For determining the total income of an Indian branch

For determining the total income of an Indian branch receipt arising on account of commercial services rendered by it to American head office to be considered. [Wellinx inc. v/s ADIT (international taxation) (2013) 35 taxmann.com 420 (Hyderabad - Tribunal)].

Analysis and Issues in Schedule AL- ITR 3 & ITR 4

Analysis and Issues in Schedule AL

(Statement of Assets and Liabilities at the end of the Year)

ITR 3 & 4

This is a new schedule incorporated in ITR 3 & 4 for the Assessment Year 2013-14. An individual assessee is required to submit Assets and Liabilities at the end of the year 31^st March, 2013.  It is mandatory if total income of the assessee exceeds Rs.25 Lakhs.

ITR 3 & ITR 4

Total Income ---à Part B-TI –Computation of Total Income- Column-13

Total Income

Aggregate income of all 5 heads of income after setting of losses and deductions under Chapter VIA.

ITR Instructions to fill Schedule AL

·         (i) This Schedule is to be filled giving details of any property held by the assessee and the corresponding liabilities, other than those included in the balance sheet filled in Part A – BS of the return.

·         (ii) The assets to be reported will not include personal effects, i.e. to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him but excludes items mentioned in column a, b, c and d of column 2 under column A of the Schedule.

·         (iii) For the purpose of column b of column 2 under column A, jewellery includes.-

(a) Ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel

(b) Precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel

Regards,

CA.VMV S RAO

Date extended for filing of online return for the first quarter 2013-14 to 07-08-2013

Circular dated 25-07-2013 – date extended for filing of online return for the first quarter 2013-14 to 07-08-2013 and last date of filing of hardcopy of return 10-08-2013. Last date of filing of annexure 2C and 2D online 07-09-2013 and filing of hardcopy annexure 2C and 2D is 10-09-2013.

Prepayment charges for closure of loan account allowed

Prepayment charges for closure of loan account which was taken for acquisition of property are allowable under section 24(b) of the Income Tax Act. [Windermere properties (Pvt.) limited v/s DY. CIT [2013]34 taxmann.com 109(Mumbai-Tribunal)].

Time for realization and repatriation to India

Time for realization and repatriation to India of Value of goods or software exported would be 9 months from date of export w.e.f 01-04-2013. [Circular 14 of 22-07-2013].

Rent received from renting of flats held as stock-in-trade

Rent received from renting of flats held as stock-in-trade shall be taxable under the head "House Property".[The High Court of Delhi at New Delhi- New Delhi Hotels Limited versus ACIT].

Similar to the case Azimganj Estate (P.) Ltd. v. CIT (2012) 206 Taxman 308 (Cal.).....On this issue, the Calcutta High Court held that the rental income from the unsold flats of a builder shall be taxable as “income from house property” as provided under section 22 and since it specifically falls under this head, it cannot be taxed under the head “Profit and gains from business or profession”. Therefore, the assessee would be entitled to claim statutory deduction of 30% from such rental income as per section 24. The fact that the said flats have been claimed as not chargeable to wealth-tax, treating the same as stock-in-trade, will not affect the computation of income under the Income-tax Act, 1961

CBDT Instruction Regarding Grant Of Interest U/s 244A On Refunds

CBDT Instruction Regarding Grant Of Interest U/s 244A On Refunds

Pursuant to the judgement of the Delhi high Court in Court On Its Own Motion Vs, UOI 352 ITR 273 the CBDT has issued Instruction No. 7/2013 dated 15.07.2013 stating that when the delay in processing the refund is not attributable to the assessee but is due to the fault of the Revenue, interest should be paid under section 244A of the Income-tax Act. The High Court had held that false or wrong uploading of past arrears and failure to follow the mandate before adjustment is made under Section 245 of the Act, cannot be attributed and treated as fault of the assessee. The CBDT has directed that in view of the direction of the High Court, in no case should interest u/s 244A of the Act be denied to the assessee where the assessee is not at fault. It is also stated that the observation of the High Court should be strictly kept in mind while dealing with such matters

