Direct tax collections rise by 14.43 % in Apr-Aug

Despite the ongoing economic slowdown, gross direct tax collections went up by 14.43 per cent to Rs.1.88 lakh crore in the first five months of the current fiscal from the Rs.1.64 lakh crore mopped up during the same period of 2012-13. The rise, however, is still way below the direct tax collection target as the Centre has envisaged a growth rate of 19 per cent over the Rs.5.65 lakh crore garnered during the entire 2012-13 fiscal year to take its kitty to over Rs.6.68 lakh crore during 2013-14. Interestingly, net direct tax collections during the April-August period this fiscal rose at a faster pace of 15.42 per cent to Rs.1,43,138 crore as compared to Rs.1,24,019 crore mopped up in the same period a year ago. According to a Finance Ministry statement here, while corporate tax collections witnessed a growth of slightly over 11 per cent in line with the slowdown in industrial activity, the collection by way of personal income tax grew by a healthy 19 per cent. As per the official data, gross corporate tax collections increased by 11.72 per cent to Rs.1,08,075 crore during the five-month period of this fiscal from Rs.96,738 crore garnered during the same period last fiscal. On the other hand, gross collections by way of personal income tax went up by 18.91 per cent to Rs.78,187 crore from Rs.65,752 crore in the like period a year ago. Adding to the Centre’s kitty during the April-August period this fiscal by way of STT (Securities Transaction Tax) was Rs.1,649 crore while the mop-up through wealth tax was 24.44 per cent higher at Rs.280 crore against Rs.225 crore collected in the same period last fiscal.

Commission paid to directors as remuneration for services rendered by them couldn't be deemed as div

IT: Commission paid to directors in form of remuneration, for services rendered by them cannot be considered as dividend/profits

Recovery proceedings to be stayed if revenue frequently seeks adjournment of appeal of assessee

IT : Where assessee's appeal was being adjourned before Tribunal from time to time at behest of department, recovery proceedings were to be stayed for a period of six weeks with a direction to Tribunal to dispose of appeal with in said period

Banks can include distribution of bank notes and coins under activities undertaken by Business Corre

BANKING : Financial Inclusion by Extension of Banking Services - Use of Business Correspondents for Distribution of Banknotes and Coins - Alternative Avenues

NRIs can acquire shares of listed Indian Co. through brokers under FDI Scheme subject to certain con

FEMA/ILT : FEM (Transfer or Issue of Security by A Person Resident Outside India) (Tenth Amendment) Regulations, 2013 - Amendment in Regulation 5

RBI eases procedure for settlement of claims of deceased depositor; claim forms to be placed on Bank

BANKING : Settlement of Claims of Deceased Depositor - Simplification of Procedure - Placing of Claim Forms on Bank's Website

RBI’s clarifications on revised ODIs; funding of ODIs by ECBs reinstated at 400% of net worth

FEMA/ILT : Overseas Direct Investments - Rationalization/Clarifications

Weightage given to valuation methods and quantum of dividend to tax income from sale of shares as ca

IT: Where assessee-NBFC made investment in shares from its own funds, valued closing stock of shares consistently at cost, earned substantial dividend income and never claimed set off of losses arising from sale of investments against other incomes, in such a situation, income arising from sale of shares was to be taxed as 'capital gain' and not as 'business income'

Revisionary authority can't levy penalty without conducting independent inquiry to establish its fin

ST : Revisionary authority cannot restore penalty waived off by adjudicating authority on merits without conducting independent inquiry to overturn findings of adjudicating authority and establish his finding and conclusion

RBI asks NBFCs with assets base of more than 50 crores to submit branch details within 1 month

NBFC : Returns to be Submitted by NBFCs - Introduction of 'Branch Info' Return

Horse rakes in small fortune for assessee; Receipts from live telecast of horse races are not 'royal

IT/ILT : Amount paid by assessee to various clubs whose races were being displayed live at premises of assessee-club could not be termed as royalty

Ford To Boost Production In India For Exports Amid Surging Demand For Smaller Cars

5-Sep-2013

Ford Motor Co. (NYSE:F) will accelerate production in India, to increase exports to more than 50 markets around the world, and expects demand for small vehicles to surge to more than 60 percent of the automobile market globally by 2020, the company announced on Wednesday.



