ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE Dt 8-2-2010 Volume 1 : Part 6

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE DATED 8-2-2010

Volume 1 : Part 6

REPORTS

F On failure of assessee to prove genuineness of transaction, amount received by way of share capital, added as cash credit : Dhingra Global Credence P.Ltd. v. ITO (Delhi) p.529

F Transfer of assets on conversion of proprietary concern into firm, revalued amount deemed to be full value of consideration, no deemd gift : Dharamshibhai B.Shah v. ITO/GTO (Ahd.) p.536

F Where no finding that consideration on sale of stock-in-trade above stated consideration, addition based on fair market value not justified : Asst.CIT v. Excellent Land Developers P. Ltd. (Delhi) p. 563

F Where surrender of income found during survey not connected with levy of penalty u/s 271E for violation of s.269T : Ajay Goel v.Addl. CIT (Delhi) p.569

F Receipt of sum by assessee in lieu of forgoing its right to use premises is not revenue receipt : Assessee holding premises on lease from Municipal Corporation, right as lessee is capital asset : Asst. CIT v. United Motors (I) Ltd. (Mumbai) 578

F Receipt of one-time fee for forgoing right to use property assessable as capital gains : Asst. CIT v. United Motors (I) Ltd. (Mumbai) 578

F Where financial capacity of donors and genuineness of gifts not established, addition justified : ITO v.Smt.Usha Aggarwal (Delhi) 593

F Assessee under duty to pay TDS on behalf of other persons to credit of Govt.: Assessee treated as assessee in default on failure to pay TDS : T.H.E. Makers P. Ltd. v. ITO (TDS) (Delhi) 611

F Where contracts are not interconnected, various sites cannot be considered together in computing minimum period for permanent establishment under art.5(2)(i) of DTAA (Germany) : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

F Where income subject to TDS, interest u/s 234B cannot be charged : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

F Where reimbursement of expenses incurred on travel not involving element of income, not taxable under art.12 of DTAA (Germany) : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

NEWS-BRIEFS

F Supreme Court defines "manufacturing" for Finance Ministry

The Supreme Court has asked the revenue department to take into account the process applicable to the product and not dictionary meaning of "manufacture" to decide the issue of benefits under the provisions of Income-tax Act, Excise Act and Customs Act. The apex court expressed its displeasure over Revenue's failure in such cases, saying the Department was not following its recommendations over the years.

"Repeatedly this court (Supreme Court) has recommended to the Department, be it under Excise Act, Customs Act or the Income-tax Act, to examine the process applicable to the product in question and not to go only by dictionary meanings (of manufacture). This recommendation is not being followed over the years", said a bench comprising Justice SH Kapadia and Justice HL Dattu.

The court dismissed a bunch of appeals filed by the Income-tax Department. In such appeals, the issue was whether twisting and texturising of partially oriented yarn amounts to "manufacture" for the purpose of extending benefits to the assessees in accordance with section 80-IA of the Income-tax Act, 1961.

Ruling in favour of the assessees, the court, however, clarified, "at the outset, we wish to clarify that our judgment should not be understood to mean that per se twisting and texturising would constitute 'manufacture' in every case. In each case, one has to examine the process undertaken by the assessee" .

The structure, the character, the use and the name of the product are distinguishing markings to be taken into account while deciding the question whether the process is a manufacture or not, said court in its order.

The apex court perused its earlier order on the issue. In that order, the court had said, "the term 'manufacture' implies a change, but, every change is not a manufacture, despite the fact that every change in an article is the result of a treatment of labour and manipulation. If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word 'manufacture' ".

The Revenue, however, has amended the Income-tax Act in 2009 to define the word "manufacture". According to it, "manufacture" shall mean a change bringing into existence a new and distinct object or article or thing with a different chemical composition or integral structure.

Then the Department had filed appeals in the apex court in 2010. Dismissing the appeals, the court said, partially oriented yarn is not fit for being used in the manufacture of a fabric. [Source : www.economictimes.com dated January 25, 2010]

F Date for filing ITR-V form extended

The Central Board of Direct Taxes has decided to extend the time limit for filing ITR-V form relating to income-tax returns filed electronically (without digital signature) on or after April 1, 2009, up to March 31, 2010 or within a period of 120 days from the date of uploading of the electronic return data, whichever is later. The ITR-V form should continue to be sent by ordinary post to Post Bag No. 1, Electronic City Post Office, Bengaluru-560100 (Karnataka). However, in cases where e-mail acknowledgement for ITR-V form is not received by the taxpayer from the CPC Bengaluru, the taxpayer may send another duly signed ITR-V form by speed post to Centralized Processing Centre, Electronic City Post Office, Bengaluru, Karnataka-560100.

