Separate date for furnishing 15G/15H announced by CBDT vide Notification dated 09-06-2016

Separate date for furnishing 15G/15H announced by CBDT vide Notification dated 09-06-2016

Earlier, TDS return for June was required to be filed by 31st July, for Sep by 31st October, for December by 31st January, for March by 31st May as per N/N 30/2012 dtd. 29-04-2016.

No separate date was prescribed for 15G/15H.However now, separate dates for uploading 15G/15H have been provided vide Notification dated 09-06-2016.

Due Date for QE 30 June shall be 15th July, for 30th Sep shall be 15th October, for 31st December shall be 15th January and for 31st March it shall be 30th April

It means for first three quarters 15G/15H to be filed 16 days ahead of due date for TDS return and for last quarter a month ahead for TDS return, thus maintaining a time distance between the TDS return and 15G/15H so that information regarding 15G/15H may be timely submitted in TDS return.

Further in respect of 15G/15H for 3rd and 4th Quarter of 2015-16 not filed electronically can be so e-filed up to 30-06-2016

Issues /Observations/ Ambiguties Regarding Income Declaration Scheme, 2016

1 As per Section 183(2) , FMV of asset on 01-06-2016= Deemed Undisclosed Income u/s 183(1). As per Section 183(3), FMV of an asset shall be determined in prescribed manner.

Also Tax, Surcharge and Penalty is required to be calculated @ 45% of Undisclosed Income u/s 184 and S.185.

However section 183(1) does not mention about Undisclosed Income. Hence the anamoly, ostensibly seminal, may mar the entire scheme.

Under Income Tax Act , the inclusive definition of word Undisclosed Income is provided u/s 158B(b) for limited purpose of Chapter XIV-B, which is also not in operation for searches after 31-03-2003.

The word Undisclosed Income is also defined u/s 271AAB but again for purpose of levy of penalty under that section.

3 It Should be clarified whether declaration can be filed by residents as well as non residents.

4 As per Circular No. 16/2016 dated 20-05-2016, A declaration under the aforesaid Scheme may be made in respect of any income or income in the form of investment in any asset located in India
However, it should also be clarified whether declaration can be filed in respect of foreign income [i.e. income accruing or arising outside India or Income received outside India.]

5 Whether stamp duty value of Immovable property can be taken as Fair Market Value under the Scheme

6 As per Circular No. 17/2016 dated 20-05-2016, in Q.No.12, it is mentioned that After the declaration is made the Principal Commissioner/ Commissioner will enquire whether any proceeding under section 142(1)/143(2)/148/153A/153C is pending for the assessment year for which declaration has been made. Apart from this no other enquiry will be conducted by him at the time of declaration.

However, as per Advertisements being published no enquiries to be made. The matter should be clarified.

7 Since an embargo has been placed on making any other declaration, whether it means that revision of declaration already filed is not possible.

If a person files a declaration in representative capacity say as Karta of HUF, whether he can file another declaration in Individual capacity is not clear from the section 186(3) of the Scheme

8 As per Circular No. 16/2016 dated 20-05-2016,
The declarant shall not be liable for any adverse consequences under the Scheme in respect of, any income which has been duly declared but has been found ineligible for declaration. However, such information may be used under the provisions of the Income-tax Act.
The term adverse consequences be defined. Whether such
person shall not be visited with penalty and prosecution
Circular No. 17/2016 dated 20-05-2016
As per Circular No. 17/2016 dated 20-05-2016, In respect of such undisclosed income which has been duly declared in good faith but not found eligible, then such income shall not be hit by section 197(c) of the Finance Act, 2016. However, such undisclosed income may be assessed under the normal provisions of the Income-tax Act, 1961. [Q.No.9]

However, while answering to Q.No.11 in respect of declaration made by person for undisclosed Income which has been acquired from money earned through corruption, it has been stated by Circular NO. 17/2016 dated 20-05-2016 that if such a declaration is made and in an event it is found that the income represented money earned through corruption it would amount to misrepresentation of facts and the declaration shall be void under section 193 of the Finance Act, 2016. If a declaration is held as void, the provisions of the Income-tax Act shall apply in respect of such income as they apply in relation to any other undisclosed income

Subjectivity between what is declared in good faith and what is declared by misrepresentation should be removed.

Further whether not being hit by section 197(c) means taxing the income in the year of accrual and not the year of detection/issue of notice, Further whether it means not inviting penalty and prosecution .

9 Section 189 bars the reopening of assessment or reassessment. However, it should have been further extended to take care of revision also.

Further Section 189 talks about disentitlement of declarant but not the privilege of Income Tax department to reopen the assessment. So, the matter should be clarified.

10 Person other than Declarant can not claim any benefit, concession,
Immunity under the Scheme[Section 197 (a)]

The benefits of the scheme shall only be available to declarant and not any other person.

One Interpretation is that If declaration is filed in different name and tax is inadvertently filed in different name, then subject to timely payment u/s 187, immunity shall be available to declarant and not the person in whose name the tax has been deposited. SO, whether such person needs to deposit tax again ?

