TR'S TRIBUNAL TAX REPORTS (ITR (Trib))
ISSUE DATED 20-12-2010
-> Assessee furnishing note along with return disclosing all relevant material facts and explanation bona fide ; penalty cannot be imposed u/s. 271(1)(c), Expln. 1 : Mimosa Investment Co. P. Ltd. v. ITO (Mumbai) p. 789
-> Revision justified where deductions allowed on technical know-how fees and accrual of interest income on deposits without recording reasons for not considering disallowance in earlier years : Frick India Ltd. v. Dy. CIT (Delhi) p. 802
-> Failure on part of assessee to establish expenses incurred solely for protection and advancement of common interests of members, deduction u/s. 44A(1) or (3) not allowable : Dy. CIT v. Gymkhana Club (Delhi) p. 808
-> Notional provision for half yearly interest on account of cumulative deposit shown in general ledger reversed on next working day, amount credited had never accrued to payee, TDS not obligatory : Bank of Maharashtra v. ITO (Ahd) p. 824
-> Finance Minister appreciates Income-tax Department's professional competence to rescue telecom dues
The Department at present expects the Rs. 2,500 crore in tax collection for the Telecom major's case. At a review meeting held involving Chief Commissioner of Income-tax, Director-General of Income-tax (Inv.), Commissioners of Income-tax at Mumbai, and CBDT Chairman, the Finance Minister exhorted the tax officers to put their best foot forward to achieve the budget collection target fixed for the Mumbai region.
Advance tax in the Mumbai region has been growing at 18 per cent. and with the TDS collection now catching up and the Rs. 2,500 crore that the Department expects to collect in the Vodafone case, the budget collection target would be met from the Mumbai region, the Income-tax Chief Commissioner (Mumbai) said.
In the financial year 2006, the collection from the Mumbai region was Rs. 53,164 crore while this fiscal, the target is Rs. 1,50,480 crore. Now, the collection from the Mumbai region has been targeted to increase three-fold in a span of five years.
The Minister said the Mumbai region should not find it difficult to meet the collection target, given the high GDP growth trajectory into which the country's economy has catapulted itself. The Minister called upon the Income-tax Department to draw plans for training its manpower and for capacity-building so as to be able to implement the Direct Taxes Code in its true spirit.
Income-tax Department needs to reinvent itself to meet the challenges to be faced while implementing the Direct Taxes Code, he said. The Department should concentrate on its core functions of tax enforcement and recovery, taxpayer awareness and education, and on upcoming tools like data-mining, risk-profiling and risk assessment, he said. He exhorted the officers to maintain their efforts in this direction and directed that all appeals should be filed on time in the future. [Source : www.businessstandard.com dated December 12, 2010]
-> Trading firms, corporate investors get income-tax notice for "under-reporting" income
The Income-tax Department is learnt to have sent notices to over a dozen proprietary stock trading firms and corporate investors, for alleged "under-reporting" of taxable income for the assessment years 2006-07 and 2007-08.
The notices have been sent to entities which availed of the rebate against Securities Transaction Tax (STT) to reduce their tax liabilities to zero or pay very low taxes. The broking firms have been asked to pay the difference with an interest rate of 12%. Three broking firms, which received the notice confirmed the development. An official at the Income-tax Department too confirmed that the notices were sent, and many more are in the pipeline.
"Brokers have been asked to pay MAT, where the liability will be 15% of the book profit. It is applicable when you are showing a loss or your net profit is less than book profit", said an income-tax official, adding the notices were part of the reassessment exercise under which the earlier years' income-tax returns filings are randomly scrutinised to check for compliance with applicable rules. The move has rattled the large proprietary trading firms as they fear huge claims from the Income-tax Department in the coming days.
"The demand has been raised under section 271(1)(c) of the Income-tax Act, relating to concealment of income", said the chartered accountant of a broking firm that received the notice, adding, "the dispute here is about the calculation of tax, and not concealment of income".
The securities transaction tax was introduced by the then Finance Minister, P. Chidambaram, in the Union Budget 2004-05. Every share transaction - be it delivery based or non-delivery based - attracted tax. But proprietary trading firms and corporate investors could claim a rebate to the extent of the STT paid, on their business income.
Brokers say that many proprietary trading firms, which generated huge STT, helped corporate investors lower their tax liability, by "selling" them the excess STT for a fee. They did this by transferring some of their trades into the accounts of the corporate investors. That could have been the main reason for the Government scrapping the rule allowing brokers to claim a rebate against STT, in the Union Budget 2009-10. [Source : www.economictimes.com dated December 11, 2010]
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