CBDT's circular on reopening of assessments due to retro law in Finance Act, 2012

0 comments Thursday, May 31, 2012

The Finance Minister had stated earlier that CBDT will issue a policy circular to clarify that in cases where assessment proceedings have become final before first day of April, 2012; such cases shall not be reopened.  

 Now CBDT has issued a letter confirming statement of Finance Minister. The Letter is as follows:

Letter [F.No.500/111/2009-FTD-1(Pt.)], dated 29-5-2012
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Service tax (settlement of cases) rules, 2012

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Service tax (settlement of cases) rules, 2012
NOTIFICATION NO. 16/2012-ST, DATED 29-5-2012
In exercise of the powers conferred by clause (j) of sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as “the Act”), read with sections 31, 32 and 32A to 32P of the Central Excise Act, 1944 (1 of 1944) made applicable to service tax vide section 83 of the Act, 1994, the Central Government hereby makes the following rules, namely:-
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Service Tax- Compounding of offences Rules, 2012

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NOTIFICATION NO. 17/2012-ST, dated 29-5-2012

In exercise of the powers conferred by clause (i) of sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994)(hereinafter referred to as “the Act”) read with sub-section (2) of section 9A of the Central Excise Act, 1944 (1 of 1944), made applicable to service tax vide section 83 of the Act, the Central Government hereby makes the following rules, namely :

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TDS credit mismatching limit restricted to Rs. 5000 from 1 lac for processing of returns of A.Y. 2011-12

0 comments Sunday, May 27, 2012
CBDT has revised its instructions relating to matching of TDS credit for processing of returns of A.Y. 2011-12. CBDT has withdrawn its earlier instruction No. 01/2012 issued on 2nd Feburary 2012.


Earlier in the withdrawn instruction it was instructed that TDS credit will be allowed if the mismatching in TDS doesnot exceed Rs. 1 lac. Now CBDT has revised this limit to Rs. 5000/- only.

Revised instructions are as follows:
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Section 40(a) not applicable to charitable trusts-no disallowance for non deduction of TDS

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Mumbai ITAT has held in Mahatma Gandhi Seva Mandir Versus Deputy Director of Income-tax (E) 1(2), Mumbai that provisions of section 40(a) are not applicable while computing income of charitable trusts u/s 11 of Income Tax Act, 1961.

In this case disallowance u/s 40(a)(ia) was made by AO while computing income of the assessee-a charitable trust on the ground that TDS was not deducted on the certain payments made by trust and it was violation of section 40(a)(ia).

However the Tribunal held as under:

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Stamp Papers have no expiry period-valid even after 6 months of purchase

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I have found the following judgement of Supreme Court on the issue of expiry period of stamp papers under Indian Stamp Act, 1899 as very useful one. In this case it has been held by Supreme Court that Stamp Papers do not have any expiry period under The Indian Stamp Act, hence it will be valid even after the purchase of 6  months.

Supreme Court in this case held as under:
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Persons carrying on agency business or earning commission income should revise their return for A.Y 2011-12, if original return filed u/s 44AD

0 comments Sunday, May 20, 2012
In the Finance Bill 2012 section 44AD has been amended retrospectively w.e.f A.Y. 2011-12 to the effect that presumptive scheme under the said section is not applicable to

persons carrying on profession as referred to in section 44AA(1) or

persons earning income in the nature of commission or brokerage income or 

 persons carrying on any agency business.
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Exemption u/s 54 available on exchange of an old flat with new one

0 comments Saturday, May 19, 2012
Mumbai ITAT has held in an important case namely Shri Jatinder Kumar Madan vs ITO that exemption u/s 54 will be available for exchange of an old flat with new one as it amounts to construction of a residential house u/s 54 eligible for exemption.

It is notable here that exchange of capital asset also amounts to transfer of capital asset u/s 2(47) of Income Tax Act and consequently capital gain arises out of it.
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Relief u/s 54EC available if investment made within 6 months of receipt of consideration instead of date of transfer

0 comments Wednesday, May 16, 2012
Pune ITAT in Mahesh Nemichandra Ganeshwade vs ITO taking a liberal view on section 54EC has held that investment u/s 54EC can be made within 6 months from the date of receipt of consideration if the same could not be made  within 6 months from the date of transfer of the capital asset.

ITAT relying upon the circular No. 791 dated 02.6.2000 of CBDT wherein CBDT has held in the context of capital gains arising u/s 45(2), that though the transfer arises in the year of conversion of a capital asset into stock-in-trade, the period of 6 months for investment u/s 54E has to be reckoned from the date of sale of the stock-in-trade, allowed the exemption u/s 54EC in such case.
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Constitutional provisions relating to taxation-How important to understand tax laws

0 comments Monday, May 14, 2012

Constitution is the foundation and source of powers to legislate all laws in India. Parliament, as well as State Legislatures gets the power to legislate various laws from the Constitution only and therefore every law has to be within the vires of the Constitution.

Talking about the taxation laws and the interpretation of taxation laws, every lawyer or a tax professional practicing taxation laws must understand the basic provisions of Constitution relating to taxation including the powers of Parliament and State Legislatures to legislate regarding levy and collection of tax, the restrictions imposed by our Constitution on such powers, entries concerning taxation in Central List i.e List-1 and State List i.e List-2 of Seventh Schedule to Constitution of India.
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Lump sum sales tax on brick klin owners on the basis of production capacity is unconstitutional

0 comments Tuesday, May 1, 2012

Punjab & Haryana High Court in M/s Balaji Bricks Industries & Another v State of Punjab [VSTI 2012 P&H B-238] has held that lump sum scheme for payment of sales tax on the basis of production capacity of Brick Klin owners is ultra vires of Article 246 read with Entry 54, List-II-State List of Seventh Schedule of Constitution.

The brick klin owners were being subjected to lump sum tax under section 5(4) of Punjab General sales tax Act, 1948. The grievence of the petitioners was that they(brick klin owners) cannot be subjected to a lump sum tax which is determined on the basis of the capacity of brick klin rather than actual sales.
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