Roaming the Taxation - MANGALAM SERVICE CO-OPERATIVE BANK LTD. V. ITO (2013)

MANGALAM SERVICE CO-OPERATIVE BANK LTD. V. ITO(2013) A registered society is a ‘person’ defined under section 2(31); capable to exercise all rights of a natural person

Primary co-operative credit society which is registered under Co-operative Societies Act, must be treated as juristic person capable of exercising all rights of a natural person

Romancing the new case law - Genesis Indian Investment Co. Ltd. v. CIT(A) (2013)

Genesis Indian Investment Co. Ltd. v. CIT(A) (2013) 

Interest received by assessee from company for delay in completion of the process of buy-back of shares under open offer to be deemed as capital gain and not interest income in the hands of Assessee.

It was not a case of delay in making the payment of the determined consideration after the transaction of purchase of sale was over. Thus, this additional amount received by the assessee being interest was part of sale consideration and, accordingly, would be treated as part of capital gain and not the income from interest 

Romancing the Taxation - All About Annual Information Return (AIR)

All About Annual Information Return (AIR)

What is Annual Information Return (AIR)?

As per the amendment to Section 285BA of the Income Tax Act, 1961, specified entities (Filers) are required to furnish an Annual Information Return (AIR) in respect of specified financial transactions registered/recorded by them during the financial year (beginning on or after April 1, 2004) to the income tax authority or such other prescribed authority.

Who is required to furnish AIR?

As per the amended Rule 114E of the Income Tax Rules, 1962, the Annual Information Return should be furnished by every person mentioned in column (2) of the Table below in respect of all transactions of the nature and value specified in the corresponding entry in column (3) of the said Table, which are registered or recorded by him during a financial year beginning on or after April 1, 2004:

Sl. No. (11)	Class of person(2)	Nature and value of transaction(3)
1	A banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act).	Cash deposits aggregating to ten lakh rupees or more in a year in any savings account of a person maintained in that bank.
2	A banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) or any other company or institution issuing credit card.	Payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to two lakh rupees or more in the year.
3	A trustee of a Mutual Fund or such other person managing the affairs of the Mutual Fund as may be duly authorised by the trustee in this behalf.	Receipt from any person of an amount of two lakh rupees or more for acquiring units of that Fund.
4	A company or institution issuing bonds or debentures.	Receipt from any person of an amount of five lakh rupees or more for acquiring bonds or debentures issued by the company or institution.
5	A company issuing shares through a public or rights issue.	Receipt from any person of an amount of one lakh rupees or more for acquiring shares issued by the company.
6	Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908.	Purchase or sale by any person of immovable property valued at thirty lakh rupees or more.
7	A person being an officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934, who is duly authorized by the Reserve Bank of India in this behalf.	Receipt from any person of an amount or amounts aggregating to five lakh rupees or more in a year for bonds issued by the Reserve Bank of India.

Abhinav Bindra vs deputy comissioner of income tax

IT : Awards, rewards, prizes received by amateur sportsperson are not "income" as per CBDT Circular No.447 and hence free from income-tax. These cannot be taxed by invoking the provisions of section 56(2)(v)/(vi)/(vii)

Facts

• In 2008, Assessee- Shri Abhinav Bindra became the first person in the history of independent India to have won the Olympic Gold Medal.

• He was given awards/rewards/prizes mainly by various governments, local authorities, trusts and institutions and of course some corporate/individuals.

• Assessee claimed that he was an amateur sportsperson and hence gifts/awards and prizes won by him are not income in terms of CBDT Circular No.447 dated 22-1-1986.

• AO held that Circular No.447 was inapplicable in view of amendment in section 10(17A) and insertion of section 56(2)(v). However, he allowed exemption in respect of rewards/prizes/gifts from the government, local authorities and trusts/funds recognized under section 10(23C) or registered under section 12AA. He taxed gifts etc received from others-eg corporates, individuals etc by invoking section 56(2)(v).

• CIT(A) enhanced income by adding awards etc received from various governments.

• Aggrieved by CIT(A)'s order, assessee filed instant appeal before ITAT.

Held

• Revenue had not controverted the assessee's contention that he was as amateur sportsman and not a professional sportsman.

• Even after the amendment in section 10(17A) and the insertion of section 56(2)(v), CBDT Circular No.447 has not been withdrawn. The fact that it has not been withdrawn was not controverted.

