SPECIAL IT RETURN RECEIPT COUNTERS FOR SALARIED TAX PAYERS WITH INCOME UPTO RS. 5 LAKH
PRESS RELEASE, DATED 22-7-2013
The CBDT has, vide notification dated 1-05-2013, made E-filing of Return compulsory for Assessment Year 2013-14 for persons having total assessable income exceeding Five lakh rupees.
The CBDT vide its earlier notifications had exempted salaried employees having total income upto Rs. 5 lakhs including income from other sources upto Rs. 10,000/- from the requirement of filing return of income for assessment year 2011-12 and 2012-13 respectively. The exemption was available only for the assessment year 2011-12 and 2012-13. The exemption was giving considering 'paper filing of returns' and their 'processing through manual entry' on system.
However, this year the facility for online filing of returns has been made user-friendly with the advantage of pre-filled return forms. These E-filed forms also get electronically processed at the central processing centre in a speedy manner. Hence, the exemption provided during the last two years is not being extended for assessment year 2013-14. Taxpayers are encouraged to file their returns electronically. E-filing is an easy, fast and secure method of filing of income tax return. Moreover, Digital signature is not mandatory for these taxpayers and they can transmit the data in the return electronically by downloading ITRs, or by online filing and thereafter submit the verification of the return in From ITR-V acknowledgement after signature to Central Processing Centre. The processing for E-filed returns is faster.
From 25 th July to 31 st July 2013 (Except 27 th and 28 th July being holidays), Special Return Receipt Counters (FOR SALARIED TAX PAYERS)will operate at Pratayakshar Bhawan, Civic Centre, Minto Road, New Delhi this year. (Instead of Pragati Maidan and Mayur Bhavan as were done in the past).
The special counters have been set up jurisdiction wise as follows:
| ♦ | For CIT-XIV Charge (Govt. Salary) at 'B' Block, Ground Floor in Civil Centre, | |
| ♦ | For CIV-XV Charge (PSUs/Schools/Colleges/Bank Salary) at 'C' Block, Ground Floor in Civic Centre, | |
| ♦ | For CIT-XVI Charge (Private Salary) at 'C' Block, Ground Floor in Civil Centre, | |
| ♦ | In addition special counters separately will function at 'B' and 'C' Block in Civic Centre for Senior Citizens and Differently abled persons. |
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 17 : Part 4 (Issue dated : 30-07-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal --Additional evidence--Commissioner (Appeals) admitting new evidence after considering facts and circumstances of case in entirety and validly--Justified--Income-tax Rules, 1962, r. 46A-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
Business expenditure --Capital or revenue expenditure--Assessee running tutorial institution--Purchase of books for use by students for professional entrance examinations--Is capital expenditure--Depreciation to be allowed at 60 per cent.--Income-tax Act, 1961, ss. 32, 37-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
----Cost of books and awards--Assessee failing to produce vouchers of purchase of books--Expenditure to be disallowed--Assessee to furnish details regarding expenditure on awards--Matter remanded--Income-tax Act, 1961-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
----Demurrage charges paid to railways--Assessee furnishing certificate regarding nature of demurrage--Deduction allowable--Income-tax Act, 1961-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
----Disallowance--Payments in cash exceeding specified limit--Finding that single transactions made to appear as multiple transactions--Payments to be disallowed--Income-tax Act, 1961, s. 40A(3)-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
----Interest on borrowed capital--Interest-free advances--Direction to disallow interest at same rate charged by bank from assessee--Justified--Income-
tax Act, 1961-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
Business income --Remission or cessation of trading liability--Addition--Unclaimed liabilities--No record of any remission or cessation of trading liability--Addition to be deleted--Income-tax Act, 1961, s. 41(1)-- Dy. CIT v. Bax Global India P. Ltd. (Delhi) . . . 414
Capital gains --Computation--Sale of land--Valuation by stamp valuation authority applied--Fair market value lower than value adopted by stamp duty authority--Direction to adopt fair market value--Justified--Income-tax Act, 1961, s. 50C-- ITO v. Gita Roy (Kolkata) . . . 431
Cash credits --Assessee producing details and creditor confirming loan granted to assessee--Addition to be deleted--Income-tax Act, 1961, s. 68-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
Company --Dividend--Deemed dividend--Advance to shareholder--Advance to company in which shareholder had substantial interest--Section 2(22)(e) not applicable--Amount not assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- Asst. CIT v. Color Crafts P. Ltd. (Chandigarh) . . . 419
Depreciation --Assets given on financial lease--Assessing Officer to determine nature of lease--Different yardstick cannot be adopted for allowing depreciation and taxing lease rent--Matter remanded--Income-tax Act, 1961, s. 32-- Dy. CIT v. Bax Global India P. Ltd. (Delhi) . . . 414
Double taxation avoidance --Non-resident--Permanent establishment--Exact period of continuation of activities in India to be ascertained--Matter remanded--Double Taxation Avoidance Agreement between India and Mauritius, art. 5(1), (2)(i)-- GIL Mauritius Holdings Ltd. v. Assistant Director of Income-tax (International Taxation) (Delhi) . . . 491
Income --Business income--Remission of liability--Bank--Amount transferred from inter-branch transaction blocked accounts to reserves through profit and loss account--Transfer permitted by Reserve Bank of India subject to conditions that claim in respect of entries should be honoured and amount should not be used for declaration of dividends--Amount not of revenue nature to begin with--Amount not assessable under section 41(1)--Income-tax Act, 1961, s. 41(1)-- Punjab National Bank v. Addl. CIT (Delhi) . . . 462
Income from undisclosed sources --Unexplained sales and expenditure--Addition based on statement of director recorded by Central excise authorities--Addition not supported by evidence--Additions not valid--Income-tax Act, 1961-- Asst. CIT v. A. K. Alloys P. Ltd. (Chandigarh) . . . 424
Interpretation of taxing statutes --Interpretation beneficial to assessee--Principle applicable to non-residents-- Deputy Director of Income-tax (International Taxation) v. Solid Works Corporation (Mumbai) . . . 510
Loss --Set off--Loss on share transactions--Actual delivery received by agent of assessee--Loss not speculation loss--Commissioner (Appeals) allowing set off of loss against other heads of income--Justified--Income-tax Act, 1961, s. 43(5)-- Dy. CIT v. Dr. S. Thilagavathy (Chennai) . . . 506
Non-resident --Income deemed to accrue or arise in India--Double taxation avoidance--Assessee providing various hotel related services to hotels across the world--Assessee having no permanent establishment in India--Payments received not royalty or fees for technical services--Income-tax Act, 1961, s. 9(1)(vii), Explanation 2 --Double Taxation Avoidance Agreement between India and the U. S. A, art. 7-- Deputy Director of Income-tax (International Taxation) v. Sheraton International Inc. (Delhi) . . . 457
----Royalty--Payment from re-sellers on sale of shrink wrap software--Not royalty but business income--Non-resident not having permanent establishment in India--Income not assessable in India--Income-tax Act, 1961, s. 9--Double Taxation Avoidance Agreement between India and the U. S. A., art. 12(3)-- Deputy Director of Income-tax (International Taxation) v. Solid Works Corporation (Mumbai) . . . 510
Revision --Powers of Commissioner--No tax effect--Order cannot be revised--Income-tax Act, 1961, s. 263-- Punjab Wool Syndicate v. ITO (Chandigarh) . . . 439
Unexplained income --Unexplained credit entries in capital account--Assessee furnishing details of remittance--Addition to be deleted--Income-tax Act, 1961-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and Mauritius :
Art. 5(1), (2)(i) --Double taxation avoidance--Non-resident--Permanent establishment--Exact period of continuation of activities in India to be ascertained--Matter remanded-- GIL Mauritius Holdings Ltd. v. Assistant Director of Income-tax (International Taxation) (Delhi) . . . 491
Double Taxation Avoidance Agreement between India and the U. S. A :
Art. 7 --Non-resident--Income deemed to accrue or arise in India--Double taxation avoidance--Assessee providing various hotel related services to hotels across the world--Assessee having no permanent establishment in India--Payments received not royalty or fees for technical services-- Deputy Director of Income-tax (International Taxation) v. Sheraton International Inc. (Delhi) . . . 457
Art. 12(3) --Non-resident--Royalty--Payment from re-sellers on sale of shrink wrap software--Not royalty but business income--Non-resident not having permanent establishment in India--Income not assessable in India-- Deputy Director of Income-tax (International Taxation) v. Solid Works Corporation (Mumbai) . . . 510
Income-tax Act, 1961 :
S. 2(22)(e) --Company--Dividend--Deemed dividend--Advance to shareholder--Advance to company in which shareholder had substantial interest--Section 2(22)(e) not applicable--Amount not assessable as deemed dividend-- Asst. CIT v. Color Crafts P. Ltd. (Chandigarh) . . . 419
S. 9 --Non-resident--Royalty--Payment from re-sellers on sale of shrink wrap software--Not royalty but business income--Non-resident not having permanent establishment in India--Income not assessable in India-- Deputy Director of Income-tax (International Taxation) v. Solid Works Corporation (Mumbai) . . . 510
