TDS CHART FOR 2013-2014

CBDT Instruction Regarding Unmatched TDS Challans In Form 26AS

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. 11 of 2013 dated 27.08.2013 stating that where the report by the deductor in the TDS statement are not found available in the OLTAS database resulting in TDS mismatch,
the CPC(TDS)/ AOs(TDS) shall immediately issue
letters to the deductors, in whose case TDS challans are unmatched, with a view to verify and correct these challans. If necessary, the deductors may be asked to file correction statements, as per the procedure laid down and necessary follow up action be taken. It has been directed that the task should be completed by 31st December 2013 for FY 2012-13 in the case of CPC (TDS) and FYs 2011-12 & earlier in case of AOs (TDS).

Source:- ITATonline.org

AO is supposed to be mentor of assessee; should provide correct advice to assessee if wrong claim is made in return

Where due to ignorance wrong section had been mentioned by assessee in return, AO was required to advise assessee about correct claim and assess tax legitimately
In the instant case the assessee had invested sale consideration from sale of shop in construction of residential house and claimed exemption of capital gains. The AO didn’t consider the claim of the assessee on ground that the assessee had mentioned the wrong sections while claiming the exemption. On appeal, the CIT (A) upheld the order of the AO. Aggrieved assessee filed the instant appeal.

The Tribunal held in favour of assessee as under:

1) Claim of the assessee was fortified by the assessment order itself, wherein it had been mentioned that exemption was claimed by assessee by mentioning a wrong section. Further, the CIT (A) had acknowledged this fact;

2) Even if a wrong section was mentioned by the assessee in the return, it was the duty of the AO to assist the taxpayer in a reasonable way and provide the relief if due to the assessee. This attitude rather would help the revenue in assessing the income correctly;

3) A correct advice by the department would inspire the confidence of public at large. Even identical guidelines or instructions have been issued from time-to-time by the CBDT to its Officers;

4) If due to ignorance a wrong section had been mentioned by the assessee, AO ought to have advised the assessee about the correct claim and assessed the tax legitimately. This was the clear intention of the Legislature;

5) Thus, matter was remanded to the AO to examine the claim of the assessee afresh under provisions of section 54F after providing due opportunity of being heard to the assessee - Paramjeet Singh Chhabra v. ITO [2013] 35 taxmann.com 612 (Indore - Trib.)

 

source:- http://taxmannpublications.blogspot.in

‘Tax avoidance’ arrangement is legitimate if it’s within four corners of law, says HC

Where arrangement of assessee to avoid payment of tax did not contravene any statutory provision and was achieved within four corners of law, it couldn’t be found fault with

In the instant case the assessee was holding shares in BFSL, which had purchased 15 acres of land from assessee. The assessee sold its shareholding in BFSL for a certain consideration to DLF through Stock Exchange after paying STT and claimed exemption from gain on sale of shares under section 10(38). The AO held that sale of shares by assessee was a colourable device and that virtually the immovable property had been transferred to DLF and assessee was liable to tax on short-term capital gain on sale of immovable property. Further, the CIT (A) and the Tribunal upheld the order of the AO.

The High Court held in favour of assessee as under:

1) Every taxpayer is entitled to arrange his affairs so that his taxes would be as low as possible and that he is not bound to choose that pattern which will replenish the treasury. If the taxpayer is in a position to carry through a transaction in two alternative ways, one of which will result in liability to tax and the other will not, he would at liberty to choose the latter one and would do so effectively in the absence of any specific tax avoidance provision;

2) If BFSL had sold the property by executing a registered sale deed and received the sale consideration, then it ought to have paid capital gains on the said consideration. All the authorities were carried away by this aspect of the matter and because the Department was deprived of the tax, they had come to the conclusion that it was a colourable device and tax planning to avoid payment of taxes;

3) The assessee by resorting to such tax planning had taken advantage of the benefit of the loopholes in the law, which had endured to his benefit. After seeing how this loophole had been exploited within four corners of the law, it was open to the Parliament to amend the law plugging the loopholes;

4) However, by any judicial interpretation one couldn’t read into the section, which was not intended to by the Parliament at the time of enacting this provision. If the shareholder chose to transfer the land to the purchaser of the shares, it would be a legal transaction, in law, and merely because it was able to avoid payment of tax, it couldn’t be said to be a colourable device or a share transaction;

5) The finding of the assessing authority that it was a transfer of immovable property was contrary to law and material on record.