This has been done in relaxation of the stipulation in Circular No. 3/2009 dated May 21, 2009 which allows taxpayers who file their income-tax returns in electronic form without digital signature to submit their ITR-V form duly verified and signed, within a period of 30 days thereafter to Post Bag No. 1, Electronic City Post Office, Bengaluru, Karnataka-560100, by ordinary post.

The relaxation has been made following requests from taxpayers that, as a one-time measure, the time limit for filing of ITR-V form may be extended to March 31, 2010 and that alternative modes of submission of ITR-V form may also be provided in cases where an ITR-V form has not been received at CPC, Bengaluru by ordinary post. [Source : www.pib.nic.in dated January 27, 2010]

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE Dt 8-2-2010 Volume 1 : Part 6

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE DATED 8-2-2010

Volume 1 : Part 6

 

 

REPORTS

F On failure of assessee to prove genuineness of transaction, amount received by way of share capital, added as cash credit : Dhingra Global Credence P.Ltd. v. ITO (Delhi) p.529

F Transfer of assets on conversion of proprietary concern into firm, revalued amount deemed to be full value of consideration, no deemd gift : Dharamshibhai B.Shah v. ITO/GTO (Ahd.) p.536

F Where no finding that consideration on sale of stock-in-trade above stated consideration, addition based on fair market value not justified : Asst.CIT v. Excellent Land Developers P. Ltd. (Delhi) p. 563

F Where surrender of income found during survey not connected with levy of penalty u/s 271E for violation of s.269T : Ajay Goel v.Addl. CIT (Delhi) p.569

F Receipt of sum by assessee in lieu of forgoing its right to use premises is not revenue receipt : Assessee holding premises on lease from Municipal Corporation, right as lessee is capital asset : Asst. CIT v. United Motors (I) Ltd. (Mumbai) 578

F Receipt of one-time fee for forgoing right to use property assessable as capital gains : Asst. CIT v. United Motors (I) Ltd. (Mumbai) 578

F Where financial capacity of donors and genuineness of gifts not established, addition justified : ITO v.Smt.Usha Aggarwal (Delhi) 593

F Assessee under duty to pay TDS on behalf of other persons to credit of Govt.: Assessee treated as assessee in default on failure to pay TDS : T.H.E. Makers P. Ltd. v. ITO (TDS) (Delhi) 611

F Where contracts are not interconnected, various sites cannot be considered together in computing minimum period for permanent establishment under art.5(2)(i) of DTAA (Germany) : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

F Where income subject to TDS, interest u/s 234B cannot be charged : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

F Where reimbursement of expenses incurred on travel not involving element of income, not taxable under art.12 of DTAA (Germany) : Joint DIT v. Krupp Uhde GmbH (Mumbai) p. 614

NEWS-BRIEFS

F Supreme Court defines "manufacturing" for Finance Ministry

The Supreme Court has asked the revenue department to take into account the process applicable to the product and not dictionary meaning of "manufacture" to decide the issue of benefits under the provisions of Income-tax Act, Excise Act and Customs Act. The apex court expressed its displeasure over Revenue's failure in such cases, saying the Department was not following its recommendations over the years.

"Repeatedly this court (Supreme Court) has recommended to the Department, be it under Excise Act, Customs Act or the Income-tax Act, to examine the process applicable to the product in question and not to go only by dictionary meanings (of manufacture). This recommendation is not being followed over the years", said a bench comprising Justice SH Kapadia and Justice HL Dattu.

The court dismissed a bunch of appeals filed by the Income-tax Department. In such appeals, the issue was whether twisting and texturising of partially oriented yarn amounts to "manufacture" for the purpose of extending benefits to the assessees in accordance with section 80-IA of the Income-tax Act, 1961.

Ruling in favour of the assessees, the court, however, clarified, "at the outset, we wish to clarify that our judgment should not be understood to mean that per se twisting and texturising would constitute 'manufacture' in every case. In each case, one has to examine the process undertaken by the assessee" .

The structure, the character, the use and the name of the product are distinguishing markings to be taken into account while deciding the question whether the process is a manufacture or not, said court in its order.

