PRESS RELEASE: FINANCE MINISTER & CBDT HARSH ON CA FATERNITY

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PRESS RELEASE: 

FINANCE MINISTER &

CBDT HARSH ON CA FATERNITY

 
7 REASONS: WHY SHOULD CBDT EXTEND TIME

 

INSPITE OF THE REQUEST OF VARIOUS ASSOCIATIONS & CHAMBER OF COMMERCE, FINANCE MINISTER AND CBDT HAS NOT EXTENDED THE TIME LIMIT TO FILE TAR & ITR BY THE CHARTERED ACCOUNTANTS.

THE BELOW MENTIONED REASONS WILL HIGHLIGHT THE IMPACT OF SUCH DECISION OF THE FINANCE MINISTER AS WELL AS CBDT ON THE ISSUE

 

1) NOTIFICATION ISSUED TOO LATE – ONLINE FILLING OF REPORT IS A NEW SYSYEM IMPLEMENTED BY IT DEPARTMENT THIS YEAR. NOTIFICATIONS FOR THE SAME HAD BEEN ISSUED TOO LATE, I.E. IN THE MONTH OF MAY & JUNE (NOTIFICATION NO. 36 DATED 23RD MAY, 2013 & NOTIFICATION NO. 44 DATED 19TH JUNE, 2013)

 

2) WASTED TIME IN UNDERSTANDING THE SYSTEM: WE HAD WASTED SO MANY TIME IN UNDERSTANDING THE SYSTEM AS IT WAS A NEW SYSTEM.

 

3) WASTED TIME DUE TO FAULTY SYSTEM: WE HAD WASTED SO MANY TIME DUE TO FAULTY SYSTEM OF TAX AUDIT REPORT.

 

4) WASTED TIME DUE TO CHANGE IN UTILITY BY DEPARTMENT (12 TIMES): WE HAD WASTED SO MANY TIME DUE TO THE FACT THE DEPARTMENT HAD CHANGED UTILITY EVERY WEEK AND SOMETIMES TWO OR THREE TIMES IN A WEEK.

 

5) WASTED TIME TO ANALYSE THE EFFECT OF FAULTY SYSTEM: WE HAD WASTED SO MANY TIME DUE TO ANALYSING THE EFFECTS OF FAULTY SYSTEM OF THE DEPARTMENT ON VARIOUS TAX AUDIT REPORTS FILLED BY US.

 

6) MENTAL PRESSURE ON CA’S – AS A RESULT OF THE ABOVE, WE CHARTERED ACCOUNTANTS HAD UNDUE PRESSURE NOT ONLY DUE TO THE FAULTY SYSTEM OF THE CBDT BUT ALSO DUE TO THE UNCERTAINTY PREVAILED THROUGHT INDIA AMONG ALL CA’S.

 

7) MANY OF THE ISSUES HAD STILL NOT RESOLVED – 17 PROBLEMS STILL REQUIRES SYSTEM CHANGE BY IT DEPARTMENT, WHICH HAS BEEN INCLUDED SEPARATELY BELOW.

 

AS A RESULT, WE COULD HAVE COMPLETED ONLY 80-90% OF OUR WORK AND WE EARNESTLY REQUEST CBDT TO EXTEND THE TIME OF FILLING TAR AS WELL AS ITR. OTHERWISE IT WILL BE HARSH ON CA FATERNITY.

 

17 PROBLEMS STILL REQUIRES SYSTEM CHANGE BY IT DEPARTMENT – CA NITESH MORE

 

1) PROBLEM OF LEGAL HEIR CERTIFICATE: AS THERE IS SO MUCH PROBLEMS AND DELAY IN GETTING SUCH CERTIFICATE & IN MOST OF THE CASES, LOCAL REVENUE DENY TO ISSUE SUCH CERTIFICATE, WE REQUEST THAT A CERTIFICATE FROM A CA CERTIFYING THAT A PERSON IS A SURVIVING FAMILY MEMBER OF DECEASED SHOULD BE ACCEPTED.

 

2) PROBLEM OF NEGATIVE SHAREHOLDERS FUNDS IN ITR6: ITR6 DOES NOT ACCEPT NEGATIVE SHAREHOLDERS FIGURE.

 

3) “FORM 10CCB” DOES NOT CONTAIN OPTION TO CLAIM 80IE DEDUCTION. HOWEVER, IT CONTAINS 80IA, 80IB, 80IC.