Unfortunately, three authorities committed the very same mistake which was illegal, contrary to settled legal position and, therefore, required to be set aside - Bhoruka Engineering Inds. Ltd. v. Dy.CIT [2013] 36 taxmann.com 82 (Karnataka)

Gift received by assessee on the occasion of his daughter’s marriage isn’t exempt from tax

Gift received by assessee on occasion of his daughter's marriage won't be exempt as the word individual appearing in proviso to sub-clause (vi) of sec. 56(2) relates to marriage of assessee and not of his daughter

The High Court held as under:

1) Proviso to sec. 56(2)(vi) provides that gift received on the occasion of the marriage of an individual would be exempt from tax. There is no ambiguity in such proviso;

2) The expression "individual" appearing in proviso (b) to section 56(2)(vi) of the Act, is preceded by the word "marriage" and, therefore, relates to the marriage of the individual concerned, i.e., the assessee and not to the marriage of any other person related to him in whatsoever degree, whether as his daughter or son;

3) The expression "marriage of the individual" is unambiguous in its intent and does not admit of an interpretation, that it would include an amount received on the marriage of a daughter;

4) If the Legislature had intended that gifts received on the occasion of marriage of the assessee's children would be exempted, nothing would prevent the Legislature from adding the words "or his children", after the words "marriage of the individual";

5) Thus, in view of unambiguous legislative intent appearing in the proviso, the addition made to the appellant's income on account of gifts received on the occasion of his daughter's marriage was to be affirmed - Rajinder Mohan Lal v. Dy.CIT [2013] 36 taxmann.com 250 (Punjab & Haryana)

 

 Source:- http://taxmannpublications.blogspot.in

Black money to White money

There are number of ways to convert Black money to White money. Some ways which are used by assessee are also known to assessing officers. Income tax department of Gujarat issued one book in which they mentioned how different ways are adopted by assessee to make their black money to white. But it becomes difficult to trace it as it is done in legitimate manner. Recently The Economic Times thrown some light on this aspect which is mentioned below:-  

In April last year the shares of a company called Global Securities, listed on the Bombay Stock Exchange (BSE), were trading in a band of Rs 15-25 a share. Daily volumes during the month varied wildly — from a few hundred shares, to a few lakh. The company's net profit in 2012-13 was to the tune of around Rs 3.9 lakh.

Between April 2012 and March 2013, the price of the stock rose slowly but steadily. It peaked at Rs 151 per share in early March 2013 before falling sharply. Between late May and December, volumes in the stock averaged a few hundred to a few thousand a day. From January onwards, volumes soared to as much as a few lakh shares before dropping steeply after April 1 this year.

Global Securities, along with two other companies also listed on the BSE, Finalysis Credit and Guarantee and Aricent Infra, are the subject of a recent complaint to the BSE that claims that the shares of these companies were traded in a way as to enable brokers to convert client funds from black to white. ET Magazine approached each of the companies asking for a response. Finalysis managing director Sajjad A Qadir said: "Yes we are aware of complaints. We are conducting an inquiry and the authorities too are investigating the matter."

A compliance officer of Aricent infra responded: "We have not yet received intimation of any such complaint by the BSE authorities nor we have received any such complaint at our end. We will certainly look into the matter at our end." Communications to the official email IDs of Global Securities and follow-up calls to officials did not elicit a response.

In response to a questionnaire, BSE responded: "The exchange routinely receives various letters/complaints on various scrips ... wherever warranted [it] conducts the necessary analysis/ investigation... The exchange does not comment on the status of the investigation of individual cases."

Regulators could well find that trading in stocks of these companies was legitimate, and that they were not used by operators to launder funds. But complaints about manipulation of stocks, many of them 'penny' stocks, to enable conversion of black money into white are hardly new. Here's how shares in listed companies are used for conversion:

Black Listing

While there are various ways in which this is done, the basic principle arises from the fact that under Indian tax law, long-term capital gains on listed equity shares (capital gains when there is at least a year's gap between the time a share is bought and when it is sold) is tax-free.

A broker and his client could strike a deal whereby the broker sells shares in a penny stock to his client for a low price, say a few rupees. The catch here is that the contract note issued to the client is backdated to a year earlier. In the interim, the broker has manipulated the price of the stock up through circular trading — two or more brokers circulate the stock between them each selling at a higher price than earlier.

