No disallowance of interest for debit balance in partner capital account

If debit balance in partners' capital account is due to loss and not due to any amount withdrawn there can be no dis allowance of interest u/s 36(1)(iii)
Meerut Rubber Factory ITA 5114/2010 ITAT DELHI

Capital Asset must be created before making application for grant of registration u/s 12AA

Hardayal Charitable and Educational Trust [2012] 25 taxmann.com 288 (Agra - Trib.)    In the instant case, the building of educational  institution was still under construction and no educational activity was carried on till date of making application u/s 12AA. Hence ITAT asked to make fresh application when activity is started. 
Self Employers Service Society v. CIT [2001] 247 ITR 18/[2000] 113 Taxman 703 (Ker.) (para 13) followed.

Amount paid to wife of late partner was allowed as deduction.

The issue before the Tribunal was whether the amount paid by the assessee to Mrs Mehru Minoo

Shroff, wife of late Dr M.S.Shroff is first charge on receipts of firm in terms clause 13 of the partnership deed executed on 1-4-2003. Held that, as there was an absolute contractual obligation imposed on the continuing firm/partners by the partnership deed to pay an amount of 2% of the gross receipts subject to maximum of 3 lakhs p.a. to the legal heir of the deceased partner, it was a first charge on the receipts of the continuing firm/partners and constituted a diversion of income by overriding title. The claim of assessee was allowed

Shroff Eye Centre v. ACIT ( Delhi)(Trib.) www.itatonline.org

If developer has taken any steps in relation to construction of flats, on the basis of development agreement, then it has to be considered as transfer under section 2 (47)(v)

When an owner enters into an agreement for development of the property and certain rights are assigned to the developer who in turn has made the substantial payment and taken steps to construction of flats , then the transaction is held to be a transfer under section 2(47)(v). Legal ownership continued with the owner does not have bearing on taxability of capital gains. Though total profits received in later year for the purpose of capital gains tax the year of transfer is relevant. On the facts of the case the provisions of section 53A of Transfer of Property Act is held to be applicable
ACIT v. A. Rama Reddy ( 2012) 52 SOT 521 (Hyd.)(Trib.)

Service Tax Return for April to June 2012 to be submitted till 25-10-2012

As per notification 47/2012 dated 28-9-2012, service tax return for QE 30-6-2012 only to be submitted till 25-10-2012

Investment out of cash accumulated by assessee accepted

Santokh Ram ITA 24/2011 dated 25-7-2012 of ITAT ASR


The cases relied upon by the assessee are as under:
 i) Shivcharan Dass vs. CIT 126 ITR 263 (P&H)
ii) Bhawna Sareen vs DCIT, Jalandhar, ITA No.217(Asr)/2010 (Amritsar Bench).
iii) ITO vs. Chaman Lal Nagpal , ITAT, Amritsar Bench (2006) 102 TTJ(Asr) 890.
iv) Asstt. CIT vs. Jagdish Raj Chauhan, ITAT, Amritsar  Bench (2006) 100 TTJ (Asr) 64
v) CIT vs. K. Sreedharan 201 ITR 1010
vi) R.K.Dave vs. Ito , ITAT Jodhpur Bench (2005) 94 TT

S. 54F exemption can be claimed if amount invested although construction not completed

IN THE ITAT AMRITSAR BENCH

Smt. Usha Vaid

v.

Income-tax Officer, Dasuaya

IT Appeal No. 98 (Asr.) of 2011

[Assessment year 2006-07]

July 27, 2012

This view is supported by the decision of the Hon’ble Madras High Court in the case of  CIT vs. Sardar Mal Kuthari 302 ITR 286. The Ld. counsel for the assessee has also placed reliance on the following decisions : 

i)  Mrs. Seetha Subramanian vs. ACIT 56 TTJ 417 (Mad)  

ii)  Smt. Ranjit Sandhu vs. DCIT 133 TTJ (Chd)(UO) 46 (2010). 

S.54 and S.54EC can be claimed simultaneously

IN THE ITAT MUMBAI BENCH ‘D’

Assistant Commissioner of Income-tax, Cr-23(2)

v.