S. 9(1)(vii), Explanation 2 --Non-resident--Income deemed to accrue or arise in India--Double taxation avoidance--Assessee providing various hotel related services to hotels across the world--Assessee having no permanent establishment in India--Payments received not royalty or fees for technical services-- Deputy Director of Income-tax (International Taxation) v. Sheraton International Inc. (Delhi) . . . 457
S. 32 --Depreciation--Assets given on financial lease--Assessing Officer to determine nature of lease--Different yardstick cannot be adopted for allowing depreciation and taxing lease rent--Matter remanded-- Dy. CIT v. Bax Global India P. Ltd. (Delhi) . . . 414
----Business expenditure--Capital or revenue expenditure--Assessee running tutorial institution--Purchase of books for use by students for professional entrance examinations--Is capital expenditure--Depreciation to be allowed at 60 per cent.-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
S. 37 --Business expenditure--Capital or revenue expenditure--Assessee running tutorial institution--Purchase of books for use by students for professional entrance examinations--Is capital expenditure--Depreciation to be allowed at 60 per cent.-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Finding that single transactions made to appear as multiple transactions--Payments to be disallowed-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
S. 41(1) --Business income--Remission or cessation of trading liability--Addition--Unclaimed liabilities--No record of any remission or cessation of trading liability--Addition to be deleted-- Dy. CIT v. Bax Global India P. Ltd. (Delhi) . . . 414
----Income--Business income--Remission of liability--Bank--Amount transferred from inter-branch transaction blocked accounts to reserves through profit and loss account--Transfer permitted by Reserve Bank of India subject to conditions that claim in respect of entries should be honoured and amount should not be used for declaration of dividends--Amount not of revenue nature to begin with--Amount not assessable under section 41(1)-- Punjab National Bank v. Addl. CIT (Delhi) . . . 462
S. 43(5) --Loss--Set off--Loss on share transactions--Actual delivery received by agent of assessee--Loss not speculation loss--Commissioner (Appeals) allowing set off of loss against other heads of income--Justified-- Dy. CIT v. Dr. S. Thilagavathy (Chennai) . . . 506
S. 50C --Capital gains--Computation--Sale of land--Valuation by stamp valuation authority applied--Fair market value lower than value adopted by stamp duty authority--Direction to adopt fair market value--Justified-- ITO v. Gita Roy (Kolkata) . . . 431
S. 68 --Cash credits--Assessee producing details and creditor confirming loan granted to assessee--Addition to be deleted-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
S. 263 --Revision--Powers of Commissioner--No tax effect--Order cannot be revised-- Punjab Wool Syndicate v. ITO (Chandigarh) . . . 439
Income-tax Rules, 1962 :
R. 46A --Appeal--Additional evidence--Commissioner (Appeals) admitting new evidence after considering facts and circumstances of case in entirety and validly--Justified-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
Volume 17 : Part 4 (Issue dated : 30-07-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal --Additional evidence--Commissioner (Appeals) admitting new evidence after considering facts and circumstances of case in entirety and validly--Justified--Income-tax Rules, 1962, r. 46A-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
Business expenditure --Capital or revenue expenditure--Assessee running tutorial institution--Purchase of books for use by students for professional entrance examinations--Is capital expenditure--Depreciation to be allowed at 60 per cent.--Income-tax Act, 1961, ss. 32, 37-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
----Cost of books and awards--Assessee failing to produce vouchers of purchase of books--Expenditure to be disallowed--Assessee to furnish details regarding expenditure on awards--Matter remanded--Income-tax Act, 1961-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
----Demurrage charges paid to railways--Assessee furnishing certificate regarding nature of demurrage--Deduction allowable--Income-tax Act, 1961-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
----Disallowance--Payments in cash exceeding specified limit--Finding that single transactions made to appear as multiple transactions--Payments to be disallowed--Income-tax Act, 1961, s. 40A(3)-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
----Interest on borrowed capital--Interest-free advances--Direction to disallow interest at same rate charged by bank from assessee--Justified--Income-
tax Act, 1961-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
Business income --Remission or cessation of trading liability--Addition--Unclaimed liabilities--No record of any remission or cessation of trading liability--Addition to be deleted--Income-tax Act, 1961, s. 41(1)-- Dy. CIT v. Bax Global India P. Ltd. (Delhi) . . . 414
Capital gains --Computation--Sale of land--Valuation by stamp valuation authority applied--Fair market value lower than value adopted by stamp duty authority--Direction to adopt fair market value--Justified--Income-tax Act, 1961, s. 50C-- ITO v. Gita Roy (Kolkata) . . . 431
Cash credits --Assessee producing details and creditor confirming loan granted to assessee--Addition to be deleted--Income-tax Act, 1961, s. 68-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
Company --Dividend--Deemed dividend--Advance to shareholder--Advance to company in which shareholder had substantial interest--Section 2(22)(e) not applicable--Amount not assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- Asst. CIT v. Color Crafts P. Ltd. (Chandigarh) . . . 419
Depreciation --Assets given on financial lease--Assessing Officer to determine nature of lease--Different yardstick cannot be adopted for allowing depreciation and taxing lease rent--Matter remanded--Income-tax Act, 1961, s. 32-- Dy. CIT v. Bax Global India P. Ltd. (Delhi) . . . 414
Double taxation avoidance --Non-resident--Permanent establishment--Exact period of continuation of activities in India to be ascertained--Matter remanded--Double Taxation Avoidance Agreement between India and Mauritius, art. 5(1), (2)(i)-- GIL Mauritius Holdings Ltd. v. Assistant Director of Income-tax (International Taxation) (Delhi) . . . 491
Income --Business income--Remission of liability--Bank--Amount transferred from inter-branch transaction blocked accounts to reserves through profit and loss account--Transfer permitted by Reserve Bank of India subject to conditions that claim in respect of entries should be honoured and amount should not be used for declaration of dividends--Amount not of revenue nature to begin with--Amount not assessable under section 41(1)--Income-tax Act, 1961, s. 41(1)-- Punjab National Bank v. Addl. CIT (Delhi) . . . 462
Income from undisclosed sources --Unexplained sales and expenditure--Addition based on statement of director recorded by Central excise authorities--Addition not supported by evidence--Additions not valid--Income-tax Act, 1961-- Asst. CIT v. A. K. Alloys P. Ltd. (Chandigarh) . . . 424
Interpretation of taxing statutes --Interpretation beneficial to assessee--Principle applicable to non-residents-- Deputy Director of Income-tax (International Taxation) v. Solid Works Corporation (Mumbai) . . . 510
Loss --Set off--Loss on share transactions--Actual delivery received by agent of assessee--Loss not speculation loss--Commissioner (Appeals) allowing set off of loss against other heads of income--Justified--Income-tax Act, 1961, s. 43(5)-- Dy. CIT v. Dr. S. Thilagavathy (Chennai) . . . 506
Non-resident --Income deemed to accrue or arise in India--Double taxation avoidance--Assessee providing various hotel related services to hotels across the world--Assessee having no permanent establishment in India--Payments received not royalty or fees for technical services--Income-tax Act, 1961, s. 9(1)(vii), Explanation 2 --Double Taxation Avoidance Agreement between India and the U. S. A, art. 7-- Deputy Director of Income-tax (International Taxation) v. Sheraton International Inc. (Delhi) . . . 457
----Royalty--Payment from re-sellers on sale of shrink wrap software--Not royalty but business income--Non-resident not having permanent establishment in India--Income not assessable in India--Income-tax Act, 1961, s. 9--Double Taxation Avoidance Agreement between India and the U. S. A., art. 12(3)-- Deputy Director of Income-tax (International Taxation) v. Solid Works Corporation (Mumbai) . . . 510
Revision --Powers of Commissioner--No tax effect--Order cannot be revised--Income-tax Act, 1961, s. 263-- Punjab Wool Syndicate v. ITO (Chandigarh) . . . 439
Unexplained income --Unexplained credit entries in capital account--Assessee furnishing details of remittance--Addition to be deleted--Income-tax Act, 1961-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and Mauritius :
Art. 5(1), (2)(i) --Double taxation avoidance--Non-resident--Permanent establishment--Exact period of continuation of activities in India to be ascertained--Matter remanded-- GIL Mauritius Holdings Ltd. v. Assistant Director of Income-tax (International Taxation) (Delhi) . . . 491
Double Taxation Avoidance Agreement between India and the U. S. A :
Art. 7 --Non-resident--Income deemed to accrue or arise in India--Double taxation avoidance--Assessee providing various hotel related services to hotels across the world--Assessee having no permanent establishment in India--Payments received not royalty or fees for technical services-- Deputy Director of Income-tax (International Taxation) v. Sheraton International Inc. (Delhi) . . . 457
Art. 12(3) --Non-resident--Royalty--Payment from re-sellers on sale of shrink wrap software--Not royalty but business income--Non-resident not having permanent establishment in India--Income not assessable in India-- Deputy Director of Income-tax (International Taxation) v. Solid Works Corporation (Mumbai) . . . 510
Income-tax Act, 1961 :