Ford said it expects industry demand for B-segment vehicles -- subcompact cars with high mileage and low prices -- to double in India, and demand for sport-utility and multi-activity vehicles to triple, between 2012 and 2017. And, markets in Asia-Pacific and Africa will account for about 50 percent of global industry volume for small vehicles, the company said.



“Despite current macroeconomic factors and ongoing market challenges, India is a big part of our global strategy,” Dave Schoch, Ford group vice president and president of Asia Pacific, said at an automobile convention in New Delhi, according to a press statement.



The announcement followed the launch of Ford’s EcoSport compact sports-utility vehicle, or SUV, in India in June, which the company expects to perform well as the country's rapidly growing middle class warms up to SUVs.



Over the past year, there has been a 52 percent surge in the sale of SUVs, compared to a 6.7 percent dip in passenger-car sales, which is the first automotive sales decline in a decade, according to a Wall Street Journal report.



Ford has bagged more than 40,000 orders since the launch of its EcoSport SUV, following the success of its hatchback Figo, which sold 300,000 units.



The automaker plans to export the EcoSport, including to European markets, from its Chennai factory, which can roll out 200,000 vehicles and 340,000 engines a year. In the fiscal year ended March, Ford sold 77,225 vehicles in India, accounting for a 17 percent dip in sales, however it exported 29,319 vehicles, marking a 15 percent growth in exports.



In India, Ford produces the Classic and Fiesta mid-size cars; the Endeavour SUV; and the Figo, which is exported to 38 countries from its Chennai facility.



Ford is also planning to set up a $1 billion facility in Sanand, in the western Indian state of Gujarat, to supplement its exports from the Chennai plant, and both facilities will boost the automaker’s annual production capacity in India to 440,000 vehicles and 610,000 engines.



“An estimated 25 per cent of vehicles that roll out from our two plants and 40 per cent of engines put together in India is what we envisage for exports, as part of our long-term strategy,” Ford India’s President and Managing Director Joginder Singh said, in April.



The Asia-Pacific region contributed to less than a fifth of Ford’s global sales volume -- 282,000 vehicles -- in the first quarter of 2013.

Source:- ibtimes.com

Coal India Against Proposal To Borrow Surplus Coal From Others

A government proposal aimed at reducing India’s dependence on expensive imported coal by letting state-run Coal India Ltd borrow surplus coal from the captive mines of power and steel companies to meet shortages in the local market has hit a roadblock.



The coal miner has rejected the proposal on the grounds that it may not be able to return the coal at a future date to the entities from which it would procure, two senior government officials said.

The government officials, who declined to be named, were present at a meeting on Thursday of the committee constituted to consider the proposal.



The meeting was chaired by Planning Commission member and former cabinet secretary B.K. Chaturvedi. Other officials present in the meeting were the coal and power ministry secretaries and Coal India officials.

According to the proposal, which was proposed by the industry lobby group Power Producers Association of India, surplus coal from captive coal mines held by power and steel companies would be made available to Coal India to meet its fuel-supply obligations. Coal India would act as a “bank” and be obligated to return coal to each captive coal mine holder at a future date. In effect, Coal India would become a custodian of all the surplus coal available with the captive mine holders.



“It is unlikely that the proposal will take off,” one of the officials cited above said. The second official had stated categorically that it could not agree to the clause that demanded a future supply obligation on its part.

A third official also present in Thursday’s meeting said the movement of the proposal would depend on a response by the law ministry.



“The committee has sent the proposal to the law ministry, which will examine whether coal banking is permissible under the coal nationalization act,” the third official said.



The spokesperson for Coal India couldn’t be reached for comment Thursday evening.



