IT: Sitting fees paid to directors do not amount to fees paid for any professional services as per Explanation to section 194J(1)
Friday, 13 September 2013
No reasonable cause exists in receiving cash loan unless borrowings are for meeting specific urgent
IT: In absence of any plea that assessee has to meet any specific urgent needs, there would be no reasonable cause for receiving loan by way of cash
Pre-deposit pending appeals may be paid by utilizing balance available in Cenvat credit
ST : Rule 3 of CENVAT Credit Rules, 2004 does not prohibit assessee from utilizing Cenvat credit against liability to make deposit under section 35F of Central Excise Act; hence, assessee can utilize his credit balance for paying pre-deposit under section 35F ibid
TP adjustment deleted in current year as reasonings for it were similar and were rejected by ITAT in
IT/ILT : Where no transfer pricing adjustment was made in assessee's own case for previous year, same was to be followed
Payment 'for lease' is different from 'for obtaining a lease'; only former is subject to Sec. 194-I
IT : Payment of lease premium for allotment of plot of land as also payment for additional built up area and fees for FSI, are not liable to TDS liability under section 194-I
GST envisaged as full part of indirect tax system
International Monetary Fund (IMF) has said that the elimination of exemptions/concessions under Statutory Regulatory Orders (SROs) and in the law, as well as withdrawal of power of the executive to grant preferential tax treatment through SROs would facilitate gradually moving the GST to a full-fledged integrated VAT-style modern indirect tax system.
According to the IMF country-report issued on Thursday, the additional fiscal adjustment in years two and three of the programme will be concentrated on efforts to broaden the tax base and to further reduce untargeted subsidies. On the revenue side, the authorities envisage measures yielding 3/4 percent of GDP in each of the subsequent years. The focus will be on eliminating exemptions and concessions embedded in the SROs and in the law, as well as on eliminating the power of the executive to grant preferential tax treatment through SROs.
These steps will facilitate gradually moving the GST to a full-fledged integrated VAT-style modern indirect tax system with few exemptions and to an integrated income tax by 2016/17.
Tax administration reforms will also be critical to this revenue effort. On the income tax side, the authorities will focus on 300,000 potential tax payers, through the national data warehouse. In addition to the 100,000 notifications for late return filing under section 114 envisaged for FY2013/2014, the authorities will pursue additional 100,000 in each of the following two years. If the tax payers fail to respond satisfactorily, these notifications will be followed by a provisional assessment of income under section 122-which will become final if the tax payer again fails to respond satisfactorily-and measures to collect the tax liability (including attachment of bank accounts), will be applied.
The authorities will also develop plans to strengthen the administration of Customs, sales and excise taxes (structural benchmark). Among the initiatives to widen the tax base we will finalise a comprehensive plan to separate existing SROs either by eliminating exemptions or concessions through SROs by end-December 2013. Pakistan will introduce the remaining to FY14/15 finance bill by end-June 2014.
The government has already stopped issuing any new tax concessions or exemptions (including Customs tariffs) through SROs except by an act of Parliament, and will also approve by end-December 2015 legislation to permanently prohibit the practice. We will also quantify the remaining tax expenditures and publish a detailed list in the budget in future years.
IMF said that the Pakistan's tax ratio for 2012/13 was 9.7 percent of GDP-significantly less than the 11.4 percent of GDP in 2002/3-so fiscal consolidation will have to rely heavily on tax policy changes to broadening the tax base. The implementation of a full Value Added Tax (VAT) remains the first-best option to raise tax revenue, but if this remains politically unfeasible, other permanent tax policy measures could be considered to come closer to it by wholesale reductions in exemptions and concessions, and by fully incorporating services into the tax net.
The administrative authority to grant tax exemptions via SROs should be eliminated to prevent further degradation of the tax net. Income tax should integrate income from all sources, concessions and exceptions should be eliminated, withholding tax should be adjustable, with the minimum tax on turnover remaining as a control for deductions.
In a country of nearly 180 million people, only 1.2 million individuals and firms file income tax returns, (of which half are corporate income tax filers). Some 118,000 entities are enrolled in the sales tax system but only 15,000 actually pay any tax, with 82 percent of total sales and federal excise revenue coming from only 100 companies. These low numbers reflect the long-standing failure of the Federal Board of Revenue (FBR) to efficiently administer the system and the inability of previous reform efforts to deliver sustained results.
