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Tuesday, 29 December 2015

INCOME TAX - AOs to issue SPECIFIC questionnaire alongwith initial notice u/s 143(2)

Respected Members,


In cases selected for scrutiny, the first notice u/s 143(2) issued by the AO shall now be accompanied by SPECIFIC questionnaire alongwith a notice u/s 142(1).


The CBDT has asked the AOs to issue case specific questionnaires to the assessee along with the initial notice u/s 143(2) to avoid wastage of time of the assessee and their authorized representatives who are required to attend the proceedings on issue of the initial notice u/s 143(2) but in absence of any specific questionnaire the compliance made by the assessee or the AR of the assessee cannot serve any purpose other than merely marking their presence on record.


Please find attached the relevant directions issued by the CBDT for your ready reference.


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N.K. Goel & Bros.
Chartered Accountants
CA Yashu Goel
9899263490

Fwd: Notice Dtd. 28.12.2015, Prohibiting carrying of cash beyond Rs.25,000/-

Respected Members,

Please find enclosed a Notice issued by the Department Trade and Taxes Delhi prohibiting visitors from carrying cash above Rs. 25,000/-
 
While the members are advised to take precaution, the Bar executive is immediately moving a representation against this move of the Dept.

CA YASHU GOEL
Vice-President
Sales Tax Bar Association

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N.K. Goel & Bros.
Chartered Accountants
CA Yashu Goel
9899263490




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N.K. Goel & Bros.
Chartered Accountants
CA Yashu Goel
9899263490

Tuesday, 15 December 2015

Due date for filing Form9 Extended


Wednesday, 2 December 2015

CBDT prescribes procedure for verification of electronic and manual declarations of Form 15G/15H

Friday, 27 November 2015

Comments on accounting standards ICDS invited till Dec 15 http://mybs.in/2S28gWE

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CA Yashu Goel
9899263490
yashu.goel@icai.org

Monday, 19 October 2015

CBDT Press Release Reg Claiming Of Medical Expenditure For Tax Purposes Made Easy


The CBDT has issued a press release dated 14.10.2015 stating that the condition of obtaining the certificate for claiming expenditure under section 80DDB in respect of specified ailments from a specialist working in a Government hospital has been amended. As per amended Rule 11DD, the prescription can be issued by any specialist mentioned in the amended Rule. Henceforth, it will not be mandatory to obtain a certificate from a specialist working in a Government hospital



Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
PRESS RELEASE
New Delhi, 14th October, 2015

Subject: Claiming of medical expenditure for tax purposes made easy.

One of the pillars of the of the taxation proposals included in the Finance Minister's budget speech for 2015-16 was extension of benefits to the middle class. In this process the Finance Minister announced extension of certain benefits in respect of medical treatment under section 80DDB. This section allows a deduction for expenditure incurred on treatment of specified ailments.

Taking the process forward, Central Board of Direct Taxes has issued a Notification vide S.O. No.2791 (E) on 12th October 2015 amending Rule 11DD. The amended Rule relaxes the condition of obtaining the certificate for claiming expenditure under section 80DDB in respect of specified ailments from a specialist working in a Government hospital. As per amended Rule 11DD, the prescription can be issued by any specialist mentioned in the amended Rule. Henceforth, it will not be mandatory to obtain a certificate from a specialist working in a Government hospital.

The Notification is available on the website of the Income Tax Department www.incometaxindia.gov.in.

(Shefali Shah)
Pr. Commissioner of Income Tax (OSD)
Official Spokesperson, CBDT

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M/s N.K. Goel & Bros.
WWW.TaxingNarad.COM
Chartered Accountants
CA Yashu Goel
9899263490

Monday, 12 October 2015

Department of Trade & Taxes Delhi, has notified a scheme dated 08-10-2015 introducing an award scheme for the general public " Bill Banvao Inaam Pao"
The scheme would be for Bill/ Cash Memo /Retail Invoice of purchases made from  a registered dealer in Delhi.
Prize money is maximum Rs 50000
CA Yashu Goel

Saturday, 3 October 2015

Santa: I have heard recently that Mr. Rajan has reduced Repo Rate by 50 basis points and everyone is saying that this is good for the market. Loan EMI may also come down. What is this rate cut means actually? I want to understand this.

Banta: To understand this you first need to know, how does a bank function.

Santa: Why?

Banta: Because all these are inter-related. Tell me – what does a bank do?

Santa: Bank takes money from depositors and gives loan to earn interest. That way they keep everyone happy and make a profit also.

Banta: Correct, but there are more to it. Let me explain this in a very simplistic way. Bank needs money. Bank can get money from depositors like you and me and also from RBI. But bank also needs to pay certain interest to us and also to RBI.

Santa: Ok.

Banta: Let us try to understand first – what happens when we deposit, say, Rs. 100 with a bank.

Santa: I know that. Bank gives that Rs. 100 to someone who needs a loan.

Banta: No, it is not that simple. Remember, though bank can earn interest by giving away loans, but it is also very risky. There are many cases of loan defaults. This way banks can put all our money into high risk areas. It has to be protected.

Santa: How?

Banta: Ok, RBI has made it mandatory that upon receiving, say, Rs. 100 – banks first have to deposit Rs. 4 with RBI. RBI keeps this Rs. 4 in its current a/c and hence banks do not receive any interest on this money. This is known as Cash Reserve Ratio or CRR, which is currently at 4%.

Santa: Hmmm, then?

Banta: RBI has also made it mandatory that upon receiving, say, Rs. 100 – banks need to compulsorily buy central and state govt. securities of Rs. 21.50. Of course banks will earn some interest income here. This is known as Statutory Liquidity Ratio (SLR), which is currently at 21.50%.

Santa: Ok, so you mean to say that upon receiving Rs. 100, banks can spend only Rs. 74.50 at its own will.

Banta: Correct. 100 – (4 + 21.50) = 100 – 25.50 = 74.50

Santa: But you were saying that banks can also borrow from RBI. What interest banks pay to RBI?

Banta: Before 30th September, banks were paying 8.25% interest to RBI when it borrows money from RBI. Now this rate has been reduced by 50 basis points. So banks now need to pay interest to RBI, if it borrows from RBI, at the rate of 7.75%. This is known as Repo Rate.

Santa: Can fixed deposit rate be affected by reduction of Repo Rate?

Banta: Of course. If banks get money from RBI @7.75%, why will banks pay higher interest to you and me? One year FD rate is already revised by many banks and it is equal to or very close to 7.75%.