Deepak S. Bheda

IT APPEAL NO. 5011 (MUM.) 2010

[ASSESSMENT YEAR 2007-08]

JUNE 15, 2012

Transactions in commodity exchange to be treated non speculative w.e.f. 01-04-2006

Held by ITAT Mumbai in ITA 2742/2011 in case of Arnav Akshay Mehta on 12-09-2012
ITAT held that s.43(5)(d) to apply retrospectively w.e.f. even if MCX recognized  on 22-5-2009
The issue that 43(5)(d) applies to securities and not commodities not dealt in the case

Cash Receipt of Share Application Money is not contravention of 269SS

 INCOME TAX APPELLATE TRIBUNAL, DELHI

ITA No.2858/Del/2012 – Assessment year: 2008-09

Deputy CIT V/s.  M/s Alpex Exports (P) Ltd.

Date of pronouncement 28-08-2012

Addition can not be made only on the basis of low GP ratio

1. ITA 4126/Del/2010 (ITAT Delhi) Sh. Prem Chand vs ITO
2. ITA 1406/2012/Del (ITAT) ITO vs Sai Internaitonal
3. 296 ITR 45 (Gau) Madnani Cosntruction Corporation
4.  38 ITR 579 S.N. Namasivyam Chhettiar
5. 26 ITR 159   Pandit Bros.
6. S. Veeriah Reddiar 38 ITR 152 Ker
7. International Forest Co. v. CIT [1975] 101 ITR 721 (J&K)                                                                                                       
8. Aluminium Industries (P.) Ltd. v. CIT [1995] 80 Taxman 184 (Gauhati)
9. CIT v. Paradise Holidays [2010] 325 ITR 13 (Delhi).                                                                               The accounts which are regularly maintained in the course of business and are duly audited, free from any qualification by the auditors, should normally be taken as correct unless there are adequate reasons to indicate that they are incorrect or unreliable. The onus is upon the Revenue to show that either the books of account maintained by the assessee were incorrect or incomplete or that the method of accounting adopted by him was such that true profits of the assessee cannot be deduced therefrom

Service Tax on Retreading old tyres

CBEC in the month of Feburary,2012, in their circular CBEC F.No.137/125/2011-ST. have addressed the issue and relied on the judgment of Hon’ble Supreme Court in the case of M/s P.C. Cheriyan v. Mst. Barfi Devi. The context is as below:

“ In the said judgment, Hon’ble Supreme Court has observed that-

“The retreading of old tyres does not bring into being a commercially distinct or different entity. The old tyre retains its original character, or identity as a tyre. Retreading does not completely transform it into another commercial article, although it improves its performance and serviceability as a tyre. Retreading of old tyres is just like resoling of old shoes.”

Though this judgment is given in the context of Transfer of Property Act, however, the basic principle behind “manufacture” of coming into existence of a commercially different and distinct entity is equally applicable to Central Excise Act and has been relied upon by the Tribunal in certain cases while interpreting ‘manufacture’ under section 2(F) of the Central Excise Act. “

 This is a works contract and service tax shall be charged @ 70% of amount charged w.e.f. 1-7-2012

After filing appeal before CIT A,assesee has no right to withdraw it

High Court of Madras in case of M. Loganathan ITA 361/2006 dated 18-07-2012
Followed CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 wherein the Apex Court held that when an assessee takes the assessment on appeal, he cannot withdraw the same. Thus, when the machinery of the Act has been activated, the assessee cannot prevent the appellate authority from settling the real income to be assessee. 

Rajiv Gandhi Equity Saving Scheme 80CCG

Newly inserted Section 80CCG provides deduction wef assessment year 2013-14 in respect ofinvestment made under notified equity saving scheme. The deduction under this section is available if following conditions are satisfied:

NSC shall double in 10 years w.e.f. 01-04-2012

NOTIFICATION NO.GSR 319(E), DATED 25-4-2012

Rate of interest on nsc subscribed on or after 01-04-2012 changed 

Rate of Interest on Senior Citizen Scheme shall be 9.3% w.e.f. 01-04-2012

NOTIFICATION NO.GSR 321(E), DATED 25-4-2012

Post Office MIS Interest w.e.f. 01-04-2012 shall be 8.5%

NOTIFICATION NO.GSR 322(E), DATED 25-4-2012

8.8% Interest on PPF w.e.f. 01-04-2012

NOTIFICATION NO. S.O. 904(E), DATED 25-4-2012

No TDS on software purchase from Resident where tax deducted in previous transfer