The Coal Mines (Nationalisation) Act, 1973 governs the right of ownership and transfer of coal in the country. At present, no private agency can sell coal in the open market within India.



Reuters reported that India’s coal imports this fiscal could touch 165 million tonnes, topping last year’s record coal import volume of 135 million tonne.



July coal imports at 13.4 million tonnes were 33% higher than the same month last year.



Mint reported on 21 August that the mining and metals sector, which includes coal imports, contributed about 35% to the current account deficit that shot up to 4.8% of gross domestic product in the year ended March.



The government will have to devise a way that is beneficial to all parties concerned, said Chintan J. Mehta, a Mumbai-based analyst with Sunidhi Securities and Finance Ltd.



“The coal will have to be sold at a price higher than what Coal India currently charges but substantially lower than the price of imported coal. If that happens, then such a mechanism would be beneficial both to the government as well as the private producers and help India cut its current account deficit,” he said.



Source:- livemint.com

India Poised To Become World's Second Largest Steel Producer

5-Sep-2013

India could become the second greatest world producer of steel by 2015 or 2016, according to a report from the multinational professional services firm Ernst and Young, published today by local media. The South Asian nation is currently in fourth place in that area, but could surpass Japan and the United States to take second position, following China, the leader in that sphere by a wide margin, the company said.



Agreeing with that prediction, Sminu Jindal, General Manager of Jindal SAW Ltd, India's largest steel conglomerate, said increasing development of infrastructure and great internal demand in recent years has helped the sector grow by leaps and bounds.



According to estimates from the Indian Planning Commission, steel orders over the next five years will increase to 40 million tons for infrastructure alone.



The World Steel Association (WSA) expects that general internal demand will increase 5.9 percent in the current year and up to seven percent in 2014.



Jindal recalled that in recent years, most great steel producers worldwide have reduced their production and closed plants, due to decreased demand, while the sector in India has been the target of huge investment, including from abroad.

Source:- plenglish.com

India Scrambles To Reduce Oil Bill Inflated By Sinking Rupee

5-Sep-2013

Oil Minister M. Veerappa Moily has suggested pricking the ballooning oil bill with everything from a street theatre campaign encouraging lower fuel use, to shutting fuel stations, to increasing imports from Iran.



India's crude import bill was $144 billion last fiscal year - the largest part of its overall import costs. India, Asia's third-largest economy, imports about 80 percent of its oil, which accounts for about 30 percent of its energy needs.



That has hit India hard over the last four months as the rupee fell 20 percent to record lows near 70 to the dollar. The economy is struggling with decade-low growth, a record current account deficit and a steep fiscal shortfall.



International oil prices have gained about 15 percent over the same period. In rupee terms, the Brent oil benchmark has gained nearly 50 percent since May 1, when faith in emerging market growth began to falter just as the U.S. Federal Reserve started signalling it might wind down its monetary stimulus.



Economist have long pointed to India's fuel subsidies as an area where it could save money, but raising retail oil prices is a political problem when few of the nation's consumers have ever paid market rates for the fuels they use. And elections are coming up by May 2014.



"Subsidies are something they can do something about and that is clearly something that they should address ... but you get into this whole issue about elections and public anger," said Praveen Kumar, who leads the South Asia oil and gas research team at FGE in Singapore.



"People are angry with all that's happening with the economy and the rupee crashing. I don't see this situation can continue for too long," he said.



One step that could save $4.3 billion in oil costs, according to Reuters calculations, would be a hike of around 5 rupees per litre, or about 10 percent, in diesel prices. An oil ministry source has suggested such an increase might come after September 6, when the current parliament session ends.



"The rupee depreciation has left us with no alternative but to pass on costs to customers," said an Indian oil company official, although noting that demand has edged lower with the higher oil prices and slower economic growth.



State-owned retailers sell diesel at subsidised prices that are currently about 10 rupees per litre below estimated true market levels.



However, total subsidies for LPG, kerosene and diesel amount to about $25 billion a year, according to FGE's Kumar, and "there's no way they can dismantle that over night."