Santa: But as now banks are getting money at a cheaper rate, then they should reduce the loan interest rate i.e. passing on the benefits it receives.

Banta: Correct. They should. And on that hope market is cheering. If companies get loan at a cheaper rate, they will likely to expand their businesses. That will create more jobs, more income and boost the economy.

Santa: How is inflation linked to this?

Banta: See, when loan becomes cheaper, people tends to borrow more. That means people will have more money to spend. This will increase the demand for goods, and if supply does not increase to match this demand, then prices will increase.

Santa: So there is a chance, that inflation may rise also?

Banta: Well, yes. But inflation depends on many other factors as well, like production (industrial and agricultural), manufacturing, export – import, foreign currency movement etc. So inflation may increase or may not.

Santa: One last question. Like we deposit our money with banks, can banks also deposit their money with someone?

Banta: Yes, they can deposit with RBI and earn interest too. This interest is typically 1% less than the repo rate. This rate is known as Reverse Repo Rate.

Santa: Great! So now I understand CRR, SLR, Repo Rate, Reverse Repo Rate and their impact on deposit rate, loan interest rate and on inflation. Thanks.

Banta: Welcome!

Monday, 21 September 2015

I-T department to use email for issuing notices


 

 

The IT department has decided to launch a new system of issuing email notices to which an assessee can respond electronically, obviating the need for a physical interface with the taxman which often led to complaints about harassment. 

 

The Central Board of Direct Taxes, the apex policy-making body of the IT department, is working on a strategy to create the required processes and capacity in this regard. 

 

 

Explaining the procedure,CBDT Chairperson Anita Kapur said if a taxpayer provides the department with a bonafide email address in his Income Tax Return (ITR), the Board will be able to send him an e-notice and not a paper document dispatched through post for which he usually has to travel and meet the Assessing Officer (AO). 

 

"The taxpayer can respond through the email and if we have some more queries we give you another notice by the electronic medium so that both the AO and the taxpayer remain in an e-environment and, may be, during the final hearing when the AO wants to close the matter, the taxpayer can come once to the tax office," the CBDT chief said. 

 

"The taxpayer can send documents over email, scan them, upload them and it's over," she added. 

 

"It (scrutiny session) should be over and should not go beyond that. This is the way we are trying to address the issues of compliance and limiting the interface between the taxman and the taxpayer. This will be a sea change in our tax administration," Kapur said. 

 

Tax experts say the initiative will also ensure privacy of a taxpayers' communication with his AO and the tax department. 

 

The CBDT chief said she was aware of instances where the taxpayers complained about the AO raising numerous queries upon meeting the assessees despite their earlier order sheets having mention of only a few queries. 

 

"This (sending emails) is one way of giving both the taxpayer and the AO a good opportunity to solve their things without any problem. It has also been mentioned in our earlier instructions to the field that the questionnaire sent to the taxpayer in scrutiny cases should be focused and specific so that the person knows what is he being enquired about. 

 

"We are trying to do this for a medium-level taxpayer and others," Kapur said, adding she hopes this would bring down taxpayers' complaints. 

 

The CBDT chief added that the number of cases landing for scrutiny had gone down over the years following introduction of technology in the administration of taxes. 

 

"The overall percentage of cases brought under scrutiny across the country in a financial year is less than one per cent. The entire system is handled electronically and there is no human intervention. I can assure taxpayers that there is no personal role of a tax official in deciding who can be scrutinised or who cannot be," she said. 

 

Kapur also added that as part of measures to further check instances of harassment of taxpayers, the CBDT has recently asked its field offices to not undertake any "fishing or roving inquiries" 

 

We are asking our officers that if we are selecting a case for scrutiny on a third-party information (through banks, credit card agencies) just limit your inquiry to those issues which have been flagged and based on which your case have been selected for scrutiny. No fishing inquiries (should be undertaken)," she said. 

 


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M/s N.K. Goel & Bros.
WWW.TaxingNarad.COM
Chartered Accountants
CA Yashu Goel
9899263490

Sunday, 20 September 2015

A section 54 claim cannot be rejected on grounds that new house was purchased in a foreign country in foreign currency

[2014] 51 taxmann.com 56 (Chennai - Trib.) IN THE ITAT CHENNAI BENCH 'C' N. Ranganathan v. Income-tax Officer*


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M/s N.K. Goel & Bros.
WWW.TaxingNarad.COM
Chartered Accountants
CA Yashu Goel
9899263490

Tuesday, 15 September 2015

Company law update

MCA amends Companies Deposit Rules to exclude loans from relatives of directors by private company from definition of deposits

Important amendments applicable from 15th September 2015 includes:
• Loans from relatives of directors of a private company only
• Such money should not be out of borrowed funds
• Details of deposits from directors and their relatives to be given in Board Report
• All Limits under rule 3 for accepting deposits to include share premium

Saturday, 12 September 2015

DS 2 notified

For a copy of the notification click here

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N.K. Goel & Bros
Chartered Accountants
S-10, Shivaji Park, New Delhi 110026

Thursday, 10 September 2015

CBDT has issued a press release stating that no extension of due date for filing Tax Audit and I T Returns for the A.Y. 2015-16. CA Yashu Goel



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CA Yashu Goel
9899263490
yashu.goel@icai.org

Thursday, 13 August 2015

Bogus sales and purchases: Reliance on statement of supplier who confesses to providing accommodation entries without giving assessee right of cross-examination violates principles of natural justice and the addition has to be deleted in toto

Bogus sales and purchases: Reliance on statement of supplier who confesses to providing accommodation entries without giving assessee right of cross-examination violates principles of natural justice and the addition has to be deleted in toto

(i) The assessment was reopened on the basis of the statement of Shri Hiten L. Rawal, the proprietor of M/s Zalak Impex. In this statement recorded u/s 131 of the Act, Shri Rawal confessed to have provided accommodation entries in the form of sales and purchases, to various parties. The assessee was stated to have obtained bills for non-existing parties, amounting to Rs. 4,09,12,718, during the year under consideration. It remains undisputed that the assessee was never provided any opportunity to cross examine Shri Hiten L. Rawal, though he specifically asked for such cross examination. On the other hand, the burden was sought to be shifted on the assessee by the A.O., by asking him to produce Shri Rawal, even though it was the A.O. who had relied on the statement of Shri Rawal, without either confronting this statement to the assessee, or providing opportunity to the assessee to cross examine Shri Rawal. Therefore, the reassessment order is as a result of violation of the natural principle of audi alteram partem. A statement recorded at the back of a party cannot be used against such party without confronting such statement to the party. Hence, on this score alone, the reassessment order is unsustainable in the eye of law and we hereby cancel the same. As a consequence, the order of the ld. CIT(A) is also cancelled in toto.