Amendment to Securities Laws

An Ordinance to Amend the Securities Laws Promulgated; SEBI would have now Powers to Regulate any Pooling of Funds Under An Investment Contract Involving A Corpus Of Rs.100 Crore Or More, Attach Assets In Case Of Non-Compliance And Chairman SEBI would have Powers to Authorize The Carrying out of Search and Seizure Operations, As Part of Efforts to Crack Down on Ponzi Schemes
The President was pleased to promulgate an Ordinance to amend the Securities Laws today. This was consequent to the approval of the Cabinet, which met on July 17, 2013, to amend Securities and Exchange Board of India (SEBI) Act and related Acts for providing more powers to the capital markets regulator for enforcement against illegal Collective Investment Schemes and to curb insider trading.

Owing to new and innovative methods of raising funds from investors, such as art funds, time-share funds, emu /goat farming schemes, there has been regulatory gap /overlap regarding types of instruments / fund raising. At the same time, SEBI receives complaints against unapproved fund raising activities of certain companies that claim that they do not come under the purview of SEBI Collective Investment Scheme regulations. With the amendments in force now, SEBI would have powers to regulate any pooling of funds under an investment contract involving a corpus of Rs.100 Crore or more, attach assets in case of non-compliance and Chairman SEBI would have powers to authorize the carrying out of search and seizure operations, as part of efforts to crack down on ponzi schemes.

Besides, SEBI would have powers to seek information, such as telephone call data records, from any persons or entities in respect to any securities transaction being investigated by it. Establishment of Special Courts enabled by this Ordinance would fast-track the resolution of pending SEBI related cases.

These amendments to the SEBI Act, SCR Act and the Depositories Act were finalized after detailed consultations with SEBI and other Ministries and Departments including MHA, DoT, MCA, DFS etc. Government believes that these amendments would give SEBI the legal backing to clamp down on unscrupulous entities that are using newer methods to take gullible investors for a ride. The promulgation of the Ordinance demonstrates the firm commitment and resolve of the Government to act with speed and alacrity to curb irregularities and frauds in securities market.


*****

DSM/RS/ka
(Release ID :97305)

Gold Import Vs CAD

RBI tightens gold import norms to squeeze CAD

The Reserve Bank of India (RBI) on Monday streamlined its gold import policy to ensure at least 20 per cent of the yellow metal sourced from abroad was made available to the country's gems & jewellery exporters. Also, for domestic use, the nominated banks and importing agencies have been made responsible for making gold available only to the entities engaged in jewellery business and bullion dealers supplying gold to jewellers.

While the move is aimed at helping manage the country's precarious current account deficit (CAD) situation and improve gold availability for exporters, domestic prices of the yellow metal might rise. For instance, insisting on meeting certain export levels before allowing fresh import of gold would limit the availability for domestic use, pushing prices up.

The revision has been done in consultation with the government and will be applicable to gold imports in any form /purity, including gold coins.

Besides banks and other agencies that import gold, the new regime would cover the bullion refineries that imported gold in Dore form (raw form), RBI said in statement.

RBI had imposed certain restrictions on import of gold in various forms earlier, too. Those were applicable on nominated banks, agencies, premier, star trading houses, units in special economic zones (SEZs) and export-oriented units, which were permitted to import gold for use in the domestic sector.

The central bank said any import of gold under any type of scheme would follow the 20-80 principle. The present instructions on import of gold on a consignment basis and the letter-of-credit restrictions stand withdrawn.

Under the new norms, an entity importing 100 kg of gold (which will have to be kept in bonded warehouse), for example, will have to release 20 kg to exporters (of gold, gold jewellery) against an undertaking to Customs authorities.

This entity would be permitted by the Customs to make fresh imports only to the extent of actual exports out of the 20 kg of gold held in the bonded warehouse, RBI added. For instance, it will be permitted to undertake fresh imports only after at least 15 kg of this 20 kg has been exported.

