PFA
s. 50C – Circle-rate prevailing on the date of execution of sale deed is relevant & not the rate on registration date
ITO vs. Modipon Ltd (ITAT Delhi),ITA No.2171/Del/2009, Date of Pronouncement-09.01.2015
Assessee sold the land vide registered agreement dated 27th May 2004, for consideration of Rs.2,62,08,000/- and on the said date the circle rate was Rs.13,000/- per sq meter. However, on the date of registration of sale-deed, i.e. 16th September 2004, the circle-rate enhanced to Rs.20,000/- per sq meter. It was thus prayed that the AO was not justified to enhance the sale consideration, on the basis of circle-rate prevailing on the date of execution of sale deed. The ld CIT(A) however rejected the said submission and held that u/s 50C of the Act, the circle-rate has to be adopted on the date of transfer of the property, which is the date of sale-deed.
Before us, the ld counsel for the assessee, submitted that the circle-rate as on the date of agreement to sale is to be taken instead of circle-rate on the date of sale. He relied on the decision of Vishakapatnam Bench in the following cases:-
iii) Molle Rami Reddy Vs. ITO, ITA No. 311/Vizag/2010, dated 10.12.2010
Section 50C provides that where consideration received or accruing as a result of the transfer by an assessee, of a capital asset being a land or building or both is less than the value adopted or assessed by stamp-value authority, the value so adopted by the stamp value authority shall be deemed to be full value of consideration u/s 48 of the Act. It is thus manifest that the value adopted by the stamp-valuation authority is deemed as the consideration for computation of capital gain. However, such valuation adopted by the stamp-valuation authority should be in respect of the transfer by the assessee, of the capital assets. Now, in the instant case, undisputedly on the execution of the sale-deed circle, rate was Rs.20,000/- per sq meter and therefore, the value adopted for the purpose of stamp-duty was Rs.4,03,20,000/- which was deemed as full value of consideration by the AO. The assessee on the other hand contends that circle-rate on the date of agreement registered with registrar of Ghaziabad was for Rs. 13,000/- per sq meter, which works out to be the actual sale-consideration of Rs.2,62,08,000/- and therefore the said figure should be adopted instead of Rs.4,03,20,000/-. In our opinion, on the peculiar set of facts we find that the agreement to sale was duly registered, whereby, the total consideration was agreed to between parties works out to Rs.2,62,08,000/- and was adopted as the consideration for the payment of stamp-duty i.e.@ 4% of Rs.2,62,08,000/- i.e. Rs.10,48,320/-. In view thereof, the aforesaid valuation is also the value adopted by the stamp valuation authority in respect of transfer of the capital asset by the assessee. However subsequent to the said agreement to sell, there was change in the circle rate from 16th June 2014, whereby the valuation was enhanced from Rs.13,000/- to Rs.20,000/- per sq meter. This enhancement was beyond the control of the assessee (seller). It is also not the case of the revenue, that the buyer has given more than the consideration that has been accepted by the parties where they executed the agreement to sale. Furthermore on facts of a case, the Hon'ble Apex court held that registration of the transfer in accordance with the agreement to sale cannot be termed as the "date of transfer" as envisaged by Section 50C of the Act (Sanjeev lal & Anr. Vs. CIT & Anr. (2014) 365 ITR 389(SC)).
ITAT has followed ratio of the decisions in the case of Kodura Satya Srinivas ITA No.556/559 dated 02.07.2010 and Mook Rani Reddy 311/Visaka) dated 10.12.2010. No contrary decision has been brought to our Notice.
Having regard to the above, factual and judicial position we delete the addition. As a result the ground is allowed.
Chhattisgarh High Court upheld legal sanctity of services tax levy on hotels and restaurants
January 14, 2015[2014] 52 taxmann.com 341 (Chhattisgarh)
Service Tax : Article 366(29A)(f) does not indicate that service part is subsumed in sale of food/beverages; hence, service tax on service portion of supply of food/ beverages in hotels/restaurants is Constitutional; however, States cannot levy VAT on service portion quantified as per service tax law
PFA
CA Kapil Goel The definition of Provident funds or PF varies widely from country to country, but in simple terms their purpose is to provide financial support to those who meet the retirement age (Currently the retirement age for PF is 58). The Government sets the age limits at which withdrawals from Provident Funds are […]
Perusal of appeal on same issue of prior years to be deemed as reasonable ground for delaying appeal of current AY
January 14, 2015[2014] 51 taxmann.com 60 (Madras)
IT : Where assessee for earlier assessment years had diligently pursuing matter before higher authorities and had succeeded in getting a decision in its favour, same would constitute sufficient cause for delayed appeal for current assessment year
ITEMS INCLUDED IN BASIC WAGES BASIC WAGES – HOW TO CONSTRUE The expression 'basic wages' has to receive an interpretation which would achieve the object of the enactment. The Act has to be considered in its proper perspective and contextual so as to fructify the legislative intentions underlying the enactment. If two views are possible, […]
How to Compute Basic Wages for Employee Provident Fund
ITEMS INCLUDED IN BASIC WAGES
BASIC WAGES – HOW TO CONSTRUE
The expression 'basic wages' has to receive an interpretation which would achieve the object of the enactment. The Act has to be considered in its proper perspective and contextual so as to fructify the legislative intentions underlying the enactment. If two views are possible, the view which furthers the legislative intention should be preferred to one which would frustrate it.
