Thursday, May 27, 2010

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE DATED 31-5-2010 Volume 3 : Part 5

 

Reports

 

->> When specific method suggested to determine profit of entire project takes care of undervaluation of closing stock, no separate addition required : Desai Real Estate Developers v. ITO (Panaji) p. 439

 

->> Expenses incurred for leasehold premises are revenue in nature : Asst. CIT v. SET India P. Ltd. (Mumbai) p. 454

 

->> Finding that service fees paid by principal was at arm's length : Addition in hands of agent u/s. 92 not justified : Asst. CIT v. SET India P. Ltd. (Mumbai) p. 454

 

->> Gift from holding company of assessee given voluntarily without consideration not income : Asst. CIT v. SET India P. Ltd. (Mumbai) p. 454

 

->> Bad debts : Amounts written off in books offered to tax in earlier years allowable : Asst. CIT v. SET India P. Ltd. (Mumbai) p. 454

 

->> Incremental liability towards leave encashment of salary on actuarial valuation , deductible : Asst. CIT v. SET India P. Ltd. (Mumbai) p. 454

 

->> Objection to jurisdiction taken for first time before Tribunal in second round of litigation permissible : Shrimant F.P. Gaekwad (Decd.) v. Asst. CIT (Ahd.) p. 476

 

->> Building of erstwhile Ruler and lands appurtenant thereto exempted : Shrimant F.P. Gaekwad (Decd.) v. Asst. CIT (Ahd.) p. 476

 

->> Grant of approval to trust u/s. 80G to be considered independently of deeming provisions of section 80G(5)(vii) : Vidya Institute v. CIT (Delhi) p. 491

 

->> Cross-objection at assessee's instance in its own appeal not maintainable u/s.253(4) : Vidya Institute v. CIT (Delhi) p. 491

 

->> Interest accrued on debentures cannot be allowed u/s. 40(a)(ia) as tax not deducted at source : Dy. CIT v. Umang Dairies Ltd. (Delhi) p. 497

 

->> Where genuiness of gifts not proved, addition of alleged gifts to income justified : Rajinder Kumar Mittal v. Asst. CIT (Delhi) p. 508

 

    NEWS-BRIEFS

 

 

->> Finance Ministry temporarily suspends e-filing of income-tax returns

    The Finance Ministry has temporarily suspended the facility for e-filing of income-tax returns as it could not procure a security certification for the Income-tax Department's website in time.

 

    "Pending completion of the certification procedure, the e-filing facility for assessment year 2010-11 has been temporarily suspended . . . The facility is expected to be renewed very shortly", an official release said.

 

The Department has initiated the process for renewal of the security certificate of its e-filing portal, which expired on May 8, 2010, it added. The security certification, which is provided by specialised agencies, indicates that adequate safeguards have been taken to protect data from unauthorised access.

 

The Government had introduced the system for mandatory filing of income-tax returns by corporates in electronic format from assessment year 2006-07.

   

The temporary suspension of e-filing of returns, the release added, will not affect taxpayers, as the due date for submitting income-tax return for assessment year 2010-11 is July 31, 2010. The e-filing portal of the Income-tax Department remains fully secure and the lapse of the security certificate does not mean that its security features are slackened or compromised, it said. [Source : www.economictimes.com dated May 17, 2010]

 

->> Government keen to address areas of concern in impending DTC draft

 

The Government has said that it has identified nine areas of concern in the Direct Taxes Code (DTC) draft, and they would be taken into consideration while it is being redrafted.

 

The revised discussion paper would soon be put up for public comments, after which the DTC bill will be tabled in Parliament during the monsoon session, the Finance Minister said.

 

The Minister said that the second draft of the code would be put in the public domain soon.

 

Last year, the Finance Ministry had come out with the first discussion paper on the DTC, proposing that tax slabs be widened sharply. As per the proposals, the highest tax liability of 30 per cent. was to fall on people with an annual income of above Rs. 25 lakh, against the current level of over Rs. 8 lakh. It had proposed similiar widening for other tax slabs too.

 

But the draft also proposed that long-term savings be taxed at the time of withdrawal, and the minimum alternate tax (MAT) be calculated against the gross assets of the companies concerned. These proposals evoked sharp reactions from the industry as well as the public.

 

The Finance Minister also said that the Government has written to 65 countries, asking them to make exchange of information more effective and remove the secrecy clause.