 

4) ONE OF MY CLIENTS HAS MADE LATE PAYMENT OF TDS DEDUCTED , IT MEANS PROVISIONS OF TDS HAS NOT BEEN COMPLIED WITH. SO, WE HAVE TO WRITE “NO” ACCORDINGLY TO THE ANSWER OF QUESTION WHETHER TDS PROVISIONS HAVE BEEN COMPLIED WITH. BUT THERE IS NO COLUMN IN POINT NO.27, WHERE DETAILS CAN BE GIVEN. IF DETAILS ARE NOT GIVEN PAGE IS NOT BEING VALIDATED.

 

5) SUPPOSE A PROPRIETORSHIP FIRM IS SUCCEEDED BY PARTNERSHIP FIRM ON 30TH NOVEMBER, THAN TWO  B/S & TWO P/L IS TO BE PREPARED. BUT, ITR AS WELL AS FORM 3CD DO NOT TAKES PART OF YEAR.

 

6) ONE OF OUR CLIENT HAS NOT DEPOSITED P.F. DEDUCTED FROM EMPLOYEES. IN SOME OF THE MONTHS PF HAS BEEN DEPOSITED PARTLY. BUT THERE IS NO PROVISION TO ENTER AMOUNT DEPOSITED IN THE ANNEXURE FORMAT FOR THE SAME.

 

7) AN INDIVIDUAL HAVE 3 DIFFERENT BUSINESSES AUDITED BY 3 DIFFERENT CAS. HOW TO UPLOAD FORM 3CD?

 

8) IN ITR6, B/F LOSS OF LAST YEAR IS NOT ADJUSTED TO COMPUTE THE TAXABLE INCOME OF CURRENT YEAR. HOWEVER, IN ITR4, IT IS ADJUSTED.

“WE HAVE BROUGHT FORWARD BUSINESS LOSS OF THE AY 12-13 WHICH IS TO BE ADJUSTED THIS YEAR. BUT IN ITR 6 FOR AY 13-14, THE FIGURE GIVEN IN BFLA IS NOT GETTING CAPTURED WHILE CALCULATING TAX. PLEASE HELP. HOWEVER IF WE USE ITR 4, THE THIS PROBLEM DOES NOT ARISE. IN ITR 6, THE CELL IS CPLOURED AS YELLOW WHEREAS IN ITR 4, THE CELL IS COLOURED AS GREEN.
BIRENDRA SETHIA
09007160933

 

9) ANCESTRAL PAN PROBLEM I.T.RETURN SUBMISSION

MY CLIENT HAD A PAN CONTAINING ANCESTRAL I.E. 01/01/0001. I AM ABLE TO LOGIN INTO THE ACCOUNT OF PARTY BY 01/01/0001. ORIGINAL DOI 10/03/1993 WHICH I AM PUTTING IN THE IT RETURN BUT AT THE TIME OF SUBMISSION IT SAY MISMATCH IN WRONG DOB.

 

10)     THOSE WHO HAVE MORE THAN ONE UNDERTAKING SAY , 5 UNDERTAKING FOR TAKING BENEFITS U/S 80IA ARE UNABLE TO FILE FORM 10CCB AS  NO PLACE TO PROVIDE DIFFERENT INFORMATION FOR DIFFERENT UNDERTAKING.

 

11)    AS PER THE PROVISO OF SEC 32 OF THE IT ACT, DEPRECIATION IS ALLOWED TO THE AMALGAMATING COMPANY AND THE AMALGAMATED COMPANY IN THE RATIO OF THE NUMBER OF DAYS FOR WHICH THE ASSET IS USED BY THEM. BUT IN THE ITR THERE IS NO OPTION OF FEEDING DEPRECIATION FIGURES, THE DEPRECIATION FIGURES ARE AUTOMATICALLY CALCULATED ONCE THE DETAIL OF BLOCK OF ASSETS ARE FEEDED. KINDLY GUIDE HOW TO CLAIM THE CORRECT AMOUNT OF DEPRECIATION IN BOTH THE COMPANIES. 

 

12)    IN A CASE, ASSESSEE HAS TAKEN A LOAN FROM A RELATIVE WHO IS NOT HAVING PAN NO. SYSTEM IS NOT ACCEPTING ENTRY WITHOUT PAN . PLEASE CLARIFY THAT IN SUCH CASES, HOW TO FILE 3CD.

