Thursday, March 17, 2011

ITR : Volume 332 : Part 1 Issue dated 21-03-2011

INCOME TAX REPORTS (ITR) HIGHLIGHTS

SUPREME COURT JUDGMENTS

   >> Committee on Disputes suggested by SC outlived its utility : Electronics Corporation of India Ltd. v. UOI p. 58

   >> Extra-territorial jurisdiction : Power of Parliament : G. V. K. Industries Ltd. v. ITO p. 130

HIGH COURT JUDGMENTS

   >> Notice u/s 16(4)(i) of Wealth-tax Act calling for return : No further necessity for notice u/s 16(4)(ii) : Best judgment assessment valid : CWT v. Motor and General Finance Ltd. (Delhi) p. 1

   >> Relief u/s 80-IA to be reduced from profits and gains of business before computing relief u/s 80HHC : Great Eastern Exports v. CIT (Delhi) 14

   >> Assessee not entitled to simultaneous deduction u/ss 80-IB and 80HHC by virtue of specific exclusion u/s 80-IB(13) : Olam Exports (India) Ltd. v. CIT (Ker) p. 40

   >> For computation of deduction under any section under heading C of Chapter VI-A profits of business not to be reduced by profits of business allowed u/s 80-IA(1) : Associated Capsules P. Ltd. v. Deputy CIT (Bom) 42

   >> Complaint dismissed where inordinate delay in proceedings : Rakoor Industries P. Ltd. v. R. L. Bali, ITO (Delhi) p. 56

   >> Special deduction u/s 80-IA : Depreciation not claimed by assessee had to be deducted : CIT v. Parle Plastics Ltd. (Bom) p. 63

   >> Tribunal finding lending money constituted substantial part of business of company : Loan not assessable as deemed dividend : CIT v. Parle Plastics Ltd. (Bom) p. 63

   >> Cash in hand in excess of Rs. 50,000 of individuals and HUFs : Assessable : CWT v. Smt. K. R. Ushasree (Ker) p. 75

   >> Provision for opportunity to assessee to be heard by Valuation Officer : No further opportunity to be given before AO : CWT v. Vardhman Polytex Ltd. (P&H) p. 81

   >> Delay in audit by auditor appointed under Act not attributable to assessee : Delay in filing return to be condoned : Bombay Mercantile Co-operative Bank Ltd. v. Central Board of Direct Taxes (Bom) p. 87

   >> Transport subsidy and interest subsidy not includible while computing special deduction u.s 80-IB : CIT v. Meghalaya Steels Ltd. (Gauhati) p. 91

   >> Notice of transfer of case to trust without giving reasons not valid : Noorul Islam Educational Trust v. CIT (Mad) p. 97

   >> No evidence that AO had considered accounts and found them complex : Order for special audit and consequent assessment not valid : Alidhara Texpro Engineering P. Ltd. v. Deputy CIT (Guj) p. 115

   >> Tax contemplated by s 179 does not include penalty and interest : H. Ebrahim v. Deputy CIT (Karn) p. 122

   >> Recovery of tax : Liability of director of private company must prove absence of gross neglect or misfeasance or breach of duty : H. Ebrahim v. Deputy CIT (Karn) p. 122

   >> AO making inquiries, eliciting replies before treating expenses as revenue expenditure : Not a case of lack of inquiry : CIT v. Sunbeam Auto Ltd. (Delhi) p. 167

    STATUTES AND NOTIFICATIONS

   >> C. B. D. T. Instructions :

    Instruction No. 3 of 2011, dated 9th February, 2011-Revision of monetary limits for filing of appeals by the Department before Income-tax Appellate Tribunal, High Courts and Supreme Court-Measures for reducing litigation-Regarding p. 1

   >> Press Notes/Releases :

    Tax Information Exchange Agreement between India and Bermuda p. 4

    JOURNAL

   >> Amendments in relation to Settlement Commission (V. B. Srinivasan, Retd. Chairman, Income-tax Settlement Commission) p. 17

   >> Charitable purposes and MAT on SEZ (K. Srinivasan, Former Member, CBDT) p. 13

   >> Direct tax laws could have been left untouched (T. C. A. Ramanujam and T. C. A. Sangeetha, Advocates) p. 6

   >> Tax evaded money abroad-Does the Finance Bill tackle it ? (S. Rajaratnam, Retd. Member, I. T. A. T.) p. 1

    NEWS-BRIEF

   >> GST moves forward as Cabinet clears Constitutional Amendment Bill

    The introduction of goods and services tax (GST) system has moved a step forward, with the Union Cabinet giving its nod for introduction of a Constitutional Amendment Bill in Parliament.

