CPC (TDS) – How to close Short Payment Defaults using Online Correction facility

CPC (TDS) -Advisory for closure of Short Payment Defaults using Online Correction facility before allowing Conso Files

As you may be aware that at the time of filing TDS statements, it is mandatory to quote the challan particulars through which TDS payments have been made. The TDS forms prescribe quoting of such challans and the underlying deductee transactions corresponding to such challans.

Payment to sub-contractors for transportation of LPG cylinders would be subject to TDS under Sec. 194C

IT: Where assessee entered into a contract with IOC for carriage of LPG cylinders, in view of fact that assessee in turn got transportation of cylinders done through three parties by entering into sub-contracts with them, payments of freight charges made to sub-contractors were covered by section 194C(2) and, thus, assessee was required to deduct tax at source while making payments in question

IT : Provisions of section 40(a)(ia) are applicable not only to amount which are shown as outstanding on closing of relevant previous year, but to entire expenditure which became liable for payment at any point of time during year under consideration and which was also paid before closing of year

Amount paid at any time without deducting tax therefrom would be hit by Sec.40(a)(ia) disallowance

IT : Where assessee challenged disallowance made by Assessing Officer on account of non-deduction of tax at source while making payments to sub-contractors on ground that disallowance under section 40(a)(ia) could only be made in respect of sums remaining outstanding at end of year, following order passed by Gujarat High Court in case of CIT v. Sikandar Khan N. Tanvar [2013] 357 ITR 312/[2014] 220 Taxman 256/[2013] 33 taxmann.com 133 plea raised by assessee was to be rejected

IT : In order to determine admissibility of an expenditure under mercantile method of accounting, what is relevant is point of time when liability to pay sum accrues or arises and, therefore, as long as such a liability arises during relevant previous year, same has to be allowed as a deduction

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AO can’t decide issue of jurisdiction himself without referring matter to concerned DG, Chief CIT or CIT

IT : Where an assessee calls in question jurisdiction of Assessing Officer, then Assessing Officer shall, if not satisfied with correctness of claim, refer matter for determination under sub-section (2) of section 124 before assessment is made to Chief Commissioner or Director General and Commissioner; he cannot decide issue of jurisdiction himself

No liability of bank to withhold tax from cap gains remitted to a non-resident when it was merely acting as broker

Where assessee-bank was only acting as an authorized dealer to brokers of foreign residents in transferring funds in respect of share transactions, which resulted in gains, it was not liable to withhold tax under section 195.

CBDT extends due date for obtaining Tax Audit Report u/s 44AB upto 30-11-2014

In exercise of power conferred by section 119 of the Income-tax Act (‘the Act’), the Central Board of Direct Taxes (CBDT) hereby extends the due date for obtaining and furnishing of the report of audit under section 44AB of the Act for Assessment Year 2014-15 in case of assessees who are not required to furnish report under section 92E of the Act from 30th day of September, 2014 to 30th November, 2014.

It is further clarified that the tax audit report under section 44AB of the Act filed during the period from 1st April, 2014 to 24th July, 2014 in the pre-revised Forms shall be treated as valid tax audit report furnished under section 44AB of the Act.

Deduction on children’s education u/s. 80C & 80E

The cost of educating our children is rising consistently. It’s a matter of concern for all of us. One relief is the tax benefit provided for spending on children’s education. The Income Tax Act provides a direct deduction on account of fees paid for the education of dependent children. The act also provides for deduction on account of interest on loans taken for higher education of children.

Service Tax – Finance Act, 2014 makes Advertisements Costly

The Finance Bill, 2014 received assent from Hon’ble President on 6^th of August 2014. The main impact of this budget leads to make the advertisements costly. As per Section 66D(g) selling of space for advertisements in print media is only falls under NegativeList. The definition of “print media”as per Section 65B(39a) states as follows:

MCA displays list of companies not filed Form 5INV

MCA has started to display list of Companies who have not filed Form 5INV. Form 5 INV is required to be filed by the company/Corresponding New Bank which shall contain investor wise details of unclaimed and unpaid amounts in respect of dividends, debentures, deposits, etc. The details of unclaimed and unpaid amounts shall need to be provided as on the Annual General Meeting (AGM) date. This form is to be filed annually within 90 days from the date of AGM.

MCA is displaying the list of Companies not filed Form 5INV ROC wise and Consolidated. Link for the same is as follows :-

• Companies not filed Form 5INV,ROC Wise
• Companies not filed Form 5INV,Consolidated

IMP - Before the self-certifying documents, pl. write the purpose on it.