 

13)    DEP FOR POWER GENERATING UNITS IS ALLOWED TO BE CLAIMED TO STRAIGHT LINE BASIS, BUT THERE IS NO PROVISION IN ONLINE FORM 3CD FOR SUCH CLAIM. SOFTWARE AUTOMATICALLY CLAIMS DEPRECIATION AMOUNT OF WDV BASIS. THERE IS NO POSSIBILITY TO CHANGE IT MANUALLY.

 

14)    FROM: VINOD AGGARWAL <VINOD_CA2001@YAHOO.CO.IN>

OUR HUF CLIENT IS RUNNING HOSPITAL ENJOYING EXEMPTION U/S 1023C(VIA). AS PER RULES ITR 7 IS BE FILED ONLINE. HOWEVER WHILE UPLOADING THE SAME OPTION OF ITR 7 IS IS NOT MADE AVAILABLE. KINDLY HELP US IN THE MATTER. 

 

15)    THERE IS NO PAN OF FOREIGN DIRECTOR. HOW TO UPLOAD ITR WITH HIS DIGITAL SIGNATURE?

 

16)    PASSWORD NOT BEING GENERATED BY USING NEW DSC OF TRUSTEE – IN CASE OF TRUST

 

17)    AS PER PROVISION OF SECOND 35AD(7) REFERENCE OF 80IA(7) WHICH SAYS AUDIT REPORT IN  FORM NO 10CCB IS TO BE FILED . WHEREAS IN THAT FORM THERE IS NO REFERENCE OF SEC 35 AD .HOW TO FILE THE REPORT IN THE AFORESAID FORM?

 

 

Forms 15CA & 15CB changed again; no reporting of exempt income, no filing of form 15CB for certain payments