The apex court perused its earlier order on the issue. In that order, the court had said, "the term 'manufacture' implies a change, but, every change is not a manufacture, despite the fact that every change in an article is the result of a treatment of labour and manipulation. If an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word 'manufacture' ".

The Revenue, however, has amended the Income-tax Act in 2009 to define the word "manufacture". According to it, "manufacture" shall mean a change bringing into existence a new and distinct object or article or thing with a different chemical composition or integral structure.

Then the Department had filed appeals in the apex court in 2010. Dismissing the appeals, the court said, partially oriented yarn is not fit for being used in the manufacture of a fabric. [Source : www.economictimes.com dated January 25, 2010]

F Date for filing ITR-V form extended

The Central Board of Direct Taxes has decided to extend the time limit for filing ITR-V form relating to income-tax returns filed electronically (without digital signature) on or after April 1, 2009, up to March 31, 2010 or within a period of 120 days from the date of uploading of the electronic return data, whichever is later. The ITR-V form should continue to be sent by ordinary post to Post Bag No. 1, Electronic City Post Office, Bengaluru-560100 (Karnataka). However, in cases where e-mail acknowledgement for ITR-V form is not received by the taxpayer from the CPC Bengaluru, the taxpayer may send another duly signed ITR-V form by speed post to Centralized Processing Centre, Electronic City Post Office, Bengaluru, Karnataka-560100.

This has been done in relaxation of the stipulation in Circular No. 3/2009 dated May 21, 2009 which allows taxpayers who file their income-tax returns in electronic form without digital signature to submit their ITR-V form duly verified and signed, within a period of 30 days thereafter to Post Bag No. 1, Electronic City Post Office, Bengaluru, Karnataka-560100, by ordinary post.

The relaxation has been made following requests from taxpayers that, as a one-time measure, the time limit for filing of ITR-V form may be extended to March 31, 2010 and that alternative modes of submission of ITR-V form may also be provided in cases where an ITR-V form has not been received at CPC, Bengaluru by ordinary post. [Source : www.pib.nic.in dated January 27, 2010]

 

--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/

Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."

INCOME TAX REPORTS (ITR) HIGHLIGHTS ISSUE Dt 8-2-2010 Volume 320 : Part 6

INCOME TAX REPORTS (ITR) HIGHLIGHTS ISSUE DATED 8-2-2010

Volume 320 : Part 6

 

 

SUPREME COURT JUDGMENTS

* Twisting and texturising partially oriented yarn entitled to deduction in terms of section 80-IA : CIT v. Emptee Poly-Yarn P. Ltd. p. 665

* Determination of nature of gain or loss on renunciation, the crucial dates are date on which the right comes into existence and date of renunciation of such right : Navin Jindal v. Asst. CIT p. 708

HIGH COURT JUDGMENTS

* Court will not interfere with Tribunal's finding that house was partly used for purpose of business and partial relief of Rs. 1 lakh given by Tribunal : Rotomac Gobals P. Ltd. v. CIT (All) p. 616

* Remanding matter to examine matter afresh by Tribunal not proper where Commissioner (Appeals) examining identity, creditworthiness and genuineness of each of shareholders on merits held in favour of assessee : Bhav Shakti Steel Mines P. Ltd. v. CIT (Delhi) p. 619

* AO to issue notice u/s 143(2) to assessee where information contained in tax audit report does not enable AO to make any prima facie adjustments u/s 143(1)(a) : Peerless General Finance and Investment Co. Ltd. v. CIT (Cal) p. 622

* TRO empowered to investigate any claim or objection in connection with attachment or sale of property : Vishwanath Agarwala v. TRO (Cal) p. 636

* Amount spent by liquor manufacturer on giving free samples to defence establishments deductible : Brihan Maharashtra Sugar Syndicate Ltd. v. Deputy CIT (Bom) p. 658

* Loss due to fluctuation in rate of foreign exchange treated as business loss where assessee obtaining loan in foreign exchange and utilising amount for money-lending and bill discounting business : CIT v. Goyal M. G. Gases P. Ltd. (Delhi) p. 669

* Interest payable by assessee for failure to deduct tax till due date of filing return by payee : CIT v. Trans Bharat Aviation P. Ltd. (Delhi) p. 671