Another interpretation that comes from 197(a) is say that if declaration is made by one husband in respect of cash in his hand, and later if the same cash is deposited into the account of wife, whether wife can explain the cash so deposited on the strength of declaration made by husband,

The scope of S.197(a) be clarified

11 As per Circular 17/2016 the period of holding shall start from the said date (i.e. the date of determination of fair market value for the purposes of the Scheme) i.e. 01-06-2016. The Income tax law has not been amended . Without amending section 2(42A), litigation might arise on the issue.

12 As per Circular 17/2016, Discussing the querry No. 3 on “If the notice has been issued but not served on the declarant, then how will he come to know whether the notice has been issued, the CBDT has stated that The declarant will not be eligible for declaration under the Scheme where a notice has been issued and served on the declarant on or before 31st day of May, 2016

Further In the form of declaration (Form 1) the declarant will verify that no such notice has been received by him on or before 31st May, 2016.

However no such declaration is there in Form-1 except for the wording mentioned in Section 196

13 Circular 16/2016 dated 20-05-2016
For the purposes of declaration under the Scheme, it is clarified that the person will not be eligible under the Scheme if any notice has been served upon the person on or before 31st May, 2016 i.e. before the date of commencement of this Scheme.

As per Circular 17/2016, Discussing the querry No. 3 on “If the notice has been issued but not served on the declarant, then how will he come to know whether the notice has been issued, the CBDT has stated that The declarant will not be eligible for declaration under the Scheme where a notice has been issued and served on the declarant on or before 31st day of May, 2016

Hence whether declaration for notices u/s 148 for AY 2009-10 issued but not served till 01-06-2016 can be filed ?

14 As per Circular In the case of survey, a person is eligible to make a declaration in respect of an undisclosed income of any other previous year other than in which the survey was conducted

Comments: In such a case the declarant shall be able to make a declaration even for the previous years before the year in which survey is conducted, although incriminating material for such period is in the possession of the department.

15 Normally under VDIS Scheme, there are no harsh consequences of not disclosing the Income and the assessee is not placed at a position inferior to that he would be if there was no VDIS. But this scheme as per Section 197(c) says:

Where any income has accrued, arisen or received or any asset has been acquired out of such income prior to commencement of this Scheme, and no declaration in respect of such income is made under this Scheme,—

(i) such income shall be deemed to have accrued, arisen or received, as the case may be; or

(ii) the value of the asset acquired out of such income shall be deemed to have been acquired or made,

in the year in which a notice under section 142, sub-section (2) of section 143 or section 148 or section 153A or section 153C of the Income-tax Act is issued by the Assessing Officer, and the provisions of the Income-tax Act shall apply accordingly

At the onset, the purpose is to disincetivise the assessee for not making the declaration under the scheme and provide for higher valuation of asset by providing deeming provisions but scheme of fixing the year of deemed accrual or acquisition is not clear.

E.g. As per 197(c) for assessment year 2016-17, notice u/s 148 for undisclosed income of AY 2016-17 is issued on 30-09-2018 , then income shall be deemed to have accrued in 2018-19, being the year of issue of notice and not in previous year 2015-16 relevant to assessment year 2016-17. In such a case, how shall AO assess the assessee, when the income itself is not deemed to have arisen in AY 2016-17. Further the Income tax law has not been amended to provide for such fiction.

As per Press Release dated 14-05-2016, Non-declaration of undisclosed income under the Scheme, will render such undisclosed income liable to tax in the previous year in which it is detected by the Income tax Department

Hence there is not only ambiguity but also contradiction regarding application of S.197 (c). Whether the year of issue of notice or year of detection is relevant for S.197(c ).

Further there is no amendment in Income tax law to give effect to section 197 (c).

Inspection Procedure for grant of registration certificate under Punjab Vat framed vide order dated 17-06-2016

Inspection Procedure for grant of registration certificate under Punjab Vat framed vide order dated 17-06-2016 as under:

1. TI to inform applicant prior to visit via SMS and email.

2. If applicant is female, inspecting official should be accompanied by female official

3. Before leaving office for Inspection, TI to inform ETO ward in charge and also record the same in movement register

4. Inspection to be carried out in day time

5. TI shall inform the applicant about discrepancies at the time of inspection, if it is not possible to inform before hand. Applicant may provide additional documents at the time of visit which shall be accepted by TI. For unresolved discrepancies, TI to give notice providing date and time to submit the proof at office.

6. At the time of inspection, applicant may call his advocate for assistance.

7. TI to record his findings in system with in 48 hours from completion of inspection

Yet another circular on TCS [23/2016 dtd 24-06-2016] sets at Knot all speculations regarding TCS 1. Goods Sold for Rs. 5 lac. Cheque Received Rs. 4 lacs. Cash Received Rs. 1 lakh. Since cash received lesser than 2 lacs, no TCS applicable 2. Goods Sold for Rs. 5 lac. Cheque Received Rs.2 lacs. Cash Received Rs.3 lakh. TCS shall apply on Rs. 3 lacs only and not whole of consideration of Rs. 5 lacs

