Banks to acknowledge receipt of nil TDS declaration from customers, RBI directs banks

Posted on 1st Jun 2013 by Business So Simple in Miscellaneous

ACKNOWLEDGEMENT BY BANKS AT THE TIME OF SUBMISSION OF FORM 15-G/15-H

CIRCULAR DBOD.NO.LEG.BC.100/09.07.005/2012-13, DATED 31-5-2013

As you are aware banks are not required to deduct TDS from depositors who submit declaration in Form 15-G/15-H under Income Tax Rules, 1962. However, it has been brought to our notice that despite submission of Form 15-G/15-H by customers, banks are deducting tax at source, at times, causing inconvenience to customers resulting in a number of complaints. Such instances arise because either the forms are misplaced or a track is not kept of forms received in the branches.

The matter has been examined by us in consultation with Indian Banks’ Association (IBA). With a view to protect interest of the depositors and for rendering better customer service, banks are advised to give an acknowledgment at the time of receipt of Form 15-G/15-H. This will help in building a system of accountability and customers will not be put to inconvenience due to any omission on part of the banks.

New changes in tax return forms for the A/Y 2013-14(N/ NO. 34/2013 [F.NO.142/5/2013-TPL]/SO 1111(E), DATED 1-5-2013)

Posted on 3rd May 2013 by Business So Simple in Miscellaneous

New changes in tax return forms for the A/Y 2013-14(N/ NO. 34/2013 [F.NO.142/5/2013-TPL]/SO 1111(E), DATED 1-5-2013)

CBDT vide NOTIFICATION NO. 34/2013 [F.NO.142/5/2013-TPL]/SO 1111(E), DATED 1-5-2013 Incorporated new changes in Income tax return filing forms for the A/Y 2013-14 as below:

– Return in ITR 1 can’t be filed if assessee incurs losses under the head ‘Income from other sources

– Return in ITR 1 can’t be filed if assessee claims tax relief or has any income which is exempt under Chapter III

–Return in ITR 4S can’t be filed if assessee claims tax relief or has any income which is exempt under Chapter III

–Mandatory e-filing of audit reports

–Mandatory e-filing of return if income exceeds Rs. 5,00,000 or assessee claims tax relief

-List of forms to be used by different persons for filing of return of income for the Assessment Year 2013-14

Please find below a comparative chart and list of tax return forms for your reference:

Form	Existing position		New Position
Form Sahaj (ITR 1)	Return in ITR 1 can’t be filed if assessee incurs losses under the head ‘Income from other sources’
	An individual if his total income includes: (a) Salary and family pension; (b) Income from one house property (excluding losses); (c) Income from other sources but does not include: • Winnings from lottery; and • Winnings from horse races.	An individual if his total income includes: (a) Salary and family pension; (b) Income from one house property (excluding losses); (c) Income from other sources but does not include: • Winnings from lottery; • Winnings from horse races; and • Loss under this head.
Form Sahaj (ITR 1)	Return in ITR 1 can’t be filed if assessee claims tax relief or has any income which is exempt under Chapter III
	Return in ITR 1 cannot be filed by a resident person (other than not ordinarily resident in India), if he has: (a) Any asset (including financial interest) located outside India; (b) Signing authority in any account located outside India.	Return in ITR 1 cannot be filed by a resident person (other than not ordinarily resident in India), if he has: (a) Any asset (including financial interest) located outside India; (b) Signing authority in any account located outside India; (c) Claimed any relief of tax under Section 90, 90A or 91; (d) Incomme exceeding Rs. 5,000 which is not chargeable to tax. In other words, if assessee claims exemption in respect of any income under Section 10, 10A, 10AA, etc.
Form Sugam (ITR 4S)	Return in ITR 4S can’t be filed if assessee claims tax relief or has any income which is exempt under Chapter III
	Return in ITR 4S cannot be filed by an Individual or a HUF deriving income as referred to in Sections 44AD or 44AE, if it has: (a) Any asset (including financial interest) located outside India; (b) Signing authority in any account located outside India.	Return in ITR 4S cannot be filed by an Individual or a HUF deriving income as referred to in Sections 44AD or 44AE, if it has: (a) Any asset (including financial interest) located outside India; (b) Signing authority in any account located outside India; (c) Claimed any tax relief under Section 90, 90A or 91; (d) Income exceeding Rs. 5,000 which is not chargeable to tax. In other words, if assessee claims exemption in respect of any income under Section 10, 10A, 10AA, etc.
Audit Report	Mandatory e-filing of audit reports
	No such requirement	E-filing of following audit reports shall be mandatory in following cases: (a) Audit report under Sec. 44AB in respect of books of account; (b) Audit report under Sec. 92E in respect of international transaction; or (c) Audit report under Sec. 115JB in respect of MAT computation.
Mandatory e-filing of return	Mandatory e-filing of return if income exceeds Rs. 5,00,000 or assessee claims tax relief
	It is mandatory for an individual or an HUF to e-file the return of income if its total income exceeds Rs. 10,00,000	(a) It is mandatory for every person (not being a co. or a person filing return in ITR 7) to e-file the return of income if its total income exceeds Rs.5,00,000 (b) Every person claiming tax relief under Section 90, 90A or 91 shall file return in electronic mode.

List of forms to be used by different persons for filing of return of income for the Assessment Year 2013-14

*Individual and HUF*
Nature of income	ITR 1 (Sahaj)	ITR 2	ITR 3	ITR 4	ITR 4S (Sugam)
Income from salary/ pension	Yes	Yes	Yes	Yes	–
Income from one house property (excluding losses)	Yes	Yes	Yes	Yes	–
Income or losses from more than one house property	–	Yes	Yes	Yes	–
Income not chargeable to tax which exceeds Rs. 5,000	–	Yes	Yes	Yes	–
Income from other sources (other than winnings from lottery and race horses or losses under this head)	Yes	Yes	Yes	Yes	–
Income from other sources (including winnings from lottery and race horses)	–	Yes	Yes	Yes	–
Capital gains/loss on sale of investments/ property	–	Yes	Yes	Yes	–
Share of profit of partner from a partnership firm	–	–	Yes	Yes	–
Income from proprietary business/ profession	–	–	–	Yes	–
Income from presumptive business	–	–	–	–	Yes
Details of foreign assets	–	Yes	Yes	Yes	–
Claiming relief of tax under sections 90, 90A or 91	–	Yes	Yes	Yes	–

*Other Assesses*
*Nature of income*	*ITR 5*	*ITR 6*	*ITR 7*
Firm	Yes	–	–
Association of persons (AOP)	Yes	–	–
Body of Individuals (BOI)	Yes	–	–
Companies other than companies claiming exemption under Sec. 11	–	Yes	–
Persons required to furnish return under: (1) Section 139(4A); (2) Section 139(4B); (3) Section 139(4C); and (4) Section 139(4D)	–	–	Yes

Regards,

Bipul Kumar

Cell: 9560084833

Email: bkumarca80@gmail.com

AMENDMENT BY LOK SABHA TO FINANCE BILL, 2013 (30 APRIL 2013)

Posted on 1st May 2013 by Business So Simple in Miscellaneous

AMENDMENT BY LOK SABHA TO FINANCE BILL, 2013 (30 April 2013)

Existing Position	*Position as amended by the Lok Sabha*

Scope of Sec. 10(48) widened to include other prescribed income also and not just income arising from sale of crude oil
The Finance Act 2012 inserted a new clause (48) in Section 10 to provide for exemption in respect of any income received in India in Indian currency by a foreign company on account of sale of crude oil in any period in India, if a few conditions are satisfied.		The Finance Bill, 2013 as passed by the Lok Sabha (herein after referred to as ‘the Finance Bill, 2013’) enlarges the scope of Section 10(48). With effect from the assessment year 2014-15, the exemption will also be available in respect of income arising on account of sale of any other goods or rendering of services as notified by the Central Government.

Trading in commodity derivatives no more a speculative transaction
Proviso to Section 43(5) provides a list of transactions which shall not be deemed to be ‘speculative’ transactions.		A new clause (e) is inserted in proviso to Section 43(5) wef assessment year 2014-15 to provide that trading in commodity derivatives carried out in a recognised association shall not be treated as ‘speculative’ transaction. For this purpose, an eligible transaction means: (a) Any transaction carried out electronically on screen-based system through a member registered for trading in commodity derivatives under the FCRA; (b) Transaction is supported by a time stamped note issued by such member; (c) The contract note should indicate unique client identity number, unique trade number and PAN.
TRC – Can be a conclusive evidence but has to be supported by prescribed documents
(1) The Finance Act, 2012 imposed a mandatory condition to furnish Tax Residency Certificate (‘TRC’) for availing of benefits under the DTAAs. The TRC helps in establishing the country of residence of a non-resident taxpayer. (2) However, the Finance Bill, 2013 had amended section 90 to provide that submission of TRC was a necessary but not a sufficient condition for claiming benefits under DTAA. This amendment was proposed to be introduced retrospectively wef AY 2013-14. (3) This proposed amendments raised apprehensions among the taxpayers that it would give powers to the tax collectors to disregard the TRC and view the transaction independently.	Considering these apprehensions of the taxpayers, the provision proposed by the Finance Bill, 2013 that TRC was a necessary but not a sufficient condition for claiming benefit under DTAA has been removed. As per the amended version, apart from the submission of a TRC (which is a necessary condition), the assessee shall also provide such other documents and information as may be prescribed for claiming benefits under the DTAAs.
Time-limit for completion of an assessment when reference is made to the TPO
Sections 153 and 153B, inter-alia, provide the time-limit for completion of an assessment and re-assessment. These time-limits get extended if a reference is made under Section 92CA to the TPO. These time-limits were extended by Finance Act, 2012 by 3 months wef July 1, 2012.	The Finance Bill, 2013 provides that the revised time-limit will be applicable regardless of the fact whether: (a) A reference to TPO is made before, on or after July 1, 2012; or (b) The order of TPO is passed before, on or after July 1, 2012.
TAN not required to deduct tax from payment made for purchasing an immovable property
A new section 194-IA is inserted by the Finance Bill, 2013 to provide that transferee is liable to deduct tax at source at 1% from payment being made to a resident-transferor in respect of purchase of an immovable property.	The Finance Bill, 2013 approved of the provisions of Section 194-IA. However, it provided an exemption to the transferee from obtaining a TAN, which is otherwise a mandatory requirement for deduction of tax at source.
Concessional withholding rates on certain rupee denominated long-term infrastructure bonds is withdrawn
The Finance Bill, 2013 proposed to introduce a provision wherein even Indian Rupee loan given by non-resident through the route of Long-term Infrastructure Bonds would also enjoy the concessional rate of tax deduction at source.	This amendment has been withdrawn in the Finance Bill, 2013. However, a new provision is inserted in Section 194LD which provides as under: (1) Tax under this section shall be deducted in respect of interest on a rupee denominated bond of an India company or Government security which is payable after May 31, 2013 but before June 1, 2015; (2) Tax at concessional rate shall be deducted if payment is made to a FII or a qualified foreign investor; (3) Tax to be deducted at 5%; (4) If tax is deducted under Sec. 194LD, provisions of Sections 195 and 196D will not be applicable.
Non-resident referred to in Section 194LC will not be penalised for not having a PAN
By virtue of Section 206AA, if PAN of the recipient is not available, tax is deductible either at the normal rate or at the rate of 20%, whichever is higher.	Under the amended provisions of Section 206AA, in respect of payment of interest on long-term infrastructure bonds to a non-resident (as referred to in Section 194LC), tax will be deducted at the normal rate of 5%, even if the non-resident-recipient does not have PAN.
Even gold coins weighing less than 10 gms will be subject to TCS
Sale of bullion/jewellery is subject to TCS provisions in following cases: (1) If the sale consideration of bullion (excluding any coin/article weighing 10 grams or less) exceeds Rs. 2,00,000; or (2) If the sale consideration of jewellery exceeds Rs. 5,00,000 and out of sale consideration any amount is received in cash.	With effect from June 1, 2013, consideration of any coin or any other article weighing 10 grams or less shall not be excluded while calculating the monetary limit of Rs. 2,00,000.
No wealth-tax on agriculture land
The urban land is not chargeable to wealth-tax if it is a land: (1) On which construction of a building is not permissible under any law for the time being in force in the area in which such land is situated; or (2) occupied by any building which has been constructed with the approval of the appropriate authority; or (3) being an unused land held by the assessee for industrial purposes for a period of two years from the date of its acquisition by him; or (4) held by the assessee as stock-in-trade for a period of 10 years from the date of its acquisition by him.	Land classified as agricultural land in the records of the Government and used for agricultural purposes, will not be treated as an ‘asset’ under Section 2(ea) with retrospective effect from the AY 1993-94. Consequently, such land will not be chargeable to wealth-tax, even if such land is situated in an urban area. As per the amended provision, following lands will not be chargeable to wealth-tax: (1) Land classified as agricultural land in the records of the Government and used for agricultural purposes; or (2) Land on which construction of a building is not permissible under any law for the time being in force in the area in which such land is situated; or (3) Land occupied by any building which has been constructed with the approval of the appropriate authority; or (4) An unused land held by the assessee for industrial purposes for a period of two years from the date of its acquisition by him; or (5) Land held by the assessee as stock-in-trade for a period of 10 years from the date of its acquisition by him.

Form 16:Part A (details of tax deduction and deposit ) generated from TRACES portal only

Posted on 22nd Apr 2013 by Business So Simple in Miscellaneous

Now Form 16:Part A (details of tax deduction and deposit ) will be generated from TRACES portal only.

Please find below reference of CIRCULAR NO. 4/2013 [F.NO.275/34/2011-IT(B)], DATED 17-4-2013 (SECTION 203 OF THE INCOME-TAX ACT, 1961, READ WITH RULE 31 OF THE INCOME-TAX RULES, 1962 – DEDUCTION AT SOURCE – CERTIFICATE FOR TAX DEDUCTED – ISSUANCE OF CERTIFICATE FOR TAX DEDUCTED AT SOURCE IN FORM NO.16

Section 203 of the Income-tax Act 1961 (“the Act”) read with the Rule 31 of the Income-tax Rules 1962 (“the Rules”) stipulates furnishing of certificate of tax deduction at source (TDS) by the deductor to the deductee specifying therein the prescribed particulars such as amount of TDS, valid permanent account number (PAN) of the deductee, tax deduction and collection account number (TAN) of the deductor, etc. The relevant form for such TDS certificate is Form No. 16 in case of deduction under section 192 and Form No. 16A for deduction under any other provision of Chapter XVII-Bof the Act. TDS certificate in Form No. 16 is to be issued annually whereas TDS certificate in Form No. 16A is to be issued quarterly. TDS Certificate in Form No 16 as notified vide Notification No. 11/2013 dated 19-2-2013 has two parts viz Part A and Part B (Annexure). Part A contains details of tax deduction and deposit and Part B (Annexure) contains details of income.

With a view to streamline the TDS procedures, including proper administration of the Act, the Board had issued Circular No. 03/2011 dated 13-5-2011 and Circular No. 01/2012 dated 9-4-2012 making it mandatory for all deductors to issue TDS certificate in Form No. 16A after generating and downloading the same from “TDS Reconciliation Analysis and Correction Enabling System” or (https://www.tdscpc.gov.in) (hereinafter called TRACES Portal) previously called TIN website. In exercise of powers under section 119 of the Act, the Board has now decided as following:-

ISSUE OF PART A OF FORM NO. 16 FOR DEDUCTION OF TAX AT SOURCE MADE ON OR AFTER 1-4-2012:

All deductors (including Government deductors who deposit TDS in the Central Government Account through book entry) shall issue the Part A of Form No. 16, by generating and subsequently downloading through TRACES Portal, in respect of all sums deducted on or after the 1st day of April, 2012 under the provisions of section 192 of Chapter XVII-B. Part A of Form No 16 shall have a unique TDS certificate number.

AUTHENTICATION OF TDS CERTIFICATE IN FORM NO. 16:

The deductor, issuing the Part A of Form No. 16 by downloading it from the TRACES Portal, shall, before issuing to the deductee authenticate the correctness of contents mentioned therein and verify the same either by using manual signature or by using digital signature in accordance with sub-rule (6) of Rule 31.

In other words, Part A of Form No. 16 shall be issued by all the deductors, only by generating it through TRACES Portal and after duly authenticating and verifying it.

‘Part B (Annexure)’ of Form No. 16 shall be prepared by the deductor manually and issued to the deductee after due authentication and verification alongwith the Part A of the Form No. 16 stated above.

Sub rule (3) of rule 31of the Rules sets the time limit for issuance of Form 16 by the deductor to the employee. Currently, Form 16 should be issued by 31st May of the financial Year immediately following the financial year in which income was paid and tax deducted.

The Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purpose of download of Part A of Form No. 16 from the TRACES Portal and shall be responsible for the day-to-day administration in relation to the procedure, formats and standards for download of Part A of Form No. 16 in electronic form.

It is further clarified that Part A of Form No. 16 issued by the deductors in accordance with this circular and as per the procedure, formats and standards specified by the Director General of Income-tax (Systems) and containing Unique Identification Number shall only be treated as a valid compliance to the issue of Part A of Form No. 16 for the purpose of section 203 of the Act read with rule 31 of the Rules.

With regards,
Bipul Kumar+91-9560084833 [Cell]
bkumarca80@gmail.com

RBI Guidelines have been issued for FEMA purposes. No additions for violation of RBI’s norms on valuation of shares sold by non-resident to resident

Posted on 19th Apr 2013 by Business So Simple in Miscellaneous

IT : RBI Guidelines have been issued for FEMA purposes. No additions for violation of RBI’s norms on valuation of shares sold by non-resident to resident

Facts

The assessee, M/s Zeppelin Mobile Systems GmbH -a tax resident of Germany. It has an Indian subsidiary called Zeppelin Mobile Systems India Ltd., which is a closely held unlisted company under the Indian Companies Act, 1956. It is engaged in the business of designing, manufacturing and assembling of Polyurethanes Foam based Prefab Structures, Telecom Shelters and derivatives. During the year, the assessee had sold part of the shares held by it in its Indian subsidiary to M/s Sintex Industries Ltd and returned capital gains from such sale on basis of sale price of Rs. 390 per share. AO contended that as per RBI’s guidelines, valuation should be Rs. 400 per share and DRP made additions @ Rs.10 per share accordingly.

Held

Undoubtedly, the RBI Guidelines are Guidelines for the banks, issued for FEMA purposes since the Guidelines have been issued for FEMA purposes, it is the FEMA Authorities who are competent to take appropriate action against the assessee on breach of the Guidelines. No objection whatsoever has been raised by the RBI to the rate of Rs. 390/- per share, as maintained by the assessee and the RBI has accorded its approval. Had the alleged difference between the rates existed, thereby constituting a violation of the RBI Guidelines by the assessee, such violation would obviously have been taken care of and the approval would not have been accorded. On merits also, Sintex Industries Ltd., to whom the shares were sold by the assessee, has not denied such rate of Rs 390/- per share. Rather, such rate stands admitted in the Memorandum of Understanding (supra) between the assessee and Sintex Industries Ltd. Nothing adverse or detrimental to the assessee’s case has been brought on record by the authorities below. In the result, assessee’s appeal allowed.

COMPILATION OF QUALITY SCRUTINY ASSESSMENT CASES COMPLETED DURING FINANCIAL YEAR 2012-13

Posted on 16th Apr 2013 by Business So Simple in Miscellaneous

COMPILATION OF QUALITY SCRUTINY ASSESSMENT CASES COMPLETED DURING FINANCIAL YEAR 2012-13

LETTER [F.NO. 225/65/2013/ITA-II], DATED 11-4-2013

I am directed to draw your kind attention towards Board’s decision to review the Quality of assessments completed by the Assessing Officers during financial year 2012-13 in each CCIT/DGIT charge. The same finds mention in clause 2(k) of “Guidelines for Scrutiny Selection” [File No. 225/97/2012/ITA-II] for Financial Year 2012-13, dated 23-8-2012 read with clarification dated 20-9-2012.

2. All the CCsIT/DGsIT charges are therefore requested to ensure that a compilation of at least 50 quality assessments passed in their respective charges is made in respect of scrutiny assessments completed during financial year 2012-13, clearly bring out the quality of work done and the resultant revenue impact. The compilation should be made in the format enclosed as Annexure to this letter.

3. I am further directed to request that all CCsIT/DGsIT may send their compilation as per annexed format alongwith copies of all the orders to the concerned CCIT (CCA) who in turn would send the above analysis to their respective Zonal Member by 30th April, 2013 after due consolidation. A copy of the consolidated compilation should also be sent to Member (IT) without enclosing hard copies of assessment orders.

4. Para 2(1) of Board’s letter dated 20-9-2012 mentions that quality orders compiled through above process would form source material for quality assessment work to be incorporated in forthcoming issue of ‘Let us Share’, In this regard, I am further directed to request that a copy of compilation alongwith all assessment orders may also be sent to respective Appraisal Committees constituted for ‘Let us Share’ by DGIT(Admin.).

Annexure

FORMAT of Compilation

Chief Commissioner of Income Tax (CCA)..

LIST OF QUALITY ASSESSMENT CASES

CCIT/DGIT charge……….

Name of the case	Name of the Assessing Officer/ Addl. CIT/CIT	Assessment completed under section-(143(3)/144/147/153A/153C)	Selection criteria (CASS /Compulsory Manual Scrutiny /Discretionary Manual Scrutiny)	Brief description or the significant issues identified in the assessment on the basis of which the case has been characterized as quality work	Amount of concealment detected/disallowance made	Whether Penalty Imposed /prosecution launched (the relevant section should be mentioned)	Comment of CCsIT/ DGsIT on Quality of order

Note:

(a)		The compilation should not include the cases of PSU, Government organisations and the cases with a history of addition/disallowances being consistently made and contested in appeals in the past years. In such cases only those issues should be reported which have been detected for the first time during the year.
(b)		Before reporting such cases in compilation, due care must be taken that the issues have been properly thrashed and it is not a case where the Assessing Officer has resorted to summary additions, routine disallowances or best judgment assessment without any worth while independent inquiry. Reporting of such cases would be viewed adversely.
(c)		The cases where addition has been made due to Transfer Pricing Adjustment on the basis of TPO report should not be included.
(d)		The Central Charges are requested to incorporate those cases where the Assessing Officer, while framing assessments in search and seizure cases, have been able to establish tax evasion and made independent detailed investigation traversing beyond the indicated facts in Appraisal report of the investigation unit. The assessments in any other cases which reflect the work done by the Assessing Officers on the basis of their independent investigations can also be included if it amounts to quality work.

Section 54F provides exemption only construction of a new house not renovation or modification of an existing house

Posted on 12th Mar 2013 by Business So Simple in Miscellaneous

IT : Section 54F does not provide for exemption in case of renovation or modification of an existing house and what gains exemption is only construction of a new house

■■■

[2013] 31 taxmann.com 33 (Kerala)

HIGH COURT OF KERALA

Pushpa

Income tax Officer*

THOTTATHIL B. RADHAKRISHNAN AND K. VINOD CHANDRAN, JJ.

IT APPEAL NOS. 30 & 32 OF 2012

AUGUST 22, 2012

Section 54F of the Income-tax Act, 1961 – Capital gains – Exemption of, in case of investment in residential house – Construction – In support of claim of deduction under section 54F, assessee brought on record copy of approved plan pertaining only to roof changing and for construction/extension of/to first floor – Tribunal found that there was nothing on record to show that capital gains was actually utilized for construction of a new house – Accordingly, Tribunal rejected assessee’s claim for deduction – Whether section 54F does not provide for exemption in case of renovation or modification of an existing house and what gains exemption is only construction of a new house – Held, yes – Whether, therefore, impugned order of Tribunal rejecting assessee’s claim was to be upheld – Held, yes [Para 3] [In favour of revenue]

CASES REFERRED TO

M.R. Moir v. Williams [1892] I QB 264. (para 1), Mrs. Meera Jacob v. ITO [2009] 313 ITR 41l (Ker.) (para 1) and CIT v. Pradeep Kumar [2007] 290 ITR 90/[2006] 153 Taxman 138 (Mad.) (para 1).

O. Ramachandran Nambiar and Geen T. Mathew for the Appellant. P.K.R. Menon and Jose Joseph for the Respondent.

JUDGMENT

Thottathil B. Radhakrishnan, J.– The short issue raised by the assessee in these two appeals is as to whether the refusal of claim for exemption under s. 54F of the IT Act is sustainable. The learned counsel appearing for the appellant making reference to P. Ramanatha Aiyar’s The Law Lexicon points out that the word ‘building’ has to be understood depending upon the circumstances. What is a ‘building’ must always be a question, of degree, and circumstances. Its ordinary and usual meaning is, a block of brick or stone work, covered in by a roof. That entry in the Law Lexicon is made with reference to M.R Moir v. Williams [1892] I QB 264. Referring to the Law Lexicon, we find that the term ‘building’ has been considered in the context of different statutes in relation to different types of structures. With that, reference is made to the decision of this Court in Mrs. Meera Jacob v. ITO [2009] 313 ITR 41l (Ker.). The learned counsel for the Revenue also pointed out CIT v. Pradeep Kumar [2007] 290 ITR 90/[2006] 153 Taxman 138 (Mad.)

2. In the case in hand, in our view, no substantial question of law arises calling for interference at the instance of the assessee. Sec. 54F provides that capital gains on transfer of capital assets shall not be charged in cases of investment in residential house. The section pointedly says that such eligibility would be available if the assessee has, within the period prescribed, constructed, a residential house. For the purpose of that section, the residential house so constructed is referred to as new asset. The object sought to be achieved by that provision is to exclude capital gains on transfers of certain capital assets from being charged provided the new asset is a residential house. Obviously, a new house is not something which is either an extension or addition made to an existing structure. As noted by this Court in Mrs. Meera Jacob (supra), the exemption is available only when the investment is in the construction of a house and not for investment in modification or renovation. The Bench also held that it is the conceded position that the assessee has not constructed any separate apartment or house. Sec. 54F does not provide for exemption on investment in renovation or modification of an existing ‘ house and what gains exemption is only construction of a house. Of course, the observation in that judgment that even addition of a floor of a self-contained type to the existing house would have qualified for exemption, is not a statement as to law, to be noted as a precedent because that case was not one such.

3. ‘Reverting to the case in hand, the Tribunal adverted to the entire materials and has categorically found that there is nothing on record to show that the capital gains was actually utilized for the construction of ‘ a new house. The copy of the approved plan dt. 28th June, 2000 from the Trivandrum Corporation placed before the Tribunal pertains only to roof changing (sunshade projection) and for construction/extension of/to the first floor. The sanction bears a condition to the effect that the house shall consist of a single residential unit. On the said set of facts and materials, we do not find any question of law arising for decision. The provisions of s. 54F of the IT Act have been appropriately applied. With these, we do not find any legal infirmity in the decision of the Tribunal.

In the result, these appeals fail. They are accordingly dismissed. No costs.

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*In favour of revenue.

Budget 2013: important things for the middle class

Posted on 1st Mar 2013 by Business So Simple in Miscellaneous

Budget 2013: important things for the middle class

1) You can look forward to more tax-free bonds in the coming days, as some institutions are expected to raise around Rs 25,000 crore via tax-free bonds in 2012-13. The finance minister has also permitted some institutions to issue tax free bonds in 2013-14 up to Rs 50,000 crore.

2) The hike in income threshold to invest in Rajiv Gandhi Equity Saving Scheme ( RGESS) is good news for new investors to the stock market. Now, those with income of up to Rs 12 lakh can invest in (RGESS). Earlier only those with income of Rs 10 lakh and less could invest in the scheme.

3) If you are taking a housing loan of less than Rs 25 lakh this year, you can claim additional tax break of Rs 1 lakh on interest payment. This is in addition to Rs 1.5 lakh permitted currently.

4) If you have been worried about inflation eating into your long term savings, you should wait for inflation indexed bonds and inflation indexed national security certificates. The details of these instruments will be announced shortly.

5) If you are living in a tier II city and find it difficult to find an insurer near your place, the budget has some good news for you. Insurance companies can open officers in tier II cities without prior permission from Insurance Regulatory and Development Authority.

6) Union Budget 2013-14 has raised the eligibility cap on life insurance premiums to 15% for policyholders with disabilities or specified ailments, noting that some policies meant for such individuals exceed the existing limit of 10%. If policies do not meet the eligibility criterion, the amount of deduction allowed will be restricted to 10% (15% in case of persons with disabilities) of the sum assured and the maturity proceeds will be taxed.

7) The finance minister has announced a tax credit of Rs 2,000 for individuals with income of less than Rs 5 lakh. In simple terms, if your tax payable amounts to Rs 10,000, your liability will be limited to Rs 8,000.

8) Securities transaction tax is reduced. STT on mutual fund (MF) and exchange traded fund (ETF) redemptions at fund counters is slashed to 0.001% from 0.25%; STT on MF/ETF purchase and sale on exchanges is reduced from 0.1% to 0.001%, only on the seller.

9) If you are derivative trader in the equities market, you should be happy as STT on futures has come down 0.017% to 0.01 % and if you are derivative trader in commodities market, you have to pay CTT at the same rate applicable to equity futures. There was no CTT earlier.

10) If you are going abroad, here is some good news for you. Duty-free shopping limit is hiked to Rs 50,000 for a male passenger and Rs 1 lakh for a female passenger.

11) Mobile phone prices to go up; the excise duty is hiked to 6% on handsets which costs more than Rs 2,000

12) If you are a service tax evader, you should make use of the new voluntary Compliance Encouragement Scheme announced in the budget. You can file a declaration of service tax due since 1.10.2007 and make the payment in one two instalments before prescribed dates. You don’t have to pay interest and penalty and other consequences will be waived.

(1 MAR, 2013, 01.44AM IST, ET BUREAU)

BUDGET 2013-14: KEY HIGHLIGHTS IN DIRECT TAXES

Posted on 28th Feb 2013 by Business So Simple in Miscellaneous

BUDGET 2013-14: KEY HIGHLIGHTS IN DIRECT TAXES

Ø Little room to give away tax revenues or raise tax rates in a constrained economy.

Ø No case to revise either the slabs or the rates of Personal Income Tax. Even a moderate increase in the threshold exemption will put hundreds of thousands of Tax Payers outside Tax Net.However, relief for Tax Payers in the first bracket of Rs.2 lakhs to Rs.5 lakhs. A tax credit of Rs. 2000 to every person with total income upto Rs. 5 lakhs.

Ø Surcharge of 10 percent on persons (other than companies) whose taxable income exceed Rs. 1 crore to augment revenues.

Ø Increase surcharge from 5 to 10 percent on domestic companies whose taxable income exceed Rs. 10 crore.

Ø In case of foreign companies who pay a higher rate of corporate tax, surcharge to increase from 2 to 5 percent, if the taxabale income exceeds Rs. 10 crore.

Ø In all other cases such as dividend distribution tax or tax on distributed income,current surcharge increased from 5 to 10 percent.

Ø Additional surcharges to be in force for only one year.

Ø Education cess to continue at 3 percent.

Ø Permissible premium rate increased from 10 percent to 15 percent of the sum assured by relaxing eligibility conditions of life insurance policies for persons suffering from disability and certain ailments.

Ø Contributions made to schemes of Central and State Governments similar to Central Government Health Scheme, eligible for section 80D of the Income tax Act.

Ø Donations made to National Children Fund eligible for 100 percent deduction.

Ø Investment allowance at the rate of 15 percent to manufacturing companies that invest more than Rs. 100 crore in plant and machinery during the period 1.4.2013to 31.3.2015.

