No deduction in certain cases – Specified payment under section 197A(1f) 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.
Miscellaneous
CIT v Reliance Communication Infrastructure Ltd. [28 taxmann.com 302] –BOMBAY HIGH COURT Background: Assessee filed its return of income for the AY 2004-05 declaring a loss of Rs.277 crores. The AO passed order under Section 143(3) of the Act determining the loss at Rs.276 crores under the normal provisions of the Act and determining the income of Rs.394 crores under the provisions of Section 115 JB of the Act. The Commissioner of Income Tax on review found that the assessment order appeared to be erroneous and prejudicial to the interest of the revenue on following two counts: (i) That 50 crores shares of Reliance Infocomm Ltd. (RIL) were transferred at the rate of Rs.1/- per share (the face value per share) to Mr Mukesh Ambani when the market value of the share was Rs.53.01/- per share. Therefore, a sum of Rs.2635 crores was proposed to be taxed as a short term capital gain being a difference between market value per share of Rs.53.71 and face value per share was Rs.1/-. (ii) Amount of Rs.3037 crores received from Reliance Infocomm Ltd. as fees for grant of Indefeasible Right of Connectivity (IRC) for a period of 20 years was income accrued to the assessee in the assessment year 2004-05 itself.
Advance lease income taxable on pro-rata basis as per AS-19 – Bombay HC
My Home Power Ltd v DCIT [ITA NO. 1114 (HYD.) OF 2009 dtd 2.11.2012] Hyderabad ITAT Background: Assessee had filed return of income for the assessment year under consideration on 28.2.2008 showing a loss of Rs. 86,54,970. The company is engaged in the business of power generation through biomass power generation unit. During the year under consideration it has received 1,74,037 Carbon Emission Reduction Certificates (CERs) popularly known as ‘carbon credits’ for the project activity of switching off fossil fuel from naphtha and diesel to biomass. It has sold 1,70,556 CERs to a foreign company M/s. Noble Carbon Credits Ltd., Ireland and had received an amount of Rs. 12.87 crores. The assessee had accounted this receipt as capital in nature and had not offered the same for taxation. The AO dealt in detail the taxability of sale proceeds arising out of the sale of CERs and held the same to be a revenue receipt since the CERs are a tradable commodity and even quoted in stock exchange. The CIT(A) confirmed the order of the AO and also gave a finding that the said income of the assessee cannot be considered as income from business for the purpose of entitlement for deduction u/s. 80IA of the Act.
Carbon credits are not taxable – Hyderabad ITAT
DDIT v Lucent Technologies International Sales Ltd [IT Appeal No. 4054 (Delhi) of 2011 dtd 24.08.2012] Delhi ITAT Background: During the year under consideration, the assessee supplied telecom equipments to various companies. In its return of income for A.Y. 2006-07, the income from services rendered in India was offered to tax. However, income from offshore supplies made to Indian customers was not offered to tax. A survey u/s 133 A of the Act was carried out on 22.2.2009 at the office premises of Alcatel Lucent India Ltd. located at New Delhi and Gurgaon. Based upon the documents found, statement recorded during and after the survey and subsequent discussions, it was held in the assessment order of Alcatel Lucent France, for assessment year 2006-07 that various Alcatel Lucent Overseas entities including the assessee had a permanent establishment (PE) in India. The AO determined net income chargeable to tax as attributable to PE in India @ 2.5% of the sales made by the assessee in India. Accordingly, assessment was framed at an income of Rs.6,55,033/- and also levied the interests u/s 234A, 234B and 234C. Before the CIT (A), the assessee questioned the levy of interest u/s 234B by the AO at Rs. 3,46,360/-. The CIT(A) being convinced with the contention of the assessee has deleted the interest levied u/s 234B.
Advance tax not required to be paid (for 234B calculation), if the payer defaults in ...
CIT v Pelican Investments (P.) Ltd. [ITA No: 3424 of 2010 dtd 21 August 2012] Bombay High Court Background: The assessee by an agreement dated 7th November, 1984 with Hotel Leelaventure Limited (HLL) was granted a licence to occupy a shopping arcade for a period of 11 years. The assessee was required to pay to HLL, compensation for the said licence commencing from the date of occupation certificate, at the rate of Rs. 150/- per sq. mtr. per month during the period of the licence. Thereafter, the assessee and HLL entered into a fresh agreement dated 24th January, 1999, by which HLL granted the assessee further licence in respect of the same premises for a period of 10 years. The assessee filed its return of income on 29th October, 2006 for , declaring a total loss of Rs. 48,626/-. The AO made an order under section 143(3). The annual value under section 23(1)(a) was computed at Rs. 60,27,027/-. A deduction under section 24 at 30% amounting to Rs. 18,08,108/- was allowed. The AO, accordingly, assessed a sum of Rs. 42,18,919/- to be income from house property.
In the absence of renewal clause in the lease agreement, subsequent agreement cannot be merged ...
Tamil Nadu Cements Corporation Ltd. v JCIT [TC(A). No. 1123 of 2005] (Madras High Court) Background: The assessee during the relevant assessment year deducted prior period expenses of Rs 96,94,693 from book profits while computing MAT under section 115JA. The Assessing Authority viewed that as per the provisions of the Companies Act, prior year adjustments could not be reduced for arriving at the net profit of that particular year. The AO held that the computation done by the assessee was not in accordance with Section 115JA of the Act.
Prior period expenses allowable as a deduction from book profits while computing MAT – Madras ...
CIT v Pruthvi Brokers & Shareholders (P.) Ltd. [2012] 23 taxmann.com 23 (Bombay HC) Facts of the case: Assessee had claimed in his return for A.Y. 2004-05 a deduction under section 43B in respect of payment of SEBI fees of Rs. 10,00,000 each paid on 16th July, 2004 and 29th April, 2004 i.e. during the financial year 2004-05. Thus, admittedly, for the relevant assessment year viz. 2004-05, the assessee was not entitled to a deduction in respect of the said payments. In the course of assessment proceedings before the AO, the assessee stated that the claim was made inadvertently. The respondent, however, made a claim of Rs. 40,00,000 under section 43B in respect of payment of the SEBI fees on 9th May, 2003 i.e. in the assessment year 2004-05. The AO rejected the claim on the ground that he had no authority to allow any relief or deduction which had not been claimed in the return. CIT(A) and ITAT ruled in assessee’s favour and allowed the deduction. Hence, the instant Departmental appeal.
Assessee entitled to claim additional deductions/reliefs before appellate authorities – Bombay HC
Notification No. 21/2012 [F.No.142/10/2012-SO (TPL)] S.O. 1323(e), dated 13-6-2012 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 shall be made on the following specified payment under section 194J of the Act, namely:-
Notification: No TDS u/s 194J on “off-the-shelf” software
The Finance Bill, 2012 was introduced in Parliament on 16 March 2012. Certain official amendments have been carried out during the passage of the Bill in Parliament. A supplementary memorandum elucidating the official amendments to the Finance Bill, 2012 as reflected in the Finance Act, 2012 enacted on 28 May 2012, is attached. Click here to download