Under Lok pal and Lokayaukta Act 2013, as per section 14(1)(g) the Lokpal shall inquire any allegation of corruption made in a complaint in respect of any person who is or has been a director, manager, secretary or other officer of every other society or association of persons or trust (whether registered under any law for the time being in force or not), by whatever name called, wholly or partly financed by the Government and the annual income of which exceeds such amount as the Central Government may, by notification, specify; It has been notified vide Notification dated 20-06-2016 issued by Ministry of Pesonnel, Public Grievances and Pensions that inquiry into allegations of corruption in above cases to be made only where grants or financial assistance given by the Central Government exceeds Rs. 1 crores. Income other than Central Government Grants not to be considered for conducting such inquiry. Even state government grant not covered. The moot point is whether Invocation of section 13(1)(c) of Income Tax Act i.e. use or application of any part of income or assets of the trust for the benefit of trustee etc. might invite such enquiry

Clarified by CBDT vide press release dated 21-06-2016 that no statement regarding arrest of willful defaulters has been issued. CBDT also expressed that though the provisions for arrest and detention by the Tax Recovery Officers in respect of the non-compliant tax defaulters are contained in the Income-tax Act, these are used extremely sparingly

U/s 11 of Model GST law, remission of tax on quantities found deficient due to natural causes has been allowed. U/r 21 of Central excise law similar remission is available for deficiencies arising out of natural as well as accidental cases and other cases where goods found unfit for consumption or marketing before removal. U/R 21 of PVAT Rules, ITC is required to be reversed where goods are lost or destroyed due to whatever reasons. Hence remission should be allowed under GST law on quantities found deficient on account of reasons other than natural causes also. Although Schedule I of Model GST law, dealing with supplies without consideration also does not include deficiencies due to unnatural reasons with in definition of supply but perhaps matter needs a bit of more clarification also. [GST Law Note-3]

As per Section 10(4)(b) of Model GST Law, every exemption notification and its clarification shall be made available on official site. It should better be stretched to include all types of notifications. At present, on the site of CBEC while, all the notifications especially old notifications are not available, the site of Punjab Vat which once used to be one stop destination for all notifications/circular has lost its sheen of being so virtuoso with times. Legislating the old demand of the Industry is welcome and the respective governments should follow suit to adopt the better practices [GST Law Note-2]

Under Model GST Law Section 9(3)(c), thresh hold exemption limit is also available for supply of services by reverse charge mechanism , where services are for personal use other than for use in the course or furtherance of business. Note that exemption is available only for services under RCM and not for supply of goods, if covered by RCM. Further no threshold limit is available if services are received for business purpose. This feature was not available under present service tax law and under vat law also purchase tax is leviable from Re.1. [GST Law Note-1]

TDS ON SALARY TO NUNS AND PRIESTS OF CHURCH SURRENDERING SALARY TO CHURCH

1.     A  circular was issued by the Government in Circular No.1 of 1944 V.No.26(43)-IT/43, dated 24.01.1944 in which the liability to tax on the fees received by the missionaries and subsequently made over to the society had been considered. 

2. This Circular has been considered subsequently by the Central Board of Direct Taxes in the year 1977 in their proceedings dated 5th December, 1977. In that instructions, the question for consideration was whether the fees or other earnings when the same is made over to the Congregation to which they belong under the rules thereof is liable to be taxed. The Central Board of Taxes, has concluded as follows:

The Board have examined this issue and have decided that since the fees received by the missionaries are to be made over to the congregation concerned there is an over-riding title to the fees which would entitle the missionaries to exemption from payment of tax. Hence such fees of earning are not taxable in their hands.

3.     When the Act came into force in 1971 as early as in 1963, the Government of India in a communication issued by the Commissioner of Income Tax, Bombay City in reference No.Dat/284 (287)/60, which is addressed to one of the Solicitors in Bombay, it has considered the claim made by the Rev. Fr. Valeria Godinho regarding exemption from payment of income tax for the Priests of the Archdiocese, Bombay. In that letter, it has been stated as follows:

   It has been decided in the case of Rev.Fr.Valeria Godinho that the Departmental appeals  filed be withdrawn. Incase where amount received by Priests as salary are subject to an overriding title by their conditions and rules of service, to be passed over to the Church authorities (whose income is exempt from tax) such amounts will not be liable to be taxed.

4.     Commissioner of Income Tax, Madras, in his proceedings in R.C.No.230..11(75), dated 30.01.1969 addressed to the Secretary, Madras Catholic Educational Council on the representation of the council for exemption of the emoluments drown by the Priests or Nuns employed in the religious educational institutions has categorically stated as follows:

     It has been stated that in cases where the amount received by Priests and   

    Religious as salary are subject to an overriding title by their conditions, and

   rules and service to be passed over to the chruch authorities (whose income

   is exempted from tax) such amounts will not be liable to be taxed.

Madras High Court therefore Concluded that no TDS is required to be deducted on salary paid to Nuns and Priests subject to their providing affidavit that entire salary as a teacher/non teaching staff or in any other capacity has to be paid by the Government directly to the Congregation or Diocese, to which he belong. Also state that also state that all the payment made by the Government directly to the Congregation or Diocese is in full satisfaction of their salary as claimed by the schools and they will not have any further claim insofar as the payment of salary to them as it is directly made to the Congregation or Diocese. As according to them, it is the ultimate, final beneficiary which is receiving the salary

Madras High Court in Correspondent  v.Central Board of Direct Taxes 03-03-2016 [2016] 70 taxmann.com 85 (Madras)

Yet another Interesting legal issue of Inter Trust Charity between Sister Societies where both societies exchanged donations. AO and CIT A applied 13(3)(b) read with 13(1)(c).

Comments:

S. 13(3)(b) covers a person whose total contribution up to end of financial year is more than 50,000/-. Since both trusts exchanged more than Rs. 50,000/-, both stood covered by 13(3)(b). Further as per S.13(1)(c), if any part of income or property of the trust is used or applied for the benefit of person covered by 13(3), exemption u/s 11 is not available . Further as per 12AA(4) introduced by Finance Act 2014, registration may be cancelled and as per S.115TD introduced by Finance Act 2016, tax on MMR is payable on aggregate market value of assets less liabilities.

Held by ITAT that:

1.     Explanation below Section 11(2) only prohibits inter trust charity out of income accumulated u/s 11(2) and not out of current income

2.     As per 2^nd proviso to S.11(3A), payment or credit of money to trust registered u/s 12AA or Institution u/s 10(23C)(iv),(v),(vi),(via) is permitted in case of dissolution of the trust in the year in which trust or institution is dissolved.

3.     There is no apparent bar on payment or credit to such other organizations out of previous year's income subject to the provisions of section

4.     When the donation given by one trust to another trust out of current year's income is permitted in section 11 of the Act as an application of income, the same cannot be curtailed by another provision of the Act (i.e section 13(1)(c ) (ii) read with section 13(3) of the Act) as it would defeat the very purpose of such provision.

5.     It is not the case of the revenue that the funds of the trust have been applied /diverted for the private benefit of the trustees, settlors or any individuals /relatives. This is what is the true intention of section 13(1)(c ) of the Act.

6.     In the instant case, it is a case of simple donation by one public charitable trust to another public charitable trust, wherein no individual could hold any substantial interest.

7.     In view of the above findings, we hold that the payment of donation by assessee trust to another registered public charitable trust is not in violation of section 13(1)(c) of the Act as the said payment is not made for the benefit of any person either directly or indirectly referred to in section 13(3) of the Act.

[St. Joseph's Convent Chandannagar Educational Society [2016] 70 taxmann.com 21 (Kolkata - Trib.)

CBDT releases FAQ on TCS vide Circular No. 22/2016 dtd 08-06-2016:

1.     TCS on Motor Vehicles exceeding 10 lacs is applicable to retail sale to customers only .

2.     TCS on motor vehicles exceeding 10 lacs is not applicable to transactions between manufacturer to dealer/distributors

3.     TCS @1% is not limited to luxury cars and includes all motor vehicles

4.     Sale to Government, UN Instituions, Foreign Embassies etc. are not exigible to TCS

5.     TCS on motor vehicle is applicable on single transactions exceeding ten lacs and aggregate of transactions not to be done for the purpose of threshold limit of 10 lacs.

6.     TCS to be collected on the booking/advance also @ 1%.

7.     If Motor Vehicle for Rs. 20 lacs is sold and booking advance is taken at Rs. 5 lacs and later Rs. 15 lacs is taken, then first collect 1% on 5 lacs and later 1% on 15 lacs.

8.     An Individual who is liable to Audit u/s 44AB in immediately preceeding financial year is liable for collection of TCS [As per S.206C Explanation ©, An individual or HUF covered by 44AB(a)/(b) is only liable for TCS , which means that if in the case of Individual or HUF turnover is lesser than one crore in case of business or Rs 25 lacs in case of profession, TCS is not applicable]

9.     TCS on motor vehicle is independent of the mode of payment i.e. TCS is applicable whether payment is made in cash or cheque.

If Motor vehicle is sold for more than 10 lacs, then TCS is applicable u/s 206C(1F), but if motor vehicle is sold for lesser than 10 lacs, and payment is received in cash then TCS shall be applicable u/s 206C(1D). Section 206C(1F) and S.206C(1D) can not apply simultaneously

Shoddy Yarn exempted from advance tax retrospectively i.e. 01-04-2016 by virtue of Notification dated 06-06-2016. Earlier vide Notification dated 31-03-2016, shoddy and worsted yarn were brought under advance tax w.e.f. 01-04-2016, out of which shoddy yarn again stands exempted from 01-04-2016 to the much respite of blanket manufacturers using shoddy yarn, who shall not now require any registration with department to claim exemption.

Delhi High Court strikes down service tax on Sale of flats before Construction in Suresh Kumar Bansal [2016] 70 taxmann.com 55 (Delhi) dtd 03-06-2016

Delhi High Court strikes down service tax on Sale of flats before Construction in Suresh Kumar Bansal [2016] 70 taxmann.com 55 (Delhi) dtd 03-06-2016. Held That

Method of calculation under Rule 8D regarding computation of exempt expenditure against exempt Income changed vide Notification dated and effective from 02-06-2016

Method of calculation under Rule 8D regarding computation of exempt expenditure against exempt Income changed vide Notification dated and effective from 02-06-2016. As per Old Rule 8D, the disallowance of exempt expenditure was required to be made for i) Directly relatable expenditure  +   ii) Interest x [Avg Investments yelding exempt Income/ Avg Total Assets] + ½% of Avg. Investments yielding exempt Income

However as per New Rule 8D, the disallowance of exempt expenditure is required to be made for i) Directly relatable expenditure  +   1%  of Avg. Investments yielding exempt Income [Here Avg Investments = Annual Avg of Monthly Avgs of Opg, and Clg. Balances]

Also disallowance shall not exceed the total expenditure claimed by the assessee.

