Changes in TDS Procedures vide Notification 11/2013 dated 19-02-2013

Changes in Rule 31A for TDS returns
1. TDS returns in Form 24Q,26Q ,27Q can be furnished under digital signatures also but this is optional only
2. Refund claims of TDS can be made in Form 26B. Refunds to be claimed under digital signatures only.
3. As per section 197A(1F) inserted by Finance Act 2012 w.e.f. 01-07-2012, no deduction of tax shall be   made from specified payment to notified institutions etc.Now information of such institutions shall be required to be given in TDS returns along with information already being furnished in TDS return.
4. Director general to frame procedures for TDS refund also along with procedures for TDS returns already   being framed.

There can be no presumption of gross receipts being cum service tax unless other wise proved by assessee

30 taxmann.com 239 Mahasha Enterprise 09-01-2013

No disallowance of 75% abatement in the hands of service recepient in case of GTA services on the pretext of not proving that Cenvat Credit not claimed by GTA unless records of GTA are verified by department

30 Taxmann.com 241 Delhi Cestat Ahluwalia Contracts I Ltd 08-01-2013

Depreciation can not be disallowed where there is no change in facts and circumstances of the case as compared to last year

Depreciation can not be disallowed where there is no change in facts and circumstances of the case as compared to last year. In this case manufacturing activity was closed in last year also and depreciation was allowed . However during the year under consideration the department wants to disallow on the ground of assets not being used for business purposes. However depreciation allowed by Tribunal on the grounds that depreciation was accepted in last year
30 Taxmann.com 221 Delhi Tribunal Hindustan Fertilizer

Non-payment of interest on loan taken from a co-operative bank would not attract provisions of section 43B because co operative bank is not scheduled bank

[2013] 30 taxmann.com 203 (Bombay) Upendra T. Kapadia OCTOBER 30, 2012

Non-consideration of various issues such as date of acquisition of bonus shares, expenditure incurred on earning exempt income etc., made assessment order erroneous and, thus, Commissioner was justified in setting aside same in exercise of his power under section 263

[2013] 30 taxmann.com 57 (Hyderabad - Trib.) Ninestar Enterprises (P.) Ltd.DECEMBER 31, 2012

Where main activities of Improvment trust were to purchase undeveloped land and to sell off same after development, activities of assessee were in nature of trade and Commissioner had rightly cancelled registration already granted under section 12AA to it

[2013] 30 taxmann.com 58 (Amritsar - Trib.) Improvement Trust DECEMBER 18, 2012

In case of a charitable trust, if objects are of general public utility and receipts from those objects exceed Rs. 10 lakh, in such a case Assessing Officer can deny exemption under sections 11 and 12 but can not cancel registration of trust granted under section 12A

[2013] 30 taxmann.com 134 (Chennai - Trib.) Madras Motor Sports Club DECEMBER 21, 2012

Where simply an equipment or sophisticated machine or standard facility is provided albeit developed or manufactured with the usage of technology, such a user cannot be characterized as providing technical services.

[2013] 30 taxmann.com 200 (Mumbai - Trib.) Siemens Ltd. FEBRUARY 12, 2013

Where particular technology was made available to assessee exclusively and assessee had right over intellectual property, agreement with supplier was not only for purchase of machine but also for acquiring technical know-how

[2013] 30 taxmann.com 176 (Mumbai - Trib.) Bajaj Holdings & Investments Ltd.JANUARY 16, 2013

Even though assessee was engaged in purchase and sale of properties, still he could purchase and hold some plots as capital asset and claim benefit of deduction under section 54F in respect of sale of those plots

[2013] 30 taxmann.com 202 (Jodhpur - Trib.) Sunil Bhandari NOVEMBER 30, 2012

Deposit of money in fixed deposit cannot be construed as deposit in capital gain bond for claiming exemption under section 54EC

