DIRECT TAX: PROFESSIONAL UPDATES FOR THE 3rd WEEK OF AUGUST 2014, BY RAJPUT JAIN & ASSOCIATES TEAM

• ITR -3 Form is to be used by an individual or an HUF who is a partner in a firm and where income chargeable to income-tax under the head “Profits or gains of business or profession” does not include any income except the income by way of any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him from such firm.
• ITR 4 Return Form for Assessment Year 2014-2015 is to be used by an individual or a Hindu Undivided Family who is carrying out a proprietary business or profession.
• Bar in S. 269SS/ 269T does not apply to loans/ advances accepted/ repaid via journal entries. Limitation period for S. 271D penalty is as per S. 275(1)(c) & not 275(1)(a)  CIT vs. Worldwide Township Projects Ltd (Delhi High Court) 
•  Query: Whether it is mandatory to file return electronically?

Answer: E-filing of return is mandatory for:

(a) Every resident and ordinarily resident individual and HUF, if he/it has any of following:

  (i) Signing authority in any account located abroad;

  (ii) Any asset located abroad; or

  (iii) Financial interest in any entity located abroad.

          (b) A political party [if its income exceeds the limit, without claiming exemptions under Section 13A, which is not chargeable to tax]

(c) Every person claiming tax relief under Section 90, 90A or section 91;

(d) A firm or an individual or HUF who are required to get their accounts audited under section 44AB;

(e) Every company;

(f) Every AOP or BOI;

(g) A person [other than a company and a person required to furnish return in form ITR 7] whose total income exceeds Rs. 5 lakh rupees during the previous year 2013-14.

• ITAT: No TDS on member interest payments by co-operative society ‘carrying banking business’   Bagalkot District Central Co-operative Bank
• ITAT: Landlord services to tenant 'optional', payment not rental but business income Green Valley Agro Mills Ltd.
• ITAT: Royalty payment under restrictive covenants of technical collaboration agreement, ‘revenue’ in nature (J. L. Morison (India) Ltd.)
• ITAT : Absent Sec 47(xiiib) conditions fulfillment, capital gains in LLP conversion year taxable u/s 45 (Aravali Polymers LLP)
• Section 50/112: Though gains on depreciable assets held for more than 3 years have to be treated as STCG u/s 50, the gains have to be taxed at the rate applicable to a LTCG. Smita Conductors Ltd vs. DCIT (ITAT Mumbai)
• HC: Quashes Revenue's 'arbitrary', non-judicious order u/s 201(1); Assessee entitled to appeal remedy  REMCO (BHEL) House Building Co-Operative Society Limited [TS-377-HC-2014(KAR)]
• Circumstances leading to formation of PE and estimation of profit attributable thereto under Rule 10 explained. Even foreign assessees are liable for interest u/s 234B Nortel Networks India International Inc vs. DDIT (ITAT Delhi)
• Disallowance u/s. 40(a) (ia) of the Income Tax Act applies only to amounts payable as of 31st March [Supreme Court In CIT vs. Vector Shipping Services (P) Ltd]. 
•  SC: Dismisses Revenue SLP; Loss on partly convertible debenture transfers ‘non- speculative', held HC (New Ambadi Estates Pvt Ltd.)

• Assessing officer cannot object submission of additional evidence if same is accepted by CIT (Appeal) under Income Tax Act.
• Employee can take benefit of 80G for Donation through Employer to PM National Relief Fund, CM/LG Relief Fund, as per employer certificate [Circular 2 of 12-01-05]. 
• Taxsutra Alert - HC : ITAT holding share income as capital gains, not mere 'another possible view' Harit Exports Ltd. [TS- 443-HC-2014(BOM)]

• Mandatory to mention PAN of donee in schedule 80G in ITR. PAN of Prime Minister National Relief Fund is AACTP4637Q, South Block, PM Office, and New Delhi-110001.

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DIRECT TAX: PROFESSIONAL UPDATES FOR THE 2nd WEEK OF AUGUST 2014, BY RAJPUT JAIN & ASSOCIATES TEAM

