Friday, June 4, 2010

INCOME TAX REPORTS (ITR) HIGHLIGHTS ISSUE DATED 7-6-2010 Volume 324 : Part 1

INCOME TAX REPORTS (ITR) HIGHLIGHTS ISSUE DATED 7-6-2010

Volume 324 : Part 1

 

 

SUPREME COURT JUDGMENTS

 

 

>> Rule dealing with valuation of perquisites valid : BHEL Workers Union v. UOI p. 26


>> Form in which to be submitted is to be prescribed by statutory authority : UOI v. Income-tax Bar Association, Lucknow p. 80

>> NTT Act, 2005 : Constitutional validity : Madras Bar Association v. UOI p. 166

>> Penalty leviable even if return discloses no income : Joint CIT v. Saheli Leasing and Industries Ltd. p. 170

HIGH COURT JUDGMENTS



>> Unabsorbed depreciation of amalgamating company cannot be deducted while taking WDV of assets taken over of amalgamated company : CIT v. Silical Metallurgic Ltd. (Mad) p. 29


>> Amalgamation does not affect claim for special deductions u/ss. 80HH, 80-I : CIT v. Silical Metallurgic Ltd. (Mad) p. 29


>> Commissioner (Appeals) can consider grounds not raised before AO : Binny Ltd. v. Asst. CWT (Mad) p. 34


>> Roads, gardens etc. would be land appurtenant to house : Binny Ltd. v. Asst. CWT (Mad) p. 34


>> Amount received as capitation fees not entitled to exemption u/s 10(22) : P. S. Govindasamy Naidu and Sons v. Asst. CIT (Mad) p. 44


>> Reassessment after four years on basis of subsequent assessment not valid : Multiscreen Media P. Ltd. v. UOI (No. 1) (Bom) p. 48


>> Reassessment within four years on basis of additional material discovered in assessment proceedings of a subsequent year valid : Multiscreen Media Private Ltd. v. UOI (No. 2) (Bom) p. 54


>> Levy of penalty not sustainable where disallowance deleted by Tribunal and deletion affirmed by court : CIT v. Chakiat Agencies P. Ltd. (Mad) p. 65


>> No power vested with Commissioner to direct AO to complete assessment in a particular manner : CIT v. Smt. Tasneem Z Madraswala (Mad) p. 67


>> Transport corporation contributing to statutory insurance fund towards third party claims : Actual amount paid by way of insurance alone deductible : CIT v. Kattabomman Transport Corporation Ltd. (Mad) p. 71


>> Assessee taking whole profit from export unit as eligible instead of ratio of export turnover to total turnover : No concealment or misrepresentation by assessee : CIT v. Lakhani India Ltd. (P & H) p. 73


>> Issue not taken in assessment order cannot be taken in appeal : Southern Foundation P. Ltd. v. Asst. CIT (Mad) p. 76


>> Remand in respect of non-compete fees justified : Empee Distilleries Ltd. v. Asst. CIT (Mad) p. 82


>> Failure to consider a ground not ground for appeal to High Court : CIT v. Malladi Project Management P. Ltd. (Mad) p. 87


>> Reasons stated by Commissioner (Appeals) and Tribunal inconsistent with each other : Matter remanded : CIT v. Pentagon Industries (Mad) p. 89


>> Whether average cost of total shares held by assessee or actual cost of shares sold : Not a matter which could be rectified u/s 154 : CIT v. Ranbaxy Holdings Co. (Delhi) p. 92


>> Explanation given by assessee accepted by Commissioner (Appeals) as well as Tribunal and additions deleted : Finding of fact : CIT v. Jas Jack Elegance Exports (Delhi) p. 95


>> Ex gratia payment to employees deductible : CIT v. Maina Ore Transport P. Ltd. (Bom) p. 100


>> Tribunal not justified in holding that amount had not accrued : CIT v. Beirsdorf (India) Ltd. (Bom) p. 106


>> Special deduction u/s 80HHC allowable on basis of book profits and not on basis of eligible profits : CIT v. Jumbo Bag Ltd. (Mad) p. 111


>> Tax effect less than prescribed limit and case not falling within exceptions provided in circular : Appeal not maintainable : CIT v. Oscar Laboratories P. Ltd. (P & H) p. 115


>> Sums received on retirement from firm shown as capital receipt in return and treated as such in original assessment : Subsequent deduction of sum in hands of firm as revenue expenditure not a ground for reassessment : Prashant S. Joshi v. ITO (Bom) p. 154


>> Intimation u/s 143(1) cannot be treated as assessment order : WCI (Madras) P. Ltd. v. Asst. CIT (Mad) p. 181


>> Tribunal finding income escaped assessment : Plea of limitation of four years to be rejected : WCI (Madras) P. Ltd. v. Asst. CIT (Mad) p. 181


>> Long-term capital gains : Assessee entitled to benefit of indexation : CIT v. Anuj A. Sheth, HUF (Bom) p. 191

AUTHORITY FOR ADVANCE RULINGS



>> Mauritius company not having PE in India selling equity shares in Indian company to company organised under Mauritius law : Long term capital gains not taxable in India : E*Trade Mauritius Ltd., In re p. 1

STATUTES



>> Notifications :

Income-tax Act, 1961 : Notification under section 90 : Agreement between the Government of the Republic of India and the Government of the Republic of Finland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
p. 1

NEWS-BRIEF



>> Prudent taxpayers await DTC in early June

The Government said that the revised draft of the Direct Taxes Code (DTC), which is aimed at simplifying the tax structure, would be made available for public comments in the first week of June.