(ii) Further, even otherwise, before the A.O., the assessee had contended that the assessee being in an export promotion zone, the movement of its goods is controlled and customs approved; that the purchases being approved purchases, there was no question of their being bogus purchases. The assessee enclosed the custom approved invoices in respect of purchases from Zalak Impex. As per these invoices, the goods purchased had been verified and approved by the Customs Authority. This clearly shows that the goods had actually been purchased and received by the assessee. As such, these purchases could not have, by any stretch of imagination, been treated as bogus purchases. It is also noteworthy that the payments made by the assessee to Zalak Impex were through account payee cheques only. Neither of the Taxing Authorities, however, took these invoices into consideration and wrongly held the assessee's purchases from Zalak Impex to be bogus purchases. Nothing has been brought on record to show that these invoices were self made or fabricated. Moreover, the comparative chart of purchases made during the year and the selling price has not been refuted and this also goes to prove the theory of bogus bills and accommodation entries to be wrong. Therefore, the order under appeal is a result of complete misreading and non-reading of cogent documentary evidence brought on record by the assessee. For this reason also, along with the reason that the sales made by the assessee were never questioned, the addition is deleted in toto.

 FOR COPY OF JUDGEMENT CLICK HERE


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M/s N.K. Goel & Bros.
WWW.TaxingNarad.COM
Chartered Accountants
CA Yashu Goel
9899263490

Wednesday, 12 August 2015

S. 41(1)/ 68: Unclaimed liabilities to creditors, even if fictitious and bogus, cannot be assessed u/s 41(1) in the absence of a write-back. The bogus credits can be assessed u/s 68 only in the year the credits were made and not in the year they are found to be not payable

S. 41(1)/ 68: Unclaimed liabilities to creditors, even if fictitious and bogus, cannot be assessed u/s 41(1) in the absence of a write-back. The bogus credits can be assessed u/s 68 only in the year the credits were made and not in the year they are found to be not payable

Applying the ratio in the cases mentioned supra, the amount in question cannot be brought to tax in the year under appeal under the provisions of Section 41(1) of the Act. It is trite law that an addition under Section 68 can be made only in the year in which credit was made to the account of the creditors in the books of account maintained. Admittedly, in this case the credit to the account of creditors was made in the earlier years and therefore, the amount even cannot be brought to tax under Section 68 in the year under appeal. However, it is open to the Department to levy tax on such amount by resorting to the remedies available under the provisions of Act by duly following the procedure known to the law

for PDF copy of the judgement please click here




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M/s N.K. Goel & Bros.
WWW.TaxingNarad.COM
Chartered Accountants
CA Yashu Goel
9899263490

IT : Long-term capital loss of sale of equity shares attracting STT is allowed to be set off against long term capital gain on sale of land in accordance with section 70(3)

IT : Long-term capital loss of sale of equity shares attracting STT is allowed to be set off against long term capital gain on sale of land in accordance with section 70(3)

• Section 10(38) excludes in expressed terms only the income arising from transfer of Long term capital asset being equity share or equity fund which is chargeable to STT and not entire source of income from capital gains arising from transfer of shares.

• It does not lead to exclusion of computation of capital gain of Long term capital asset or Short term capital asset being shares.

• Accordingly, Long term capital loss on sale of shares would be allowed to be set off against Long term capital gain on sale of land in accordance with section 70(3).

■■■

[2015] 58 taxmann.com 115 (Mumbai - Trib.)

IN THE ITAT MUMBAI BENCH 'D'

Raptakos Brett & Co. Ltd.

v.

Deputy Commissioner of Income-tax, Mumbai

B.R. BASKARAN, ACCOUNTANT MEMBER
AND Amit Shukla, JUDICIAL MEMBER

IT Appeal nos. 3317 (Mum,) of 2009 & 1692 (Mum.) of 2010
[ASSESSMENT YEAR 2007-08]

JUNE  10, 2015 

Soli Dastur and Madhur Agarwal for the Appellant. Ravi Sawana for the Respondent.

ORDER

 

Amit Shukla, Judicial Member - The aforesaid appeals have been filed by the assessee against order dated 08.03.2009 passed by the CIT(A) Central – II, Mumbai, for the quantum of assessment u/s. 143(3) for A.Y. 2007-08 and against order dated 12.01.2010 in relation to the penalty proceedings u/s. 271(1)(c) for the assessment year 2007-08.

2. We will first take up the quantum appeal in ITA No. 3317/Mum/2009, vide which, following grounds have been raised.

"1.1 On the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) – Central II, Mumbai ["the CIT(A)"] erred in confirming the action of Deputy Commissioner of Income Tax (the A.O) by not allowing the claim of set off of Long term Capital Loss on sale of shares where Security Transaction Tax ("STT") was deducted against the Long Term Capital Gain arising on sale of land at Chennai;

1.2 The appellant prays that such set off of the said Long Term Capital Loss be allowed

2.1 On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the action of the A.O. in disallowing the expenses of Rs.39,80,215/-u/s 14A of the Act by applying Rule 8D of the Income tax Rules 1962 ("the Rules");

2.2 the CIT(A) also erred in confirming the action of the A.O. in applying Rule 8D in as much as the said rule was ultravires and void;

2.3 the CIT(A) further erred confirming the action of the A.O. in applying Rule 8D retrospectively in as much as the said rules would be applicable with effect from A.Y. 2008-09;

2.4 the CIT(A) further erred in confirming the action of the A.O. in disallowing the expenses proportionately against the dividend income earned so exempt u/s. 10(38) of the Act.

2.5 the Appellant prays that the said disallowance of expenses be deleted.

2.6 Without prejudice to above, the Appellant prays that the said disallowance of expenses be appropriately reduced."

3. The brief facts of the case, qua the issue raised in ground no.1 are that the assessee is a pharmaceutical company, engaged in manufacturing and sale of pharmaceuticals, formulations, dietetic specialities and animal husbandry. The assessee in the computation of income had shown Long term capital loss on sale of shares amounting to Rs.57,32,835/- and loss on sale of mutual funds units amounting to Rs.2,61,655/-. The said Long term capital loss has been set off against the Long term capital gains of Rs.94,12,00,000/- arising from sale of land at Chennai. The Assessing Officer held that the losses claimed cannot be allowed since the income from Long term capital gain on sale of shares and mutual funds are exempt u/s. 10(38). That apart, of the Long term capital loss in respect of shares where securities transaction tax has been deducted, would have been exempt from Long term capital gain had there been profits, therefore, Long term capital loss from sale of shares cannot be set off against the Long term capital gain arising out of the sale of land.

