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21.03.2016 - Voice of CA presents - Updates
Monday, March 21, 2016


I. Headlines Today    

  1. IT Notification No. 18: Income-tax (6th Amendment) Rules, 2016 - Method of determination of period of holding of capital assets, being a share or debenture of a company, which becomes the property of the assessee in the circumstances mentioned in clause (x) of section 47  (Click for detail)
  2. Reducing tax exemptions across sectors  (Click for detail)
  3. Retrospective tax settlement scheme to start from June 1  (Click for detail)
  4. Easing norms for exim trade  (Click for detail)
  5. Put the onus on tax authority to demonstrate tax benefit  (Click for detail)
  6. How to make best out of small savings rate cuts  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  Vipin Walia Vs. ITO, W.P.(C) 8273/2015 & CM No. 17434/2015 (for Stay), Date of Order: 15.02.2016, High Court of Delhi

Whether it is illegal to issue a notice u/s 148 to the deceased assessee whereas it should have been done so by issuing a notice to legal representative of assessee within period of limitation for issuance of notice?

Held-Yes

Brief Fact
A notice u/s 148 of the Income Tax Act, 1961, dated 27.03.2015 was issued to Mr. Inder Pal Singh Walia seeking to reopen the assessment for AY 2008-09 by the ITO which was returned unserved to the Department with the remarks "Addressee expired". Infact Mr. Inder Pal Singh Walia had expired on 14th March 2015. Hence, the notice dated 27th March 2015 had been addressed to a dead person. The ITO issued a letter dated 15th June 2015 to the Petitioner with the notice u/s 148 of the Act and requisitioning the details of legal heirs of the deceased Assessee to complete the assessment proceedings. On 6th July 2015, the Petitioner wrote to the ITO pointing out that he was unaware of the financial affairs or transactions carried on by his late father and the Petitioner approached the Court.

Held:
As far as Assessees who have expired, Section 159 of the Act sets out how the Department should go about proceeding against the legal representatives ('LRs') of such Assessee. Section 159(2) of the Act makes a specific reference to a reassessment proceeding under Section 147 of the Act. While Section 159(2)(a) of the Act talks of a proceeding already taken against an Assessee 'before his death'. Section 159(2)(b) of the Act envisages any proceeding which could have been taken against the deceased if he had survived. It permits such a proceeding to be taken against the LRs of the deceased Assessee even if it had not taken while the Assessee was alive. Section 159(2)(b) is relevant as far as the present case is concerned. What was sought to be done by the ITO was to initiate proceedings under Section 147 of the Act against the deceased Assessee for AY 2008-09. The limitation for issuance of the notice under Section 147/148 of the Act was 31st March 2015. On 27th March 2015, when the notice was issued, the Assessee was already dead. If the Department intended to proceed under Section 147 of the Act, it could have done so prior to 31st March 2015 by issuing a notice to the LRs of the deceased. Beyond that date it could not have proceeded in the matter even by issuing notice to the LRs of the Assessee.

(Please click here for judgment)

 

2.  M/s Virtusa (India) Pvt.Ltd. Vs. DCIT, I.T.A. No. 146/Hyd/2015, Date of order: 04.03.2016, ITAT - Hyderabad

Whether where assessee relied on ITR – 6 format to arrive at total liability as well as MAT credit calculations and paid tax accordingly, procedure followed by assessee was proper, addition made is to be deleted?

Held-Yes

Brief Facts
The assessee filed its return of income on 30/11/2012 declaring total income of Rs. 42,87,89,690 under the normal provisions of the Income-tax Act,196. The return of income was processed by the Central Processing Centre (CPC), Bangalore and assessed u/s 143(1) raising demand of Rs. 32,06,700/-. The main difference in the computation of tax by the assessee and the AO was that the Assessing officer has computed the eligible MAT credit available of Rs.3,90,62,234 without including surcharge and education cess while arriving at the amount of total tax payable under the normal provisions of the Income Tax Act, 1961and under sec. 115JB of the Act. In this case the assessing officer has overlooked the format proceed to calculate the MAT credit to compute assessment u/s 143(1) applying different methods when the proper and correct method is proposed by CBDT in ITR-6. Therefore, the Assessing Officer is expected to follow the ITR-6 format to complete the assessment u/s 143(1) or 143(3) of the Act.

Held:
The tax liabilities for normal provisions as well as MAT are calculated with surcharge and cess. The MAT credit in row “7” are calculated automatically using the prescribed algorithm, this is nothing but balancing figure i.e., the difference between tax liability as per normal provisions and MAT provisions. Both the above tax liabilities are calculated with surcharge and cess. These are the standard format, which are expected to be followed by all the assessees and also important to note that the above format of ITR 6 was amended w.e.f. AY 2012-13 by CBDT. Moreover, this is more relevant for the department also. These formats are regulated by CBDT. Assessing Officer cannot overlook these formats and (interpret it in his own method of calculating tax credit while making assessment u/s 143(1) of the Act.) proceed to calculate the MAT credit to compute assessment u/s 143(1) applying different methods when the proper and correct method as proposed by CBDT in ITR-6. The Assessing Officer is expected to follow the ITR-6 format to complete the assessment u/s 143(1) or 143(3) of the Act.

(Please click here for judgment)


III. A Useful Article:

1.  No Service tax could be levied if there was a transfer of right to use goods irrespective of the fact that the transfer was non-exclusive

(Please click here for detail)

[Contribution by CA. Bimal Jain and contributor is available at eMail-id: bimaljain@hotmail.com]

 

 Golden Rules:

  "Never think hard about past - it bring tears,
don't think more about future - it bring fears,
live this moment with a smile - it bring cheers"

                                       
 

  Thanks & Regards

  Team

Voice of CA 

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