S. 2(22)(e) --Company--Dividend--Deemed dividend--Advance to shareholder--Advance to company in which shareholder had substantial interest--Section 2(22)(e) not applicable--Amount not assessable as deemed dividend-- Asst. CIT v. Color Crafts P. Ltd. (Chandigarh) . . . 419
S. 9 --Non-resident--Royalty--Payment from re-sellers on sale of shrink wrap software--Not royalty but business income--Non-resident not having permanent establishment in India--Income not assessable in India-- Deputy Director of Income-tax (International Taxation) v. Solid Works Corporation (Mumbai) . . . 510
S. 9(1)(vii), Explanation 2 --Non-resident--Income deemed to accrue or arise in India--Double taxation avoidance--Assessee providing various hotel related services to hotels across the world--Assessee having no permanent establishment in India--Payments received not royalty or fees for technical services-- Deputy Director of Income-tax (International Taxation) v. Sheraton International Inc. (Delhi) . . . 457
S. 32 --Depreciation--Assets given on financial lease--Assessing Officer to determine nature of lease--Different yardstick cannot be adopted for allowing depreciation and taxing lease rent--Matter remanded-- Dy. CIT v. Bax Global India P. Ltd. (Delhi) . . . 414
----Business expenditure--Capital or revenue expenditure--Assessee running tutorial institution--Purchase of books for use by students for professional entrance examinations--Is capital expenditure--Depreciation to be allowed at 60 per cent.-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
S. 37 --Business expenditure--Capital or revenue expenditure--Assessee running tutorial institution--Purchase of books for use by students for professional entrance examinations--Is capital expenditure--Depreciation to be allowed at 60 per cent.-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Finding that single transactions made to appear as multiple transactions--Payments to be disallowed-- Brilliant Study Centre v. Asst. CIT (Cochin) . . . 394
S. 41(1) --Business income--Remission or cessation of trading liability--Addition--Unclaimed liabilities--No record of any remission or cessation of trading liability--Addition to be deleted-- Dy. CIT v. Bax Global India P. Ltd. (Delhi) . . . 414
----Income--Business income--Remission of liability--Bank--Amount transferred from inter-branch transaction blocked accounts to reserves through profit and loss account--Transfer permitted by Reserve Bank of India subject to conditions that claim in respect of entries should be honoured and amount should not be used for declaration of dividends--Amount not of revenue nature to begin with--Amount not assessable under section 41(1)-- Punjab National Bank v. Addl. CIT (Delhi) . . . 462
S. 43(5) --Loss--Set off--Loss on share transactions--Actual delivery received by agent of assessee--Loss not speculation loss--Commissioner (Appeals) allowing set off of loss against other heads of income--Justified-- Dy. CIT v. Dr. S. Thilagavathy (Chennai) . . . 506
S. 50C --Capital gains--Computation--Sale of land--Valuation by stamp valuation authority applied--Fair market value lower than value adopted by stamp duty authority--Direction to adopt fair market value--Justified-- ITO v. Gita Roy (Kolkata) . . . 431
S. 68 --Cash credits--Assessee producing details and creditor confirming loan granted to assessee--Addition to be deleted-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
S. 263 --Revision--Powers of Commissioner--No tax effect--Order cannot be revised-- Punjab Wool Syndicate v. ITO (Chandigarh) . . . 439
Income-tax Rules, 1962 :
R. 46A --Appeal--Additional evidence--Commissioner (Appeals) admitting new evidence after considering facts and circumstances of case in entirety and validly--Justified-- ITO v. Bhagwan Dass (Chandigarh) . . . 446
Revised FAQs on income tax returns
Q 1. What are the modes of filing return of income?
Return of income can be filed in paper mode or in e-filing mode. If return of income is filed through electronic mode, then the assessee has following two options:
(1) E-filing using a Digital Signature
(2) E-filing without a Digital Signature
If return of income is filed by using a digital signature, then there is no requirement of sending the signed copy ITR V (i.e. acknowledgement of return filed electronically) to Bangalore CPC. However, if the return is filed without using digital signature, then the assessee shall send the signed copy of ITR V to CPC, Bangalore at below mentioned address. Income Tax Department - CPC, Post Bag No -1, Electronic City Post Office, Bangalore -560100, Karnataka within 120 days of uploading the return either by ordinary post or speed post only.
Q 2. When it is mandatory to file return of income?
Every company is required to file return of income. However, for an individual and HUF, it is mandatory to file return of income if his/its gross total income (before claiming Chapter VI-A deduction) exceeds the maximum exemption limit. The maximum exemption limit and the slab rates for Assessment Year 2013-14 are given in the following table:
| Class of persons | Tax slab(Amount) | Tax rate |
| Resident senior citizen (aged 60 years and above but less than 80 years) | Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,000 to Rs. 5,00,000 | 10% | |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% | |
| Above Rs. 10,00,000 | 30% | |
| Resident super senior citizen (aged 80 years or above) | Up to Rs. 5,00,000 | Nil |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% | |
| Above Rs. 10,00,000 | 30% | |
| Any other individual or HUF (i.e. other than above) | Up to Rs. 2,00,000 | Nil |
| Rs. 2,00,000 to Rs. 5,00,000 | 10% | |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% | |
| Above Rs. 10,00,000 | 30% |
Q 3. Is it mandatory to file return of income, if I have a PAN?
No, it is not mandatory to file return of income if your income is less than maximum exemption limit irrespective of the fact that you have been allotted a PAN.
Q 4. I am an Individual and resident of India. Do I need to file return if my income is below taxable limit but I am having an account in a foreign bank?
Yes, it is mandatory for you to file the income tax return. In view of newly inserted proviso to Section 139(1), it is mandatory to file income-tax return, if following conditions are satisfied:
| (a) | The assessee is resident and ordinarily resident in India; | |
| (b) | He 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. |
The assessee is required to provide requisite details of such account, assets or financial interest in the return of income.
Q 5. Which form should I opt to file income-tax return for the assessment year 2013-14?
| Individual and HUF | |||||
| Nature of income | ITR 1 (Sahaj) | ITR 2 | ITR 3 | ITR 4 | ITR 4S (Sugam) |
| Income from salary/pension | ✓ | ✓ | ✓ | ✓ | |
| Income from one house property (excluding losses) | ✓ | ✓ | ✓ | ✓ | |
| Income or losses from more than one house property | ✓ | ✓ | ✓ | ||
| Income not chargeable to tax which exceeds Rs. 5,000 | | ✓ | ✓ | ✓ | |
| Income from other sources (other than winnings from lottery and race horses or losses under this head) | ✓ | ✓ | ✓ | ✓ | |
| Income from other sources (including winnings from lottery and race horses) | ✓ | ✓ | ✓ | ||
| Capital gains/loss on sale of investments/property | ✓ | ✓ | ✓ | ||
| Share of profit of partner from a partnership firm | ✓ | ✓ | |||
| Income from proprietary business/profession | ✓ | ||||
| Income from presumptive business | ✓ | ||||
| Details of foreign assets | ✓ | ✓ | ✓ | ||
| Claiming relief of tax under section 90, 90A or 91 | ✓ | ✓ | ✓ | ||
| Other Assessees | |||
| Nature of income | ITR 5 | ITR 6 | ITR 7 |
| Firm | ✓ | ||
| Association of Persons (AOP) | ✓ | ||
| Body of Individuals (BOI) | ✓ | ||
| Companies other than companies claiming exemption under Sec. 11 | ✓ | ||
Persons including companies required to furnish return under: (1) Section 139(4A); (2) Section 139(4B); (3) Section 139(4C); and (4) Section 139(4D) | ✓ |
| ITR-1 | |
| Who can file return in ITR 1 | Return in ITR 1 can be filed by an individual if his total income includes: (a) Salary or pension (b) Income from one house property (except brought forward loss under this head) (c) Income from other sources (except winnings from lotteries or horse races or losses under this head) |
| Who can't file return in ITR 1 | Return in ITR 1 cannot be filed by an individual if he: (a) Is resident and ordinarily resident and has an asset located outside India or has signing authority outside India (b) Has claimed any relief under Section 90 or 90A or 91 (c) Has income not chargeable to tax which exceeds Rs. 5,000 |
| ITR-2 | |
| Who can file return in ITR 2 | Return in ITR 2 can be filed by an individual and HUF if his/its total income includes: (a) Salary or pension (b) Income from more than one house property (including losses thereon) (c) Income from capital gains (d) Income from other sources (including winnings from lotteries or horse races or losses under this head) |
| Who can't file return in ITR 2 | Return in ITR 2 cannot be filed by an individual and HUF if he/it has income chargeable to tax under the head 'Profit or gains from business or profession' |
| ITR-3 | |
| Who can file return in ITR 3 | Return in ITR 3 can be filed by an Individual or HUF deriving his/its share of profit as partner of firm. |
| ITR-4S | |
| Who can file return in ITR 4S | Return in ITR 4S can be filed by an Individual or HUF deriving presumptive business income. |
| Who can't file return in ITR 4S | Return in ITR 4S cannot be filed by a person who: (a) Is resident and ordinarily resident and has an asset located outside India or has signing authority outside India (b) Has claimed any relief under Section 90 or 90A or 91 (c) Has income not chargeable to tax which exceeds Rs. 5,000 |
| ITR-4 | |
| Who can file return in ITR 4 | Return in ITR 4S can be filed by an Individual or HUF deriving income from proprietary business or profession |
Q 6. What are the due dates for filing of income-tax return for the year ending March 31, 2013?