4. The learned CIT(A) too has confirmed the action of the Assessing Officer on the ground that exempt profit or loss construes separate species of income or loss and such exempt species of income or loss cannot be set off against the taxable species of income or loss. Tax exempt losses cannot be deducted from taxable income and, therefore, the Assessing Officer has rightly disallowed the claim of losses from shares to be set off against the Long term capital gain from sale of land.

5. Before us the learned senior counsel, Shri Soli Dastur, submitted that what is contemplated in section 10(38) is exemption of positive income and losses will not come within the purview of the said section. The set off of Long term capital loss has been clearly provided in sections 70 and 71. The Legislation has not put any embargo to exclude Long term capital loss from sale of shares to be set off against Long term capital gain arising on account of sale of other capital asset. Even in the definition of capital asset u/s. 2(14), no exception or exclusion has been provided to equity shares the profit/gain of which are treated as exempt u/s. 10(38). Capital gain is chargeable on transfer of a capital asset u/s. 45 and mode of computation has been elaborated in section 48. Certain exceptions have been provided in section 47 to those transactions which are not regarded as transfer. Nothing has been mentioned in sections 45 to 48 that capital gain or loss on sale of shares are to be excluded as section 10(38) exempts the income arising from the transfer of long term capital asset being an equity share or unit. Legislature has given exemption to income arising from transfer of Long term capital asset being an equity share in company or unit of equity oriented fund, which is chargeable to STT. Section 10(38) cannot be read into section 70 or 71 or sections 45 to 48. In support of his contention, he strongly relied upon the decision of Hon'ble Calcutta High Court in the case of Royal Calcutta Turf Club v. CIT (1983) 144 ITR 709 (Cal). In this decision he submitted that similar issue with regard to the losses on account of breeding horses and pigs which are exempt u/s. 10(27) whether can be set off against its income of other source under the head "business". The Hon'ble High Court after considering the relevant provisions of section 10(27) and section 70, held that section 10(27) excludes in expressed terms only any income derived from business of livestock breeding, poultry or dairy farming. It does not exclude the business of livestock breeding, poultry or dairy farming from the operation of the Act. The losses suffered by the assessee in respect of livestock, breeding were held to be admissible for deduction and were allowed to be set off against other business income. He drew our attention to the various observations and findings of the Hon'ble High Court and also the reliance placed by their Lordships to various decisions of Hon'ble Supreme Court, especially in the case of CIT v. Karamchand Premchand Ltd. (1960) 40 ITR 106. He also referred to various observations of Hon'ble Supreme Court from the said decision. Thus, he submitted that the losses on account of sale of shares should be allowed to be set off against Long term capital gain on sale of land. In his fairness, he also pointed out before us that there is a decision of Hon'ble Gujarat High Court in the case of Kishorebhai Bhikhabhai Virani v. Asst. CIT (2014) 367 ITR 261 (Guj), which has decided this issue against the assessee. However, he submitted that in the said decision, the decision of Hon'ble Calcutta High Court has not been referred at all. Therefore, this decision does not have precedence value as compared to the Calcutta High Court decision, which is based on Supreme Court decision on this point. He also pointed out that ITAT Mumbai Bench also in the case of Schrader Duncan Ltd. v. Addl. CIT (2012) 50 SOT 68 has decided somewhat similar issue against the assessee. However, he distinguished the said decision and highlighted the points as to why said decision cannot be followed.

6. On the other hand, the learned DR strongly relied upon the order of the AO and CIT(A) and submitted that, firstly, if the income from the Long term capital gain on sale of shares is exempt, then the loss from such sale of shares will also not form part of the total income and therefore, there is no question of set off against other income or Long term capital gain on different capital asset. Secondly, the decisions of Hon'ble Gujarat High Court and ITAT Mumbai Tribunal should be followed. He further submitted that it is quite a settled law that income includes loss also and, therefore, if the income from sale of shares does not form part of the total income, then the losses from such shares also will not form part of the total income. Thus, the order of the CIT(A) should be confirmed.

7. We have heard rival submissions and perused the relevant findings given in the impugned orders. The main issue before us is, whether Long term capital loss on sale of equity shares can be set off against Long term capital gain arising on sale of land or not, as the income from Long term capital gain on sale of such shares are exempt u/s. 10(38). The nature of income here in this case is from sale of Long term capital asset, which are equity shares in a company and unit of an equity oriented fund which is chargeable to STT. First of all, Long term capital gain has been defined under section 2(39A), as capital gains arising from transfer of a Long term capital asset. Section 2(14) defines "Capital asset" and various exceptions and exclusions have been provided which are not treated as capital asset. Section 45 is the charging section for any profits or gain arising from a transfer of a capital asset in the previous year i.e. taxability of capital gains. Section 47 enlists various exceptions and transactions which are not treated as transfer for the purpose of capital gain u/s. 45. The mode of computation to arrive at capital gain or loss has been enumerated from sections 48 to 55. Further sub section (3) of section 70 and section 71 provides for set off of loss in respect of capital gain.