In ordinary course we keep issuing and submitting our KYC documents (identity and residential proofs..such as PAN card, electricity bill etc.) to various people. For housing or car or other loans, bank accounts,or even for buying new sim card we submit these documents. At almost all these places they ask for self certification on these documents. We immediately sign those documents and hand over. Just imagine your self certified copies are freely available in the hands of such persons & those documents can be used by him for EVERYTHING! Its really serious and its been seen that in most of the terrorist activities, KYC documents are sourced from the SIM card sellers. Hence, please inculcate a habit of writting the purpose for which you are submitting the self certified KYC Documents so that those documents cannot be used again. 

RECENT UPDATES IN DIRECT & INDIRECT TAXES AND IN OTHER AREAS OF PROFESSIONAL INTEREST

INCOME TAX

CIT Vs Vikas International 

Income Tax - Sections 28(iiib), 80HHC - export - gem stones - polished diamonds - Whether premium on the licences purchased by assessee from outside parties for sale or import, would be liable to be treated as cash assistance taxable u/s. 28(iiib) as against its export eligible to deduction us. 80HHC - Whether the said assistance would be taxable as income from other sources - Whether deduction u/s 80HHC could be claimed on export of cut and polished diamonds and gem stones. - Revenue's appeal dismissed : GUJARAT HIGH COURT

Important CBDT Circular On Depreciation/ Amortisation Of Intangible Assets

The CBDT has issued Circular No. 09/2014 dated 23.04.2014 in which it has dealt with the important issue of treatment of expenditure incurred for development of roads &highways in Build-Own-Transfer (BOT) agreements.

HOW TO OPEN DOCX, XLSX, PPTX IN MS OFFICE 2003

For all those members who have MS Office 2003 or older versions: 

Please follow below mentioned steps to make your current version (e.g. MS Office 2003) to be able to open all Office 2007 as well as 2010 versions with minor formatting and visual inabilities, (follow the Figures in the end for better understanding): 

Finance Ministry admits unauthorised access of Income Tax E-Filing Account

In a reply to RTI Filed by PRI Finance Ministry has admitted that there have been instances when the authentication details of certain class of e-filers have been obtained by persons from sources other than the e-filing website and then the passwords were reset and the e-filing account accessed.

Get Your Insurance Policy in Demat form – Open e-Insurance Account

You have been enjoying the benefits ofDemat account and would have experienced the ease and convenience that Demat form of holding Securities have brought to dealings in Securities Market. Now it’s time to hold Insurance Policies in electronic form and experience the same ease and convenience.

Financial statements, Audit / Board’s report for FY 13-14 to be governed by Companies Act 1956

General Circular 08/2014,  Dated 04.04.2014

Subject: Commencement of provisions of the Companies Act, 2013 with regard to maintenance of books of accounts and preparations/adoption/filing of financial statements, auditors report, Board’s report and attachments to such statements and reports— Applicability with regard to relevantfinancial year.

WHO REQUIRE WHICH ITR. - COMPULSORY E FILLING WITH OR WITHOUT DIGITAL SIGN

Table showing Income Tax form number and by whom it can be filled

Form Person	Description
Sahaj (ITR-1) Individual	Income from salary/pension:    or Income from one house property(excluding where loss brought forward from previous year): or Income from other sources( excluding winnings from lottery and income from races horses) and where no loss from income from other source Note:Further in a case where income of another person like spouse,minor child,etc.is to be clubbed with the assessee this return form can be used only if the income being clubbed falls in to above income categories only. Following person can not file ITR-1 ·         Person have claimed relief under section 90, 90A or 91 of foreign tax paid. ·           ·         Any resident having any asset (including financial interest in any entity) located outside India or a signing authority in any account located outside India. ·         Claimed exempted income more than 5000/-
ITR-2  Individual / HUF	Individual who can not file Sahaj above and where the total income does not include any income chargeable to income-tax under the head “Profits or gains of business or profession”,
ITR-3 Individual / HUF	partner in a firm and income chargeable to income-tax under the head “Profits or gains of business or profession” does not include any income except the income by way of any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him from such firm
ITR-4S Individual / HUF	deriving business income and such income is computed in accordance with special provisions referred to in section 44AD and section 44AE of the Act for computation of business income Following person can not file ITR-4S ·         Person have claimed relief under section 90, 90A or 91 of foreign tax paid. ·         Any resident having any asset (including financial interest in any entity) located outside India or not a signing authority in any account located outside India. ·         Claimed exempted income more than 5000/-
ITR-4 Individual / HUF	Not covered in sr number 1 to 4 Above and deriving income from a  business or profession
ITR-5 Partnership Firms (& others)	Not being an individual or a Hindu undivided family or a company or a person to which Sr no 8 applies.Applicable for All source of Incomes
ITR-6 Company	Not covered in 8 below.All Income heads
ITR-7 person including a company whether or not registered under section 25 of the Companies Act, 1956	required to file a return under sub-section (4A) or sub-section (4B) or sub-section (4C) or sub-section (4D) of section 139