| Assessee | Due date |
| An Individual or HUF | July 31, 2013 |
| A Company | September 30, 2013 |
| A person whose accounts are required to be audited | September 30, 2013 |
| A working partner of a firm whose accounts are required to be audited | September 30, 2013 |
| An assessee who is required to furnish a report under Sec. 92E for international transaction | November 30, 2013 |
| Any other person | July 31, 2013 |
Q 7. Whether it is mandatory to file return electronically?
E-filing of return is mandatory for:
| (a) | Every company; | |
| (b) | A firm or an individual or HUF who are required to get their accounts audited under section 44AB; | |
| (c) | Every person claiming tax relief under Section 90, 90A or 91. | |
| (d) | Every resident and ordinarily resident assessee in India, if he 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. |
| (e) | A person other than a company and a person required to furnish return in form ITR- 7, if his total income exceeds Rs. 5 lakh rupees during the previous year 2012- 13. |
Q 8. How to file return electronically?
Income tax return can be filed electronically with the help of following instructions:
| (a) | Visit https://incometaxindiaefiling.gov.in; | |
| (b) | Choose the appropriate ITR form suitable for your status and source of income (Refer FAQ No. 5) and download excel utility from the aforementioned website; | |
| (c) | Fill the income-tax return in the downloaded excel utility and generate XML file; | |
| (d) | Use the following link to create your account: https://incometaxindiaefiling.gov.in/e-Filing/Registration/RegistrationHome.html; | |
| (e) | After creation of account, you need to login and then click on "submit return" option; | |
| (f) | Select the 'assessment year' and 'form name', then click 'next'; | |
| (g) | Click on Browse option to select the generated XML file and upload it; | |
| (h) | On successful uploading, a pop-up menu will be displayed on the screen. Click on "Download" button to get the acknowledgement i.e. ITR-V; | |
| (i) | The final step is to get the printout of such acknowledgement, get it signed and send it to "Income Tax Department - CPC, Post Bag No - 1, Electronic City Post Office, Bangalore - 560100, Karnataka" within 120 days of uploading the return either by ordinary post or speed post only. |
If ITR-V is not submitted within stipulated period of 120 days, then it will be deemed that assessee has not filed the return of income.
The assessee who are required to file the ITR-1 may alternatively fill and file their return online without downloading the excel utility after login at the incometaxindiaefiling.gov.in.
If assessee is using digital signature ("DSC") for uploading the return, it is to be registered on the website beforehand. If return is filed through DSC, assessee would not be required to send the print-out of the acknowledgement to CPC.
Q 9. What if I have forgotten the login details of https://incometaxindiaefiling.gov.in?
| (a) | Click on forget password or on the following link (https://incometaxindiaefiling.gov.in/e-Filing/UserLogin/LoginHome.html); | |
| (b) | Enter you user id (i.e., your PAN) and the captcha (i.e. the security random code) and click on continue; | |
| (c) | In the password reset page, one of the following options can be selected: |
| (i) | Answer to the secret question; | |
| (ii) | Upload the digital signature certificate; or | |
| (iii) | Enter e-filed acknowledgment number or bank account number as furnished in return of income. |
| (d) | Enter new password twice and click on 'Reset Password' to generate new password; | |
| (e) | If you are still unable to retrieve your password then 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; | |
| (v) | Registered PAN Address; |
New password will be communicated to you by the income-tax department via email.
Q 10. If the last date to file income-tax return is a public holiday, whether the next day would be treated as "last date of filing"?
Normally, income-tax department continues its operation during the last days of filing of income-tax return even if the last days eventually fall on Sundays or on holidays. However, if department is closed on the last due date then the immediately next working day of the department would be considered as the last date of filing of income tax return.
Q 11. How can I find my jurisdictional Assessing Officer?
Either click on Services>Know your Jurisdiction given on the home page of incometaxindiaefiling.gov.in or use the following link https://incometaxindiaefiling.gov.in/e-Filing/Services/KnowYourJurisdictionLink.html to know your jurisdictional officer.
Q 12. How to know about TAN of my deductor?
It can be found either on the Form 16/16A or in the 26AS tax credit statement available on https://www.tdscpc.gov.in/app/login.xhtml TRACES (TDS Reconciliation and Correction Enabling System) website.
Q 13. How would I know whether my e-return has been processed at CPC Bangalore?
Log on to the e-filing website and select CPC processing status to check the status of return.
Q 14. I am the authorized signatory of the firm. While filing the return of income I get an error that 'PAN mentioned in Verification section is invalid'.
In case of return of income of firm/company/AOP/BOI/Artificial judicial person/Co¬operative society/trust etc., PAN of authorized signatory is required to be filled in verification field instead of the assessee's PAN.
Q 15. I had e-filed my return and had identified some mistake which seems to be a 'mistake apparent from record'. Can I make rectification with CPC in paper form?
No, the CPC doesn't accept any of the manual correspondence. You have to login to incometaxindiaefiling.gov.in and have to file rectification request using web portal.
Q 16. What to do in case of TDS mismatch?
Even if the credit for TDS as claimed in the return matches with the balance as appearing in the Form 26AS, still Assessing Officer may raise a demand for payment of differential amount due to TDS mismatch. The reason for such differences could be as under:
| (1) | TAN of deductor was wrongly mentioned | |
| (2) | Name of deductor was not spelt correctly | |
| (3) | Tax deducted by one deductor wrongly included in the amount of tax deducted by another deductor |
In case of such TDS mismatch, an assessee can file a rectification request.
Steps to file the rectification request:
| (1) | Login to your account in https://incometaxindiaefiling.gov.in | |
| (2) | Go to My Account > Rectification request | |
| (3) | You need the following to fill in the required details: |
| (a) | PAN | |
| (b) | Assessment Year | |
| (c) | Latest Communication Reference Number (it starts with CPC/Assessment Year/) | |
| (d) | Latest CPC Order date |
| (4) | Click on Validate to go to next step | |
| (5) | On the next screen, choose 'Taxpayer is correcting data for Tax Credit Mismatch Only' from the drop-down box of 'Rectification Request Type' | |
| (6) | Check from the following relevant boxes for which taxpayer is seeking rectification: |
| (a) | TDS on salary details | |
| (b) | TDS on other than salary details | |
| (c) | IT details |
| (7) | Fill in all the relevant details including details of tax deducted and reported in the return of income filed earlier | |
| (8) | Click on the button of 'Submit' to submit the rectification request. |
The TDS mismatch may also be due to error in TDS return filed by deductor. In such a situation, you should intimate the deductor about such error and require him to rectify the TDS return. However, if your return is related to assessment year 2011-12 then it is advised to the assessee to claim the actual tax deducted in the return and such mismatch would be handled in accordance with Instruction No. 4/2012, in the following manner:
| (a) | Where difference between TDS claimed and amount reported in 26AS does not exceed Rs. 5,000, the claim shall be accepted; | |
| (b) | Where even a single claim isn't matching, the credit shall be allowed only after due verification by department; | |
| (c) | Where there are claims with invalid TAN, the TDS credit for such claims is not to be allowed; and | |
| (d) | In all other cases, the credit shall be allowed after due verification by department. |
Q 17. I have my return electronically and furnished the signed copy of acknowledgment to the CPC. However, I have received a letter from CPC that said copy of acknowledgement had not been received. Since, time limit to resend the acknowledgement already expired, whether it will be deemed that I have not filed the return.
