Special deduction--Pet bottles not falling within negative list--Assessing Officer allowing deduction after examining evidence--Notices on ground pet bottles falling within negative list--No prima facie view that there were reasons to believe that income had escaped assessment--Notices not valid-- Ajay Kumar Sharma v . CIT (Delhi) . . . 428

S. 148 --Reassessment--Notice--Industrial undertaking--Pet bottles--Special deduction--Pet bottles not falling within negative list--Assessing Officer allowing deduction after examining evidence--Notices on ground pet bottles falling within negative list--No prima facie view that there were reasons to believe that income had escaped assessment--Notices not valid-- Ajay Kumar Sharma v . CIT (Delhi) . . . 428

----Reassessment--Notice after four years--Conditions precedent--Commission paid to directors allowed after examining nature of payments and agreements with directors--Reopening on ground payment not eligible for deduction as payment could have been made to director who is shareholder as disbursement of profit or dividend--No suppression on part of assessee or failure on part of assessee to state fully and truly all material facts necessary for assessment--Notice not valid-- OHM Stock Brokers Pvt. Ltd. v . CIT (Bom) . . . 443

----Reassessment--Notice within four years--No power in Assessing Officer to review assessment--Commission paid to directors--Assessee explaining basis on which decision taken to make payment of commission--Amounts paid to directors assessed as salary income in their hands--Reopening of assessment on change of opinion without tangible material not valid-- OHM Stock Brokers Pvt. Ltd . v. CIT (Bom) . . . 443

S. 156 --Advance tax--Interest--Notice of demand--No direction in assessment order for charging interest--Notice of demand cannot be issued levying interest under section 234B-- CIT v . Dehradun Club Ltd . (Uttarakhand) . . . 396

S. 158BC --Search and seizure--Block assessment--Conditions precedent--Search in premises of father of assessees--Seizure of documents not belonging to assessees--No authorisation of search or search warrants against assessees--Block assessments in hands of assessees under section 158BC--Not valid--Provisions of section 158BD applicable-- CIT v. Ram Singh (P&H) . . . 391

S. 158BD --Search and seizure--Block assessment--Conditions precedent--Search in premises of father of assessees--Seizure of documents not belonging to assessees--No authorisation of search or search warrants against assessees--Block assessments in hands of assessees under section 158BC--Not valid--Provisions of section 158BD applicable-- CIT v. Ram Singh (P&H) . . . 391

S. 234B --Advance tax--Interest--Notice of demand--No direction in assessment order for charging interest--Notice of demand cannot be issued levying interest under section 234B-- CIT v . Dehradun Club Ltd . (Uttarakhand) . . . 396

----Writ--High Court--Petitions against assessment orders--Appeals pending before Commissioner (Appeals) or before Tribunal--Challenge to charging of interest--Court will not gone into legal pleas taken by assessee--Remedy in appellate forums-- Super Spinning Mills Ltd . v. Asst. CIT (Mad) . . . 401

S. 234C --Writ--High Court--Petitions against assessment orders--Appeals pending before Commissioner (Appeals) or before Tribunal--Challenge to charging of interest--Court will not gone into legal pleas taken by assessee--Remedy in appellate forums-- Super Spinning Mills Ltd . v. Asst. CIT (Mad) . . . 401

S. 260A --Appeal to High Court--Competency of appeal--Circular prescribing monetary limits for appeals by Department--Net tax effect less than prescribed limit--Appeal not maintainable-- ITO v . Ramdas Alva (Karn) . . . 471

S. 276C --Offences and prosecution--Wilful attempt to evade tax--Provisions of Income-tax Act have overriding effect over criminal law--Framing of charge--Guilt of accused need not be proved--Books of account containing false entries--Proceedings can be initiated under section 276C-- Dy. CIT v . General Sales P. Ltd .
(Delhi) . . . 410

Right to Information Act, 2005 :

S. 8(1)(j) --Right to information--Exemption from disclosure--Invasion of privacy of individual--Return of income--Information found in income-tax return--Personal and exempt--No case of public interest in disclosure made out--Information not to be disclosed-- Girish Ramchandra Deshpande v . Central Information Commissioner
(SC) . . . 472

 

