Thursday, March 4, 2010



ISSUE DATED 8-3-2010

Volume 321 : Part 3



F Whether depreciation should be allowed as under IT Rules for purpose of computing MAT u/s115J : Matter remanded to Larger Bench : Dynamic Orthopedics P. Ltd. v. CIT p. 300

F Service of notice on the assessee u/s 143(2) within prescribed period of time is a pre-requisite for framing block assessment under Chapter XIV-B : Asst. CIT v. Hotel Blue Moon p. 362

F Bonds and debentures bought by assessee are by way of investment : Interest on such investments not liable to interest-tax : CIT v. Sahara India Savings and Investment Corporation Ltd. p. 371


F Tribunal finding loss on account of transactions in shares was business loss, is a finding of fact : CIT v. SMC Credit Ltd. (Delhi) p. 194

F Interest u/s 234B can be levied against assessee as the computation of income in terms of s 115JA : CIT v. Brindavan Beverages Ltd. (Karn) p. 197

F Collector has no jurisdiction to deduct tax at source on compensation for agricultural land : Risal Singh v. Union of India (P&H) p. 251

F Amount shown in document discovered during search assessable as unexplained investment where presumption of truth of document not rebutted by assessee : Surendra M. Khandhar v. Asst. CIT (Bom) p. 254

F Provision for estimated costs of rendering warranty services allowable expenditure : CIT v. Hinditron Services P. Ltd. (Bom) p. 263

F Petitioner not entitled to complain that transfer pricing order passed without personal hearing where it filing written objections but not availing of opportunity of personal hearing : Intimate Fashions (India) P. Ltd. v. Joint CIT, TPO (Mad) p. 265

F Refusal to condone delay valid where Tribunal finding there was no satisfactory explanation for delay : Bindra Contractors v. Union of India (P&H) p. 269

F Irregularity in procedure not relevant in block assessment : Smt. Sharmishtha Sinha v. CIT (Patna) p. 271

F Authority to consider application for certificate of no deduction of tax at source for year in question in accordance with law : Infrastructure Development Authority v. CIT (TDS) (Patna) p. 278

F Sentence reduced in view of trial for a long period : Parveen Kumar v. ITO (P&H) p. 282

F Intimation by bank for attachment of property does not give cause of action for writ petition : Subashree v. Canara Bank (Mad) p. 285

F Amount received on account of refund of excise duty to be treated as taxable income : CIT v. Aggarwal Steel Rolling Mills (P&H) p. 290

F CBDT to give reasons on consideration of materials available before it : Precot Mills Ltd. v. CBDT (Mad) p. 293

F S 164 not applicable where beneficiaries known and their shares determinate : CIT v. P. Sekar Trust (Mad) p. 305

F Ruling of AAR not binding on Tribunal : CIT v. P. Sekar Trust (Mad) p. 305

F Trust not assessable u/s 164 where shares to be allotted to beneficiaries determinate under trust deed and beneficiaries known : CIT v. Manilal Bapalal Family Benefit Trust (Appex) (Mad) p. 322

F Loan given by employer at rate of interest lower than SBI lending rate : Valuation of concession u/r 3 at difference between SBI lending rate and rate paid by employee valid : All India Punjab National Bank Officer's Association v. Chairman-cum-Managing Director, Punjab National Bank (MP) p. 324

F Tax liability consequent on settlement with Commissioner in previous year deductible : CWT v. Manna Lal Surana (Raj) p. 335

F Tribunal remanding matter to AAC to decide appeal afresh after hearing all Lrs of deceased : Question whether an order can be passed without providing opportunity of hearing to Lrs academic : Smt. Kesar Devi v. CIT (No. 1) (Raj) p. 341

F Notice issued to Lrs after Tribunal deciding appeal for AY 1972-73 by order dated December 17, 1986 beyond time : Smt. Kesar Devi v. CIT (No. 2) (Raj) p. 344

F Information that assessee had shifted her residence and consequent service by speed post : Presumption that notice had been served : Mayawati v. CIT (Delhi) p. 349

F Notice for reassessment can be questioned only on ground of want of jurisdiction : Revathi C P Equipment Ltd. v. Deputy CIT (Mad) p. 384


F No capital gains for reorganisation plan : Dana Corporation, In re p. 178


F Reforms process in tax administration taken forward

The General Budget 2010-11 has carried forward the process of reforms in tax administration in the country. The citizen-centric initiative "Sevottam" which was launched as a pilot project at Pune, Kochi and Chandigarh, will be extended to four more cities this year. The centralized processing centre at Bengaluru is now fully functional and processing around 20, 000 tax returns daily. This initiative aimed at reducing the physical interface between the taxpayers and the tax administration and to speed up procedures and processes, will be taken forward by setting up two more centers during the year.

The Income-tax Department is now ready to notify SARAL-II form for individual salaried taxpayers for the coming assessment year.

