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Showing posts from July, 2013

Case Law on Sec 40(a)(ia)

Dear Members,

The following important judgement is available for download at
CIT vs. Vector Shipping Services (P) Ltd (Allahabad High Court)S. 40(a)(ia) disallowance applies only to amounts "payable" as of 31st March and not to amounts already "paid" during the year. Merilyn Shipping (SB) approved

The assessee engaged Mercator Lines Ltd to perform ship management work on behalf of the assessee for which it paid an amount of Rs. 1.17 crore. The assessee claimed that the amount paid by it to Mercator was a 'reimbursement of salaries' and that as Mercator had deducted TDS on the payments made by it to the employees, the assessee was not required to deduct TDS. The AO disagreed and disallowed the entire payment u/s 40(a)(ia). The Tribunal upheld the assessee's claim and held that no TDS was required to be deducted on a reimbursement. It also relied on Merilyn Shipping and Transport Ltd 136 ITD 23 (SB) where it was held…

ITR Trouble Shooting Guide

Trouble Shooting Guide for Problems in accessing - (31-07-2013)

Since ICAI was reported of the difficulties being faced while uploading the income tax returns in the e-filing website, the matter was taken up with appropriate authorities. The authorities have shared a Trouble Shooting guide for problems in accessing the with us with a request to spread the message. Members interested may please click on the link below.

Considering the difficulties being faced by assessees at large, ICAI had requested CBDT to extend the due date of e-filing return of income. Accordingly, the date has been extended to 05.08.2013.

Analysis and Issues in Schedule AL- ITR 3 & ITR 4

Analysis and Issues in Schedule AL (Statement of Assets and Liabilities at the end of the Year) ITR 3 & 4
This is a new schedule incorporated in ITR 3 & 4 for the Assessment Year 2013-14. An individual assessee is required to submit Assets and Liabilities at the end of the year 31st March, 2013.  It is mandatory if total income of the assessee exceeds Rs.25 Lakhs. ITR 3 & ITR 4 Total Income ---à Part B-TI –Computation of Total Income- Column-13
Total Income Aggregate income of all 5 heads of income after setting of losses and deductions under Chapter VIA.
ITR Instructions to fill Schedule AL
·(i) This Schedule is to be filled giving details of any property held by the assessee and the corresponding liabilities, other than those included in the balance sheet filled in Part A – BS of thereturn. ·(ii) The assets to be reported will not include personal effects, i.e. to say, movable property (including wearing apparel and furniture) held for personal use by the assessee o…

Rent received from renting of flats held as stock-in-trade

Rent received from renting of flats held as stock-in-trade shall be taxable under the head "House Property".[The High Court of Delhi at New Delhi- New Delhi Hotels Limited versus ACIT].

Similar to the case Azimganj Estate (P.) Ltd. v. CIT (2012) 206 Taxman 308 (Cal.).....On this issue, the Calcutta High Court held that the rental income from the unsold flats of a builder shall be taxable as “income from house property” as provided under section 22 and since it specifically falls under this head, it cannot be taxed under the head “Profit and gains from business or profession”. Therefore, the assessee would be entitled to claim statutory deduction of 30% from such rental income as per section 24. The fact that the said flats have been claimed as not chargeable to wealth-tax, treating the same as stock-in-trade, will not affect the computation of income under the Income-tax Act, 1961

CBDT Instruction Regarding Grant Of Interest U/s 244A On Refunds

CBDT Instruction Regarding Grant Of Interest U/s 244A On Refunds

Pursuant to the judgement of the Delhi high Court inCourt On Its Own Motion Vs, UOI352 ITR 273 the CBDT has issued Instruction No. 7/2013 dated 15.07.2013 stating that when the delay in processing the refund is not attributable to the assessee but is due to the fault of the Revenue, interest should be paid under section 244A of the Income-tax Act. The High Court had held that false or wrong uploading of past arrears and failure to follow the mandate before adjustment is made under Section 245 of the Act, cannot be attributed and treated as fault of the assessee. The CBDT has directed that in view of the direction of the High Court, in no case should interest u/s 244A of the Act be denied to the assessee where the assessee is not at fault. It is also stated that the observation of the High Court should be strictly kept in mind while dealing with such matters

Amendment to Securities Laws

An Ordinance to Amend the Securities Laws Promulgated; SEBI would have now Powers to Regulate any Pooling of Funds Under An Investment Contract Involving A Corpus Of Rs.100 Crore Or More, Attach Assets In Case Of Non-Compliance And Chairman SEBI would have Powers to Authorize The Carrying out of Search and Seizure Operations, As Part of Efforts to Crack Down on Ponzi Schemes
The President was pleased to promulgate an Ordinance to amend the Securities Laws today. This was consequent to the approval of the Cabinet, which met on July 17, 2013, to amend Securities and Exchange Board of India (SEBI) Act and related Acts for providing more powers to the capital markets regulator for enforcement against illegal Collective Investment Schemes and to curb insider trading.