Wednesday, March 20, 2013

Section 80IA(4): Retrospective Amendment Is Valid: Gujarat High Court

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>


 

Dear Subscriber,

 

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

Katira Construction Ltd vs. UOI (Gujarat High Court)

Explanation that s. 80IA(4) does not apply to "works contracts" is clarificatory and its retrospective operation is valid

 

By the Finance Act No.2 of 2009 an Explanation was added to s. 80IA(4) with retrospective effect from 1.4.2000 to provide that s. 80IA(4) would apply to a business which is in the nature of a works contract awarded by any person and executed by an undertaking or enterprise. The said retrospective amendment was challenged on the ground that (i) it was a fresh levy of tax, (ii) no reasons were given to support the retrospective levy, (iii) the period of retrospective operation was long and so it violated Article 19(1)(g) of the Constitution. HELD by the High Court dismissing the challenge:

 

(i) An enactment can be questioned only on the ground of lack of competence or on the ground that the statute violates the fundamental rights or any other constitutional provisions. An enactment cannot be struck down by just saying that it is arbitrary or unreasonable. Some or other constitutional infirmity has to be found before invalidating an Act. As all taxes are raised for public good, there is considerable latitude to Parliament in framing a taxing statute. There is always a presumption of constitutionality and the burden is on the Petitioner bringing such a challenge;

 

(ii) On merits, the argument that the Explanation below s. 80-IA (13) provides for a levy of tax which was hitherto unknown is not acceptable. It cannot be said that the Legislature in introducing the explanation materially changed the exemption which existed till such explanation was introduced. The explanation was introduced for the "removal of doubts" and is declaratory in nature. By the Explanation, the Legislature has distinguished between cases of developing/ operating etc from a works contract. It cannot be disputed that there is an intrinsic difference between developing an infrastructure facility and executing a works contract. The Explanation merely aims to clarify that deduction u/s 80IA(4) is not available in case of execution of works contract. Such an interpretation is possible even on the basis of the existing provisions of s. 80IA (4) (Radhe Developers 341 ITR 403 (Guj) referred)

 

The issue is pending in the Bombay High Court in Patel Engineering W. P. No. 219 of 2010. Contrast with Avani Exports. On the Q as to what is a "works contract" see Pratibha Industries (ITAT Mum)


(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

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Latest:

Society of the Franciscan (Hospitaller) Sisters vs. DDIT (Bombay High Court)

Stay Applications are not a "Meaningless Formality". No recovery during pendency of a stay application. S. 226(3) notice must ordinarily be pre-served on assessee


High Court Fumes At CBEC Tax Recovery Mania


---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>


 

Dear Subscriber,

 

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

PML Industries Limited vs. UOI (P&H High Court)

CBEC Tax Recovery Circular is untenable, misconceived, wholly illegal and arbitrary

 

The High Court had to consider two issues: (i) whether the revenue is justified in initiating recovery proceedings on the basis of Circular dated 01.01.2013, even when an application for waiver of pre-deposit is pending before the Appellate Authorities for the reason that on such application for stay or waiver of pre deposit, no orders have been passed? And (ii) whether the second proviso in sub-section (2A) of s. 35C is directory and that the Tribunal in appropriate circumstances can extend the period of stay beyond 180 days? HELD by the High Court:

 

(i) The Circular is purported to be issued in terms of the judgement in Krishna Sales (73) ELT 519 (SC). Though in Krishna Sales it was held that mere filing of an appeal does not operate as stay or suspension of the order appealed against, the Board has overlooked the fact that the assessee is not seeking stay only on account of filing of an appeal, but for the reason that the assessee has sought dispensing with the pre-deposit of duty and penalty and has a right to demand decision on such application, a right which is created by the Statute. Therefore, the very basis of the Circular is untenable, misconceived, wholly illegal and arbitrary. Therefore, the condition of recovery, if no stay is granted within 30 days, is illegal, arbitrary, unjustified and consequently set aside (Larsen & Tuobro (Bom) referred);

 

(ii) As regards appeals pending before the Tribunal, the assessee has no control over the non-disposal of the appeal on account of non-availability of infrastructure; the members of the Tribunal and the workload. The vacation of stay for the reason that the Tribunal is not able to decide appeal within 180 days is a harsh, onerous and unreasonable condition. It burdens the assessee for no fault of his. Such a condition is onerous and renders the right of appeal as illusory. An order passed by a judicial forum cannot be annulled for no fault of the assessee. Therefore, s. 35C(2A) which provides for automatic vacation of stay on the expiry of 180 days has to be read down to mean that after 180 days the Revenue has a right to bring to the notice of the Tribunal the conduct of the assessee in delay or avoiding the decision of appeal, so as to warrant an order of vacation of stay. If the provision is not read down in the manner mentioned above, it suffers from illegality rendering the right of appeal as redundant.

