Seized amount already disclosed in sec. 139 return can't be added back to income during block assessment

IT : Where prior to initiation of block assessment proceedings, assessee filed his return under section 139 wherein amount seized from him had already been disclosed, in view of provisions of clause (b) of sub-section (1) of section 158BB, amount so disclosed could not be added to assesse's undisclosed income while completing block assessment

Purchases by account-payee cheque held sufficient to allow claim even if recipient couldn't be produced

IT-I : Where assessee, a builder, purchased cement from one party by account payee cheques at rates which were reasonable as compared to rates paid to other parties, assessee's claim for deduction in respect of said expenses was to be allowed under section 37(1)

IT- II : Where assessee in support of payment of labour charges, brought on record documentary evidence such as election card, driving licence, ration card etc. of recipients, transactions in question being genuine in nature, assessee's claim for deduction of labour charged was to be allowed

Tribunal to consider notional tax effect in case of loss while examining maintainability of revenue's appeal

IT : In case of loss, if notional tax effect is above limit prescribed by CBDT, appeal would be maintainable

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[2014] 42 taxmann.com 7 (Allahabad)

HIGH COURT OF ALLAHABAD

Commissioner of Income-tax-II, Lucknow

v.

Siddhartha Construction Co. (P.) Ltd.*

Section 268A, read with section 260A of the Income-tax Act, 1961 - Filing of appeal or application for reference by income-tax authorities [Loss returns] - Assessment year 1998-99 - Whether merely because income of assessee is computed at negative (i.e., loss), appeal before Tribunal would not be barred - Held, yes - Whether in such cases, if notional tax effect is found to be above limit prescribed by CBDT at relevant time, appeal would be maintainable - Held, yes [In favour of revenue]

CENVAT - Sales Commission Services are not Input Services - If there is any conflict between jurisdictional High Court and CBEC circular, the decision of jurisdictional High Court is binding on department rather than CBEC circular: HC

Service Tax

CENVAT – Sales Commission Services are not Input Services - If there is any conflict between jurisdictional High Court and CBEC circular, the decision of jurisdictional High Court is binding on department rather than CBEC circular: HC

THE Respondents had availed CENVAT Credit on Sales Commission Services obtained by them.

The adjudicating denied this credit but the Commissioner (A) allowed the appeal of the assessee accepting their contention that sales commission paid is an activity relating to their business incurred before the clearance of goods and that on the basis of orders procured by the commission agent, clearances are made.

In appeal before the CESTAT, the Revenue submitted that the 'sales commission services' cannot fit into the definition of 'Input service' u/r 2(l) of CCR, 2004 in view of the Gujarat High Court decision in the case of M/s. Cadila Healthcare Ltd. - 2013-TIOL-12-HC-AHM-ST.

Know status of your PAN/ TAN on Phone

Interactive Voice Response (IVR) for knowing the status of your PAN/ TAN application is now available at TIN call centre (TCC) in Hindi/English language. You may call on 020- 27218080 to check the status of your application.

Investment of sales consideration provides sec. 54F relief even if construction isn't completed within 3 years

Where consideration received on transfer of property had been invested by assessee in construction of residential house, merely because construction was not completed in all respects within stipulated period, benefit of section 54F, could not be denied.

The Tribunal held in favour of assessee as under:

1)  It was clear from the order of the CIT (A) that the assessee had commenced construction of the building within a period of three years from the date of transfer of property. The construction, however, could not be completed by the assessee within three years;

2)  The Karnataka High Court in case of CIT v. Sambandam Udaykumar [2012] 19 taxmann.com 17 had taken a view that under the provisions of section 54F, the condition precedent was that the capital gain realized from sale of capital asset should have been parted by the assessee and invested in construction of a residential house;

3)  Benefit of section 54F couldn’t be denied to assessee if the money was invested in constructing the residential house, even if the construction was not completed in all respects and house was not in a condition to be occupied within the stipulated period;

4)  There is no particular stage of completion of construction that is contemplated by the provision. Therefore, the benefit of deduction under section 54F was to be allowed to the assessee – ITO v. Smt. B.S. Shanthakumari [2014] 41 taxmann.com 325 (Bangalore - Trib.)

Credit Linked Subsidy Programme – Prime Minister’s Employment Generation Programme (PMEGP)

The Prime Minister’s Employment Generation Programme (PMEGP) is the result of the merger of two schemes – Prime Minister’s Rojgar Yojana (PMRY) and The Rural Employment Generation Programme (REGP) for generation ofemployment opportunities through establishment of micro enterprises in rural as well as urban areas.

Depreciation on electric fittings which are integral part of plant and machinery can be claimed at @25%

D.R. relied upon the order of the A.O. and argued that as per Rule, on electric item depreciation is allowable @ 15%. Therefore, he requested to confirm the order of the A.O. At the outset, ld. A.R. argued that the assessee is engaged in the business of running a multiplex theatre. The cost of electric fittings and equipments amounting to Rs.59,48,760/-.