Compulsory e filing of Income Tax return:

1.    Individual & HUF:

(i)            If income exceeding 5 Lakh; or

(ii)          if deduction under section 90, 90A,91 claimed in return; or

(iii)         resident and has

(a) assets (including financial interest in any entity) located outside India; or

(b) signing authority in any account located outside India

Or

(iv)         assessee is required to furnish Electronically a report of audit specified under sub-clause (iv), (v), (vi) or (via) of clause (23C) of section 10, section 10A, clause (b) of sub-section (1) of section 12A, section 44AB, section 80-IA, section 80-IB, section 80-IC, section 80-ID, section 80JJAA, section 80LA, section 92E or section 115JB or to give a notice under clause (a) of sub-section (2) of section 11 of the Act

2.    Firm

3.    Company

4.    person who required to file a return under sub-section (4A) or sub-section (4B) or sub-section (4C) or sub-section (4D) of section 139

Compulsory e filing of Income Tax return with Digital Signature:

1.              To whom provisions of section 44AB (Audit) are applicable

2.              Company

3.              Political party require to file ITR-7

Partners Not Liable to Tax on exempted income of Firm :CBDT clarification

SECTION 10(2A) OF THE INCOME-TAX ACT, 1961 - FIRM - SHARE OF PROFITS TO PARTNER OF FIRM - CLARIFICATION ON INTERPRETATION OF PROVISIONS OF SECTION 10(2A) IN CASES WHERE INCOME OF FIRM IS EXEMPT

CIRCULAR NO. 8/2014 [F.NO.173/99/2013-ITA-I], DATED 31-3-2014

Income tax - Whether, after 18 years of the Search conducted, documents obtained under RTI Act can be relied upon for establishing that no notice u/s 143(2) was issued - YES: HC

Income tax - Whether, after 18 years of the Search conducted, documents obtained under RTI Act can be relied upon for establishing that no notice u/s 143(2) was issued - YES: HC 

By TIOL News Service

ERNAKULAM, APR 04, 2014: THE issue before the Bench is - Whether document obtained under Right to Information Act for establishing the non issuance of notice u/s 143(2) can be accepted as an evidence, although there has been a lapse of 18 years since the search was first conducted. And the answer favours the assessee.

Concealment penalty upheld as assessee had given false info about date and cost of acquisition of capital asset

IT : Where assessee gave incorrect information about date of acquisition and cost of acquisition of a property sold during relevant year, it was sufficient to raise an inference that assessee intended to evade tax liability on capital gain and, therefore, impugned penalty order passed by Tribunal under section 271(1)(c) was to be upheld

'Subrata Roy' had valid excuse for seeking one day's adjournment; HC allows his recall application

IT : Where assessee requested for one day adjournment and did not advance any arguments on questions of law, judgment passed [in CIT v. Subrata Roy[2013] 38 taxmann.com 324/219 Taxman 133 (All.) was to be recalled

How to save tax on mutual fund returns?

One of the best ways to invest your money is investing in mutual funds. However, many of us do not know itstax implications. If we can plan well, we can save tax on mutual fund returns. In this article, I would explain you as to how mutual fund returns are taxed and possible ways to save tax on such returns.

Sum paid in cash of smaller denomination in lieu of currency of higher denomination is out of ambit of sec. 40A(3)

No element of expenditure was involved when sums were paid by assessee-company to its managing director for conversion of currency in small denomination into currency of higher denomination, and, thus, provisions of section 40A(3) were not applicable.

IMP - GUJARAT HIGH COURT ON 12A

IT: Question as to whether trust is created or established for benefit of any particular religious community or caste would be relevant only when income of trust is being assessed in terms of section 11, however, at time of disposing of application of a trust seeking registration, Commissioner has to merely decide whether said trust has fulfilled necessary requirements of registration as provided under section 12A

TDS CREDIT TO BE ALLOWED WITHOUT FORM 26AS-TDS CERTIFICATE

Department is required to give credit for TDS once valid TDS certificate had been produced or even where

deductor has not issued TDS certificates, on the basis of evidence produced by the assessee regarding deduction of tax at source and on the basis of indemnity bond.

