Katrina kaif held not liable to pay service tax as its paid by her agent

0 comments Sunday, December 30, 2012

Mumbai CESTAT in Katrina Kaif's (famous actress) case has held that once the service tax is paid by agent the assessee herself need not to pay service tax again. Since definition of assessee includes agent, where service tax liability of assessee-actress had been discharged by her agent, service tax could not be demanded from assessee-actress.

This judgement implies that service tax liability can also be discharged by agent of assessee and in which case assessee need not to pay service tax.

Similarly service tax liability can also be shifted by agreement on to the service provider in cases where reverse charge is applicable. Main thing is that revenue should get its due taxes irrespective of the fact who is paying it or on whom it has been shifted by agreement between the service provider and service receiver
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Deduction u/s 54EC for investment made from earnest money before sale of asset whether allowable


Bombay High Court in the Mrs. Parveen P. Bharucha v. Deputy Commissioner of Income-tax, Circle 2, Pune has held that allowing deduction of investment made u/s 54EC from the earnest money/advance of the sale consideration of the Capital asset sold, was a possible view in view of CBDT's circular 359 dated 10-05-1983, which was taken by AO during assessment proceedings u/s 143(3), hence reopening on the ground that investment should have been made after the sale of the capital asset is a mere change of opinion which is not allowed.
Although this judgement is on the point of reassessment, it also brings attention towards circular No. 359 dated 10-05-1983 of CBDT wherein it was directed that deduction for investment u/s 54E(existing at the relevent time) was available even if such investment was made before the date when capital asset was sold and such investment was made out of the earnest money/advance received as being part of net sale consideration.
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Sale of used cars not to be included in gross turnover, if not incidental or ancillary to business


Delhi High Court in Panacea Biotech Ltd. vs Commissioner of Trade and Taxes has held that in pharmaceutical business sale of used car cannot be treated as incidental or ancillary to the business and hence the sale of same cannot be included in the gross turnover.
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Entry tax deferment quarterly statement amended-certain technical flaws exist

0 comments Thursday, December 27, 2012

General circular No. N-1-2011 / spl. 31 - 60  dated : 17.5.2011on Entry Tax deferment issued by Excise & Taxation department, Punjab in pursuance of orders of Punjab & Haryana High Court  has been amended.

The circular has changed the format of quarterly statement of deferment claimed from entry tax to be filed by the persons claiming deferment from the entry tax.
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Due date for efiling of VAT-20 extended

0 comments Wednesday, December 26, 2012



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Investment limit of 50 Lakh u/s 54EC applicable to finanical year and not to transaction

0 comments Saturday, December 22, 2012

 ITAT Bangalore has held in Shri Vivek Jairazbhoy Vs.Dy. Commissioner of Income Tax that limit of investment of Rs. 50 Lakh u/s 54EC of Income Tax Act, 1961 is applicable to a financial year and not to transaction that means if period of 6 months of investment u;/s 54EC spreads to two financial years then investment of more than Rs. 50 Lakh can be made in two such financial years in respect of same transaction.
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Circular on taxability of set top boxes under Delhi VAT

0 comments Tuesday, December 18, 2012

Commissioner, VAT, Department of Trade and Taxes, Delhi has issued a circular clarifying the taxability of set top boxes under Delhi VAT Act, 2004. It has been mentioned that set top boxes are being supplied by cable operators on lease basis against refundable securities.

The circular suggest that such leasing is a deemed sale of goods as transfer of right to use goods.

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Concealing a receipt in return attracts penalty even if due taxes are deposited

0 comments Saturday, December 15, 2012

     The assessee's services were terminated by the foreign company with which he was employed.
     The company Offered him continued employment for a limited tenure, on same terms and remuneration as before.The employer-company paid him an extraordinary compensation of VSD 10 lacs for retention and seaverance of his services.
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Penalties under PVAT Act can be adjusted against Excess ITC

0 comments Friday, December 14, 2012

Section 15 of PVAT Act 2005 deals with the Net Tax Payable by a taxable person. Sub section 1 of Section 15 provides that the output tax under PVAT Act shall be adjusted from the Input Tax Credit for determining Net Tax Payable by a taxable Person. If any excess ITC is still left then it is to be adjusted from the CST liability under CST Act 1956 at the option of the taxable person as per section 15(2) of PVAT Act.

Section 15(3) of PVAT Act provides that the Excess ITC if any left after adjustment of output tax or CST liability u/s 15(1) and 15(2) then such ITC shall be adjusted against any outstanding tax, Penalty or Interest under PVAT Act 2005 or CST Act 1956 as the case may be.
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Public notice under PVAT regarding efiling of returns for third quarter of year 2012-13

0 comments Thursday, December 13, 2012


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No disallowance u/s 40(a)(ia) for short deduction of TDS

0 comments Tuesday, December 11, 2012

Facts: The assessee was engaged in trading of agricultural products. During the course of assessment proceedings, from the tax audit report in Form No. 3CD the Assessing Officer noted that the tax auditor had quantified the amount of Rs. 40,41,233 disallowable under section 40(a)(ia). However, in computation of income the assessee had added back only Rs. 20,16,778. The remaining amount of Rs. 20,24,455 was therefore, disallowed by the Assessing Officer.

