Entries Tagged 'Income Tax' ↓

Resident assessee can claim losses incurred from house property located abroad in return filed in India

An option is available to the resident-assessee to file return of income either under the Indian tax laws or under the treaty – If assessee files the return of global income in India, the Revenue is bound to give effect to such return – Therefore, losses from house property located abroad was to be included in the income of resident-assessee

Facts:

(a) The assessee filed his return of income after including losses from house property located abroad. He purchased this property in Australia which was already on rent. He obtained a loan from ANZ Bank, Australia (‘ANZ’) to purchase the property.

 

(b) The loss was computed under the head house property due to payment of interest to ANZ.

 

(c) During appellate proceedings, the CIT(A) referred to the decision of Apex Court in case of CIT v. PVAL Kulandagan Chettiar [2004] 137 Taxman 460 (SC) and held that as far as rent income from Australia was concerned, the assessee was required to file the return in Australia and such income could not be included in Indian income. Therefore, negative income could not be assessed in India.

 

The Tribunal held in favour of assessee as under:

(1) In view of Section 5 of the Income-tax Act (‘the Act’) in case of a resident, income accruing or arising outside India had to be assessed in India. The Sec 90(2) of the Act clearly provides that wherever DTAA is applicable to assessee he has an option to apply either Indian Tax Laws or provisions of DTAA, whichever are more beneficial to him.

 

(2) Therefore, the assessee had an option to file return of income under the Indian tax laws where DTAA was applicable.

 

(3) In the instant case, the assessee had exercised the option of filing return under Indian laws, thus, the same could not have been refused simply because DTAA was applicable.

 

(4) The decision in case of PVAL Kulandagan Chettiar (supra) was distinguishable because in that case the assessee was a resident of India and Malaysia. It was due to financial connection of the assessee with Malaysian property it was held that income from Malaysian rubber plantation was taxable only in Malaysia.

 

(5) The assessee had right to file the return of global income in India and the Revenue was bound to give effect to such return. The CIT(A) was not correct in holding that income from house property in Australia was not assessable in India. Accordingly, the order of the CIT(A) was to be set aside and the Assessing officer was to be directed to include the loss from such house property in the hands of the assessee.

 

RBI asks banks to furnish statements on monthly basis for remittances made by NRIs out of NRO accounts

A.P. (DIR SERIES 2013-14) CIRCULAR NO. 106, DATED 18-2-2014
Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to A.P. (DIR Series) Circular No. 12 dated November 16, 2006 in terms of which the lock-in period of 10 years for remittance of sale proceeds of immovable property was dispensed with and AD Category – I banks could allow remittances out of balances in NRO accounts including sale proceeds of immovable property provided the amount does not exceed USD one million per financial year (April-March). In terms of the circular ibid, AD – Category I banks were required to furnish on a quarterly basis, to the Chief General Manager-in-Charge, Foreign Exchange Department, Foreign Investments Division (NRFAD), Reserve Bank of India, Central Office, Mumbai-400001 within 10 days of the reporting quarter, a statement on the number of applicants and total amount remitted, as per proforma annexed to it.
2. With a view to having access to more real time data, it has been decided to collect this information on a monthly basis. Accordingly, AD – Category I banks may furnish on a monthly basis, a statement on the number of applicants and total amount remitted, as per proforma annexed, to the Chief General Manager-in-Charge, Foreign Exchange Department, Foreign Investments Division (NRFAD), Reserve Bank of India, Central Office, Mumbai-400001 within 7 days of the end of the reporting month. The data may be sent preferably by e-mail as per the proforma.
3. It may be noted that the proforma has been revised to also include “Transfers from NRO to NRE account”.
4. AD Category- I banks may bring the contents of the circular to the notice of their constituents concerned.
5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions/approvals, if any, required under any other law.

HOW TO GET NEW PASSWORD IN NEW EMAIL ID:SENT BY INCOME TAX DEPARTMENT

The problem is due to missing of Principal contact details. If the principal contact details is not exist in the portal, then these assessee can not reset the password using the existing procedure. These assessee has to submit the following documents to validate@incometaxindia.gov.in to reset the password.