SOME OF THE ITEMS THAT ARE INCLUDED IN THE TERM "WAGES" FOR THE PURPOSE OF CONTRIBUTION UNDER SECTION 6 OF EMPLOYEES PROVIDENT FUND AND MISC. ACT 1952
I. Maternity benefits and sickness allowance are part of 'Basic Wages'
- Maternity benefits and sickness allowance which are payable in accordance with the terms of contract of employment;
- Sickness allowance and maternity benefit which are payable under the statute and also form part of contract of employment(e.g Plantation Workers under the Plantations Labour Act, 1951)
II. Ad hoc allowance included for purpose of contributions
1. Nomenclature of a payment to an employee is not decisive of its liability to PF Contributions but the pith and substance of the payment is;
2. On their own admitted statements in the management's representation, the ad hoc allowance is being paid towards the demand of employees for revision of pay and dearness allowance;
3. The ad hoc allowance is aid to all employees; and
4. The observation of the Hon'ble Supreme Court in the Union of India and others v Ogale glass Works which states that the award of industrial tribunal cannot stand in the way of enforcing the statutory provision cast on the Regional Provident Fund Commissioner under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. In view of that, any agreement entered into between the employer and employees' union against deduction of PF on the adhoc allowance in question is not binding on this organization.
III. Bonus : When the word Bonus was used without any qualification in Sec.2(b) (ii), the legislature had in mind every kind of bunus that may be payable to an employees.
- Payments made for production between quota and norm were part of basic wages.
- Payments beyond the nor were production bonus and excluded from the definition.
IV. Incentive to the employees is paid only for the work done by the employees during the course of eight hours and is not over and above the prescribed time of work. It forms part of basic wages and contribution in respect thereof is bound to be paid.
V. Interim advance and settlement benefit forms part of basic wages and are liable for payment of provident fund contribution and other dues under the Act.
VI. Encashment of earned leave by the employees forms part of basic wage.
LIABILITY OF EMPLOYER
It is the duty of the employer to contribute towards provident fund. The employers agreement, with the employee, not to deduct does not discharge the employer of his obligation in law to make payment. The term of the settlement which provides that there shall be no deduction only means that the company has agreed to take on the liability
VII Payment of extra work – whether overtime
The definition of basic wage includes the emoluments paid to an employee on holidays. If extra work is done on time, it would not come within the definition of overtime and as such the payments received by the workmen for extra work within the normal duty hours, would not be overtime.
Similarly, the reward for good work is not similar to overtime and if it is taken so, it would tantamount to taking cognizance of an illegality committed by the establishment.
(Edited by CA Sandeep Kanoi Based on inputs from EPFO Website)
In the instant case, it is not disputed that the petitioner society is running an educational institution. Merely because there are other objects of the society does not mean that the educational institution is not existing solely for educational purpose.
PFA
Mere Presence of other objects does not mean that Institution was not existing Solely for Educational Purpose
Allahabad Young Mens Christian Association Vs. CCIT (Allahabad High Court), WRIT TAX No. – 2053 of 2009, Order Date :- 06.01.2015
In the instant case, it is not disputed that the petitioner society is running an educational institution. Merely because there are other objects of the society does not mean that the educational institution is not existing solely for educational purpose. The emphasis of the word "solely" is in relation to the educational institution, which is running not for the purpose of making profit and is not in relation to the objects of the society.
In American Hotel & Lodging Association, Educational Institute vs. CBDT 2008 (301) ITR 86 SC the authority is required to consider the nature and genuineness of the activities. The third proviso only sets out the conditions, which must be adhered to by the institution and compliance therewith is not to be tested at the stage of approval since they require considerations of facts and findings, which takes place in future. The requirement mentioned in the third proviso can only be tested after the end of the previous year when income is ascertained and thereafter applied. Further, the Supreme Court held that the authority is only required to examine that the petitioner's institution comes within the phrase "exists solely for the educational purpose and not for profit". Other conditions like application of income is not to be examined at this stage. The authority is only required to examine the nature, activities and genuineness of the institution. The mere existence that there is some profit does not disqualify the petitioner if the sole purpose of existence was not profit making but educational activities. The authority has to find out the predominant object of the activity and see whether the institution exists solely for education and not to earn profit. Merely because some profit arises from its activity will not mean that the predominant object of the activity is to earn profit and that it is not an educational activity. In order to ascertain whether the institute is carried on with the object of making profit or not it is the duty of the prescribed authority to ascertain whether balance of income has been applied wholly and exclusively to the object for which the institution is not established and in deciding the character of the recipient it was not necessary to look at the profits of each year but to consider the nature and the activities undertaken.
The Supreme Court held that the threshold conditions are actual existence of an educational institution and approval of the prescribed authority for which every applicant has to move an application in the standardised form in terms of the first proviso. If the prerequisite conditions of actual existence of the educational institution is fulfilled then the question of compliance with the requirements as spelt out in the other provisos would arise. At this stage, such considerations are not required.
From the record, it also appears that the facts were not analyzed by the authorities below in a proper manner. Before us the documents which were produced, it appears prima facie contradictory facts, which need further investigation. In these circumstances, we deem it fit to set aside the impugned order and remand the matter to the CCIT. Hence, without entering into the merits of the case, we set aside the impugned order and direct the competent authority (CCIT) to reconsider the application denovo for exemption under Section 10(23C) (vi) for the Assessment Year 2008-09 and onwards strictly on merit. The petitioner is also directed to submit necessary documentary evidence, if any and cooperate.
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