"Revised discussion note on the Direct Tax Code will be revealed in the first week of June and will remain open for (public comments ) for 15 days, by Budget session, it should be a law", said a confident Union Revenue Secretary at the Bengal National Chamber of Commerce and Industry function.

However, it drew flak from certain quarters for its proposals such as imposing a minimum alternate tax on gross assets and taxing long-term savings at the time of withdrawal.

The silence on giving income-tax rebate on housing loans was also criticised and these grievances are expected to be addressed in the revised draft.

The Finance Minister has said that in all nine concerns were considered while revising the first draft.
[Source : www.economictimes.com dated May 24, 2010]


>> Industrial Park Scheme concessions extended further

Under the Industrial Park Scheme, 2008, the undertaking notified under rule 18C of the Income-tax Rules, 1962, which begins to develop and operate or maintain and operate an industrial park anytime during the period beginning the 1st day of April 2006 and ending on the 31st day of March 2009, is entitled to benefits under section 80-IA(4)(iii) of the Income-tax Act, 1961. The Central Board of Direct Taxes (CBDT) has amended the Industrial Park Scheme, 2008 and rule 18C of the Income-tax Rules, 1962 to give effect to the extension of the ending date of operation of the Scheme to March 31, 2011. The Finance Act (No.2) 2009 had extended the ending date of the scheme from March 31, 2009 to March 31, 2011.
[Source : www.pib.nic.in dated May 24, 2010]


>> Proposed taxpayer schemes look to expand I-T 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 event is likely to be inaugurated by the Finance Minister who will also lay out a roadmap of the Department for the future.

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, the CBDT Member said.

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.
[Source : www.economictimes.com dated May 19, 2010]


>> The Centralized Processing Center (CPC) has potential to deliver : FM

The introduction of electronic filing of I-T returns, e-payment of taxes, establishment of the national network (TAXNET), and consolidation of the Regional Computer Centers into the National Data Center have laid the foundation for the next generation administrative reforms in the Income-tax Department. The recent notification of the SARAL II form by the Department would simplify the task of complying with the income-tax reporting requirements for the taxpayer.

Here is the text of the speech delivered by the Finance Minister on the occasion. "Speech of Hon'ble Finance Minister on the occasion of dedication of the Centralized Processing Center (CPC) of the Income-tax Department, Bengaluru to the Nation on May 29, 2010.

It gives me immense pleasure to be here on this occasion of the dedication to the nation of the Centralized Processing Center (CPC) of the Income-tax Department in Bengaluru. Bengaluru, the IT Capital and Silicon Valley of India, was appropriately chosen as the location for the first CPC. The setting-up of CPC is a big step in the utilization of technology for bringing in administrative reforms within the Income-tax Department.

The Income-tax Department had initiated computerization in the 90s with the establishment of the Regional Computer Centers and distribution of PCs to Officers. However, computerization gained momentum since 2003-04 with the introduction of Processing Software, outsourcing of PAN card services and establishment of the Tax Information Network (TIN) for tax payment and TDS reporting.

The objective for technology induction in the Department has been to enhance the capacity of the Department to handle the increase in numbers of taxpayers and to provide better taxpayer services in a systematic manner. Over the past few years, the Department has increasingly focused on e-governance initiatives and building the technological framework to be able to handle challenges of the changing economic environment.

The introduction of electronic filing of I-T returns, e-payment of taxes, establishment of the national network (TAXNET), and consolidation of the Regional Computer Centers into the National Data Center have laid the foundation for the next generation administrative reforms in the Department.

Bulk processing of returns and redesigning the procedures in a centralized facility was determined to be the most efficient way to increase the processing capacity of the Department. The CPC project at Bengaluru was approved by the Union Cabinet at a total cost of Rs. 255 Crore over a 5-year period. It should be endeavour of the Department to achieve economies of scale by automating non-core processes in partnership with the corporate sector and to attain operational excellence by high quality and service compliance levels.

The success of these kinds of initiative depends upon implementation as well as education. The Department faces a huge task of not only educating its own officers and staff, but also taxpayers. I am informed that the Department has already taken steps to educate the taxpayers as well as important stake-holders like State and Central Government deductors for increasing awareness about the issues, which, if not addressed properly, may act as a barrier in realizing the full potential of this Mega IT-Initiative Project.

The tax-policy making process has also undergone the substantial changes with technology induction. I understand that CBDT is making policies, which are system compatible and can easily be implemented using the information technology tools. The recent notification of the SARAL II form by the Department would simplify the task of complying with the income tax reporting requirements for the taxpayer.

The functioning of CPC has been made possible by reengineering key business processes coupled with automation. The working environment of CPC is different from that in the Government. Government employees here have an opportunity to excel while performing duties in this conducive environment, which is on the lines of the private sector and highly challenging.

Technological innovation is key to success in addressing issues relating to voluminous data and repetitive procedures. However, technological limitations invite criticism from those who are at the receiving end. There has been some criticism of computerization in the Department on issues relating to credit of TDS and refunds to the taxpayers.

The computerization projects involving complex legislative framework and evolving international tax jurisprudence are associated with risks and rewards. We should accept these challenges and should not be disappointed with failures. We should try our best to deliver the quality services to the taxpayers keeping in mind the challenges of technological limitations and continue to innovate to make the existing processes and procedures more efficient.

Taking forward tax administration reforms, I have announced setting up two more Centralised Processing Centers during my Budget speech 2010-11, looking to the successful experience of the CPC at Bengaluru. I am happy to announce that Income-tax Department has identified two more locations for setting up CPC at Pune and Maneasar.

With these words I dedicate the Centralized Processing Center of the Income-tax Department at Bengaluru to the nation and wish it all success in the years to come.
[Source : www.pib.nic.in dated May 29, 2010]

 



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