Exemption u/s 54 available on exchange of an old flat with new one0 comments Saturday, May 19, 2012Mumbai 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. Relief u/s 54EC available if investment made within 6 months of receipt of consideration instead of date of transfer0 comments Wednesday, May 16, 2012Pune 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. Constitutional provisions relating to taxation-How important to understand tax laws0 comments Monday, May 14, 2012Constitution 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. Lump sum sales tax on brick klin owners on the basis of production capacity is unconstitutional0 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. Punjab VAT Department launched special drive for surveying unregistered persons liable to be registered1 comments Tuesday, April 24, 2012Excise and Taxation Department, Punjab has launched a special drive for finding out the unregistered dealers by way of survey u/s 48 of Punjab VAT Act, 2005, who are eligible for registration under Punjab VAT Act but may not have registered as yet.
All the AETCs incharge of all the districts have been instructed to conduct systematic survey u/s 48 read with section 60 of Punjab VAT Act, 2005 to find out such unregistered persons. The copy of Public notice is being produced herebelow: Transfer of Right to use goods-deemed sale or a service7 comments Sunday, April 15, 2012Transfer of Right to use goods for cash, deferred payment or valuable consideration is considered as deemed sales under sub-clause (d) of Article 366(29A) of Constitution of India and also consequently under Punjab VAT Act and CST Act liable to VAT and CST respectively. Right to use of tangible goods service has also been brought under service tax net by the Finance Act, 2008, w.e.f 16-05-2008 vide notification No. 18/2008-ST, dated 10-05-2008.whereby taxable service has been defined u/s 65(105)(zzzzj) of Finance Act, 1994 to mean as “any services provided or to be provided, to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances”. Section 40(a)(ia) applicable to expenses payable at the end of year and not to expenses paid during the year0 comments Thursday, April 12, 2012Vishakhapatnam Tribunal has held in the following case that disallowance u/s 40(a)(ia) due to non deduction of TDS is applicable to the expenses payable only and not to the expenses already paid in the previous year. The object behind section 40(a)(ia) which I understand is to disallow those expenses which are expanded without deduction of requisite TDS, however the Tribunal has interpreted the word “payable” in section 40(a)(ia) strictly and consequently has held that said section doesnot apply to the expenses already paid. Limit u/s 54EC can exceed Rs. 50 lakh if investment spreads over two financial years-ITAT Ahmedabad0 comments Thursday, April 5, 2012ITAT Ahmedabad has held in the follwing case that exemption u/s 54EC although is limited to Rs. 50 Lakh in one financial year but such exemptiuon can exceed Rs. 50 lakh if inbvestment is spread over two financial years. It has also been held that if the delay in investment of bonds is due to the fact that bonds were not available then such delay can be condoned and exemption will be allowed. It is notable here that recently Jaipur ITAT in Assistant Commissioner of Income-tax, Circle-2, Ajmer v. Shri Raj Kumar Jain & Sons (HUF) [2012] 19 taxmann.com 27 (Jaipur - Trib.) held that as per section 54EC investment within 6 months is investment for that particular financial year in which transfer has taken place and said period of six months would not include some part of subsequent financial year. Applying correct rate of depericiation is not a fresh claim, can be allowed by ractification letter0 comments Sunday, April 1, 2012Chennai ITAT has held in an following case namely ITO vs. Sri Balalji Sago and Starch Products that rate of depericiation if wrongly applied in the return of income and assessment proceedings the same can be ractified by filing letter for ractification of mistake, since applying incorrect rate of depericiation is an error apperant on record and there is no need to file revised return for it. It is further held that judgement of Supreme Court in Goetze (India) Ltd. v. CIT 284 ITR 323 to the effect that no fresh claim can be made except by filing revised return is not appliocable to the facts of this case as the assessee while asking for applying correct rate of depericiation, is not making any fresh claim so as to file revise return. Individuals and HUFs having foreign assets cannot file Sehaj and Sugam forms, efiling for income exceeding 10 lakhs also made mandatory0 commentsRule 12 of Income Tax Rules have been amended so as to provide that a resident individual and HUFs having any asset (including financial interest in any entity) located outside India; or a signing authority in any account located outside India shall not be be eligible to file return of income in ITR-1(Sehaj form) and ITR-4 (Sugam Form). Efiling of returns from A.Y. 2012-13 by individuals and HUFs having income exceeding Rs. 10 lakh and the individuals and HUFs having any asset (including financial interest in any entity) located outside India; or a signing authority in any account located outside India and required to furnish the return in Form ITR-2 or ITR-3 or ITR-4, has also been made mandatory. Order passed against payer under section 195, read with section 201(1)/(1A), would be invalid, if no action against payee is taken and time limit u/s 148 also expired0 commentsMumbai ITAT has held in a case namely Crompton Creaves Ltd. vs DCIT that Where revenue had not taken any action against payees for non-deduction of tax at source and time-limit for taking action against them under section 148 had also expired, order passed against payer under section 195, read with section 201(1)/(1A), would be invalid. Lump sum scheme for payment of service tax in works contract introduced0 comments Tuesday, March 20, 2012In works contract service lump sum scheme for payment of service tax in a works contract has been introduced by amendment in Rule 2A of the Service Tax (Determination of Value) Rules, 2006 vide Notification No. 11/2012 - Service Tax dated 17-03-2012. In works contract service there were two types of schemes which were earlier available i.e payment of service tax on actual service involved and the composite scheme. In the composite scheme service tax @ 4.8% is required to be paid on the total value of the whole contract including material part, while in the other case service tax is required to be paid on the actual value of labour and services incorporated in works contract(which can be possible where proper books of accounts are being maintained). Rate of tax in composite scheme under works contract service enhanced to 4.8%0 commentsRate of tax in composite scheme in Works contract service has been changed w.e.f 01-04-2012. The earlier rate of tax in the composite scheme was 4% which now has been enhanced to 4.8%.
