INSTRUCTION NO. 1/2008, DATED 9-1-2008 Your attention is drawn to the guidelines for selection of cases under scrutiny for the F. Y. 2007-08 under which claim of refund of Rs. 5 lakhs or above is one of the criteria for compulsory scrutiny. Such cases were to be selected for scrutiny by CASS in all the networked stations and manually in non-networked stations.
While a co-operative society is treated under the Income-tax Act, 1961, as an assessee for extending certain concessions in computing taxable income, the income of a co-operative society is not exempt in its entirety. The Act has classified co-operative societies on the basis of various activities carried out by them.
The Institute has been receiving complaints from members of the Institute, proprietary concerns and firms of Chartered Accountants alleging that they have come across audit reports, balance sheets, certificates etc. of different entities submitted by the said entities/someone with Banks, Financial Institutions, Income-Tax Department, etc. wherein they find that their signatures, seal/stamp have been forged and /or such documents have been prepared on their forged letterhead etc. The members of the Institute, proprietary concerns and firms of chartered Accountants have been requesting the Institute to take necessary legal action in such matters.
It was incumbent on the Assessing Officer to show in the reasons recorded by him that any income escaped assessment due to error or omission on the part of the assessee in not disclosing all material facts relevant for assessment of this year. The assessment order does not show any error or omission on the part of the assessee in disclosing all material facts. So the Tribunal held that the CIT(A) was right in cancelling the re-assessment.
The Supreme Court will decide whether recovery of government dues, including income tax and excise, should get priority over liabilities of banks and other creditors while dividing the assets of a sick company. Tax authorities have moved the apex court challenging the Punjab and Haryana High Court which held that excise dues cannot get priority over liabilities of secured or unsecured creditors, banks and financial institutions.
In a move that will bring cheers to tax payers, Supreme Court has ruled that those aggrieved by a blatantly erroneous or prejudiced order by the Income-Tax Appellate Tribunal (ITAT) can take the matter back to the Tribunal and get the error rectified. The apex court issued such an order in a case involving Honda Siel.
ACIT vs Mahalaxmi Chemical Works The notice under s.148 was issued for the reason that interest paid was not allowable since funds taken on interest were not used for business purpose.During reassessment said interest was not disallowed, accepting the assessee’s explanation. The reassessment for that reason could not be held to be invalid since there was prima facie reason to believe at the time of issue of notice under s.148 that income had escaped assessment.
The controversial double tax avoidance treaty between India and Mauritius is likely to survive despite pressure from the income-tax authorities. The pact may be reworked, but not scrapped, thanks to the lobbying by a high-level delegation headed by Mauritius Prime Minister Navinchandra Ramgoolam.
The Tribunal observed that the loss incurred by the assessee is on account of the loan advances to BFL from which the assessee company had earned interest. It was the surplus fund of the assessee which was utilized for advancing loan with the intention of earning interest, but assessee is not a money lender. It is common in the commercial practice that if surplus money is available then the business invests the same for earning interest instead of keeping it idle. The said investment would be capital in nature as surplus funds are invested with a view to earn interest. The assessee is also not a dealer in securities and investments. ‘ A So the loss sustained by the assessee in respect of the loan advanced to BFL is in the nature of capital loss and is not allowable u/s.28 of the Act also.
THE New Year has just set in, and things have started going awry for the CBDT. In fact the CBDT’s ‘time chakra’ had entered the adversarial zone some time late last year when the Delhi High Court had begun to take note of its frivolous appeals. It did warn the income tax authorities and also asked for detailed procedure and screening methodoligies adopted by the Board before an appeal is filed before the High Courts.