Changes Made

a)     Hence  no, disallowance now required for not directly relatable interest.

b)    Further the rate of ½% on Avg Investments increased to 1%.

c)     Method of Calculating Average Investment changed

d)    Disallowance not to exceed the total expenditure claimed by the assessee.

The above change is in consonance with Para 167 in the Budget Speech of FM which said that:

“Another issue which has led to considerable number of disputes is quantification of disallowance of expenditure relatable to exempt income in terms of Section 14A of the Income Tax Act. I propose to rationalize the formula in Rule 8D governing such quantification. The said Rule is being amended to provide that disallowance will be limited to 1% of the average monthly value of investments yielding exempt income, but not exceeding the actual expenditure claimed 

Inordinate delay in release of Judgment

1.     As per Supreme Court in Kanwar Singh vs. Thakur Ji Maharaj , in ordinate delay in itself is sufficient  to set aside the judgment without going into the merits of the case.

2.     Supreme Court in Bhagwan Das Fateh  Chand Baswani held that long delay in releasing the judgment gives rise to unnecessary speculations.  The Court added that :”the party whose appeal is ultimately dismissed may justifiable fear that the arguments raised at the Bar may not have been reflected upon or appreciated by the Court at the time of dictating the Judgment”. Hence the apex Court dismissed the Madras Court Judgments kept reserved for five years.

3.     Supreme Court in Anil Rai vs. State of Bihar (2001) 7 SCC 348 laid down certain guidelines to be observed by High Court and Others

4.     Apex Court in Suheli Leasing and Industry Ltd (2010) 36 PHT 267 held that after the arguments are concluded, an endevour should be made to pronounce the Judgment at earliest and in any case not beyond a period of three months. Keeping it pending for long time sends a wrong signal to the litigants and the society.

5.     In Shiv Sagar Veg Restaurant 176 Taxman 260(Bom) order of ITAT was set aside because there was in ordinate delay of 4 months

6.     Haryana Tax Tribunal in Punj Llods 48 PHT 89(HTT) taking a serious note of inordinate delay set aside the impugned order.

Comments

7.     As per Rule 34(5) of ITAT Rules

 The pronouncement may be in any of the following manners :—

          (a)  The Bench may pronounce the order immediately upon the conclusion of the hearing.

          (b)  In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement.

          (c)  In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board.

Observations of ITAT Mumbai in Times Guaranty Ltd.(ITA 1681/M/2007) dtd 15-04-2015 on

Exception and Extraordinary Circumstances “of the case”

“…………..the inference that can be drawn that the relevant factors such as complexity of the matter, number of issues involved, lengthy arguments and discussions involved or the issue being of such importance that it requires more time and efforts, difference of opinion between the adjudicating members on some issue which require more discussion etc. can be safely said to be ‘exceptional and extraordinarily circumstances of the case.’ The factors/ circumstances such as one or both the concerned Member being on leave or his/their non availability for some reason for a particular period , his occupation in some other work of equal importance as may be entrusted by the Hon’ble President of the ITAT or due to the reason that the concerned Member/Members could not spare time because of hearing or in making decision in any other factually lengthy or involving complicated issue or of the nature which require a lot of time to get to the conclusion of the matter would also fall within the purview of the above stated phrase. It cannot be assumed that such exceptional and extraordinarily circumstances of the case would mean happening of any event which is never heard or seen or which is rarely seen to happen

………………………………………….

………………………………………….

Even, if the pronouncement of the order, for certain reasons, could not be done within the period of 90 days, there is a convention to seek the permission of the Hon'ble President for pronouncement of the same even after the period of 90 days. The above said conventions are being followed not under any statutory rules or regulations but because of the own devised procedure/convention of the Tribunal for the sake of quick disposal of the cases.

We may further point out that it is also the practice/convention that if the pronouncement of the matter is delayed for certain reasons for a considerable period, the matter is refixed for clarification so that the relevant points be refreshed in the memory and if so required matter can be heard afresh. This all depends upon the satisfaction of the Bench itself as to whether it is in a position to pronounce the order or that some clarifications are required or that a fresh hearing is required.

Further the word 'ordinarily' as mentioned in clause (c) of rule 34(5) is sufficient to explain that the period of further 30 days beyond the period of 60 days from the date of hearing, is not the end point and in special circumstances, order can be pronounced beyond the such further period of 30 days also. Reliance in this respect can be placed on the another decision of the Tribunal in the case of "Gift Holding (P.) Ltd. vs. Income-tax Officer" [2012] 18 taxmann.com 103 (Mum.),

Rule 31A further amended vide Notification 39/2016 dated 31-05-2016 to provide that for the purpose of TDS on Immovable property Statement cum Challan 26QB to be filed with in 30 days from the end of month in which TDS deducted.

Earlier Rule 31A was  amended vide N/N 30/2012 dated 29-04-2016  w.e.f. 01-06-2016 for TDS return for June to be filed by 31^st May, for Sep by 31^st October, for December by 31^st January, for March by 31^st May.

Further  Rule 30 was amended to extend the time period of TDS deposit on transaction of immovable property exceeding Rs 50 lacs from 7 days from the end of month to 30 days from end of month

 Now Rule 31A further amended vide Notification 39/2016 dated 31-05-2016 to provide that for the purpose of TDS on Immovable property Statement cum Challan 26QB to be filed with in 30 days from the end of month in which TDS deducted.  Hence period extended from 7 days from the end of month to 30 days from the end of month.

To mitigate litigation on baddebts, CBDT has asked officials not to file or pursue appeal s on the issue of failure of the assessee to establish that debt has become irrecoverable. CBDT has confirmed the decision of Supreme Court in TRF Ltd., which says that it is not necessary for assesseeto establish that debt has become irrecoverabie and it is enough if bad debt is written off as irrecoverable in the books of accounts of the assessee. [Circular No. 12/2016 dated 30-05-2016]

What would be the point of taxation for Swachh Bharat Cess?

. As regards Point of Taxation, since this levy has come for the first time, all services (except those services which are in the Negative List or are wholly exempt from service tax) are being subjected to SBC for the first time. SBC, therefore, is a new levy, which was not in existence earlier. Hence, rule 5 of the Point of Taxation Rules would be applicable in this case. Therefore, in cases where payment has been received and invoice is raised before the service becomes taxable, i.e. prior to 15th November, 2015, there is no lability of Swachh Bharat Cess. In cases  where payment has been received before the service became taxable and invoice is raised within 14 days, i.e. upto 29th November, 2015, even then the service tax liability does not arise. Swachh Bharat Cess will be payable on services which are provided on or after 15th Nov, 2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date. Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov, 2015 but payment is received prior to that date and invoice in respect of such service is not issued by 29th Nov, 2015

Determination of Point and Place of Sale in case of Motor Vehicle

[(Tata Engineering and Locomotive (1970) 1 SCC 622] and KTC Automobile 54 PHT 1 (SC)

Manufacturer to Dealer Delivery Order is addressed by Sale office to Stock Yard in incharge

1.     Delivery of motor vehicle from stock yards of automobile manufacturer prior to the issue of allocation letter to the dealer is not appropriation to the contract of sale

2.     It  is when the stock yard incharge  appropriates the requisite number of vehicles to contract of sale out of available stock  by putting down the engine and chasis number in delivery challan, that the goods are appropriated. Till such appropriation it is always open  to the company to allot any vehicle to any dealer or to transfer the vehicle from the stock yard in one state to a stock yard in another state

3.     Dealer is exempted from requirement of registration even though he is in possession o motor vehicle, if he obtains a trade certificate from registering authority of the area. In the trade certificate only class of motor vehicle is mentioned and not the specific particulars of vehicle such as engine number or chasis number. It is permissible for dealer to use motor vehicle covered by trade certificate to use a vehicle for test, repair etc. including proceeding to and from the place of registration.

4.     If the motor vehicle duly covered by insurance and trade certificate of the dealer gets destroyed  during transit from manufacturer to consumer, the liability to pay compensation falls on insurer of buyer who had issued the cover note for insurance [Bombay High Court in Clancy Arcanjia Dias]

Dealer to Customer

1.   Clearly, mere mentioning of engine number and chassis number of motor vehicle in the invoice of sale does not entitle the intending purchaser to appropriate all the goods i.e. the motor vehicle till its possession is or can be lawfully handed over to him by the dealer without violating the statutory provisions governing the motor vehicles.

2.    Such transfer of possession can take place only when the vehicle reaches the place where the registering authority will be obliged to inspect for the purpose of finding out whether it is roadworthy and register- able motor vehicle and whether its identification marks tally with those given in the sale invoice and Application for registration. The possession can lawfully be handed over to the purchaser at this juncture because law requires the purchaser as an ‘’owner “ to make application registration but at the same time the law prohibits the use of motor vehicle by the owner until it is duly registered by the Registering Authority. Hence, in order to satisfy the requirements of law noticed above, the dealer can deliver the possession and owner can take the possession and present the vehicle for registration only when it reaches the office of Registering Authority

3.   With the handing over of  the possession of a specific motor vehicle just prior to registration, the dealer completes the agreement of sale rendering it a perfected sale. The purchaser as an ‘’ owner’’ under the Motor Vehicles Act is thereafter obliged to obtain certificate of registration which alone entitles him to enjoy the possession of the vehicle in practical terms by enjoying the right to use the vehicle at public places, after meeting the other statutory obligations of the insurance etc. 

4.   Hence, technically though the registration of motor vehicle is a post- sale event, the event of sale is closely linked in time with the event of registration.

5.    Neither the manufacture nor the dealer of a motor vehicle can permit the intended purchaser having an agreement of sale to use the motor vehicle even for taking to it to the registration office in the purview of statutory provisions already noticed. Hence the lawful possession with the right of use is permissible to be given to the intended owner only after reaching the vehicle to the office of registering Authority. Thus seen , in practical terms though sale preceeds the event of registration, in normal circumstances and as the law stands, it is co-terminus with the registration of new motor vehicle.

6.   Article 286(2) of the constitution empowers the parliament to formulate by making law, the principles for determining when a sale or purchase of goods take place in the context of clause (1). As per section 4(2) of the Central Sales Tax Act, in the case of specific or ascertained goods the sale or purchase is deemed to having taking place inside the state where the goods happened to be at the time of making the contract of sale. However, in the case of unascertained or future goods, the sale or purchase shall be deemed to be taken place in the State where the goods happened to be at the time of their appropriation by the seller or buyer, as the case may be.

