Income Tax Scrutiny criterias for F.Y. 2011-12/A.Y. 2012-13

1 comments Thursday, March 1, 2012
1. Where value of international transaction as defined u/s. 92B exceeds Rs.15 Crore.

2. Cases where there was addition of Rs.10 Lacs or more in earlier assessment year and question of law or fact is confirmed in appeal or pending before appellate authority.

3. Cases in which addition of Rs.10 Crore or more was made in earlier assessment year on the issue of transfer pricing.
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No Scrutiny for senior citizens and small tax payers having income upto 10 lakhs

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No.402/92/2006-MC (07 of 2011)
Government of India / Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi dated the 14th March 2011
PRESS RELEASE
Streamlining procedure for scrutiny of income-tax returns
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Adjustment of service tax paid under wrong accounting code is to be allowed

0 comments Thursday, February 23, 2012
Ahemdabad CESTAT has held in the following case that adjustment of service tax paid under wrong accounting code is to be allowed. 

In this case assessee was manufacturing a 'diesel generating set'. Besides that it was also providing maintenance of diesel generating sets to its clients. Before taking service tax registration under 'management, maintenance or repair' service, it paid service tax under wrong service tax code relating to 'erection, commissioning or installation' service.
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PVAT-Three cheques required to be deposited alongwith new VAT-2 form while making payment of VAT by cheque

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Recently a new single challan form namely VAT-2 has been introduced for payment of VAT in Punjab. This form has replaced the earlier three challan forms i.e VAT-2, VAT-2A and VAT-2B. Now for depositing VAT, Punjab Municipal Fund(PMF) and Punjab Municipal Infrastructure Development Fund(PMIDF) only one challan form i.e VAT-2 is required to be filled up.
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No Service Tax on Toll collected for user of roads-Clarification of CBEC

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CBEC has clarified in the following circular that Toll collected by SPV for users of roads under an agreement between NHAI or State Authority and concessionaire under PPP or BOT/Operate-transfer model is exempt from service tax. It has been clarified that TOLL is a subject of State List under Constitution hence is not liable to service tax.


However if Toll is collected by an independent entity engaged by SPV and for which purpose any commission/charges is paid to such agency by SPV then such commission/charges will be liable to service tax under Business Auxiliary Service.
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Foreign Lawyers cannot practice in India-Madras High Court

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Madras High Court has held in A.K.Balaji Vs. GOI has held that  foreign Lawyers cannot practice law in India but are entitled to visit India for short periods to advice on foreign law & conduct international commercial arbitration
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Calculation of cost of indexation in case of gifted or inherited capital asset

0 comments Tuesday, February 21, 2012

Bombay High Court has held in following case that benefit of indexation shall be available from the year when previous owner acquired a capital asset in case such capital asset is acquired under a gift or will.

In this case assessee acquired the capital asset under a gift. The donor acquired the capital asset on 29-01-1993 whereas the capital asset was gifted to the assessee on 01-02-2003 and the assessee sold such capital asset on 30-06-2003. 
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Clarification of CBEC-Commitment charges recovered by banks liable to service tax

0 comments Sunday, February 19, 2012

CBEC has issued following clarification relating to taxability of commitment charges recovered by banks for keeping available the undistributed balance of a loan committment,  under the Banking and Financial service. 

It has been clarified that commitment charges charged by banks is liable to service tax as these are not in the form of interest but they are directly linked to the provision of service provided by the banks under the Banking and Financial Service covered by section 65(105)(zm) of Finance Act, 1994.
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CBDT exempts salaried persons upto 5 lakh income from return filing in A.Y 2012-13

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NOTIFICATION NO 9/2012, Dated: February 17, 2012

In exercise of the power conferred by sub-section (IC) of section 139 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby exempts the following class of persons, subject to the conditions specified hereinafter, from the requirement of furnishing a return of income under sub-section (1) of section 139 for the assessment year 2012-13, namely:-
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Consideration deemed to be received u/s 50C cannot be treated as consideration actually received

0 comments Tuesday, February 14, 2012

Legal fiction created by section 50C is limited to purposes of section 48 alone and does not displace legal fiction created by sections 69, 69A and 69B, this is a verdict which Chandigarh ITAT has given in the following case.

The Tribunal in this case has held that a legal fiction u/s 50C cannot be so extended to create another legal fiction to effect that consideration deemed to be so received would also be deemed to generate cash/funds for making investments or meeting expenses, or otherwise displace legal fiction created by sections 69, 69A and 69B.
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ETO(Mobile Wing) of any district can check goods u/s 51 of PVAT Act anywhere in State of Punjab

0 comments Sunday, February 12, 2012

Section 51 of Punjab VAT Act, 2005 deals with the establishment of Information collection centres or check posts and inspection of goods in transit. Amongst other officials.Excise and Taxation officer(Mobile wing) have been given power u/s 3 of PVAT Act, 2005 to act as designated officer u/s 51. Which means that such Mobile wing officer can levy penalty and make inspection of goods in transit u/s 51 of Punjab VAT Act, 2005.