    A constitutional amendment is required to introduce a dual GST system in the country. The proposed Bill will, among other things, empower the Centre to tax goods at the point of sale. Currently, the Centre can levy tax only at the manufacturing stage and not at the point of retail sale. The Bill will also empower States levy tax on services.

    The Union Cabinet has cleared the fourth and final draft of the Constitutional Amendment Bill, official sources said. All the previous three drafts were opposed by State Governments citing autonomy issues.

    Indications are that the Constitutional Amendment Bill, which is likely to be introduced in the ongoing Budget session, will specify that the GST Council for taking decisions on all important matters would be formed through a Presidential order. Also, the composition of the GST Dispute Resolution Authority will be decided by Parliament.

    Last year, a draft of the Constitutional Amendment Bill had suggested that a GST Council Chaired by the Union Finance Minister with States as members would be formed to decide on changes in GST rates. However, many States were opposed to special powers being conferred on the Union Finance Minister to veto matters on State GST. [Source www.thehindubusinessline.com dated March 16, 2011]

   >> Union Budget 2011 : No filing of tax returns if salary is the only source of income

    In a big relief from cumbersome tax filing process for the salaried taxpayer class, the Finance Minister proposed to exempt them from filing tax returns unless they have other sources of income, as filing of a return is duplication.

    Salaried taxpayers who do not have other sources of income and whose incomes are subject to Tax Deduction at Source (TDS) will be excluded from filing returns.

    The Government will be issuing a notification exempting "classes of persons" from the requirement of furnishing income-tax returns, said the Memorandum to the Finance Bill, 2011.

    The decision, which will come into effect from June 1, 2011, will reduce the compliance burden on small taxpayers, it added.

    Every person whose income exceeds the taxable limit is required to file return of income. [Source : www.economictimes.com dated March 1, 2011]

   >> Union Budget 2011 : Finance Minister gives more relief to taxpayers, and enhance senior citizens category

    In some relief to general taxpayers, the Finance Minister enhanced the tax exemption limit by Rs. 20,000 to Rs. 1.80 lakh, gave additional benefits to senior citizens but excluded women from additional sops.

    The Minister in his budget proposals for 2011-12 has lowered the age for senior citizens to 60 years from 65 years now. Besides, a new category of "very senior" citizens of 80 years and above has been introduced with no tax on their income up to Rs. five lakh.

    Senior citizens will get tax exemption for income up to Rs. 2.5 lakh, higher from Rs. 2.4 lakh now, and very senior citizens (80 years and above), will not have to pay any tax for annual income up to Rs. 5 lakh.

    However, income of very senior citizens between Rs. 5 lakh and Rs. 8 lakh will attract a tax of 20 per cent. and above Rs. 8 lakh 30 per cent.

    The general taxpayers will have to pay 10 per cent. tax on income between Rs. 1.8 lakh and Rs. 5 lakh ; 20 per cent. between Rs. 5 lakh and Rs. 8 lakh ; and 30 per cent. on income above Rs. 8 lakh.

    The exemption limit for women taxpayers will be Rs. 1.9 lakh. They will have to pay 10 per cent. tax on income between Rs. 1.9 lakh and Rs. 5 lakh ; 20 per cent. between Rs. 5 lakh and Rs. 8 lakh ; and 30 per cent. for income above Rs. 8 lakh.

    In case of senior citizens (between 60 and 80 years), the exemption limit has been raised to Rs. 2.5 lakh from Rs. 2.4 lakh. They will have to pay 10 per cent. on income between Rs. 2.5 lakh and Rs. 5 lakh ; 20 per cent. between Rs. 5 lakh and Rs. 8 lakh ; and 30 per cent. on income above Rs. 8 lakh.