NOTIFICATION NO. 21/2012 [F.No.142/10/2012-SO(TPL)] S.O. 1323(E), DATED 13-6-2012

CA Certificate F.26A/27BA notified for regularizing TDS/TCS defaults

NOTIFICATION NO. 37/2012 [F.NO. 142/18/2012-SO(TPL)], DATED 12-9-2012 by CBDT

Cost Inflation Index for Financial Year 2012-13 notified at 852

Depreciation on Let Out unused Machinery allowed by P&H HC

ITA 124 of 2004 dated 6-8-2012 CIT Vs. Ranbir Chemicals (P&H HC)

appellant-revenue submitted that the assessee had let out the machinery without there being any commercial expediency and the amount of lease was not increased in spite of providing additional machinery worth ` 45,64,613/-.Held by CIT A and ITAT that once purchase of machinery and letting out was not in doubt depreciation has to be allowed. Order confirmed by High Court

Tax Audit held not required for Entities having exempt Income by Punjab & Haryana High Court

ITA 494 of 2005 dated 17-07-2012
Chapter IV of the Act provides for 'computation of total income'. Section 44AB of the Act is one of the sections enacted under Chapter IV-D dealing with computation of profits and gains of business or profession. Section 44AB of the Act becomes operative where there is computation of profits and gains of business or profession as a part of total income. In other words, it has no applicability where the assessee
is not involved in or has no income from profits and gains from business or profession. In the present case, it was not disputed that the income of the assessee was exempted under Section 10 (20) of the Act which
falls in Chapter III of the Act. There was no income of the assessee which would fall under heading “profits and gains of business or profession”. Once that was so, it could not be said that the provisions of
Section 44AB were applicable and as a sequel thereto, penalty under Section 271B of the Act was not leviable. The Tribunal had rightly decided the issue in favour of the assessee.

Deductor absolved from duty to quote correct PAN by P&H HC

In Instant case assesee quoted 196 wrong PANs and penalty was Rs. 1960000 was imposed by department. Assessee later revised TDS return. CIT(A) and ITAT observed that liability to quote correct PAN is that of deductee. Penalty was absolved and order of ITAT was confirmed by High Court

Decision of ITAT, Ahmedabad “D” Bench in the case of Financial Cooperative Bank Limited v. ITO,

followed in instant case.
ITA 124/7-8-12 in case of CIT vs. SP Office, Yamunanagar decided by P&H HC

Refund Harrassment case-Anand Parkash DHC on 31-08-2012

HIGH COURT OF DELHI

Court on Its Own Motion

v.

Commissioner of Income-tax

W.P.(C) No. 2659 OF 2012

AUGUST 31, 2012

Service Tax not to be included for calculation of turnover for presumtive basis

M/s Mitchell Drilling International Pty. Ltd. ITA No.698/Del./2012
Sedco Forex International Drilling Inc. vs. Addl. DIT (International Taxation) in ITA
No.5284/Del./2011

Service Tax on Educational Service

Vide Not 25/2012, dated 20.06.2012 the Central Government exemptions to education services from the whole of the service tax leviable under section 66B of the FA 1994.   Item No. 9 of the said mega Notification provides that the services to or by an educational institution in respect of education exempted from service tax by way of-

Addition made u/s 68 for non production of creditors

Amount equivlent to cheques issued deposited in accounts of creditors. Creditors were men of small means. The assessee didn't ask for summoning creditors. Hence burdern of proof not discharged

Agra ITAT in case of Sumant Gupta 16-03-2012 ITA 454/2009

Department can not take advantage of its own inaction

Orrisa High Court in case of Managing Committee CFH scheme 3-07-2012

a certificate ought to have been given to the petitioner during the financial year 2009-10 and the Department cannot take advantage of its own inaction and lapses by taking a stand that the financial year is over. Such action of the opposite parties as rightly apprehended by the petitioner would lead to unnecessary complication and unavoidable and inappropriate proceedings. Had the certificate been given in time as was done in the previous year there would not have been any necessity for making any deduction of tax by some of the principals from the payments made to the petitioner and the ultimate consequence, because of Departmentalinaction, the Assessee-petitioner has to again go through the process of seeking refund in its assessment.