In every district there is a separate Mobile Wing. In such case the question arises in mind do the powers u/s 51 of ETOs(MW) extend only to their respective districts to which they are posted or it extends to the whole of State of Punjab.
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Service tax on construction services-clarification by CBEC

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CBEC has issued following clarifications regarding service tax on construction services covered under clause zzq and zzzh of section 65 of Finance Act, 1994 i.e services in relation to commercial or industrial construction service and service in relation to construction of complex.
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No penalty where service tax along with interest and late fee deposited before issue of SCN

0 comments Saturday, February 11, 2012
Mumbai CESTAT has held in the following case that where assessee had paid service tax along with interest and penalty for late filing of return before issue of SCN, no penalty could be imposed on it.

Facts: In this case The assessee was engaged in providing maintenance or repair services. During relevant period though the assessee had collected service tax from service recipients but deposited same with the revenue belatedly along with interest. Besides that it also paid fees for late filing of return. Subsequent thereto, the Assistant Commissioner issued show-cause notice, and on adjudication of same, imposed penalties under sections 76, 77 and 78. The Commissioner (Appeals) upheld said order.
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Time barred assessment is void ab-initio,no need to deposit 25% u/s 62(5) under PVAT Act, 2005

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Punjab VAT Tribunal is a very important case namely Baba Ji Rice Mills, vs. State of Punjab (2012) 41 PHT 197 (PVT) has held that once the case is hit by point of limitation, payment of 25% of the additional demand not essentially to be adjudicated. 


It is notable here that as per section 62(5) of Punjab VAT Act, 2005 prior payment of 25% of additional demand is mandatory before any appeal is being heard.
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No reassessment in the absence of new material even in case of intimation u/s 143(1)(a)

0 comments Friday, February 10, 2012

Mumbai ITAT has held in a very important following case that when only intimation u/s 143(1) is being issued and no assessment is framed u/s 143(3) even then reaaseessment u/s 147/148 shall be invalid in the absesnce of new material.
In this case The AO accepted the ROI filed by the assessee u/s 143(1). He thereafter issued a notice u/s 148 on the ground that the assessee had claimed a deduction for ERP software and that although only 20% of the said expenses was debited to the P&L A/c, the entire amount was claimed as a deduction. The assessee claimed that the reopening was not valid as there was no “new material” in the AO’s possession. 
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Income from licence of property is income from other source and not from house property

0 comments Thursday, February 9, 2012

I find the following judgement of Karnataka High Court to be an important one, wherein it has been held that income from licence of property should be treated as income under the head other source and not under house property, hence sharing for the readers of the blog.

FACTS
Under license agreement, the assessee granted license of the scheduled property to the licensee, which, in consideration, agreed to part with 25 per cent of room income collected from the room guests to the assessee. The assessee had shown the said income under the head 'other sources' and had claimed expenses. The Assessing Officer, however, treated that income as income from house property. The Commissioner (Appeals) allowed the assessee's appeal holding that having regard to the terms of the agreement and the facts and circumstances of the case the assessee had rightly shown the income derived under the licensing agreement as income from other sources and the Assessing Officer was not justified in treating the said income as income from house property. The Tribunal confirmed the order of the Commissioner (Appeals).
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Assessment order without signature of Assessing Officer is invalid

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Section 292B of Income tax Act, 1961 provides that Return of income, etc., not to be invalid on certain grounds.—No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.

Thus if there is any mistake or omission or defect in any assessment, notice return, etc, then such notice assessment, return etc will not become invalid merely by such omission, defect or mistake.
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Word 'individual' used in clause (b) of proviso to section 56(2)(vi) includes only bride or bridegroom

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Chandigarh ITAT has held in the following case that the word Individual used in clause (b) of proviso to section 56(2)(vi) of Income Tax Act, 1961 is referred to the bridegroom and bride. In this case the assessee received gift cheques in his own name on the occasion of marriage of his daughter, which were held to be his income as gifts from non-reletives exceeding Rs. 50000 in a year.It is held that the gift received on one’s own marriage only are exempted.

Facts: During the previous year relevant to the assessment year 2007-08, the assessee on the occasion of the marriage of his daughter received a certain amount through cheques from NRI friends and relatives as shaguns/gifts. The Assessing Officer having noticed (i) that the said amount had been received on the occasion of assessee's daughter marriage and not on the marriage of the assessee, and (ii) that the cheques were in the name of the assessee and the same were credited by the assessee to his bank account, invoked the provisions of section 56(2)(vi) and treated the aggregate gifts exceeding Rs. 50,000 as the assessee's income from other sources. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer.
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CBEC circular-Meaning of Gross Amount in works contract services under composite scheme

0 comments Wednesday, February 8, 2012

CBEC has issued the following circular explaining the applicability of  Explanation to Rule 3(1) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 w.e.f 07/07/2009 only. The said circular explains that Gross Receipts for the purpose of composite scheme would include free of cost goods and services supplied only in those works contracts execution of which has commenced w.e.f 07/07/2009 only. In respect of other works contracts whose execution has started before 07/07/2009 would not be effected by the said explanation.
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No Interest charged in assessment order, no interest could be charged in notice of demand

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When Assessing officer did not levy any interest in the assessment order, no interest could be charged in the notice of demand issued under Section 156 of the Act, this has been held by Uttrakhand High Court in an important following case.

Facts: In this case the Assessing Officer in an order u/s 143(3)/148  wrote"Initiate penalty proceedings under section 271(1)(c) for not offering the above income of taxation. Penalty proceedings under section 271B are also initiated as the assessee’s business turnover exceeds Rs. 40 lakhs and accounts are not audited as per section 44AB issue demand notice and challan.”
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