Due date to file ITR-V for Ay 2012-13 & 2013-14 Extended

There are many taxpayers who have uploaded their Income Tax Returns (without digital signature Certificate) for A.Y. 2OI,z-Lg [filed between 1.4.2012 to 31.10.2013 and for A.Y. 2013-14 [filed between 01.4.2013 to 31.10.2013, but have either not filed the corresponding ITR-V or have filed it with the local Income-Tax Office. ITR-V is accepted only at CPC, Bengaluru by ordinary or speed post. Therefore an opportunity is being given to such taxpayers to regularize their Income-tax returns. 

Don't Take TDS Lightly

Nowadays delay in payment of TDS and in TDS return Filing makes an assessee liable to Late Payment Interest, Late Payment Penalty, Late Filing Fees, Late Filing Penalty and Further makes him liable to prosecution under the provision of the Income Tax Act, 1961. In this article we are discussing some of these provisions which makes it clear that TDS cannot be taken lightly and we should take utmost care in timely payment of TDS and filing of TDS return.

HC nods to trust registration as it carried out a few charitable activities due to receipt of paltry donations

IT : Where assessee-foundation, formed to promote cause of education, gave major portion of donation received for benefit of students during first year of its formation, Tribunal rightly concluded that charitable activities carried out by assessee could not be regarded as of low magnitude and, thus, assessee's claim of registration under section 12AA was to be allowed

Profits from sale of agricultural land by real estate developer were taxable as business receipts

IT : Where assessee-firm was constituted for purpose of carrying on business of buying and developing properties into plots and in meantime it purchased agricultural land and sold same after three years, income derived on purchase and sale of agricultural land formed income from business

Sec. 54 relief allowed as two houses were acquired instead of one big house to avoid disharmony among children

Facts:

The assessee sold his house and invested the capital gains from sale of house in purchasing two independent residential houses for his two sons. 

The issue for consideration of High Court was:

Whether exemption under sec. 54 would be available in respect of two separate residential houses acquired out of capital gains?

The High Court held in favour of assessee as under:

1)  It was open to the assessee to purchase a big residential house out of the sales consideration so as to accommodate his two sons and avail of exemption under section 54. Instead, he chose to purchase two small residential houses to avoid any litigation or disharmony;

2)  The context in which the expression "a residential house" is used in section 54 makes it clear that it was not the intention of the Legislature to convey the meaning that it referred to a single residential house;

3)  The singular 'a residential house' also permits use of plural by virtue of section 13(2) of the General Clauses Act. Therefore, the acquisition of two residential houses by the assessee out of the capital gains would fall within the phrase 'residential house' and, accordingly, the assessee would be entitled to the benefit undersec. 54(1);

4)  However, while interpreting this word, the authorities have to keep in mind the facts of the particular case. When we hold 'a' could not be read as singular, it also could not be read as multiples and so as to avoid paying taxes. – CIT v. Khoobchand M. Makhija[2014] 43 taxmann.com 143 (Karnataka)

HAPPY HOLI

No TDS from salary paid to NR working on a foreign ship for less than 90 days as it is exempt under sec. 10(6)(viii)

Payments made to foreigner-crew member of ship who had worked for a period of less than 90 days in India, were not income of employees in India liable to TDS.

Due date of payment of last installment of advance tax extended till March 18, 2014

DATE OF PAYMENT OF THE MARCH INSTALMENT OF ADVANCE TAX EXTENDED FROM 15TH MARCH 2014 TO 18TH MARCH 2014

The final instalment of Advance tax for Financial Year 2013-14 is required to be paid on or before 15th March, 2014 by the tax payers who are liable to pay advance tax. These taxpayers can make payments in the designated branches of the authorized banks, electronically or physically, as per law. The banks are open for half day on 15th March, 2014, being a Saturday. Accordingly, to facilitate payment of this instalment of Advance tax for the Financial Year 2013-14, the Central Board of Direct taxes (CBDT) has issued an order to extend the time limit to make such payments of Advance Tax, from 15th March, 2014 to 18th March, 2014. Taxpayers, therefore, can now pay their advance tax instalment by 18th March, 2014 without entailing any consequential interest for deferment.

Presumptive taxation under Sections 44AD, 44AE and 44AF

Sections 44AD, 44AE and 44 AF cover special provisions of computing profits on a presumptive basis. All the schemes are optional at the discretion of the assessee. Conditions and manner of computation common to all three sections are given at the end after specific provisions applying to each section.

ADVANCE TAX DUE DATE ADVANCE TAX CHALLAN INTEREST ON LATE DEPOSIT

Who is responsible to pay Advance Income Tax

The provisions of advance tax are applicable on all types of persons irrespective of the residential status of the person.

Senior citizen exempted from advance tax
W.e.f.  Financial year i.e 2012-13(assessment year) ,Resident Senior citizens (age 60 years on or before end of previous year) are exempted to deposit Advance Income Tax ,if they do not have income from business and profession.