AMIT BAJAJ ADVOCATE

 The Pune ITAT has imposed costs on the revenue for causing harrasment to the assessee in recovery proceedings in a case namely Shramjivi Nagari Sahakari Pat Sanstha V ACIT. The bank account of assessee was attached even before the communication of CIT(A)'s order to the assessee. This is an important order as it is generaly seen that the department ussualy adopt coercive measures for recovery proceedings, I hope the department take some lesson from this order.

Facts: The assessee, a credit co-operative society, contravened s. 269SS & 269T because of which penalty u/s 271E was levied. The CIT(A) confirmed the levy of penalty. Before service of the CIT(A)’s order, the assessee’s bank account was attached u/s 226(3). The assessee filed a stay application and claimed that as the assessee had to bear costs owing to the illegal action of the AO, costs had to be awarded to it. HELD upholding the assessee’s plea:

The Delhi High Court in an important case namely CIT V Safetag International India Pvt Ltd. has held that in case of reassessment proceedings u/s 147 of Income Tax Act if the assessee doesnot demand reasons recorded by AO for reopening of case then AO is not bound to supply the same suo moto to the assessee. 

 
Brief Facts: The assessee’s assessment was reopened u/s 147. The assessee did not ask for the recorded reasons. Even before the CIT(A), though the assessee challenged the reopening as being without jurisdiction, it did not ask for the reasons. Before the Tribunal, the assessee claimed that it was not aware that it could demand the reasons and object thereto. Pursuant thereto the Tribunal remitted the case to the AO with direction that the reasons & opportunity to object be provided and denovo assessment be framed if objections were rejected. On appeal by the department, the appeal was allowed:

Section 8-A of Punjab VAT Act 2005 provides for lump sum schemes for such goods or class of goods or such persons subject to such conditions as may be prescribed by State Government. The provisions of section 8-A are applicable irrespective of anything contained contrary in the other Provisions of Punjab VAT Act.

As a result the Punjab Government has uptill now provided lump sum schemes for Dhaba Owners and for Brick Klin owners. But it is to be noted that these lump sum schemes are optional only. A dealer may or may not choose to pay under lump sum schemes.

The Bihar Human Rights Commission took on the Income Tax Department for violating Human Rights of an asseessee while conducting search and seizure operation. The commission asked the Department to carry on  serach & seizure operations without violating one's basic Human Rights.

In this case the income-tax department conducted search and seizure operations u/s 132 at the premises of the assessee when interrogation & recording of statement was conducted for more than 30 hours and till the odd hours of the night without any break or interval. The assessee filed a complaint alleging violation of human rights. The commission upheld the plea as under:

Delhi High Court in an important case namely CIT V. Simbhaoli Sugar Mills Ltd. has held that reassessment proceedings u/s 147 cannot be initiated merely  on the basis of  internal audit report objections when no new fact has come to light. This is very important decision as many a times the objections are raised by internal audit department on the Assessment orders.

The implication of this judgement would be that if a case is reopened for reassessment u/s 147 merely on the basis of internal audit report objections, when the assessee has made full disclosure of information in the original assessment proceedings and no new material has come to light then such reopening of case will be a mere change of opinion, for which action u/s 147/148 is not allowed.

Uploading of intra-state transactions (i.e transactions within the state) on the website of Excise and Taxation Department, Punjab, which was made compulsory by Punjab Government w.e.f 01-06-2011 has been suspended.(See earlier issued public notice).

A Public notice to this effect has been issued by the Government today, making it clear that uploading of information of intra-state transaction will not be mandatory rather it will be directory and optional only.

