Thursday, January 20, 2011

ITR : Volume 330 : Part 4 Issue dated 24-01-2011



ISSUE DATED 24-1-2011

Volume 330 Part 4





>>> MAT : Interest can be charged on tax calculated on book profits for failure to pay advance tax : Joint CIT v. Rolta India Ltd. p. 470



>>> Brought forward unabsorbed loss and deficiencies of earlier years to be adjusted first before granting special deduction u/ss 80-I and 80HH : Modi Nagar Paper Mills Ltd. v. Deputy CIT (All) p. 405

>>> Requirement of filing audit report along with return only wef 1-7-1995 : Failure for earlier years : Penalty cannot be imposed : S. V. Pathak and Co. v. N. C. Tewari, CIT (Bom) p. 410

>>> Additional Director competent to issue warrant of authorisation : Sunil Dua v. CIT (Delhi) p. 413

>>> Inclusion of jewellery proper where genuineness of Will not proved : Sunil Dua v. CIT (Delhi) p. 413

>>> Deposits not huge amounts : Explanation of assessee to be accepted : Sunil Dua v. CIT (Delhi) p. 413

>>> Concurrent finding by authorities that amount disclosed in audit reports, balance-sheets and regular returns of income : Finding of fact : CIT v. Modern Engineering Works (Delhi) p. 416

>>> Payee showing amount in its return and paying tax : Reassessment proceedings quashed : CIT v. Rainee Singh (Delhi) p. 417

>>> Settlement of cases : Notice u/s 142(1) based on material discovered during search operation not valid : Smt. Neeru Agarwal v. UOI (All) p. 422

>>> Mere change in sub-heading in books of account : Not entitled to make additions u/s 41 : CIT v. Auto Kashyap India P. Ltd. (Delhi) p. 435

>>> NBFC : Interest on intercorporate deposit not received for more than six months : Interest does not accrue : CIT v Vasisth Chay Vyapar Ltd. (Delhi) p. 440

>>> Receipts from freight and insurance packing charges, sales tax set off and gross service income : Ninety per cent. to be excluded from profits of business : CIT v. Dresser Rand India P. Ltd. (Bom) p. 453

>>> Interest on deposits not allowable : CIT v. Dresser Rand India P. Ltd. (Bom) p. 453

>>> Purchase of immovable property by Central Government : Valuation whether as on date of agreement with original allottee or with assignee or as on date of determination : Matter remanded : R. N. Soin and Sons P. Ltd. v. Appropriate Authority (Delhi) p. 455

>>> Interest on loans obtained by assessee to settle liability of its sister concern to retain business premises of assessee allowable : CIT v. Neelkanth Synthetics and Chemicals P. Ltd. (Bom) p. 463

>>> Tribunal finding investments not belonging to assessee but to family members as well : Finding of fact : CIT v. Chandulal Chhugani (Chhattisgarh) p. 467

>>> Assessee trust having imparting education as one of its objects entitled to registration u/s 12A : Director of I. T. v. Garden City Educational Trust (Karn) p. 480



>>> Rules :

Special Economic Zones (Sixth Amendment) Rules, 2010
p. 5

>>> C. B. D. T. Circulars :

Circular No. 5 of 2010 : Corrigendum
p. 5

Circular No. 8 of 2010, dated 13th December, 2010.-Income-tax deduction from salaries during the financial year 2010-11 under section 192 of the Income-tax Act, 1961
p. 22

>>> Notifications :

Income-tax Act, 1961 : Notifications under section 35(1)(ii)/(iii) : Scientific research associations
p. 19

Income-tax Act, 1961 : Notification under section 35AC(1) Expln., clause (b) : Eligible projects or schemes
p. 75

Income-tax Act, 1961 : Notification under section 80-IB(10)(a), (b) : Scheme for slum redevelopment
p. 19

Income-tax Act, 1961 : Notification under section 90 : Avoidance of double taxation and mutual administrative assistance in tax matters among Governments of SAARC Member States
p. 6



>>> I. T. Dept. to process more than 40 lakh cases to avoid refund chaos

The Income-tax Department will process more than 40 lakh refund cases before April this year.

The Department has streamlined the process as the statutory time limit to process the return and issue refund in the financial year 2009-10 is March 31 and almost 49 lakh such cases worth crores of rupees are pending with the Department.

However, a number of such refunds have been processed already.

"The Department is hopeful of dispatching all these returns by March this year. Cases where the addresses are recorded incorrect, Permanent Account Number (PAN) is wrong and incorrect particulars of bank accounts result in backlogs," a senior I-T officer said.

Many refunds will be sent back to the taxpayers through the Refund Banker Scheme, which is operational in a number of cities with the help of State Bank of India (SBI), they said.

An I-T officer said the Finance Ministry has asked the Central Board of Direct Taxes (CBDT) to expedite the process and the Board has subsequently instructed the Department to process the refunds on a "prompt" basis.
[Source : dated January 13, 2011]

>>> Prospects look good to raise the exemption limit on savings

To give some relief to common man battling rising prices, the Finance Minister is expected to raise the exemption limit on annual savings of an individual in the upcoming Budget.

The savings exemptions may be raised in the Union Budget 2011-12 from the present Rs. 1 lakh. In 2010-11, the Finance Ministry allowed an additional exemption of Rs. 20,000 for investment in long-term infrastructure bonds.

The Minister is expected to raise the Rs. 1 lakh exemption limit by another Rs. 20,000 in the Union Budget in February, a Cabinet Minister told. Besides pushing up the savings rate, this would align the current income-tax regime towards the proposed Direct Taxes Code (DTC).