* Revision by Commissioner not valid where notice referring to four issues but order referring to nine issues : CIT v. Ashish Rajpal (Delhi) p. 674

* Opportunity to AO mandatory where assessee itself produce additional evidence before Commissioner (Appeals) : CIT v. Shree Kangra Steel P. Ltd. (HP) p. 691

* Surplus realised on sale of shares by assessee to its subsidiary companies exempt from capital gains : CIT v. Shahibaug Enterprises P. Ltd. (Guj) p. 695

* Amount paid to obtain additional share exempted : Lalitaben Hariprasad v. CIT (Guj) p. 698

* Difference between price of shares allotted to assessee and market price treated as income of assessee : CIT v. Kirtivan D. Kotian (Karn) p. 704

* Surplus received on cancellation of foreign exchange forward contract was a capital receipt not taxable : Deputy CIT (Assessment) v. Garden Silk Mills Ltd. (Guj) p. 720

JOURNAL

* Revenue subsidies vis-a-vis deductions u/s 80-IA, 80-IB or 80-IC (Sanjay Mody, Chartered Accountant) p. 1

* New Dispute Resolution Scheme : A critique (Himanshu S. Sinha, Partner, Associated Law Advisers, Delhi, formerly TPO) p. 12

* Condonation of delay in filing application under section 10(23C)(vi)-(T. N. Pandey, Retd. Chairman, CBDT) p. 17

NEWS-BRIEF

* Finance Ministry rearranges tax intelligence arm to counter evasion

The Finance Ministry has overhauled its income-tax (I-T) intelligence wing in order to speed up investigation of high-value cases of Rs. 10 lakh and above and stop new methods of tax evasion.

Commissioners of Income-tax (CITs) of the Central Information Branch (CIB) will now report to the intelligence wing, headquartered in the national capital.

CIB and the intelligence wing, which were till now performing a support role for the conduct of search and survey operations for the investigation arm of the department, would henceforth independently probe cases of tax evasion, official sources said.

CIB is the nodal office in the department to gather all documents pertaining to transactions in relation to which Permanent Account Number (PAN) or General Index Register Number are given during sale and purchase of property and monetary deposits.

Under the new arrangement, Commissioners (CIB) have been designated as the Directors of Income-tax (DITs), who will report to the Director General of Income-tax, Intelligence.

The intelligence wing would also feed exhaustive taxpayer information to the technology-based database of the department, called 360 degree profiling, sources said.

360 degree profiling enables the Income-tax Department to track all PAN card-based transactions of a taxpayer, including those done by debit and credit cards.

According to official I-T Department guidelines, the intelligence wing "takes up intensive investigation of selected cases or class of cases and develop them for further action or specialised operation. The wing also studies and analyses emerging trends in tax evasion, new modus operandi, create an economic offence data base both in traditional and non traditional fields".

The wing will have enhanced liaison with other enforcement agencies such as the Financial Intelligence Unit, Enforcement Directorate, Directorate of Revenue Intelligence, among others.

The Directorate also has access to all the information received by the department pertaining to Annual Information Return, Tax Deducted at Source, Banking Cash Transactions Tax and Securities Transaction Tax. [Source : www.businessstandard.com dated January 25, 2010]

* Date for filing ITR-V form extended

The Central Board of Direct Taxes has decided to extend the time limit for filing ITR-V form relating to income-tax returns filed electronically (without digital signature) on or after April 1, 2009, up to March 31, 2010 or within a period of 120 days from the date of uploading of the electronic return data, whichever is later. The ITR-V form should continue to be sent by ordinary post to Post Bag No. 1, Electronic City Post Office, Bengaluru-560100 (Karnataka). However, in cases where e-mail acknowledgement for ITR-V form is not received by the taxpayer from the CPC Bengaluru, the taxpayer may send another duly signed ITR-V form by speed post to Centralized Processing Centre, Electronic City Post Office, Bengaluru, Karnataka-560100.

This has been done in relaxation of the stipulation in Circular No. 3/2009 dated May 21, 2009 which allows taxpayers who file their income-tax returns in electronic form without digital signature to submit their ITR-V form duly verified and signed, within a period of 30 days thereafter to Post Bag No. 1, Electronic City Post Office, Bengaluru, Karnataka-560100, by ordinary post.