8. From the conjoint reading and plain understanding of all these sections it can be seen that, firstly, shares in the company are treated as capital asset and no exception has been carved out in section 2(14), for excluding the equity shares and unit of equity oriented funds that they are not treated as capital asset. Secondly, any gains arising from transfer of Long term capital asset is treated as capital gain which is chargeable u/s. 45; thirdly, section 47 does not enlist any such exception that transfer of long term equity shares/funds are not treated as transfer for the purpose of section 45 and section 48 provides for computation of capital gain, which is arrived at after deducting cost of acquisition i.e. cost of any improvement and expenditure incurred in connection with transfer of capital asset, even for arriving of gain in transfer of equity shares; lastly, section 70 & 71 elaborates the mechanism for set off of capital gain. Nowhere, any exception has been made/ carved out with regard to Long term capital gain arising on sale of equity shares. The whole genre of income under the head capital gain on transfer of shares is a source, which is taxable under the Act. If the entire source is exempt or is considered as not to be included while computing the total income then in such a case, the profit or loss resulting from such a source do not enter into the computation at all. However, if a part of the source is exempt by virtue of particular "provision" of the Act for providing benefit to the assessee, then in our considered view it cannot be held that the entire source will not enter into computation of total income. In our view, the concept of income including loss will apply only when the entire source is exempt and not in the cases where only one particular stream of income falling within a source is falling within exempt provisions. Section 10(38) provides exemption of income only from transfer of Long term equity shares and equity oriented fund and not only that, there are certain conditions stipulated for exempting such income i.e. payment of security transaction tax and whether the transaction on sale of such equity share or unit is entered into on or after the date on which chapter VII of Finance (No.2) Act 2004 comes into force. If such conditions are not fulfilled then exemption is not given. Thus, the income contemplated in section 10(38) is only a part of the source of capital gain on shares and only a limited portion of source is treated as exempt and not the entire capital gain (on sale of shares). If an equity share is sold within the period of twelve months then it is chargeable to tax and only if it falls within the definition of Long term capital asset and, further fulfils the conditions mentioned in subsection (38) of section 10 then only such portion of income is treated as exempt. There are further instances like debt oriented securities and equity shares where STT is not paid, then gain or profit from such shares are taxable. Section 10 provides that certain income are not to be included while computing the total income of the assessee and in such a case the profit or loss resulting from such a source of income do not enter into computation at all. However, a distinction has been drawn where the entire source of income is exempt or only a part of source is exempt. Here it needs to be seen whether section 10(38) is source of income which does not enter into computation at all or is a part of the source, the income in respect of which is excluded in the computation of total income. For instance, if the assessee has income from Short term capital gain on sale of shares; Long term capital gain on debt funds; and Long term capital gain from sale of equity shares, then while computing the taxable income, the whole of income would be computed in the total income and only the portion of Long term capital gain on sale of equity shares would be removed from the taxable income as the same is exempt u/s 10(38). This precise issue had come up for consideration before the Hon'ble Calcutta High Court in Royal Turf Club, wherein the Hon'ble High Court observed that "under the Income tax Act 1961 there are certain incomes which do not enter into the computation of the total income at all. In computing the total income of a resident assessee, certain incomes are not included under s.10 of the Act. It depends on the particular case; where the Act is made inapplicable to income from a certain source under the scheme of the Act, the profit and loss resulting from such a source will not enter into the computation at all. But there are other sources which, for certain economic reasons, are not included or excluded by the will of the Legislature. In such a case, one must look to the specific exclusion that has been made."

The Hon'ble High Court was besieged with the following question

"Whether under s.10(27) read with s.70 of the I.T. Act, 1961, was the assessee entitled to set off the loss on the two heads, namely, Broodmares Account and the Pig Account, against its income of other sources under the head "Business""

Their Lordships after analysing the provisions of section 70 and section 10(27) observed in the following manner:

"In this case it is important to bear in mind that set-off is being claimed under Section 70 of the 1961 Act which permits set off of any income falling under any head of income other than the capital gain which is a loss, the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head. We have noticed that in the instant case the exclusion has been conceded in computing the business income or the source of income from the head of business and in computing that business income, the loss from one particular source, that is, broodmares account and the pig account, had been excluded contrary to the submission of the assessee. The assessee wanted these losses to be set off. The Revenue contends that as the sources of the income are not to be included in view of the provisions of Clause (27) of s. 10 of the 1961 Act, the loss suffered from this source could also not merit the exclusion. Under the I.T. Act, there are certain incomes which do not enter into the computation of the total income at all. In this connection we have to bear in mind the scheme of the charging section which provides that the incomes shall be charged and s. 4 of the Act provides that the Central Act enacts that the incomes shall be charged for any assessment year and in accordance with and subject to the provisions of the 1961 Act in respect of the total income of the previous year or years or whatever the case may be. The scheme of " total income " has been explained by s. 5 of the Act which provides that subject to the provisions of the Act, the total income of the previous year of a person who is a resident includes all income from whatever source it is derived. In computing the total income, certain incomes are not included under s. 10 of the Act. It depends on the particular case where certain income, in respect of which the Act is made inapplicable to the scheme of the Act, and in such a case, the profit and loss resulting from such a source do not enter into the computation at a l. But there are other sources which for certain economic reasons are not included or excluded by the will of the Legislature. In such a case we must look to the specific exclusion that has been made. The question is in this case whether s. 10(27) is a source which does not enter into the computation at all or is a source the income in respect of which is excluded in the computation of total income. How this question will have to be viewed, has been looked into by the Supreme Court in several decisions to some of which our attention was drawn."

After discussing the various decisions of the Hon'ble Supreme Court specifically the decision of in the case of Karamchand Premchand (supra), the Hon'ble High Court came to the following conclusion:

"cl.(27) of s.10 excludes in express terms only "any income derived from a business of live-stock breeding or poultry or dairy farming. It does not exclude the business of livestock breeding or poultry or dairy farming from the operation of the Act. Therefore, the losses suffered by the assessee in the broodmares account and in the pig account were admissible deductions in computing its total income"

Thus, the ratio laid down by the Hon'ble Calcutta High Court is clearly applicable and accordingly we follow the same in the present case.

9. Now coming to the argument of the learned DR and learned CIT(A) that income includes loss and if income is exempt then loss will also not be taken into computation of the income, and such an argument is with reference to the decision of Hon'ble Supreme Court in the case of CIT v. Hariprasad & Company Pvt. Ltd. (1975) 99 ITR 118 . The Hon'ble Supreme Court, opined that, if loss was from the source or head of income not liable to tax or congenitally exempt from income tax, neither the assessee was required to show the same in the return nor was the Assessing Officer under any obligation to compute or assess it much less for the purpose of carry forward. Further, the Hon'ble Supreme Court observed that "From the charging provisions of the Act, it is discernible that the words ' income ' or ' profits and gains' should be understood as including losses also, so that, in one sense 'profits and gains' represent ' plus income ' whereas losses represent 'minus income'. In other words, loss is negative profit. Both positive and negative profits are of a revenue character. Both must enter into computation, wherever it becomes material, in the same mode of the taxable income of the assessee. Although Section 6 classifies income under six heads, the main charging provision is Section 3 which levies income-tax, as only one tax, on the 'total income ' of the assessee as defined in Section 2(15). An income in order to come within the purview of that definition must satisfy two conditions. Firstly, it must comprise the ' total amount of income, profits and gains referred to in Section 4(1)'. Secondly, it must be 'computed in the manner laid down in the Act'. If either of these conditions fails, the income will not be a part of the total income that can be brought to charge."

