INCOME TAX REPORTS (ITR) HIGHLIGHTS ISSUE DATED 7-3-2011 Volume 331 Part 4
HIGH COURT JUDGMENTS
-->> Appeal to High Court : Commissioner directed to move Board for instructions to withdraw appeals or references where tax effect less than prescribed : CIT v. Vitessee Trading Ltd. (Bom) p. 433
-->> Reassessment beyond four year period on basis of SC ruling for disallowing section 80HHC deduction in toto not permissible : CIT v. Baer Shoes (India) P. Ltd. (Mad) p. 435
-->> Financial institution writing off part of its loan to the company and claiming no deduction in respect of loan : Amount not assessable u/s 41 : CIT v. Tosha International Ltd. (Delhi) p. 440
-->> Revised return after search not entitled to exclusion of income from block assessment : CIT v. K. P. Chandradasan (Ker) p. 443
STATUTES AND NOTIFICATIONS
-->> Bill :
Budget Speech of Minister of Finance for 2011-12 :
Part - A p. 21
Part - B p. 46
FINANCE BILL, 2011 p. 56
Notes on Clauses p. 103
Memorandum explaining the provisions in the Finance Bill, 2011 p. 131
-->> Notifications :
Income-tax Act, 1961 : Notification under section 10(23C)(vi) : Approved institutions p. 160
-->> C. B. D. T. Circulars/Orders :
Income-tax Act, 1961 : Order under section 119(2)(b) : Extension of time limit for filing ITR-V Forms p. 160
HIGHLIGHTS OF FINANCE BILL 2011
-->> Tax rates
Basic exemption limit for a. y. 2011-12 raised to Rs. 1,80,000 : basic exemption limit for women, Rs. 1,90,000 : Basic exemption limit for senior citizens (above 60 years of age) Rs. 2,50,000 : basic exemption limit for very senior citizens (80 years and above) Rs. 5 lakhs
Surcharge for domestic companies reduced to 5 % : for other companies to 2 %
Slabs remain the same as for a. y. 2010-11
-->> Exemptions
Definition of "charitable purpose" : monetary limit in respect of receipts from activity in nature of trade, commerce or business, etc., raised from Rs. 10 lakhs to Rs. 25 lakhs, s 2(15) wef 1-4-2012
Exemption for specific notified perquisites and allowances of serving and retired Chairmen and Members of the Union Public Service Commission, new cl (45) in s 10 wref 1-4-2008
Exemption of specified income of notified body or authority or Trust or Board or Commission, new cl (46) in s 10 wef 1-6-2011
Infrastructure Debt Fund : income of notified fund, exempt, new cl (47) in s 10 wef 1-6-2011 : interest received by non-resident fund taxable at 5 % on gross interest, s 115A wef 1-6-2011 : tax deductible at five per cent. by such notified infrastructure debt fund on interest paid to non-resident, new s 194LB wef 1-6-2011
-->> Deductions
Weighted deduction for contribution made for approved scientific research programme raised from 175 per cent. to 200 per cent. s 35(2AA) wef 1-4-2012
Deduction in respect of specified businesses : new businesses specified : developing and building a housing project under a Government scheme for affordable housing and production of fertiliser in India commenced after 1-4-2011 : s 35AD(8)(c) wef 1-4-2012 : loss of "specified business" claiming deduction under section 35AD allowed to be set off against the profit of another "specified business" whether or not eligible, s 73A, wef 1-4-2011
Contribution by Central Government or other employer to pension scheme under section 80CCD(2) excluded from limit of Rs. 1 lakh provided under section 80CCE, s 80CCE wef 1-4-2012 : contribution paid by employer towards a pension scheme up to ten per cent. of employee's salary allowed as deduction : s 36(1)(iva) wef 1-4-2012
Deduction for investment in long-term infrastructure bonds extended for one year : s 80CCF wef 1-4-2012
Extension of terminal date for power sector up to 31st March, 2012, s 80-IA(4)(iv) wef 1-4-2012
No deduction for undertakings engaged in commercial production of mineral oil for blocks licensed under contract awarded after 31st March, 2011, s 80-IB(9) wef 1-4-2012
-->> Transfer pricing
Percentage variation below which no adjustment made to be notified by Government : s 92C wef 1-4-2012
Jurisdiction of TPO to extend to international transactions other than those referred to him, noticed in the course of proceedings : s 92CA(2A) wef 1-6-2011
TPO to exercise power of survey under section 133A : s 92CA(7) wef 1-6-2011
Due date for filing of return of income with transfer pricing report by corporate assessees 30th November of assessment year : s 139 wef 1-4-2011
Anti-avoidance measures to discourage transactions by resident with persons in jurisdictions which do not effectively exchange information with India, new s 94A wef 1-6-2011
-->> Companies
Dividends received from foreign subsidiary to be taxed at lower rate of 15 %, new s 115BBD wef 1-4-2012
Higher rates of tax on income distributed by debt funds : 25 % where distributed by money market fund, etc. and 12.5 % in case of other fund to individual or HUF : 30 % in all other cases : s 115R(2) wef 1-6-2011