[2013] 30 taxmann.com 130 (Cochin - Trib.) R. Vidhyadharan DECEMBER 21, 2012

Guideline of land value fixed by sub-registrar is only a guideline value to ascertain market value of land for collection of stamp duties and it cannot be a sole basis for fixing fair market value as on 1-4-1981

[2013] 30 taxmann.com 130 (Cochin - Trib.) R. Vidhyadharan DECEMBER 21, 2012

For registration of a newly registered trust under section 12AA, objects for which it was formed should be examined and not its activities, which is yet to be commenced

2013] 30 taxmann.com 168 (Chennai - Trib.) A.V.S. Educational Trust JANUARY 18, 2013

Section 14A is not applicable in respect of share application money

[2013] 30 taxmann.com 169 (Mumbai - Trib.) Rainy Investments (P.) Ltd. JANUARY 16, 2013

Mere providing of machinery on hire without any manpower cannot be termed as carrying out of any work by plant and machinery owners and, thus, no tax is required to be deducted under section 194C

[2013] 30 taxmann.com 235 (Hyderabad - Trib.)
JANUARY 18, 2013
Covered by 194I w.e.f.13-07-2006

Power of Designated Officer Conferred upon Inspectors

Notification dated 15-01-2013. Powers conferred for Ist January  2013 to 31st Dec 2013.
Earlier Notifications issued on 16-5-2011 and 22-12-2011. Powers under following sections only conferred:

Under  sections  I l, 13, 14, 26 to 32,36, 38 to 41,45 to 49,52 to 60,66,76,77 and 83
Hence power under section 51 can not be exercised by Inspectors

Difference in figures of income as per TDS certificates and in return of income does not necessarily lead of escapement of income :

[2013] 30 taxmann.com 54 (Kolkata - Trib.)

IN THE ITAT KOLKATA BENCH 'B'

Meheria Reid & Co.

28-12-2012

CBEC Circular dated 01-01-2013 on Recovery of Demand held invalid by Mumbai High Court

WRIT PETITION NO.878 OF 2013

Larsen & Toubro Limited & Anr Vs.The Union of India and others    . .

Disposal of appeal by High Court by merely saying that case was not a fit case to be interfered with is not proper; High Court must discuss issues raised by parties and dispose of matter with a reasoned order

[2013] 30 taxmann.com 8 (SC)

SUPREME COURT OF INDIA

Commissioner of Central Excise, Allahabad

v.

U.P. State Sugar Corpn. Ltd.*

RULES OF INTERPRETAITON

Interpretation of Statutes – Importance of Subject:

For understanding the provisions of a statute, knowledge to apply the ‘correct’ interpretation, is an essential pre-requisite.

In the case of taxing statutes, as in different type of statutes, there are certain bedrock principles on which the interpretation or construction of the particular statute is done by the Courts and Tribunals; and the tax practitioners are required to have the knowledge of these basics in their catalogue to understand the statute and implications of its provisions. Some important aspects relating to‘Interpretation’ of Taxing Statutes are dealt herein.

Revenue Authorities of State can not refuse to follow the jurisdictional HIgh Court on the Grounds that matter of some other HIgh Court is pending before the Supreme Court

GM Mittal Stainless Steel P Ltd 263 ITR 255 (SC)

54F benefit is available on capital Gain calculated u/s 50C on value exceeding actual consideration

Raj Babbar vs ITO ITA 6497/MUM/2011 DECIDED ON 02-01-2013

Disposal of appeal by High Court by merely saying that case was not a fit case to be interfered with is not proper; High Court must discuss issues raised by parties and dispose of matter with a reasoned order

[2013] 30 taxmann.com 8 (SC)

SUPREME COURT OF INDIA

Commissioner of Central Excise, Allahabad

v.