The proposals related to indirect taxes are focused to achieve a further degree of fiscal consolidation without impairing the recovery process and moving forward on the road to GST. Project ACES-Automation of Central Excise and Service Tax, has been rolled out in the country. This will impart greater transparency in tax administration and improve the delivery of taxpayer services. Budget proposes to expand the scope of Settlement Commission in respect of Central Excise and Customs so that certain category of cases that hitherto fell outside its jurisdiction may be admitted. [Source : dated February 26, 2010]

F High Courts get powers to condone late income-tax appeals

According to the amendment, brought in the Finance Bill which has empowered the Income-tax (I-T) Department to file appeals, nullifying an earlier ruling by the Supreme Court, the High Courts now have powers to condone delays in filing appeals as per section 260A of the Income-tax Act. The amendment will be effected retrospectively from October 1998.

The amendment follows I-T Department's application to the Supreme Court challenging the Bombay High Court's ruling last year which rejected over 700 appeals.

The I-T Rules stipulate that the appeals could be filed with High Courts 120 days after receiving the order of Income-tax Appellate Tribunal (ITAT). For such appeals, I-T Department approaches the Commissioner of Income-Tax (Appeals), followed by ITAT. Interestingly, although the Bombay High Court had declined condoning the delays, the Delhi High Court had condoned 30 such applications. [Source : dated March 1, 2010]

F Income-tax Department alerts taxpayers not to throw caution away on sharing financial details on internet

The Income-tax Department has alerted taxpayers against sharing personal financial information like PAN card number and credit card details on the internet in the wake of a spurt in fake e-mails being sent to people. Concerned over fictitious and unauthorised e-mails landing in personal internet addresses of many people, the Department has issued an "alert message".

"Information has been received from several quarters that people are receiving electronic mails informing them of their income-tax refunds and seeking their credit card details. It is clarified that the Department does not send e-mails regarding refunds and does not seek any information regarding credit cards of taxpayers. Taxpayers are therefore cautioned that they should not respond to such mails and if they do so it would be at their risk and responsibility," the department's "alert" message said. These are some of the e-mail IDs which have been found to be fake. Unauthorised e-mail addresses could be more than the reported ones and hence taxpayers should avoid them. The IT Department mail is only to be read to keep oneself updated but not to be replied to, the official said.

"Income-tax Department does not send e-mails regarding refunds and does not seek any taxpayer information like user name, password, details of ATM, bank accounts, credit cards, etc. Taxpayers are advised not to part with such information on the basis of e-mails," the department has said at the end of its e-mails.

In case of genuine IT e-mails, they have been appended with a note saying "this is a computer generated mail and calls for no signature," the official said. The Department has also advised taxpayers to keep their user ID and password secure, not share them with any other entity and suggested that the password be changed periodically when checking tax credit statements online. [Source : dated March 1, 2010]

F Finance Minister promises revised DTC draft to India Inc.

The Government has assured India Inc. that it would come out with a revised direct taxes code (DTC) draft and seek their comments before finalising it.

The Government, the Finance Minister said, will consider suggestion of the industry to raise savings limit for personal income tax payers next year. Currently, individuals can seek tax exemption on savings up to Rs. 1 lakh in a year, in addition to Rs. 20,000 in infrastructure bonds.

The Government had come out with the draft DTC which will replace the Income-tax Act of 1961 last August and had sought comments from various stakeholders. The industry had expressed concerns over the provisions of the DTC, including the new method for computing minimum alternate tax (MAT).

The Government may introduce the bill during the Monsoon session, the Finance Minister said, adding thereafter it would go to the standing committee for further scrutiny. Once the report is received from the standing committee, hopefully by the end of the Winter session, he said, the law would be placed before Parliament for final approval.

Besides MAT, concerns have also been raised about the DTC provisions relating to taxation of savings and exemption for housing loans.

The DTC proposed that MAT should be levied on gross assets of a company rather than on book profit as is the current practice. Describing the proposal as retrograde, the chambers said the proposal amounting to imposing wealth tax on productive assets.

As regards savings, the DTC proposed to introduce the EET (exempt exempt tax) model which means all savings be taxed at the time of withdrawal by subscriber. Currently, savings schemes like public provident fund are not taxed at any stage.

The DTC is silent on tax exemption on repayment of home loans. Currently, the repayments up to prescribed limit enjoy tax exemption. [Source : dated February 28, 2010]

F Apex court to reconsider own judgement in "zero tax" cases

A Division Bench of the Supreme Court (SC) felt its earlier ruling in an income-tax case was wrong and referred the question, involving "zero tax" companies which make profits, to a larger bench of three or more judges.

The Assessing Officer recomputed the book profit after allowing depreciation according to Schedule XIV of the Companies Act, which was lower under the Income-tax Rules. This raised a dispute in which the Commissioner of Income-tax (Appeals), the Appellate Tribunal and the Kerala High Court took different views.

The High Court allowed the appeal filed by the Department holding that the Assessing Officer was right in re-computing the book profit for the purpose of section 115J of the Income-tax Act after allowing depreciation as per Schedule XIV to the Companies Act and not as per the rates specified in Rule 5 of the Income-tax Rules, as claimed by the assessee. The Supreme Court stated its earlier ruling on this question required reconsideration. [Source : dated February 22, 2010]

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