    For very senior citizens (80 years and above), there will be no tax on income up to Rs. 5 lakh. They will have to pay 20 per cent. on income between Rs. 5 lakh and Rs. 8 lakh and 30 per cent. above Rs 8. lakh. [Source : www.economictimes.com dated February 28, 2011]

   >> Union Budget 2011 : Finance Minister proposes new simplified tax return form 'Sugam'

    To reduce compliance burden of small taxpayers, the Finance Minister proposed to introduce a new simplified income-tax return form "Sugam" to reduce the compliance burden of small taxpayers who fall within the scope of presumptive taxation.

    The Income-tax Department will launch 58 more Aaykar Seva Kendra (ASK) or the Sevottam centre scheme for serving taxpayers more efficiently. ASK is a pilot project initiated by the I-T Department to set up a one-stop service centre for enquiries.

    "The three pilot projects of Aaykar Seva Kendras (ASKs) under CBDT have come of age. CBDT will commission eight more such centres this year. In 2011-12, another fifty ASKs will be set up across the country," the Minister said in his Budget speech. Currently, these pilot projects are at Pune, Cochin and Chandigarh. Besides, the Centralised Processing Centre (CPC) at Bengaluru has increased its daily processing capacity from 20,000 to 1.5 lakh returns in 2010-11.

    He added CBDT will provide a separate web-based facility to enable a direct, stand-alone interface for taxpayers with the I-T Department, so that they can report and track the resolution of their refunds and credit for prepaid taxes.

    The Finance Minister also proposed to launch a new scheme with an outlay of Rs. 300 crore to provide assistance to States to modernise their stamp and registration administration and roll out e-stamping in all the districts in the next three years.

    "With the development of the economy, the need to review the provisions of the Indian Stamp Act, 1899 has been felt over the years. I propose to introduce a Bill shortly to amend the Indian Stamp Act," he added. [Source : www.economictimes.com dated February 28, 2011]

   >> Union Budget 2011 : Marginal increase in income-tax exemption limit and more sops to peg fiscal deficit

    Income-tax exemption limit for individuals has been raised from Rs. 1.6 lakh to Rs. 1.8 lakh, giving a relief of Rs. 2000 to every taxpayer, in the Budget for 2011-12 which widened the Service Tax net to cover more services that will raise the cost of air travel, hotel accommodation and those who drink in AC restaurants.

    Presenting his third Budget in the Lok Sabha, the Finance Minister preferred not to roll back central excise duty levels to November 2008 and kept it at 10 per cent. while he levied a nominal one per cent. central excise duty on 130 items that will enter the tax net.

    Basic food and fuel items will continue to be exempted while the new levy will not apply to precious metals and stones. Jewellery made of gold, silver and precious metals sold under brand name would be covered by the new levy.

    Minimum Alternate Tax on book profits of companies has been raised from 18 to 18.5 per cent. and the lower rate of Excise Duty raised from 4 to 5 per cent.

    The Finance Minister's income-tax sops included reducing eligibility age of senior citizens from 65 to 60, creating a new category of "Very Senior Citizens" of 80 years and above who will be eligible for a higher exemption limit.

    The Minister estimated a net revenue loss of Rs. 200 crore in the Budget. The proposal related to indirect taxes are estimated to result in a net revenue gain of Rs. 11,300 crore, including Rs. 4000 crore on Service Tax expansion, while the proposals on direct taxes are expected in a revenue loss of Rs 11,500 crore.

    The Budget for next year pegs the fiscal deficit at 4.6 per cent. of GDP for 2011-12 which works out to Rs. 4,12,817 crore. Gross tax receipts are estimated at Rs. 9,32,440 crore, an increase of 24.9 per cent. over Budget estimates for 2010-11.

    Net non-tax revenue receipts for the next financial year are estimated Rs. 1,25,435 crore. The total expenditure proposed for 2011-12 is. Rs. 12,57,729 crore. Plan expenditure will be Rs. 4,41,547 crore, an increase of 18 per cent and non-Plan expenditure will be Rs. 8,16,182 crore, an increase of 10.9 per cent. over Budget estimates of 2010-11. [Source : www.economictimes.com dated February 28, 2011]



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