U.P. State Sugar Corpn. Ltd.*

26-08-2011

STAY OF DEMAND

1.KEC INTERNATIONAL LTD. vs. B.R. BALAKRISHNAN & ORS.(2001) 170 CTR (Bom) 415 : (2001) 251 ITR 158 (Bom) : (2001) 119 TAXMAN 974 (Bom)
2. TANEJA DEVELOPERS & INFRASTRUCTURE LTD. vs. ASSISTANT
COMMISSIONER OF INCOME TAX & ORS. (2009) 222 CTR (Del) 521 : (2010) 324 ITR 247 : (2009) 20 DTR 137
3.UTI Mutual Fund vs. INCOME TAX OFFICER and Ors.(2012) 249 CTR (Bom) 190 : (2012) 69 DTR (Bom) 306 : (2012) 345 ITR 71 (Bom) : (2012) 206 TAXMAN 341 (Bombay)
4.VALVOLINE CUMMINS LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX
& ORS.(2008) 217 CTR (Del) 292 : (2008) 307 ITR 103 : (2008) 171 TAXMAN 241 : (2008) 8 DTR 145
5.M/s Maheshwari Agro Industries Vs. Union of India & Ors. S.B. Civil Writ Petition No.1264/2011 HIGH COURT OF JUDICATURE FOR RAJASTHAN

Queens Educational Society- Decision of Uttrakhand High Court for Educational Institutions dissented

1. Pine Grove International Charitable Trust (P&H) 327 ITR 73
2. Vanita Vishram Trust (Bom) 327 ITR 121
3. Maa Saraswati Trust (HP) 194 Taxmann 84
4.St. Lawrence Educational Society (Delhi HC) 197 Taxmann 504

Scope and Powers of CIT u/s 12A/12AA-Decisions favoring Assessee

1. Saint Kabir Educational Trust (Asr Tribunal) 41 DTR 0267

2. Dream Land Educational Trust (ITAT Amritsar) 109 TTJ 850

3. DN Memorial Trust ITA 618/ASR/2011 

4. Surya Educational Trust P&H HC 15 Taxmann.com 123

5. Spring Dale Education Society P&H HC 16 Taxmann.com 285

6. Tishir Shiksha Prasar Samiti 21 Taxmann.com 525

7. Gagan Education Society 145 TTJ 230

8. Divine Health Services ITAT Amritsar ITA 417/2010

Where assessee, a shareholder of KMPL, alongwith other shareholders sold entire shares of KMPL to 'R', it could not be regarded as an indirect transfer of flats owned by KMPL to 'R' and, consequently, provisions of section 50C could not be applied to transaction of sale of shares

[2013] 29 taxmann.com 424 (Mumbai - Trib.)

IN THE ITAT MUMBAI BENCH 'I'

Irfan Abdul Kader Fazlani

An ad interim stay was granted in respect of demand raised in pursuance of Circular No. 967/01/2013-CX, dated 1-1-2013

[2013] 29 taxmann.com 427 (Andhra Pradesh)

HIGH COURT OF ANDHRA PRADESH

Ultratech Cement Ltd.

v.

Union of India*

“For effective and co-ordinate investigation” Income Tax cases can be transferred

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 16883 of 2012  SHREE RAM VESSEL SCRAP PVT LTD Date : 23/01/2013

S. 163 " From or through" vs "through"

The foreign company was in receipt of some income from the assessee, on account of sale of shares. The Act uses the words “from or through”, instead of the word ‘thorough’ in s.163(1)(c). Any person in India from or through whom the non-resident is in receipt of any income directly or indirectly can be treated as agent of the non-resident.
Utkal Investments Ltd. v Asst. DIT (2009) 120 TTJ 67 /123 TTJ 286 (Mum).

Additional Evidence which goes to the root of the matter has to be considered

Tribunal confirming, the order of CIT(A) without considering the additional evidence, which was crucial. The High court held that the additional evidence goes very root of the matter and a reasonable approach is needed and not the hyper technical approach adopted by the tribunal hence the matter remanded to the Tribunal.
Daljieet Kaur v ITO (2009) 212 Taxation 46 (MP).