Before the Commissioner (Appeals), the assessee submitted that the Assessing Officer ought to have allowed expenditure on which tax had been deducted and should have disallowed the expenditure on which no tax had been deducted. Alternatively, it was argued that proportionate disallowance of Rs. 15,75,239 should have been made.
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Reimbursement of expenses not liable to service tax-Rule 5(1) is ultra vires


Delhi High Court has in a very important case namely Intercontinental Consultants and Technocrats Pvt Ltd Vs UOI held that reimbursement of expenses cannot be charged to service tax by treating the same as part of service charges. Rule 5(1) of Service Tax (Determination of value) Rules has been held as ultra vires to the extent it brings the reimbursement of expenses within the ambit of service tax

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No TDS u/s 194C on transportation if the same is incidental to contract of sale

0 comments Sunday, December 2, 2012

Gujrat High Court has held in  CIT vs Krishak Bharti Cooperative Ltd that TDS u/s 194C will not be applicable on transportation of goods if such transportation is incidental to contract of sale.

In this case where assessee entered into a contract with GAIL for supply of gas to its consumption points through pipelines and in addition to price of gas it had agreed to make separate payments for transportation of gas, it was held that contract was a contract for purchase of gas and not a work contract

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Signature mismatch on cheque may lead to criminal proceedings-SC


  A person may face criminal proceedings if a cheque issued by him gets dishonoured on the ground that his signature does not match the specimen signature available with the bank, the Supreme Court has said. 

A bench of justices T S Thakur and Gyan Sudha Mishra set aside the verdict of Gujarat High Court which had held that criminal proceedings for dishonouring of cheque can be initiated only when the cheque is dishonoured because of lack of sufficient amount in the bank account and not in case where a cheque is returned due to mismatch of signature of account holder. 
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Starting date of Efiling of VAT-20 postponed to 5th december

0 comments Saturday, December 1, 2012




This is to inform all concerned that the e-Filing service for VAT 20 would now be available from 5th December 2012, instead of 1st December 2012 as communicated earlier.
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Step by step guideline for Efiling of VAT-20

1 comments Friday, November 30, 2012
A new website has been launched by the Excise & Taxation Department, Punjab namely COTIS upgrading the system of efiling of VAT returns. Efiling of VAT-20 will also be done on this new website. E-filing of VAT-20 will be done by uploading Xml file, which can be  generated  from the Smart Form VAT-20 software utility and then such XML file will be uploaded.
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Excel utility for filing VAT-20 online

0 comments Thursday, November 29, 2012

VAT-20(Annual Statement) under Punjab VAT Act, 2005 is going to be online w.e.f 01-12-2012. I have received the excel utility software for filing VAT-20 online. The same can be downloaded as below:

Online VAT-20

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Trade mark is "Goods", royalty for its use is liable to VAT


 Kerala High Court in Malabar Gold Private Limited vs. CTO has held that Trader Mark falls within the definition of goods and royalty received for use of Trade Mark is a deemed sale as transfer of right to use goods and liable to VAT/sales tax.

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Income from other source credited to P & L A/C cannot be discarded for computing partner's remuneration

0 comments Wednesday, November 28, 2012

  The assessee-firm derived its income from profession as an advocate. In the profit and loss account, the assessee-firm credited certain amount received as licence fee and compensation for use of shared facilities.
 In the course of assessment, the Assessing Officer opined that since the aforesaid income was not a professional income, the same could not form part of 'book profit' for computation of allowable remuneration to partners under section 40(b).
  The Commissioner (Appeals) upheld the assessment order.
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Crucial date of sale for issuing C forms

0 comments Sunday, November 25, 2012

Many a times I have received a query from different parts of the country that what is the crucial date of sale to be taken while issuing of C forms under CST Act, 1956 i.e whether date of invoice or the date on which goods are received by the purchasing dealer? 

C form is a form for the concessional rate of CST on the inter-state sale of goods and is issued by purchasing dealer in one State to the selling dealer in another State for the inter-state sales transactions done  during the period of three months i.e a quartar.
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Public Notice for exporters of paddy/rice-is it contempt of court?

0 comments Saturday, November 24, 2012

Excise & Taxation Department, Punjab has issued a public notice for Exporters of Paddy/Basmati Paddy/Rice directing them to pay the purchase tax on purchase of paddy even if the rice manufactured out of it is exported. 

It has been further directed in the public notice that dealers exporting rice/paddy should pay purhase tax on the paddy and then they may claim refund afterwards of such purchase tax paid when rice are exported.

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Punjab VAT-Circular and Public notice on works contracts

0 comments Wednesday, November 21, 2012

Punjab circular – Works contract – TDS Deposit guideline

Circular no.01/VAT-1/2012/TD/                              Dated 9-11-2012

1.         The tentative draft paragraph titled "Taxation on works contracts under PVAT" intended for inclusion in Comptroller & Auditor General of India Audit report (Revenue Receipts) of Punjab government for year 2011-12 has highlighted the deficiencies in compliance to provisions of Punjab VAT Act, 2005 by various Departments of State government.
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Advocates of Punjab & Haryana to submit form with photographs to Bar Council for updation

0 comments Saturday, November 17, 2012

Bar Council of Punjab & Haryana is updating its Roll of Advocates enrolled with it. Hence a direction has been issued to all Advocates of Punjab & Haryana for submission of information in the form annexed with the letter issued as produced herebelow. The letter as well as the application form is being produced herebelow for all concerned readers of the blog.
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VAT-20 for year 2011-12 can be filed manually till 20-11-2012