• As reported by some of the newspapers and PTI government may provide a major relief to the tax-payers, by increasing the Income Tax slab limit for exemption from Rs.2 lakh to Rs.5 lakh.
• The official e-mail of Income Tax Department has been migrated to an upgraded version requiring better security. For this, a new password is being reset for the official e-mail at http://mail.incometaxindia. Gov.in. You are requested to send your password request from an existing email to webcr@incometaxindia.gov.in mentioning your official e-mail id @incometaxindia.gov.in, name, designation and city. New password will be sent within 24 hours. Help line numbers- 0120-2770483, 9711572258, 9891860580
• Due to delayed share allotment share application money from related party couldn’t be held as a loan transaction [Parle Biscuits (P.) Ltd. vs. Deputy Commissioner of Income Tax (I.T.A. No. 9010 (MUM.) of 2010) Date of Order: 11.04.2014, ITAT – Mumbai].
• SC: Dismisses Revenue's SLP; “Precaution” can't be equated to “concealment” u/s 271(1) (c), held HC (Durr India Pvt. Ltd.)
• Capital Gain on depreciable assets held for more than 3 years is to be taxed at rate applicable to LTCG Smita Conductors Ltd vs. DCIT (ITAT Mumbai)
• Family arrangement cannot be regarded as being without consideration ACIT vs. BilakhiaHoldings P. Ltd (ITAT Ahmedabad) 
• Vide Notification No. 32/2014 dated 23-06-2014; CBDT has made mandatory filing of Wealth Tax Return only by electronic means for certain persons including company and an assessee being individual or HUF who is liable to audit u/s 44AB. 
•  One can reset  the password using the “Forgot Password” link in the Income Tax website by following three options:

-     Answer Secret Question

-     Upload Digital Signature Certificate

-     Enter E-filed Acknowledgement Number and Bank Account Number

If you are unable to retrieve your password, send an email request from registered email-id, to validate@incometaxindia.gov.in with following details:

                                i.            PAN

                              ii.            Name of the assessee as appearing on the PAN card

                            iii.            Date of Birth/Date of incorporation

                            iv.            Name of father as appearing on the PAN card (in case of individual)

                              v.            Registered PAN Address

• HC: Rejects delay condonation holding Revenue's explanation as "after thought" to "cover lapses" Harinagar Sugar Mills Ltd. [TS-453-HC-2014(BOM) 
• HC : Absent employee's 'non-resident' status in specific AY, Indian employer not representative-assessee u/s 163 Comverse Networks Systems India Pvt. Ltd. [TS-462-HC-2014(DEL)] 
•  ITAT : Loan to single entity ineligible for 'substantial business part’ exception u/s 2(22)(e) KishoriLal Agarwal 
•  ITAT : Allows smart cards preparation expenditure by TPA as revenue absent enduring benefit MD India Healthcare Services (TPA) Pvt. Ltd. [TS-448-ITAT-2014(PUN)] 
•  Query: How to claim benefit of tax deducted in advance on income which is taxable in subsequent years?

Answer: Certain provisions of TDS (including TCS) require deduction of tax at source at the time of payment or at the time of credit, whichever occurs earlier. Advance payments are also subjected to TDS. Old ITR form did not have any mechanism to carry forward the excess TDS, thus, taxpayers were required to show the entire TDS as a deduction and claim refund of excess TDS. To overcome the issues, the Schedule TDS/TCS in the ITR forms introduced two new columns:

(a) Unclaimed TDS/TCS brought forward

  (i) Financial Year in which deducted/collected

 (ii) Amount brought forward

(b) TDS/TCS being claimed this year from amount brought forward or from TDS/TCS of current financial year.

Thus, the portion of TDS credit pertaining to income taxable in the subsequent year can be carried forward to subsequent year and can be claimed in the year in which income is offered to tax.

• Profit from sale of agricultural land would not be included for purpose of computing book profit under section 115JB. [2014] 
• HC: Allows Sec 10(23C) exemption; Educational institute's "annual receipt" threshold excludes land sale consideration Madrasa E-Bakhiyath- Us-Salihath Arabic College [TS-503-HC-2014(MAD) 
•  SC: Dismisses assessee's SLP; HC held habitual dealer's share trading as business Manoj Kumar Samdaria [TS-502-SC-2014] 
•  Income Tax Department started sending e-mail/SMS to assessees for requesting to update contact details. 
•  Central Board of Direct Taxes (CBDT) extended the due date for obtaining and furnishing of the report of audit under section 44AB of the Act for Assessment Year 2014-15 in case of assessees who are not required to furnish report under section 92E of the Act from 30th day of September, 2014 to 30th November, 2014 vide F.No.133/24/2014-TP dated 20/08/2014. (Order Under Section 119 of the Income-tax Act, 1961) 
• Further, CBDT had also affirmed our representation regarding the tax audit reports filed prior to 25th July, 2014, which we had mailed on 12.08.2014 and further clarified that the tax audit report under section 44AB of the Act filed during the period from 1st April, 2014 to 24th July, 2014 in the pre-revised Forms shall be treated as valid tax audit report furnished under section 44AB of the Act.
  
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  Hope the information will assist you in your Professional endeavors. For query or help, contact:   info@carajput.com or call at  011-43520194