AO can't invoke addition under sec. 41(1) merely on basis of time barred liability, rules HC

IT : Where assessee had outstanding creditors for goods and Assessing Officer made addition in income of assessee under section 41(1) on basis that with respect to 14 creditors liability was outstanding for more than three years, Assessing Officer was not justified in his view

Section 80E – Deduction for Interest on education Loan

Have you taken an education loan to support higher studies of yourself or of your spouse, Children or for the student of whom you are legal guardian and you are not aware of the tax benefits that you are entitled to. Then here is a guide that will assist you to know tax benefits on education loans. These benefits help you to reduce the overall cost of your education loan.

The deduction under section 80E is available to an individual if following conditions are satisfied:

Deemed STCG under sec. 50 qualifies for sec. 54EC relief as deeming fiction only provides mode of computation

Capital gain computed under section 50 qualifies for exemption if investment is made out of sale proceeds towards prescribed bonds under section 54EC.

In the instant case the issue that arose for consideration of High Court was as under:

Whether the exemption permitted by the statute under Section 54EC shall be available in the case of capital gains arising out of transfer of depreciable asset under section 50?

S. 43B applies only to Statutory liability not to contractual liability

Section 43B applies only toStatutory liability not tocontractual liability

It is necessary to consider the controversy whether the obligation of the assessee to pay the additional custom duty, in terms of clause 11 of the Agreement with the importers, can be considered as a statutory liability. Although, the assessee is obliged to pay the additional customs duty as and when the importers are called upon to pay the same, nonetheless, it cannot be considered as a statutory liability because the same is not imposed on the assessee by virtue of any statute. Customs duty is an incident of import of goods and an importer is obliged to pay the same under the Customs Act. Therefore, the liability to pay the additional customs duty is a statutory liability of the importers. However, in the hands of the assessee, the liability to pay the quantum of custom duty imposed on the importers, either directly to them or on their behalf, cannot be considered as a statutory liability as this obligation is not imposed by any statute but from the contracts entered into between the assessee and the importers. The liability in question is thus, clearly a contractual liability insofar as the assessee is concerned.

S. 263: CIT Has No Power To Revise Transfer Pricing Order And Assessment Order On TP Issue

Tata Communications Limited vs. DCIT (ITAT Mumbai)

S. 263: CIT cannot revise the TPO’s transfer pricing order passed u/s 92CA(3). CIT also cannot revise s. 143(3) order because such order is not erroneous if it follows binding order of TPO

The AO made a reference u/s 92CA(1) to the TPO for the computation of arm’s length price (“ALP”) in relation to the international transactions in AY 2005-06 & 2006-07. Pursuant thereto, the TPO passed an order u/s 92CA(3) proposing an adjustment of Rs. 12.19 crore for AY 2005–06 & Rs. 9.18 crore for AY 2006–07.

Tax Audit Limit Increased From 45 to 60

In view of the enhancement of professional competence of members to perform quality services in an IT-enabled environment, the Council of the Institute at its 331st meeting held from 10th to 12th February, 2014 has decided to increase the "specified number of tax audit assignments" for practicing Chartered Accountants, as an individual or as a partner in a firm , from 45 to 60. The said limit will be effective for the audits conducted during the financial year 2014-15 and onwards. Accordingly, the Council Guidelines No.1-CA(7)/02/2008, dated 8th August,2008 stands amended from 1.4.2014 as under:-

In the Council General Guidelines, 2008, the Council Guidelines No.1-CA(7)/02/2008, dated 8th August,2008, in Chapter VI "Tax Audit assignments under Section 44AB of the Income-tax Act, 1961 ", in Explanation given in Para 6.1, in sub-para(a) and sub-para(b), the figure "45" be substituted with the figure "60"

Amendment to Auditor’s Report Format Under the Companies Act

ICAI has issued announcement dated 7th February 2014 and made important amendments to Auditor Report. The details of announcement is as below:

• Announcement 1 : Manner of Reporting on Section 227(3)(bb) of the Companies Act, 1956.

• Announcement 2 : Reference to the Accounting Standards Applicable to the Companies in the Auditor’s Report and Limited Review Reports and various Engagement Standards.

Due Date to file ITR-V for AY 2009-10 2010-11 2011-12 extended up to 31.03.2014

CBDT has again extended the Due date to file ITR-V for ay 2009-10 2010-11 2011-12 extended up to 31.03.2014. The due date has been extended many time earlier also but still many online returns are yet to processed due to non submission of ITR-V by the assesees.

ITR-V is required to filed by assessee ,who has funished his/her Income Tax return online without digital singnature with in 120 days from uploading of the income tax return at income tax efiling site.

Less/Nil tds certificate

CPC(TDS) team feels glad to constantly update our stakeholders with relevant advisory communications from time to time. This communication seeks to provide important information related to a Certificate issued for Deduction of Tax at Lower/ NIL Rates under section 197/197A of the Income Tax Act, 1961.

About Certificate u/s 197/ 197A:

Small service provider's exemption was available to each co-owner on letting out of jointly owned properties

If a property, jointly owned by two or more persons, is rented out by such persons separately to a single person, all such co-owners would be eligible for small service provider's exemption of Rs. 10 lakh separately.

Facts: