Thursday, January 7, 2010

ITR HIGHLIGHTS ISSUE Dt 11-1-2010 Volume 320 : Part 2






>> DVO's report not a ground for reassessment : CIT v. Iqbal Hussain (All) p. 142 and CIT v. Gulam Mohammad (All) p. 168

>>Tribunal not to interfere with the concurrent finding of AO and Commissioner (Appeals) that accounts manipulated subsequent to search : CIT v. S. N. Murali Mohan (Karn) p. 144

>>Valuation of diamonds during search at an average : CIT v. S. N. Murali Mohan (Karn) p. 144

>>Interest shown in computation sheet annexed to assessment order sufficient for levy of interest u/ss 234B and 234C : CIT v. Assam Mineral Development Corporation Ltd. (Gauhati) p. 149

>>Assessee obtained a decree to recover debt does not mean that debt was not bad : CIT v. Punjab Tractors Ltd. (P&H) p. 153

>>Commissioner not competent to assume jurisdiction where issue taken by him already dealt with by Commissioner (Appeals) : CIT v. Shalimar Housing and Finance Ltd. (MP) p. 157

>>Interest paid by assessee on delayed payments of sales tax not a penalty : CIT v. H. P. State Forest Corporation (HP) p. 170

>>Share broker purchasing shares for its client and paying money against purchase but money receivable from client becoming bad and treated as bad debt, allowable : CIT v. Bonanza Portfolio Ltd. (Delhi) p. 178

>>Cash payments allowable where nature of business of assessee and evidence in form of bills and cash memos : CIT v. Raja Pal Automobiles (All) p. 185

>>Tribunal rightly condoned the delay in filing application for registration by trust where there was a reasonable cause : CIT v. Village Life Improvement Foundation (P&H) p. 188

>>Revenue cannot claim interest from employee where employer paying tax with interest u/s 201(1A) : CIT v. Emilio Ruiz Berdejo (Bom) p. 190

>>Appellate authorities cannot decide appeal against order u/ss 195(1) and 201 whether payment was assessable or not : CIT v. Samsung Electronics Co. Ltd. (Karn) p. 209

>>Assessee deducting tax at source and remitting amount to Revenue but disputing such liability : Appeal denying such liability maintainable before Commissioner (Appeals) : CIT v. Samsung Electronics Co. Ltd. (Karn) p. 209

>>Housing society entitled to deduction from interest income on account of expenses incurred towards maintenance of houses of members : CIT v. Maruti Employees Co-operative House Building Society Ltd. (P&H) p. 254


>>Direct tax code may spare home loans

The Government may modify the draft direct tax code to retain tax shelters on interest and principal repayments for home loans to make the proposed new code more attractive for the average Indian, a Finance Ministry official said.

The proposed direct taxes code, which has been unveiled for public debate and is due to become operational from April 2011, does not provide tax incentives to loan-funded house purchases that are for personal use.

At present, taxpayers are allowed to deduct from their income the interest paid on home loans to a maximum of Rs. 1.5 lakh every year. In addition, the repayment of the principal amount is also allowed to be included within the rebate available under section 80C, which has a maximum limit of Rs. 1 lakh.

The draft code, billed as a comprehensive reform of the direct taxes regime, has suggested increasing the exemption limit under section 80C to Rs. 3 lakh, but the list of eligible expendi-ture/savings does not include the principal payment. The code also restricts the interest deduction only in respect of houses rented out and where such income is included in the income of the assessee.

At present, if a home buyer in the highest 30 per cent. tax slab were to avail the maximum tax exemption available on home loans then Government loses over Rs. 77,000 in tax.

The planned move to discontinue tax benefits for housing has faced widespread criticism and the Finance Ministry official said "we are looking at provisions (in the direct taxes code) that concern common man directly, including tax incentives to housing."

Tax reforms are aimed at increasing compliance and widening the tax base by lowering rates and removing exemptions. The Government is hoping to redraft the new code quickly so that it can be placed in Parliament in the Budget session itself.
[Source : dated December 26, 2009]

>>Payments to Foreign universities for services to non-profit organisations are tax-free

Foreign universities providing consultancy services to business chambers or other non-profit organisation are not liable to pay tax in India, the Authority for Advance Rulings (AAR) has said.

The ruling make business with the Indian non-profit sector more attractive for the foreign universities.

In a recent ruling involving a wing of a foreign university, the AAR has said the university is not liable to pay income-tax in respect of the payments received by it from FICCI, a prominent industry body.

FICCI had sought direction from AAR over the tax liability of the university and the amount of tax which the chamber had to deduct while making payments.

AAR is a quasi-judicial body, set up to give opinion to guide companies on their potential tax liabilities. AAR's rulings are case-specific, but they have a persuasive impact on tax assessment cases of similar circumstances.

The AAR ruling means that FICCI is not required to deduct tax at source while making payments to the university for its consultancy services.

The industry chamber had entered into an agreement with a wing of the foreign university for certain work and services related to a Defence Research and Development Organisation (DRDO) project.
[Source : dated December 26, 2009]


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