7.   There can be no difficulty in holding that motor vehicle remains in the category unascertained or future goods till its appropriation to the contract of sale is occasioned by handing over its possession at or near the office of registration authority in deliverable or registrable state.

Hence from manufacturer to dealer, sale takes place when motor vehicle’s engine and chasis number is mentioned on the delivery challan and in case of dealer to consumer sale takes place at or near the ofiice of registration authority where goods in deliverable and registrable state are handed over by dealer to consumer.

On the basis of above legal position, it was held in KTC Automobile(supra) that sale takes place in the  state where registration, temporary or permanent,  of vehicle is done and not from where the vehicles are released.

No Penalty can be levied for unexplained expenditure assessed on the basis of DVO Report

Sathe Biscuits 148 TTJ 10 (Pune)
Amit Estate Organizer (ITAT Ahemdabad) ITA 1206/AHD/2008
Apsara Talkies (Madras High Court) 155 ITR 303
TPK Ramalingam (Madras) 211 ITR 520

Just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. - Bombay High Court there fore concluded in Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) dtd 25-04-2016

1.       As per Section 250(4), CITA is obliged  to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him

Analysis of Direct Tax Amendments in Finance Act 2016 passed on 14-05-2016 (including changes made in Finance Bill)

Finance Bill 2016 comprised 12 Chapters, 238 Clauses and 15 Schedules spread over 221 pages. It brought in Krishi Kalyan Cess, Infrastructure Cess, Equalization Levy, The Income Declaration Scheme, Direct and Indirect Tax Dispute Resolution Schemes and amendments previous Finance Acts ranging from Finance Act 2001 to 2015 . The Journey of Change did not end here and In Lok Sabha 47 further amendments were brought in Finance Bill on 29-04-2016 including insertion of 3 more clauses there by increasing total clauses to 241.

Out of this first 115 clauses, Introduction of Equalization Levy under

Chapter VIII, The Income Declaration Scheme under Chapter IX and Direct Tax Dispute Resolution Scheme under Chapter X and Schedule I on  tax rates deal with the Changes made in Direct Taxes.

Summary of Changes Made in Income Tax by Finance Act 2016 passed on 14-05-2016

Changes Effective from 01-06-2016

1	Electronic Hearing under Income Tax law enabled
2	Document required to be issued by an Income Tax Authority can be issued in paper form or communicated in electronic form
3	Equalization Levy @ 6% on online digital advertisement and incidental services or provision of digital advertizing space
4	TCS @ 1% on luxury vehicles and cash sale of goods or provision of services
5	Exit Tax for Charitable Institutions

Analysis of TCS provisions regarding Sale of Goods and Provisions of Service effective from 01-06-2016

TCS provisions have been made applicable to all the goods and services wef 01-06-2016. While the provisions are intended to frame a system of reporting high value transactions to curb black money, the law framed by the parliament in this regard is plagued by number of doubts and issues which can clog the very implementation of provisions. The author has made a humble attempt to consolidate the issues involved in this taxation as under:

CBDT has clarified that the process for cancellation of registration is to be initiated strictly in accordance with section 12AA(3) and 12AA(4) after carefully examining the applicability of these provisions. CBDT has also cautioned that since cancellation of registration of trust shall invite accereted income tax as per Finance Act 2016, authorities are, therefore, advised not to cancel the registration of a charitable institution granted u/s 12AA just because the proviso to section 2(15) comes into play. CBDT has sternly forbidden to cancel registration merely on the ground that the cut-off specified in the proviso to section 2(15) of the Act is exceeded in a particular year without there being any change in the nature of activities of the institution [Circular 21/2016, Dated: May 27, 2016]

E-appeals which were due to be filed by 15-5-2016 can be filed up to 15-6-2016. All e-appeals filed within this extended period would be treated as appeals filed in time. Taxpayers who could not successfully e-file their appeal and had filed paper appeals are required to file an e-appeal in accordance with Rule 45 before the extended period i.e. 15-6-2016. [CIRCULAR NO.20/2016 dtd 26-05-2016]

Comprehansive Analysis of Income Computation and Disclosure Standads

The binding effect of a decision of Supreme Court does not depend upon whether. a particular argument was considered therein or not, provided that the point with reference to which an argument was subsequently advanced was actually decided.

Smt. Somavanti v. State of Punjab [1963] 2 SCR 774 and T. Govindraja Mudaliar v. State of Tamil Nadu [1973] 3 SCR 222.

Taxability of Damages for breach of contract received by the buyer of Immovable property discussed by ITAT Amritsar

The law under section 51 and 56(2)(ix) provides for the taxability of forfeiture of advance money received in the hands of seller. Till AY 2014-15, the forfeited sum was deductible from the cost and even the excess of forfeited money over cost was capital receipt not taxable by virtue of Supreme Court Judgment in Travoncore Rubbers. In the hands of buyer the forfeiture of amount by reason of failure on the part of buyer was not treated as capital loss by virtue of Bombay High Court Judgement in Sterling Investment Corporation 123 ITR 441. However wef AY 2015-16, the forfeited amount is taxable in the hands of seller as Income from other Sources and no reduction from cost of the asset has to be made.

