"08 July 2012" Archive

Taxability of waiver of loan taken for acquiring capital asset

Bombay Gas Co. Ltd. Vs Additional Commissioner of Income-tax, 1(1), Mumbai (ITAT Mumbai)

It is settled law that if the loan is taken for acquiring the capital asset, waiver thereof would not amount to any income exigible to tax. On the other hand, if this loan was for trading purpose and was treated as such from the very beginning in the books of account, the waiver thereof may result in the income more so when it was transfe...

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Operational Issues Arising Under Reverse Charge Mechanism Scheme of Service Tax

Service tax is supposed to be paid by the service provider (SP). However, in some of the cases like import of services, payment to transporter for transport of goods by road, etc., the liability to pay tax has been cast on the service recipient (SR). Budget 2012 has made large number of changes in the scheme of taxation with respect to Se...

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Posted Under: Income Tax | ,

Clarification on Point of Taxation for Works Contract Services & open issues

Query:- What is the option open to the Assessee following Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 which is rescinded vide Notification No. 35/2012-ST dated 20-6-2012, w.e.f 1-7-2012. Answer:- Change in the manner of payment of tax from composition scheme under erstwhile the Works Contra...

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Posted Under: Income Tax |

Reverse Charge Mechanism under New Service Tax Regime

CA Rajender Handa S. No. Service Provider Service Recipient Proportion of Tax by Ser. Provider Proportion of Tax by Ser. Receiver 1. Insurance Agent Person Carrying on Insurance Business Nil 100% 2. GTA in respect of Transport of Goods by road Consignor or Consignee (Person liable to pay freight):-v Factory Regd. Under Factories Act, 1948...

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Posted Under: Income Tax |

LLP – Synopsis, Swot Analysis, Formation Process etc.

Partnership: Partnership (regulated by Partnership Act, 1932) is one of the preferred business vehicles by entrepreneurs in India. In-fact, India is one of a country which recognizes partnership as a taxable entity (assessee) under the Income Tax Act, 1961. Less stringent regulations, low compliance cost, ease, speed and flexibility o...

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Posted Under: Income Tax |

Reasonability of interest paid to persons covered under section 40A(2)(b)

DCIT Vs Sports Station (India) (P.) Ltd. (ITAT Delhi)

DCIT v. Sports Station (India) (P.) Ltd. As is apparent from the impugned order, the Assessing Officer did not bring any material on record for holding that the payment of interest at the rate of 15 per cent per annum to unsecured creditors was excessive and how interest at the rate of 12 per cent per annum was reasonable or represented f...

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S. 80-IB deduction can’t be denied for Common statutory registration, accounts or power connection

FIL Industries Ltd. Vs Additional Commissioner of Income-tax (ITAT Amritsar)

After reading statutory provisions as contained in section 80IB(1), 80IB(2) & 80IB(4) of the Act, we find that provisions do not provide in any way separate registration or maintenance of separate records for claiming deduction u/s 80IB of the Act. The requirement under section 80IB(1), 80IB(2) and 80IB(4) is that profit must derive from ...

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Statutory violation do not change nature of agricultural income

Assistant Director of Income-tax (Exemption) II, Hyderabad Vs A.P. Forest Development Corporation (ITAT Hyderabad)

With regard to the assessee's claim for exemption under section 10(1) of the Act in respect of agricultural income, the only aspect that clinches the nature of the agricultural income is whether agricultural operations were carried out or not. Once it was established that such agricultural activities were carried out by the assessee, asse...

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Why High Courts are now burdened with DRT/SARFAESI matters?

After the constitution of Debt Recovery Tribunals (DRT) and Debt Recovery Appellate Tribunals (DRAT) under The Recovery of Debts due to Banks and Financial Institutions Act, 1993 and after conferring the authority to entertain appeals from the aggrieved persons under section 17 of SARFAESI Act, 2002, Banks have gained an upper-hand in the...

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Posted Under: Income Tax |

Reporting Guidelines for Foreign Investments in India

1. Reporting of FDI for fresh issuance of shares: (i) Reporting of inflow:(a) The actual inflows on account of such issuance of shares shall be reported by the AD branch in the R-returns in the normal course.(b) An Indian company receiving investment from outside India for issuing shares / convertible debentures / preference shares under ...