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INCOME-TAX (FOURTEENTH AMENDMENT) RULES, 2013 – SUBSTITUTION OF RULE 37BB AND FORM NOS. 15CA AND 15CB
NOTIFICATION NO. 67/2013 [F. NO. 149/119/2012-SO (TPL)]/SO 2659(E), DATED 2-9-2013
In exercise of the powers conferred by sub-section (6) of section 195 and section 192, section 194B, section 194BB, section 194E, section 194LB, section 194LC, section 194LD, section 196B, section 196C, section 196D read with section 295 of the Income-tax Act, 1961 (43 of 1961) and in supersession of the notification of the Government of India in the Ministry of Finance, Department of Revenue, issued by the Central Board of Direct Taxes vide number S.O.2363(E) dated the 5th August, 2013 published in the Gazette of India, dated the 5th August, 2013, the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—
1. (1) These rules may be called the Income-tax (14th Amendment) Rules, 2013.
(2) They shall come into force on the 1st day of October, 2013.
2. In the Income-tax Rules, 1962 (hereafter referred to as the said rules), for rule 37BB, the following rule shall be substituted, namely:—
“37BB. Furnishing of information by the person responsible for making any payment including any interest or salary or any other sum chargeable to tax, to a non-resident, not being a company, or to a foreign company—(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or salary or any other sum chargeable to tax under the provisions of the Act, shall furnish the following, namely:—
(i) the information in Part A of Form No.15CA, if the amount of payment does not exceed fifty thousand rupees and the aggregate of such payments made during the financial year does not exceed two lakh fifty thousand rupees;
(ii) the information in Part B of Form No.15CA for payments other than the payments referred in clause (i) after obtaining—
(a) a certificate in Form No. 15CB from an accountant as defined in the Explanation below sub-section (2) of section 288; or
(b) a certificate from the Assessing Officer under section 197; or
(c) an order from the Assessing Officer under sub-section (2) or sub-section (3) of section 195.
(2) The information in Form No. 15CA shall be furnished by the person electronically to the website designated by the Income-tax Department and thereafter signed printout of the said form shall be submitted to the authorised dealer, prior to remitting the payment.
(3) An income-tax authority may require the authorised dealer to furnish the signed printout referred to in sub-rule (2) for the purposes of any proceedings under the Act.
(4) The Director General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture, transmission of data and shall also be responsible for the day-to-day administration in relation to furnishing the information in the manner specified.
Explanation 1.— For the purposes of this rule, “authorised dealer” means a person authorised as an authorised dealer under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999 (42 of 1999).
Explanation 2.—For the removal of doubts, it is hereby clarified that for payments of the nature specified in column (3) of the specified list below, no information is required to be furnished under sub-rule (1).
SPECIFIED LIST
Sl.No. Purpose code as per RBI Nature of payment
(1) (2) (3)
1 S0001 Indian investment abroad -in equity capital (shares)
2 S0002 Indian investment abroad -in debt securities
3 S0003 Indian investment abroad -in branches and wholly owned subsidiaries
4 S0004 Indian investment abroad -in subsidiaries and associates
5 S0005 Indian investment abroad -in real estate
6 S0011 Loans extended to Non-Residents
7 S0202 Payment- for operating expenses of Indian shipping companies operating abroad.
8 S0208 Operating expenses of Indian Airlines companies operating abroad
9 S0212 Booking of passages abroad -Airlines companies
10 S0301 Remittance towards business travel.
11 S0302 Travel under basic travel quota (BTQ)
12 S0303 Travel for pilgrimage
13 S0304 Travel for medical treatment
14 S0305 Travel for education (including fees, hostel expenses etc.)
15 S0401 Postal services
16 S0501 Construction of projects abroad by Indian companies including import of goods at project site
17 S0602 Freight insurance – relating to import and export of goods
18 S1011 Payments for maintenance of offices abroad
19 S1201 Maintenance of Indian embassies abroad
20 S1 202 Remittances by foreign embassies in India
21 S1301 Remittance by non-residents towards family maintenance and-savings
22 S1302 Remittance towards personal gifts and donations
23 S1303 Remittance towards donations to religious and charitable institutions abroad
24 S1304 Remittance towards grants and donations to other Governments and charitable institutions established by the Governments.
25 S1305 Contributions or donations by the Government to international institutions
26 S1306 Remittance towards payment or refund of taxes.
27 S1501 Refunds or rebates or reduction in invoice value on account of exports
28 S1503 Payments by residents for international bidding”.
3. In the said rules, in Appendix II, for Form No.15CA and Form No. 15CB, the following Forms shall be substituted, namely:—
Income-Tax Department
FORM NO. 15CA
(See rule 37BB)
Information to be furnished for payments, chargeable to tax, to a non-resident not being a company, or to a foreign company
Ack. No.
FORM NO. 15CB
(See rule 37BB)
Certificate of an accountant 1
1. To be signed and verified by an accountant (other than an employee) as defined in the Explanation below sub-section (2) of section 288 of the Income-tax Act, 1961.

 

CBEC extends the last date of filing of ST-3 Return for the period October, 2012 – March,2013 from 31st August,2013 till 10th September, 2013 vide Order No. 4/2013-ST.

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F.No.137/99/2011-Service Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

***

New Delhi, dated the 30th August, 2013

Order No: 4/2013-Service Tax

In exercise of the powers conferred by sub-rule(4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs hereby extends the date of submission of the  Form ST-3  for the period from 1st October 2012 to 31st March 2013, from 31st August, 2013 to  10th September, 2013. The circumstances of a special nature, which have given rise to this extension of time, are as follows: 

“Difficulties have been faced by  assessees in uploading the offline utilities”.

Himani Bhayana

Under Secretary (Service Tax)

Central Board of Excise and Customs

To

All Chief Commissioners of Central Excise / Customs and Central Excise

Directors General of Service Tax /Central Excise Intelligence /Audit/Systems All Commissioners of Central Excise/ Customs and Central Excise

All Commissioners of Service Tax

All Commissioners LTU

All Additional Directors General Systems

 

Deduction in respect of amount deposited in Site Restoration Account (SRA) Section 33ABA

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Who is eligible to claim deduction for SRA?

Eligible assessee: assessee engaged in production/ extraction of petroleum/natural gas/both in India

What are conditions for Claiming Deduction?

Requirement: amount deposited with SBI or MPNG (ministry of petroleum or natural gas) in SRA a/c.

Time limit: amount should be deposited till the end of relevant previous year. Deduction amount: lower of following

  1. Actual deposit in SRA within time
  2. 20% of profit (profit before this section & set off losses)

    Where it can be utilized?