India consumed about 1.4 million barrels per day (bpd) of diesel in 2012/2013, making up over 40 percent of the country's total fuel demand.



Graphic - Indian crude oil price vs rupee decline link.reuters.com/bux72v



IRAN REVERSAL



Nearly half of Moily's targeted savings - $8.5 billion - are supposed to come from increasing imports from Iran, which are paid for in rupees because Western sanctions make payment in dollars impossible. Moily is targeting raising imports to around 260,000 bpd, only about 6,000 bpd lower than the average for fiscal 2012/2013.



Boosting imports to that level would virtually wipe out cuts by India that have won it a waiver from Washington's sanctions.



"Frankly there is not much room there because they have to show that they slashed Iranian crude imports by another 15 percent or risk sanctions from the U.S.," Kumar said.



India's July imports from Iran were just 35,500 bpd, down 82 percent from a year ago because of problems with shipping and refinery insurance coverage due to the sanctions, which aim to force Iran to curb its nuclear ambitions.



Boosting Iranian imports would also depend on whether Tehran was willing to continue to be paid in rupees, which are not only falling against the dollar but also cannot be traded freely on global markets. The two countries already cannot balance their trade.



Buying oil in dollars is putting huge pressure on the rupee and the RBI has now told state-run oil refiners they must buy their dollars from it, effectively taking 10 percent of daily demand, or some $500 million, out of the spot currency market.



These dollar swaps can be for up to six months, leaving the risk of further depreciation with the refiners, who must hope the rupee gains before they have to pay back the Reserve Bank of India.



"Our people (refiners) are not happy. They feel that if they had done it directly, they could have got a slightly better deal or could have hedged their foreign exchange risk to some extent," said an oil ministry source.



The state refiners have asked for a cap on possible losses or the chance to roll over the swaps if the rupee moves against them.



State refiners, who also sell petroleum products domestically, include Indian Oil Corp Ltd (IOC.NS), Hindustan Petroleum Corp (HPCL.NS) and Bharat Petroleum Corp (BPCL.NS).



STREET THEATRE



Other measures suggested by Moily in letters sent to the prime minister and the finance ministry included a $2.6 million public relations campaign that would use "street theatre" to promote lower fuel usage, which he said could save about $2.5 billion.



On Sunday, Moily also suggested that petrol stations could be shut at night to curb demand - but this was dropped after an outcry from the opposition.



India's overall crude imports rose 10.3 percent in the first seven months of the year, according to trade data, as New Delhi tries to keep the lights on to power faltering growth in Asia's third-largest economy.



India is the world's fourth-biggest energy consumer after the United States, China and Russia but about a third of its population still lacks electricity.

Source:- in.reuters.com

Ril In Fresh Trouble As Cag Questions Ministry On Gas Price Hike

The Mukesh Ambani-owned Reliance Industries Limited (RIL) is in for more trouble as the Comptroller and Auditor-General has questioned the Petroleum and Natural Gas Ministry over the recent gas price increase and wanted to know the steps taken to ensure that the operator (RIL-BP) delivers gas at $4.2 mbtu as per the approved production plan.

Virtually questioning the Rangarajan formula, the CAG has taken serious note of the price revision done in July and sought to know why the Ministry has not exercised its right to fix the price under Article 21.6.3 of the production sharing contract (PSC) for the KG-DWN-98/3 block.

In its August 14 communication, the Office of the Principal Director of Audit, Economic and Service Ministries has sought to know the steps the Ministry has taken to make sure that the operator complies with PSC provisions and meets the Addendum to Initial Development Plan (AIDP) targets, given that technical reports have indicated that the operator has “not fulfilled” its obligations in respect of drilling wells. In view of the shortfall in gas production due to non-compliance with the production sharing contract and the ADIP, has the government “ensured that the operator delivers as per the approved production profile at the price fixed of $4.2 mbtu? asks the letter. “If not, reasons thereto, along with supporting documentation. If yes, orders/action taken by the Ministry may be detailed along with supporting documents.”