The same issue has been dealt by Bombay High Court in the case of Crawford Bayley & Co. v. Union of India [2011] 16 taxmann.com 323 (Bom.),wherein, the Court, despite expiry of the time limit to send the acknowledgment, allowed additional time to assessee to resend the same, since the assessee had furnished adequate material before the Court in support of its contention that having filed return electronically, it had also submitted ITR-V Form by ordinary post.
Based on the above, it can be inferred if you have already submitted the ITR-V to the CPC then you can resend the acknowledgement even though the time limit for filing ITR-V has already expired, provided you have sufficient evidences to substantiate the fact that you have send the acknowledgment earlier within 120 days of uploading the return either by ordinary post or speed post only.
Q 18. Can I file the return even if the due date to file the same has been expired?
Yes, you can file return of income belatedly within a period of one year from the end of relevant assessment year or before the completion of assessment whichever is earlier.
Q 19. What are the consequences of filing belated return?
If return is filed after the end of relevant assessment year, then in that case, penalty of five thousand rupees can be levied under section 271F.
If the return of income is not filed within the due date specified under section 139(1), then loss incurred during the year, under the heads 'Profits and gains of business and professions' and 'Capital gains' cannot be carried forward to next year.
Q 20. Can I file return of income even if my income is below taxable limits?
Yes, you can file return of income voluntarily even if your income is less than the maximum exemption limit.
Q 21. I have filed my return of income; however, I omit to claim benefit of Section 80C deduction. What should I do?
The benefit of omitted claim can be availed only by filing of revised return. But in that case you have to ensure that your original return has been filed within the due date as return can be revised, only if it has been filed originally within the specified due date. An income-tax return can be revised within one year from the end of relevant assessment year or before completion of assessment, whichever is earlier.
Q 22. I am a salaried person. My total taxable salary is Rs. 5,40,000 on which tax has been duly deducted under Sec. 192 amounting to Rs. 39,140. During finalization of return, I found that my bank has given me a credit of Rs. 124,500 towards interest. Please guide me what should I do now?
In this situation, you have to pay the balance taxes on the interest income (or any other income) before filing of return. As per revised computation, your total tax liability would be Rs. 64,787. Since, tax of Rs. 39,140 has already been deducted under Sec. 192, the balance tax of Rs. 25,647 should be paid along with interest under Section 234B and 234C. The tax and interest can be paid in any authorized bank, through Challan No. ITNS 280. Alternatively, it can be paid through online bank portal through following link https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp.
Q 23. What documents needed to be enclosed along with the return of income?
Income-tax returns are annexure less. Hence, there is no need to enclose any document(s) along with the return of income. Thus, documents like TDS certificate, balance sheet, Profit & Loss A/c, Capital A/c, proof of investments, etc. are not to be attached along with the return of income. However, these documents should be retained and have to produce before the Assessing Officer whenever required so.
Q 24. My employer has deducted tax without allowing me relief of section 89. Now, can I claim the relief while filing the return of income?
If the employer fails to provide relief under section 89 and deducts excess tax, then you can claim such relief in your return of income and can claim refund of excess tax deducted.
Q 25. How to claim deduction of donation given to an organization registered under section 80G.
Deduction under section 80G can be claimed by filing the return of income in which the following details needs to be given:
| (a) | Name of donee; | |
| (b) | PAN of donee; | |
| (c) | Address of donee; and | |
| (d) | Amount of donation. |
Q 26. How to avoid deduction of tax, if during the year, the accrued interest on deposit in my saving account is Rs. 15,000 and my total income including such interest income is below taxable limit.
You can file a self-declaration to the banker in form 15H stating that your income is below taxable limit.
Q 27. Whether salaried persons are not required to file return of income for assessment year 2013-14?
Exemption from filing return of income isn't available for salaried persons for assessment year 2013-14, as the benefit of non-filing of return of income for salaried persons was allowed under Notification No. 9/2012 only in respect of the assessment year 2012-13. No similar notification for assessment year 2013-14 has been issued so far. Therefore, every assessee earning income more than basic exemption limit shall file the return of income.
Q 28. Whether all salaried class taxpayers can choose ITR-1 for filing income tax returns?
No, all salaried class taxpayers can't choose ITR-1 for filing tax returns from assessment year 2013-14 onwards. They can choose ITR-1 only if they are claiming exemption under sec. 10 (E.g. HRA, Conveyance allowance etc) upto Rs 5,000 or less. So, if taxpayer is claiming any exemption under sec. 10 which exceeds Rs. 5,000, they cannot file return of income in ITR-1 (As per amended Rule 12 of income-tax rules).
Q 29. I omitted to submit rent receipt and investment proof to my employer because of which relief for HRA and certain other deductions weren't given to me, the tax deducted from my salary income is much higher than my actual tax liability. How to claim refund of such excess tax?
Even if the benefit of HRA under Section 10(13A) and deduction under Chapter VI-A are not considered by the employer in Form 16, yet they can be claimed in the income-tax return. Accordingly, the excess tax deducted by employer can be claimed as refund.
Q 30. Can I claim deduction under section 80C of interest on housing loan?
Repayment of principal portion of residential housing loan will be allowed as deduction under section 80C within the overall limit of Rs. 1,00,000. However, such deduction is available if housing loan is borrowed by assessee from:
| (a) | Central Government or any State Governments | |
| (b) | Banks, including a co-operative banks | |
| (c) | LIC | |
| (d) | National Housing Bank | |
| (e) | Domestic Public company providing long-term finance for construction or purchase of houses in India | |
| (f) | Assessee's employer being an authority or a board or a corporation or any other body established or constituted under Central or State Act | |
| (g) | Assessee's employer being a public company or a public sector company or a university or a university established by law or a college affiliated to such university or a local authority or a co-operative society. |
However, interest on housing loan is deductible under section 24(b) while computing income chargeable to tax under the head "Income from house property".
Q 31. How to claim benefit of tax deducted in advance on income which is taxable in subsequent years.
The portion of TDS credit, pertaining to income taxable in the subsequent year, can be claimed through same TDS certificate.
IT: Where a company had introduced in assessee-company a sum of Rs. 900 crores in form of zero coupon convertible debenture to be converted into equity shares within a span of 36 months and out of which a sum of Rs. 500 crores was invested by assessee in short-term deposits with banks, interest earned on these deposits was an income chargeable under head 'income from other sources'
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[2013] 35 taxmann.com 187 (Madhya Pradesh)
HIGH COURT OF MADHYA PRADESH
Bharat Oman Refineries Ltd.
v.
Commissioner of Income-tax-1*
KRISHN KUMAR LAHOTI, ACTG. CJ.
AND M.A. SIDDIQUI, J.
AND M.A. SIDDIQUI, J.
IT APPEAL NO. 238 OF 2012†
APRIL 29, 2013
Section 56, read with section 28(i), of the Income-tax Act, 1961 - Income from other sources - Chargeable as [Interest] - Assessment year 2008-09 - Assessee, a joint venture company, was constituted by Bharat Petroleum Corporation Ltd. (BPCL) and Oman Oil Company with equal contribution of equity - In said company, BPCL had introduced a sum of Rs. 900 crores in form of zero coupon convertible debenture to be converted into equity shares within a span of 36 months - Out of said sum a sum of Rs. 500 crores was invested by assessee in short-term deposits with banks - On these fixed deposits, assessee earned interest - It claimed that interest income was taxable as 'income from business' being as accretion to its capital - Lower authorities disallowed assessee's claim and treated interest income as 'income from other sources' - Whether interest income in question was an income chargeable under head 'income from other sources' - Held, yes [Para 9][In favour of revenue]
FACTS
| ■ | The assessee, a joint venture company, was constituted by Bharat Petroleum Corporation Ltd. (BPCL) and Oman Oil Company with equal contribution of equity. It established a refinery at Agasod (Bina). In the said company, the BPCL had introduced a sum of Rs. 900 crores in the form of zero coupon convertible debenture to be converted into equity shares within a span of 36 months. Out of the said sum a sum of Rs. 500 crores was invested by the assessee in short-term deposits with the banks. On these deposits, the assessee had earned interest. In the return of income filed for the assessment year 2008-09, the assessee claimed that the interest income was taxable as 'income from business' being as accretion to its capital. | |
| ■ | The Assessing Officer did not agree with the assessee and treated the interest income as 'income from other sources' and found it taxable. Both the Commissioner (Appeals) and the Tribunal upheld the order of the Assessing Officer. | |
| ■ | On appeal to High Court: |
HELD
| ■ | The Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT [1997] 227 ITR 172/93 Taxman 502 considering the legal position held that the interest earned by the assessee before commencement of business on short-term deposits with banks, even out of term loans secured from financial institutions, is an income chargeable under the head 'income from other sources' and would not go to reduce the interest payable by the assessee which would be capitalized after the commencement of commercial production. It accordingly held that it was an 'income from other sources' and shall be liable to be taxed accordingly. The Division Bench of the Madhya Pradesh High Court considering similar controversy in the case of M.P. State Industries Corpn. Ltd. v. CIT [1968] 69 ITR 824 held that the interest earned by investing the surplus share money in bank deposits is taxable as 'income from other sources' and not as 'business income'. [Para 8] | |
| ■ | As the Madhya Pradesh High Court have considered the similar question in the case of M.P. State Industries Corpn. (supra) and have decided the question, there is no reason to differ with the aforesaid. So the said appeal does not involve substantial questions of law for consideration and accordingly it was liable to be dismissed at admission stage. [Para 9] | |
| ■ | However, the assessee submitted that it may be granted leave to file SLP before the Apex Court. Considering the fact that the controversy is squarely covered by the judgments of the Apex Court and the Division Bench of the Madhya Pradesh High Court, it is not a fit case for filing SLP before the Apex Court. [Para 10] |
CASE REVIEW
Tuticorin Alkali Chemicals & Fertilisers Ltd. v. CIT [1997] 227 ITR 172/93 Taxman 502 (SC) (para 10) and M.P. State Industries Corpn. Ltd. vCIT [1968] 69 ITR 824 (MP) (para 10) followed.