0 comments Friday, November 16, 2012

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Discount after the sale is also a trade discount if given in regular practice of trade


Supreme Court In IFB Industuries Limited vs State of Kerala has held that trade discounts doesnot mean only those discounts which are given on invoice but discounts given after the sale in accordance with the regular practice of trade is also a trade discount and the deduction of the same should be allowed for determining taxable turnover for the purpose of sales tax/VAT.
In this case a division bench of the Kerala High Court has held that unless the discount was shown in the invoice itself, it would not qualify for deduction and further that any discount that was given by means of credit note issued subsequent to the sale of the article was in reality an incentive and not trade discounteligible for exemption under rule 9(a) of the Rules.
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Meaning of expression "Similarly Placed Person" in context of Entry Tax Deferment in Punjab

0 comments Wednesday, November 14, 2012

As we know the Punjab Tax on Entry of Goods into Local Areas Act, 2000 was stayed by Punjab & Haryana High Court in Bhushan Power & Steel Limited vs State of Punjab in CWP 15378 of 2008. Thereafter a lot of writ petitions were filed challenging the said act on similar grounds as was in Bhushan Power & Steel case, whereby the Hon'ble High Court in CWP 18609 of 2011 passed the following order"

"Learned counsel for the petitioners placing reliance upon an order passed by this Court in C.M. No. 2467 of 2011 in C.W.P. No. 15378 of 2008 Bhushan Power & Steel Limited v. The State of Punjab and others, on 28.3.2011 submitted that as the petitioners in these writ petitions are also similarly placed, interim order in the same terms be passed in the present petitions.

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Worship of Hindu Gods is not “religious activity for the purpose of section 80G

0 comments Thursday, November 8, 2012

  Nagpur ITAT has held in Shiv Mandir Devsttan Panch Committee Sanstan vs. CIT that “Hinduism” is not a religion & worship of Hindu Gods is not “religious purpose” while deciding the application for granting of certificate u/s 80G of Income Tax Act.

It is notable that certificate u/s 80G is granted to those organizations only who are established for charitable purposes and Explanation 3 to section 80G provides that charitable purpose doesnot include a purpose which is of religious nature

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Time limit for filing ITR-V forms for A.Ys. 2010-11 and 2011-12 extended to 31-12-2012

0 comments Thursday, November 1, 2012

Notification NO. 1/2012 under CPR Scheme 2011 [F. No. DIT(S)-III/ITR-V Extension/2012-13], Dated 23-10-2012

In exercise of its powers under clause (ii) of Para 14 read with clause (7) of Para 4 of the 'Centralized Processing of Returns Scheme, 2011', issued vide C B D T Notification No. SO 16(E) dated 4.1.2012, the Director General of Income Tax (System) hereby extends the time limit for filing ITR-V forms relating to Income Tax Returns filed electronically (without digital signature Certificate) for A.Y. 2010-11 (filed during F.Y. 2011-12) and for A.Y. 2011-12 (filed on or after 1st April, 2011). These ITR-V forms can now be filed upto 31st December, 2012 or within a period of 120 days from the date of uploading of the electronic return data, whichever is later. This direction is issued to mitigate the hardship and grievance of the tax payers who have been prevented by reasonable causes to file the ITR-V in time.
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VAT-20 (annual statement) in Punjab to be online w.e.f 01-11-2012

0 comments Tuesday, October 30, 2012

Excise & Taxation Department, Punjab has made online filing of VAT-20 (annual statement) under Punjab VAT Act, 2005, for the year 2011-12, mandatory w.e.f 01-11-2012. A public notice to this effect has been issued.  

 The online utility for filing VAT-20 is not available as yet, therefore it is stated in the public notice  that the annual return will now be filed from 1st December 2012 to 31st December 2012.
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No seizure of Jewellery upto 500 grams claimed to be of married lady

0 comments Monday, October 29, 2012

We have duly considered the rival contentions and gone through the record carefully. In the judgement of Hon'ble Gujarat High Court relied upon by the assessee, the scope of the circular bearing no. 1916 has been considered. It is true that this circular was issued by the Board guiding its officials not to seize gold jewellery, if it is found to the extent of 500 grams and claimed to be of a married lady. Similarly, to the extent of 250 grams claimed to be belonging of a unmarried lady and 100 grams claimed to be belonging of male member, than no seizure is to be affected.
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No TDS u/s 194C when transportation done by supplier

0 comments Friday, October 19, 2012


CIRCULAR NO. 9/2012 [F. NO. 275/11/2012-IT(B)], DATED 17-10-2012

Representations have been received from various sections of the Industry on the difficulties faced in the matter of Tax Deduction at Source on Gas Transportation Charges paid by the purchasers of Natural gas to the sellers of gas.
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Works contract service after negative list-Part II(reverse charge)

0 comments Wednesday, October 17, 2012

In the previous article(see previous article here) some aspects of works contract service were discussed. In this continuing article an attempt has been made to discuss the reverse charge mechanism in works contract service.

