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PFA
S. 264: ITAT entertains appeal against order passed by CIT u/s 264
The assessee sought revision of its assessment, finalized u/s.143(3) on 03.12.2008, accepting the returned income of Rs.35,19,179/-, u/s.264 of the Act on the ground that the deduction u/s.80-IB, to which it was entitled, had not been allowed per the impugned assessment. The deduction, for which it was otherwise eligible since the first year of operating a cold storage, i.e., A.Y. 1998-99, could not be claimed up to the immediately preceding year on account of continued losses. The assessee returning profit for the first time for the current year, forgot to prefer the claim u/s.80-IB, and hence its petition u/s.264. The ld. CIT, as a competent authority, rejected the same on the ground that the said claim had not been made either per the return of income for the year or even during the assessment proceedings, so that the application for revision u/s.264, as made, is misconceived and not maintainable. Reliance was also placed by him on the decision in the case of Goetze (India) Ltd. vs. CIT [2006] 284 ITR 323 (SC). On appeal by the assessee to the Tribunal:
We have heard the party before us, and perused the material on record. Without doubt, the impugned order is not a speaking order, i.e., not dilating on the scope of the revision u/s.264, on the maintainability or otherwise in law of the petition under which the fate of the assessee's appeal would lie. The assessee, on the other hand, has cited several decisions by the higher courts of law, including by the apex court, qua the scope of provision u/s.264, viz. Dwarka Nath vs. ITO [1965] 57 ITR 349 (SC); Ramdev Exports vs. CIT [2001] 251 ITR 873 (Guj); Parekh Brothers vs. CIT [1984] 150 ITR 105 (Ker); and M. Chettyappan & Ors. v. CIT [1977] 110 ITR 684 (Mad). Under the circumstances, we only consider it fit and proper to restore the matter back to the file of the ld. CIT to adjudicate the assessee-appellant's application afresh in accordance with the law per a speaking order and after allowing a reasonable opportunity of hearing to it.
In this article we have listed four tips to save Tax Through Your Parents which includes 1. By Investment & Share Trading in your parents name 2. By Paying Rent to Parents to claim HRA or Section 80GG deduction 3. By shifting losses on Shares by off market Transactions 4. By doing share trade in Parents Name.
Your parents can help you save tax / reduce your tax liability
CA Sandeep Kanoi
Saving tax is the main motto of all taxpayers. While some hire chartered accountants, others pore through tax laws, or ask friends to find out if there are ways by which they can save.
Actually, the simplest way of saving tax is by investing through parents and children. If you invest in the right instrument, the rate of return may be higher as well. Your parents can help bring down your tax liability in several ways. Here are some smart strategies that can reduce your tax outgo.
In this article we have listed four tips to save Tax Through Your Parents which includes 1. By Investment & Share Trading in your parents name 2. By Paying Rent to Parents to claim HRA or Section 80GG deduction 3. By shifting losses on Shares by off market Transactions 4. By doing share trade in Parents Name.
1. Investment & Share Trading in your parents name
a. Shift Interest Income to parents Account
Every adult enjoys a basic tax exemption limit. For senior citizens (above 60 years), the basic exemption limit is Rs 3 lakh a year and for super senior citizens (Above 80 Years) the exemption Limit is Rs. 5 Lakh. If any or both of your parents do not have a high income but you have an investible surplus, you can avoid tax by transferring money to them which can then be invested in their name. Even if they have taxable income but their Income is not good enough to be charged at highest rate of tax and you are paying tax at highest rate of tax than you can still take the benefit of lower slab rates.
Here's how you go about it. Income tax deductions allow senior citizens a tax-free income of Rs 3 lakh(above 60 years) and super senior citizens (Above 80 Years) the exemption Limit is Rs. 5 Lakh. To exhaust this limit, say you gift Rs 30 lakh to each parent in cash (Includes Payment by cheque) , which they invests in senior citizens savings scheme that earns a return of nine per cent and pays interest every quarter. Each will get yearly interest of nearly Rs 2.7 lakh.
That means both parents have earned Rs 5.40 lakh from the senior citizen saving scheme. A total savings of tax on Rs 5.40 lakh – the tax-free limit (Rs 3 lakh) that each parent enjoys. So, they don't even need to file tax returns.
b. Invest in PPF account of Parents
The Public Provident Fund offers tax-free income but there is a limit of Rs 1,50,000 a year. Invest in your parents' names if your own limit is exhausted.
c. Trade / Investin Shares in Parents Demat Account
Or open a demat account in their name and dabble in stocks. Short-term capital gains will not attract 15% tax if the basic exemption limit has not been crossed.
Here I would like to mention that like wife & Minor Child clubbing provisions do not get attracted in case of gift or Transfer of money to parents. There is also no limit under the Income Tax Act,1961 on the amount you can give to your parents.