Why You Must Have an PAN Card

PAN (Permanent Account Number) is useful in number of ways and it is requisite compulsory for some of yours financial dealings. With the government of India's intiatives and legal reforms, this particular card has become more crucial than ever before regarding various legal and financial dealings. Here we bring to you, some of the ways why your PAN card may be crucial and rather useful:

Bank Fixed Deposits

While depositing any amount in excess of Rs. 50,000 in the private banks, a copy of the PAN card needs to be submitted with the rest of the documentation. This will then ensure that the bank issues a TDS certificate and also deducts 10% TDS or whichever rate is legally relevant. On failure to provide for a PAN card copy, one will not get the TDS certificate and also the slab for tax deduction is higher at 20% of the amount. Even Form 15G or 15H will not help in saving taxes in this case. 

Payments in Hotel and Restaurants

For any bill amounting to Rs. 25,000 and above, you will have to submit a copy of the PAN card, whether the payment is in cash or by credit/debit card. 

Payment to travel agents

If you are thinking of a foreign tour, or plan to exchange a large volume of foreign currency in a single transaction, worth over Rs. 25,000, then a copy of the PAN card needs to be submitted. 

House Renting

While renting personal space for residence or even for commercial purposes, the landlords usually ask for a copy of the PAN Card as primary identity proof, and other details. 

Jewellery purchases

Everytime one purchases jewellery above a certain value from any jewellery store, one would have to produce a copyt of the PAN Card. this move has been taken to ensure that black money doesnt start flowing into the system. 

Bank Finance

When you approach banks for home loans, mortgage loans , they ask you for Income tax return. The question of Income tax return does not arise when you don’t have Pan Card.

Some of the other important uses of the PAN card includes payment in 2nd hand car dealings, installation of telephone,  visa facilitation centres.

Tax saving through Provident fund

Under Income Tax Act, 1961, contribution by employer and employee to the provident fund account enjoys certain tax benefits and some are taxable as well.

Provident Funds provides a compulsory contribution for the future of an employee after his retirement or for his dependents in case of his early death. In such fund employee and employer contribute equally. There are many provident funds in which the contribution can be made and the taxability of the same depends upon the type of provident fund in which the contribution is made.

Basically, there are three types of Provident Fund Schemes provided by the employer, namely Statutory provident fund, Recognised provident fund and Unrecognised provident fund.

However, an employee may also contribute to the Public Provident Fund scheme.

Statutory provident fund-

This fund is set up under the provisions of the Provident Fund Act, 1925. This fund is maintained by Government and Semi-Government organizations, local authorities, railways universities and recognized educational institutions.

Taxability as per the Income Tax Act, 1961:

•         Employer’s contribution to provident fund – Exempt

•         Deduction under Section 80C – Available for employee’s own contribution

•         Interest credited to provident fund – Exempt

•         Payment at retirement or termination of service – Exempt

Recognized Provident Fund –

This fund is one which is recognized by the Commissioner of Income tax in accordance with the rules contained there in the Employee’s Provident Funds and Miscellaneous Provisions Act, 1952. According to this Act, any organization, which employs 20 or more persons, is obligated to register under the Act and start a PF scheme for the employees in the organisation.

Taxability as per the Income Tax Act, 1961:

•         Employer’s contribution to provident fund – Exempt up to 12% of salary – excess is taxable

•         Deduction under Section 80C – Available for employee’s own contribution

•         Interest credited to provident fund – Exempt up to notified rate (now 9.5%)

•         Payment at retirement – Taxable except in following under mentioned circumstances

The employee should have rendered continious service with his employer for 5 years or more; or if not so, he should have been terminated due to ill health, due to discontinuation of employer’s business or by reason beyond his control. If he has found another employment, the balance due to him should have been transferred to his account in the recognised provident fund of the new employer.

Unrecognized Provident Fund –

Unrecognized provident fund is the provident fund which is neither a statutory provident fund nor a recognized fund. This scheme is started by an employer which is not approved by the Commissioner of Income Tax.

Taxability as per the Income Tax Act, 1961:

•         Employer’s contribution to provident fund – Exempt from tax

•         Deduction under Section 80C – Not Available

•         Interest credited to provident fund – Exempt

•         Payment at retirement – Employee’s own contribution is exempt but interest on his own contribution is taxable under the head “income from other sources”.

Payment received towards the employer’s contribution and interest thereon is taxable under the head “Salaries”.