What is reverse charge: Before jumping to the reverse charge mechanism in works contract service, it is important to understand what is reverse charge.  Normally service tax is payable by the service provider after charging/collecting the same from the service receiver.
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Again two challan forms for VAT payment under Punjab VAT Act, 2005

0 comments Monday, October 15, 2012

 It is for the information of all concerned readers of blog that for VAT payment under Punjab VAT Act, 2005 two challans are required to be filled up. One is VAT-2 and other is VAT-2A. Earlier only one consolidated challan i.e VAT-2 was introduced in suppression of the three challans i.e VAT-2, VAT-2A and VAT-2B w.e.f 14-12-2011. It was a relief for the common taxpayer after the introduction of one consolidated challan in form VAT-2.
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AO must apply his mind before disposing off stay application


Delhi High Court in an important case namely Virgin Mobile India (P.) Ltd. v. Assistant Commissioner of  Income tax has held that while disposing off the stay application of an assessee the assesseing officer must apply his mind and should dispose not outrightly reject the stay application without reasons.

It is generally seen that stay applications are rejected by assessing officers in a mechanical manner. Even  no reasons are given while disposing off the stay applications. The AOs while disposing off stay applications just try to safeguard the interests of revenue and they dont try to see the hardship being caused to assessees if the stay application is rejected. This judgement is a good one to cite before AOs during the hearing of stay applications.
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Due date of Service tax return for April-June-2012 extended to 25-11-2012


Due date for filing of service tax returns for the period 
01-04-2012 to 30-06-2012 has been extended from 25-10-2012 to 

Rule 7 of the Service Tax Rules, 1994 - Returns - Extension of time to file return in form ST3

ORDER NO. 3/2012 [F.No.137/99/2011-ST], dated 15-10-2012
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Works contract service after negative list-Part 1

1 comments Sunday, October 14, 2012

Service portion in the execution of a works contract has been declared as service u/s 66E after the introduction of negative list. That means works contract service per se is not a service but it is a service because it has been declared to be  a service u/s 66E. Here an attempt has been made to elaborate on the works contract service after the introduction of negative list.
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No penalty u/s 51 of PVAT Act when there is voluntary reporting and no Punjab Tax involved

0 comments Friday, October 12, 2012

Punjab & Haryana High court in State of Punjab vs ABB Limited has upheld the order of Tribunal to the effect that when there is voluntary reporting at the ICC when goods were imported into the State of Punjab hence there was no tax of Punjab was involved, therefore no penalty u/s 51 of Punjab VAT Act could be levied.

Held: Tribunal concluded that there was no error on the part of the respondent-dealer as full sales tax on the transaction being inter state sale had been paid and the element of tax in Punjab State was not involved. It was also noticed that there was voluntary reporting at ICC and the goods were accompanied by proper and genuine documents complete in all respects. Also payments for the transactions were made through the banking channels i.e. by cheques and were not kept out of the books of account.
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Direction regarding collection of processing fee under Punjab VAT Act

0 comments Sunday, October 7, 2012



                        All the Deputy Excise & Taxation Commissioners (Divisions),
and  all AETC's (District Incharge) in the state.

No. DETC-VAT-2012/2                      Patiala, dated: 05-10-2012
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Service Tax return required to be submitted by 25th October, 2012 shall cover period between April to June, 2012 only

0 comments Saturday, September 29, 2012
Rule 7 of the Service Tax Rules has been amended so as to provide that the Form ‘ST-3’ required to be submitted by the 25th day of October, 2012 shall cover the period between 1st April to 30th June, 2012 only.

It means that now the ST-3 return required to be filed by 25th October 2012 will be only for the period April-June, 2012 and not for the period of 6 months from April-September, 2012.

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Department cannot take advantage of assessee's ignorance-Bombay HC

0 comments Thursday, September 27, 2012
Bombay High Court in a very important case has held that  Income-tax Deptt. can't take advantage of assessee's mistakes in claiming exemption in IT return and deny him exemption.

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Section 44AB of Income Tax Act-certain points

0 comments Wednesday, September 26, 2012
Due date of filing Income tax return for assessees who are liable to get their books of accounts audited is 30th September. Since the due date is nearing, lets get some points refreshed on section 44AB.
Who has to get his accounts audited compulsorily:

1.A Person carrying on business is required to get his books of account compulsorily audited u/s 44AB If the total sales, turnover or gross receipt in business for the previous year relevant to assessment year exceed or exceeds Rs. 60 Lakh for the Assessment year 2011-12 and 2012-13 (Rs. 1 Crore from the assessment year 2013-14).
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Service tax on legal services under reverse charge mechanism stayed by Delhi High Court

0 comments Tuesday, September 25, 2012

Service Tax on Legal services under reverse charge mechanism  was imposed by Central Government w.e.f 01-07-2012. Thereby recepient of service, if its a business entity was made liable to pay service tax on the legal services received.

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C forms can be issued for purchase of goods used in telecommunication even if such goods not resold

0 comments Sunday, September 23, 2012

Andhra Pardesh High Court in a very important judgement namely Indus Towers Limited vs Commercial Tax officer has held that C forms can be issued for the purchase of goods used in the telecommunication network even if such goods are not resold.

The Hon'ble High Court held as under:

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Income tax and TDS rate on interest income of Non-resident reduced to 5%

 Interest Income of a Non-Resident Investor will now be taxed at the reduced rate of 5 per cent instead of the existing rate of 20 per cent and withhold Tax on such Income has also been reduced to 5 per cent

Section 194LC of the Income-tax Act, 1961 – Income by way of Interest from Indian Company – Approval of loan agreements/long term infrastructure bonds and rate of interest for the purpose of Section 194LC

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CST (Punjab) Rules amended-Statutory forms under CST to be online

0 comments Saturday, September 22, 2012
Rule 7 of Central Sales Tax (Punjab) Rules has been amended to provide for the issuance of online statutory forms i.e C, F, H, E-I, E-II and I forms under Central Sales Tax Act, 1956. The rules provide for compulsory filing of returns in the Form-1 and VAT-18 and VAT-19 by every dealer registered under CST Act.

