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Friday 18 December 2015

For Investment u/s 54 F funds other than from transfer of capital asset can also be used. Section 54F does not put any restriction in this regard-Held by Punjab and Haryana High Court in Kapil Kumar Aggarwal ITA 12/2015 dtd. 04-11-2015. P&H High Court relied upon K.C. Gopalan 107 taxman 591(Ker); Anandraj 56 taxmann.com 176 (karnatka); Rajesh Kumar jalan 286 ITR 274 (Gau) and V.R. Desai 197 taxman 52 (Ker). In Anand Raj the assessee used borrowed funds, still exemption was held allowable.[Page 13 Para 18]


Employer vs Employees Contribution: CBDT takes a step aback but does not leave the ground: 2nd Proviso of section 43B which provided for deduction of employer contribution to labor welfare funds only if payment is made with in time prescribed under relevant labor law was rescinded by Finance Act 2003 w.e.f. AY 2004-05 and was merged with first proviso which provided for deduction even of payment is made till due date of filing of return. Since first proviso operated was inserted w.e.f. AY 1988-89, SC in Alom Extrusions held that amendment is curative in nature. If it is applied prospectively, the person who did not pay employer contribution for so many years till AY 2004-05 and pays timely contribution for AY 2004-05 only shall stand at better footing as who paid employer contribution but after due date under relevant labor law. Hence the amendment should be applied retrospectively. Delhi High Court in AIMIL Limited, Uttrakhand High Court in Kichha Sugar Compnay, P&H High Court in Rai Agro Industries, Hemila Mills, Mark Auto Industries, held that for employees contribution also pay ment till due date of filing return shall qualify for deduction. This opinion was based on the view that relevant labor laws permit payment in grace period or after due date by charging some interest. However Gujrat High Court in Gujrat State Road Transport Corp and ITAT KOL(SB) in LKP Securities held that S.43B is not applicable to employee contribution and it is governed by express provisions of 36(1)(va). Now, CBDT in its circular has accepted the Alom Extrusion and has decided that issue of retrospective application of employer contribution shall no longer be contested and all grounds based there on shall be withdrawn/not pressed. However CBDT has in the same breath held that issue of employee contribution be armoured with whole hog.


Finance Act 2015 amended S. 195(6) w.e.f. 01-06-2015 to provide that person responsible for making payment to non resident shall funsih information as per prescribed rules whether or not tax is chargeable under the Act . However Rule 37BB was not amended at the same time and required that furnishing of information in 28 categories was not required because most of these comprised cases where income can not be said to be chargeable to tax in India like investment in equity abroad , personal; gifs, donations, travel for education including fee, hostel expenses etc. Also penal provisions providing that penalty for Rs. One lakh shall be levied for non furnishing or inaccurate information. Since then persons making remittance for import of goods were furnishing declarations even though no income is chargeable to tax in India. However now the CBDT has amended rule 37BB vide notification dated 16-12-2015 w.e.f. 01-04-2016. Important features of Rule 37BB are 1) No Information required to be filed where no income is chargeable to tax and remittance falls under Liberlased Remittance Scheme. 2) No information required to be filed where information apart from old 28 categories relates to advance/settlement payment against imports and three other categories. 3) Where however no tax is chargeable in India in respect of remittances and also it does not relate to Liberalised remittance system, Part D of 15CA without CA certificate in 15CB is sufficient 4) Limit of filing F. 15CA in summary manner (Part A) without obtaining CA certificate which was earlier Rs. 50000 for single payment and Rs. 250000 for aggregate of payments during financial year has been raised to Rs. 5 lacs albeit for remittances against sums chargeable to tax in India. 5) Now only where aggregate of remittances shall exceed Rs. 5 lacs and also remittance is chargeable to tax in India, the requirement of F. 15CB i..e CA certificate shall arise along with F. 15CA (PartC) shall arise. 6) In cases of lower/ no deduction AO certificate and Part B of F.15CA to be furnished. Again CA Certificate not required. 7) Further as per amended Rule 37BB(6) CA Certificate in F. 15CB shall also now be furnished and verified electronically. Earlier CA Certificate in 15CB was furnished manually. 8) Also in case of digitally signed 15CAs signed hard copies shall not be required to be provided by banks to income tax authorities. 9) Banks shall file digitally signed quarterly statement with in fifteen days from the end of the quarter to department in F. 15CC.