The authorities need to develop and implement a strategy to strengthen tax administration, with the technical assistance of the Fund and the World Bank. While key elements of the strategy will need to be defined, these should include significantly stepping-up the FBR's enforcement activities and improving its legal authority (such as to facilitate asset seizures for tax evaders and to presumptively bill tax payers). The anti-money laundering framework will need to be fully applied in this effort.
Under the authorities' proposed programme, the fiscal deficit would be reduced to around 31/2 percent of GDP by FY2016/17. World Bank studies suggest that aggressively broadening the coverage of GST and key taxes (income taxes and import tariffs) could yield up to 41/2 percent of GDP over time, and increases in tax rates (such as GST or excises) could be considered, in addition to other potential measures.
On the expenditure side, current spending-mostly electricity subsidies-could be reduced by 11/2-2 percent of GDP over the programme period. Together, measures of this order of magnitude could deliver the desired deficit reduction while permitting increased spending on growth enhancing investment and social protection. Given the significant devolution of revenues to the provinces, the government will seek explicit agreement with the provinces to deliver the budgeted surpluses through saving additional revenue transfers, it said.
The IMF said that initial fiscal adjustment effort includes permanent deficit reduction measures of 2 percent of GDP, coming mainly from revenue increases and lower energy subsidies. Tax measures included in the 2013/14 budget-including a one point hike in the GST rate-are expected to yield 3/4 percent of GDP annually. Reduced energy subsidies will produce another 3/4 percent of GDP in savings. The remainder will come from lower current expenditures (0.15 percent of GDP), savings of the PSDP budget, and (in the second half of the fiscal year) a new levy on natural gas expected to yield about 0.4 percent of GDP on an annualized basis.
Taxmen fear muted show by corporates in Q2 advance tax payout
There are indications that the advance tax collection in for July-September quarter may see a "muted growth" in the Mumbai circle, according to a senior Income Tax official here.
"Looks like there will be a muted growth... We are targeting a growth of 18.5 per cent in collections from Mumbai this fiscal," said the official in Mumbai, which contributes a third of the direct tax mop-up.
The official, however, noted that nothing is final yet as Sunday is the last day for making the payment, and he expects quite a lot of companies to pay up tomorrow.
The picture will be clear only on Sunday or by Monday, the official added.
The advance payouts, a staggered way of meeting tax requirements by taxpayers paying large amounts, are generally considered as a barometer of corporate performance, and the pulse of the economy in general.
The concern over Q2 payouts comes at a time of economic downturn, wherein quarterly growth has slipped to a four-year low of 4.4 per cent for the April-June quarter.
Meanwhile, it is understood that the country's largest lender State Bank of India is likely to have paid much less amount than in the year-ago period for the second quarter, with its outgo dropping to Rs 1,100 crore from Rs 1,820 crore.
Without giving out the numbers, the I-T official said the bank is indicating a drop.
Besides, other state-owned lenders have also shown a drop or flat outgo for the quarter, while some private sector companies have shown increase.
The numbers could not be independently verified from the I-T department officials.
Stiffer adv. norms for life insurers; ban on inductive ads, more info if multiple products shown in
INSURANCE : Advertisements - Life Insurance Products
CBDT's last call to taxpayers to file ITR-V on or before October 31, 2013 for Assessment Years 2011-
IT/ILT : Extension of Date For Receipt of ITR-VC in CPC, Bengaluru, For Assessment Years 2011-12 and 2012-13
NP rate to be applied only on purchases made from AEs and not on entire turnover for ALP determinati
IT/ILT : Where Indian branch of assessee, an Israel based company, purchased diamonds from both AE and non-AEs to sell same in local market, in order to determine ALP of purchases made from AE, expected net profit margin of 2.25 per cent was to be applied to purchases made from said AE only and not to entire turnover of assessee
SC : Flat owner can sell or mortgage his flat to seek borrowings without permission of society
CL : Flat owner can sell, let or mortgage his flat for loan without permission of the builder or Society
Onus on assessee to establish that investment in unrecorded purchases sourced from accounted stock
IT : Where there were unaccounted sale transactions, onus was on assessee to prove that investment in unaccounted purchases was made out of accounted stock
‘Administrative delays’ are not reasonable excuses to have condonation of delay in filing of appeal
ST : Department cannot seek condonation of delay in filing appeal merely by stating that delay was caused due to time consumed in administrative procedures, which is too general and unsatisfactory explanation
Power evacuation facilities are part of wind mills; eligible to depreciation at 80%
IT : Power evacuation facilities and transmission lines are part of wind mill, eligible for depreciation at 80 per cent
INCOME TAX APPELLATE TRIBUNAL: BANGALORE BENCHES:BANGALORE CONSTITUTION FOR THE WEEK FROM 16.09.2013 TO 19.09.2013
[unable to retrieve full-text content]INCOME TAX APPELLATE TRIBUNAL: BANGALORE BENCHES:BANGALORE CONSTITUTION FOR THE WEEK FROM 16.09.2013 TO 19.09.2013 {ad} For more information...
