Income Tax, Wealth Tax and Direct tax Code Related News

  • Feb
  • 11
  • 2016

Section 80IC: Despite substantial expansion there cannot be two initial Assessment Year

Added In Income Tax
The initial assessment year has been defined and the expression or’ has been used in respect of new units by stating commences operation’ or complete substantial expansion’. Here the expression or’ is to be read as a mutually exclusive expression which refers to a particular situation by excluding the other situation. Therefore, initial assessment year would clearly commence either on commencement of operation or at completion of substantial expansion of existing unit. In any case the word ‘initial’ cannot be used twice by referring to series of events.

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  • Feb
  • 11
  • 2016

Buy Back Tax – Fair Enough?

Added In Income Tax
Mr. P. Chidambaram, plugged one of the most common tool of profit distribution used by unlisted companies. Finance Act 2013, introduced Sections 115-QA to 115-QC in the Income Tax Act — effective from June 1, 2013 — to tax income distribution by unlisted companies through buyback of shares u/s 77A of the Companies Act 1956.

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  • Feb
  • 11
  • 2016

No Penalty for non disclosure of manner of Income, if same was not asked during statement recorded U/s/ 132(4)

Added In Income Tax
Where no question was asked during statement recorded under section 132(4), in respect of manner of earning income surrendered, assessee could not be expected to substantiate same later on; penalty could not be levied under section 271AAA

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  • Feb
  • 11
  • 2016

Search and seizure are reasonable cause for delay in filing & Payment of Wealth Tax

Added In Income Tax
We understand that in case of search, assessee is to comply with law and various declaration and formalities which certainly take lot of time. From the aforesaid situation and circumstances, it is clear that there was sufficient cause which prevented the assessee to pay wealth tax in the wealth tax return

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  • Feb
  • 11
  • 2016

Assessment completed by AO relying on estimations cannot be remanded back by CIT to reverify some aspects of estimation relied on

Added In Income Tax
The ITAT Hyderabad in the case of Sri Surakshitha Homes vs. ITO held that where the AO has assessed income on estimation basis then CIT cannot order to revise the assessment by picking and choosing some aspects of estimation to be re-verified. Therefore, the assessment cannot be remanded back to AO to afresh examination of some aspects of estimation made by AO.

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  • Feb
  • 11
  • 2016

Unilateral claim based on internally generated documents without any independent evidence cannot be allowed as business expenditure

Added In Income Tax
The ITAT Delhi in the case of DCIT vs. M/s Leroy Somer & Controls held that the internally generated documents by company without confirmation of the same by the other party are not sufficient to make a claim of discount. Therefore, unilateral claims without any independent evidence cannot be allowed as business expenditure.

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  • Feb
  • 11
  • 2016

Expense on gifts to doctors allowed being not prohibited in law, CBDT circular only applicable A.Y. 2013-14 onwards

Added In Income Tax
ITAT Mumbai held in the case Syncom Formulations (I) Ltd. vs. DCIT that receiving of gifts by doctors is prohibited by MCI guidelines but giving of the same by manufacturer is not prohibited under any law for the time being in force. Giving small gifts bearing company logo to doctors does not tantamount to giving gifts to doctors but it is regarded as advertising expenses.

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  • Feb
  • 11
  • 2016

Addition u/s 153A for completed assessments not valid if no incriminating material found during search

Added In Income Tax
ITAT Mumbai held In the case of M/s. Ideal Appliances Co. Pvt. Ltd. vs. DCIT that it is settled legal position that no addition can be made to the income already assessed since no incriminating material was unearthed during the search. Also in those cases where the assessment had been completed under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search, it will be considered that there was no assessment pending. Therefore, addition could be made only on the basis of incriminating material found during search.

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  • Feb
  • 11
  • 2016

Section 263 – Revision merely on DCIT suggestion & without independent judgment, not valid in law

Added In Income Tax
ITAT Pune held In the case of Span Overseas Ltd. vs. CIT that from the show cause notice, it is clear that the CIT has invoked the provisions of section 263 on the proposal submitted by the DCIT and deficiencies in the assessment order pointed out by the DCIT. As per the provisions of section 263, it is the CIT who has to examine the records and thereafter form an independent opinion that the order passed by the Assessing Officer is erroneous in so far as it prejudicial to the interest of revenue. In the present case, the CIT has not exercised his independent judgment for invoking revisional powers. Hence revision order is bad in law.

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  • Feb
  • 11
  • 2016

Validity of Notice via post for delivery, posted on last day of Limitation Period & Notice by affixture

Added In Income Tax
ITAT Lucknow held In the case of ITO vs. Shri Rajesh Agarwal that undisputedly notice of hearing under section 143(2) was issued on the last day of limitation/prescribed period for issuance of notice i.e. on 30.9.2011 at 15.19 hours by speed post. Therefore, the CIT (A) has rightly held that probability of service of the said notice by midnight on the same day is very remote.

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