1. Copy of the PAN card of the Company/Trust/Firm/HUF etc.
2. Copy of Proof of the date of incorporation.
3. Copy of the PAN card of the principal contact.
4. Copy of the one more identity proof issued by the Government Agency like Passport/Driving Lincence/Voter ID card/Aadhar card etc.
5. Authorisation letter issued using the in letter head of the Company/Trust/Firm/HUF etc.(having the address telephone etc)

After verifying the credentials, password will be sent to the new e-mail id.

No deduction of tax in certain cases

NOTIFICATION NO. 56/2012 [F. NO. 275/53/2012-IT(B)], DATED 31-12-2012

In exercise of the powers conferred by sub-section (1F) of section 197A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified below, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), excluding a foreign bank, namely:-

(i)  bank guarantee commission;

(ii)  cash management service charges;

(iii)  depository charges on maintenance of DEMAT accounts;

(iv)  charges for warehousing services for commodities;

(v)  underwriting service charges;

(vi)  clearing charges (MICR charges);

(vii)  credit card or debit card commission for transaction between the merchant establishment and acquirer bank.

2. This notification shall come into force from the Ist day of January, 2013.

New Circle rates in Delhi

 

The Present Circle Rates of the Residential Properties in Eight Categories of Colonies in Delhi

The Government of Delhi has introduced the new circle rates in eight categories of colonies in Delhi with effect from December 05, 2012.

The Delhi government had first introduced the circle rates for the real estate properties in Delhi in July 2007. These rates were notified under the provisions of Delhi Stamp (Prevention of Undervaluation of Instruments) Rules, 2007 on July 18, 2007.

At present, there are eight categories of colonies in the Delhi — A, B, C, D, E, F, G, and H based on the Municipal Corporation of Delhi (MCD) categorization. The circle rates vary depending on the category of a colony or residential area in Delhi.

As notified by the Government of Delhi, with effect from December 05, 2012 the new circle rates of real estate properties in Delhi based on the colonies categorization are:

Category A Colonies – Rs. 645,000 Per Square Meter
Category B Colonies – Rs. 204,600 Per Square Meter
Category C Colonies – Rs. 131,040 Per Square Meter
Category D Colonies – Rs. 106,384 Per Square Meter
Category E Colonies – Rs. 58,316 Per Square Meter
Category F Colonies – Rs. 47,141 Per Square Meter
Category G Colonies – Rs. 37,820 Per Square Meter
Category H Colonies – Rs. 19,361 Per Square Meter

From November 16, 2011 to December 04, 2012, the circle rates of real estate properties in Delhi were:

Category A Colonies – Rs. 215,000 Per Square Meter
Category B Colonies – Rs. 136,400 Per Square Meter
Category C Colonies – Rs. 109,200 Per Square Meter
Category D Colonies – Rs. 87,200 Per Square Meter
Category E Colonies – Rs. 47,840 Per Square Meter
Category F Colonies – Rs. 38,640 Per Square Meter
Category G Colonies – Rs. 31510 Per Square Meter
Category H Colonies – Rs. 15,870 Per Square Meter

From February 08, 2011 to November 15, 2011, the circle rates of real estate properties in Delhi were:

Category A Colonies – Rs. 86,000 Per Square Meter
Category B Colonies – Rs. 68,200 Per Square Meter
Category C Colonies – Rs. 54,600 Per Square Meter
Category D Colonies – Rs. 43,600 Per Square Meter
Category E Colonies – Rs. 36,800 Per Square Meter
Category F Colonies – Rs. 32,200 Per Square Meter
Category G Colonies – Rs. 27,400 Per Square Meter
Category H Colonies – Rs. 13,800 Per Square Meter

From July 18, 2007 to February 07, 2011, the circle rates of real estate properties in Delhi were:

Category A Colonies – Rs. 43000 Per Square Meter
Category B Colonies – Rs. 34100 Per Square Meter
Category C Colonies – Rs. 27,300 Per Square Meter
Category D Colonies – Rs. 21,800 Per Square Meter
Category E Colonies – Rs. 18,400 Per Square Meter
Category F Colonies – Rs. 16,100 Per Square Meter
Category G Colonies – Rs. 13,700 Per Square Meter
Category H Colonies – Rs. 6900 Per Square Meter

Adjustment Of Refunds Against Arrears

Circular No. 4 of 2012, dated 20-6-2012

The Board has been apprised that in certain cases the assessees have disputed the figures of arrear demands shown as outstanding against them in the records of the Assessing Officer. The Assessing Officers have expressed their inability to correct/reconcile such disputed arrear demand on the ground that the period of limitation of four years as provided under sub-section (7) of section 154 of the Act has expired.

Further, in some cases, the Assessing Officers have uploaded such disputed arrear demand on the Financial Accounting System (FAS) portal of Centralized Processing Center (CPC), Bengaluru which has resulted in adjustment of refund arising out of processing of Returns against such arrear demand which has been disputed by such assessees on the grounds that either such demand has already been paid or has been reduced/ eliminated in the appeals, etc. The arrear demands, in these cases also were not corrected / reconciled for the reason that the period of limitation of four years has elapsed.

2. The Board, in consideration of genuine hardship faced by the abovementioned class of cases, in exercise of powers vested under section 119(2)(b) of the Act, hereby authorize the Assessing Officers to make appropriate corrections in the figures of such disputed arrear demands after due verification/reconciliation and after examining the same on merits, whether by way of rectification or otherwise, irrespective of the fact that the period of limitation of four years as provided under section 154(7) of the Act has elapsed.

3. In view of the above the following has been decided:-

(a) In the category of cases where based on the figure of arrear demand uploaded by the Assessing Officer but disputed by the assessee, the Centralized Processing Center (CPC), Bengaluru has already adjusted any refund arising out of processing of return, the jurisdictional Assessing Officer shall verify the claim of the assessee on merits. After due verification of any such claim on merits, the Assessing Officer shall issue refund of the excess amount, if any, so adjusted by CPC due to inaccurate figures of arrear demand uploaded by the Assessing Officer. The Assessing Officer, in appropriate cases, will also upload amended figure of arrear demand on the Financial Accounting System (FAS) portal of Centralized Processing Center (CPC), Bengaluru wherever there is balance outstanding arrear demand still remaining after aforesaid correction/ reconciliation.

(b) In other cases, where the assessee disputes and requests for correction of the figures of arrear demand, whether uploaded on CPC or not uploaded and still lying in the records of the Assessing Officer, the jurisdictional Assessing Officer shall verify the claim of the assessee on merits and after due verification of such claim, will make suitable correction in the figure of arrear demand in his records and upload the correct figure of arrear demand on CPC portal.

4. It is specifically clarified that these instructions would apply only to the cases where the figures of arrear demand is to be reconciled/ corrected – whether such arrear demand has been uploaded by the Assessing Officer on to Financial Accounting System (FAS) of CPC or it is still in the records of the Assessing Officer.

TDS on software payments – No deduction in certain cases

NOTIFICATION NO. 21/2012 [F.No.142/10/2012-SO(TPL)] S.O. 1323(E), DATED 13-6-12

In exercise of the powers conferred by sub-section(1F) of section 197A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that no deduction of tax shall be made on the following specified payment under section 194J of the Act, namely:-

Payment by a person (hereafter referred to as the transferee) for acquisition of software from another person, being a resident, (hereafter referred to as the transferor), where-
(i) the software is acquired in a subsequent transfer and the transferor has transferred the software without any modification,
(ii) tax has been deducted-
(a) under section 194J on payment for any previous transfer of such software; or
(b) under section 195 on payment for any previous transfer of such software from a non-resident, and
(iii) the transferee obtains a declaration from the transferor that the tax has been deducted either under sub-clause (a) or (b) of clause (ii) along with the Permanent Account Number of the transferor.