Mere writing off debts is enough to claim deduction for bad-debts unless AO has reasons to contradic
IT: Once assessee write off a debt as a bad debt in his books of account, it is a bad debt unless Assessing Officer for good reasons holds otherwise
No anti-competition act in absence of evidence to prove manipulation of price and restricted supply
CL : In absence of any evidence to establish that opposite parties formed a cartel and acted in a concerted manner either to decide purchase price of films for exhibition in multiplexes or limited or controlled supply of films, opposite parties could not be held to be guilty of provisions of section 3(3)
Partial takeover of an EOU on slump sale basis isn't splitting up of business to deny sec. 10B relie
IT: Where assessee took over a part of business undertaking of MSSL as a going concern on slump sale basis which was registered as 100 per cent EOU, it could not be concluded that assessee's business was set up by splitting up or reconstruction of existing business of MSSL and, thus, denial of assessee's claim under section 10B on aforesaid ground was not justified
Margin earned by Forex dealers constitutes value of services provided by them
ST/ECJ: Foreign Exchange/Currencies are 'money' and not 'goods'; therefore, foreign exchange transactions are supplies of services and taxable amount is net result of transactions of supplier of services over a given period of time
Exemption to a trust couldn't be denied in absence of findings on non-utilization of funds for state
IT : Where assessee, a society, was registered under section 12A, in absence of any finding that funds of society were misappropriated and were not utilized for its objects, denial of exemption to assessee was wrong
Notification for Extension of date for receipt of ITR-Vs in CPC, Bengaluru, for the cases of AY 2012-13 and 2011-12 received in e-filed in FY 2012-13.
Notification for Extension of date for recqipt of ITR-Vs in CPC.
BengFluru. for the casgs qf AI 29I,2-13 and 2OlL-12 received in e-filed
in FY 2Ol2-13.
There are many taxpayers who have uploaded their Income Tax Returns
electronically (without digital signature Certificate) for A.Y. 2OLl-12 [filed
during F.Y. 2Ol2-L3l and for ITRs of A.Y. 2OL2-13 [filed on or after
1.4,2012], but have either not filed the corresponding ITR-V or have filed it
with the local Income-tax office. ITR-V is accepted only at the Centralized
Processing Center (CPC) of the Income-tax Department at Bengaluru by
ordinary or speed post. Therefore, a final opportunity is being given to such
taxpayers to regularize their Income-tax returns.
All such taxpayers may mail the ITR-V, by 3!st October, 2OL3, by ordinary
post or speed post at Post Bag No. 1, Electronic City Post Office, Bengaluru -
560100 (Karnataka). Taxpayers who have filed their ITR-V with the local
Income-tax office may again mail their ITR-V to the CPC by 31st October,
2013. Those taxpayers who have earlier mailed their ITR-V, but have not
received the acknowledgement e-mail from the CPC, may mail their ITR-V to
the CPC again.
The ITR-V form should be mailed to the CPC only at the above address by
ordinary post or speed post. Taxpayers may note that no other place or form
of delivery will be accepted.
Taxpayers may also note that without acknowledgement of the ITR-V from the
CPC it would not be possible for the Income-tax Department to process the
Income-tax returns or issue any refunds therefrom, as these would be treated
as not having been filed with the Department.
Notify that the Form DP-1 shall be submitted online by all the dealers latest by 16-10-2013.
[unable to retrieve full-text content]Notify that the Form DP-1 shall be submitted online by all the dealers latest by 16-10-2013. {ad} For more information...
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