The relaxation has been made following requests from taxpayers that, as a one-time measure, the time limit for filing of ITR-V form may be extended to March 31, 2010 and that alternative modes of submission of ITR-V form may also be provided in cases where an ITR-V form has not been received at CPC, Bengaluru by ordinary post. [Source : www.pib.nic.in dated January 27, 2010]

* Corporate business restructuring gets a tax fillip

In a ruling that will provide great relief to corporates planning to restructure their businesses, the Authority for Advance Ruling (AAR) held that restructuring of businesses cannot be construed as an exercise for avoiding tax in India.

AAR, a quasi judicial body for settling tax disputes involving foreign entities, in an order last week on an application filed by a foreign group companies, held that any tax benefit resulting from the restructuring of businesses cannot be a ground for income-tax (I-T) authorities to conclude that the entire exercise was for avoiding tax.

The companies' rationale for the amalgamation was based on business and commercial grounds. The group had told AAR that with this amalgamation, all the three overseas entities' assets as well as liabilities would be transferred to the Indian company.

This ground was acceptable to AAR, which held that it is within the legitimate right of the parties to enter into transactions that would help them access the benefits given under the tax statute. The AAR also observed that the contracting parties are not expected to do transactions in a way that would entail any tax liability.

The three foreign entities had moved the AAR in relation to the tax benefits resulting from the amalgamation. The AAR's ruling is binding on the company paying taxes and the I-T department.

The I-T authorities did not dispute the fact that its laws provided exemption from capital gains tax on such cases. However, despite admitting that transfer of capital asset is entitled to exemption provided under section 47 with section 2(1B) of the Income-tax Act, the tax authorities held that since the entire exercise was driven by a motivation to avoid tax, the amalgamation should not be accepted by the AAR. It is this argument the AAR had declined to accept.

The I-T Department had told the AAR that the latter should not make any decision until the High Court decides on the application for amalgamation filed by the group. The I-T Department had proposed to intervene in this application and present its case of adverse revenue implications in the event of the approval of the scheme.

The AAR, however, observed that since the amalgamation includes taking over all assets and liabilities, which also included tax recoverable, tax avoidance cannot be seen as the objective of the foreign group. Besides, the Department is proposing to intervene in the matter in the High Court, it is free to request for appropriate direction for recovery of the I-T arrears. [Source : www.economictimes.com dated January 28, 2010]

* CBDT to cross-verify all high value refunds this fiscal

The Central Board of Direct Taxes (CBDT) has stated that an officer in the Income-tax Department, Mumbai noticed on or about January 12, 2010 that refunds had been issued from his jurisdiction without his knowledge or approval of his higher authorities. The officer immediately brought the matter to the notice of his superior officers.

On internal inquiry by the Income-tax Department, it was found that User Ids and Passwords of certain officers had been fraudulently used to generate refunds in some cases. Upon detection of the fraud, the following actions were taken by the Income-tax Department to contain the damage :-

(i) Stop payment orders were issued. As a result, refund outgo in at least two cases could be prevented.

(ii) Investigation and search action was undertaken by the Directorate of Income-tax (Investigation), Mumbai to detect the bank accounts to which the refunds had been credited and the beneficiaries.

(iii) I-T investigators have identified the bank accounts, beneficiaries and some of the scamsters involved.

(iv) Mumbai police and CBI Mumbai have been informed.

Further actions being taken to prevent the recurrence of such frauds are as follows :-

a) All high value refunds issued during the current financial year will be cross-verified.

b) The system of handling high value refunds will be replaced with a more robust and foolproof system. [Source : www.pib.nic.in dated January 25, 2010]

 

--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/

Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."

Met personally to Mr Meena.

Dear Shri Makwana Saheb,
                                           Today I met to Mr. Meena Saheb. Two Refunds will be issued . One ECS by Indemnity bond. Other cheque was returned back to department. Reissue same again tomorrow.

               One thing is appreciable. He throw out all Tobaccos and other thing. He trtuned to be without Tobacco for ever.
               What I said he got by heart. One thing inmy life I did riight things.
God save him.