CASES REFERRED TO
CIT v. VGR Foundations [2008] 298 ITR 132 (Mad. ) (para 5), Tuticorin Alkali Chemicals & Fertilisers Ltd. v. CIT [1997] 227 ITR 172/93 Taxman 502 (SC) (para 6), M.P. State Industries Corpn. Ltd. v CIT [1968] 69 ITR 824 (MP) (para 6), CIT v. Karnal Co-operative Sugar Mills Ltd. [2000] 243 ITR 2/[2001] 118 Taxman 489 (SC) (para 7), CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315/102 Taxman 94 (SC) (para 7), CIT v.Karnataka Power Corpn. [2001] 247 ITR 268/[2000] 112 Taxman 629 (SC) (para 7) and Shree Krishna Polyster Ltd. v. Dy. CIT [2005] 274 ITR 21/[2005] 144 Taxman 41 (Bom.) (para 7).
G.N. Purohit and Abhishek Oswal for the Appellant. Sanjay Lal for the Respondent.
ORDER
1. Shri G.N. Purohit, learned Sr. Advocate with Shri Abhishek Oswal, Counsel for appellant.
2. Shri Sanjay Lal, Counsel for respondent.
3. This appeal is directed against an order dated 30.7.2012 passed by the Income Tax Appellate Tribunal, Indore Bench, Indore in ITA No.2/Ind/2012 (Assessment Year 2008-09), by which an appeal preferred by the appellant was dismissed and the order passed by the CIT(A), Bhopal dated 3.10.2011 was affirmed. The ITAT and CIT have confirmed addition of Rs.31,39,70,137/- to the total income on account of the interest earned on FDRs made out of zero coupon convertible bonds. The appellant has suggested that the appeal involves following substantial questions of law and on these substantial questions of law, this appeal may be admitted:-
| (i) | Whether the Tribunal is correct in law in basing its finding on erroneous finding of AO about nexus of funds invested in FDR, and holding that interest which accrued on equity funds deployed with the Bank could be taxed as income from other sources and not as a capital receipt liable to be set off against pre operative expenses? | |
| (ii) | Whether the Tribunal was correct in law in holding that the interest earned by the assessee by short term investment of zero coupon debentures funds is liable to Income Tax as income from other sources? |
4. The facts necessary to consider this appeal and in respect of involvement of the aforesaid substantial questions of law are thus:-
| (i) | The appellant is a joint venture company constituted by Bharat Petroleum Corporation Limited (in short 'the BPCL'), a Government of India Undertaking and Oman Oil Company, incorporated on 26.2.1994 with a equal contribution of equity. It established its refinery at Agasod, Bina, District Sagar (M.P.) | |
| (ii) | That, as per approval granted by the Government of India, the share of BPCL was restricted to 50% of the equity. For raising funds from Banks and financial institutions, a debt equity ratio was fixed as 1.6:1. The initial equity capital of BPCL and Oman Oil Company Limited was 151 Crores. | |
| (iii) | That, to satisfy the debt equity ratio of 1.6:1 for raising a loan of Rs.1350.31 Crores, the company was required an additional equity due to embargo of 50% imposed by the Government of India and there being no progress in work for quite sometime, Oman Oil withdrew itself for arranging fresh capital. | |
| (iv) | As per appellant, the BPCL had introduced 900 Crores in the form of zero coupon convertible debenture to be converted into equity shares within a span of 36 months. The total sum of Rs.900 Crores was received on 9.3.2007, out of which a sum of Rs.500 Crores was invested in short term deposits with the State Bank of Patiala and and ICICI Bank. This amount was subsequently re-vested in short term deposits with the State Bank of Patiala, Jammu & Kashmir Bank and Central Bank of India. On these fixed term deposits, with various banks for short period, the company had earned an interest at Rs.31,39,70,136.99. | |
| (v) | The appellant had submitted its return of income for assessment year 2008-2009 (financial year 2007-08) on 25.8.2008. In the said return, the appellant had shown total income of Rs. 43,91,84,655/- being interest earned on fixed deposits made out of borrowed funds and claimed that the sum of Rs. 31,39,70,136.99 was taxable as income from business being as accretion to the capital of the appellant. The Assessing Officer, Deputy Commissioner of Income Tax-1(2), Bhopal framed the assessment order under Section 143(3) of the Income Tax Act, 1961 on 30.12.2010. The Assessing Officer had not accepted the contention of the appellant regarding accretion in capital and treated the sum of Rs. 31,39,70,136.99, the interest earned on non-interest bearing fund as income from other sources and found it taxable. Against the order of the Assessing Officer, the appellant herein preferred an appeal before the CIT(A), Bhopal, which was dismissed. Second appeal was also preferred before the Income Tax Appellate Tribunal but that was also dismissed. These orders have given the appellant a cause for filing this appeal. |
5. The main contention of the appellant before this Court is that aforesaid amount was zero coupon money and was parked with the banks and the interest earned on the amount was not liable to income tax as income from other sources, but the interest could have been treated as income from the business and could have been assessed because it will reduce cost of construction of the industries and thereby will reduce the capital invested by the appellant. Apart from this, the amount of Rs. 500 Crores was parked with the bank to satisfy the debt equity ratio as was necessary to be maintained as per condition imposed by the bank. Reliance is placed to a judgment of Madras High Court in CIT v. VGR Foundations [2008] 298 ITR 132 and submitted that in view of the law down in Para 5 of the judgment, this appeal may be admitted for final hearing.
6. Shri Sanjay Lal, learned counsel appearing for revenue opposed the aforesaid contention and submitted that the controversy involved in this case is squarely covered by a judgment of Apex Court in Tuticorin Alkali Chemicals & Fertilisers Ltd. v. CIT [1997] 227 ITR 172/93 Taxman 502 (SC)and a Division Bench judgment of this Court in M.P. State Industries Corpn. Ltd. v CIT [1968] 69 ITR 824 (MP) and submitted that this appeal does not involve any substantial question of law as suggested by the appellant.
7. Per contra, Shri Purohit, learned senior advocate submitted that there are divergent views of the Supreme Court as find place in CIT v. Karnal Co-operative Sugar Mills Ltd. [2000] 243 ITR 2/[2001] 118 Taxman 489 (SC), CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315/102 Taxman 94 (SC)and CIT v. Karnataka Power Corpn. [2001] 247 ITR 268/[2000] 112 Taxman 629 (SC), so this appeal may be admitted on the aforesaid substantial questions of law. In reply to it, Shri Lal, learned counsel for revenue submitted that recently a Division Bench of High Court of Bombay have considered all the aforesaid judgments in Shree Krishna Polyster Ltd. v. Dy. CIT [2005] 274 ITR 21/[2005] 144 Taxman 41 (Bom.) and relying on the judgment in Tuticorin Alkali Chemicals & Fertilizers (supra) held that such interest can be treated as an income from other sources and was not a business income.
8. We have considered the rival contentions of the parties and find that in Tuticorin Alkali Chemicals & Fertilizers (supra), the Apex Court considering the legal position held that the interest earned by the assessee before commencement of business on short term deposits with banks, even out of term loans secured from financial institutions, is an income chargeable under the head "income from other sources" and would not go to reduce the interest payable by the assessee which would be capitalised after the commencement of commercial production.