 

See also Treatise On The Law & Practice Of Stay & Recovery Of Tax Arrears & Important case laws on the law of recovery & the controversy over the ITAT's power to grant unlimited stay


(Click Here To Read More)


Regards,


Editor,


itatonline.org

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Latest:

CIT vs. Regalia Apparels Pvt. Ltd (Bombay High Court)

Explanation to S. 37(1): No disallowance for compensatory payments


Section 40(a)(ia) TDS: Despite High Court Stay, Special Bench Verdict Is Binding: ITAT Kol

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, Mar 19, 2013 at 3:22 PM

 

Dear Subscriber,

 

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

ITO vs. M/s MGB Transport (ITAT Kolkata)

S. 40(a)(ia) TDS: Special Bench verdict binding despite suspension by High Court

 

The assessee paid dumper hire charges of Rs. 36.37 lakhs and claimed it as a deduction. The AO disallowed the claim u/s 40(a)(ia) on the ground that the assessee had not deducted TDS thereon u/s 194C. Before the Tribunal, the assessee argued that it was not liable to deduct TDS u/s 194C as there was only no "contractual agreement". In the alternative, it was argued that in accordance with the Special Bench judgement in Merilyn Shipping 136 ITD 23 (SB), the disallowance u/s 40(a)(ia) had to be confined to the amounts "payable" as at the end of the year and it did not apply to the amounts already paid during the year. The assessee also argued that though the Andhra Pradesh High Court had granted an "interim suspension" against the said judgement of the Special Bench, it was still binding. HELD by the Tribunal:

 

The argument that s. 194C does not apply in the absence of a written contractual agreement is not acceptable. Even a verbal contract is sufficient. As regards the judgement of the Special Bench in Merilyn Shipping 136 ITD 23 (SB) where the view was taken that s. 40(a)(ia) can apply only to the amounts remaining payable as at the end of the year and not to the amounts paid during the year, though the Andhra Pradesh High Court has granted "interim suspension" of the said judgement, the said stay/ suspension applies only to the parties to that proceeding and does not destroy the binding effect of the judgement of the Special Bench. There is a difference between "stay of operation" of an order and "quashing of an order". While, in the case of a "quashing", the order of the lower court ceases to exist, in the case of a "stay", the order of the lower court continues to operate and have binding effect. Accordingly, the judgement of the Special Bench in Merilyn Shipping still holds ground and the TDS provisions will apply, for purposes of invocation of s. 40(a)(ia), only on the amounts remaining payable at the end of the year and not on the amounts paid (Shree Chamund Mopeds Ltd. vs. Church of South India Trust Association AIR 1992 SC 1439, 1444 & Pijush Kanti Chowdhury vs. State of West Bengal 2007 (3) CHN 178 followed).

 

See also: Despite Suspension, Special Bench Verdict In Merilyn Shipping Is Binding


(Click Here To Read More)


Regards,


Editor,


itatonline.org

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

Latest:

UTI Mutual Fund vs. ITO (No. 2) (Bombay High Court)

Stay of demand can be granted even if there is no financial hardship



Tuesday, March 19, 2013

Revised Coop. dept Circular on Audit Empanelment dated 18.3.2013

Dear Members,

The circular of coop. department is hosted on http://wirc-icai.org/Default2.aspx   under section.

The Highlights of amendments made in empanelment instructions are as follows:
1. The audit experience now include the experience as internal/concurrent auditor. However, the three years experience criteria has not been relaxed; which make difficult for new member to empanel on the panel prepared by Coop. Commissioner for audit of coop. societies in the state of Maharashtra.