  3. Amount withdrawn from SRA a/c
  4. Withdrawn amount is utilized for ‘specified purpose’ i.e. as per scheme framed then amount is exempt
  5. Withdrawn amount is utilized for ‘ non specified purpose’ then fully taxable under B & P head in the previous year of withdrawn
  6. Withdrawn amount is not utilized till the end of previous year in which amount is withdrawn then fully taxable under B & P head in the previous year of withdrawn
  7. If Amount is withdrawn in following cases then amount is exempt
  8. On partition of HUF
  9. On death of assessee
  10. Liquidation of company
  11. If any asset is purchased from withdrawn amount as per specified scheme and such asset is sold before 8 years from the end of previous year in which asset was purchased then actual cost of asset is taxable B & P income in the previous year of sale
  12. Exception- if asset is sold before 8 years in following cases then nothing is taxable
  13. Sold to govt.
  14. Sold to govt. company
  15. Sold to local authority
  16. Transfer due to conversion of firm into company or V/V. 

    Reference: Section 33ABA of the Income Tax Act 1961 Site Restoration Fund

    (1) Where an assessee is carrying on business consisting of the prospecting for, or extraction or production of, petroleum or natural gas or both in India and in relation to which the Central Government has entered into an agreement with such assessee for such business, has before the end of the previous year—

    (a)  deposited with the State Bank of India any amount or amounts in an account (hereafter in this section referred to as the special account) maintained by the assessee with that Bank in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) approved in this behalf by the Government of India in the Ministry of Petroleum and Natural Gas; or

    (b)  deposited any amount in an account (hereafter in this section referred to as the Site Restoration Account) opened by the assessee in accordance with, and for the purposes specified in, a scheme framed by the Ministry referred to in clause (a) (hereafter in this section referred to as the deposit scheme),

    the assessee shall, subject to the provisions of this section, be allowed a deduction (such deduction being allowed before the loss, if any, brought forward from earlier years is set off under section 72) of—

    (i)  A sum equal to the amount or the aggregate of the amounts so deposited; or

    (ii)  A sum equal to twenty per cent of the profits of such business (computed under the head “Profits and gains of business or profession” before making any deduction under this section),

    Whichever is less:

    Provided that where such assessee is a firm, or any association of persons or anybody of individuals, the deduction under this section shall not be allowed in the computation of the income of any partner or, as the case may be, any member of such firm, association of persons or body of individuals :

    Provided further that where any deduction, in respect of any amount deposited in the special account, or in the Site Restoration Account, has been allowed under this sub-section in any previous year, no deduction shall be allowed in respect of such amount in any other previous year :

    Provided also that any amount credited in the special account or the Site Restoration Account by way of interest shall be deemed to be a deposit.

    (2) The deduction under sub-section (1) shall not be admissible unless the accounts of such business of the assessee for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant as defined in the Explanationbelow sub-section (2) of section 288 and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant :

    Provided that in a case where the assessee is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this sub-section if such assessee gets the accounts of such business audited under such law and furnishes the report of the audit as required under such other law and a further report in the form prescribed under this sub-section.

    (3) Any amount standing to the credit of the assessee in the special account or the Site Restoration Account shall not be allowed to be withdrawn except for the purposes specified in the scheme or, as the case may be, in the deposit scheme.

    (4) Notwithstanding anything contained in sub-section (3), no deduction under sub-section (1) shall be allowed in respect of any amount utilized for the purchase of—

    (a)  Any machinery or plant to be installed in any office premises or residential accommodation, including any accommodation in the nature of a guest-house;

    (b)  Any office appliances (not being computers);

    (c)  Any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head “Profits and gains of business or profession” of any one previous year;

    (d)  Any new machinery or plant to be installed in an industrial undertaking for the purposes of business of construction, manufacture or production of any article or thing specified in the list in the Eleventh Schedule.

    (5) Where any amount standing to the credit of the assessee in the special account or in the Site Restoration Account is withdrawn on closure of the account during any previous year by the assessee, the amount so withdrawn from the account, as reduced by the amount, if any, payable to the Central Government by way of profit or production share as provided in the agreement referred to in section 42, shall be deemed to be the profits and gains of business or profession of that previous year and shall accordingly be chargeable to income-tax as the income of that previous year.

    Explanation.—Where any amount is withdrawn on closure of the account in a previous year in which the business carried on by the assessee is no longer in existence, the provisions of this sub-section shall apply as if the business is in existence in that previous year.