Owing to new and innovative methods of raising funds from investors, such as art funds, time-share funds, emu /goat farming schemes, there has been regulatory gap /overlap regarding types of in…

Gold Import Vs CAD

RBI tightens gold import norms to squeeze CAD The Reserve Bank of India (RBI) on Monday streamlined its gold import policy to ensure at least 20 per cent of the yellow metal sourced from abroad was made available to the country's gems & jewellery exporters. Also, for domestic use, the nominated banks and importing agencies have been made responsible for making gold available only to the entities engaged in jewellery business and bullion dealers supplying gold to jewellers. While the move is aimed at helping manage the country's precarious current account deficit (CAD) situation and improve gold availability for exporters, domestic prices of the yellow metal might rise. For instance, insisting on meeting certain export levels before allowing fresh import of gold would limit the availability for domestic use, pushing prices up. The revision has been done in consultation with the government and will be applicable to gold imports in any form /purity, including go…

GN on Tax Audit-2013



By: Mr. M. GOVINDARAJAN In exercise of the powers conferred by Section 93(1) of the Finance Act, 1994 read with Section 95(3) of Finance Act, 2004 and Section 140(3) of Finance Act 2007 and in supersession of Notification No. 40/2012-Service tax, dated 20.06.2012 the Government by Notification No. 12/2013-Service tax, dated 01.07.2013 gave exemption to the services on which service tax is leviable under Section 66B of the Finance Act, 1994, received by a Unit located in a Special Economic Zone ('SEZ' for short) and Developer of SEZ ('Developer' for short) and used for the authorized operation from the whole of the service tax, education cess and secondary and higher education cess levied thereon. This notification came into effect from 01.07.2013. The exemption is provided as detailed below: The exemption shall be provided by way of refund of service tax paid on the specified …

Circular on Writing of Arrears of Excise,Customs & ST

Circular No.  971/5 /2013 F.No.296/10/2009-CX-9(Pt.) Government of India Ministry of Finance Department of Revenue Central Board of Customs & Excise
New Delhi, the 29th May, 2013 To             All Chief Commissioners             All Directors General Sub:     Writing off of arrears of Central Excise duty, Customs duty and Service Tax - Constitution of Committees to advise the authority for writing off of arrears-reg.
I am directed to refer to the Circular No. 946/07/2011 dated 01.06.2011 issued from this file number on the subject and to say that certain amendments have been made in the Delegation of Financial Power Rules, 1978 vide S.O. 3624 dated 14.12.2012. A copy of the said notification is enclosed.
2.         With this amendment, the authorities competent to write-off the arrears of Central Excise and the Commissioner of Service Tax are also delegated powers to write-off the arrears of Service Tax as well. Consequently, the constitution of the Committees for examin…

ICAI cannot be deemed to be pursuing commercial activities by

CBDT Instructions On S. 143(1) Intimations And S. 154 Rectifications July 5th, 2013 The CBDT has issued Instruction No. 03/2013 dated 05.07.2013 with regard to the the directive issued by the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273 on the procedure to be followed on the receipt and disposal of rectification applications filed u/s 154 of the Act. The CBDT has set out a detailed procedure on where applications should be received, the maintenance of registers and their disposal.
 The CBDT has also issued Instruction No. 04/2013 dated 05.07.2013 with regard to the directive issued by the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273 that the demand should not be enforced in cases where no intimation u/s 143(1) was sent by the field authorities in respect of returns which were processed prior to 31.03.2010.

ICAI cannot be deemed to be pursuing commercial activities by coaching classes

ICAI cannot be deemed to be pursuing commercial activities by taking coaching classes or campus placements for a fee exemption under 10(23C)(iv) cannot be denied to ICAI on account of fees received by it for providing coaching classes and campus placement for its students. [ ICAI v/s Director General of Income-tax (exemptions) [2013] 35 140 (Delhi)].

Kerala HC on ST on AC Restuarants

Kerala HC rules service tax on AC restaurants invalid
The Kerala High Court on Wednesday held that the Centre's decision to impose service tax on food and beverages supplied by air-conditioned restaurants with licences to serve alcoholic beverages in the 2011-12 budget was beyond the legislative competence of Parliament. Justice A.M. Shaffique passed the verdict while allowing a batch of writ petitions filed by Kerala Bar Hotels Association and certain bar hoteliers. The service tax was imposed on air-conditioned restaurants with licence to serve alcoholic beverages in the 2011-12 Union Budget. A service tax of 12.36 per cent applicable on 30 per cent of the bill had been imposed on such restaurants, which came into effect on April 1 last year. The petitioners contended that Article 366 Section 29 (f) of the Constitution defined supply of food and drinks in hotels as 'deemed sales' and empowered the State governments to collect sales tax on the total value of …

Breather for IT firms as CBDT withdraws controversial tax circular

Breather for IT firms as CBDT withdraws controversial tax circular In a major relief to the IT industry, the Central Board of Direct Taxes (CBDT) today announced the withdrawal of a controversial circular that could have adversely impacted the tax spend for this industry. The CBDT also modified another circular relating to taxation of R&D centres that also has a crucial role in software development. The circular (No 2 of 2013) that has been withdrawn related to the adoption of Profit Split Method (PSM) as a preferred mode for computation of tax liability. The decisions were taken following representation from the industry for clarity on two circulars concerning global taxation of transfer pricing. Tax experts hailed the latest announcements stating that compliance cost will come down and chances of double taxation may be reduced. "The rescinding of Circular No. 2 is very good news for the industry. This is a positive move and would certainly improve the sentiments o…