2. Offline Submission of Modified Form can be submitted till 25 th March 2013 in the respective DDR office. (There is no Online submission)
3. Experience now includes Internal, Concurrent and Statutory Audit experience . Firm can also add the experience of its partners as a part of their experience.
4. In case of Partnership Firm, Atleast 2 partners, should possess experience as well as knowledge in Marathi for 3 years.
5. No requirement of submitting documents in support of experience of audits conducted earlier . Only affidavit duly notarized in support of audit experience as well as working knowledge of Marathi Language is sufficient .
6. The empanelment is for three years, subject to amendment in the Act.
7. For empanelment, the firm should have head office in Maharashtra .
8. It is advisable that the members/Firms who have already submitted Forms, should please resubmit the modified form with the requisite affidavit.
9. For more details please refer instructions along with the circular No. 238/2013 dt.18.3.2013"

For circular/shudhhi patrak click here:

https://docs.google.com/file/d/0B8GyRsbVIg8gZWY1eUJIZkVFNEk/edit?usp=sharing


For revised A, B, C society classification click here:

https://docs.google.com/file/d/0B8GyRsbVIg8gTTF5c056ZGJhQ1k/edit?usp=sharing


For Empanelment Form click here:

https://docs.google.com/file/d/0B8GyRsbVIg8gbno2a3FCY2pYWFU/edit?usp=sharing


For Instruction for filling of form click here:

https://docs.google.com/file/d/0B8GyRsbVIg8gc1ZMT2ZKelJYYWM/edit?usp=sharing


For Format of Affidavit click here:

https://docs.google.com/file/d/0B8GyRsbVIg8gSEpYWGwzbWxYRGc/edit?usp=sharing



The Last date is 25.3.2013


The minimum experience of three years would really cause a hardship for new members. I'm of the opinion that, at least the new members should be allowed empanelled under "C" category. Please have your comments.



Regards,
-------
CA.C.V.PAWAR
PATIL DAWARE GIRASE PAWAR & ASSOCIATES
CHARTERED ACCOUNTANTS
0253-2319641. M-9423961209

INDIAN CA - NURTURED IN INDIA, GROOMED FOR THE WORLD

For latest Updates visit Blogspot : http://canews1.blogspot.in

Financial Hardship Not Necessary For Stay Of Demand: Bombay High Court

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Mon, Mar 18, 2013 at 2:13 PM
 
The following important judgement is available for download at itatonline.org.

UTI Mutual Fund vs. ITO (No. 2) (Bombay High Court)

Stay of demand can be granted even if there is no financial hardship

 

The AO raised a demand on the assessee on the same lines as had been done in the preceding AY. Though in the preceding AY, the assessee had obtained a stay from the High Court (see UTI Mutual Fund vs. ITO 345 ITR 71 (Bom)), the AO refused to follow that for the present AY. The assessee filed a Writ Petition to challenge the refusal to grant stay. To oppose the grant of stay, the department relied on CIT vs. IBM India Pvt. Ltd where the Karnataka High Court had held that in matters involving large amounts due to the Revenue, an interim order of stay would be granted only in case of genuine financial hardship of the assessee and not otherwise. The Department argued that as the assessee did not have any financial hardship, the stay should be rejected. HELD by the High Court rejecting the department's plea and granting stay of the demand:

 

The order of the Karnataka High Court in CIT vs. IBM India Pvt. Ltd cannot be read to mean that consideration of whether an assessee has made out a strong prima facie case for stay of enforcement of a demand is irrelevant. Nor is the law to the effect that absent a case of financial hardship, no stay on the recovery of a demand can be granted even though a strong prima facie case is made out. In considering whether a stay of demand should be granted, the Court is duty bound to consider not merely the issue of financial hardship if any, but also whether a strong prima facie raising a serious triable issue has been raised which would warrant a dispensation of deposit. That is a settled position in the jurisprudence of our revenue legislation. In CEAT Limited v. UOI 2010 (250) ELT 200 (Bom) it was held that "If the party has made out a strong prima facie case, that by itself would be a strong ground in the matter of exercise of discretion as calling on the party to deposit the amount which prima facie is not liable to deposit or which demand has no legs to stand upon, by itself would result in undue hardship of the party is called upon to deposit the amount." Where a strong prima facie case has been made out, calling upon the assessee to deposit would itself occasion undue hardship. Where the issue has raised a strong prima face case which requires serious consideration as in the present case, a requirement of pre-deposit would itself be a matter of hardship. Also the manner in which the Revenue has sought to brush aside a binding decision of the Court in the case of the assessee on the issue of a stay on enforcement for the previous year has to be serious disapproved. The rule of law has an abiding value in our legal regime. No public authority, including the Revenue, can ignore the principle of precedent. Certainty in tax administration is of cardinal importance and its absence undermines public confidence.