Other Supporting Case laws favouring Assessee:
Smt. Prabhavati Shah vs. CIT (1998) 231 ITR 1 (Bom)
Orissa High Court in B. L. Choudhury v. CIT [1976] 105 ITR 371

Addition made for understatement of Sale on basis of rate of sale to co-operative which was only 5% of total sales

Additions made for under statement of sales, by comparing sale prices of sales made to cooperative
societies, which was merely 5% of total sales, with that of sales to other individuals, on inference that they were at a lower price, without bringing any material on record or examining the individuals was held to be unjustified, and additions made on account of suppressed sales was deleted.
ITO vs. Rabindranath Seal (2009) 180 Taxman 104 (Kolkatta) (A.Y. 2001-02)

Once an order of refund of sales tax has been passed, the same has to be treated as income notwithstanding pendency of appeal against refund order

CIT v Beirsdorf (India) Ltd. & Anr (2009) 28 DTR 188 (Bom) / (2009) 183 Taxman 178 (Bom).

Accrued interest which was receivable by the assessee only after the end of the previous year cannot be assessed to tax in the current year even though the assessee is following mercantile system of accounting.

CIT vs. FAL Industries Ltd. (2009) 17 DTR 308 (Mad)

Fall in Sale without showing any material to show sale outside the books does not warrant rejection of books

Asstt CIT v Ravi Agricultural Industries (2009) 121 TTJ (Agra) (TM) 903. (2009 ) 117 ITD
338 (AGRA) (TM).

Valuation of stock at 10% of cost held justified which was sold at 8.43% of cost

Wolkem India Ltd. (2009) 18 DTR 190 / (2009) 221 CTR 767 (Raj)

Assessee has option to follow different methods of accounting for different sources of income under Business Income

ACIT vs. Mehul J. Somaiya, ITA No. 7118/Mum/2007, Bench – B, A.Y. 2002–03, dt. 10-
12-2008 – BCAJ p. 670, Vol. 40-B, Part 5, February 2009

Promoter holding shares with sole motive of retaining the control can not be recognized as stock in trade

ACIT vs. Pal Enterprises Pvt. Ltd., ITA Nos. 1994/Mum/2005, Bench – ‘H’, A.Y. 01–02,
dt. 20-10-2008 – BCAJ p. 518, Vol. 40-B, Part 4, January 2009

For genuine difficulties for changing method of accounting from merchantile to cash for interest income- Change is genuine

Asst. CIT v. Coromandal Investment (P) Ltd. [(2009) 225 CTR 313 (Guj)]

If some deficiencies are found in books of accounts some guess work has to be applied by AO

National Plastics Inds. vs. ITO (2009) 309 ITR 191 (Bom)

INSTITUTIONAL TAX NOTIFICATION QUASHED BY PUNJAB AND HARYANA HIGH COURT

The Punjab and Haryana High Court has quashed a February 2, 2011, notification of the Punjab Government for levying institution tax. A Division Bench held the notification was violative of the Constitution of India.

VAT 15 POST LAUNCH ISSUES

1. In Miscellaneous Information: Information regarding payment to contractors and tax deducted in being called for while at the same time separate return Vat 27 is required to be filled in thus information is being repetitively called for without scrapping Vat-27

New Vat 15 launched on 31-01-2013

Finally Excise and Taxation Department of Punjab has launched Vat 15 on 31-01-2013
It is required to be submitted till 5th March 2013
Following issues were raised before Vat Department before launch:

Surplus generated was utilised for the educational activities assessee being educational institution , cancellation of registration was not justified.(

Surplus being generated is utilized for the purpose of objects of the institution. It is nowhere provided that the trust cannot be constituted by a family and it is also not provided under the Act that trust will not have number of institutions. Education itself is charitable object and if the surplus is utilized for the purpose of charitable activities then it cannot be said that registration is to be disallowed. Chief CIT has allowed exemption under s. 10(23C) on finding that the activities of the assessee are genuine and as per its object. Assessee has explained the reasonableness is respect of the payments made to the persons covered under s. 13(3). Reasonableness is actually to be seen by the AO and not by the CIT while allowing registration or cancelling the registration. CIT was not justified in cancelling the registration.
Rajasthan Vikas Sansthan v. CIT (2012) 78 DTR 411 (Jodhpur) (Trib.)