• As per Circular No.447, in the case of a non-professional sportsman, the award received by him will be in the nature of a gift and/or personal testimonial which will not be liable to tax in his hands as it would not be in the nature of income.

• Question of exemption under section 10(17A) and distinction made by CIT(A) between "award" and "reward" is relevant only when receipt in question is income.

• Also question of taxing a receipt under section 56(2)(v) as income arises only when it has the character of income.

• As Circular No.447 excludes the awards etc received by amateur sportsperson from ambit of "income" in section 2(24), question of considering exemption under section 10(17A) or taxability under section 56(2)(v) does not arise.

• In the result, assessee's appeal allowed.

CIT vs GAIL (India) ltd.

IT : No penalty on deductor of TDS for non-mention of payee’s PAN in Form 16A if payee didn’t intimate his PAN to deductor

• If payee doesn't furnish his PAN to deductor as required by section 139A(5A), deductor can't be penalized under section 139A(5B) read with section 223B(1) for not mentioning payee's PAN in TDS certificate issued to payee in Form 16A.

• Where there is nothing on record to show that contractors to whom certain amounts were paid by asssessee after deducting TDS under section 194C/194J had intimated their PANs to assessee (deductor) as required by section 139A(5A), penalty can't be imposed on assessee (deductor) under section 272B(1) for non-mention of the PANs of the contractors(payees) in Form 16A TDS certificates issued to them.

• Default by contractors (payees) in furnishing their PANs to assessee (deductor) as per the requirements of section 139A(5A) is "sufficient cause" within the meaning of section 273B for deductor's contravention of section 139A(5B) ( failing to mention PANs of payee-contractors on their TDS certificates in Form 16A issued to payee-contractors). In view of this sufficient cause, no penalty imposable

Romanccing The Superb Case law on MAT (For All Inter & Finals) Ester india vs Union of India

Ester india vs Union of India

Base:- Can Interest be allowed u/s 115JAA on MAT Credit and its constitutional Validity

IT : Provisions of sections 115JA and 115JAA are neither arbitrary nor unreasonable nor ultra vires to any provisions of the Constitution. The contention of the petitioner that the tax paid on the basis of computation under section 115JA of the Act amounts to a compulsory deposit on which no interest is paid to the assessee is also misconceived. The tax as payable on income as computed under section 115JA of the Act is a tax levied under the Act, albeit computed on the basis of the book profits of the assessee instead of under the normal computation provisions of the Act. The fact that section 115JAA of the Act provides for credit on account of tax paid against the tax payable for the subsequent years does not in any manner suggest that the levy on the basis of computation under section 115JA of the Act is not a tax under the Act (Because Interest is only available on TAX Refund and since it is not considered as Tax no question of Interest arise. )

section 115JA not violative of Article 14 of the constitution:
• Merely because section 115JA of the Act provides for an alternate method of calculating taxable income which is different from the normal computation provisions under the Act cannot render the tax based on such computation to be without the authority of law.

MAT not a compulsory interest-free deposit; It's a tax; section 115JAA not unconstitutional:
• The provisions of section 115JAA of the Act are provisions for the benefit of an assessee and are intended to give certain credit in computation of the taxes payable by an assessee in respect of any tax paid by the assessee under section 115JA of the Act. A set off in payment of income tax under section 115JAA is only available subject to the assessee paying the minimum tax for each year as computed on the basis of section 115JA. The credit can only be availed for a period of five succeeding years. This too does not in any manner indicate that the provisions of section 115JA are unconstitutional or arbitrary.

New Section 92BA in Transfer Pricing

Romancing the New Section

New Section 92BA

Specified Domestic Transaction (SDT)

This section provides that an SDT means any of the following transactions (not being an international transaction): 

• Expenditure for which payment is made to a related party as specified u/s 40A(2)(b);
• any transaction in relation to transfer of goods or services between various businesses of the same assessee as referred to in section 80A;
• any transfer of goods or services referred to in section 80-IA(8) – inter-unit transfers;
• any business transacted between the assessee (covered u/s 80IA) and its associated enterprise – section 80-IA;
• any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which provisions of sections 80-IA(8) or 80IA(10) are applicable; or
• any other transaction as may be prescribed by the CBDT,

These provisions are applicable to an assessee only where the aggregate value of the above mentioned transactions exceeds rupees 5 crores during the relevant financial year and they come into effect from Assessment year 2013-14 relevant to the financial year 2012-13 onwards.