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Entry Tax in Punjab increased by 0.5% w.e.f 18-09-2012

0 comments Tuesday, September 18, 2012
Entry Tax rates has been enhanced by the Excise & Taxation Department, Punjab by 0.5% on all the goods w.e.f 18-09-2012. This increase has been made and also was expected after the increase in the VAT rates by 0.5% on almost all the goods under Punjab VAT Act, 2005. 

However no notification confirming the increase in entry tax rates is available as yet but a public notice to this effect has been issued which confirms the increase in the rates of entry tax rates w.e.f 18-09-2012.
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Cost Inflation Index for Financial year 2012-13 notified

0 comments Monday, September 17, 2012

Cost Inflation Index for financial year 2012-13 has been notified and the same is 852

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Scrutiny, audit, assessment processes under Punjab VAT to be handed over to external agencies

0 comments Saturday, September 15, 2012
Excise & Taxation Department, Punjab is looking forward to handover the scrutiny, audit and assessment process in the hands of some external agency for a limited period of 8 months to 1 year till the time the new system i.e. Compuerisation of Tax Information System (COTIS) is fully implemented.

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Transactions through MCX stock exchange are non-speculative after 01-04-2006

Mumbai ITAT has held that the transactions carried out through MCX Stock Exchange after 1st April 2006, would be eligible for being treated as non-speculation within the meaning of clause (d) of proviso to section 43(5).  

It is held by ITAT in this case as follows : 
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No TDS on discount given to Stamp Vendors for purchasing stamps in bulk quantity

0 comments Tuesday, September 11, 2012
The assessee, an association of stamp vendors, bought stamps from the State Govt. at a discount. The department claimed that the stamp vendors were “agents” of the State Govt. and that the said discount was “commission or brokerage” and the State Govt. ought to deduct TDS u/s 194H. The assessee filed a Writ Petition to challenge the department’s action. The Gujarat High Court upheld the assessee’s plea that (a) title in the stamps passed to the vendors and that they were not “agents” of the State Govt. but were transacting on a “principal to principal” basis and (b) the discount available to the stamp vendors was not “commission or brokerage” so as to fall within s. 194H. On appeal by the department to the Supreme Court, HELD dismissing the appeal:
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Lower/Nil rate of tax deduction certificate for works contractors under Punjab VAT Act, 2005


It is ussualy seen that works contractors registered under Punjab VAT Act, 2005 have always refund to claim from the Excise & Taxation department due to the fact that their final tax liability is much lower/Nil than the tax deductions made u/s 27 of Punjab VAT Act, 2005. It results in blocking of their working capital till the time they get refund from the Department.The solution to it is to resort to section 27(10) of Punjab VAT Act, 2005.

The relevant provisions of PVAT Act 2005 and certain relevant judgements have been discussed herebelow in this regard
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Processing fee levied on all VAT dealers, luxury tax, lump sum tax on brick klins doubled in Punjab

0 comments Wednesday, September 5, 2012
Excise & taxation Department, Punjab has levied processing fee of Rs. 800 on every taxable dealer (i.e Person having VAT registration) in Punjab under a new Rule 40-A of Punjab VAT Rules, 2005. This rule provides as under:

"Every taxable person shall pay annual processing fee of Rs. Eight Hundred only during the month of October alongwith the filing of quarterly return. This processing fee is in lieu of operation, maintenance and upgradation of such facilities and services as electronic issuance of statutory forms, e-filing of returns, e-payment of taxes and such other online and offline services being rendered or proposed to be rendered by the Excise and Taxation Department."
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House lacking basic amenities does not qualify for exemption u/s 54

In the instant case, in order to examine the entitlement of the assessee for exemption under section 54, it is to be seen whether the assessee had constructed residential house within three years of the transfer of his property. For doing so, the meaning of the term ‘house’ is to be explored. The term ‘house’ has not been given any statutory definition and, thus, has to be assigned meaning as understood in common parlance. As per dictionary, it means abode, a dwelling place or building for human habitation. A building, in order to be habitable by a human being, is ordinarily required to have minimum facilities of washroom, kitchen, electricity, sewerage, etc.
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Powers u/s 8(3) of PVAT Act should be exercised in exceptional circumstances

0 comments Monday, September 3, 2012

Section 8(3) of Punjab VAT Act, 2005 provides that a prior 15 days notice is required to be issued by notification of intention to amend the schedules, before any schedules are amended. However the State Government may also dispense with the requirement of issuance of the prior notice if the circumstances so exist. Section 8(3) runs as under:
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Notifications relating to VAT increase by 0.5% in Punjab


Punjab Government has increased the VAT rate by 0.5% on almost all goods under Punjab VAT Act, 2005 for which a public notice was issued earlier in the newspapers. Now the official notifications are available and  sharing the same herebelow for the benefit of all concerneds.

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VAT rate in Punjab increased by 0.5% w.e.f 03-09-2012

0 comments Sunday, September 2, 2012
Punjab Government has increased the rate of VAT on all goods in Punjab by 0.5% under the Punjab VAT Act, 2005 w.e.f 03-09-2012.

Thus the rate of tax on all the goods stand increased by 0.5% w.e.f 03-09-2012. For example in case of goods mentioned under Schedule B rate of tax would be now @ 5.5% and after adding surcharge @ 10% the rate of tax would be 6.05%.
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Punjab's traders may move HC against processing fee, e-TRIP

0 comments Saturday, September 1, 2012

 Traders in Punjab are mulling approaching the High Court against the state government's decision to levy new processing fee and e-TRIP system. "We are going to have a meeting soon in which the trading community and various industry associations will participate to collectively decide about next course of action which may also include approaching the (Punjab and Haryana) High Court, having protest rallies against the processing fee and e-TRIP," Punjab Pradesh Beopar Mandal, President, Amrit Lal Jain told PTI today. "We are already in touch with prominent High Court lawyers to give their opinion on how to go about against processing fee and e-TRIP," Mandal’s Secretary, Mohinder Aggarwal said. 
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Clarification-service tax on vocational education/training course

0 comments Wednesday, August 29, 2012
Circular No. 164/15/2012-ST,   New Delhi, 28th August, 2012

Subject:  service tax – vocational education/training course  — regarding.

            Clarification has been sought in respect of levy of service tax on certain vocational education/training/ skill development courses (VEC) offered by the Government (Central Government or State Government) or local authority themselves or by an entity independently established by the Government under the law, as a society or any other similar body.

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Doctor's remuneration to suffer TDS u/s 192 and not 194J, if he is governed by service rules of employer

0 comments Sunday, August 26, 2012

ITAT Ahemdabad in DCIT vs Wockhardt Hospitals Ltd. has held that Where assessee-hospital engaged some doctors on fixed monthly remuneration, and doctors were governed by its service rules, remuneration paid was taxable as 'salaries' and liable for deduction of tax under section 192.
In this case the assessee-company was running hospital with branches. It had engaged services of some doctors and was deducting TDS from payments made to them under section 194J. According to the assessee, the doctors were appointed as consultants whose remuneration was liable for TDS under section 194J and there was no employer and employee relationship. The Assessing Officer, however, treated the relationship between the doctors and the assessee as one of employer and employee and held that said payments were liable to TDS under section 192. The Commissioner (Appeals) allowed the assessee's appeal.

On the revenue's appeal it was held as under:

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No reopening in the absense of tangible material even when only intimation u/s 143(1) was issued originaly

0 comments Friday, August 24, 2012

Gujrat High Court in Inductotherm (India) Pvt. Ltd. vs CIT has held that reopening of aseessment u/s 147/148 would be invalid when no new material has come before the AO even when no assessment u/s 143(3) was framed earlier but only an intimation u/s 143(1)(a) was issued.

In this case: For AY 2002-03, the AO issued an Intimation u/s 143(1) accepting the return. Subsequently, based on objections raised by the audit, he issued a s. 148 notice to reopen the assessment. The AO set out four issues in the recorded reasons and for two he stated that the reopening was to “verify” the expenditure. The assessee filed a Writ Petition to challenge the reopening inter alia on the ground that there was no reason to believe that income had escaped assessment. 

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E-trip in Punjab-is it valid?

0 comments Monday, August 20, 2012
Excise and Taxation Department, Punjab has made it mandatory to furnish information regarding intra-state movement of goods (within Punjab) by all persons making sales of Rs. 3 Lakh or above in a single transaction except in the case of Iron and Steel where this threshold shall be Rs. 2 Lakh instead of Rs. 3 Lakh and above. 

This mandatory uploading of intra-state transaction has been made compulsory by merely a public notice. 
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Works contract services provided by sub-contractor in exempt works contract services, exempt from service tax

0 comments Friday, August 17, 2012
Recently I received a query that under the negative list of services regime whether in a works contract service which is exempt from service tax, sub-contractor would also be exempted from payment of service tax?

The answer to the above question is being provided under serial No. 29 sub-clause (h) of the mega Notification, which provides that service provided by following person in respective capacities are exempt from service tax :

(h) sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt[Notification No. 25/2012-ST, dated 20.06.2012]

The above entry makes it clear that if the principal contractor is providing an exempt works contract service [for example providing works contract service to Government] then in such case if some part of the works contract is sub-contracted then the sub-contractor would also be exempt from payment of service tax.
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Deduction u/s 54F available even if flat purchased in daughter's name

0 comments Wednesday, August 15, 2012

Briefly the facts are during the relevant previous year, the assessee has sold 1,10,000 shares for a consideration of Rs.96,36,519. Out of sale consideration of shares, the assessee invested a sum of Rs.55,68,662/- for purchasing a flat in the name of his minor daughter. The assessee claimed the amount invested in purchase of flat as a deduction u/s 54F (1) of the Act. The AO disallowed the deduction claimed on the ground that the flat was not purchased by the assessee in his own name. The AO relying upon different High Courts’ decisions and also a decision of ITAT, Nagpur Bench in case of ITO vs. Prakash Timaji Dhanjode 258 ITR (AT) 0114 held that the assessee is not entitled for deduction u/s 54F(i). Assessee being aggrieved by the assessmentorder filed an appeal before the CIT (A). Since the AR of the assessee or no one appeared before the CIT (A) on the last date fixed on 28-11-2011 the appeal was decided by the CIT (A) on the basis of statement of facts and grounds of appeal filed before him. The CIT (A) upheld the reasoning of the AO that since the property was purchased in the name of the assessee’s doughter and not in the name of the assessee himself, no deduction u/s 54F can be allowed.
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Income from other sources included in P&L A/c to be considered for calculating Book Profits for the purpose of section 40(b)(v)

0 comments Monday, August 6, 2012

Calcutta High court in Serajudding & Brothers vs CIT has held that Even if the income from other sources is included in the profit and loss accounts to ascertain the net profit in relation to book-profit for computation of the remuneration of the partners u/s 40(b)(v) the same cannot be discarded.

It means that book profits for the purpose of calculating remuneration of partners in a partnership firm u/s 40(b)(v) will include income from other sources as well if the same has been included in the Profit & Loss Account. In such case not the profits computed under the head Business alone to be considered as Book Profits for the purpose of section 40(b)(v) but other income included in P&L A/c has also to be considered as part of Book Profits for the purpose of section 40(b)(v).
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CBDT clarifies, extended due date of 31-08-2012 applies to all returns which were due to be filed by 31-07-2012

0 comments Wednesday, August 1, 2012
The CBDT has issued the following Press Release dated 01.08.2012

 PRESS RELEASE [No. 402/92/2006-MC (20 of 2012)], dated 1-8-2012

A section of Media has reported that the Central Board of Direct Taxes has extended ‘due date’ of filing of returns to 31st August, 2012 in respect of only those returns which were to be e-filed by 31st July, 2012. It is clarified that the notification issued by the Board on 31st July, 2012 has extended the ‘due date’ of filing of all returns for the Assessment Year 2012-13 which were due to be filed by 31st July, 2012 to 31st August, 2012.

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Get ready to pay professional tax in Punjab


The Punjab government, which is expecting to mop up Rs 500 crore by imposing a tax on the self-employed and salaried professionals, is looking up to Bihar to finalise the modalities. Bihar, governed by Nitish Kumar-led JDU-BJP combine imposed the professional tax in September last year and fund-starved SAD-BJP government in Punjab, led by Parkash Singh Badal, has decided to follow suit.
Punjab will be the tenth state to tax the professionals and, following the Bihar model, will be charging Rs 1,000 to Rs 2,500 depending on the salary of the employed. The slab, incidentally is one of the highest in comparison to the tax imposed in other states.
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Natural justice denied to assessee at assessment stage cannot be cured by sufficient natural justice at appellate stage

0 comments Tuesday, July 31, 2012

Delhi ITAT in Jai Karan Sharma vs DCIT has gone one step further by holding that where natural justice is denied to the assessee in the assessment proceedings then such defect can not be cured at the appellate level as well.
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54EC exemption not available against deemed capital gain calculated u/s 50C


Section 54EC provides for exemption from tax on long-term capital gain when the capital gain arises from the transfer of long-term capital asset and the whole or any part of the said capital gain is invested in certain bonds within the period of 6 months. Section 54EC speaks of the actual capital gain which arises out of transfer of long-term capital asset and not deeming amount. Whereas section 50C provides for deeming fiction where value of consideration is adopted as per the stamp valuation authorities or any authority of the State Government. Even if the property has been sold at a lesserprice but under the deeming fiction of section 50C, the value adopted by the stamp valuation authorities is to be taken as sale consideration. Such a deeming fiction cannot be imported into section 54EC. Hence, the deemed value cannot be considered for the purpose of exemption under section 54EC. Thus, for the purpose of deduction under section 54EC, the sale value would be taken at Rs. 16 lakhs, which is the actual sale consideration and has been invested in the bond. At the same time, for the working of the long-term capital gain, the sale consideration will be taken up as per the value determined under section 50C, which is at Rs. 24.48. Thus, the sale value for the purpose of computation of long-term capital gain would be taken at Rs. 24.48 lakhs.
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Agents of NRIs, Private Discretionary trusts exempted from mandatory efiling even if income exceeds 10 lakhs



Subject: Relaxation from compulsory e-filing of return of income for assessment year 2012-13 – for representative assesses of non-residents and in the case of private discretionary trusts -reg

Rule 12 of the Income-tax Rules, 1962 mandates that an individual or Hindu undivided family, if his or its total income or the total income in respect of which he is or it is assessable under the Act, during the previous year, exceeds ten lakh rupees, shall furnish the return electronically for the assessment year 2012-13 and subsequent assessment years.

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Due date for filing return of income for A.Y. 2012-13 extended to 31-8-2012


Due to power failure across Northern and Eastern states, the CBDT extended the due date for filing I-T returns to 31st August from 31st July
The Central Board of Direct Taxes (CBDT) has extended the due date for filing income tax (I-T) returns for assessment year 2012-13 to 31st August from 31st July. This means, you can file your I-T returns for FY2011-12 till 31st August.
CBDT, in a notification said, "On consideration of the reports of disturbance of general life caused due to failure of power, the CBDT in exercise of powers conferred under section 119 of the Income Tax Act, 1961, hereby extends the ‘due date’ of filing of returns of income for the Assessment Year 2012-13 to 31 August 2012".