Exemption for dividend distribution tax in case of SEZ to cease, ss 10(34), Expln. 115-O wef 1-4-2011
-->> Minimum alternate tax
Rate of MAT raised to 18½ % from 18% : section 115JB(1) wef 1-4-2012
Alternate minimum tax regime for LLPs, new Chapter XII-BA wef 1-4-2012
Exemption for MAT in case of SEZ to cease, s 115JB wef 1-4-2012
-->> Income-tax authorities
Power of discovery and inspection, enforcing attendance of any person and examining him on oath, compelling production of books of account and other documents and issuing commission for purpose of enquiry or investigation in relation to double taxation avoidance agreements, new sub-s (2) in s 131, s 133 wef 1-6-2011
-->> Settlement of cases
Assessee subject to search can file application for settlement if additional income-tax payable on income disclosed in application exceeds Rs. 50 lakhs : Entities related to such assessee subject to search also allowed to file application for settlement, if additional income-tax payable exceeds Rs. 10 lakh, s 245C(1) wef 1-6-2011
Power to Settlement Commission to rectify orders within a period of six months, new sub-s (6B) in s 245D (s 22D of W. T. Act) wef 1-6-2011
-->> Non-residents
Non-residents to file annual information providing prescribed details as regards liaison offices in India, new s 285 wef 1-6-2011
-->> Miscellaneous
-->> Power to exempt persons from filing returns, new sub-section (1C) in s 139, s 296 wef 1-6-2011 [Proposal to exempt salaried persons having no other income under this provision]
-->> Time taken in obtaining information from tax authorities in jurisdictions situated outside India to be excluded from time limit for assessment or reassessment : new cl. (viii) in Expln. 1 to s 153 wef 1-6-2011
-->> SERVICE TAX
-->> New services to be taxed
Services provided by air-conditioned restaurants having licence to serve alcoholic beverages
Short-term accommodation provided by hotel, inn, guesthouse, club or campsite for continuous period of less than three months
-->> Existing services expanded
Life insurance service to include re-insurance
Club or association service to include service provided to non-members
Authorized service station service to include services to all motor vehicles other than goods carriage and three-wheeler scooter auto-rickshaws and services of decoration and similar services in respect of vehicles
Business support services to include operational or administrative assistance
Legal consultancy services to included service to individuals in relation to advice, consultancy or assistance in any branch of law, representational service and service of arbitration provided by an arbitral tribunal to business entity
Commercial training or coaching service to include unrecognized courses
Health services to include diagnostic services, provided by a centrally air-conditioned (wholly or partially) clinical establishment having more than 25 beds for in-patient treatment and services provided by a clinical establishment with the aid of laboratory or other medical equipment and services provided by a doctor from the premises of such establishment
-->> Services exempted
Organizer of business exhibitions in relation to business exhibitions held outside India
25% abatement from receipts for transport of goods through coastal and inland shipping
Works contract for construction or finishing of new residential complex under Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana
Services provided within port or airport specified purposes
Rashtriya Swasthya Bima Yojana
Air freight excluded from taxable value of transport of goods by air service
Transportation of goods by road, rail or air when both origin and destination outside India
Refund of service tax to SEZ units and developers
-->> Rates of service tax on travel by air revised wef 1-4-2011
Domestic travel (economy class) from Rs. 100 to Rs. 150
International travel (economy class) from Rs. 500 to Rs. 750
Domestic travel (other than economy class) 10% (standard rate)
-->> Other amendments
Exemption on membership fees under "club or association service" representing industry or commerce from 16-6-2005 to 31-3-2008
Exemption on inter-State or intra-State transportation of passengers in a vehicle bearing contract carriage permit or a tourist vehicle permit from 1-4-2000 to 6-7-2009
Monetary limit of Rs. 1 lakh for adjustment under rule 6(4B)(iii) of Rules raised to Rs. 2 lakh wef 1-4-2011
Option to insurers to pay sum based on gross premium
Sale and purchase of foreign exchange : composition rate reduced from 0.25% to 0.1% of the gross amount of currency exchanged towards discharge of service tax liability
Service tax self-assessed and not paid recoverable with interest without recourse to section 73
Value of money changing service defined
Value of telecommunication services to be gross amount charged by telegraph authority from service receiver
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