The Hon’ble Supreme Court in M/s. Dabur India Ltd. and another v. State of Uttar Pradesh and others. AIR 1990 SC 1814, observed that Government, Central or State, cannot be permitted to play dirty games with the citizens of this country to coerce them in making payments which the citizens were not legally obliged to make. If any money is due to the Government, the Government should take appropriate steps, but it should not take extra legal steps or adopt the course of manoeuvring. Because of the above discontentment expressed at the Bar, it has become necessary to provide guidelines for just exercise of the power of Revenue authorities. To prevent the abuse of power and to see that it does not become a new despotism, courts are gradually evolving the principles to be observed by the authorities while exercising such power. New problems call for new solutions.

CIT A can admit additional evidence only after applying R46A

Held by ITAT Asr in case of Gurdaspur Central Coop Bank Ltd ITA 99/2011

Bullock cart Drivers are not covered by GTA service

CESTAT, NEW DELHI BENCH

Kisan Sahkari Chini Mills Ltd.

v.

Commissioner of Central Excise, Meerut-II

FINAL ORDER NOS. ST/A/240-243/2012-CUS.

STAY ORDER NOS. ST/S/294-296/2012-CUS.

APPLICATION NOS ST/S/2683-2685/2011

APPEAL NOS. ST/1525 OF 2010

ST/1275-1277/2011

FEBRUARY 8, 2012

Commission paid by exporters exempted from service tax

As per Clause G of Rule 2(1)(i) of Service tax Rules, in relation to taxable services provided or agreed to be provided by any person located in non taxable territory and received by person in taxable territory, the recipient of service shall be liable to pay service tax. 

Hence in respect of commission on exports payable to person located outside India, service tax liability shall fall upon exporter.

However vide notification 42/2012 dated 29-06-2012, specific exemption has been provided to exporters subject to certain conditons

Limited Period Service tax exemption for Railways

Vide Notification 43/2012 dated 2-07-2012, exemption has been provided from service tax up to 30-09-2012 in respect of AC coach or first class coach travelling by passenger, whether or not accompanied by baggage. Further transportation of goods by Railways has also been exempted up to 30-09-2012

Service of Slaughtering of all types of animals exempted

Vide Notification 44/2012 dated 7-8-2012, while earlier slaughtering of bovine animals only was exempted under entry 33 of mega exemption notification 25/2012 dated 20-6-12

Service Tax on Directors' Services brought under reverse charge

Vide Notification 46/2012 and 45/2012 dated 7-8-2012, on service provided by director to a company service tax has been imposed on reverse charge basis i.e. company shall be liable to pay 100 % service tax.

Service Tax on Security Services

Vide Notification 45/2012 and 46/2012 dated 07-08-2012 read with Notification 30/2012 dated 20-6-2012, security services has been brought under reverse charge mechanism u/s 68(2)i.e.if security services are provided by individual,HUF or partnership firm,AOP to a body corporate, 75% of service tax is required to be deposited by that body corporate and balance 25% is to be remitted by security service agency

Disallowance of Interest on borrowed capital advanced without interest

In the case of S.A.Builders Ltd. 288 ITR 1 (SC), the Hon’ble Apex Court have examined the issue of disallowance of interest on account of advance of interest free funds to sister concerns. The Hon’ble Apex Court have held in this decision that the issue of lending of funds to the sister concern should have been examined from the view point as to whether this was done as a measure of commercial expediency.