 

"Twenty low or no-tax countries have been identified for negotiating and signing tax information exchange agreement", the statement added.

 

Among other matters, the Finance Minister said that two more Centralised Processing Centers (CPC) would be set up this year. "The first one at Bengaluru has enabled faster processing of tax returns and better records management", he said.

 

The Minister further stated that the Refund Banker Scheme would be extended to more cities this year. The scheme enables speedier refunds to the bank accounts of taxpayers.

 

The statement said that the scheme was introduced in nine more cities last year, taking the number to 15. Under the scheme, tax refunds are transmitted to the State Bank of India for distribution among taxpayers. [Source : www.economictimes.com dated May 19, 2010]

 

->> A host of new taxpayer services to be introduced this year by Income-tax Department

 

With the present Income-tax Act proposed to be replaced by the Direct Taxes Code (DTC) next year, the I-T Department is planning to introduce a host of services related to processing of tax returns and refunds in the current fiscal.

 

The Department will also observe 150 years of the introduction of the first ever Income-tax Act in 1860, as it will celebrate the "Income Tax day" on July 24 this year.

 

The event is likely to be inaugurated by the Finance Minister who will also lay out a roadmap of the department for the future.

 

"This is the last year of the 1961 Income-tax Act. This year, a number of taxpayer programmes of the department can be initiated and completed", a CBDT Member said.

 

The Department, this fiscal, is planning to set up an independent Tax Deducted at Source (TDS) directorate while fast processing of tax returns and technological upgrade of tax refunds are the other core issues, he said. The revenue accrued from TDS has been constantly growing over the years and with the increase in the number of service organisations across the country, the share from under this category of taxes is bound to grow. According to estimates, the TDS revenue contributes almost 40 per cent. to the direct taxes kitty.

 

Programmes like the Refund Banker scheme, presently on in 15 cities of the country, will also be extended to other locations this fiscal.


 

The DTC, aimed at simplifying the tax structure, is proposed to be introduced in April next year and will ultimately replace the Income-tax Act, 1961, bringing all other direct taxes, including wealth tax, under its purview.

 

The Finance Minister had said that if a reasonable level of discussion happens on the code, a bill could be placed in the Winter Session of Parliament.

 

According to the Finance Ministry records, the first Income-tax Act which was introduced in India in 1860 received the assent of the then Governor General and was modelled on the English Statute. [Source : www.economictimes.com dated May 19, 2010]

 

->> Jeevan Akshay-VI approved for income-tax deduction

 

The Central Government have approved Jeevan Akshay-VI Plan of the Life Insurance Corporation of India as an annuity plan eligible for deduction under clause (xii) of sub-section (2) of section 80C of the Income-tax Act, 1961.

 

Persons who have invested in this plan during the financial year 2007-08 or subsequently (relevant assessment year being 2008-09 and subsequent assessment years) will be eligible for deduction of the amount invested from their total income chargeable to income-tax. The benefit will, however, be limited to the overall ceiling of Rs. 1,00,000 available for deductions under section 80C. [Source : www.pib.nic.in dated May 19, 2010]

 

->> Taxpayers complacent about getting their income-tax records rectified

 

Despite the fact that the income-tax authorities have requested people to fill in rectification forms, many have neglected to do so, which means that the amount could resurface as outstanding dues in future.

 

Those who feel they have been wrongly charged under section 234C or TDS, should approach the concerned officer individually so they can make the change manually along with tax return acknowledgment and Form 16 to verify the facts.

 

One lakh people have filled in a special rectification form that has been prepared by the Department. Yet, this is but a third of the total number of taxpayers who have received such notices. Those who are lagging behind have chosen not to file for correction either in the belief that the system will make the necessary change automatically, or because the CAs who file their returns have not advised them to do so.

 

"Most people are quick to panic once they receive any notice from the I-T Department,'' an I-T Officer said. "Yet, this time, they have not completed their due diligence as they know several others are affected, and they feel the system will handle it on its own accord. It is advisable that they approach us to set the records straight.''

 

Six officers, most of them women, are processing each application manually, entering the recovery amount as "nil" after verifying the details on the income-tax acknowledgment form as well as Form 16. This eliminates the error from the I-T records and the amount will not show up in the assessee's records later. [Source : www.economictimes.com dated May 19, 2010]



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