 

See also R.P. David 86 ITR 699 (Mad) & KEC International Ltd 41 SOT 43 (Mum) where it was held that the fact that the assessee is financially sound and in a position to pay is not in itself a ground for refusing to exercise the discretion in granting the stay. See also Treatise On The Law & Practice Of Stay & Recovery Of Tax Arrears


(Click Here To Read More)


Regards,


Editor,


itatonline.org

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Latest:

Monthly Digest Of Imp Case Laws (January 2013) Is Available For Download



Monday, March 18, 2013

Note on amendment of rules and forms related to TDS and TCS

---------- Forwarded message ----------
From: Nandkishore Hegde <hegdenandkishore@yahoo.com>
Date: Sat, Mar 16, 2013 at 1:26 PM
Subject: Note on amendment of rules and forms related to TDS and TCS
To: NEXT GEN <NEXTGEN-CA@yahoogroups.com>, CA NEWS <CANEWS@yahoogroups.com>


 

Dear colleagues,
 
Please find a note prepared by my colleagues in the end of February on the amendment of rules. You may find this a bit old as the rules were notified in February. However given that we were busy with the Budget and its analysis in the first two weeks, I am taking the liberty of sending this to those who have not read about it.
 
Best regards
N .C. Hegde
 
 
 
Background
The Income-tax Act, 1961 ('the Act') empowers the Central Board of Direct Taxes ('CBDT'), subject to the control of the Central Government, to make rules for carrying out the purpose of the Act. The CBDT has made further rules to amend the Income-tax Rules, 1962 namely Income-tax (2nd Amendment) Rules, 2013 via Notification No. 11/2013/F.No. 142/31/2012-SO (TPL) dated 19 February 2013 ('Notification No. 11/2013').
 
These amendments are with regard to rules and forms in relation to tax deducted at source ('TDS') and tax collected at source ('TCS').
 
Amendment to Income-tax Rules
 
Following rules have been amended by the said notification:
 
·         Rule 31A – Statement of deduction of tax under sub-section 3 of section 200
 
Prior to the amendment of Rule 31A, the person responsible for deduction of tax at source (herein after referred to as 'deductor') may either file the TDS return in paper form or electronically. However, with the amendment of Rule 31A, the deductor also has an option to file the TDS return electronically through a digital signature. In case the TDS return is not signed digitally, the same is required to be filed electronically along with the verification of the return in Form 27A or verified through an electronic process as prescribed earlier.
 
The Notification also prescribes a new form for claim of refund of sum paid as tax deducted or collected at source. The deductor shall furnish Form No. 26B electronically under digital signature for claiming the refund.
 
Sub-rule (5) of Rule 31A is amended to provide that the Director General of Income-tax (Systems) ['DGIT(S)'] shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements as well as claim for refund in Form No. 26B.
 
·         Rule 31AA – Statement of collection of tax under proviso to sub-section (3) of section 206C
 
The amendments made to Rules 31AA are similar to that of Rule 31A wherein the person responsible for collection of tax at source (hereinafter referred to as 'collector'), may choose to furnish the TDS return electronically through a digital signature. However, if the same is not signed digitally, the same is required to be filed electronically along with the verification of the return in Form 27A or verified through an electronic process as prescribed earlier.
 
The collector, at the time of preparing statements of tax collected shall additionally furnish particulars of amount received or debited on which tax was not collected in view of the declaration made by the buyer of the goods under section 206C(1A) of the Act.
 
Sub-rule (5) of Rule 31AA is amended to provide that the DGIT(S) shall specify the procedures, formats and standards for the purposes of furnishing and also verification of the statements furnished as above.
 