2. This notification shall come in to force from the 1st day of July, 2012.

( J. Saravanan)
Under Secretary(TPL-III)

How to prevent Financial or Accounting fraud

Revised list of document for opening of bank account of Sole Proprietorship Firm

RBI/2011-12/506 DBOD. AML.BC. No 93 /14.01.001/2011-12                    April 17, 2012

 

The Chairmen / Chief Executive Officers

All Scheduled Commercial Banks (excluding RRBs)/

All India Financial institutions/ Local Area Banks

 

Dear Sir,

 

Know your Customer (KYC) Guidelines – Accounts of Proprietary Concerns

1. Please refer to our circulars DBOD. AML BC. No. 80/14.01.001/2009-10 dated March 26, 2010 and DBOD. AML.BC. No. 38 /14.01.001/2010 -11 dated August 31, 2010regarding customer identification procedure for opening accounts of proprietary concerns.

 

2. On a review, it has been decided to include the following documents in the indicative list of required documents for opening accounts of proprietary concern:

 

i) The complete Income Tax return (not just the acknowledgement) in the name of the sole proprietor where the firm’s income is reflected, duly authenticated/ acknowledged by the Income Tax Authorities.

ii) Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.

 

 

Yours faithfully,

(Sudha Damodar)

Chief General Manager

UNION BUDGET 2012- INTERNATIONAL TAXATION PROVISIONS

Tax Rates Remain Unchanged


  • The corporate tax rates remain unchanged at 40% for a foreign company.
  • The surcharge applicable on companies with total income exceeding INR 10 million also remains same at 2% for Foreign Companies.
  • Similarly Education Cess and Secondary Higher Education Cess continue to be levied at 2% & 1% respectively.

 

Withholding Taxes

  • On Interest

Section 115A (ii) which provides for withholding of tax on interest paid to non residents on External Commercial Borrowings (i.e borrowings in Foreign Currency) has been reduced from 20% to 5%(plus applicable surcharge and cess) for certain specific sectors1 for a period of 3 years2.

It is further proposed to insert a new section 194LC to provide that interest income paid by such specified company1 to a nonresident shall be subjected to tax deduction at source at the rate of 5% (plus applicable surcharge and cess).

This amendment will take effect from 1st July, 2012.

On Royalty

  • Royalty paid to non residents is subject to withholding to tax at the rate of 10% as per section 115A;
  • Section 9(1)(vi) that any income payable by way of royalty in respect of any right, property, or information shall be deemed to accrue or arise in India;
  • The definition of royalty is provided in explanation 2 to section 9 of The Income Tax Act. The definition of royalty has always been a matter of dispute, this year budget provides a clarification explanation to be included in section 9(1)(vi) by way of retrospective amendments from 1st June, 1976 will accordingly apply in relation to the assessment year 1977-78 and subsequent assessment years..
  • The explanation has been included to target payments towards shrink-wrap and embedded software, online databases and data clouds, which have been disputed before Indian tax courts in the past (except data clouds) and include them within the ambit of ‘royalty’.
  • The proposed explanation seeks to include that “consideration for use or right to use” of computer software is royalty, by clarifying that it includes and has always included transfer of all or any right for use or right to use a computer software (including granting of software) irrespective of the medium through which it is transferred.
  • Further explanation has been included that royalty includes “consideration in respect of any right, property or information whether or not”:

(a)  The possession or control of such right, property or information is with the payer;

(b) Such right, property or information is used directly by the payer;

(c)  The location of such right, property or information is in India.

  • The term “process” includes and shall be deemed to have always included transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal), cable, optic fiber or by any other similar technology, whether or not such process is secret.  The impact of this is that non-resident broadcasters could be required to pay tax on royalty in India on account of providing services in India.

On Non Resident Sportsmen Or Sports association

Section 115BBA which provides for withholding of tax on payment made to non-resident and non citizen sportsmen or sports association has been raised from 10% to 20% of the gross receipts.