Rule 3 of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, has been suitably amended whereby for the words ―four per cent, the figures and words ―4.8 per cent has been substituted. Reverse Charge Mechanism in service tax-more clarifications in works contract service required0 comments In the Budget-2012-13 under the new Reverse Charge Mechanism in certain services the receipient of the service has been made liable to pay tax instead of service provider. In three of services namely hiring of means of transport, construction and man power supply both service receiver and service providers have been made liable to tax in the prescribed percentages. Section 68(2) of the Finance Act, 1994 has been suitably amended in the budget of 2012-13 whereby a proviso has been added to the said section authorising Central Government to notify the service and extent of service tax payable by such person and extent of service tax payable by service receiver. Proposed income tax amendments in Budget 2012-13-Part-20 comments Monday, March 19, 2012Consideration in excess of F.M.V of shares to be treated as income from other source if consideration received is in excess of Face Value of shares: It is proposed to insert a new clause (viib) in the aforesaid sub-section so as to provide that where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be chargeable to income-tax under the head “Income from other sources”. However, the said new clause shall not apply where the consideration for issue of shares is received by a venture capital undertaking from a venture capital company or a venture capital fund. Proposed amendments in Budget 2012-13 in Taxation-Part 10 comments Saturday, March 17, 2012RATES OF INCOME-TAX after Budget 2012 presented on 16.03.2012 A. Normal Rates of tax:
Fair Market Value assessed by DVO to be adopted even if its lower than stamp duty valuation0 comments Wednesday, March 14, 2012Kolkata ITAT has held in the following case that Where fair market value assessed by DVO is lower than stamp duty valuation, value adopted by DVO has to be adopted for computing LTCG. In this case during the relevant assessment year, the assessee sold certain property and disclosed sale consideration in the sale deed for her half share at Rs. 20 lakhs and computed long-term capital gains at nil by taking indexed cost of acquisition at Rs. 30.81 lakhs. The Assessing Officer noticed from the sale deed that the stamp valuation of the property was at Rs. 1.3 crores. The Assessing Officer adopted valuation by Stamp Duty Authorities and computed the long-term capital gain at Rs. 50.70 lakhs. On appeal, the Commissioner (Appeals) referred the matter to the DVO for ascertaining the fair market value of the said property. The Commissioner (Appeals) directed the Assessing Officer to adopt the value as per DVO's report for the purpose of computing the capital gains. The DVO valued the property at Rs. 30.87 lakhs. Decision of any High Court is binding on all the subordinate authorities and Tribunals through out India untill contrary view is taken by other High Court0 comments Thursday, March 8, 2012I have found an old judgement but very usefull one namely CIT vs. Godavari Saraf which I want to share for the readers of the blog. It has been held in this judgment by Bombay High Court that until contrary decision is given by any other competent High Court, which is binding on a Tribunal in the relevant State, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land. Plea of alternative remedy not acceptable against writ petition if there is jurisdictional error2 commentsIt is well known that when an alternative remedy is available to a person then the writ petition in the High Court may not be acceptable. Punjab & Haryana High Court in the following case has held that plea of alternative remedy cannot be invoked where the question involved is of lack of jurisdiction on admitted facts. It means that where an order of an authority suffers from error of lack of jurisdiction on admitted facts then in such case writ petition challenging such order can be filed and such writ should be accepted irrespective of the fact that the petitioner had the alternative remedy of filing an appeal against such order and he has not exhausted it before filing writ petition. Capital gains exemption u/s 54EC of Income tax Act, 19612 comments Sunday, March 4, 2012Section 54EC of Income Tax Act, 1961 provides an option to save tax on capital gain arising from transfer of long term capital asset subject to fulfillment of certain conditions. Provisions of section 54EC are being discussed hereinbelow for the benefit of all concerneds. Circumstances under which deduction u/s 54EC is available: The deduction u/s 54EC will be available subject to the following conditions:
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