While concluding the issue their Lordships observed that "it may be remembered that the concept of carry forward of loss does not stand in vacuo. It involves the notion of set- off. Its sole purpose is to set off the loss against the profits of a subsequent year. It pre-supposes the permissibility and possibility of the carried-forward loss being absorbed or set off against the profits and gains, if any, of the subsequent year. Set off implies that the tax is exigible and the assessee wants to adjust the loss against profit to reduce the tax demand. It follows that if such set-off is not permissible or possible owing to the income or profits of the subsequent year being from a non-taxable source, there would be no point in allowing the loss to be "carried forward". Conversely, if the loss arising in the previous year was under a head not chargeable to tax, it could not be allowed to be carried forward and absorbed against income in a subsequent year from a taxable source." The ratio and the principle laid down by the Hon'ble Apex Court would not apply here in this case, because the concept of income includes loss will apply only when entire source is exempt or is not liable to tax and not in the case where only one of the income falling within such source is treated as exempt. The Hon'ble Apex Court on the other hand, itself has stated that if loss from the source or head of income is not liable for tax or congenitally exempt from income tax, then it need not be computed or shown in the return and Assessing Officer also need not assess it. This distinction has to be kept in mind. Hon'ble Calcutta High Court in Royal Turf Club have discussed the aforesaid decision of the Hon'ble Supreme Court and held that the same will not apply in such cases. Thus, in our conclusion, we hold that section 10(38) excludes in expressed terms only the income arising from transfer of Long term capital asset being equity share or equity fund which is chargeable to STT and not entire source of income from capital gains arising from transfer of shares. It does not lead to exclusion of computation of capital gain of Long term capital asset or Short term capital asset being shares. Accordingly, Long term capital loss on sale of shares would be allowed to be set off against Long term capital gain on sale of land in accordance with section 70(3).

10. Coming to the decision of the ITAT Mumbai Bench in the case of Schrader Duncan Ltd. (supra), the issue involved there was, whether the loss on transfer of capital asset being units US 64 Scheme of Unit Trust of India can be allowed and entitled to carry forward the same for set off of in subsequent assessment years, when the income arising from such transfer of unit is exempt u/s. 10(33). The Tribunal held that the source both capital gain and capital loss on sale of units of US64 is itself excluded and not only the income arising out of capital gain. The Hon'ble Tribunal have noted the history of US64 Scheme and the purpose for which such scheme was launched. In this context of transfer of US64 scheme the Tribunal held that the provisions were not meant to enable the assessee to claim loss by indexation for set off against other capital gain chargeable to tax. This decision is slightly distinguishable and secondly, we have already discussed the issue at length and have held that the ratio of Hon'ble Calcutta is applicable in the present case. Lastly, coming to the decision of Hon'ble Gujarat High Court in the case of Kishorebhai Bhikhabhai Virani (supra), we find that the issue involved in the present case was almost the same, wherein the Hon'ble High Court after following the decision of Hon'ble Supreme Court in the case of Harprasad & Company Pvt. Ltd. (supra), had decided the issue against the assessee. Since we have already noted down the ratio of Hon'ble Calcutta High Court, wherein the Hon'ble High Court has discussed this issue in detail after relying upon series of decisions of Hon'ble Supreme Court and have reached to a conclusion as discussed above, and, therefore, we are respectfully following the ratio of the decision of the Calcutta High Court. Further the said decision have not been referred or distinguished by the Hon'ble Gujarat High Court. Accordingly, we allow the assessee's ground no.1 and direct the Assessing Officer to allow the claim of set off of Long term capital loss on sale of shares against the Long term capital gain arising on sale of land.

11. The next ground relates to disallowance of expenses of Rs.39,80,215/- u/s. 14A which has been made after applying Rule 8D. During the year the assessee had shown dividend income of Rs.5,15,28,242/- which was claimed as exempt u/s. 10(34). In response to the show cause notice, the assessee submitted that investments have been made out of its own capital and internal accruals and, therefore, no disallowance u/s. 14A is called for. However, the learned Assessing Officer without examining the assessee's claim and the accounts of the assessee, proceeded to apply Rule 8D thereby making the disallowance of Rs.39,80,215/- even though such Rule has been made applicable w.e.f. 01.04.2008. The CIT(A) too has confirmed the said addition after following the decision of the Mumbai Special Bench in the case of ITO v. Daga Capital management (P.) Ltd. (2008) 119 TTJ 289.

12. Before us, the learned senior counsel, Shri Soli Dastur, submitted that the disallowance have been made after applying Rule 8D, which admittedly is not applicable in the impugned assessment year i.e. A.Y. 2007-08. He submitted that section 14(2) was brought in the statute by Finance Act 2006, w.e.f. 01.04.2007. The said subsection provided mechanism for determination/quantification of amount of expenditure incurred in relation to exempt income. Such quantification/determination was to be done as per the method prescribed if the Assessing Officer, having regard to the accounts of the assessee is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. He submitted that though subsection (2) was brought in the assessment year 2007-08, however, the method specified for quantification of expenditure was prescribed u/s. 8D, which was brought in the Rules w.e.f. 24.03.2008. Thus, even if the conditions of sub section (2) stands fulfilled, then also there cannot be any determination of expenditure as the formula given in Rule 8D as the same was not existing in the statute. He submitted that upto the assessment year 2006-07, there could be some reasonable basis for disallowance. However, in the assessment year 2007-08 the statute provided for quantification/determination of the disallowance as per the method prescribed but the said method was not there in the statute or rules. Therefore, no disallowance can be made because there can be no determination of expenditure. He referred to the decision of Hon'ble Supreme Court in the case of Chandra Kishore Jha v. Mahavir Prasad and Others (1999) 8 SCC 266, wherein has been laid down that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in other manner. This proposition has been earlier laid down by Hon'ble Apex Court in the case of State of Uttar Pradesh v. Singhara Singh AIR 1964 SC 358. Accordingly, he submitted that no disallowance should be made.

13. On the other hand, the learned DR submitted that there is no allocation of expenditure by the assessee and, therefore, some disallowance is called for even though Rule 8D is not applicable in this year. Otherwise also he submitted that once the statute is provided the determination of amount of expenditure in terms of subsection (2), then even if Rule 8D has been brought w.e.f. 24.03.2008, then it has to be implied that same rule is applicable in this year also and, accordingly, disallowance can be determined in accordance with Rule 8D.