The latest move is expected to lead to higher domestic prices, say experts. Naveen Mathur, head of commodities at Angel Broking, said too many restrictions on imports with complex procedures would lead to supply squeeze in the domestic market, pushing prices.

RBI also said the government would issue separate instructions, if any, to the Customs authorities/Directorate General of Foreign Trade to operationalise and monitor these import restrictions.

The latest scheme follows exporters' meeting last month with Commerce Minister Anand Sharma. They had complained that banks were not importing gold for exporters and that jewellery exports were suffering due to low gold availability.

Jewellery exports fell in the first two months of the current financial year, despite a favourable currency and improving economic conditions in the US, one of India's major export markets.

"This will help the domestic and export industry. That's because there was no gold available. The move will increase supply," said Gitanjali Gems Managing Director Mehul Choksi.

Given the low availability of gold (due to increased import duty, and banks being allowed gold imports only on a consignment basis), monthly gold jewellery exports fell a staggering 73 per cent to $556.81 million in June, from $2,062.32 million in the same month a year earlier. In rupee terms, these exports plunged 72 per cent to Rs 3,251.80 crore, from Rs 11,555.17 crore in the month the previous year, according to data compiled by the Gems & Jewellery Export Promotion Council.

RBI said banks and agencies should also ensure compliance with instructions while effecting the foreign exchange transactions put through by/for their clients.

RBI also said: "Entities/units in SEZs and EoUs, premier and star trading houses are permitted to import gold exclusively for the purpose of exports only." This means the units that were allowed to supply certain part of gold in domestic market would now not be able to do so.

Source: Business Standard

Section 271(1)(c) penalty under Income Tax Act

No section 271(1)(c) penalty under Income Tax Act even if explanation unproved if it is not disproved by assessment officer. [Saket Agarwal v/s ITO (ITAT Delhi)].

In case of mismatch, assessment officer to check deposit of TDS and give credit as per Form 16,16A

In case of mismatch, assessment officer to check deposit of TDS and give credit as per Form 16,16A. May ask deductor to file correction statement. [Instruction 5 of 08-07-2013].

Penalty was liable to be waived off under section 80 of the Service Tax Act

Where an assessee having limited operations had co-operated in proceedings and paid service tax along with interest, penalty was liable to be waived off under section 80 of the Service Tax Act. [Royal travels v/s commissioner of central excise [2013] 35 taxmann.com 19 (Ahmedabad – CESTAT)].

Section 194I now bifurcated

TDS update- section 194I now bifurcated - 194IA (2 p.c.) and 194IB (10 p.c.) use new sections for filing E-TDS return.

GN on Tax Audit-2013

Guidance Note on Tax Audit u/s 44AB of the Income-tax Act, 1961- Revised 2013 Edition. - (09-07-2013)

The result of ICAI final exam held in May, 2013 and (CPT) held in June, 2013

The result of ICAI final exam held in May, 2013 and (CPT) held in June, 2013 are likely to be declared on 16-07-2013 around 2.00 P.M.

The result of [ISA] assessment test held on 22-06-2013

The result of [ISA] assessment test held on 22-06-2013 is likely to be declared on 16-07-2013 around 2.00 P.M.

Income tax department has released Income Tax Return (ITR ) 7

Income tax department has released Income Tax Return (ITR ) 7 as applicable for persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) for e-filing of returns for assessment year 2013-14 of financial year 2012-13.