Object remained same even after amendment – No cancellation of registration without giving any contrary finding

Mere finding that objects of trust has been altered without consent of department would not be sufficient to exercise power under section 12AA(3) without giving a finding that objects of trust are no longer charitable. Where assessee education‐trust was formed with main object of imparting education, mere fact that it amended clause of trust deed to include technical and medical education within its ambit and it paid commission to persons who solicited students for studying in assessee's education, it could not lead to conclusion that assessee was not imparting education. Therefore, Director (Exemption) was not justified in cancelling registration under section 12AA(3).
Krupanidhi Educational Trust v. DIT(IT) (2012) 139 ITD 228 (Bang)(Trib.)

Director is not required to examine whether the Trust has actually carried on charitable activities

Statute does not prohibit or enjoin the CIT from registering trust solely based on its objects, without any activity, in the case of a newly registered trust. Statute does not prescribe a waiting period, for a trust to qualify itself for registration. Tribunal was therefore right in holding that while examining the application u/s. 12AA(1)(b) r.w.s. 12A, the CIT/Director is not required to examine the question whether the trust has actually commenced and has, in fact, carried on charitable activities.
DIT v. Foundation of Opthalmic and Optometry Research Education Centre (2012) 79 DTR
178(Delhi)(High Court)

Received shares as corpus and subsequent sale there is no violation the assessee is eligible for exemption

Assessee trust received 11,47,110 equity shares of M. Ltd and 2,01,500 equity shares of S Ltd.from another trust towards corpus donation. There is no restriction on accepting shares by a charitable institution. However, cl.(iia) of the proviso to s. 13(1)(d)(iii) entitles an assessee trust to hold the shares for a maximum period of one year before which they have to be converted into the modes of investment as prescribed in s. 11(5). Contention of the Dept. Representative that the assessee has violated the provisions of s. 11(1)(d) by selling the shares suffers from the basic fallacy in not recognizing that the assessee has merely converted one form of investment into another viz. Money by selling the shares. The corpus donations received by the assessee could not be considered as general donations merely on the ground of its utilization in the subsequent year for giving corpus donations to other charitable institutions. (A.Y. 2006 – 07 & 2007‐08)
Sera Foundation v. ITO (2012) 79 DTR 210/150 TTJ 537 (Delhi) (Trib.)

Capital gain applied for charitable purpose ‐Not by acquiring a new asset but for other charitable purpose – Claim for exemption is allowed

If capital gain is applied for charitable purpose of assessee not by acquiring a new asset but for other charitable purpose, then there is no reason why it should not be considered as application of income for
charitable purpose enabling assessee to claim exemption under section 11(1). (AY 2006‐07)
Al Ameen Education Society v. DIT (Ex) (2012) 139 ITD 245 (Bang.)(Trib.) (2006‐07

Absence of charitable activities -Trust is not entitled to exemption

An assessee that engages itself only or predominantly in activities relating to its ancillary or incidental objects which are not related to any charitable purpose and does not carry on any activity relating to its main object of charitable nature is not entitled to exemption u/s. 11 ; assessee institution having never carried out any scientific research, and applied a very insignificant portion of its income towards research and development activities, it is not entitled to exemption u/s. 11; claim for exemption u/s. 11 is also not sustainable in view of cl. (b) of sub s(4A) thereof as the leasing business carried on by the assessee was not wholly for the charitable purposes. (A.Y. 1989 – 90 & 1990 – 91)
M. Visvesvaraya Inds. Research and Development Centre vs. CIT (2012) 79 DTR 387 (Bom.) (High
Court)