The Apex Court have held that it was an income from other sources and shall be liable to be taxed accordingly. The Division Bench of this Court considering similar controversy in M.P. State Industries Corpn. (supra) held that the interest earned by investing the surplus share money in bank deposits, such interest is taxable as income from other sources and not as business income. The Division Bench of Bombay High Court in Shree Krishna Polyster Ltd (supra) have also considered the legal position and held that the interest on short term deposits with bank by investing surplus fund acquired in public issue invested in short term bank deposits did not spring or emanate from the business activity of the assessee, hence it cannot be considered as business income and is liable as income from other sources. The Bombay High Court considered all the judgments including the judgment in Tuticorin Alkali Chemicals & Fertilizers (supra), Division Bench's judgment of this Court in M.P. State Industries Corpn. (supra) and held that such income is an income from other sources and cannot be treated as an income from business and held that the said interest is liable to be taxed.
9. As the Division Bench of this Court have considered this question in M.P. State Industries Corpn. (supra) and have decided the question, we do not find any reason to differ with the aforesaid. So we find that this appeal does not involve aforesaid substantial questions of law for our consideration and accordingly we dismiss this appeal at admission stage.
10. At this stage, Shri G.N Purohit, learned Senior Counsel submitted that the appellant may be granted leave to file an SLP before the Apex Court, but considering the fact that the controversy is squarely covered by the judgment of the Apex Court in Tuticorin Alkali Chemicals & Fertilizers (supra) and M.P. State Industries Corpn. (supra) of the Division Bench of this Court, we do not find that it is a fit case for filing an SLP before the Apex Court. The prayer made by the appellant is rejected.
This quashing of 148 shows that a mistake committed by AO during assessment is fatal for revenue.AO failed to apply correct position of law knowingly or unknowingly. But CIT(A) could have taken the remedial action by making addition under proper head or by giving notice for enhancement.Power of CIT(A) is co-terminus with that of AO as held by many courts including apex court.These things shows that we are working in a mechanical way without application of mind at any level proving fatal for the revnue.
IT: Once claim was examined, scrutiny assessment was framed and AO came to conclusion, such an assessment could not have been subjected to process of reopening by succeeding AO
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[2013] 35 taxmann.com 84 (Gujarat)
HIGH COURT OF GUJARAT
Siddhi Vinayak Transport
v.
Assistant Commissioner of Income-tax*
AKIL KURESHI AND MS. SONIA GOKANI, JJ.
SPECIAL CIVIL APPLICATION NO. 1907 OF 2013
APRIL 22, 2013
Section 147, read with section 40(a)(ia), of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts [To make disallowance under section 40(a)(ia)] - Whether when earlier Assessing Officer had framed scrutiny assessment and examined certain deductions thoroughly, thereafter, it is not open to latter Assessing Officer to re-open assessment on basis that earlier Assessing Officer had committed a legal error - Held, yes - Assessing Officer in scrutiny assessment found that assessee did not deduct TDS on labour payments - After considering assessee's explanation, he disallowed 20 per cent of said expenditure under section 40(a)(ia) - However, succeeding Assessing Officer sought to re-examine said issue on premise that entire expenditure had to be disallowed and Assessing Officer was not justified in limiting it to 20 per cent - Whether reassessment was not justified since succeeding Assessing Officer cannot doubt legality of a conclusion recorded by earlier Assessing Officer - Held, yes [Para 12] [In favour of assessee]
FACTS
| ■ | The assessee was a transport contractor. It did not deduct TDS on payment made on account of freight and labour. | |
| ■ | In scrutiny assessment, the Assessing Officer disallowed 20 per cent of said expenses under section 40(a)(ia). On appeal, the Commissioner (Appeals) deleted said disallowance and said decision was pending in appeal before Tribunal. | |
| ■ | Thereafter, the Assessing Officer initiated reassessment on ground that earlier Assessing Officer made an error in limiting such disallowance to 20 per cent as 100 per cent disallowance was called for. | |
| ■ | On appeal: |
HELD
| ■ | When the earlier Assessing Officer had framed scrutiny assessment and examined certain deductions thoroughly, it is thereafter simply not open to the latter Assessing Officer to re-open the assessment on the basis that the earlier Assessing Officer committed a legal error. Once the claim was examined, scrutiny assessment was framed and Assessing Officer came to the conclusion, such an assessment could not have been subjected to process of reopening. This is not to suggest that the revenue would be rendered without any remedy even in a case where the Assessing Officer committed a gross error in under-assessing income chargeable to tax. [Para 10] | |
| ■ | Section 263, of course, when the requirements laid down in the provisions are satisfied, empowers the Commissioner to take such an order in revision. However, the succeeding Assessing Officer cannot doubt the legality of a conclusion recorded by the earlier Assessing Officer in his assessment order, which was framed after scrutiny. [Para 11] | |
| ■ | It is not a case where the Assessing Officer, while framing original scrutiny assessment, did not examine the petitioner's claim of deduction. He was acutely conscious of such a claim and was also of the opinion that the entire claim was not required to be granted. He called for explanation of the assessee and after taking into consideration the explanation, made disallowance to the extent he was convinced to do. If, in the process, he made a legal error, the succeeding Assessing Officer cannot correct such an error, through the process of re-opening of the assessment. This is precisely, in the present case, what the respondent seeks to achieve. His reasons recorded clearly reflected such a state of affairs. He expresses his opinion that the disallowance which was limited to 20 per cent of the expenditure was not justified in law and the entire expenditure should have been disallowed. This cannot be the basis for re-opening of the assessment previously framed after scrutiny. [Para 12] | |
| ■ | In view of the above conclusion, the impugned notice was to be quashed. [Para 13] |
CASE REVIEW
Transwind Infrastructure (P.) Ltd. v. ITO [2013] 33 taxmann.com 404 (Guj.)[para 11] followed.
CASES REFERRED TO
Transwind Infrastructure (P.) Ltd. v. ITO [2013] 33 taxmann.com 404 (Guj.) (para 11).
Manish J. Shah for the Appellant. Sudhir M. Mehta for the Respondent.
ORDER
Akil Kureshi, J. - Heard learned counsel for the parties for final disposal of the petition.
2. Petitioner has challenged a notice dated 24.8.2012, as at AnnexureA to the petition, issued by the respondent-Assessing Officer under Section 148 of the Income Tax Act, 1961 (for short "the Act").
3. The petition arises in the following factual background:
3.1. The petitioner is a partnership firm. For the Assessment Year 2008-09 the petitioner filed its return of income on 26.09.2008 declaring total income of Rs.7,22,630/. Along with return, the petitioner also filed audited accounts, as statutorily required. Such return of the petitioner was taken in scrutiny by the Assessing Officer, who framed scrutiny assessment under Section 143(3) of the Act on 27.12.2010.
3.2. During such scrutiny assessment, Assessing Officer examined the requirement of tax deduction at source on a total labour charge payment of Rs.16.09 cores (rounded off), on which no tax was so deducted. Assessing Officer, after putting the petitioner to notice in the order of assessment, disallowed a sum of Rs.3.21 crores (rounded off), out of the abovenoted total labour payment charges.
3.3. The order of assessment was carried in appeal by the petitioner. One of the ground in such appeal was in respect of disallowance of said sum of Rs. 3.21 crores (rounded off). CIT (Appeals) passed the appellate order on 02.07.2012 and allowed the assessees objection to the disallowance of Rs. 3.21 crores (rounded off) made by the Assessing Officer. It is stated that such order of CIT (Appeals) is pending before the Tribunal, under an appeal filed by the Revenue.
3.4. On 24.08.2012 the respondent Assessing Officer issued a notice of reopening the assessment for the said Assessment Year 2008-09. At the request of the petitioner, he supplied the reasons recorded for issuing of such notice, which reads as under:
"Reasons for reopening of assessment u/s 147 of the Income-tax Act, 1961
In this case, the Assessee an Firm engaged in the business of Transportation had filed its return for A.Y.2008-09 on 26.09.2008 declaring income of Rs.7,22,630/. The case was completed in scrutiny manner under section 143(3) of the Act, on 27.12.2010 by determining taxable income of Rs.3,71,93,320/. On verification of the assessment records revealed that during the scrutiny assessment an amount of Rs.3,21,84,435/ was disallowed under Section 40(a)(ia). It was further noticed that in the scrutiny assessment disallowance of Rs.3,21,84,435/ made was 20% of Rs.16,09,22,175/ on account of freight payment. Under Section 40(a)(ia) whole expenditure was required to be disallowed for failure to deduct the tax at source whereas only 20% of the total expenditure on account of freight payment of Rs.16,09,22,175/ was made by the Assessing Officer on lump sum basis. Since, no provision for lump sum disallowance of expenditure under Section 40(a)(ia) of the Act, disallowance required to be made of Rs.16,09,22,175/ or the actual expenditure on which no tax was deducted through required to be deducted as per the provision of the Act.