The CAG has also asked the Ministry to clarify why it has not exercised its right to fix price for the KD-D6 block in view of details of the ADIP, the statement of costs, expenditure and receipts and cost recovery statements and shortfall in production. “As per records made available for audit with reference to requisition 30, dated July 18, 2013, regarding revision of pricing of natural gas, the Petroleum Ministry initiated a proposal for the Cabinet Committee on Economic Affairs to fix a new price of domestic gas as per the recommendations of the Rangarajan Committee.”

As per provision 21.6.3 of the PSC, the formula or basis for the prices to be determined shall be approved by the government before the sale of natural gas to consumers. To grant approval, the government shall take into account the prevailing policy, if any, on the pricing of natural gas… and it may delegate this function to a regulatory authority. The basis for valuation of natural gas from the KG-D6 block has been regulated by the Ministry.

“In this regard, audit observed that while approving the AIDP for the KG-D6 in December 2006, the Directorate-General of Hydrocarbons considered rates between $4 and $5 per mbtu for a production profile up to 2020 and also worked out the government take on profit petroleum on these fixed prices. However, government is aware that the natural gas production from the D1-D3 gasfields is less than that approved by the managing committee,” the letter says. The average output during 2010-11 was 48.13 mmscmd against the approved production of 53.40 mmscmd; during 2011-12, it came down to 35.33 mmscmd, against 61.88 mmscmd.

Source:- thehindu.com

India Should Seek To Maximise Cotton Exports

5-Sep-2013

World cotton production in 2013-14 is set to decline for the second year in a row to 25.5 million tonnes (mt) ( 26.5 mt). However, world consumption, projected at 23.7 mt with only a marginal increase from the previous year's 23.5 mt, will still trail production.



Together with a sharply lower world trade (export-import) estimate of 8.8 mt (last year 9.7 mt), the global cotton market may end the year with record high stocks of 19.2 mt (last year 17.4 mt).



Giving out these figures, the Washington DC-headquartered International Cotton Advisory Committee (ICAC), an inter-governmental organisation of cotton producing and consuming countries, said that the United States will likely account for most of the decline in world production with a 25 per cent fall to 900,000 tonnes.



It is well known that in the US, corn, soyabean, wheat and cotton compete for acreage. Cotton has been losing out gradually in recent years.



From a consumption and trade perspective, China is the mover and shaker of the world cotton market.



The fibre has to compete with polyester for market share. According to ICAC, 2013/14 is likely to be the fifth consecutive year in which cotton prices will be substantially higher than polyester prices in China, raising the risk of the natural fibre losing market share.



At the same time, the Chinese government has announced a program of purchasing cotton from growers which will boost its national reserves to a record 15 mt by March 2014. ICAC has asserted that the direction of the world cotton industry over the next few years will be determined by policy decisions by the Government of China.World trade in cotton is forecast to decline by approximately a million tonnes to less than 9 mt.



This reduction is almost entirely accounted for by reduced imports into China. Shipment from all major exporters is expected to fall. No wonder then, with consumption lower than production and trade projected to decline sharply, the ending stocks for the year are sure to hit a high. This will have implication for export prices.According to ICAC, the forecast for the season average Cotlook A Index in 2013/14 ranges from 85 to 126 cents per pound, with a midpoint of 103 cents per pound while world ending stocks are forecast to climb to 19 mt by July 2014 with India and Pakistan contributing to the burdensome inventory.



However, given the market fundamentals, speculative capital may opt to stay out of cotton.A substantially stronger dollar in the months head and steady tapering of liquidity-infusing quantitative easing are also factors to be reckoned with. While cotton prices may stay firm, a bull run appears most unlikely.



Meanwhile, cotton acreage in India has reached 11.1 million hectares, unchanged from the previous year, according to the latest Weather Watch Group report. With a more benign South-West monsoon in terms of temporal and spatial distribution of rains this year, the prospect of higher yield is real.In 2012, cotton production reached 34 million bales (of 170 kg each) while this year 35 million bales look a distinct possibility.



Given this level of production which will throw up a huge surplus, India must seek to maximise cotton exports.



As pointed out earlier, world trade volume is set to shrink and there will be competition from other origins.An unrestricted export policy alone can help the country liquidate stocks, earn foreign exchange and ensure remunerative price to growers. A weak rupee will provide India the much needed competitive edge in the export market.

Source:- thehindubusinessline.com

Indian Rupee Climbs 106 Paise To Close At 66.01 Against Us Dollar

5-Sep-2013

The Indian rupee appreciated further on Thursday, adding 106 paise to 66.01 against the US dollar, after steps taken by new Reserve Bank of India (RBI) Governor Raghuram Rajan to attract US currency inflows boosted market sentiment.



To support the rupee, Rajan on Wednesday announced steps such as enhanced limits for exporters to re-book cancelled forward exchange contracts and a special concessional window to swap foreign currency non-resident (FCNR) deposits.



The rupee started the day strong at 66 a dollar from the previous close of 67.07 at the Interbank Foreign Exchange Market and moved in a range of 65.54 to 66.52 before ending at 66.01, a rise of 106 paise or 1.58 per cent. It had risen 56 paise on Wednesday.



"Rupee benefitted with a slew of constructive announcements from the new RBI governor," said Anindya Banerjee, currency analyst at Kotak Securities. "However, the dollar bounced back as demand from importers surfaced."



The rupee also got support as Rajan's near-term agenda boosted stocks, with the benchmark S&P BSE Sensex shooting up 412.21 points or 2.22 per cent. Foreign institutional investors bought a net Rs 172.53 crore of shares on Wednesday.



Rajan announced plans to revise and strengthen the monetary policy framework and stressed the need for faster, broad-based, inclusive growth, among other steps.



Still, concerns remain about high inflation, growth slowdown, current account deficit and expectations of the US Federal Reserve easing its stimulus programme, said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).



"To stabilise the rupee, we need to focus more on export revenue and inward remittances. Until that happens, the central bank can intervene through borrowed funds, but we can't sustain that kind of stability," said Brahmbhatt. "The trading range for the spot USD-INR pair is expected to be within 65.50 to 67.00."

Source:- businesstoday.intoday.in

Relevant docs relied upon by SEBI to hold appellant as guilty should also be supplied to appellant

SEBI : Where vital documents relied upon by SEBI for passing order against appellant holding him guilty of violating Insider Trading Regulations were not supplied to appellant, order was passed in violation of principles of natural justice without giving any opportunity of hearing to appellant

ECB allowed for general corporate purposes under approval route with min. average maturity of 7 year

FEMA/ILT : External Commercial Borrowings (ECB) from the Foreign Equity Holder

RBI issues clarifications on Liberalized Remittance Scheme for Authorized Dealer Category - I Banks

FEMA/ILT : Liberalized Remittance Scheme - Clarifications

Pending reconciliation of excess cash in ATMs represents failed ATM transactions; can’t be credited

Banking : Disclosure of Customer Complaints and Unreconciled Balances on Account of Atm Transactions

MCA extends due date for e-filing of Form 23C up to October 31,2013; no additional fee on late filin

CL : Section 233(B) of The Companies Act, 1956 - Audit of Cost Accounts in Certain Cases - Relaxation of Last Date and Additional Fee in Filing of E-Form 23C for Appointment of Cost Auditor

Innovative Housing Loan Schemes are risky; RBI asks banks to link disbursal of home loans with stage

Banking : Housing Sector: Innovative Housing Loan Products – Upfront Disbursal of Housing Loans

Training in journalism is 'vocational training' and exempt from service tax

ST : Training courses in fields like journalism, media management, dramatic arts, direction and script writing, television production, T.V. and Radio anchoring etc. are eligible for exemption in respect of 'vocational training'

Provision for interest recognized as per Government's directives is allowable as revenue expenditure