EXEMPTION TO SPECIAL ECONOMIC ZONE FROM SERVICE TAX

EXEMPTION TO SPECIAL ECONOMIC ZONE FROM SERVICE TAX

By: Mr. M. GOVINDARAJAN

In exercise of the powers conferred by Section 93(1) of the Finance Act, 1994 read with Section 95(3) of Finance Act, 2004 and Section 140(3) of Finance Act 2007 and in supersession of Notification No. 40/2012-Service tax, dated 20.06.2012 the Government by Notification No. 12/2013-Service tax, dated 01.07.2013 gave exemption to the services on which service tax is leviable under Section 66B of the Finance Act, 1994, received by a Unit located in a Special Economic Zone ('SEZ' for short) and Developer of SEZ ('Developer' for short) and used for the authorized operation from the whole of the service tax, education cess and secondary and higher education cess levied thereon. This notification came into effect from 01.07.2013. The exemption is provided as detailed below: The exemption shall be provided by way of refund of service tax paid on the specified services received by the SEZ Unit or the Developer and used for the authorized operations; Where the specified services received by the SEZ or the developer are used exclusively for the authorized operations, there is an option not to pay the service tax ab initio, subject to the conditions and procedures. Instead of availing exemption or claiming refund the SEZ unit is having the option to avail CENVAT credit on the specified services in accordance with the CENVAT credit Rules, 2004. Conditions The following are the conditions prescribed in this Notification are as follows: The SEZ unit or the developer is to get an approval of the Approval Committee of the list of services required for authorized operations; The ab initio exemption shall be allowed subject to the following procedure and conditions: A declaration shall be furnished in Form A1 verified by the specified officer of the SEZ along with the list of specified services; On receipt of the declaration the authorization shall be issued by the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be to the SEZ unit or the developer in Form – A2; The SEZ unit or the Developer has to provide a copy of the said authorization to the provider of specified services; On the basis of the authorization the service provider shall provide the specified services to the SEZ unit or the Developer without payment of service tax; The SEZ unit or the Developer has to file Quarterly report in Form A3 furnishing the details of specified services received by it without payment of duty; An undertaking in Form A1 is to be furnished that in case the specified services on which exemption has been claimed are not exclusively used for authorized operation or were found to have been used exclusively for authorized operation, it shall pay to the government an amount that is claimed by way of exemption from service tax and ceases along with interest as applicable on delayed payment of service tax; The refund of service tax on the specified services that are not exclusively used for authorized operation or the specified services on which ab-initio exemption is admissible but not claimed, shall be allowed subject to the following procedure and conditions: The service tax paid on the specified services common authorized to the authorized operation in SEZ and DTA units (Domestic Tariff Area) shall be distributed amongst the SEZ unit or the developer and DTA in the manner as prescribed in Rule 7 of CENVAT Credit Rules; For the purpose of distribution the turnover shall be taken during the relevant period; The eligibility of refund is of the service tax paid on- The specified service on which ab-initio exemption is admissible but not claimed; and The amount distributed to it. The claim for refund is to be made to the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, in Form A4; The amount indicated in the invoice, bill or, as the case may be, challan, on the basis of which refund is being claimed, including the service tax payable thereon shall have been paid to the person liable to pay the service tax thereon, or as the case may be, the amount of service tax payable under reverse change shall have been paid under the provisions of the Act; The claim for refund shall be made within one year from the end of the month in which actual payment of service tax was made to the service provider or such extended period as the Authority shall permit; Only one claim of refund is to be made for every quarter; If already not registered, before filing a claim for refund under this Notification, an application for registration shall be made; If more than one SEZ unit registered under a common service tax registration, a common refund may be claimed at the option of the assessee. The units shall maintain proper account of receipt and use of the specified services, on which exemption or refund is claimed for authorized operations. Erroneous refund Where any sum of service tax paid on specified services is erroneously refunded for any reason whatsoever, such service tax refunded shall be recoverable under the provisions of the said Act and the rules made there under, as if the recovery of service tax is erroneously refunded.

Not to enforce demand if intimation u/s 143(1)

CBDT – Not to enforce demand if intimation u/s 143(1) undelivered for returns processed prior to 31-03-2010 instruction no.4/2013 dated 05-07-2013 [honorable delhi high court vide judgment in case of court on its own motion v/s UOI].

SA-700 on tax audit report u/s 44AB

SA-700 on tax audit report u/s 44AB of the Income Tax Act, not applicable for reports filed up to 31st March, 2014.