ITAT Asr on Disallowance of Expenses paid through Cheque

I.T.A. No.277(Asr)/2012 dated 7-08-2012 Chaman lal Jain dismissed the disallowance of expenses paid through cheque

ITAT Asr on GP Ratio

Assessee engaged in business of wholesale goods like, shampoo, soaps, Hair dye, Mehndi and other cosmetic items etc. Books rejected  GP ratio was better than last year. Addition made by AO held not sustainable

I.T.A. No.277(Asr)/2012 Chaman lal Jain

ITAT Asr on S.263

Royal Times Traders ITA 220/2012 09-08-2012
Assessee firm had offered explanation regarding capital introduced by partners before AO being amount introduced in cash from various sources. Order under s. 263 was held bad in law.
Decisions relied:

Judgements on Stock Valuation

CIT vs. Hindustan Zinc Ltd. (2007) 210 CTR (SC) 282 : (2007) 291 ITR 391 (SC)
British Paints India Ltd 188 ITR 44 SC
Hot Line Teletube & Components 175 Taxmann 286
M/s Dynavision (Supreme Court) ITA 197/2005

No TDS u/s 194H on discount to stamp vendors

Supreme Court in case of   AHMEDABAD STAMP VENDORS ASSOCN Date: 06/09/2012 “Heard learned counsel on both sides. The respondent in this civil appeal is Ahmedabad Stamp Vendors Association and the Members of the said Association are licensed Stamp Vendors.We are satisfied that 0.50% to 4% discount given to the Stamp Vendors is for purchasing the stamps in bulk quantity and the said discount is in the nature of cash discount.In the circumstances, we concur with th e impugned judgement that the impugned transaction is a sale. Consequently, Section 194H of the Income Tax Act, 1961, has no application. The civil appeal filed by the Department is dismissed with no order as to costs

Luxuries Tax on Hotel and marriage palaces increased from 4% to 8% w.e.f 5-09-2012

Public Notice issued on 5-09-2012

Processing Fee of Rs. 800 under Vat

  Rules 40-A has been added to the Punjab Vat Rules, 2005 as per which “Every taxable person shall 

pay annual processing fee of Rs. Eight Hundred only during the month of October along with the 

filing of quarterly return. This  processing fee is in lieu of operation, maintenance and up gradation of 

such facilities  and services as electronic issuance of statutory forms, e-filing of returns, e-payment 

of taxes and such other online and offline services being rendered or proposed to be rendered by the 

Excise and Taxation Department.”

So Only Vat dealers are required to required to pay processing fee. TOT dealers or casual traders 

are not required to pay processing fee.

(Public Notice dated 05-09-2012)

Querries

Banking
Partnership firm succeded bycompany. Whether cheques in name of  firm can be deposited into bank account of company.

Service Tax on vocational educational courses-Clarification

Circular dated 28-08-2012 issued by CBEC regarding VEC offered by Government institutions and Institutions established under law as under:

1. Clarification has been sought in respect of levy of service tax on certain vocational education/training/ skill development courses (VEC) offered by the Government (Central Government or State Government) or local authority themselves or by an entity independently established by the Government under the law, as a society or any other similar body.

Increase in Vat Rates by 0.5% w.e.f 03-09-2012

Following amendments made in notification dated 03-09-2012:

1. Vat Rate of Items in Schedule B which were taxable @ 4% originally and increased to 5% vide notification dated 29-01-2010 has been increased to 5.5% w.e.f 03-09-2010 (on goods other than declared goods i.e. wheat, paddy, rice (Entry 162,164)). With surcharged of 10%, the effective rate shall be 6.05%

Vat on Cell Phones in Punjab

-          Originally taxable @ 5% under entry 60 of Sch B

-          Vide Notification 7-01-2011, entry  no. 60 sub entry 6 was omitted which contained words “Cellular Telephone” 6(g)

Vat on Sugar in Punjab

-         Originally, Sr. No. 49 of Sch A declared “Sugar and Khandsari “tax free

-          Later by Notification dated 5-11-2007, following amendmends were made:

80IB is allowable for disallowance u/s 40(a)(ia) also

 M/s. Kashmir Udyog I.T.A. No.124(Asr)/2011 21-8-2012
M/s. Singla Cabales, Jammu, in ITA No.147(Asr)/2012 1-6-2012
M/s. Sun Pharmaceuticals, in ITA No.184(Asr)/2009, dated 11.06.2010
Sunandan Aggaral ITA 166/2012 dated 26-7-2012