ITR HIGHLIGHTS ISSUE DATED 19-9-2011 Volume 337 Part 2

INCOME TAX REPORTS (ITR) HIGHLIGHTS

 

ISSUE DATED 19-9-2011

Volume 337 Part 2

 

    HIGH COURT JUDGMENTS

 

|->> Disclosure u/s. 132(4) : Income included in return and tax paid : Not a case of concealment of income : CIT v. Bhandari Silk Store (P&H) p. 153

 

|->> Interest on delayed payment of enhanced compensation : Inference of cash system of accounting : Taxable in year of receipt : CIT v. Karambir Singh (P&H) p. 159

 

|->> Tribunal finding transaction bogus and sustaining addition : Finding of fact : Papneja Traders v. CIT (P&H) p. 172

 

|->> Consideration not arising out of business but is long-term capital gains : S. 28(va) does not apply : CIT v. Mediworld Publications P. Ltd. (Delhi) p. 178

 

|->> Block assessment : Addition solely on basis of estimate by Valuation Officer not valid : CIT v. Kantilal B. Kansara (HUF) (Guj) p. 187

 

|->> Reassessment after four years to disallow deduction on ground it was capital expenditure not valid : Parle Sales and Services P. Ltd. v. ITO (Guj) p. 203

 

|->> No evidence that assessee had given cash to person searched or had received commission : Block assessment of assessee not valid : CIT v. Radhey Shyam Bansal (Delhi) p. 217

 

|->> Undisclosed income : Failure by assessee to prove that concession was as a result of intimidation, duress and coercion : No evidence that confession made as a result of mistaken belief of law or facts : Asst. CIT v. Hukum Chand Jain (Chhattisgarh) p. 238

 

|->> Compounding of offences not possible after filing complaint : Anil Batra v. Chief CIT (Delhi) p. 251

 

AUTHORITY FOR ADVANCE RULINGS

 

|->> Service of conducting seismic surveys and providing onshore seismic data acquisition and other associated services : Taxable u/s. 44BB : Bergen Oilfield Services AS, Norway, In re p. 167

 

|->> Employees of non-resident deputed to Indian subsidiary for performing managerial functions : Salary and benefits paid to expatriate employees by non-resident employer and reimbursed by Indian subsidiary are fees for included services accruing to non-resident : Verizon Data Services India P. Ltd., In re p. 192

 

|->> Tax resident of Norway providing sea logistics services for ONGC fall with s. 44BB : Siem Offshore Inc., In re p. 207

 

STATUTES AND NOTIFICATIONS

 

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

 

    Circular No. 5 of 2011, dated August 16, 2011-Income-tax deduction from salaries during the financial year 2011-12 under section 192 of the Income-tax Act, 1961 p. 37

 

JOURNAL

 

|->> Unfair not to consider human body as plant in Income-tax assessments in business or profession (T. N. Pandey, Retd. Chairman, CBDT) p. 19

 

NEWS-BRIEF

 

|->> DTC would come into force from April next year

 

    The Finance Minister hoped that the Direct Taxes Code (DTC), which seeks to replace the Income-tax Act of 1961, would come into force from April 1, 2012. The DTC is an ambitious tax reform that will replace the half a century old direct tax laws.

 

    On the Goods and Services Tax (GST), he said, "We are on track . . . there has been some progress".

 

    He said both the Centre and the Empowered Committee of State Finance Ministers were in talks for implementation of the GST regime.

 

    Besides Parliament, the GST Bill needs to be cleared by half of the State Assemblies. Once implemented, GST would subsume most of the indirect taxes, like excise duty.

 

    On economic prospects this fiscal, the Finance Minister said agricultural output is expected to be good. Besides, a better show by the core sector industries would help the country in achieving economic growth in the coming quarters.

 

    While the Reserve Bank has pegged the economic growth for 2011-12 at 8 per cent, the Prime Minister's Economic Advisory Council has estimated it at 8.2 per cent.

 

    The Indian economy expanded at the slowest pace in six quarters by 7.7 per cent. in the first (April-June) quarter of the current fiscal. It was 8.8 per cent. in the corresponding period last fiscal.

 

    The output of eight infrastructure industries rose at its fastest pace in 15 months in July at 7.8 per cent., against 5.7 per cent. in the corresponding period last fiscal. [Source : www.economictimes.com dated September 2, 2011]

 

|->> IT-Agents carry firearms to crack tax evaders and money laundering

 

    "The Special Agents and agents will be able to carry firearms after the Directorate of Criminal Investigation (DCI) is operationalised in the Income-tax Department soon," a top officer of the Department, privy to the development, said.

 

    The Finance Ministry has recently notified bringing under one umbrella the intelligence and criminal investigation units of the Income-tax Department to effectively deal with terror financing cases and transactions that pose threat to national security.

 

    The Department will now recruit Special Agents and Agents (Criminal Investigation) under the new wing, half of whom would be recruited or brought on deputation from premier investigative agencies and police organisations of the country.

 

    The DCI will be headed by the Director General of Intelligence (Income-tax) and was notified in May this year to tackle the menace of blackmoney with cross-border ramifications.

 

    The new arrangement, first in Income-tax Department's history, will be duly notified. [Source : www.financialexpress.com dated September 7, 2011]

 

|->> India Signs DTAA with Uruguay

 

    The Agreement will provide tax stability to the residents of both countries, facilitate mutual economic cooperation and stimulate the flow of investment, technology and services.

 

    The Government of the Republic of India signed a Double Taxation Avoidance Agreement (DTAA) with the Oriental Republic of Uruguay for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income and on capital on September 8, 2011. The Agreement was signed by the Chairman, Central Board of Direct Taxes on behalf of the Government of India and by the Ambassador of Uruguay to India, on behalf of the Oriental Republic of Uruguay.

 

    The DTAA provides that business profits will be taxable in the source state if the activities of an enterprise constitute a permanent establishment in that state. Such permanent establishment includes a branch, factory, etc. Profits of a construction, assembly or installation projects will be taxed in the state of source if the project continues in that state for more than six months.

 

    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 royalty income will be taxed both in the country of residence and in the country of source. However, the maximum rate of tax to be charged in the country of source will not exceed 5% in the case of dividends and 10% in the case of interest and royalties. Capital gains from the sale of shares will be taxable in the country of source and tax credit will be given in the country of residence.

 

    The Agreement further incorporates provisions for effective exchange of information including banking information and assistance in collection of taxes between tax authorities of the two countries in line with internationally accepted standards including anti-abuse provisions to ensure that the benefits of the Agreement are availed of by the genuine residents of the two countries.

 

    The Agreement will provide tax stability to the residents of India and Uruguay and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between India and Uruguay. [Source : www.pib.nic.in dated September 8, 2011]