    (6) Where any amount standing to the credit of the assessee in the special account or in the Site Restoration Account is utilized by the assessee for the purposes of any expenditure in connection with such business in accordance with the scheme or the deposit scheme, such expenditure shall not be allowed in computing the income chargeable under the head “Profits and gains of business or profession”.

    (7) Where any amount, standing to the credit of the assessee in the special account or in the Site Restoration Account, which is released during any previous year by the State Bank of India or which is withdrawn by the assessee from the Site Restoration Account for being utilized by the assessee for the purposes of such business in accordance with the scheme or the deposit scheme is not so utilized, either wholly or in part, within that previous year, the whole of such amount or, as the case may be, part thereof which is not so utilized shall be deemed to be profits and gains of business and accordingly chargeable to income-tax as the income of that previous year.

    8) Where any asset acquired in accordance with the scheme or the deposit scheme is sold or otherwise transferred in any previous year by the assessee to any person at any time before the expiry of eight years from the end of the previous year in which it was acquired, such part of the cost of such asset as is relatable to the deduction allowed under sub-section (1) shall be deemed to be the profits and gains of business or profession of the previous year in which the asset is sold or otherwise transferred and shall accordingly be chargeable to income-tax as the income of that previous year :

    Provided that nothing in this sub-section shall apply—

    (i)  where the asset is sold or otherwise transferred by the assessee to Government, a local authority, a corporation established by or under a Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); or

    (ii)  where the sale or transfer of the asset is made in connection with the succession of a firm by a company in the business or profession carried on by the firm as a result of which the firm sells or otherwise transfers to the company any asset and the scheme or the deposit scheme continues to apply to the company in the manner applicable to the firm.

    Explanation.—the provisions of clause (ii) of the proviso shall apply only where—

    (i)  All the properties of the firm relating to the business or profession immediately before the succession become the properties of the company;

    (ii)  All the liabilities of the firm relating to the business or profession immediately before the succession become the liabilities of the company; and

    (iii)  All the shareholders of the company were partners of the firm immediately before the succession.

    (9) The Central Government may, if it considers necessary or expedient so to do, by notification in the Official Gazette, direct that the deduction allowable under this section shall not be allowed after such date as may be specified therein.

    Explanation.—for the purposes of this section,—

    (a)  “State Bank of India” means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955);

    (b)  The expression “amount standing to the credit of the assessee in the special account or the Site Restoration Account” includes interest accrued to such accounts.]

 

List of Income Taxable as Profits and Gains of Business or Profession

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As per section 28 of the Income Tax Act, 1961 following income will be chargeable as profits and gains of business or profession.

The following income shall be chargeable to income-tax under the head “Profits and gains of business or profession”,—

(i)  the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year ;

(ii)  any compensation or other payment due to or received by,—

  1. any person, by whatever name called, managing the whole or substantially the whole of the affairs of an Indian company, at or in connection with the termination of his management or the modification of the terms and conditions relating thereto;
  2. any person, by whatever name called, managing the whole or substantially the whole of the affairs in India of any other company, at or in connection with the termination of his office or the modification of the terms and conditions relating thereto ;
  3. any person, by whatever name called, holding an agency in India for any part of the activities relating to the business of any other person, at or in connection with the termination of the agency or the modification of the terms and conditions relating thereto ;
  4. any person, for or in connection with the vesting in the Government, or in any corporation owned or controlled by the Government, under any law for the time being in force, of the management of any property or business ;

(iii)  income derived by a trade, professional or similar association from specific services performed for its members ;

(iiia)  profits on sale of a licence granted under the Imports (Control) Order, 1955, made under the Imports and Exports (Control) Act, 1947 (18 of 1947) ;

(iiib)  cash assistance (by whatever name called) received or receivable by any person against exports under any scheme of the Government of India ;

(iiic)  any duty of customs or excise re-paid or re-payable as drawback to any person against exports under the Customs and Central Excise Duties Drawback Rules, 1971 ;]

(iiid)  any profit on the transfer of the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme under the export and import policy formulated and announced under section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);

(iiie)  any profit on the transfer of the Duty Free Replenishment Certificate, being the Duty Remission Scheme under the export and import policy formulated and announced under section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) ;

(iv)  the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession ;