Ø ‘Eligible date’ for projects in the power sector to avail benefit under Section 80-IA extended from 31.3.2013 to 31.3.2014.

Ø Concessional rate of tax of 15 percent on dividend received by an Indian company from its foreign subsidiary proposed to continue for one more year.

Ø Securitisation Trust to be exempted from Income Tax. Tax to be levied at specified rates only at the time of distribution of income for companies, individual or HUF etc. No further tax on income received by investors from the Trust.

Ø Investor Protection Fund of depositories exempt from Income-tax in some cases.

Ø Parity in taxation between IDF-Mutual Fund and IDF-NBFC.

Ø A Category I AIF set up as Venture capital fund allowed pass through status under Income-tax Act.

Ø TDS at the rate of 1 percent on the value of the transfer of immovable properties where consideration exceeds Rs. 50 lakhs. Agricultural land to be exempted.

Ø A final withholding tax at the rate of 20 percent on profits distributed by unlisted companies to shareholders through buyback of shares.

Ø Proposal to increase the rate of tax on payments by way of royalty and fees for technical services to non-residents from 10 percent to 25 percent.

Ø Reductions made in rates of Securities Transaction Tax in respect of certain transaction.

Ø Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. Agricultural commodities will be exempted.

Ø Modified provisions of GAAR will come into effect from 1.4.2016.

Ø Rules on Safe Harbour will be issued after examing the reports of the Rangachary Committee appointed to look into tax matters relating to Development Centres & IT Sector and Safe Harbour rules for a number of sectors.

Ø Fifth large tax payer unit to open at Kolkata shortly.

Ø A number of administrative measures such as extension of refund banker system to refund more than Rs. 50,000, technology based processing, extension of e-payment through more banks and expansion in the scope of annual information returns by Income-tax Department.

Government resolution to provide tax administration free from corruption, bias or favouritism

Posted on 30th Jan 2013 by Business So Simple in Miscellaneous

Government resolution to provide tax administration free from corruption, bias or favouritism

TO REITERATE GOVERNMENT’S RESOLUTION TO PROVIDE A TAX ADMINISTRATION THAT IS FREE OF CORRUPTION, BIAS OR FAVOURITISM

OFFICE MEMORANDUM [F.NO. C. 14014/2/2013-VIG], DATED 22-1-2013

In the recent past, instances of some officers of the Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC) being subjected to searches investigations by Anti-Corruption Branch of the Central Bureau of Investigation (CBI) have been reported. Some complaints alleging misconduct, misdemeanour exhibited by Officers in their official conduct/duties have also been received.

Incidents of this nature have the potential of eroding the confidence of the taxpaying community and public at large in the Department. I appreciate that misconduct of this nature is limited to only a few misguided officials. Therefore, it is incumbent upon the Department to act firmly and swiftly against such officers.

It is needless to emphasize that the Government Servants are expected to discharge their official functions with utmost devotion and integrity. The Government has laid down elaborate dos and don’ts governed by the Conduct Rules and it is expected that all officers abide by them scrupulously.

The Vigilance Wings of both the Boards have the prime responsibility to expeditiously conclude disciplinary proceedings in the case(s) of charged officers. While the innocent must be protected, those found indulging in gross misconduct must be subjected to strict punitive action as per extant rules/instructions expeditiously.

Preventive Vigilance is critical for any organization, Senior officers must regularly inspect the work of their subordinates. Periodical meetings with Taxpayers, Tax Bar, Chartered Accountants Association, Trade Associations etc. will serve as a good feed back mechanism. Personal counselling, especially of the younger officers is also a mode of correcting instances of inadvertent infringement of Conduct Rules etc.

The general reputation of an officer is also an important input for the Administration before taking a view about transfers/postings. The Administration Division in CBDT and CBEC and the field formations must be sensitized about the critically of rotation of officers between sensitive and non-sensitive assignments. Besides facilitating exposure to all areas of work, this also prevents the possibility of officers developing any vested interest which in turn adversely imparts objective official functioning.

Our work environment must maintain Zero Tolerance towards malpractices and corruption. An onerous responsibility is cast on the Senior Officers to lead by example. It is expected that all the vulnerable areas will be secured effectively to eliminate any possible misuse, explanation or unintended abuse. Not only is personal integrity necessary, it is incumbent upon the supervisory cadre to promote good and ethical behaviour in their subordinate officers.

The CBDT and CBEC being the most important revenue garnering agencies of the Central Government, the revenue mobilization endeavour must be premised on the Departmental personnel exhibiting complete objectivity, integrity and sincerity in their conduct.

The Chief Commissioners/Directors General are advised to sensitise the field formations suitably and reiterate the Government’s resolve to provide a tax administration that is free of corruption, bias or favouritism.