2. Pay them rent if you live in their house
This option is mainly for those having Salary Income and receiving House Rent Allowance and leaving in parents' house. You can pay them rent to parents to claim House Rent Allowance exemption. This is possible only if the property is registered in the name parents. If Property is jointly owned by parents than you can divide rent between them by paying them seprately so that the tax liability gets split between the two parents. If their income exceeds the basic exemption limit, you can help them save tax by investing in their name under Section 80C options such as the Senior Citizens' Saving Scheme, five-year bank fixed deposits or tax-saving equity mutual funds.
Further Those not having salary Income can claim deduction U/s. 80GG but in this case Maximum allowable deduction is Rs. 2000/- Per Month. Section 80GG dealing with deduction on rent paid where the taxpayer doesn't receive HRA, specifically mentions that the taxpayer or his or her spouse/ minor children should not own any residential accommodation where the taxpayer resides, performs the duties of his office or employment or carries out his business.
For more details please visit the following link :-Section 80GG Deductions – For rent paid
3. Sell them shares and offset Capital Losses
f you have kept loss making shares in your portfolio for over a year, you can consider selling them to your parents in an off-market transaction. A long term capital loss on shares could be set off against long term gains if you sell the shares in an off-market sale, which is a transaction without going through the exchange. Finding buyers off-market is difficult, therefore, you could sell them to your parents in order to set off losses.
The main criteria for this arrangement is that shares should be sold at market price and the payment should be made via cheque.
4. Mediclaim – Health insurance policy for parents
To save tax through parents Buy a health insurance policy for them and get deduction for the Health premium paid under Section 80D. Up to Rs 15,000 a year is deductible from your taxable income if you buy a health insurance policy for your parents. If the parents are senior citizens, the deduction is even higher at Rs 20,000. This exemption is over and above exemption for your own health premium.
(Republished with amendments)
KNOWN THINGS BUT SELDOM PRACTISED-AT LEAST PRACTICE THEM FROM TODAY
The proverb, 'A stitch in time saves nine' is applicable to a host of situations.
This proverb literally means that if one does not immediately sew a small hole in a garment eventually the small hole will take on the proportions of a big tear and the garment might end beyond the state of repair.
So it goes to say that it is better to deal with trouble when it first appears rather than put it off for later when it will be more difficult to deal with.
Most times, we tend to neglect small things pushing them to the back of our minds, this neglect later result in bigger losses. If there is a crack in the ceiling it is prudent to have it repaired immediately before it turns into something bigger and leads to the entire ceiling coming, crashing down someday. It makes sense for students to study a little every day, so that on the day of the examinations they are free from worry.
Despite understanding this proverb time and time again we are faced with situations in our life where a little attention in the beginning could have meant the saving of a lot of time in the end. Almost all of us at some point in our lives have misplaced our keys. If we had kept them in the right place we would have spared ourselves the time we took looking for them later.
When it comes to matters of health we are often guilty of being negligent. We continue to eat fast foods and unhealthy food totally avoiding exercise. This results in a lot of weight gain which leads to other complications like diabetes, arthritis, etc. All these complications could be avoided if we had taken care of the diet in the first place.
Timely prevention is always better than cure. When one ties one's shoelaces, one should make sure that they are secure. It takes just a fraction of a second to do this, but most of us won't be bothered to do it.
The result: in a few hours unknown to the wearer the shoelaces come undone and the wearer ends up tripping on one's own shoes. This is another example of how a stitch in time saves nine.
At work we are aware that we should be taking backups on the computer. However one tends to get lazy and puts off the back up till later and often the system hangs and one ends up having to do the entire work all over again.
This proverb can be related to relationships as well. Often there are misunderstandings at home between father and mother, between children and their parents. It is important that these differences be cleared before they reach the point where they begin to change the nature of the relationship itself.
A stitch in time saves nine applies to everybody and this phrase can be applied to almost everything in our lives. Procrastination is the thief of time', so we must make sure to make a timely stitch which will prevent us from having to make several later.
The current status of the Automobile industry is that it's crying and no one is bothered to hear the same. Before we get into the platform of debate I just want to accentuate few question about how government would find or measure the true potentiality after cost audit is abolished for the industry.
Cost Audit Deprived for the Automobile Industry
The current status of the Automobile industry is that it's crying and no one is bothered to hear the same. Before we get into the platform of debate I just want to accentuate few question about how government would find or measure the true potentiality after cost audit is abolished for the industry. How government would measure about the type of incentives ,duty cuts are required for the growth of the industry. In the recent new cost audit rules which have been released recently have been quite debatable across the board of cost accountants and industrial experts. The subject and the new rules are so wide that its quite difficult to cover in one article getting it further confined to couple of 1000 words. In my last articles which got published I covered explicitly about the different countries and the Big Giants of the Automobile Industry who have adopted Costing Methods and have accepted the applicability of the same and made a revolutionary change in their earning and within economy. Hence again I break up the process of discussing the same matter http://taxguru.in/chartered-accountant/cost-planning-cost-management-tools-toyota-australia-series4.html and http://taxguru.in/chartered-accountant/costing-methodscost-management-automobileseries-2.html. Before I get into the topic few grey areas of the profession and the Indian upcoming economic growth, I find there is wide gap between the fraternities. The Indian government has a clear road map to convert Indian manufacturing in a global hub but only manufacturing would not be suffice neither land and taxation policy reforms. If we compare the global standard of operating business we find that ethical values are very high.
These ethical values does not come from book but from strong cost accounting practices, control over price manipulation, safe guarding the minority stakes and public stake holders. Mere getting GDP growth based on high level of corruption and malpractices would only result to short term growth and long term collapse affecting not single but couple of generations. High auditing standards, efficient government reporting coming from accountants and extensive control over price manipulation as controlled by (Competition Commission of India) are the key wheels of sustainable economic growth. Just think that an economy like US which had one of the best standards failed to survive Lehman Brothers collapse and few other big financial institutions to fail. Then In a country like India where you don't have that quality of standards, over and above you are abolishing cost audit rules and applicability for few industries and still dreaming India to be a Global Manufacturing Hub sounds something missing just like food without salt.
Indian automobile industry has been abolished from the new cost audit rules applicability. This industry was being catered by the Cost Accountants over the last several decades. Lest encapsulate the short journey of the Industry through couple of images:
So if the above progress of the industry over the last several decades has been achieved then Cost Audit and Cost Accountants has been an equal partner of sharing couple of decade's expertise about growing the industry. Now suddenly the Cost Accountants are removed.
Lets encapsulate the growth of the current automobile industry followed with the huge inflow of funds being expected to come for this industry over the next 5 years.
- A total of 16.9 m two-wheelers were sold in FY14, a growth of a tepid 7% over the previous year.
- The industry is not only accounts for 22 per cent of the country's manufacturing gross domestic product (GDP). But also is one of the largest employment generators.
- The auto sector is one of the biggest job creators, both directly and indirectly. It is estimated that every job created in an auto company leads to three to five indirect ancillary jobs.
- The cumulative foreign direct investment (FDI) inflows into the Indian automobile industry during the period April 2000 – August 2014 was recorded at US$ 10,119.68 million, as per data by Department of Industrial Policy and Promotion (DIPP).
Now Investments in this sector which is also one of the biggest reasons why Cost Accountants should be kept as historically we have seen that mere inflow is not sufficient but proper ROI is also a grey area for the long term sustainability of the inflow. That is only achievable when Cost Audit is placed and proper reports are being taken into account by the government to improve the quality of industry.
The industry has grown not only due to inflow of capital but efficient use of resources by the Corporate as well as by the government-the source of which have been the cost audit reports and cost audit rules and regulations.
Some of the major investments and developments in the automobile sector in India are as follows:
- Ashok Leyland plans to invest Rs 450–500 crore (US$ 73.54–81.71 million) in India, by way of capital expenditure (capex) and investment during FY15. The company is required to manage Rs 6,000 crore (US$ 980.56 million) of assets in seven locations across the world, for which maintenance capex is needed.
- Honda Motors plans to set up the world's largest scooter plant in Gujarat to roll out 1.2 million units annually and achieve leadership position in the Indian two-wheeler market. The company plans to spend around Rs 1,100 crore (US$ 179.76 million) on the new plant in Ahmedabad, and expand its range with a few more offerings.
- Yamaha Motor Co has restructured its business in India. Now, Yamaha Motor India (YMI) will take care of its India operations. "The restructuring is part of Yamaha's mid-term plan aimed at improving organisational efficiency," as per Mr Hiroyuki Suzuki, Chief Executive and Managing Director. YMI would be responsible for corporate planning and strategy, business planning and business expansion, quality control, and regional control of Yamaha India Business.
- Tata Motors plans to use the 'hub-and-spoke' model in which India will be the key manufacturing base while it will have mini-hubs in overseas markets. The company also plans to set up mini hubs in potential markets like Africa, Middle-East and South East Asia.
- Hero Cycles through its unit OPM Global has acquired a majority stake in German bicycle company Mitteldeutsche Fahrradwerke AG (MIFA) for €15 million (US$ 19.11 million). The company plans to invest an additional €4 million (US$ 5.09 million) as capital expenses in restructuring the acquired company.
Remember that all these investments were coming to India since cost audit and cost accounting report have been fruitful for the government to measure the potentiality of the industry to grow in the long term.
How endless in the ancillary ad how endless its to calculate the same.