(v)  any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from such firm :

Provided that where any interest, salary, bonus, commission or remuneration, by whatever name called, or any part thereof has not been allowed to be deducted under clause (b) of section 40, the income under this clause shall be adjusted to the extent of the amount not so allowed to be deducted ;

(va) any sum, whether received or receivable, in cash or kind, under an agreement for—

  1. not carrying out any activity in relation to any business; or
  2.  not sharing any know-how, patent, copyright, trade-mark, licence, franchise or any other business or commercial right of similar nature or information or technique likely to assist in the manufacture or processing of goods or provision for services:

                Provided that sub-clause (a) shall not apply to—

  1. any sum, whether received or receivable, in cash or kind, on account of transfer of the right to manufacture, produce or process any article or thing or right to carry on any business, which is chargeable under the head “Capital gains”;
  2. any sum received as compensation, from the multilateral fund of the Montreal Protocol on Substances that Deplete the Ozone layer under the United Nations Environment Programme, in accordance with the terms of agreement entered into with the Government of India.

                Explanation.—For the purposes of this clause,—

(i) “agreement” includes any arrangement or understanding or action in concert,—

(A) whether or not such arrangement, understanding or action is formal or in writing; or

(B) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings;

(ii) “service” means service of any description which is made available to potential users and includes the provision of services in connection with business of any industrial or commercial nature such as accounting, banking, communication, conveying of news or information, advertising, entertainment, amusement, education, financing, insurance, chit funds, real estate, construction, transport, storage, processing, supply of electrical or other energy, boarding and lodging;

(vi)  any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy.  Explanation.—For the purposes of this clause, the expression “Keyman insurance policy” shall have the meaning assigned to it in clause (10D) of section 10;

(vii)  any sum, whether received or receivable, in cash or kind, on account of any capital asset (other than land or goodwill or financial instrument) being demolished, destroyed, discarded or transferred, if the whole of the expenditure on such capital asset has been allowed as a deduction under section 35AD.

Explanation 1.—[Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.

Explanation 2.—Where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as “speculation business”) shall be deemed to be distinct and separate from any other business.

 

Cost Inflation Index for Financial Year 2011-12 as Per Notification Issued on 23-6-2011

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In exercise of the powers conferred by clause ( v ) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes number S.O. 709(E), dated the 20th August, 1998, namely :—

In the said notification in the Table, after serial number 30 and the entries relating thereto, the following serial number and entries shall be inserted, namely :—

 “31 2011-12 785″

 

Cost Inflation Index for Financial Year 2012-13

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Cost Inflation Index for Financial Year 2012-2013 is 852 and for Year 2011-2012 is 785.

In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, number S.O. 709 (E), dated the 20th August, 1998,

In the said notification, in the Table, after serial number 31 and the entries relating thereto, the following serial number and entries shall be inserted,

Sl. No. Financial Year Cost Inflation Index
(1) (2) (3)
“32 2012-13 852″

 

Cost of Inflation Index for FY 2013-2014 .i.e AY 2014-15

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Cost of Inflation Index for FY 2013-2014 .i.e AY 2014-15 for calculating capital gain is 939. Each Central Board of Direct taxes announces cost of Inflation index for the purpose of calculating inflation adjusted cost of asset for calculating capital gain tax on sale of capital assets.For Financial Year 2013-14 COI Index was declared through income tax Notification No.40/2013/F.No.142/7/2013-TPL.

GOVERNMENT OF INDIA

MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF DIRECT TAXES
NOTIFICATION
INCOME-TAX
New Delhi, the 6th day of June, 2013

Notification No.40/2013/F.No.142/7/2013-TPL

S.O. 1464(E) – In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes published in the Gazette of India, Extraordinary, vide number S.O. 709(E), dated the 20th August, 1998, namely:-
2. In the said notification, in the Table, after serial number 32 and the entries relating thereto, the following serial number and entries shall be inserted, namely:-

Sl. No.  Financial Year Cost Inflation Index
(1) (2) (3)
“33  2013-14  939”

 

ITAT Explains Transfer Pricing Implications Of Royalty Payment

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Reebok India Co vs. ACIT (ITAT Delhi)

Transfer Pricing: Scope in the context of expenditure (royalty payment) explained