C A Shah D J

The INTERNET now has a personality. YOURS! See your Yahoo! Homepage. http://in.yahoo.com/

Quality tax audit scheme: a move to finetune tax assessment

The Central Board of Direct Taxes recently framed a scheme for ensuring quality tax assessments by its officers across India. In the preface to the scheme (issued in December 2009), the CBDT has expressed its concerns on the need for improving the general quality of tax assessments conducted by its officers. While in the past, the CBDT had issued instructions to the range heads (the country is divided into different revenue ranges) to monitor the quality of the tax assessments falling under their jurisdiction, there was no comprehensive plan in place for improving and monitoring the overall quality of tax assessments. While there are separate audit wings, an internal audit mechanism and the Comptroller & Auditor General audits, this scheme is a first of its kind aimed at improving quality of tax assessments by the revenue officers. Although the need for a plan to improve the quality of tax assessments has existed for several years, the CBDT has finally implemented a scheme effective from January 2010.

As per the scheme, the range head has to monitor at least five assessment cases for each of the revenue officers (assessing officers) falling under his jurisdiction. The cases will be jointly selected by range heads and assessing officers. The range heads would give appropriate directions for the guidance of assessing officers regarding the course of investigation to be adopted for completing these assessments in a proper manner and would also monitor the assessment proceedings in these identified cases. Once the assessments are completed, the assessing officers would send a copy of the assessment order to their range heads and to the concerned commissioner of income-tax. Also, monitoring, the scheme deals with quality assessments. The scheme mentions that for quality assessment, the assessing officer has to clearly identify the issues arising for consideration, has to give sufficient opportunity to the taxpayer to give his response, has to evaluate and analyse the response in detail and accordingly give his finding and conclusion in accordance with provisions of the law, resulting in substantial additions to income declared by the tax payer.

The scheme mentions that the cases identified for monitoring by the range head are expected to comply with this criteria of quality assessments and also authorises the chief commissioners of income tax to set monetary thresholds for assessments to qualify as quality assessments, normally not being less than Rs 5lakh, excluding recurring adjustments. Other than the identified...

--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/

Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."

CBDT and ICAI have jointly constituted a study group to identify and address direct tax issues

Central Board of Direct Taxes (CBDT) and accounting rule-maker Institute of Chartered Accountants of India (ICAI) have jointly constituted a study group to identify and address direct tax issues that will affect convergence of India's accounting standards with International Financial Reporting Standards (IFRS).

With IFRS convergence due for April 2011 and the government coming up with the new Direct Tax Code, the suggestions of the study group find relevance. Many provisions in the direct tax code need to be amended for a smooth transition to IFRS, a globally recognised accounting format. The study group will soon finalise and send its recommendations to the government for consideration.

Convergence to IFRS, which forms part of India's commitment at the G-20 summit, will help Indian business entities get into business tie-up and conduct business worldwide.

Apart from income tax law, several other legislations like the Companies Act, SEBI Act, Insurance Act also have to be amended so as to enable a smooth transition to IFRS.

Central Board of Direct Taxes (CBDT) and accounting rule-maker Institute of Chartered Accountants of India (ICAI) have jointly constituted a study group to identify and address direct tax issues that will affect convergence of India's accounting standards with International Financial Reporting Standards (IFRS).

With IFRS convergence due for April 2011 and the government coming up with the new Direct Tax Code, the suggestions of the study group find relevance. Many provisions in the direct tax code need to be amended for a smooth transition to IFRS, a globally recognised accounting format. The study group will soon finalise and send its recommendations to the government for consideration.

Convergence to IFRS, which forms part of India's commitment at the G-20 summit, will help Indian business entities get into business tie-up and conduct business worldwide.

Apart from income tax law, several other legislations like the Companies Act, SEBI Act, Insurance Act also have to be amended so as to enable a smooth transition to IFRS.

--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/

Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE Dt 18-1-2010 Volume 1 : Part 3

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE DATED 18-1-2010 Volume 1 : Part 3

REPORTS

F Waiver of term loan availed of by assessee not assessable as income : Accelerated Freez and Drying Co. Ltd. v. Dy. CIT (Cochin) p. 226

F Sum received from NRE account of NRI, not to be added as cash credit : Amritraj S. Punamiya HUF v. ITO (Mumbai) p. 242

F No interest for delay in TDS due to technical lapses in a public institution : ITO v. Registrar, Cochin University of Science and Technology (Cochin) p. 252

F Gain on cancellation of forward foreign exchange contracts is business income but 90% thereof liable to be reduced from profits for purpose of deduction : Dy. CIT v. Intergold (I) Ltd. (Mumbai) p. 257

F Amendment to section 10A(3), extending period of exemption is substantive : Dy. CIT v. Intergold (I) Ltd. (Mumbai) p. 257