·         Rule 31ACB – Form for furnishing certificate of accountant under the first proviso to sub-section (1) of section 201
 
The first proviso to section 201(1) by the Finance Act, 2012 provides that where the person responsible for deduction of tax does not deduct tax at source either fully or partly, shall not be considered as assesse in default if the payee furnishes his return of income under section 139 taking into account the sum received from the deductor while computing income and has paid the tax due on the said income. Further, the deductor is also required to furnish a certificate from an accountant in the form as may be prescribed.
 
In light of the above proviso, the CBDT has prescribed Form No. 26A. However, the details of the said form are yet to be notified.
 
·         Rule 37J – Form for furnishing certificate of accountant under the first proviso to sub-section (6A) of Section 206C
 
The first proviso to section 206C (6A) by the Finance Act, 2012 provides that where the person responsible for collection of tax does not collect the same either fully or partly, shall not be considered as assesse in default if the payer furnishes his return of income under section 139 taking into account the sum paid to the collector while computing income and has paid the tax due on the said income. Further, the collector is also required to furnish a certificate from an accountant in the form as may be prescribed.
 
In light of the above proviso, the CBDT has prescribed Form No. 27BA. However, the details of the said form are yet to be notified.
 
In continuation to the amendments in the Rules as mentioned above, certain forms have also been amended through the said notification. It may be noted that presentation of the information in the forms have changed when compared to the forms currently being used.
 
·         Form No. 15G – Declaration under section 197A (1) and 197A(1A) of the Act to be made by an individual or a person (not being a company or firm) claiming certain receipts without deduction of tax.
Ø  Details of the declarant are required to be provided in a tabulated manner along with the details of sources of income. However, the schedules as provided in the old form still prevail.
 
·         Form No. 15H – Declaration under section 197A(1C) of the Act to be made by an individual who is of the age of sixty years or more claiming certain receipts without deduction of tax.
Ø  This form is bought in line with Form 15G as mentioned above.
 
·         Form No. 16 – Certificate under section 203 of the Act for tax deducted at source on salary
 
·         Form No. 16A – Certificate under section 203 of the Act for tax deducted at source
Ø  Information being provided in Annexure A and B to Form No. 16 and 16A earlier shall now be provided as part of the Form No.16 and 16A respectively.
 
·         Form No. 24Q – Quarterly statement of deduction of tax under section 200(3) of the Act in respect of salary
 
·         Form No. 26Q – Quarterly statement of deduction of tax under section 200(3) of the Act in respect of payments other than salary
 
·         Form No. 27EQ – Quarterly statement of collection of tax at source under section 206C of the Act
 
·         Form No. 27Q – Quarterly statement of deduction of tax under section 200(3) of the Act in respect of payments other than salary made to non-residents
 
In relation to Form Nos. 24Q, 26Q, 27EQ, 27Q following amendments are prescribed:
Ø  Additional information with regard to details of Ministry/Department/State is required to be provided where the deductor is a Central/State Government.
Ø  Number of the certificate under section 197 issued by the Assessing Officer for non-deduction or lower deduction of tax is now required to be provided in Annexure I to the aforementioned forms.
Ø  Further, following additional information is required to be provided in Form 27Q
Ø  Whether the rate of TDS is as per the Act or Double Tax Avoidance Agreement
Ø  Nature of remittance
Ø  Unique Acknowledgement of the corresponding Form 15CA, if available
Ø  Country to which remittance is made
 
·         Form No. 27C – Declaration under section 206C (1A) of the Act to be made by a buyer for obtaining goods without collection of tax.
Ø  Details of the buyer of the goods are required to be provided in a tabulated manner along with the Assessing Officer's details.
 
·         Form No. 27D – Certificate under section 206C of the Act for tax collected at source.
Ø  Status of matching with the Form No. 24G (Book Adjustment Statement) has been considered in the new form.
 
Conclusion
A significant amendment brought out by the CBDT by way of Income-tax (2nd Amendment) Rules, 2013 is the option of filing of the e-TDS returns through digital signature and e-filing of TDS refunds. Further, new forms have been prescribed in light of the amendments made by the Finance Act, 2012.
 
Source: Notification No. 11/2013/F.No. 142/31/2012-SO (TPL) dated 19 February 2013 issued by the CBDT