It is further proposed to amend section 115BBA to provide that income arising to a non-citizen, non-resident entertainer (such as theatre, radio or television artists and musicians) from performance in India shall be taxable at the rate of 20% of gross receipts.

On payment made By One Non Resident to Another( Reversal of Vodafone Case)

The recent Supreme Court judgement set out that a requirement of tax presence was necessary for imposing a withholding tax obligation. The decision has been nullified by retrospective amendment in the statute, the budget proposes to tax on indirect transfers of Indian entities by non residents.

The changes made to tax indirect transfers are:

Meaning of Property

As per section 2(14) “capital asset” means property of any kind held by the assessee whether or not connected with his business or profession except stock in trade, consumable stores or raw material held for the purposes of his business or profession.

 

“Both the Bombay High Court and the Supreme Court held in Vodafone that “controlling interest” is not a capital asset”.

The Finance Bill proposes to add the following Explanation and the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April 1962, namely:

“Explanation– For the removal of doubts, it is hereby clarified that ‘property’ includes and shall be deemed to have always included any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever.”

Meaning of Transfer

As per section 2(47) transfer means any sale, exchange, extinguishment or relinquishment of rights.

“Revenue’s primary case in Vodafone in the Supreme Court was that there was an “extinguishment” under this provision. It was inserted by Parliament to widen the scope of section 2(47) in order to cover transactions in which there is no sale in the ordinary sense. Although section 2(47) does not so provide, it is submitted that it is not open to the Revenue to invoke “extinguishment” in a transaction in which there is admittedly a sale, simply because that sale is not taxable. The Chief Justice’s implicit approval of this proposition is, it is submitted, to be welcomed.

The Finance Bill proposes to add the following Explanation and the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April 1962, namely:

Explanation – For the removal of doubts, it is hereby clarified that “transfer” includes and shall be deemed always to have included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterized as being effected or dependent upon or flowing from the transfer of a share or shares of a company incorporated outside India.”

Scope of Income Deemed To accrue or arise in India

Section 9 contains provision for Income to accrue or arise in India. It is a legal fiction created to tax income which may or may not accrue or arise in India.

Sub clause (1)(i) provides for income accrue or arises in India directly or indirectly, through the transfer of a capital asset situate in India.

“The Supreme Court held in Vodafone that the words “directly or indirectly” do not qualify the transfer of the asset.”

The Finance Bill proposes to add the following Explanation and the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April 1962, namely:

1. “Explanation – the expression ‘through’ shall mean and include and shall be deemed to have always meant and included “by means of”, “in consequence of” or “by reason of”.

2. “ Explanation–          to clarify that an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India if the share or interest derives, directly or indirectly, its value substantially from the assets located in India.

 

  • Further Amended section 195(1) to clarify that obligation to comply with sub-section (1) and to make deduction there under applies and shall be deemed to have always applied and extends and shall be deemed to have always extended to all persons, resident or non-resident, whether or not the non-resident has:-

(a) a residence or place of business or business connection in India; or

(b) any other presence in any manner whatsoever in India.

  1. The specified company shall be an Indian company engaged in the business of –

i.      construction of dam,

ii.      operation of Aircraft,

iii.      manufacture or production of fertilizers,

iv.      construction of port including inland port,

v.      construction of road, toll road or bridge;

vi.      generation, distribution of transmission of power

vii.      construction of ships in a shipyard; or

viii.      developing and building an affordable housing project as is presently referred to in section 35AD(8)(c)(vii).

This amendment will take effect from 1st April, 2013 and will, accordingly, apply in relation to the Assessment Year 2013-14 and subsequent assessment years.

  1. It is proposed to amend Section 115A of the Income Tax Act to provide that any interest paid by a specified company to a non-resident in respect of borrowing made in foreign currency from sources outside India between 1st July, 2012 and 1st July, 2015, under an agreement, including rate of the interest payable, approved by the Central Government, shall be taxable at the rate of 5% (plus applicable surcharge and cess).