The assessee paid royalty at the rate of 5% to its associated enterprise and claimed that the same was at arm’s length basis by applying the CUP method. The TPO and DRP determined the ALP of the royalty at Nil on the basis that (a) the approval given by the Government for payment of royalty did not automatically mean that the transaction was at arm’s length; (b) the assessee had not furnished a cost benefit analysis, (c) the technology had in fact not helped the assessee in earning better margins. It was held that as the technology had not contributed to the assessee’s profitability and there was no commercial benefit received, no independent enterprise would have make payment for royalty for the technology and so its ALP had to be determined at Nil. On appeal by the assessee to the Tribunal, HELD reversing the TPO & DRP:

(a) The TPO’s argument that the assessee need not have paid for the technology as it did not derive any benefit therefrom is not acceptable. The assessee is free to conduct business in the manner it deems fit and the commercial and business expediency of incurring any expenditure has to be seen from the assessee’s point of view. The Revenue cannot step into the shoe of the assessee and decide what is prudent for the business. On facts, the very survival of the assessee in the industry depended upon the licence and technology & know how provided by the AE. There has been a considerable increase in the sales figures and the growth in revenue clearly demonstrates the benefits derived by the assessee from the use of technology;

(b) the payment of royalty was approved by the Government of India. Though it is not conclusive proof, the said approval of the Government has to be given consideration while considering the arms length price of the transaction;

(c) Under Rule 10B(1)/ s. 92C(2), the arm’s length price has to be determined by one of the five methods which is found to be most appropriate method. While the assessee rightly considered the CUP method for determining the ALP, the TPO’s conclusion that the arms length price of the royalty payment should be NIL without specifying any cogent basis is not sustainable (EKL Appliances 345 ITR 241 (Del), Ericsson 146 TTJ 708 (Del), ThyssenKrupp Industries 154 TTJ 689(Mum), Dresser Rand 55 SOT 167 (Mum), SC Enviro Agro 143 ITD 195 (Mum) etc followed)

 

Service Tax on restaurant having the facility of airconditioning or central air and Theater

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Service Tax is applicable on  Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air conditioning or central air-heating in any part of the establishment, at any time during the year.

Service Tax is applicable on Services provided by way of temporary transfer or permitting the use or enjoyment of a copyright relating to original literary, dramatic, musical or artistic works of cinematography films for exhibition in a cinema hall or cinema theater

Service Tax Notification No.3 /2013

G.S.R….(E)- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied  that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of  Finance (Department of Revenue), No.25/2012-Service Tax, dated the 20th June,  2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide G.S.R. 467 (E), dated the 20th June, 2012, namely:-
In the said notification,-
1. in the opening paragraph,-
(i) in entry 9, for the words “ provided to or by”, the words “provided to ” shall be substituted;
(ii) for entry 15, the following entry shall be substituted, namely:-
“15. Services provided by way of temporary transfer or permitting the use or
enjoyment of a copyright,-
(a) covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 (14 of 1957), relating to original literary, dramatic, musical or artistic works; or
(b) of cinematograph films for exhibition in a cinema hall or cinema theatre;”;
(iii) for entry 19, the following entry shall be substituted, namely:-
“19. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of airconditioning or central air-heating in any part of the establishment, at any time during the year;”;
(iv) in entry 2o, items (a),(d) and (e) shall be omitted;
(v) for entry 21, the following entry shall be substituted, namely:-“21. Services provided by a goods transport agency, by way of transport in a goods carriage of,-
(a) agricultural produce;
(b) goods, where gross amount charged for the transportation of  goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;
(c) goods, where gross amount charged for transportation of all  such goods for a single consignee does not exceed rupees seven hundred fifty;
(d) foodstuff including flours, tea, coffee, jaggery, sugar, milk products,  salt and edible oil, excluding alcoholic beverages;
(e) chemical fertilizer and oilcakes;
(f) newspaper or magazines registered with the Registrar of Newspapers;
(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or
(h) defence or military equipments;”;
(vi) entry 24, shall be omitted;
(vii) in entry 25, in item (b), for the words, “a vessel or an aircraft”, the words “a
vessel” shall be substituted;
2. In paragraph 2 relating to Definitions, in clause (k),-
(a) in sub-clause (iv), the word “or” shall be omitted;
(b) sub-clause (v), shall be omitted; .
3. This notification shall come in to force on the 1st day of April, 2013.