IT: Where assessee was required to pay 6 per cent interest on unspent amount received from Government department, provision for same was allowable

Sum claimed as income of affiliate but not taxed in its hands can't be reduced from declared income

IT : Where assessees made rectification applications by going back on their declared income, on premise that such amount formed part of income offered by sister concern before Settlement Commission, applications were to be rejected, as Settlement Commission had not accepted entire amount as income of such sister concern

ITAT permitted revision of income to be accumulated by a trust as its earlier claim was a bona fide

IT: If a return is filed within time specified in section 139(4) and option contemplated by Explanation to section 11(1) is exercised in writing along with such return, requirements of Explanation to section 11(1) would stand satisfied

Appointment of arbitrator during pendency of proceedings has no consequences

CL: Where party had failed to appoint arbitrator as per terms of agreement, appointment of arbitrator by it during pendency of proceedings under section 11(6) of Arbitration Act was of no consequence

Form WC 02 - Application Form for withdrawing from Composition by a works contractor in respect of scheme as notified by Government under sub-section (12) of section 16

[unable to retrieve full-text content]Form WC 02 - Application Form for withdrawing from Composition by a works contractor in respect of scheme as notified by Government under sub-section (12) of section 16 {ad} For more information...

No concealment penalty on voluntarily surrender of income in return; assessment of same isn't conclu

IT : Where assessee had voluntarily surrendered cash receipt and agricultural income to avoid further litigation, assessment order was not conclusive evidence that said amount assessed in hands of assessee was his income and, therefore, imposition of penalty under section 271(1)(c) was not justified

Even a fraudulent transaction can’t take away Cenvat credit entitlement if assessee isn’t a party to

ST/ECJ: Where an assessee, being recipient of goods/services, did not and could not know that transaction concerned was connected with a fraud committed by seller/service provider, Department cannot deny benefit of input credit to assessee

ITO vs. Gope M. Rochlani (ITAT Mumbai)

Expl 5 to s. 271(1)(c): Undisclosed income offered in belated return filed u/s 139(4) eligible for immunity from penalty Pursuant to a search and seizure action u/s 132 on 16.10.2008, the assessee offered undisclosed income of Rs. 1.25 crore to tax in the statement recorded u/s 132(4) for AY 2008-09. The due date for filing of the return of income u/s 139(1) for AY 2008-09 was 30.09.2009. The assessee filed the return of income on 31.10. 2009. The return was accordingly filed u/s 139(4) and not u/s 139(1). The AO held that as the return had been filed late, it was beyond the “due date” specified in clause (b) of Explanation 5A to s. 271(1)(c) and so penalty had to be levied under Explanation 5A to s. 271(1)(c). The CIT(A) reversed the AO. On appeal by the department to the Tribunal HELD dismissing the appeal: Explanation 5A to s. 271(1)(c) provides that if during the course of search, the assessee is found to be the owner of any asset or income which has not been shown in the return of income which has been furnished before the date of search and the “due date” for filing the return of income has expired, the assessee is deemed to have concealed the particulars of his income or furnish inaccurate particulars of income and liable for penalty u/s 271(1)(c). In other words, if the income is offered in the return is filed by the “due date”, no penalty can be imposed. The question is whether the “due date” in Explanation 5A encompasses a belated return filed u/s 139(4). The “due date” can be very well inferred as due date of filing of return of income u/s 139(4) because wherever the legislature has provided the consequences of filing of the return of income u/s 139(4), then the same has also been specifically provided. E.g., s. 139(3) which denies the benefit of carry forward of losses u/s 72 to 74A if the return of income is not filed within the time limit provided u/s 139(1). In absence of such a restriction, the limitation of time of “due date” cannot be strictly reckoned with s. 139(1). Even a belated return filed u/s 139(4) will be entitled to the benefit of immunity from penalty (Rajesh Kumar Jalan 286 ITR 276 (Gau) & Jagriti Aggarwal 339 ITR 610 (P&H) & Jagtar Singh Chawla (decisions in the context of s. 54) followed)