Order under Section 119 of the Income Tax Act, 1961

order [f.no225/163/2012/ita-ii], dated 31-7-2012

On consideration of the reports of disturbance of general life caused due to failure of power and further in consideration of the fact that the e-filing of returns for a specified category of individuals and HUF has been made mandatory, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961, hereby extends the 'due date' of filing of returns of income for the Assessment Year 2012-13 to 31st August 2012 in respect of assessees who are liable to file such returns by 31st July 2012 as per provisions of section 139 of Income Tax Act, 1961.
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Fishing inquiries unconnected with reasons recorded in income tax reassessment proceedings not allowed

0 comments Sunday, July 29, 2012

It is generally seen in the reassessment proceedings u/s 147 of Income Tax Act, 1961, the assessing officers tend to make inquiries and ask questions  even at the start of the reassessment proceedings which are totally unconnected to income that is believed to have escaped assessment in the reasons recorded for reassessment proceedings.

I have seen  some cases where questionnaire being issued in the reassessment proceedings contain no question relating to the income believed to have escaped assessment in the reasons recorded but  different questions totally unconnected to the reasons recorded are being asked.
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VAT on Sugar, amended rate of tax on cell phones applicable w.e.f 25-07-2012 in Punjab

0 comments Wednesday, July 25, 2012
Few days back there was a news that VAT on sugar has been imposed by Punjab Government @ 5%, but no notification publicly was available confirming the same. Now Excise & Taxation Department, Punjab has issued a public notice confirming that VAT @ 5% has been imposed on sugar w.e.f 25-07-2012.

It has also been clarified that surcharge will not be applicable on sugar hence rate of tax on sugar will be 5% only and not 5.5%.
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Punjab VAT-Uploading of Intra-state Transaction(within Punjab) made compulsory

Excise & taxation Department Punjab has made uploading of intra-state movement of goods i.e movement of goods within the state of Punjab upto Rs. 2 lakh in case of Iron & Steel Goods and Rs. 3 Lakh in other case on the official website of the Department i.e www.pextax.com, compulsory w.e.f 10th August 2012.

Section 51 of Punjab VAT Act, 2005 stipulates that every movement of goods shall be accompanied by documents as mentioned in sub-section 2 of this section. For the purpose of inter-state trade, information regarding such movement of goods is collected on the Information Collection centres(ICC) set up by the Department of Excise & taxation Punjab. To facilitate the furnishing of this information, the Department had introduced an e-service namely"e-ICC" whereby the owner of goods can furnish this information from his premises.

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Property jointly owned not to be added in calculating Residential houses owned by Assessee u/s 54F

0 comments Monday, July 23, 2012

A reading of the provisions contained in Section 54F(1), as it stood at the relevant point of time, shows that exemption from payment of tax on the capital gains arising on thetransfer of any long-term capital asset not being a residential house is available to an assessee being a Hindu Undivided Family or an individual, if the long-term capital gain is invested in purchasing a residential house or constructing the residential house within the time stipulated therein. Proviso to sub section (1) states that the exemption contemplated under sub section (1) would not be available where an assessee owns a residential house as on the date of thetransfer and that the income from the residential house is chargeable under the head “income from house property”. The Finance Act, 2001 amended the proviso with effect from 2001-02 to permit exemption under Section 54F, even if the assessee has owned one residential house as on the date of transfer, other than the new asset, or purchase in investments any residential house other than the new asset within a period of one year or three years as the case may be, but after the date of transfer of the original asset and the income from such residential house other than the one owned on the date of transfer of the original asset is chargeable under the head “income from house property”.
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Section 14A can't be invoked in respect to income, for which deduction under Chapter VI-A is claimed

Delhi High Court in the following important case namely CIT vs Kribcho has held that disallowance u/s 14A cannot be made for income for which deduction under chapter VI-A is claimed.

Section 14A states that for the purpose of computing total income under Chapter IV, no deduction shall be allowed in respect of expenditure incurred in relation to the income which does not form part of the total income under this Act. It does not state that income which is entitled to deduction under Chapter VI-A has to be excluded for the purpose of the said section.
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Exemption u/s 54F available if investment made after due date u/s139(1) but before date of filing of belated return


In the instant case, it is found that the eligible new asset was not purchased within one year before the date on which thetransfer of the original asset took place. Thus, the amount which is not utilized by the assessee for the purchase of new asset before the date of furnishing the return of income under section 139 was required to be deposited as per the provisions of sub-section (4) for availing deduction under section 54F in respect of those amounts also. In other words, as per the plain language employed in the above sub-section (4), only the amount which was actually utilized by the assessee for the purpose of purchase of the new residential house before the date of furnishing of the return of income under section 139 shall only be eligible forcomputation of deduction under section 54F(1). It is found that in the instant case it is not in dispute that the return of income for the relevant year was filed by the assessee on 9-1-2009, which is the date of furnishing of return of income under section 139 by the assessee. Thus, it is held that considered view, the amount utilized by the assessee for purchase of new residential house before 9-1-2009 qualifies for consideration with reference to which deduction under section 54F(1) is to be computed. Thus, the Commissioner (Appeals) was not justified in holding that only the amount which was utilized by the assessee before 31-3-2008 only qualifies for deductionunder section 54F. The assessee claimed that Rs. 15 lakh was utilized by him for the purchase of new residential flat on or before 9-1-2009. The orders of the lower authorities on this issue is, therefore, set aside and the Assessing Officer is directed to verify the amount which was invested by the assessee before the date of furnishing of return of income under section 139 by the assessee and, thereafter, allow the deduction under section 54F(1) with reference to the said amount as per law. Needless to mention that he shall allow reasonable and proper opportunity of hearing to the assessee before adjudicating the issue afresh.
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