Delhi High Court judgment in the case of CIT vs. Zoom Communication (P) Ltd. 191 Taxman 179 (Del.). The Delhi High Court has held as under:- "It was held that so long as assessee has not concealed any material fact or any factual information given by him has not been found to be incorrect, he will not be liable to imposition of penalty u/s. 271(1)(c), even if claim made by him is unsustainable in law, provided that he either substantiate explanation offered by him or explanation, even if not substantiated, is found to be bona fide.

ITAT Ahmedabad, Bench-D in the case of Sun Petrochemicals Pvt. Ltd. Vs. ITO - ITA No. 1010/Ahd/2009 dated 05-06-2009 held that no interest can be charged when there is restrospective amendment in the Act. If no interest can be charged then the question of levy of penalty does not arise in view of restrospective amendment.

How to Write off a debt as per provisions of Section 36(1)(vii)

Held by Supreme Court in Southern Technologies Ltd. [320 ITR 577]

If an assessee debits an amount of doubtful debt to the profit and loss account and credits the asset account like sundry debtor’s account, it would constitute a write off of an actual debt.

 However, if an assessee debits `provision for doubtful debt' to the profit and loss account and makes a corresponding credit to the `current liabilities and provisions' on the liabilities side of the balance-sheet, then it would constitute a provision for doubtful debt. In the latter case, the assessee would not be entitled to deduction

Held by Supreme Court in Vijya Bank 323 ITR 168 

upholding the order of Tribunal and reversing the decision of High Court that besides debiting the Profit and Loss Account and creating a provision for bad and doubtful debt, the assessee-Bank had correspondingly/simultaneously obliterated the said provision from it's accounts by reducing the corresponding amount from Loans and Advances/debtors on the asset side of the Balance Sheet and, consequently, at the end of the year, the figure in the loans and advances or the debtors on the asset side of the Balance Sheet was shown as net of the provision “for impugned bad debt”.

In the circumstances, we hold, on the first question, that the assessee was entitled to the benefit of deduction under Section 36(1)(vii) of 1961 Act as there was an actual write off by the assessee in it's Books, as indicated above

Whether it is imperative for the assessee-Bank to close the individual account of each of it's debtors in it's books or a mere reduction in the Loans and Advances or Debtors on the asset side of it's Balance Sheet to the extent of the provision for bad debt would be sufficient to constitute a write off

SC in the case of Vijya Bank vs. CIT 323 ITR 168 has held that

What is being insisted upon by the Assessing Officer is that mere reduction of the amount of loans and advances or the debtors at the year-end would not suffice and, in the interest of transparency, it would be desirable for the assessee-Bank to close each and every individual account of loans and advances or debtors as a pre-condition for claiming deduction under Section 36(1)(vii) of 1961 Act……..because the Assessing Officer apprehended that the assessee-Bank might be taking the benefit of deduction under Section 36(1)(vii) of 1961 Act, twice over.

In this context, it may be noted that there is no finding of the Assessing Officer that the assessee had unauthorisedly claimed the benefit of deduction under Section 36(1)(vii), twice over. The Order of the Assessing Officer is based on an apprehension that, if the assessee fails to close each and every individual account of it's debtor, it may result in assessee claiming deduction twice over. In this case, we are concerned with the interpretation of Section 36(1)(vii) of 1961 Act. We cannot decide the matter on the basis of apprehensions/desirability. It is always open to the Assessing Officer to call for details of individual debtor's account if the Assessing Officer has reasonable grounds to believe that assessee has claimed deduction, twice over. In fact, that exercise has been undertaken in subsequent years.

There is also a flipside to the argument of the Department. Assessee has instituted recovery suits in Courts against it's debtors. If individual accounts are to be closed, then the Debtor/Defendant in each of those suits would rely upon the Bank statement and contend that no amount is due and payable in which event the suit would be dismissed.

Further Held by Supreme Court that if amount is recovered subsequently and it is more than difference between debt and amount so allowed , the balance can be taxed u/s 41(4).

TDS of the assessee is deducted u/s 194-I for providing accommodation on daily basis. However assessee's memorandum of association indicates that main object of the company is to carry on the business of hotels, resorts, boarding, lodges, guest houses, etc. However no property was let out and assessee received only rentals for occupation of the premises on a daily basis. Assessing Officer's contention that income has to be assessed under 'house property' because TDS is deducted u/s 194-I is not correct because Even if machinery was leased, the consequent rent comes under the definition of rent u/s 194-I. But machinery lease cannot be considered under 'income from house property'. That indicates that just because TDS was made under section 194-I, it cannot be treated as 'house property income' as the rent definition includes lease of equipment, lease of furniture, fittings which cannot be considered as 'house property Moreover, even if assessee has let out property but when the memorandum of association permits the business of letting out of properties as such, the income cannot be brought to tax as 'income from house property' as held in the case of Chennai Properties & Investments Ltd. 373 ITR 673. It was held by Supreme Court that where in terms of Memorandum of Association, main object of the assessee-company was to acquire properties and earn income by letting out the same, the said income is to be brought to tax as 'income' from business and not as 'income from house property' ITAT Hyderabad in Heritage Hospitality Limited [2016] 68 taxmann.com 150 (Hyderabad - Trib.) JANUARY 22, 2016