14. We have heard the rival submissions and also perused the material placed on record. On perusal of the impugned orders, we find that the assessee had made the claim before the Assessing Officer that no expenditure can be said to be attributable in relation to the earning of dividend income. Once such a claim has been made, the Assessing Officer was required under the statute to satisfy himself having regard to the accounts of the assessee about the correctness of the claim of the assessee. This has been specifically provided under sub section (2) which provides for determination and quantification of the amount of disallowance of expenditure under 14A. If such a condition mentioned in subsection (2) of section 14A is not fulfilled then, needless to say, that the Assessing Officer cannot proceed to disallow the expenditure. There has to be some finding of the Assessing Officer that the assessee's claim is prima facie not tenable. The assessee has pointed out that entire investments have been made out of its own capital and internal accruals, therefore, no expenses can be said to be attributable. This claim of the assessee required examination by the AO having regard to the accounts of the assessee and the nature of expenditure which can be said to be attributable for earning of the exempt income. If such an examination has not been done and no satisfaction has been arrived, then the learned Assessing Officer cannot reject the assessee's claim and proceed to disallow u/s. 14A(2). In the instant case, admittedly, the assessing officer has not conducted such an examination and the assessment order is also silent about his satisfaction on the claim of the assessee. Therefore, we are of the opinion that the matter should be restored back to the file of the AO to examine the conditions as laid down in section 14A(2) and, thereafter, decide the issue in accordance with the provisions of law without resorting to Rule 8D, which admittedly is not applicable in the impugned assessment year. The AO while deciding this issue may consider the decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. (328 ITR 81). Needless to say that the AO will give reasonable opportunity of hearing to the assessee and the assessee is free to raise all the contentions before the AO, which has been raised before us. Accordingly, ground no.2 is treated as partly allowed for statistical purposes.

15. In the result, the appeal of the assessee is partly allowed.

16. Now we come to appeal in ITA No. 1692/Mum/2010. This appeal is in relation to the penalty proceedings u/s. 271(1)(c) wherein penalty has been levied on account of disallowance for assessee's claim for set off of loss as discussed in ground no.1 and disallowance made u/s. 14A in the quantum appeal. Since, we have already allowed the assessee's appeal on first issue and on second issue also matter has been set aside, therefore, the penalty on such disallowances have no legs to stand. Accordingly, the penalty levied is deleted and the appeal is allowed.

17. In the result, the appeal of the assessee in ITA No. 3317/Mum/2009 is partly allowed and that in ITA No. 1692/Mum/2010 is allowed.

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--
M/s N.K. Goel & Bros.
WWW.TaxingNarad.COM
Chartered Accountants
CA Yashu Goel
9899263490

Thursday, 30 July 2015

Public notice

Tuesday, 14 July 2015

How to e-file return using EVC without sending signed copy of ITR-V?

How to e-file return using EVC without sending signed copy of ITR-V?

Taxpayers filing return of income electronically (without digital signatures) are required to send the signed copy of ITR-V acknowledgement to the CPC, Bengaluru within 120 days of uploading the return. From the Assessment Year 2015-16, an option is given to the taxpayer to file return of income via 'Electronic Verification Code' ('EVC'). In that case, taxpayers shall not be required to send the signed copy of ITR-V to CPC, Bengaluru.
The procedures and modes of filing of return through EVC has been notified by the CBDT. Thus, taxpayers can now file their return without worrying about sending copy of ITR-V acknowledgment to the CPC, Bengaluru. The new procedure is as under:
I. Verification of person via EVC
EVC means a code generated for the purpose of electronic verification of the person furnishing the return of income. EVC will be a unique number linked to assessee's PAN. It cannot be used for filing return of income of any other PAN. One EVC can be used to validate one return, irrespective, of assessment year or type of return.
EVC generated via Adhaar Card will be valid only for 10 minutes and in any other case, it will be valid for 72 hours.
II. Who cannot file return via EVC?
(a) Persons, whose accounts are required to be audited under Section 44AB;
(b) Political parties filing their return of income in ITR-7; and
(c) Companies.
III. Modes of generating EVC
Taxpayers can generate EVC by any of the four modes specified hereunder:
(1) Through Net-Banking: Banks registered with Income-tax Dept. are providing direct access to the e-filing website to their account holders. By clicking on e-filing option account holder will be redirected to the e-filing website where he can generate the EVC using "e-File" menu.
EVC generated will be sent to the registered e-mail id and mobile number of taxpayer, which can be used to verify income-tax return.
(2) Through AadhaarNumber: Taxpayers can link their Aadhaar Number with their PAN on e-filing website to generate the EVC. Aadhaar Number can only be linked if the PAN database (i.e., name, DOB and gender) are similar to data available with UIDAI for his Aadhaar number.
Once the Aadhaar Number is linked to PAN, 'one time password' ('OTP') will be generated by UIDAI and sent to the taxpayer's mobile number registered with UIDAI. This Aadhaar based OTP will be the EVC and can be used to verify the income-tax return.
(3) Through ATM:All taxpayers can generate EVC through ATM only if ATM card of taxpayer is linked to PAN validated bank account and bank is also registered with the Income-tax department. Taxpayer can access ATM of registered bank using his Debit/Credit card and thereafter he/she needs to select option of "Generate EVC for Income Tax Return Filing" on ATM screen. The bank will communicate this request to e-filing website which will generate EVC and send the EVC to assessee on his registered mobile number.
(4) Through E-filing Website of Income-tax Dept.: Assessee can also generate EVC by using e-filing website of Income-tax Dept. (i.e., www.incomeindiaefiling.gov.in). However, this facility is available only to the assessee's having total income of Rs. 5 Lakhs or below and who are not claiming Income-tax refund. To use this facility, assessee can visit the e-filing website and select the option 'Generate EVC' from e-File menu. EVC generated will be sent to the registered email ID and mobile number.

Thursday, 9 July 2015

Circular DVAT

Monday, 6 July 2015

TODAY


Madras High Court Directs that Seats be Provided to Accused During Trial

Madras High Court while dealing with issue that why should people accused in criminal cases not be allowed to sit in court halls during trial has directed the court's registrar-general to look into the same and make available seating facilities for accused in the criminal and trial courts.

 

Gujarat HC Issues Notice to Government for Arresting Businessman Without Requisite Magisterial



Gujarat High Court has issued notice on the state government for allegedly arresting a businessman in Shillong for some non-cognizable offences without the requisite magisterial order.

 

Madras High Court: Right to Protest is Not the Right to Cause Nuisance to Public



Madras High Court has observed that the right to protest is not the right to cause nuisance or harassment to the public at large.