Now lest figure out how big is the industry in term of its ancillary industries and how those industries will be affected through price manipulation which could cost the end user for the automobile as well as other products.
Now lest figure out how big is the industry in term of its ancillary industries and how those industries will be affected through price manipulation which could cost the end user for the automobile as well as other products.
The automotive sector with its deep backward linkages (such as metals like steel, aluminum, copper etc., plastics, paint, glass, electronics, capital equipment, trucking, warehousing and logistics) and forward linkages including (dealership retails, credit and financing, logistics, advertising, repair and maintenance, petroleum products, gas stations, insurance, service parts) has been recognized and identified at different for a (Development Council of Automobile and Allied Industries, Planning Commission, National Manufacturing Competitiveness Council and Investment Commission etc.) as a sector with a very high potential to increase the share of manufacturing in GDP, exports and employment. The sector is also seen as a multiplier of industrial growth. It helps in attaining two critical goals of the Common Minimum Programme, that of increasing manufacturing output and providing employment. Now just calculate how big is the industry.
The concept of attaining competitiveness on the basis of low cost and abundant labour, favourable exchange rates, low interest rates and concessional duty structure is becoming inadequate and therefore, not sustainable. In light of the above, it is felt that a greater emphasis is required on the development of the factors which can ensure competitiveness on a long-term basis. If the government don't come to know about the cost of operating in automobile industry then how the government would measure about the taxation incentives which have to be given and which segment of the industry have to be given.
In efficient taxation policies would be framed which would deter the growth of the industry just like the current one where government fails to understand that by not extending the incentives the Indian automobile industry is going to land up with high slow growth. Calculate the loss
Well a great thanks to Mr. Amit Apte for providing inputs about writing this article.
Indraneel Sen Gupta (neel19414@gmail.com )
Global Macro Economic Researcher and Business Strategist
Master of Economics, MBA in International Business Management, ICWAI (Final)/CWM Final/Journalist
Family is the Need of the Times
Because of the influence of European civilization joint family system has been looked down upon by the educated elite in India. The younger group in the society is fast growing materialistic and considers the old moral values as stale and unhealthy.
Materialism brings in the natural phenomenon of selfishness. In the male dominated society the greatest casualty is woman. It is rather strange that although generation gap is more prominent in India yet in tormenting women folk the two generations join hands. It all distorts the amiable atmosphere of a family.
In European countries women, after centuries of exploitation have started playing a different role. As "the institution of marriage is on the decline and divorce on the increase" a large number of women in Europe have started living alone. They avoid matrimony. They feel that they can have the responsibility of motherhood alone—even outside marriage.
Single motherhood is replacing two-parent family. Births without marriage show that many couples reject the traditional values. They live together, have children but do not believe in nuptial ties. Both are free to leave the nest.
By now it was the male who dominated the society (He still does). But now women have taken to wings. Having children is a natural course for women. But having husbands is not necessary. The girls would like to have a freedom of their own. They have fewer children, but start a family later in their late twenties.
The women have started asserting that "it takes two to run a happy family. It is the turn of men now to realize their emotional responsibility to the family as well." Apparently it all seems breaking the chains the women were tied with. They have a right to breathe fresh healthy air.
The women should have freedom from the slavery of man—no one would refute. But the view "We are a bit weighed down by centuries of answerability" expressed by European woman professional does not suit well. It means the women want to be free from answerability i.e. their responsibility of begetting children, rearing them up and sharing responsibility of the family.
102 countries formed coordinating committees in the nineties to usher in an era of bringing back the role of family. The view taken by the United Nations is that "the transition from traditional to modern society is characterized by a profound transformation in family and community life, perhaps for the worst."
Families have been breaking because of 'severe assault by war, political conflict, haphazard industrial strategies, rapid urbanisation, crime, violence and government policies that pay little heed to integrity of families.' The view of the UN is that "by forging links between communities' families deepen understanding".
According to Boutros Boutros Ghali, the former Secretary General of UN "In the change and confusion of the modern world families can help bridge ethnic and political divide... By creating a wide pool of human and financial resources families encourage economic progress. And by caring for family members and learning positive social behaviour together social welfare is encouraged.
After this frank acceptance of the role of family in the social, economic and political field we, in India, should revitalize the Institution of family in this country. Instead of aping the west we should guide them that family does not enhance only the social, economic and political growth, it is a moral force too. Running a family requires the essential spirit of cooperation, perseverance and tolerance.
The Indian family system can prove a flashing ray of hope in the devastating world culture that is shrouded by sex, violence and disintegration. Let the world realize that the disintegration of family has given rise to a licentious society that is fast falling in the jaws of AIDS. The dragon may swallow the whole human life. India too has fallen a prey to it. Let us fall back upon the traditional moral values of a family life.
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