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Posted Under: Income Tax |

Approaching DRAT in SARFAESI matters appears to be very costly?

Under the provisions of ‘Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’ in short), the Bank can invoke the process of recovery of money on its own without any adjudicatory process. The Banks can proceed with the enforcement of ‘security’ under the provisions o...

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Posted Under: Income Tax |

Motor cars expenses unrelated to research & development is not eligible for deduction u/s.35(2AB)

ACIT Vs Torrent Pharmaceuticals Ltd. (ITAT Ahmedabad)

The capital expenditure incurred by the assessee on purchase of motor cars could not be considered as expenditure incurred by the assessee on in-house research & development and, therefore, the same was not eligible for weighted deduction under section 35(2AB). Similarly, capitalized interest on purchase of car was also not eligible for t...

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ICAI to increase stipend for CA Articles

A minimum stipend offered to the CA aspirants doing articleship at CA firms will be hiked by 2.5 times to 3 times, president of the Institute of Chartered Accountants of India(ICAI) Jaydeep Shah announced here today. Talking to newsmen on the sidelines of a conference of CA students, Shah said the amount of stipend varies and depends upo...

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Posted Under: Income Tax | ,

Automatic Form 16 with 12BA for F.Y. 2012-13 & A.Y. 2013-14

Automatic Form 16 with 12BA for Financial Year 2012-13 & Assessment Year 2013-14 in Excel Format Download Automatic Form 16 Utility...

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Just because benefits of research may have enduring benefit, expenditure cannot be considered as capital in nature

Scientific Precision (P) Ltd Vs ACIT (ITAT Mumbai)

There is no dispute with the fact that assessee has commenced business activity during the year. As seen from the nature of the expenditure claim by assessee under the head research expenses, the entire expenditure pertains to use of raw material, freight and other expenditure which are in revenue field and there is no capital expenditur...

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Mere taking of a claim, which is not sustainable in law, will not amount to furnishing inaccurate particulars

Assistant Commissioner of Income Tax Vs Shri Jaswinder Singh Ahuja (ITAT Delhi)

The assessee is an individual who is the Managing Director of Cadence Design Systems India Pvt.Ltd. For the AY 2004-05, he filed a return of income at `1,75,05,081/- comprising of salary income at `1,02,72,400/- from Cadence Design Systems India Pvt.Ltd. and salary income of `65,97,305/- from Cadence Design System Inc.,USA. The assessee h...

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Single/Centralized Registration – Revised procedure & documents required

Trade Notice No. 16/ST/2012 (18/06/2012)

Trade Notice 16 dated 18.06.2012. As per this notification, now applicant is required to submit only one address proof and detail of only one major bank account for service tax registration while earlier they were required to submit two address proofs for business address and to submit detail of three major bank accounts....

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Appointment of CA / CA Firms for assessing Operational Risk with Maharashtra State Co.operative Bank Limited Mumbai

We invite sealed quotation for appointment of C.A. firms for identification of 'Operational Risk' of our Banking transactions. Basically, Bank is an Apex Co-operative Bank providing finance & allied services to DCCBs, Co-operative Sugar Factories, Co-operative Spinning Mills, Urban Co-operative Bank, Co-operative Processing & Marketing un...

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Posted Under: Income Tax |

S. 41(1) not applies if Assessee not claimed trading liability as deduction in earlier years in computing business income

ACIT Vs M/s. Delhi State Mineral Development Corporation Ltd. (ITAT Delhi)

Hon'ble Delhi High Court in the case of Vardhman Overseas Ltd. (supra) has observed that section 41(1) has been incorporated in the Act to cover a particular facts situation. Section applies where a trading liability was allowed as a deduction in earlier years in computing the business income of the assessee and the assessee has obtained ...

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S. 35D covers only expenditure which are specifically mentioned therein & nothing beyond

Commissioner of Income-tax Vs Ashok Leyland Ltd. (Madras High Court)

CIT V. Ashok Leyland Ltd. Expenditure incurred in connection with the issue of shares and debentures of the company to public subscription, which qualify for consideration under Section 35D, are underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus and nothing more. There is a re...

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