 

 

Bombay HC Says no to Noisy Religious Festivities

 


Bombay High Court while hearing a public interest litigation (PIL) on noise pollution during festivities has observed that the fundamental right of practising or professing religion did not extend to any or every place.

--
M/s N.K. Goel & Bros.
WWW.TaxingNarad.COM
Chartered Accountants
CA Yashu Goel
9899263490

Monday, 15 June 2015

S. 143(3)153A Addition made solely on the basis of a disclosure and without any incriminating material is not sustainable if facts show that disclosure was under duress

Pursuant to a search and seizure operation u/s 132, the assessee made a disclosure of unaccounted income of Rs. 20 crore. He later claimed that the disclosure was not voluntary but was because the assessee was under tremendous pressure and harassment in the form of repeated search action, survey and freezing of assets. It was also claimed that no incriminating material was found during the search. It was also claimed that the disclosure was "pro tem", meaning tentative and subject to correction. The AO & CIT(A) rejected the claim. On appeal by the assessee to the Tribunal HELD allowing the appeal:

(i)           Whether the disclosure was voluntary or given under coercive circumstances.

Conclusion: The contentions raised by ld. Counsel for the assessee lead to a clear inference that the disclosure of the assessee cannot be regarded as voluntary. The pressure of restrained DDs. of 31.48 crs. against a disclosure tax liability of about 7 crs is palpable. It has the propensity to derail the business and creating enough pressure for businessmen to somehow avoid the pressure. Besides the chronology of events and attendant circumstances do not convince us that this summary disclosure was voluntary and on the scale of merit it can override the other facts. Consequently we have no hesitation in holding that the solely relied disclosure was involuntary. In these circumstances the desirability of additions is to be judged on other facts and circumstances. Reliance is placed on Hon'ble Rajasthan High Court in the case of CIT v. Ashok Kumar Soni 291 ITR 172 for the proposition that admission in statement during search proceedings is not conclusive proof. Besides Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co.vs. State of Kerala 91 ITR 18 has also held so that such statement can be explained in the light of correct facts.

(ii)          Whether in the light of CBDT instruction dtd 10-03-2003, search proceedings and assessment can be based incriminating material and not on such disclosures.

Conclusion: A perusal of the CBDT instruction reveals that even Board is aware of such laconic disclosures and expects its officers to rely on incriminating evidence. Thus CBDT also is not in favor of search assessments being based only on such disclosures; it wants them to be based on incriminating material. In view the facts, circumstances, CBDT instruction and various case laws relied on by the assessee we are unable to uphold the additions solely on the basis of disclosure which doesn't meet the eye and have been held by us to involuntary.

(iii)        Whether the additions are based on any incriminating material discovered as a result of search in terms of sc. 153A.

Conclusion: There is no reference to impugned additions being based on any worthwhile incriminating material or evidence except raising some suspicions. The sole basis of additions in both cases is proposed to be the disclosure. Consequently the additions made are not as a result of any material found during the course of search, in view thereof impugned additions cannot be sustained as they do not conform to mandate of sec. 153A.

(iv)        Whether the assessees furnished proper explanation about the bank a/c and and transactions.

Conclusion: As the facts emerge the Corporation bank a/c belonged to Raghubir, the proceeds deposited therein came to him through banking channel on account of agreement to sell his share in ancestral land to G P Realtors not connected to assessees….. As the final disclosure remained at 20 crs., assesses to avoid the harassment agreed for its inclusion as it did not take the tax liability any further. Apropos departments contention that why assesses did not tell this in first blush assessee has demonstrated that they requested for some time to verify from parties who cooperated. The affidavits, bank certificates, documents relating to G P Realtors including compromise deed all corroborate the assesses contentions. Therefore no adverse inference or addition can be drawn against assesses in this behalf.

(v)         Whether on merits the impugned additions can be made in a search assessment u/s 153A which is meant for assessment of undisclosed income consequent to search proceedings.

Conclusion: By detailed observations we have held that neither any worthwhile incriminating material, information, and evidence was discovered as a result of impugned multiple search operations nor the additions sustained are based on any such material. The sole basis of additions is the disclosure which we have held to be involuntary. Consequently the additions do not conform to the mandate of sec. 153A.

Sunday, 14 June 2015

Levy of late fee on late filing of TDS return

Amendment in section 200A by Finance Bill 2015 w.e.f. 01-06-2015.

Till 31-5-2015 Income tax department has no power to process TDS return U/s 200A to levy TDS late fee U/s 234E

But w.e.f. 1-6-2015 as per Sec. 200A income tax department can levy late fee U/s 234E @ Rs. 200/- per day on delayed filing of TDS return.

Therefore if any late fee is levied before 1-6-2015 appeal can be filed for this or rectification application U/s 154 can be filed to get it cancelled.

Even if due to mistake any late fee U/s 234E is paid then refund will be granted of such excess late fee.

ITAT Amritsar has given a decision on this subject.

Before going to the decision, first we are reproducing the  amendment in section 200A wef 01.06.2015 .

In section 200A of the Income-tax Act, in sub-section (1), for clauses (c) to (e), the following clauses shall be substituted with effect from the 1st day of June, 2015, namely:— 

"(c) the fee, if any, shall be computed in accordance with the provisions of section 234E; 

(d) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b) and clause (c) against any amount paid under section 200 or section 201 or section 234E and any amount paid otherwise by way of tax or interest or fee; 

(e) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (d); and (f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor.

So clause (c) was inserted only wef 01.06.2015 and prior to 1st June 2015, there was no enabling provision in the act for raising a demand in respect of levy of fees under section 234E.

Now ITAT ,Amritsar in the case of Sibia Healthcare Private Limited  Vs. Dy. Commissioner of Income-tax (TDS) I.T.A. No.90 /Asr/2015 dated 09.06.2015, has given a Decision on section 234E of Income tax act on Late Fee on late filing of E TDS return.

Extract of decision is given as under 

In view of the above discussions, in our considered view, the adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A.

This intimation is an appealable order under section 246A(a), and, therefore, the CIT(A) ought to have examined legality of the adjustment made under this intimation in the light of the scope of the section 200A. Learned CIT(A) has not done so.

He has justified the levy of fees on the basis of the provisions of Section 234E. That is not the issue here. The issue is whether such a levy could be effected in the course of intimation under section 200A.

The answer is clearly in negative.

No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected.

As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage.
In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234 E is unsustainable in law. We, therefore, uphold the grievance of the assessee and delete the impugned levy of fee under section 234E of the Act.

So in Light of above decision it is very much clear that Late fee can not be imposed before 01.06.2015