1.    Self Declaration - Tax (TDS) is not deductible under section 193, 194, 194A, 194EE or 194K if the recipient makes a declaration in Form 15G / 15H under the provisions of section 197A. But, the person seeking to furnish Form 15G / 15H must have PAN number on or after 1.4.2010
2.   Certificate from AO - Under Section 197 - A person can apply to AO and seek a certificate in Form 13 for no deduction of TDS or deduction of TDS at lower rates under sections192, 193, 194, 194A, 194C, 194D, 194G, 194H[, 194-I, 194J, 194K, 194LA and 195.
2. In case PAN of the deductee is not available than TDS rate will be 20%

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Rates of Income Tax as applicable to Individuals, Hindu Undivided Families (HUF) and Artificial Jurisdictional Person:

Rates For the Assessment Year 2011-2012

Special Rates for Resident Women (who is below 65 years at any time during the previous year)
Special Rates for Resident Senior Citizen (who is 65 years or more at any time during the previous year)
Notes for the Assessment Year 2011-2012
Note 1: - Add Surcharge - Nil
Note 2: - Add Education Cess - E. Cess is 2% of Income Tax

Rates For the Assessment Year 2010-2011

Special Rates for Resident Women (who is below 65 years at any time during the previous year)
Special Rates for Resident Senior Citizen (who is 65 years or more at any time during the previous year)
Notes for the Assessment Year 2010-2011
Note 1: - Add Surcharge - Nil
Note 2: - Add Education Cess - E. Cess is 2% of Income Tax (rebate u/s 88E is not deductible)
Note 2: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax (rebate u/s 88E is not deductible )

Rates for the Assessment Year 2011-2012

Rate of Tax is 30% for the Assessment Year 2010-2011
Notes for the Assessment Year 2011-2012.
Note 1: - Add Surcharge - Nil
Note 2: - Add Education Cess - E. Cess is 2% of Income Tax
Note 3: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax

 Rates for the Assessment Year 2010-2011

Rate of Tax is 30% for the Assessment Year 2009-2010
Notes for the Assessment Year 2010-2011
Note 1: - Add Surcharge - Nil
Note 2: - Add Education Cess - E. Cess is 2% of Income Tax (Rebate u/s 88E is not available w.e.f. AY 2009-2010)
Note 3: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax (Rebate u/s 88E is not available w.e.f. AY 2009-2010)

Rates For the Assessment Year 2011-2012

Notes for the Assessment Year 2011-2012
Note 1: - Add Surcharge - Surcharge is 7.5% of income-tax and in case of domestic companies and 2.5% in case of foreign companies if net income exceeds Rs.1crore in either case.
Surcharge is subject to marginal Relief.
Note 2: - Add Education Cess - E. Cess is 2% of Income Tax plus surcharge
Note 2: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax plus surcharge

Notes for the Assessment Year 2011-2012
Note 1: - Add Surcharge - Surcharge is 7.5% of income-tax and in case of domestic companies and 2.5% in case of foreign companies if net income exceeds Rs.1crore in either case.
Surcharge is subject to marginal Relief.
Note 2: - Add Education Cess - E. Cess is 2% of Income Tax plus surcharge
Note 2: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax plus surcharge

 Rates For the Assessment Year 2010-2011

Notes for the Assessment Year 2010-2011
Note 1: - Add Surcharge - Surcharge is 10% of income-tax (Rebate u/s 88E is not available w.e.f. AY 2009-10) and in case of domestic companies and 2.5% in case of foreign companies if net income exceeds Rs. 1 crore in either case.
Surcharge is subject to marginal Relief.
Note 2: - Add Education Cess - E. Cess is 2% of Income Tax (Rebate u/s 88E is not available w.e.f. AY 2009-10) plus surcharge
Note 2: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax (Rebate u/s 88E is not available w.e.f. AY 2009-10) plus surcharge

Notes for the Assessment Year 2010-2011
Note 1: - Add Surcharge - Surcharge is 10% of income-tax (Rebate u/s 88E is not available w.e.f. AY 2009-10) and in case of domestic companies and 2.5% in case of foreign companies if net income exceeds Rs. 1 crore in either case.
Surcharge is subject to marginal Relief.
Note 2: - Add Education Cess - E. Cess is 2% of Income Tax (Rebate u/s 88E is not available w.e.f. AY 2009-10) plus surcharge
Note 2: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax (Rebate u/s 88E is not available w.e.f. AY 2009-10) plus surcharge

Rates For the Assessment Year 2011-2012

Notes for the Assessment Year 2010-2011
Note 1: - Add Education Cess - E. Cess is 2% of Income Tax
Note 2: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax

Rates For the Assessment Year 2010-2011

Notes for the Assessment Year 2010-2011
Note 1: - Surcharge - Nil
Note 2: - Add Education Cess - E. Cess is 2% of Income Tax (Rebate u/s 88E is not available w.e.f. AY 2009-10)
Note 2: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax (Rebate u/s 88E is not available w.e.f. AY 2009-10)

Sr. No.	Section	Income	Rate of Income Tax
1	67B(1)	Where the individual shares of the members of an association of persons or body of individuals (other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India) in the whole or any part of the income of such association or body are indeterminate or unknown	30% (Maximum Marginal Rate)
3	67B(1)	where the total income of any member of such association or body is chargeable to tax at a rate which is higher than the maximum marginal rate.	Such higher rate
4	67B(2)	the total income of any member for the previous year (excluding his share from such association or body) exceeds the maximum amount which is not chargeable to tax in the case of that member under the Finance Act of the relevant year.	30% (Maximum Marginal Rate)
5	67B(2)	any member or members thereof is or are chargeable to tax at a rate or rates which is or are higher than the maximum marginal rate, tax shall be charged on that	portion or portions of the total income of the association or body which is or are relatable to the share or shares of such member or members at such higher rate or rates, as the case may be, and the balance of the total income of the association or body shall be taxed at the maximum marginal rate.
6		Any other Case	Normal Rate of Income Tax as applicable to Individual

Note: - Surcharge,  Education Cess  and Secondary and Higher Education Cess are applicable in the same manner as applicable to Individual / HUF

Sr. No.	Section	Income	Rate of Income Tax
1	161(1A)	Private Trust - Income includes Profit and gains from business	30% (Maximum Marginal Rate)
2	161(1)	Private Trust - Income does not include Profit and gains from business and shares are determinate or known	Rates as applicable to each beneficiary
3	164	Private Trust - Income of Private discretionary trust where shares of beneficiaries are indeterminate	30% (Maximum Marginal Rate)
4	164A	Income of a Oral Trust	30% (Maximum Marginal Rate)
5	164(2)	Public Trust – If income is not exempted u/s 11	Taxable as AOP
6	164(2)	Public Trust – If exemption is forfeited due to contravention u/s 13	30% (Maximum Marginal Rate)

Note: - Surcharge,  Education Cess  and Secondary and Higher Education Cess are applicable in the same manner as applicable to Individual / AOP as the case may be

For the Assessment Year 2011-2012

Note 1: - Add Surcharge -
Rate of Surcharge is Nil in the following cases:
a.       If the taxpayer is an Individual / HUF/ BOI/ AOP
b.      If the taxpayer is firm
c.       If the taxpayer is company (domestic or non-domestic company) and net income does not exceed Rs. 1 crore.
d.      If the taxpayer is a co-operative or local authority.
Rate of Surcharge will be 7.5% in the following cases:
a.      If the taxpayer is a domestic company and net income exceeds Rs.1crore.
b.       In case of section 115JB - MAT - if book profit exceeds Rs.1crore.
c.       In the cases attracting sections 161(1A), 164, 164A and 167B - surcharge is applicable irrespective of income.
Rate of Surcharge will be 2.5% in the following cases:
a.       If the taxpayer is non-domestic company and net income exceeds Rs.1crore.
Surcharge is subject to marginal Relief.
Note 2: - Add Education Cess - E. Cess is 2% of Income Tax (rebate u/s 88E is not deductible) plus surcharge
Note 3: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax (rebate u/s 88E is not deductible ) plus surcharge

For the Assessment Year 2010-2011

Note 1: - Add Surcharge -
Rate of Surcharge is Nil in the following cases:
a.       If the taxpayer is an Individual / HUF/ BOI/ AOP
b.      If the taxpayer is firm
c.       If the taxpayer is company (domestic or non-domestic company) and net income does not exceed Rs. 1 crore.
d.      If the taxpayer is a co-operative or local authority.
Rate of Surcharge will be 10% in the following cases:
a.      If the taxpayer is a domestic company and net income exceeds Rs. 1 crore.
b.       In case of section 115JB - MAT - if book profit exceeds Rs. 1 crore.
c.       In the cases attracting sections 161(1A), 164, 164A and 167B - surcharge is applicable irrespective of income.
Rate of Surcharge will be 2.5% in the following cases:
a.       If the taxpayer is non-domestic company and net income exceeds Rs. 1 crore.
Surcharge is subject to marginal Relief.
Note 2: - Add Education Cess - E. Cess is 2% of Income Tax (rebate u/s 88E is not deductible) plus surcharge
Note 3: - Add Secondary and Higher Education Cess - SHE. Cess is 1% of Income Tax (rebate u/s 88E is not deductible ) plus surcharge



