Wednesday, July 6, 2011
Capital gain on sale of property is assessable in that assessment year only
Once assessee should excess consumption of raw material....
IT : Once assessee should excess consumption of raw material, natural inference was that there would be excess production which would have been sold outside books of account and, thus, matter was to be remanded back to Commissioner (Appeals) with a direction to make separate addition in respect of excess consumption of raw material as deemed sales - [2011] 11 taxmann.com 425 (Agra - ITAT)(TM)
Merely because appeal memo is not signed by all legal representatives, it c
Income-tax : As per section 159, every legal representative is personally liable to the extent of interest in the estate inherited by him and he being deemed assessee under section 159(3), is to be treated as an assessee aggrieved as contemplated under section 246A, and, therefore, entitled to file appeal subject to fulfillment of other conditions [Section 159 of the Income-tax Act, 1961 - Legal representatives] - [2011] 10 taxmann.com 101 (Mum. - ITAT)
Tuesday, July 5, 2011
Where FMV declared by assessee was more than FMV declared by DVO, estimatio
Activity of assembling wind mills would amount to 'manufacture' as well as
Payment made by Indian customers to Singapore Company for use of telecom ne
Income-tax : The payment made by the Indian customer to Singapore company for use of telecom network infrastructure is not royalty for the use of equipment, it is the royalty for the use of `process' [Section 90 of the Income-tax Act, 1961 read with Article 12(3) of the Indo-Singapore DTAA - Double Taxation Relief - Where agreement exists (Royalties and Fees for Technical Services)] - [2011] 10 taxmann.com 93 (Chennai - ITAT)
Monday, July 4, 2011
When Commissioner (Appeals) calls for remand report in a case.
Exclusion of income up to date of search is permissible only if time for fi
Types of frauds by promoters or companies.
Types of frauds by promoters or companies
Posted in Company Law Type: News on June 29, 2011
Methods or types of frauds by promoters or companies:
During the course of investigation by SFIO over the years, different types of frauds/fraudulent activities have been unearthed. Some of the types of frauds are illustrated below:
(a) Project Financing:
In one of the cases investigated by SFIO, it was noticed that an Indian company imported second hand plant and machinery from its parent company at a very high price. This over valued plant and machinery was used to obtain higher term loans from funding institutions. The loan amount thus obtained was transferred to parent company as payment liability against such plant and machinery. It was also noticed that the Indian company had received different invoices for majority of its machinery for submission to different Government agencies.
(b) Frauds during operations:
In one of the cases investigated by SFIO, it was noticed that an Indian company raised bills showing trading of diamonds among its various group companies in circular manner viz company "A" selling to "B", then "B" selling to "C" and again "C" selling back to "A". Thus, in this process, no goods were transferred and only sale and purchase bills were raised. These bills were discounted with banks and the company received huge amount of rupees as advance from banks against such bills. Initially the company complied in repayment of amount specified in the discounted bills after prescribed period. However, after sometimes, payment was stopped and main promoter of the company who was controlling all the affairs of the company fled the country and the company stopped functioning resulting into huge amount of bank funds becoming NPA.
In some cases investigated by SFIO, huge payments were shown to have been made to petty suppliers of steel items or to group companies during the period of construction of project by recording of supply of materials made by these entities. All these supplies were reflected in the books of account as work-in-progress, which was not verifiable, and during the course of investigation, these petty suppliers were found either nonexistent or not traceable. Group companies were also found to be either woundup or non-operational with no director of those companies being traceable. Funds transferred to these entities showing supply of material were found to have been taken out in cash by rotating through certain accounts or showing payments for certain non-verifiable expenses.
(c) Falsification of Financial Statements:
In some cases investigated by SFIO, it was found that, by following two accounting years, company was showing losses or very nominal profit in the Profit & Loss account filed to the Income tax department. However, huge profit was being shown in the Profit & Loss accounts filed with stock exchanges, ROC etc. The different amount of profits in the two sets of Profit & Loss Account for the same year was shown by resorting to valuation of stock at inflated value in the Profit & Loss Account that was filed with ROC, Stock exchanges following the accounting year other than financial year. In few cases, sales having heavy profit margin were recorded in those months, which were included in the accounting year followed for preparing the Profit & Loss Account filed with ROC and used for the purposes of investors or other stakeholders.
Source: MCA
Sunday, July 3, 2011
Bundle of case law
2011-TIOL-387-HC-AHM-IT
Vinodbhai Arvindbhai Patel Proprietor Shakti Construction Vs ITO (Dated: May 3, 2011)
Income tax – Sections 147, 148, 149, 150 – Whether when assessment is framed as per remand order of the Tribunal, re-assessment can be initiated even after completion of six years from the end of the assessment. - Assessee's appeal allowed: GUJARAT HIGH COURT;
2011-TIOL-369-ITAT-COCHIN + depreciation story
Dy.DIT, Ernakulam Vs Adi Sankara Trust (Dated: June 16, 2011)
Income Tax - Sections 11, 12A, 32(1) - Whether when assessee, a charitable body, has already claimed deduction for acquisition of capital assets as application of money, the further claim of depreciation on the same assets would amount to double benefits. - Revenue's appeal allowed : COCHIN ITAT;
2011-TIOL-368-ITAT-MUM
The Tata Power Co Ltd Vs Addl.CIT, Mumbai (Dated: May 31, 2011)
Income Tax - Sections 54EC, 72, 74 - Whether when assessee has long-term capital gains, the stage of setting off of long-term capital loss comes only after grant of exemption u/s 54EC. - Revenue's appeal allowed: MUMBAI ITAT;
2011-TIOL-367-ITAT-CHD
M/s Vodafone Essar Ltd Vs Addl.CIIT, Chandigarh (Dated: April 7, 2011)
Income Tax - Sections 14A, 40(a)(ia), 80IA, 115JB, 143(3), 144C(13), 194C, 195, 220(6), 226(3) - Whether when Sec 80IA benefits are debatable, the Tribunal is right in granting conditional stay of high-pitch demand raised - Whether, to do justice to the cause of Revenue, Tribunal is right in directing the assessee to pledge its investments in subsidiaries as security with the AO for the balance demand. - Case disposed of: CHANDIGARH ITAT;
2011-TIOL-366-ITAT-MAD
M/s Rane Brake Lining Ltd Vs ITO, Chennai (Dated: April 21, 2011)
Income tax – Sections 14A, 80HHC, 80IB – Whether disallowance can be made u/s 14A for the interest on borrowed fund even if it is explained that the funds utilised for investments are not borrowed funds – Whether 90% of the rent recovered as sublet is to be excluded from the profit eligible for deduction u/s 80HHC while computing the deduction – Whether the deduction u/s 80HHC is to be allowed after reducing the deduction u/s 80IB. - Assessee's appeal partly allowed : CHENNAI ITAT;
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