F Loan advanced to shareholder : Payments made cannot be reduced from deemed dividend : Amount credited in loan account by way of remuneration cannot be set off against loan : Rajesh P. Ved v. Asst. CIT (Mumbai) p. 275

F Where no material establishing consideration paid higher than declared in sale deed, deletion of amount added as unexplained investment : ITO v. Fitwell Logic System P.Ltd. (Delhi) p. 286

F Sub-contractor, meaning of : Assessee taking vehicles on hire for executing contract : Liability of hirers not established : Tax need not be deducted : Mythri Transport Corporation v. Asst. CIT (Visakhapatnam) p. 290

F Carry out, meaning of : Mythri Transport Corporation v. Asst. CIT (Visakhapatnam) p. 290

F Licence under Factories Act obtained subsequent to commencement of production irrelevant for purpose of section 80-IB : Priya Printek v. ITO (Ahd.) p.302

F Deduction under s. 80-IB only after deducting unabsorbed depreciation as well as current year depreciation : Priya Printek v. ITO (Ahd.) p.302

F Where assessee joint-owner of property along with his brother on date of transfer and utlising long-term capital gains for constructing additional floor, not entitled to exemption under s. 54F : Asst. CIT v. T.N. Gopal (Chennai) p.309

NEWS-BRIEFS

F Bankers warn risks on exposure to infra funding

Bankers have demanded special facilities to meet the demands of huge funds for the infrastructure projects. Indian Banks' Association (IBA) in its meeting asked the Government and the Reserve Bank of India to do the needful to help them fund infra projects.

To overcome asset liability mismatch constraints, the bankers have demanded the exemption of the infrastructure bonds from capital gains under section 54EA and investments under section 88 of the Income-tax Act. To enhance the ability of banks to provide medium-term financing to infrastructure projects, banks could be permitted to issue senior bonds with maturity lower than five years. The RBI should consider providing cash reserve ratio (CRR) and statutory liquidity ratio (SLR) exemption to infrastructure bonds floated by banks.

Primary constraints for banks in financing infrastructure arises from their funding structure and applicable liquidity ratios. Bank resources are mainly in the form of deposits, which are typically of maturities up to three years. On the other hand, infrastructure sector requires long-term financing for a period extending beyond 15 years. Apart from asset-liability mismatch (ALM), interest rate risk and pricing are also key issues.

The Deputy CEO, IBA also feels the need of large amount of funds, long gestation period and ALM are some of the basic problems being faced by the banks.

RBI has permitted the banks to go for infra bonds to the extent of infra lending with a maturity period beyond five years. Also, the RBI has asked them to raise bonds and go for debt. Still, no bank is raising capital in this way since they will have to give an interest rate of 9 per cent. to their investors. Then things like CRR & SLR come in the way, which compel them to charge an interest rate of 11-12 per cent. while lending to infra projects. The bankers had raised this issue during their meeting with the Finance Minister in June.

IBA earlier had formed a special committee to examine the set of problems faced by various banks in funding core sector. The report of the internal working group of IBA was submitted during its managing committee meeting held in Mumbai.

The report has outlined that banks should be permitted to go for takeout financing in a big way and fiscal incentive should be provided to the banks. The resource mobilisation for the infra funding must be exempted from relevant Income-tax Act, so as to make money cheaper for infra financing.

On fiscal side, capital gains should be made attractive to investors through fiscal measures, the report said.

Currently, two kinds of prudential limits are in force-group and single exposure. In single exposure, the banks are permitted to fund up to 25 per cent. while for groups, banks can take leverage of up to 50 per cent. But bankers feel that it is not enough keeping in view the ever increasing demands of credit from the sector which is also required by the Government's increasing focus on infra spending. As per an estimate, total exposure of the banks to the sector is valued at Rs. 1,30,000 crore. [Source : www.financialexpress.com dated December 31, 2009]

F A troubled tax code go to Law ministry for redrafting

With the consultation process for the direct taxes code over, the proposals on taxation for salaried employees and income from house property may undergo some changes.

There could also be a relook at the proposals on the minimum alternate tax, capital gains tax, double-taxation avoidance agreement, general anti-avoidance rule, taxation of charitable organisations and foreign companies, and taxing investment at the withdrawal stage.

According to the code, income from a house, which is not occupied for the purpose of any business by its owner, will be taxed under the "income from house property" head. [Source : www.businessstandard.com dated January 7, 2010]

 

--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/

Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."