"This year is going to be an year of consolidation towards DTC," a top official in the Finance Ministry had said recently. In the DTC, the Government has proposed tax exemption on annual savings of up to Rs. 1.5 lakh.

The tax exemptions for savings is received under section 80C of the Income-tax Act while the special window of Rs. 20,000 investment in infrastructure bonds is available under section 80CCF. The tax exemption for savings limit of Rs. 1 lakh when increased, will give an additional cushion to the common man who is grappling with price rise already.

"The deduction under section 80CC of Rs. 1 lakh was prescribed long back keeping in view the fact that there are very limited exemptions to deductions available to a common taxpayer. It makes a strong case to increase the level under section 80C to provide some tax relief and also increase potential for long term retiral savings," said a partner from a tax consultancy firm.
The savings of Indian households was Rs. 7,34,653 crore in 2007-08, of which over 55%, or Rs. 4,06,630 crore, is in bank deposits, according to the latest RBI figures. Bank deposits as defined by RBI, includes co-operative and non-credit societies. There has been a consistent shift in household savings away from physical assets towards financial assets.
[Source : dated January 14, 2011]

>>> Pre-budget fears over banning fake NGOs

The demand for a ban on fake non-governmental organisations and a tax regime to identify them in the forthcoming Budget have come from none other than the NGOs themselves.

In a pre-budget interactions with Finance Minister, NGOs pleaded for reining in fake organisations, ostensibly floated for the welfare of the vulnerable sections of society.

They said any kind of tax concessions given to NGOs should be conditional on the assessment of their work.

However, for the genuine NGOs they wanted modifications in the proposed Direct Taxes Code, which is scheduled to replace the Income-tax Act from April 1, 2012.

A former SEBI Chairman who represented Jaipur Foot, said organisations asked for restructuring of DTC proposals.

Currently, NGOs registered under certain sections of the Income-tax Act get various kinds of tax concessions.

However, the Direct Taxes Code bill proposes that charitable and not-for-profit organisations (NGOs) will be allowed a basic exemption of Rs. one lakh and any income over it will be liable to 15 per cent. tax.

The Bill also proposes to tax anonymous donations for NGOs at the rate of 30 per cent. as against the rate of 15 per cent. applicable to other donations.

The 30 per cent. tax will fall on the donations above Rs. one lakh or five per cent. of total donations received by the NGO, whichever is higher.

NGOs also called for green budget that will address the issue like climate change, terming nuclear energy as false solution and coal as dirty option.

"If India as a country is serious about giving energy to all, then we need to think beyond false solutions like nuclear energy and dirty options like coal and invest in decentralized renewable energy," NGO Greenpeace said.
[Source : dated January 16, 2011]

>>> I-T Dept. searches triggering alarm over food prices

The Income-tax Department surveyed business premises of big onion and vegetable traders in U. P., Maharashtra and few other States to detect hoarding and illegal profiteering.

IT sources said the officials of the Income-tax Department began an early morning operation of checking and obtaining the account books and ledgers of large wholesale onion traders based in Delhi and NCR.

Meanwhile, traders in Maharashtra's Nashik and adjoining onion-growing areas went on two-day strike against I-T raids and disrupted supply to traders from other States who are being forced to sell the vegetable at "below the cost price".

The Finance Minister had earlier said I-T raids in the premises of different traders have also helped in reducing onion prices.

There has been a "dip in onion prices in some States after I-T search," he had said. Food inflation has crossed over 18 per cent. for the week ended December 25 due to high rates of onion and other items.

Due to crop damage in key growing States, the country's total onion production is expected to decline by 12.5 per cent. to 10.5 million tonnes this year against 12 million tonnes in 2009-10, according to research body National Horticultural Research and Development Foundation (NHRDF).
[Source : dated January 10, 2011]

>>> Trade Union calls for changes to enhance tax exemption

Tax Amid skyrocketing prices, Central trade unions are all set to press the Finance Ministry for raising income-tax exemption limit to Rs. 3 lakh from existing Rs. 1.6 lakh in the 2011-12 Budget, in their meeting scheduled for Wednesday.

Besides this, the unions would ask to universalise and strengthen public distribution system and rationalise tax, duty and cess on petroleum products, with a view to reduce burden on people.

"We have unanimously decided that all nine central trade unions would ask the Finance Minister to enhance income-tax exemption limit to Rs. 3 lakh," All India Trade Union Congress Secretary said.

He said, "The common man is reeling under the price rise situation and would ask the Finance Minister for universalising of PDS and rationalisation of taxes on petroleum products including petrol, diesel and cooking gas."

The central trade unions, he said, would also ask the Ministry to enlarge the ambit of Employees Provident Fund (EPF) scheme by reducing threshold limit of 20 employees to 10.

At present, only those private establishments which have 20 or more employees come under this EPF scheme. Reducing the threshold limit to 10 would help covering 45-50 lakh more workers under this mandatory social security scheme, he added.

The Employees' Provident Fund Organisation's apex body Central Board of Trustees have already approved the reduction in threshold limit to 10 long back. But this move is awaiting Finance Ministry's approval.

The union members would also press for making EPFO's Employee Pension scheme more sustainable, by fixing the minimum pension at Rs. 1,000 per month. Besides this, they will also ask for restoring benefits like pension withdrawal by workers under EPS.

They would express their reservations against allowing foreign direct investment in multi-brand retail and further disinvestment of public companies. They would also ask for not allowing industrial house in banking business.
[Source : dated January 11, 2011]


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