Incorrect/short disallowance of expenditure Rs.12,87,37,740 (16,09,22,175 -3,21,84,435) on account of freight payment resulted in under assessment of income of Rs.12,87,37,740/ with consequent short levy of tax of Rs.5,81,98,082/ as shown below.
| Tax on Rs.12,87,37,740/ | Rs.3,86,21,322/ | |
| Surcharge @ 10% | Rs.38,62,132/ | |
| Education Cess/Secondary & Higher Ed. Cess @3% | Rs.12,74,503/ | |
| Total Tax | Rs.4,37,57,957/ | |
| Int. U/s.234B from 04/08 to 12/10 | Rs.1,44,40,125/ | |
| Total Tax & Interest | Rs.5,81,98,082/] |
In view of the above facts, I have reason to believe that Income has escaped assessment up to Rs.12,87,37,740/. Accordingly, assessment is reopened u/s 147 of the Income tax Act, 1961."
3.5. The petitioner thereupon, under its communication dated 24.01.2013, raised several objections to the reopening of assessment. Such objections were, however, rejected by the respondent, by an order dated 06.02. 2013. Hence, the petition.
4. Learned counsel for the petitioner raised following contentions in support of the prayers;
| (i) | That the entire issue of non-deduction of tax at source on the total labour payment charges of Rs.16.09 crores was examined by the Assessing Officer at length in the original order of assessment. He further stated that the extent to which he desired to disallow the expenditure is shown in the assessment order itself. In such order, he was of the opinion that 20% tax disallowance was justified. Thus, the Assessing Officer, having scrutinized the claim in the order of assessment, any attempt on behalf of the respondent to reopen of assessement on such basis, would be a mere change of opinion. | |
| (ii) | The counsel for the petitioner contended that the petitioner had, even to the limited extent of disallowance made by the Assessing Officer, carried the matter in Appeal. CIT (Appeals) had deleted the entire disallowance, after admitting additional evidence on record by virtue of third proviso to Section 147 of the Act and on the principle of merger, it would be wholly impermissible for the Assessing Officer to reexamine the entire issue when the CIT (Appeals) has already given his opinion. |
5. On the other hand, learned counsel Mr. Sudhir Mehta for the Department opposed the petition contending that since the petitioner did not produce necessary documents at the time of original assessment, the Assessing Officer made ad hoc disallowance. This, being not an order, notice for reopening came to be issued within a period of four years from the end of the relevant Assessment Year.
6. He further contended that before the CIT (Appeals), only the validity of disallowance made by the Assessing Officer was at issue in appeal filed by the assessee. Whether the entire expenditure could have been disallowed was never at issue before CIT (Appeals).
7. Having heard learned counsel for the parties and having perused documents on record, the following aspects mainly emerge;
| (a) | During the scrutiny assessment, the question of non-deduction of tax at source on labour payment charges of Rs.16.09 crores came up for consideration before the Assessing Officer. He, in fact, issued a notice to the assessee on 24.11.2010 and stated as under: | |
| "Complete details of expenses of Rs.16,37,42,549/, incurred on a/c of cartage, octroi and labour expenses is not filed till date. Further, partwise amount paid and TDS details is also not filed. You are requested to file all the details. It will be presumed that TDS is not properly deducted and amount of Rs.3,27,48,509/ being 20% will be disallowed u/s 40(a)(ia) of the IT Act" | ||
| In the final order of assessment, he devoted several pages to the petitioner's claim of deduction of labour payment charges. In paragraph 4 of the assessment order, he discussed the disallowance on account of non-deduction of TDS on cartage, labour and octroi expenses. In reply to the notice dated 24.11.2010, the assessee made averments as to why disallowance should not be made relying on provisions contained in Section 194 (c) of the Act. He, ultimately, rejected the assessee's contentions and concluded as under: | ||
| "In view of the above, contention of the assessee has no basis. However to be reasonable, 20% of the total payment i.e. Rs.16,09,22,175/ is disallowed u/s 40(a) (ia) of the IT Act. The disallowance comes to Rs.3,21,84,435." | ||
| (b) | It is this claim, which the Assessing Officer now seeks to reexamine by issuance of notice for reopening of the assessment. The reasons recorded by him clearly bring about this aspect. |
8. In the reason, he concluded that the Assessing Officer made disallowance at the rate of 20 per cent. However, the entire amount should have been disallowed and therefore, the disallowance of expenditure required to be made comes to Rs.12,87,33,740/ Therefore, he recorded that he had reason to believe that the income to the above extent chargeable to tax had escaped assessment.
9. It thus clearly emerges from the record that the Assessing Officer now wishes to re-examine the petitioner's claim of deduction on the premise that the earlier Assessing Officer made an error in limiting such allowance to 20% of the total expenditure. In his opinion, 100% disallowance was called for. To the extent that the Assessing Officer, in the scrutiny assessment, did not disallow 80% of the expenditure and limited the disallowance to 20%, had committed an error.
10. We are not examining the validity of the contention of the Assessing Officer, recorded in the form of reasons, for issuing the notice. We are limiting our observations to his assuming jurisdiction of re-opening of the assessment on such basis. When the earlier Assessing Officer had framed scrutiny assessment and examined certain deductions thoroughly, it was, thereafter, simply not open to the latter Assessing Officer to reopen the assessment on the basis that the earlier Assessing Officer committed a legal error. Once the claim was examined, scrutiny assessment was framed and Assessing Officer came to the conclusion with or without recording reasons in the assessment order, such an assessment could not have been subjected to the process of reopening. This is not to suggest that the Revenue would be rendered without any remedy even in a case where the Assessing Officer committed a gross error in underassessing income chargeable to tax.
11. Section 263 of the Act, of course, when the requirements laid down in the provisions are satisfied, empowers the Commissioner to take such an order in revision. However, the succeeding Assessing Officer cannot doubt the legality of a conclusion recorded by the earlier Assessing Officer in his assessment order, which was framed after scrutiny. In same what similar circumstance, we had in our judgment in case of Transwind Infrastructure (P.) Ltd. v. ITO [2013] 33 taxmann.com 404 (Guj.) made following observations :
10. From the above, it can be seen that the Assessing Officer was acutely conscious about the petitioner not having deducted tax on labour payment charges of Rs. 3.05 crores and the petitioner's contention that it was so done because provision for TDS was not applicable. He was not convinced by such explanation. He, however, for some strange reasons did not apply the provision of Section 40(a)(ia) of the Act instead made ad hoc disallowance of Rs. 25,60,000/ @ 8% of the total labour payment charges.
11.Whatever be the legality of such assessment, fact remains that, in the scrutiny assessment, the Assessing Officer had thoroughly and fully scrutinized the assessee's claim of deduction of labour expenditure. To the extent he was inclined to disallow the same, he did so. By no stretch of imagination it can be stated that the issue was not at large before the Assessing Officer in the original scrutiny assessment. Any reexamination of such a question at this stage would only amount to change of opinion. Remedy of reopening the assessment, therefore, was simply not available. In the decision of the Supreme Court in case of Commissioner of Income Tax Vs. Kelvinator of India Ltd. reported in [2010] 320 ITR 561 (SC) the Apex Court observed as under:
"On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a goby and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of "change of opinion" as an inbuilt test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament reintroduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer."
12. If the Revenue was of the opinion that the Assessing Officer erroneously and to the prejudice of the interest of the Revenue allowed certain claim, in a given situation, it would have been open for the appropriate authority to exercise revisional powers. However, once the claim was fully examined, power of reopening was simply not available.
12. Such observations would apply in the present case also. We make it clear that it is not a case where the Assessing Officer, while framing original scrutiny assessment, did not examine the petitioner's claim of deduction. He was acutely conscious of such a claim and was also of the opinion that the entire claim was not required to be granted. He called for explanation of the assessee and after taking into consideration the explanation, made disallowance to the extent he was convinced to do. If, in the process, he made a legal error, the succeeding Assessing Officer cannot correct such an error, through the process of reopening of the assessment. This is precisely, in the present case, what the respondent seeks to achieve. His reasons recorded clearly reflect such a state of affairs. He expresses his opinion that the disallowance which was limited to 20% of the expenditure was not justified in law and the entire expenditure should have been disallowed. We are afraid, this cannot be the basis for reopening of the assessment previously framed after scrutiny.
13. In view of the above conclusion, we are inclined to quash the impugned notice dated 24.8.2012. The question whether on the additional ground of merger, as flowing through the proviso to section 147 of the Act, the notice is bad in law, we have not gone into in this case.
14. Subject to the above observations, the petition is allowed. The impugned notice dated 24.08.2012 is quashed.
Regards,
Pawan Singla
BA (Hon's), LLB
Audit Officer
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