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Delhi High Court in an important case namely Ranbaxy Laboratories Ltd V CIT has held that if the AO doesnot assess the income for which reasons were recorded while issuing notice u/s 148 for escaped assessment then other income cannot be taxed.

Before understanding the judgement one should know that notice u/s 148 is issued for reassessment of income that has escaped assessment in the regular assessment proceedings. Notice u/s 148 is issued after recording reasons and the assessee has the right to ask for reasons recorded in writing before replying the notice u/s 148. (Read article on reassessment)

The Chennai ITAT has held in  ITO Versus Shri Anupallavi Finance & Investments that Where tax has been deducted at source and paid to the Central Government and income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax.

In this case deductor deducted TDS on accrual basis of income whereas deductee was declaring such income on cash basis as and when it was recieved by the deductee. The deductee-assessee however, claimed the credit of whole of TDS in the year of deduction stating that TDS deducted represents his income and is automaticaly offered to assessment in the year of deduction. But the AO allowed claim of TDS on pro rata basis i.e on the basis of income offered for assessment.

If You have taken education loan for the higher education of your children or of your spouce or of your own, it can save your income tax. Section 80E of Income Tax Act provides for deduction of 100% interest amount on education loan taken from any financial institution or approved charitable institution, taken for one's own, or spouce's or children's higher education.   

This deduction is available to an individual assessee only. Before A.Y. 2006-07 section 80E also provided for deduction of the principal amount of education loan, repaid. But w.e.f A.Y 2006-07 deduction of only interest amount is available u/s 80E.

Punjab & Haryana High Court in an important case namely CIT V M/S Careers Education and Infotech Pvt. Ltd., has held that voluntarily surrender of income cannot exonerate the assessee of its liability to pay penalty if it can be held that there was concealment of Income or furnishing of inacurate particulars. But in every case of surrender, inference of concealment of income cannot be drawn by itself by applying section 58 of Evidence Act.

The AO must establish and prove the concealment of income even if there is surrunder of income by assessee and mere surrender cannot lead to levy of penalty u/s 271(1)(c) for concealment of income.

Punjab Government has imposed a new tax namely institutional and building tax by promuglating ordinace dated January 10, 2011 by the name The Punjab (Institutions and Other Buildings) Tax Ordinance, 2010.This tax has been imposed on Buildings and Institutions situated outside the municipal areas in the state of Punjab.

As we know the house tax is imposed by Municipal bodies on the commercial buildings situated within their limits, but no such tax is payable on the buildings and insitutions (like marriage palaces, hotels, Dhabas, schools, water parks, amusement parks etc), situated outside the municipal limits. To bring an end to this inequality this new tax has been imposed (this was asserted by the Governement at the time of introduction of this tax few months back)

In an interesting case namely Shanti Bhushan V CIT, Delhi High Court has held that a professional cannot be allowed deduction of the expenses incurred for his heart surgery u/s 31or 37(1) of Income Tax Act 1961. Interestingly the appellant (a lawyer) claimed that heart is a plant and expenses incurred on its surgery should be considered as expenses on current repairs.But High court rejected the claim of the appellant.

Brief facts: The assessee, a lawyer, claimed that his professional work had led to a heart attack and that the expenditure incurred by him on a heart operation was deductible u/s 31 on the ground that the heart was “plant” and the expenditure was incurred on “current repairs”. It was also claimed that as his professional receipts increased substantially after the operation, the expenditure was “wholly & exclusively” for profession and deductible u/s 37(1). The AO, CIT(A) & Tribunal rejected the assessee’s claim. On appeal to the High Court, HELD dismissing the appeal: