Wednesday, June 29, 2011

(ITR (Trib) HIGHLIGHTS ISSUE DATED 20-06-2011 Volume 9 Part 8


ISSUE DATED 20-06-2011 Volume 9 Part 8


--> Where no proof of gifts received on surrender of tenancy rights penalty imposable u/s. 271(1)(c) : Harish P. Mashruwala v. Asst. CIT (Mumbai) [SB] p. 752

--> Assessee entitled to depreciation in accordance with Appendix I as he had satisfied requirement of second proviso to rule 5(1A) : K. K. S. K. Leather Processors P. Ltd. v. ITO (Chennai) p. 758

--> Appeal to Appellate Tribunal : Person alleging mistaken identity cannot appeal against order of penalty : Hirachand Ebha Wadhel v. ITO (Mumbai) p. 773

--> Interest on deposits as well as copies of returns disclosed prior to date of search, addition to be deleted : Yudhvir Ramlal Meni v. Dy. CIT (Ahmedabad) p. 781

--> Search and seizure : Where seized material not disclosing sale proceeds of shops, addition to be deleted : Yudhvir Ramlal Meni v. Dy. CIT (Ahmedabad) p. 781

--> Where no recording of satisfaction by AO of searched persons, assessment of third person not valid : Smt. P. A. Rani v. Asst. CIT (Chennai) p. 798

--> Housing project : Some units in project exceeding 1500 sq.ft. area, deduction u/s. 80-IB allowed pro rata : Sreevatsa Real Estates P. Ltd. v. ITO (Chennai) p. 808


--> Double Taxation Avoidance Agreement between India and Mozambique notified

--> The Government of India notified the Double Taxation Avoidance Agreement (DTAA) with the Government of Mozambique for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income on May 31, 2011.

--> The DTAA provides that business profits will be taxable in the source State if the activities of an enterprise constitute a permanent establishment in the source State. Profits derived by an enterprise from the operation of ships or aircraft in international traffic shall be taxable in the country of residence of the enterprise. Dividends, interest and royalties income will be taxed both in the country of residence and in the country of source. Capital gains from the sale of shares will be taxable in the country of source. The DTAA further incorporates provisions for effective exchange of information and assistance in collection of taxes between tax authorities of the two countries in line with internationally accepted standards including exchange of banking information and incorporates anti-abuse provisions to ensure that the benefits of the Agreement are availed of by the genuine residents of the two countries. The DTAA will provide tax stability to the residents of India and Mozambique and facilitate mutual economic co-operation as well as stimulate the flow of investment, technology and services between India and Mozambique. [Source : dated June 2, 2011]

--> Black money : CBDT plans global information hub

The Central Board of Direct Taxes (CBDT) is coming up with an information hub with a view to fast-tracking money laundering and tax evasion cases and make exchange of tax-related information easier and faster between India and other countries. The exchange of information unit (EoIU) in New Delhi, a part of the Income-tax Department, will provide and exchange information on issues related to direct taxes - suspicious transactions, tax evasion, money laundering, income generated through business activities by companies in India and abroad, and issues covered under the existing Double Taxation Avoidance Agreement (DTAA).

The unit will act as a nodal point, where all information coming to India from other countries including tax havens shall be processed, classified and disseminated to tax authorities across the country. "It is a two-way process and similar information will be provided to tax authorities abroad", the official said. The implementation is in the final stage and the board is looking out for a location outside the North Block to set up the unit. "The software required to operate this unit is ready and once a location is finalised, the unit will be operational," the official said. However, according to a section of tax officials, the shortage of manpower may affect the functioning of the new unit. [Source : dated June 7, 2011]

Tax evasion may be a criminal offense

In a throwback to the past, the committee on black money is considering making tax evasion a criminal offence. But given the pressure on the Government to crack down on black money, the proposal is back on the table though it might require amendment to the law. The move would create a strong deterrent as evaders simply pay tax and penalty.

In the past, Government had provisions under laws such as FERA to put offenders behind bars even for minor offences. Given the misuse and economic liberalization that led to several controls on foreign capital vanish, the Government repealed it and replaced it with Foreign Exchange Management Act (FEMA). The review is being initiated along with a fresh look at FEMA, Prevention of Money Laundering Act and those dealing with indirect taxes, the official who was present in the committee's meeting said. Members of the committee were also of the opinion that instead of enacting a fresh law to deal with black money, a better option would be to plug the gaps. Given the pressure on the Government to act on black money and corruption, the committee headed by the CBDT chairman has decided that Government agencies would exchange notes in around 10 days and work out the basic structure by the end of June so that the six-month deadline is met.

Dear Friends : The emails are schedule to be posted in the blog ( will sent to the group on various dates and time fixed. Instead of sending it on one day.

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